Fed allows CIC to buy 10% of US bank
By Winny Wang |
September 2, 2010, Thursday
|
Print Edition
Print Edition
THE United States Federal Reserve has approved China Investment Corp's application to acquire up to 10 percent of the voting shares in Morgan Stanley.
The Fed on late Tuesday said it gave the go-ahead to the stock acquisition because China's US$300 billion sovereign wealth fund had vowed not to seek a controlling interest in the New York-based investment bank.
The Fed said in a statement that CIC has committed not to exercise a controlling influence over the management or policies of Morgan Stanley; not to seek or accept more than one representative on the board of directors of Morgan Stanley; and not to have any other director, officer, employee, or agent engage with Morgan Stanley.
Several Chinese banks indirectly owned by CIC compete directly with a subsidiary bank of Morgan Stanley in New York. The Fed has reviewed carefully the competitive effects of the CIC takeover proposal and concluded that the acquisition of 10 percent would not sharply restrict competition.
CIC was formed in 2007 as a sovereign wealth fund to invest the country's foreign exchange reserves.
CIC currently holds 2.49 percent of the voting common stock of Morgan Stanley which it purchased in 2009, the Fed said.
Globally CIC invested 36 percent in equities, 32 percent in cash funds, 26 percent in fixed-income securities and 6 percent in alternative investments at the end of 2009, its annual report said.
The Fed on late Tuesday said it gave the go-ahead to the stock acquisition because China's US$300 billion sovereign wealth fund had vowed not to seek a controlling interest in the New York-based investment bank.
The Fed said in a statement that CIC has committed not to exercise a controlling influence over the management or policies of Morgan Stanley; not to seek or accept more than one representative on the board of directors of Morgan Stanley; and not to have any other director, officer, employee, or agent engage with Morgan Stanley.
Several Chinese banks indirectly owned by CIC compete directly with a subsidiary bank of Morgan Stanley in New York. The Fed has reviewed carefully the competitive effects of the CIC takeover proposal and concluded that the acquisition of 10 percent would not sharply restrict competition.
CIC was formed in 2007 as a sovereign wealth fund to invest the country's foreign exchange reserves.
CIC currently holds 2.49 percent of the voting common stock of Morgan Stanley which it purchased in 2009, the Fed said.
Globally CIC invested 36 percent in equities, 32 percent in cash funds, 26 percent in fixed-income securities and 6 percent in alternative investments at the end of 2009, its annual report said.
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