US banking giant JP Morgan has clinched a deal to buy the embattled US investment banking group Bear Stearns at a fire-sale price of $236 million, which sees Bear Stearn’s shares valued at just $2 each.

New York-based Bear Stearns, which has been building a large new office complex in London's Canary Wharf financial district, employs about 14,000 people. Its activities include private client services. Bear Stearns also provides investment banking, asset management, global clearing, institutional fixed income and equities.

JP Morgan's purchase of Bear Stearns, which was agreed late on Sunday, went through after the US Federal Reserve agreed to provide a $30 billion funding lifeline for its less liquid assets.

The purchase price of Bear Stearns is less than a tenth of what the stricken bank’s shares were worth late on Friday and is a stark illustration of the severity of its problems.

Bear Stearns has been hit hard by the global credit crisis. Last year, two of its hedge funds were badly hit as a result of exposure to US sub-prime debt and were one of the earliest casualties of the crisis.

The US Fed had voted unanimously to authorise the New York Fed to create a lending facility to improve the ability of banks to provide financing in securitisation markets. The facility, available immediately, will be in place for at least six months. The Fed’s move includes putting a $1.2 billion valuation on Bear's headquarters in New York, meaning the business itself is worth about $1billion.

The takeover of Bear Stearns is subject to shareholder approval by Bear Stearns' and JP Morgan's investors. The arrangement is due to complete by the end of June and has received approval from other US regulators.