The U.S. Federal Reserve has given approval to
- The largest Chinese Bank, Industrial and Commerce Bank of China (ICBC) to purchase the New York based The Bank of East Asia U.S.A.
- The Agricultural Bank of China to open a branch in New York City.
- The Bank of China to open its branch in Chicago. The bank already has branches in New York and Los Angeles.
The Government of China is one of the primary shareholders in all of these banks.
ICBC, one of the biggest global bank, has assets exceeding $2.5 trillion, approximately 70% of which are owned by the government. According to the agreement ICBC, along with China Investment Corporation and Huijin Investment Ltd, will acquire 80% of The Bank of East Asia which has 13 branches and deposits of approximately $620 million. The three companies will jointly operate as the holding company for The Bank of East Asia.
China Investment Corporation is an investment company that is owned and operated by the Chinese government. The business makes investments from China’s monumental foreign exchange reserves. It also acts as a parent company for other smaller firms including Huijin Investment Ltd.
The Agricultural Bank of China is the fourth largest Chinese bank with $1.85 trillion of assets. The Chinese government owns 83% of this bank
The Bank of China is the third largest Chinese bank and is approximately 70% government owned.
In return, the Chinese government has allowed foreign firms greater access to Chinese financial institutions.
The concerned banks had applied nearly two years ago to Federal Reserve regarding purchase of U.S. bank and opening up new branches. The United States and China have been conducting the annual Strategic and Economic Dialogue talks to improve bilateral relations. The meetings that concluded on Friday (11th May) were held in Beijing and included Secretary of State Hillary Clinton, Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke.