Looks like we are going to now have to learn Chinese if we want to make any bank transactions.
WASHINGTON – The Federal Reserve has for the first time given approval for a large Chinese bank to purchase a U.S. bank. It also gave approval to two other large Chinese banks to expand their operations in the United States.
By Karen Bleier
The Fed board announced Wednesday it was approving the application of the Industrial and Commerce Bank of China Limited, China’s largest bank, and two other Chinese firms to purchase The Bank of East Asia U.S.A., located in New York City.
The Fed also approved an application by the Bank of China to set up a branch in Chicago and an application by the Agricultural Bank of China Limited to establish a branch in New York City.
All three applications were approved after high-level talks last week between the United States and China.
In those talks, which were overshadowed by a dispute involving a Chinese dissident, China agreed to let foreigners including U.S. companies have bigger stakes in its securities firms and make other concessions designed to give foreign firms greater access to the U.S. market.
Treasury Secretary Timothy Geithner, who along with Secretary of State Hillary Clinton headed up the U.S. side for the annual discussions, said at the conclusion of the talks Friday that China had made “important steps” that would translate “into greater opportunities for U.S. workers and companies.”
Federal Reserve Chairman Ben Bernanke also participated in last week’s discussions in Beijing. The approval by the Fed board, which oversees U.S. bank holding companies, came on unanimous votes. The Chinese applications had been pending for as long as nearly two years.
The Fed said it would have no comment when asked whether the board actions were linked in any way to progress that had been made at last week’s talks.
The Industrial and Commerce Bank, China’s largest bank with total assets of approximately $2.5 trillion, is 70.7% owned by the government of China. The government of China holds similarly large stakes in the other two banks.
The Fed gave the Industrial and Commerce Bank and its two partners approval to acquire up to 80 percent of The Bank of East Asia U.S.A. This bank has 13 branches in New York and California and deposits of approximately $621 million.