ICBC gets approval to take over US bank

image captionState-owned ICBC is China's biggest lender and has been seeking to expand its global operations

Industrial and Commercial Bank of China (ICBC) has been given the nod to take over a US bank, the first such US approval for a Chinese firm.

The US Federal Reserve approved state-owned ICBC's plans to acquire the US subsidiary of Bank of East Asia.

This comes just days after high-level economic talks between the US and China in Beijing.

The Fed also gave permission to two other Chinese banks to increase their presence in the US.

"It is a pretty significant step. There has been a lot of backlash about Chinese state-run companies acquiring overseas assets," Stephen Joske of Australia Super, an institutional investor in Beijing, told the BBC.

"The permission [given] to ICBC is a clear message that things may be returning to normal and that fears about Chinese state-run firms may be moderating."

High standards

China's state-owned banks have played a key role in the country's growth in recent years as they lent record sums of money after the global financial crisis.

While that saw profits at Chinese banks soar, it has also led to concerns about the health of the Chinese banking sector amid concerns over bad debt levels.

At the same time, some critics in the US have also raised concerns about accounting practices used by Chinese firms.

However, the Federal Reserve said that it was satisfied with the operations of ICBC and also with the overall regulations in the Chinese banking sector.

"China's largest banks, such as ICBC, use the 'big four' accounting firms," the Fed said in a statement.

"There is no evidence that Chinese accounting methods or practices at the large Chinese banks, such as ICBC, are unreliable."

The US central bank added that the International Monetary Fund had concluded a financial system stability assessment (FSSA) of China , including a review of China's compliance with the Basel Core Principles.

It said the FSSA found that the rules set by the Chinese banking regulator "establish a benchmark of prudential standards that is of high quality and was drawn extensively from international standards and the [Basel Core Principles] themselves".

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