Fed clears China's first US bank takeover

Quigley_Sharps · May 10, 2012

The United States opened its banking market to China's biggest bank ICBC, for the first time clearing a takeover of a US bank by a Chinese state-controlled company.
Just days after high-level US-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 US 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 US 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 US 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 US 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 US 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.
"The combined deposits of the relevant institutions in the Metropolitan New York banking market represent less than one percent of market deposits," the central bank noted.
ICBC already has banking and financial services in the United States through its New York branch and its subsidiary broker-dealer.
The competition includes Bank of China branches in the New York metropolitan area, and CIC, which has a noncontrolling stake in Morgan Stanley.
ICBC will pay $140 million to buy an 80 percent interest in Bank of East Asia USA, China's state news agency Xinhua reported in January 2011, at the time the deal was signed.
"This unprecedented acquisition of a controlling stake in a US commercial bank by a mainland bank is strategically significant," Xinhua quoted ICBC chairman Jiang Jianqing as saying.
The Fed said its Board also consulted with the China Banking Regulatory Commission, the country's main banking regulator, and pointed to steady improvement in regulation since its founding in 2003.
"For a number of years, authorities in China have continued to enhance the standards of consolidated supervision to which banks in China are subject, including through additional or refined statutory authority, regulations, and guidance," it said.
In other Fed board decisions, Bank of China, the third-largest bank, won approval for a branch in Chicago. Bank of China operates two insured federal branches in New York City and an uninsured branch in Los Angeles.
Agricultural Bank of China, the fourth-largest bank, was set to establish a branch in New York City, where it already operates a representative office.
Click to expand...

Nother nail in the coffin...

Brokor · May 10, 2012

No! It's a good thing! Competition is the spirit of a free state!

Yeah, let's count the tally, shall we? China -owns large chunk of our "debt". China gets foot in door with purchase of bank to be operated in the USA (reportedly only 1% of total banking as of 2012 A.D.)....China has most of our jobs, China is scurrying to buy as much of the worlds resources as possible (ever see where Nestle ships its water?), including rare earth metals. Population count? Military? Space program?

Doesn't look good.

RightHand · May 10, 2012

Feds Clear China's 1st US Bank Takeover

China's biggest bank, for the first time clearing a takeover of a US bank by a Chinese state-controlled company.
Just days after high-level US-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 US 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 overseas.
According to the Fed the bank has total assets of roughly $2.5 trillion.
It will buy up to 80 percent of the US 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 US banks.
The broad expansion of China's footprint in the US 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 meeting, the US Treasury noted China had made "encouraging progress" on a number of issues sought by the Obama administration, 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.
"The combined deposits of the relevant institutions in the Metropolitan New York banking market represent less than one percent of market deposits," the central bank noted.
The competition includes Bank of China branches in the New York metropolitan area, and CIC, which has a noncontrolling stake in Morgan Stanley.
ICBC will pay $140 million to buy an 80 percent interest in Bank of East Asia USA, China's state news agency Xinhua reported in January 2011, at the time the deal was signed.
"This unprecedented acquisition of a controlling stake in a US commercial bank by a mainland bank is strategically significant," Xinhua quoted ICBC chairman Jiang Jianqing as saying.
The Fed said its Board also consulted with the China Banking Regulatory Commission, the country's main banking regulator, and pointed to steady improvement in regulation since its founding in 2003.
"For a number of years, authorities in China have continued to enhance the standards of consolidated supervision to which banks in China are subject, including through additional or refined statutory authority, regulations, and guidance," it said.
In other Fed board decisions, Bank of China, the third-largest bank, won approval for a branch in Chicago. Bank of China operates two insured federal branches in New York City and an uninsured branch in Los Angeles.
Agricultural Bank of China, the fourth-largest bank, was set to establish a branch in New York City, where it already operates a representative office.
Click to expand...

CATO · May 10, 2012

Instead of FRNs, will they start exchanging for yuans?

"I yuan Mao money back!"

I yuan enough mao-nee to buy a tank of gas...what's the exchange for that?

Brokor · May 10, 2012

GRRRrrrrrrr!

smithcp2002 · May 10, 2012

That's it, what is the exchange rate for lead?

scpn · May 13, 2012

Any connection?

I was up late Thursday night after work and heard some financial news on CBS news about a well known financial company declaring bankruptcy or something (I regognized the company name but can't recall it). That made me think it was time to take action (a la Sept 2008). So I was up early Friday, heading to withdraw most of what little I had in the bank to bury in the woods (it's what grandma would have done). Apparently the indicators weren't too bad on Friday but I didn't take any chances! Is this bank takeover by China another omen that the long-rumored big crash is near? Is another rush on ammo looming?

ghrit · May 13, 2012

The one thing you can count on with Chinese banks is scrupulous honesty. As traders going back milennia, the one thing that carried them along was trust. But you better read the fine print of the agreements and know who gets to interpret things.

That said, banks can and do manipulate value, and the bigger they are the more power to manipulate they have. The camel's nose is in the tent with this taking a share of a subsidiary US bank.

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Fed clears China's first US bank takeover

Quigley_Sharps The Badministrator Administrator Founding Member

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Fed clears China's first US bank takeover

Quigley_Sharps The Badministrator Administrator Founding Member

Brokor Live Free or Cry Moderator Site Supporter+++ Founding Member

RightHand Been There, Done That RIP 4/15/21 Moderator Moderator Emeritus Founding Member

CATO Monkey+++

Brokor Live Free or Cry Moderator Site Supporter+++ Founding Member

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