Though Bear Stearns suffered setbacks, it had accumulated enough capital to survive quite well: during this crisis it not only avoided any employee layoffs but continued to pay bonuses. Trading fell off sharply, of course, when the New York stock market crashed in 1929. The company began trading in government securities and soon became a leading trader in this area. World War I, with its heavy demand for capital, had encouraged the public to enter the securities markets in mass, and the young Bear Stearns prospered in the frenzied optimism of those markets. The original company was founded with $500,000 in capital in response to the thriving investment climate of the early 1920s. The company maintains offices in major cities all over the globe.
BEAR STEARNS CLIENT BASE FULL
Headquartered in New York, Bear Stearns today is a full service brokerage and investment banking firm focused on three core areas: capital markets, wealth management, and global clearing services. The partnership, in turn, was the successor to a company founded in 1923 by Joseph Bear, Robert Stearns, and Harold Mayer as an equity-trading house. Hit hard by problems in the mortgage business, Bear has announced a couple of layoffs in the last couple of months and fused its two home loan units.NAIC: 523110 Investment Banking and Securities Dealing 523120 Securities Brokerageīear Stearns Companies, Inc., the holding company that owns Bear, Stearns & Company, Inc., was created on October 29, 1985, as the successor to Bear Stearns & Company and Subsidiaries, a partnership organized in 1957. But then China Citic Bank, also a unit of Citic Group, denied that it was in talks with Bear Stearns. Jiang Dingzhi, vice chairman of the China Banking Regulatory Commission, said last week that Citic was interested in a deal with Bear Stearns.
But Bear Stearns has often said such an infusion is not necessary, and its deal with Citic seems to be an expression of confidence in Bear Stearns.Ĭonfusion over a possible deal has reigned for weeks. Some investors and analysts have suggested that the firm could require a capital infusion because of its high exposure in the moribund mortgage market. Still, the venture does not directly address Bear Stearns’ balance sheet. Bear Stearns will also have options to acquire additional shares. In turn, Bear Stearns will acquire a similar stake in Citic through a six-year convertible debt security. Citic could potentially increase the stake to 9.9 percent. The transaction would give Bear Stearns a strong foothold in Asia, where it has been weak, and may help it catch bigger rivals like Goldman Sachs and Morgan Stanley.Īccording to the statement, Citic will invest in Bear Stearns through 40-year convertible trust preferred securities that will convert to about 6 percent of Bear Stearns’ outstanding shares. The venture, however, would include some collaboration in China, giving Bear Stearns access to some of Citic’s clients. The deal, which also calls for Bear Stearns to invest $1 billion in Citic, which is owned by an arm of the Chinese government, would pool together both firms’ businesses in Asia, with the exception of China. “Combining our operations in Asia with Citic Securities will greatly benefit Bear Stearns’s global client base and generate substantial new revenues.” “This groundbreaking alliance will give Bear Stearns a unique footprint in one of the world’s fastest-growing economies,” the chief executive of Bear Stearns, James Cayne said in a statement today. The deal comes amid speculation that Bear Stearns might seek a partner following the summer’s credit crunch, which took a toll on the firm’s earnings. Citic Securities, a top state-controlled investment bank in China, is planning to invest $1 billion in Bear Stearns and form a joint venture with the firm in Asia, the companies said this morning in a statement.
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