The struggling American investment bank Morgan Stanley is negotiating the sale of a 49 percent stake to the Chinese state stabilization fund, the Financial Times reported on Friday, citing sources close to the negotiations.
Negotiations with China Investment Corp. (CIC), which already purchased a 9.9 percent stake in the bank last December, "in advanced stages, but no agreement has yet been reached," the newspaper states, quoting unnamed sources. The management of Morgan Stanley is more inclined towards the option of selling the stake to CIC than to the one that involves a merger with the American bank Wachovia, the newspaper reports. According to reports, CIC President Gao Xiqing will meet with Morgan Stanley executives in San Francisco. In response to a question from the Chinese state news agency Xinhua, an unnamed CIC official did not dismiss the possibility of purchasing a stake in Morgan Stanley but warned of political obstacles to such an agreement in the United States."Even if CIC intends to buy a stake, it could now be very difficult since the purchase of a stake, even one smaller than 10 percent, could be subject to scrutiny by the U.S. government regarding foreign investments," the official said.
