Bank Director interviewed Manatt’s Gordon Bava, chair of the firm’s Business, Finance & Tax Division, on whether he thinks foreign acquisitions of United States banks will increase over the next several years.
Bank Director reports that in May the Federal Reserve approved the Industrial and Commercial Bank of China’s purchase of an 80 percent stake in the Bank of East Asia, the U.S. subsidiary of the Chinese state-controlled bank. This marks the first time a Chinese bank has been allowed to acquire a majority stake in a U.S. bank.
When asked if he expects international acquirers to play a significant role in the U.S. bank M&A market over the next two to three years, Bava said:
“Not likely. European banks are out. Brazilian banks can do better in Brazil. The Federal Reserve Board’s approval of a major Chinese bank’s plans to acquire a small bank in Chicago is legally significant, because of the finding that the applicants are subject to comprehensive supervision on a consolidated basis. It is unlikely, however, that there will be a Chinese acquisition of a significant U.S. bank in the near term. The acquisition of Pacific Capital Bancorp by Union Bank, N.A., a member of the Mitsubishi UFJ Financial Group, could be a harbinger. With ample capital ratios, excellent U.S. regulatory relationships, and low growth prospects in Japan, MUFJ and other major Japanese banks should be looking to increase their market share in the U.S.”
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