The Federal Reserve announced that three major Chinese banks, including ICBC, have won approval to enter the US banking market. 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. 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. “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,” the Fed 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.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.