Industrial & Commercial Bank of China is nearing a deal to become the first state-owned Chinese lender to take control of a US retail bank, signing an agreement to acquire a majority stake in Bank of East Asia’s US subsidiary.

While the deal still requires approval from US regulators, the move could kick-start the long-awaited arrival of Chinese banks in the US retail market.

The US deal comes at a time when all the big Chinese banks have been expanding aggressively offshore. Last week, ICBC celebrated the opening of its first branch in Paris and is doubling its presence in Europe through branch openings in major cities.

People close to the Bank of East Asia deal, the signing of which took place during President Hu Jintao’s state visit to the US, said they hoped the transaction would get the nod from US regulators, in spite of the hurdles that state-controlled Chinese institutions have faced in the past in doing deals on US soil.

The Federal Reserve, which can veto the deal, has not yet received an application to approve the takeover, people familiar with the matter said.

The US central bank has previously blocked an attempted acquisition by China Minsheng of UCB, a San Francisco-based lender that was ultimately closed by the Federal Deposit Insurance Corporation. The bank was seized by the FDIC at a cost of more than $1bn to the industry’s insurance fund.

One factor in the Fed’s decision was Chinese standards of consolidated bank supervision, which US officials deemed insufficient. However, that determination is made on a bank-by-bank basis and could be different for ICBC, China’s largest bank.

The deal also could face scrutiny from the Committee on Foreign Investment in the United States, known as Cfius. People close to the deal said they were unconvinced the deal would be large enough to merit Cfius’ attention.

“Cfius’ mandate is not necessarily industry specific,” said Bill Curtin, international M&A partner at Hogan Lovells. “They are called upon to review, from a national security perspective, acquisitions of companies by non-US purchasers even where, as in this instance, the company in question already has a non-US parent. The parties involved will need to assess whether it is prudent to make a Cfius filing.”

In many countries, Chinese banks are being assiduously courted. This is especially true of the policy banks, such as China Development Bank, which make loans at attractive rates to countries ranging from Angola to Venezuela.

The US, though, has been slow to grant branch licenses to the Chinese banks. China Construction Bank was finally given its New York branch in the spring of 2009 after years of waiting.

Hong Kong-based Bank of East Asia has 13 branches in New York and California, areas with large Chinese populations. It sold a controlling stake in its Canadian operations to ICBC a year ago.

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