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Three banks to grow in US (2)

By Wang Xiaotian  (China Daily)

13:28, May 11, 2012

"US financial institutions routinely request that China remove its restrictions on foreign investment in the financial industry. But Chinese financial institutions also highlight the difficulties they face in trying to enter the US market," said Huang Yiping, chief economist for emerging Asia at the investment banking division of Barclays Bank Plc.

The Fed's action came after Chinese officials said earlier last week they would raise the ceiling on foreign banks' investment in stakes in ventures with domestic securities companies to as high as 49 percent from the current 33 percent.

Wang Li, a US researcher at the Chinese Academy of International Trade and Economic Cooperation, which is affiliated with the Ministry of Commerce, said he believes the US will further open up to Chinese State-owned enterprises in some sensitive areas, including finance.

"That's not only because the US would like to trade that for China's increased opening up to foreign companies.

"More importantly, it realized that under current conditions, foreign investment is crucial for its efforts to shore up the economy, and investment from China into certain fields actually would not mean as much trouble as it thought previously," Wang said.

"This could accelerate mergers and acquisitions, as Chinese banks may look to acquire regional banks in order to establish a US footprint," Bloomberg quoted Jaret Seiberg, senior policy analyst at Guggenheim Securities' Washington Research Group, as saying.

In the United States, ICBC operates an uninsured state-licensed branch in New York City and owns Industrial and Commercial Bank of China Financial Services LLC, a registered broker-dealer that engages in securities brokerage and riskless principal activities.

ICBC has stated that it will devote adequate financial and other resources to address all aspects of the post-acquisition integration process for this proposal, the Fed said.

The lender has spent more than $6 billion on overseas acquisitions in the past three years.

"In the long run, the internationalization of Chinese lenders will become inevitable and we would see more M&As outside China conducted by those banks," Guo said.

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