Fed clears China’s first US bank takeover
WASHINGTON - Agence France-Presse
Pedestrians walk by a branch of Chinese ICBC in Shanghai. The US has opened its banking market to the ICBC.The United States opened its banking market to China’s biggest bank ICBC, for the first time clearing a takeover of a U.S. bank by a Chinese state-controlled company.
Just days after high-level U.S.-China economic talks in Beijing, the Federal Reserve approved an application from Industrial and Commercial Bank of China to buy a majority stake in the U.S. subsidiary of Bank of East Asia.
The transaction will make ICBC the first Chinese state-controlled bank to acquire retail bank branches in the United States.
ICBC has been the most aggressive of China’s “big four” banks in expanding abroad.
Outside China, it operates subsidiary banks in Asian countries and has branches in a number of countries including Germany, Japan and Singapore.
According to the Fed, the bank has total assets of roughly $2.5 trillion. ICBC will buy up to 80 percent of the U.S. unit of the Hong Kong-based Bank of East Asia, which operates 13 branches in New York and California.
As part of the deal, ICBC and two state-backed financial firms –China’s sovereign wealth fund, the China Investment Corporation (CIC), and Central Huijin Investment– will be recognized as bank holding companies, regulated as commercial U.S. banks.
The Fed said the takeover may not occur before May 15, or later than three months from Wednesday.
The broad expansion of China’s footprint in the U.S. market comes amid a series of financial reforms in China that could begin to open the lucrative market to US firms.
After the May 3-4 talks in Beijing, the U.S. Treasury noted China had made “encouraging progress” on a number of issues, including taking steps toward a more open and market-oriented financial system.
The Fed said Wednesday that the ICBC proposed acquisition, which is “relatively small,” would not have much of an impact on the banking market.