China is not the first place Wall Street execs might be looking to find white knights for struggling U.S. banks. It was not that long ago that U.S. banks and their European counterparts were tripping over each other to buy into China’s crumbling banks, where non-performing debts dominated balance sheets. But now, with a solid dose of state medicine (bailouts) behind them, it’s the banks of the People’s Republic that stand ready to buy up U.S. assets. CITIC Bank Corp’s bid for a stake in Bear Stearns is just such a move, but it also has huge attraction for beleaguered Bear, giving it an enviable position in the world’s fourth-biggest economy. Sources have said Beijing-run ICBC, which has surpassed Citigroup as the world’s biggest bank by market value, is looking for small international acquisitions. China’s big banks are flush with cash after a spate of multibillion-dollar IPOs and as a red-hot domestic stock market cooks up share prices. CITIC Bank raised $5.4 billion in a Hong Kong and Shanghai initial public offering in April. ICBC raised $21.9 billion in the largest-ever initial public offering last year. China Minsheng Banking Corp recently said it would buy 9.9 percent of San Francisco-based UCBH Holdings for more than $200 million in the first investment by a mainland Chinese commercial bank in a U.S. bank. In July, China Development Bank, which lends at the direction of the government, agreed to pay as much as 9.8 billion ($13.9 billion) euros for a stake in the UK’s Barclay’s.
    
** Blackstone Group and the banks involved in the $1.8 billion takeover of mortgage and vehicle fleet company PHH Corp have yet to agree on a way to resolve a financing shortfall, dimming the prospects that the deal will go through. According to sources involved with the deal, Blackstone is unlikely to cough up the entire amount needed to fill the financing gap. Other options are dwindling, sources say. Meanwhile, JPMorgan and Lehman Brothers Holdings, the banks financing the leveraged buyout, are sticking to their stance disclosed last month that the debt portion of the deal will be $750 million less than first agreed. Blackstone is scheduled to come back to PHH by the end of this month with an indication that it is able to complete the deal. But sources say that Blackstone’s talks with the banks are not going well. Should Blackstone decide to back out of the deal and pay a break-up fee, the move could cause the entire transaction to fall apart.
    
** TomTom, the world’s biggest maker of car navigation devices, said U.S. competition authorities had approved its planned takeover of digital map maker Tele Atlas. The Dutch company, which launched a 21.25 euros per share or 1.8 billion euros ($2.56 billion) bid for Tele Atlas earlier this month, said in a statement it was preparing a filing with the European Commission for a competition review. TomTom competes with U.S.-based Garmin. It wants to buy Tele Atlas to improve its digital maps and analysts have said the takeover could balance out the likely long-term decline in TomTom’s profit margins. U.S.-based Navteq, Tele Atlas’s main competitor, agreed earlier this month to an $8.1 billion takeover by Nokia as the Finnish cellphone maker seeks to benefit from one of the fastest growing segments in the technology industry.
    
** Just how bad a business is private equity these days? The Wall Street Journal’s DealJournal reports from a Penn State M&A conference that Wall Street is taking a long hard look at itself and the funding of private equity deals. “When you net out all the profit versus all the losses, Wall Street hasn’t made money, it’s lost money,” it quotes Robert Kindler, vice chairman at Morgan Stanley, as saying.  It also has a blow-by-blow transcript, courtesty of Thomson Financial, of Citigroup’s third-quarter earnings conference call, where top-ranked financial services analyst Michael Mayo of Deutsche Bank securities took on Citi chief Chuck Prince. Mayo recently cut his Citi rating to “sell” from “buy” and said the company should oust Chuck Prince, its chairman. 

(Reporting by Eadie Chan, Michael Flaherty and Gilbert Kreijger)

(Photo: Reuters file)