China CITIC Bank, the state-owned financial services group, has become the latest Chinese investment group to target an American bank after its president said yesterday that it was exploring a bid for a stake in Bear Stearns.

Chang Zhenming, the president of CITIC, said that the Chinese bank was interested in buying a stake in the Wall Street firm, which has been badly hurt by America’s mortgage melt-down, as it looks to spend some of the $5.9 billion (£2.9 billion) sum raised through its flotation in April.

CITIC’s interest, which is not thought to have translated into a formal offer, has emerged two weeks after James Cayne, the chief executive of Bear Stearns, told analysts that his firm would look at suitable tie-ups and hinted that a Chinese group would be among his preferred choices.

CITIC, which is controlled by the state although it is now a public company, is the latest in a series of Chinese financial services groups to pursue American investment operations. Flush with cash from recent flotations and from their country’s rapid growth, Chinese financial services groups such as China Minsheng and China Investment Corporation (CIC) are buying up stakes in the United States and elsewhere.

The China’s Government, which owns a large chunk of the nation’s financial services industry and exerts considerable influence over it, is also keen to invest some of the country’s $1.4 trillion of foreign exchange reserves in higher-yielding assets.

Last week China Minsheng agreed to buy a 9.9 per cent stake in UCBH, the San Francisco bank, for up to $317 million. CIC invested $3 billion in Blackstone, the American buyout firm, over the summer.

Sources have also said that Apax Partners, the British private equity group, is keen to tap sovereign coffers. It sent its most senior partners in London on an exploratory trip to China recently to discuss a potential equity stake before the buyout group closes its next fund later this year.

Adam Compton, an analyst with RCM Investors in San Francisco, said: “The Chinese are certainly looking to put their surplus dollars to work as they diversify out of US Treasuries, but they are also keen to buy expertise – in the case of Bear Stearns, in capital markets.

“In return, Bear Stearns would get a platform into a huge and rapidly growing market. CITIC can help it to deal with China’s regulatory structure and help it to negotiate with its government.”

Bear Stearns, which was once regarded as Wall Street’s mortgage king, has been badly dented this year after two hedge funds that it managed collapsed under the weight of disastrous investments in bonds backed by sub-prime mortgages.

The group’s woes have sent its share price down by about a quarter this year, making it the subject of takeover rumours.

Berkshire Hathaway - the investment firm run by the billionaire Warren Buffett – Bank of America, Wachovia and China Construction Bank have also been reported to be interested in buying a stake in Bear Stearns.

Bear Stearns declined to comment on any potential sales of a stake.

Spreading out

— Industrial & Commercial Bank of China bought 90 per cent of Halim Indonesia Bank PT last December

— Bank of China paid $965 million (£475 million) last December for Singapore Aircraft Leasing Enterprise

— In May China Investment Corporation invested $3 billion in Blackstone, the American buyout group

— In July China Development Bank bought a 3.1 per cent stake in Barclays for €2.2 billion (£1.53 billion)

— In August Industrial & Commercial Bank of China bought a 79.9 per cent stake in Macau’s Seng Heng Bank

— China Minsheng Banking Corp said this month that it would buy a 9.9 per cent stake in the San Francisco-based UCBH

Explore Industry Sectors

• Banking & Finance

• Construction & Property

• Consumer Goods

• Engineering

• Health

• Industrials

• Leisure

• Media

• Natural Resources

• Retailing

• Support Services

• Technology

• Telecoms

• Transport

• Utilities

Times Recommends

• B&B shareholders forced into funding rescue
• John Lewis department store sales plunge 8.3%
• Families turn to credit to cover mortgage bills