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SCMP Reporter

China Merchants Bank will become the first mainland lender in more than 15 years to set up a branch in the United States  after receiving the US central bank's approval  yesterday.
The approval came as cash-rich mainland lenders are stepping up expansions in overseas markets.
Industrial  and Commercial Bank of China, the biggest mainland lender, which agreed to buy a stake in South Africa's Standard Bank, applied in April for approval to set up a US branch.
China Construction Bank Corp has also indicated it will apply.
Bank of China is the only mainland lender with a US branch,  set up in 1981 in New York to offer a full range of retail and corporate banking products and services.
Merchants Bank, which  has a representative office in New York, applied to open a branch in the city in January. It will be the lender's second overseas branch  after Hong Kong.
'It is an indication of mainland lenders' ambition to expand overseas. After all, the US is still a very lucrative market,' said Wu Yonggang, an analyst at Guotai Junan Securities.
Mr Wu said Merchants Bank's  approval  ahead of larger state-owned rivals was probably  due to its better risk management.
'Merchants Bank has a better management structure and solid fundamentals. It is also more market-driven, which is a key to gaining international recognition,' he said.
The US Federal Reserve  yesterday said the reason for giving the approval to Merchants Bank was mainland  regulators' enhanced efforts to clamp down on money laundering.
'Based on all the facts  on record, the board has determined that  [Merchants Bank's] home country supervisory authority is actively working to establish arrangements for the consolidated supervision of  [Merchants Bank],' the Fed's statement said.
'Its home jurisdiction standards to combat money laundering are consistent with approval under this standard.'
The Fed highlighted  the progress made by the mainland banking watchdog  in recent years to shore  up the industry, namely the adoption of an anti-money-laundering law in 2005 and the two related rules  enacted last year.
The mainland and the US  have been urging  each other to open their banking markets.
Lou Wenlong, a director of the China Banking Regulatory Commission's  supervisory department, indicated yesterday that the mainland had no plans to raise the limit  set for foreign investors  buying into local banks.
Construction Bank, the country's second-biggest lender, last month  called on US officials to  intensify  their efforts in allowing mainland lenders to open branches in the US.
'They need to be more open-minded towards us before we  let foreign financial institutions  expand in our domestic market to a greater extent, such as any possible stake increase,' Construction Bank president Jiang Shuqing said  during the 17th National  People's Congress.
China Minsheng Banking Corp, the country's first privately owned lender, last month agreed to  take a 9.9 per cent stake in  Nasdaq-listed UCBH Holdings, the holding  firm for US-based United Commercial Bank.
It will be the first US purchase by the  mainland private bank in an attempt to gain a foothold in the US market.



Merchants Bank cleared to open US branch