Economy

Markets

Industries

Insights

Reports

Events

Report of US 'delay tactics' over Chinese banks refuted

By Wang Lan (China Daily)
Updated: 2008-06-19 14:06

The banking regulator has refuted earlier reports that the US Federal Reserve "deliberately delayed" the approval of applications by two Chinese banks to open branches in the US.

Commenting on the reported delays, Liu Mingkang, chairman of the China Banking Regulatory Commission, was quoted by Bloomberg as saying, "there is no delay, (Fed Chairman Ben S. Bernanke) told me there are no questions regarding the ability of the regulator of the home country and the banks." However, Liu did not say when the approval was expected.

His comments were made days after the Financial Times reported that the US had delayed granting licenses to Industrial and Commercial Bank of China (ICBC) and China Construction Bank (CCB) because regulators were said to have shown concern that the Chinese banks were controlled by China Investment Corp, a sovereign wealth fund.

The alleged controversy has been closely watched by financial circles around the world as an increasing number of Chinese banks and other financial institutions are expected to follow their mainland corporate customers in their overseas expansion. The trek has taken Chinese enterprises to Southeast Asia, Africa, Europe and most recently the US.

To date, Bank of China and Bank of Communications are the only Chinese banks that have branches in the US.

"The trend of going overseas will benefit not only the nation's commercial banks but also China's banking sector as a whole, because through cooperation and competition with foreign banks, Chinese banks will gain international expertise and strengthen their competitive edge," said Cai Rong, an analyst on banking industry at Everbright Securities Co in Shanghai.

"With more Chinese enterprises going abroad for overseas projects and businesses, Chinese commercial banks have to follow their customers and provide financial services for their clients when they are in overseas market," Cai added.

For a long time, Bank of China was the only Chinese bank that had a substantial overseas presence. It has an extensive network of more than 600 branches and offices in 27 countries and many regions around the world, including all the major financial centers. Last December, Bank of China completed the purchase of Singapore Aircraft Leasing Enterprise Pte Ltd for $965 million.

ICBC, the country's biggest lender, began its overseas expansion in 1992 when it opened a representative office in Singapore and upgraded that office to a branch a year later.

Last December, ICBC announced that it had reached an agreement to buy a 90 percent stake in Indonesian lender Bank Halim.