NEW YORK (AP):

JP Morgan Chase said yesterday it would acquire rival Bear Stearns in a deal valued at US$236.2 million, a stunning collapse for one of the world's largest and most venerable investment banks.

JP Morgan Chase & Co. said the US$2 a share, all-stock deal has received the required approvals from the federal government and the Federal Reserve. Bear Stearns shares closed Friday at US$30 a share.

The Fed will provide special financing to JP Morgan Chase for the deal, JP Morgan Chase said. The central bank has agreed to fund up to US$30 billion of Bear Stearns' less liquid assets.

[Bear Stearns has acted over several years as consultants and lead brokers in bond placements that the Government of Jamaica has floated in the international capital markets.]

At almost the same time as the deal for control of Bear Stearns was announced, the Federal Reserve said it approved a cut in its lending rate to banks to 3.25 per cent from 3.50 per cent, and created another lending facility for big investment banks. The central bank's official meeting is set for tomorrow (Tuesday). Before the emergency move to lower the discount rate, which is the rate at which banks lend each other money, the Fed was widely expected to again cut its headline rate by as much as a full point to two per cent.

The announcement from both the Fed and JP Morgan comes ahead of what some analysts expected to be a brutal day for global stocks. Already, before the announcements, New Zealand's markets opened drastically lower then began to recover after the deal was unveiled.