US approves China's bank takeover

Photo / File

The United States on Wednesday 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 has branches in a number of countries including Germany, Japan and Singapore.

According to the Fed, the bank has total assets of roughly A$2.5 trillion (US$2.50 trillion).

ICBC will buy up to 80 per cent 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 recognised 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.

- AAP