中国法律博客
ChinaLegalBlog.com
Minsheng Tried to Acquire UCB, Thwarted by Slow Regulatory Process
媒体来源: 中国法律博客

For some reason, this is my third post on UCB, a California bank with China ties, and its relationship with China-based Minsheng. My earlier posts are HERE and HERE.

UCB went bust recently, and I was wondering about what Minsheng was going to do, given that it had a stake in the US bank.

Turns out that Minsheng actually tried to buy UCB when the latter became insolvent. Great idea, particularly since there are a whole lot of US banks going bust these days, necessitating government takeovers and restructurings. If a buyer is already sitting out there, you'd think that the regulators would do whatever is necessary to get that deal done.

Apparently not:

US authorities blocked Minsheng, the Chinese bank, from acquiring a Californian lender in a deal that could have saved almost $300m of taxpayers' money and $1.4bn from an industry insurance fund, say people familiar with the matter.

Minsheng had asked the Federal Reserve for permission to acquire UCB, a San Francisco bank, but the application was not approved before the struggling US lender had to be seized two weeks ago by the Federal Deposit Insurance Corporation.

The Fed had warned it could not approve the Minsheng application quickly because the law obliged it to consider closely whether an acquirer's home regulator practised sufficient "consolidated supervision". The FDIC decided it could not wait before stepping in to protect depositors.

"This may rank in the top 10 mistakes by the government in dealing with the financial crisis," said Ken Thomas, an independent bank analyst. "I am really disappointed that any branch of our government . . . could step in and turn away an offer that would have reduced the cost to the taxpayers."

The US Treasury, the FDIC and the Fed all declined to comment on the specific case. However, the Fed said: "Chinese authorities are working hard to meet the standards that would permit them to buy banks in the United States but these things can take time. We've been working with them as they seek to implement standards for consolidated supervision and they're making real progress."

A senior Chinese official said that co-operation over the wind-down had worked well but added: "The dialogue over whether Minsheng was allowed to raise its stake in UCB was not so good." (FT)

OK, maybe the hands of the regulators were tied here, and there simply wasn't time to clear Minsheng as a purchaser. Moreover, I'm sure the FDIC guys are busy as hell these days.

All that being said, you know they could have made this happen with sufficient political will. I'm disappointed.

No indication at all that this deal fell through because of local protectionism. Wouldn't surprise me, though.

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