In June 2009, Hong Kong-based Bank of East Asia announced it was selling a 70 per cent stake in its Canadian operations to the Industrial and Commercial Bank of China, the largest of China’s state-owned banks. Approval from the Canadian authorities was not an issue. Then in January of this year, Bank of East Asia announced it was selling 80 per cent of its business in the US – which consists of a network of only 13 branches in New York and California – to ICBC.
That deal, however, is still awaiting approval, and nobody is certain what the timing is. For months the deal has been pending before the Committee on Foreign Investment in the United States (CFIUS), the interdepartmental government agency reviewing foreign acquisitions. (The deal still requires Federal Reserve approval as well.)
Arguably CFIUS should not be reviewing the potential purchase at all. It is supposed to vet deals only when there are national security issues. Nobody questions the ultimate outcome, since approval is expected. It is the process with which the Chinese are taking issue. Chinese bankers and investors say the investment landscape in China is more transparent and fair than that of the US, a charge that is given weight by CFIUS operating without any transparency at all. (Treasury officials cite the need for secrecy given the market-sensitive nature of the information the committee handles.)