Morgan Stanley cleared to sell Chinese bank stake

December 08, 2010 | 22:27

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US investment bank Morgan Stanley said Wednesday it has received US regulatory approval to sell its shares in Chinese bank China International Capital Corporation.

The Wall Street bank said it expects to record a pretax gain of $700 million in the sale of its 34.3 per cent stake in CICC.

The bank is selling its stake to a group of investors that includes TPG Capital, Kohlberg Kravis & Roberts, a Singapore sovereign wealth fund and the Great Eastern Life Assurance Company.

The transaction was expected to close by year-end.

"We are proud of our history and successful track record in China," James Gorman, president and chief executive of Morgan Stanley, said in the statement.

"This includes our long partnership with CICC, which made us the first foreign securities firm to have a major stake in a China-based joint venture investment bank."

CICC, the leading Chinese investment bank, was founded in 1995 by China Construction Bank and Morgan Stanley, which invested $35 million in the joint venture at the time.

Gorman emphasized China remained a critical part of Morgan Stanley's global strategy but the bank's focus was now on expansion in its domestic US market.

Morgan Stanley is struggling to recover from the 2008 financial crisis that hit many banks in the United States.

The bank received a $10-billion government bailout to stay afloat.

In October Morgan Stanley said it swung into a $91-million loss in the third quarter compared with a year ago, citing the sale of a business and a drop in lending income.

AFP

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