INVESTMENT BANKING

CHINA DENIES REPORT STATE BANK’S TAKING BEAR STEARNS STAKE

Bear Stearns’s European businesses are thriving, its Japanese activities are on the mend, and its Chinese efforts are just about nowhere, the firm’s chief financial officer, Samuel Molinaro, said in December.

That description could be turned on its head. The Wall Street Journal reported yesterday that Bear Stearns may sell up to 20% of itself to a large Chinese bank. A deal would vault the New York investment bank over competitors that have been pouring millions of dollars into China with little near-term expectation of profit.”Bear can’t afford to make the kinds of investments the other guys are making, so this would be a brilliant maneuver,” a securities industry analyst at Punk Ziegel & Co., Richard Bove, said. “The Chinese bank would provide them business because they profit if Bear does. They can give them IPOs every day.”

The Journal reported that Bear Stearns, the fifth-biggest American investment bank, is in “early discussions” to sell $2 billion to $4 billion of convertible bonds to China Construction Bank Corporation, one of the country’s four big, state-controlled banks.

A bank spokesman, Yu Baoyue, denied the report, according to Bloomberg News.A Bear Stearns spokeswoman, Elizabeth Ventura, declined comment on the report or the Chinese bank’s statement.

– Dow Jones Newswires

EQUITY MARKETS

NYSE ANNOUNCEMENT SIGNALS CONSOLIDATION AHEAD

The New York Stock Exchange said it’s considering acquisitions, the latest indication that the pace of consolidation in global equity markets is about to accelerate.

Last week’s disclosure by the NYSE is the first sign Chief Executive Officer John Thain is moving ahead on his promise to make the newly formed NYSE Group a leader in the consolidation. Nasdaq Stock Market Inc., the NYSE’s largest American rival, got a jump on Mr.Thain last month with a $4.2 billion bid for the London Stock Exchange.

– Bloomberg News

INVESTING

HARVARD MANAGEMENT CEO BUILDS SENIOR EXECUTIVE TEAM

Harvard Management Company Chief Executive Officer Mohamed El-Erian is searching for three senior executives to round out his team after his predecessor took more than 30 colleagues to a new hedge fund company.

Mr. El-Erian, 47, who started working at the Boston-based company in January, said in a telephone interview yesterday that he wants to hire heads of international bond investing, foreign exchange and currencies, and external management. About half of Harvard’s $25.9 billion endowment, the world’s largest higher-education fund, is managed by outside firms.

Jack Meyer left after 15 years as Harvard Management’s CEO to form Convexity Capital Management, which raised $6 billion, the most for a new hedge fund. Mr. El-Erian filled two senior executive slots during the past week. His five most senior people will build up their own teams. Mr. El-Erian named Marc Seidner head of U.S. fixed-income investing and Kathryn Murtagh chief compliance officer. Mr. Seidner oversaw $26 billion in bond investments as director of active core strategies for Standish Mellon Asset Management in Boston, a unit of Mellon Financial Corp. – Bloomberg News

BANKING

GROUP OPPOSES BANK OF NEW YORK DEAL

A community group has filed a challenge with the Federal Reserve, calling for public hearings on a multibilliondollar deal between Bank of New York and JPMorgan Chase, the group announced yesterday. The Bronx-based Inner City Press/Fair Finance Watch argued in a release that the deal could raise prices and close local branches. The group also accused JPMorgan Chase of charging higher mortgage interest rates to people of color and enabling predatory lenders.

JPMorgan Chase has said it expects to close down some branches following the deal, in which the company plans to acquire the Bank of New York’s 338 branches in New York, New Jersey, and Connecticut.

– Associated Press