THE US 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 as their largest shareholder, according to US and Chinese officials.
Industrial and Commercial Bank of China, China's largest bank by assets, has been lobbying for more than a year to set up branch operations in the US.
China Construction Bank, the country's second largest by assets, filed its application in February.
Officials from both countries and bankers said the US Federal Reserve delayed granting the licences because the banks' largest shareholder was controlled by a sovereign wealth fund.
Senior Chinese officials have accused the Fed of blocking the licences for political reasons and as part of a negotiating strategy in the bilateral Strategic Economic Dialogue that begins today in Annapolis, Maryland.
"The US should give a positive sign on the bank licences during the dialogue," said a senior Chinese financial official who wished to stay anonymous. "If the Americans want to find hurdles, then the Chinese side can easily do the same."
US officials reject the claim, saying they have yet to grant the licences because of a lack of agreement as to what it would mean for China's sovereign wealth fund.
US officials say the Fed's decisions are independent, have been taken on technical grounds, and have nothing to do with diplomatic negotiations.
- (Financial Times service)
