JPMorgan Chase & Co. ended plans to manage China Everbright Bank Co.’s Hong Kong share sale amid a U.S. investigation into the Wall Street firm’s hiring practices in China, two people with knowledge of the matter said.
The U.S. bank told Everbright it would quit the deal, which at $2 billion would be the largest first-time offering by a Chinese lender in Hong Kong since 2009, because the probe delayed an internal approval process, the people said. They asked not to be identified because the matter is confidential. Brian Marchiony, a JPMorgan spokesman, declined to comment.
U.S. authorities are examining whether New York-based JPMorgan violated anti-bribery laws by hiring the children and other relatives of well-connected politicians and clients in China so that their family members would steer business to the firm, a person with knowledge of the investigation said in August. JPMorgan said it was cooperating with the probes.
The U.S. Securities and Exchange Commission in May requested records from JPMorgan concerning Tang Xiaoning, the son of China Everbright Group Chairman Tang Shuangning, the New York Times reported in August, citing a confidential government document.
Everbright Bank said last month that it won regulatory approval to sell as many as 12 billion shares in Hong Kong. Lu Hong, a board secretary at the bank’s Beijing office, didn’t return a call seeking comment after working hours today.
The Chinese bank, which had planned to raise as much as $6 billion from a sale in 2011, was aiming for $2 billion in proceeds in the latest round, according to two people with knowledge of the matter in March.
The Wall Street Journal reported JPMorgan’s decision to exit the equity offering earlier today. China International Capital Corp., UBS AG and Morgan Stanley will remain on the deal, according to the newspaper.
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