Tags: China | New | Market | Loans | US

China's Banks Finds New Market For Loans: the US

Wednesday, 09 Jun 2010 09:00 AM

The United States reportedly is undergoing a mini-invasion by banks based elsewhere that generally avoided the disastrous boom-era loans and investments made by many U.S. financial institutions.

And Chinese banks are in a particularly strong position for U.S. growth, despite their limited name recognition.

For example, cash-rich Industrial & Commercial Bank of China made a three-year, $400 million loan to General Electric, its first from a Chinese lender.

"We like banks that have global aspirations and that can work with us in all markets," says Kathryn Cassidy, senior vice president and treasurer at GE.

Three of the largest Chinese banks have received approval from the Federal Reserve to open U.S. outposts since the financial crisis erupted: In addition to Commercial Bank of China, China Merchants Bank and China Construction Bank now have offices in Manhattan.

However, except for Bank of China, other banks aren't allowed by the Fed to gather deposits from retail customers or make acquisitions in the U.S. because of concerns about the Chinese government's bank supervision.

The willingness of China's major banks to extend credit, especially for corporate loans, stands in stark contrast to the reluctance of many U.S.-based banks to stick their necks out by extending new credit at a time when the economy is struggling, loan losses remain high and the specter of tougher government regulations and higher capital requirements is looming.

South Africa’s rand slumped after a report showed manufacturing growth in China slowed and the European Central Bank said the region’s banks may suffer more losses, damping demand for higher-yielding assets, Bloomberg Business Week reports.

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The United States reportedly is undergoing a mini-invasion by banks based elsewhere that generally avoided the disastrous boom-era loans and investments made by many U.S. financial institutions. And Chinese banks are in a particularly strong position for U.S. growth,...
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2010-00-09
 

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