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Word of the talks follows an earlier report in the New York Times that Morgan Stanley—one of the two last independent, U.S.-based investment banks—is considering a merger with Wachovia or another bank.
The Federal Reserve has been active in encouraging the Chinese to invest in U.S. financial institutions and has even made it clear that it would look favorably upon a Chinese acquisition of a U.S.-based financial institution, sources said.
Though Chinese financial institutions do not have a great deal of experience in running large investment banks, Citic does own the largest brokerage in China. Sources both in the U.S. and in China says discussions are ongoing. China’s sovereign wealth fund, China Investment Corporation (CIC), owns 9.9 percent of Morgan.