China Minsheng’s United Commercial Bank’s acquisition attempt denied

A source says policies on foreign investments rule out possibility of China Minsheng’s UCB takeover.

Medium-sized China Minsheng Banking Corp. had sought to acquire United Commercial Bank before U.S. authorities closed the San Francisco-based lender earlier this month, a person close to Minsheng said Monday.

The Federal Reserve rejected China Minsheng's proposal to buy United Commercial Bank because of regulatory restrictions on foreign investment in U.S. banks, said the person, who declined to be named. She didn't elaborate.

Officials at China Minsheng declined to comment because of concerns any disclosure relating to the matter could hurt the bank's upcoming debut on the Hong Kong stock exchange.

China Minsheng Bank raised US$3.86 billion in an initial public offering last week and will start trading in Hong Kong Thursday, according to a report in Wall Street Journal.

Regulators shut down United Commercial Bank, a unit of UCBH Holdings Inc. (UCBH), on 6 November because of massive loan losses and misstated financial reports. Soon after the closure, East West Bank of Pasadena, California, took over United Commercial Bank's roughly $7.5 billion in deposits, as well as $10.2 billion in assets.