SWF Radar ICBC

Xinhua reports that, “Chinese three largest commercial banks [CCB, ICBC, and BOC] announced Tuesday that Central Huijin Investment Co., Ltd., an investment arm of the government, had increased its shareholdings of the three banks.”

XFN-ASIA writes that, “Huijin Investment Co, an investment arm of China Investment Corp (CIC), will buy shares in three of the country’s big four state-owned banks [China Construction Bank, Industrial and Commercial Bank of China (ICBC) and Bank of China], the official Xinhua news agency reported, citing CIC sources.”

Here is the original English-language report by Xinhua.

Bloomberg reports that, “The Federal Reserve told China’s sovereign wealth fund [the China Investment Corporation (CIC)] it cannot subsidize loans for its companies through the New York branch being opened by government-controlled Industrial & Commercial Bank of China Ltd. [ICBC].”

Here is the Fed’s letter (PDF) to the CIC (this link is embedded also in the Bloomberg article). Notice how the letter refers to a request not only from CIC but also from “Central SAFE Investments Limited (Huijin),” with the latter described as set to become a wholly owned subsidiary of the former “[o]nce governmental formalities are completed.”

The Economic Observer reports that, “Obstacles have been cleared for two Chinese state-owned banks – the Industry and Commerce Bank of China [ICBC - also known as the Industrial and Commercial Bank of China] and the China Construction Bank [CCB] – to set up branches in the United States, according to industry sources. The US Federal Reserve was initially skeptical of the two banks, which are backed mainly by China’s sovereign wealth fund, the China Investment Corporation (CIC). But China had made assurances [during the fourth Sino-US strategic dialogue concluded last week] that the CIC would not interfere in the operation and administration of the two banks, and would strictly play by market rules.”

ChinaStakes.com has more on the subject, providing more detail on the talks between Liu Mingkang, chairman of China Banking Regulatory Commission (CBRC), and Ben Bernanke, chairman of the US Federal Reserve Board, during the fourth Sino-US Strategic Economic Dialogue (SED).

The Financial Times reports that, “The US [Federal Reserve] has held back approval of banking licences for China's two biggest banks because of concerns over the role of China's sovereign wealth fund [the China Investment Corporation] as their largest shareholder, US and Chinese officials say. Industrial and Commercial Bank of China, China's largest bank by assets, has been lobbying for over a year to set up branch operations in the US. China Construction Bank, the country's second-largest by assets, put in its application in February.”

ChinaStakes.com writes that, “China is accelerating the pace of capital export. A series of overseas acquisitions shows that the portfolio investment strategy of an increasingly complex and flexible sovereign wealth fund and of large national enterprises is taking shape. China is adapting itself to different environments and is learning to manage its risk. It is showing patience in adopting different strategies for different regions, assets and political risks, and even different geo-political environments.”