United States Regulators Blocks China Minsheng Banking Corporation
Ltd. To Acquire UCBH Holdings Inc's United Commercial Bank-Reuters
Thursday, 19 Nov 2009 09:35pm EST
Reuters reported that United States regulators blocked China Minsheng
Banking Corporation Ltd. from acquiring United Commercial Bank (UCB)
in a deal that could have saved $1.7 billion in taxpayers' money and
insurance. China Minsheng Banking Corporation Ltd. had asked the
Federal Reserve for permission to acquire UCB, but the application was
not approved before the struggling California-based lender had to be
seized two weeks ago by the Federal Deposit Insurance Corporation. The
Fed had warned it could not approve China Minsheng Banking Corporation
Ltd.'s application quickly because it was required by law to closely
consider Chinese regulatory practices. The seizure was also expected
to cost China Minsheng Banking Corporation Ltd. $120 million for the
9.9% stake it had in UCBH Holdings Inc, the parent of UCB.
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US Wants China to Buy into Its Small Banks
November 20, 2009 · Leave a Comment
US Wants China to Buy into Its Small Banks
FINANCIALS, BANKS, BANKING, CHINA, US, ASIA, TAKEOVER, BARACK OBAMA,
MERGER, ACQUISITION
Reuters | 17 Nov 2009 | 04:56 AM ET
Chinese and U.S. regulators are negotiating a pact aimed at
encouraging Chinese financial institutions to buy into small and
medium-sized banks in the United States, bankers briefed on the plan
said on Tuesday.
Chinese bankers have complained that it’s been difficult for them to
set up branches or invest in banks in the world’s leading economy, due
partly to U.S. regulators’ tough supervision and strict approval
process for financial deals.
But the global financial landscape has been revamped by the credit
crisis, and cash-rich Chinese banks are now bigger players on the
world scene and are scouting around for investment targets.
To illustrate the global shake-down, Industrial and Commercial Bank of
China is now the world’s biggest bank by market value, while
Citigroup , once the world’s No.1 bank, is worth the same as a second-
tier commercial bank in China.
Two senior Chinese bankers said they had been invited this year by
U.S. officials, investment bankers and financial advisers to look at
several potential investments in U.S. banks, mostly in financial
trouble.
“The trend is already there,” said one Chinese banker.
“Now they’re going to make this into an agreement to show there’s a
change in official attitude towards Chinese investments in the U.S.
banking system,” said the banker, who declined to be identified due to
the sensitive nature of the matter.
A Sino-U.S. Memorandum of Understanding (MOU) to encourage Chinese
banks to invest in U.S. lenders is in the making, and China’s banking
regulator has sought feedback from big domestic banks, bankers told
Reuters.
Over 100 U.S. banks have already been seized by regulators in the
financial crisis, and more bank failures could come as the Obama
administration also needs more capital to take over troubled lenders.
No Hurry to Buy?
The MOU would be part of a new strategic framework that ranges from
climate change to international cooperation, Hong Kong’s South China
Morning Post reported on Tuesday.
The hope is to announce a deal during U.S. President Barack Obama’s
current visit to China, the newspaper said, citing unnamed mainland
bankers briefed on the matter.
In October 2007, Minsheng Banking Corp, China’s seventh-largest by
assets, agreed to buy 9.9 percent of San Francisco-based UCBH Holdings
for more than $200 million in the first investment by a mainland
Chinese bank in a U.S. bank.
But Minsheng has seen huge paper losses on its investment in UCBH,
whose business focuses on mortgages for many Chinese Americans on the
U.S. West Coast, as UCBH shares sank in the financial crisis.
Other Chinese banks such as ICBC and Merchants Bank have also shown an
interest in expanding in the United States, but their approach may be
different.
“I feel lots of uncertainties still exist in the U.S. financial market
and we want to keep a distance from these toxic assets at this
moment,” said Ma Weihua, CEO of Merchants Bank, China’s sixth-largest
lender by assets.
“Our attitude towards U.S. financial assets is very conservative right
now,” Ma told Reuters by telephone.
Merchants Bank opened its first U.S. branch in New York about a year
ago, and Ma said the branch would hire more local staff to expand its
business there.
Slideshow: The World’s Safest Banks 2009
Copyright 2009 Reuters. Click for restrictions.
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