ICBC first to buy into US retail bank
By Paritosh Bansal |
January 24, 2011, Monday
|
Print Edition
Print Edition
INDUSTRIAL and Commercial Bank of China has agreed to acquire a majority stake in the Bank of East Asia's United States unit, making it the first Chinese lender to buy into a US retail bank, the Wall Street Journal has reported.
ICBC and Bank of East Asia were mentioned in a preliminary list of companies expected to participate in a contract signing ceremony at the US-China Trade and Economic Cooperation Forum on the last day of Chinese President Hu Jintao's visit to the US.
The US head of Bank of East Asia was not available to comment on the report.
A bid by China's largest lender would be scrutinized by US regulators and could trigger political controversy, given the history of unsuccessful attempts by Chinese companies to acquire all or part of US companies.
If approved, it could pave the way for other Chinese banks to buy into the US market and inject capital to the banking industry.
"I don't think this announcement would have been made unless they had been talking to the Fed in advance," said Chip MacDonald, a banking lawyer at Jones Day, referring to the US central bank.
The terms of the deal were not disclosed, according to the Wall Street Journal's report.
Bank of East Asia's US subsidiary is relatively small. It reported net income of US$1.9 million in the quarter ended September 30, according to US Federal Deposit Insurance Corp data. It had total assets of US$717 million and deposits of US$425.2 million.
Hong Kong-based-Bank of East Asia formed its US subsidiary in August 2001 through the acquisition of Grand National Bank, based in Alhambra, California. The US subsidiary has 13 branches in New York and California.
"While it would receive careful consideration, if there aren't particular merit-based points of concern, my expectation is that a transaction like this would have every bit as good a chance as any other of getting through," said Bill Curtin, an international M&A partner at Hogan Lovells.
"Chinese market movers are increasingly a part of the global marketplace of mergers and acquisitions," Curtin said. "That means that just because a Chinese entity is a party to the transaction doesn't necessarily tilt or sway the analysis in a way that some might suspect."
ICBC and Bank of East Asia were mentioned in a preliminary list of companies expected to participate in a contract signing ceremony at the US-China Trade and Economic Cooperation Forum on the last day of Chinese President Hu Jintao's visit to the US.
The US head of Bank of East Asia was not available to comment on the report.
A bid by China's largest lender would be scrutinized by US regulators and could trigger political controversy, given the history of unsuccessful attempts by Chinese companies to acquire all or part of US companies.
If approved, it could pave the way for other Chinese banks to buy into the US market and inject capital to the banking industry.
"I don't think this announcement would have been made unless they had been talking to the Fed in advance," said Chip MacDonald, a banking lawyer at Jones Day, referring to the US central bank.
The terms of the deal were not disclosed, according to the Wall Street Journal's report.
Bank of East Asia's US subsidiary is relatively small. It reported net income of US$1.9 million in the quarter ended September 30, according to US Federal Deposit Insurance Corp data. It had total assets of US$717 million and deposits of US$425.2 million.
Hong Kong-based-Bank of East Asia formed its US subsidiary in August 2001 through the acquisition of Grand National Bank, based in Alhambra, California. The US subsidiary has 13 branches in New York and California.
"While it would receive careful consideration, if there aren't particular merit-based points of concern, my expectation is that a transaction like this would have every bit as good a chance as any other of getting through," said Bill Curtin, an international M&A partner at Hogan Lovells.
"Chinese market movers are increasingly a part of the global marketplace of mergers and acquisitions," Curtin said. "That means that just because a Chinese entity is a party to the transaction doesn't necessarily tilt or sway the analysis in a way that some might suspect."
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