LOS ANGELES, CA (Catholic Online) - The transaction will make ICBC the first Chinese state-controlled bank to acquire retail bank branches in the United States. Traditionally, ICBC has been the most aggressive of China's "big four" banks in expanding overseas. ICBC has total assets of roughly $2.5 trillion.

The bank will buy up to 80 percent of the U.S. unit of the Hong Kong-based Bank of East Asia, which operates 13 branches in New York and California.

ICBC and two state-backed financial firms, China's sovereign wealth fund the China Investment Corporation (CIC), and Central Huijin Investment will be recognized as bank holding companies, regulated as commercial U.S. banks, as part of the deal.

This expansion by China into the U.S. market comes amid a series of financial reforms in China that could begin to open the lucrative market to U.S. firms.

The U.S. Treasury noted China had made "encouraging progress" on a number of issues sought by the Obama administration, including taking steps toward a more open and market-oriented financial system.

The ICBC proposed acquisition, which is "relatively small," according to the Fed, would not have much of an impact on the banking market.

"The combined deposits of the relevant institutions in the Metropolitan New York banking market represent less than one percent of market deposits," the central bank noted.

The competition includes Bank of China branches in the New York metropolitan area, and CIC, which has a non-controlling stake in Morgan Stanley.

"This unprecedented acquisition of a controlling stake in a U.S. commercial bank by a mainland bank is strategically significant," Xinhua quoted ICBC chairman Jiang Jianqing as saying.

The Fed pointed to steady improvement in regulation since its founding in 2003.

"For a number of years, authorities in China have continued to enhance the standards of consolidated supervision to which banks in China are subject, including through additional or refined statutory authority, regulations, and guidance," it said.

In other Fed board decisions, Bank of China, the third-largest bank, won approval for a branch in Chicago. Bank of China operates two insured federal branches in New York City and an uninsured branch in Los Angeles.

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