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Lack of approval scraps BOC's French deal

BANK of China has scrapped a 236 million-euro (US$313 million) investment in La Compagnie Financiere Edmond De Rothschild because government approval has not been given, the bank said today.

"The agreement has expired and has automatically become invalid as we are unable to gain government approval before a second deadline," Wang Zhaowen, a spokesman for the Beijing-based bank said in a telephone interview from Beijing today.

"We may in the future seek cooperation in other areas with the French firm," Wang said, declining to give more details.

He also noted that the failure would not deter it from future overseas acquisitions.

He said the bank has no more details at this stage.

The bank, the world's third-largest by market value, was forced to extend an original December 31 deadline for the deal, announced in September, by three months after failing to get state approval.

The Chinese bank had agreed to purchase a 20-percent stake in the Paris-based asset manager.

Bank of China President Li Lihui said on March 24 that he expected to get a response from the government on the Rothschild purchase "very soon."

Chinese authorities are tightening scrutiny on financial institutions' overseas acquisitions after the bitter buying of Fortis and the Blackstone Group.

Chinese lenders should take a "cautious" stance on overseas acquisitions as more losses at financial companies around the world may be disclosed, China Banking Regulatory Commission Vice Chairman Cai Esheng said in December. Industrial acquisitions, at home or abroad, presented better opportunities, he said then.

Big state owned banks such as China Construction Bank have said that they are cautious about overseas acquisitions because of the uncertainty of market conditions and have no plans on hand for overseas purchasing.

Bank of China ended at 3.52 yuan (US$52 US cents) today in Shanghai, up 0.86 percent. The benchmark Shanghai Composite Index gained 0.72 percent to 2,425.29.


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