BEIJING, Oct. 22 (UPI) -- U.S. securities firm Bear Stearns (NYSE:BSC) reached a pact Monday with Chinese investment bank Citic Securities that gives each financial entity a stake in the other.

The agreement involves both Bear Stearns and Citic investing about $1 billion in each company, The Wall Street Journal reported.

Terms call for Citic to invest about $1 billion in Bear Stearns and receive securities that eventually will convert into a 6 percent equity stake in the securities firm. Citic, based in Beijing, also will have the right to buy a stake of up to 3.9 percent of Bear Stearns in the public market.

For the New York securities firm, the contract allows Bear Stearns' $1 billion worth of Citic's debt to be converted over time to amount to a 2 percent stake in Citic. Bear Stearns will also have options to buy an additional 5 percent of the company, which Bear Stearns can exercise over a five-year period.

The firms are expected to work on investment banking services in Asia through a joint venture for areas outside of China, sources familiar with the deal told the Journal. Inside China, the two sides so far have agreed to collaborate on banking matters.