ICBC Gets U.S. Retail Network With Purchase of Bank of East Asia Unit

Industrial & Commercial Bank of China Ltd., the world’s biggest lender by market value, agreed to buy a stake in Bank of East Asia Ltd.’s U.S. operations, according to a company statement today.

ICBC will buy an 80 percent stake in Bank of East Asia’s U.S. unit for $140 million, the two companies said in a joint e- mailed statement today. Both companies are seeking regulatory approval in the U.S. and in China for the transaction, according to the statement.

“Our acquisition of an 80 percent interest in BEA USA will enable us to establish a solid presence in the U.S.,” ICBC Chairman Jiang Jianqing said in the statement. “With this commercial bank license in the U.S., ICBC can further expand its retail banking business and operating network across the nation.”

If completed, the deal would mark the first purchase of a majority stake in a U.S. depository institution by a Chinese bank. It may give financial companies in both countries greater access to each others’ markets, Chip MacDonald, a partner a law firm Jones Day in Atlanta, said of the transaction on Jan. 22.

Chinese President Hu Jintao concluded a four-day visit to the U.S. with a signing ceremony in Chicago on Jan. 22. China’s Commerce Minister Chen Deming said that deals worth $25 billion were being reached among U.S. and Chinese companies during the visit, excluding an accord with Boeing Co.

Agreements Reached

Beijing-based ICBC and Bank of East Asia, based in Hong Kong, are among as many as 60 companies signing contracts, the Chicago Council on Global Affairs said in a statement. The list of firms didn’t include details on the agreements.

ICBC opened its first branch in the U.S. in October 2008. The Chinese bank bought a 70 percent stake in Bank of East Asia’s Canadian unit for about C$80.3 million last year to gain a “strong platform to further expand our businesses and network across North America,” ICBC’s Jiang said then. ICBC last week opened five branches in Europe, doubling its presence in the region to nine countries.

The Federal Reserve will have to make a determination, under the Bank Holding Company Act, that China’s central bank has enough information on ICBC operations to supervise its financial condition and compliance with the law, MacDonald said.

The U.S. operations of Bank of East Asia include 13 branches, with 10 in California and three in New York, according to its website. Bank of East Asia is run by the family of Chairman David Li. The U.S. unit held about $425.2 million in domestic deposits at the end of September, according to the Federal Deposit Insurance Corp.

source:http://www.bloomberg.com