DEALTALK-Morgan Stanley, China in stalemate over JV
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By Michael Flaherty and Samuel Shen
HONG KONG/SHANGHAI Dec 24 (Reuters) - More than a year after Morgan Stanley (MS.N: Cotización) signed a joint venture deal with a Chinese securities firm, the bank and China's regulators are in a stalemate.
While joint venture deals in China take a long time to finalise, this situation is different.
Morgan Stanley wants confirmation that the government will approve the license needed for its link-up with China Fortune Securities before the New York bank sells a stake in its existing Chinese banking partner.
According to sources close to the matter, Chinese authorities insist Morgan Stanley first sells the stake in that existing partner, China International Capital Corp, before they grant confirmation of a license for the Fortune joint venture.
The biggest hurdle to sorting out the issue is reluctance on either side to give in, according to people close to the matter. Sources interviewed for the article did not want to be identified because of the political sensitivities involved.
Morgan Stanley and the China Securities Regulatory Commission declined to comment for this article.
There is no sign that Morgan Stanley plans to abandon its agreement with Fortune. In fact, there is no expiration date with the agreement, a source close to the matter says, adding that the two banks have been cooperating since the December 2007 deal. Continuación...