Bank of China abandons Rothschild deal

April 2, 2009

, SHANGHAI, April 2 – Bank of China said on Thursday it had abandoned its bid to buy a stake in French private bank Edmond de Rothschild Finance Company after Chinese regulators failed to approve the deal.

Bank of China, one of China\’s big four state banks, announced in September it would pay 236 million euros (342 million dollars) for a 20 percent stake in the French private bank.

"The agreement became invalid automatically as the deadline passed," Bank of China spokesman Wang Zhaowen told AFP.

Bank of China had been forced to extend the original deadline for the deal to April 1 from December 31 after the government failed to grant its approval before the initial deadline.

Wang said the bank would not seek a further extension but remains committed to developing its private banking business and would "seek other ways of cooperation" with the French bank. He did not elaborate.

China has tightened up scrutiny of overseas investments by domestic institutions after several foreign investments by Chinese financial groups over the past two years have led to huge paper losses.

China\’s 200-billion-dollar sovereign wealth fund, China Investment Corp., paid five billion dollars in 2007 for a 9.9 percent stake in Morgan Stanley, which has lost two-thirds of its market value since the investment.

Last year, China\’s Ping An Insurance Group said it would book a potential loss of 2.3 billion dollars for its investment in European financial group Fortis NV, which was hit by the global financial crisis and dismantled.

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