China, US eye pact to help troubled banks: Sources
Published on Tue, Nov 17, 2009 at 16:40 | Source : Reuters
Updated at Tue, Nov 17, 2009 at 17:26
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China, US eye pact to help troubled banks: Sources
Chinese and US 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.
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 US 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% of San Francisco-based UCBH Holdings Inc for more than USD 200 million in the first investment by a mainland Chinese bank in a US bank.
But Minsheng has seen huge paper losses on its investment in UCBH, whose business focuses on mortgages for many Chinese Americans on the US 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 US 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 US financial assets is very conservative right now," Ma told Reuters by telephone.
Merchants Bank opened its first US branch in New York about a year ago, and Ma said the branch would hire more local staff to expand its business there.
