The Federal Reserve has given the green light to Industrial & Commercial Bank of China to buy the US subsidiary of the Bank of East Asia, the Financial Times reported today.
The decision marks the first time a Chinese institution has been allowed to buy a US bank.
"The Board has concluded that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market," the central bank said in a statement cited by Agence France-Presse.
The Fed also noted that Chinese bank regulators supported international agreements "that address money laundering or terrorist financing" and that there was no reason to believe proper supervision would be lacking, according to Market News International.
ICBC is 70.7 percent owned by the Chinese government and is the country’s largest bank with $2.5 trillion in assets.
The US unit of Bank of East Asia operates 13 branches in New York and California and has $780 million in assets.
According to MarketWatch, the Fed also agreed to let the Bank of China and the Agricultural Bank of China expand their operations in the United States.
Reuters said the announcement comes days after the annual US-China Strategic and Economic Dialogue talks in Beijing.
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