David Louie, chairman of the Chinese Chamber of Commerce of New York, said he has serious reservations about China's largest bank, the Industrial and Commercial Bank of China, buying an 80 percent stake in the U.S. subsidiary of Bank of East Asia, which has branches in Manhattan's Chinatown, Sunset Park, Brooklyn, and Flushing, Queens.
The deal was announced earlier this month during Chinese President Hu Jin Tao's visit to the U.S.
If the purchase is approved by federal regulators, it would be the first time that a bank controlled by the Chinese government acquired retail bank branches in the U.S.
"As a citizen of the United States, I'd have to be concerned about a foreign country owning 80 percent of a very important bank in our area and using this as a testing ground for more investment into banks," said Louie who was born in Brooklyn and whose parents were born in Taishan, China, and Hong Kong. "You always have to worry about that."
But Louie also acknowledged that such a move could help Chinatown and ultimately translate into more lending to Chinese and Chinese-American businesses.
"They're not coming in for status quo. They're coming in to shake things up and try to make some money," he said.
Wellington Chen, executive director of the Chinatown Partnership, a nonprofit organization, believes the deal, if approved, will strengthen relations between China and the U.S. because ICBC, as a new lender to Main Street businesses in the U.S., will have an interest in those businesses doing well and vice versa.
"I have less fear," Chen said. "I don't think this is so much that they (ICBC) want to dominate Chinatown. I think it's part of their global perspective. They need to diversify their portfolio."
While China has surpassed Japan as the second largest economy in the world -- second to the U.S. -- its financial institutions, including ICBC, the largest bank in the world by market capitalization, still have a very small footprint outside China. A major reason for this purchase is to "compete with other big banks that operate internationally, the likes of Citibank and Bank of America," said Nicholas Lardy, a fellow at the Peterson Institute for International Economics, a Washington think tank.
Lardy said ICBC has the resources to dramatically expand the U.S. operations of Bank of East Asia, but he believes the expansion will be gradual.
"I think it's a sensible strategy to start small with a customer base you're more familiar with and build on that franchise," Lardy said.
And some analysts believe ICBC's decision to buy branches in the U.S. may have less to do with trying to draw American customers, and more to do with trying to service the Chinese companies trying to do business in the U.S.
"Why should a Chinese company gives the fees associated with banking to an American-owned bank when potentially it could give those fees to a Chinese-owned bank?" asked Carl Weinberg, chief economist at High Frequency Economics.