Report: China bans CSFB
By CNN's Alex Frew McMillan
HONG KONG, China (CNN) -- Investment bank Credit Suisse First Boston has been blocked from doing business in China, according to a report.
CSFB was due to underwrite a stock offering later this year for Unicom Group, China's second-largest telecom. But it has been dropped from the deal.
Officials in Beijing are annoyed by CSFB's ties with Taiwan, according to the Wall Street Journal, which reported the rift on Friday.
Taiwan finance minister's visit annoys Beijing
CSFB hosted Taiwan's finance minister, Yen Ching-chang, and another high-level official at an investment conference that the investment bank held in Hong Kong in March.
The Taiwanese politicians stressed they were on a private rather than an official visit. But a CSFB executive told the Journal that Beijing's "blood is boiling" over the trip.
CSFB has also promoted Taiwanese technology companies in research materials. Chinese officials are irritated that the materials didn't refer to Taiwan as part of China, according to the newspaper.
Officials called CSFB last week to tell the company it would no longer participate in the Unicom offering.
CSFB expected to compete strongly under Mack
It is not clear how long the block will last. Investment bank Morgan Stanley was dropped from a similar offering in 1997, but with China Telecom stock.
Other investment banks say Morgan Stanley simply lost out on business grounds.
Morgan Stanley has repaired relations and is now one of the leading overseas investment banks operating in China.
CSFB likewise expected to compete strongly in China, given the good contacts of the investment bank's new CEO, John Mack, formerly of Morgan Stanley.
Mack joined CSFB, which is owned by Zurich-based Credit Suisse Group, in July.
But CSFB's efforts to break into China are now on hold. The Taiwanese officials' trip has again become a focus at a time Taiwan is trying to repair relations with the mainland.
China regards Taiwan as a renegade province. Taiwan maintains its independence, after a civil war in 1949.
The mainland has rebuffed moves by Taiwanese President Chen Shui-bian over the weekend to open up trade relations between Taiwan and China.
Through official sources, China said tighter trade "remains a big question" unless Taiwan's accepts China's "One China, two systems" policy.
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