US FDIC kills Minsheng's UBC acquisition

Chinese bank Minsheng was thwarted by the US Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve in its attempt to purchase failing California bank UCB, the Financial Times reported. The Fed refused to approve the deal quickly without close consideration of whether or not the Chinese regulating body practiced sufficient "consolidated supervision." The FDIC decided it could not wait and seized the bank, costing taxpayers US$298.7 million in funds the bank had already received from the troubled asset relief program, US$1.4 billion to the FDIC insurance fund, and US$120 million to Minsheng bank for the 9.9% share it already had in the lender. "This may rank in the top 10 mistakes by the government in dealing with the financial crisis," said independent bank analyst Ken Thomas. “The dialogue over whether Minsheng was allowed to raise its stake in UCB was not so good," said a senior Chinese official.