Chinese Bank Acquisitions in the United States: Proposed Acquisition of The Bank of East Asia (USA), National Association by Industrial and Commercial Bank of China LimitedSullivan & Cromwell LLP - January 23, 2011
On January 23, 2011, Industrial and Commercial Bank of China Limited (“ICBC”) and The Bank of East Asia, Limited (“BEA”) jointly announced that they have entered into an agreement for BEA to sell 80% of the shares of common stock of The Bank of East Asia (USA), National Association (“BEAUSA”), which is located in New York, New York, to ICBC for approximately US$140 million. The transaction, which requires the approval of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) under Section 3 of the Bank Holding Company Act of 1956 (the “BHC Act”), represents the first proposed acquisition of a U.S. bank by a Chinese bank since the BHC Act was amended by the Foreign Bank Supervision Enhancement Act of 1991 (“FBSEA”). FBSEA increased federal supervision of foreign banks operating in the United States, providing that the Federal Reserve Board must approve any new U.S. office of a foreign bank. In addition, FBSEA provided that, before approving an application by a foreign bank to expand its banking operations into the United States, including by acquiring control of a U.S. bank, the Federal Reserve Board is required to find that the foreign bank is subject to comprehensive supervision on a consolidated basis (“CCS”) by its home country supervisor.