For the first time in its history, the Federal Reserve has cleared a Chinese state-controlled bank to take over a U.S. bank, and it may come not a moment too soon.
This week, the Fed approved the Industrial and Commercial Bank of China’s purchase of an 80 percent stake in the U.S. subsidiary of the Bank of East Asia. In addition, the central bank approved applications from Bank of China and Agricultural Bank of China to open branches in Chicago and New York, respectively.
While some in the U.S. applaud the new foreign investment, it’s also a boon for Chinese banks, having gained an opening into a new market.
“This unprecedented acquisition of a controlling stake in a U.S. commercial bank by a mainland bank is strategically significant,” said ICBC chairman Jiang Jianqing, as quoted by Chinese news service Xinhua.
Now it’s starting to get scary!