On May 9, 2012, the Board of Governors of the Federal Reserve System (FRB) approved state-owned Industrial and Commercial Bank of China Ltd. (ICBC) to acquire the US subsidiary of the Bank of East Asia. After numerous obstacles and delays, this marked the first such US approval for a Chinese firm since the Bank Holding Act of 1956 was amended by the Foreign Bank Supervision Enhancement Act of 1991 (FBSEA).
The FBSEA, which increased federal supervision of foreign banks operating in the United States, requires the FRB to make a finding that a foreign bank seeking to acquire control of a US bank is subject to comprehensive supervision or regulation on a consolidated basis (CCS) by its home country supervisor. ICBC is China’s largest bank and is 70-percent owned by the government of China. ICBC’s total assets are placed at an estimated $2.5 trillion. It is the first large Chinese state-owned lender to acquire control of a US bank.
By purchasing a majority stake of 80 percent in the Bank of East Asia, ICBC will become a holding company along with China Investment Corporation and Central Huijin Investment Ltd. ICBC will be granted bank holding status and license to operate in the United States. ICBC will have ten branches in California and three in New York.
The FRB previously made a “limited” CCS determination regarding Chinese banks establishing US branches. The first such approval for a Chinese bank since the FBSEA occurred in November 2007, when the FRB approved an application by China Merchants Bank Co., Ltd. (CMB) to establish a branch in New York, New York. CMB at the time was the sixth-largest bank in China, with total assets of approximately $145.6 billion. It is indirectly controlled by the Government of China through a number of wholly owned companies.
Before approving ICBC’s acquisition of the Bank of East Asia, the FRB performed an extensive analysis on the CCS of ICBC by the China Banking Regulatory Commission and other regulatory authorities.
This decision should create opportunities for other Chinese banks to acquire regional banks in order to establish themselves in the United States. This also opens the door for Chinese banks and their holding companies that are subject to the Bank Holding Act to be granted bank holding status in the United States.
To learn more about the implications of the FRB’s decision, please contact Walter J. Mix III. Mr. Mix heads the financial services practice at BRG. He is a former commissioner of the California Department of Financial Institutions, where he oversaw foreign banks moving into the United States. He previously served as a banking executive at Union Bank of California.
FAQs
No, Bank of America isn't owned by China. BofA is an American multinational investment bank that has a partnership with China Construction Bank. In 2011 they decided to sell about half of their stake (about 13.1 billion) in the Chinese company.
Is PNC a Chinese owned bank? ›
PNC Bank is a subsidiary of The PNC Financial Services Group, Inc., a U.S.-based bank holding company headquartered in Pittsburgh, Pennsylvania, and founded in 1845.
Did the Fed clear the way for Chinese firms to buy US banks? ›
For the first time in its history the Federal Reserve gave the thumbs upto an acquisition of a U.S. bank by a Chinese bank, opening the door for other Chinese banks to follow suit.
Does China own 70% of U.S. Bank? ›
Wednesday's decision allows Industrial & Commercial Bank of China, which is 70 percent owned by the Chinese government, to take an 80 percent stake in a Hong Kong-based bank with 13 branches in the U.S. The Fed also allowed two other Chinese banks to open branches in New York and Chicago.
Who is the largest shareholder of Bank of China? ›
Central Huijin Investment (a state owned investment company) holds a majority share of 64.02%. Bank of China's complete shareholder structure can be viewed here.
What large American companies does China own? ›
Keep reading to see which U.S. giants are backed by foreign conglomerates.
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Currently, China has four types of banks: Specialized banks are majority-owned by the state. These are the Industrial & Commercial Bank of China (ICBC), the China Construction Bank (CCB), the Bank of China (BoC), the Bank of Communications (BoCom), and the Agricultural Bank of China (ABC).
What is the strongest bank in the United States? ›
Is Chase bank Chinese owned? ›
JPMorgan Chase Bank, N.A., doing business as Chase, is an American national bank headquartered in New York City, that constitutes the consumer and commercial banking subsidiary of the U.S. multinational banking and financial services holding company, JPMorgan Chase.
How many US banks are in China? ›
Among the 41 locally incorporated foreign banks in China, there are eight from the U.S. that operate about 80 branches and representative offices in China. Prepared by our U.S. Embassies abroad.
China and Japan are the largest foreign investors in American government debt. Together they own $2 trillion — more than a quarter — of the $7.6 trillion in US Treasury securities held by foreign countries.
Why are US companies pulling out of China? ›
This trend is being driven by a number of factors, including rising labor costs in China, the ongoing trade war between the United States and China, and concerns about China's political and economic stability.
How much U.S. Treasury bills does China own? ›
Foreign holders of United States treasury debt
Of the total 7.6 trillion held by foreign countries, Japan and Mainland China held the greatest portions, with China holding 868.9 billion U.S. dollars in U.S. securities. Other foreign holders included oil exporting countries and Caribbean banking centers.
Can China call in US debt? ›
China owns around 2.6% of U.S. debt, which it buys because the Chinese yuan is pegged to the dollar. It would be impossible for China to call in all its U.S. debt at once, given the different maturity dates of the U.S. securities that China owns.
Who owns most of the U.S. Bank? ›
As you can see in the following chart, the majority of U.S. Bancorp's 1.9 billion shares are held by institutional investors. Company insiders, including board members and corporate executives, own a further 0.11% of the outstanding common stock. And the public at large owns the remaining 28%.
Who owns the majority of Bank of America? ›
Bank of America Corp (NYSE:BAC)
Institutional investors hold a majority ownership of BAC through the 70.31% of the outstanding shares that they control. This interest is also higher than at almost any other company in the Major Banks industry.
Who is the main owner of Bank of America? ›
Bank of America operates through four key business segments: Consumer Banking; Global Wealth & Investment Management; Global Banking; and Global Markets. The top shareholders of Bank of America are Thomas K. Montag, Brian T. Moynihan, Geoffrey S.
Which banks are Chinese owned? ›
The Big Four and others. In 1995, the Chinese Government introduced the Commercial Bank Law to commercialize the operations of the four state-owned banks, the Bank of China (BOC), the China Construction Bank (CCB), the Agricultural Bank of China (ABC), and the Industrial and Commercial Bank of China (ICBC).
Who is U.S. Bank owned by? ›
Is U.S. Bank part of U.S. Bancorp? Yes, U.S. Bancorp [NYSE: USB] is the publicly traded parent company of U.S. Bank.
