ICBC, of which the Communist Chinese government owns 70 percent, has an estimated $2.5 trillion in assets. The bank will be allowed to become a holding company, the first time that a Communist Chinese bank has been allowed to take over an American bank, according to The New American.
As a provision of the agreement, U.S. agencies will also grant bank-holding status to China Investment Corp., the Chinese regime’s sovereign wealth fund. Bank-holding status will also be extended to Central Huijin Investment, which holds the Chinese government’s shares in ICBC.
The Fed also approved an application by the Bank of China to open a branch based in Chicago, adding to its existing branches in Los Angeles and New York. Bank of China recently said that the bank has plans to expand into the western and central areas of the U.S., as well.
“It’s a significant milestone for China and the Chinese banks, which will allow them to engage in further business in the U.S. and Europe as well,” banking lawyer Chris Daniel said, according to The Wall Street Journal.
The decision took more than one year to reach, much longer than the usual two months required to issue the same ruling on a similar matter. The Fed board unanimously approved the acquisition after analysis of the Chinese government’s banking-supervision system ensured the central bank that the oversight was adequate.
The central bank also said that despite objections to the acquisition pertaining to national security concerns, it is not the responsibility of the Fed to address those concerns but rather other government agencies, The New American reports.
Guggenheim Securities analyst Jaret Seiberg recently wrote that the Chinese firms may attempt to take over regional banks, particularly through accelerated acquisitions and mergers, as part of an effort to increase their presence in America.
Other analysts, however, have downplayed the move. Nathan Vardi of Forbes magazine recently wrote that “while China’s big banks and some parts of China’s government appear to be trying to play a bigger role in the global financial system, China’s banks will not play a meaningful role in the U.S. any time soon,” according to The New American.