Beijing: Industrial and Commercial Bank of China Ltd (ICBC), the world's biggest lender by market value, agreed to buy a stake in Bank of East Asia Ltd.'s US operations, a person with direct knowledge of the deal said, declining to be identified because the acquisition hasn't been announced.

The transaction would mark the first purchase of a majority stake in a US depository institution by a Chinese bank. If completed, it may give financial firms in both countries greater access to each others' markets, said Chip MacDonald, a partner at law firm Jones Day in Atlanta.

"This will break new ground in that it will allow Chinese banks to enter the US," MacDonald said. "There's a greater likelihood that US banks will now get equal treatment."

Chinese President Hu Jintao concluded a four-day visit to the US with a signing ceremony on Friday in Chicago. China's Commerce Minister Chen Deming said that deals worth $25 billion were being reached among US and Chinese companies during the visit, excluding an accord with Boeing Co.

Wall Street support

ICBC's deal with Bank of East Asia, previously reported by the Wall Street Journal, requires approval by US banking regulators and the Committee on Foreign Investment in the US, the newspaper said. It will be a "long process," the Journal reported, citing a person familiar with the matter.

Beijing-based ICBC and Bank of East Asia, based in Hong Kong, are among as many as 60 companies signing contracts, the Chicago Council on Global Affairs said in a statement. The list of firms didn't include details on the agreements.

"ICBC is developing a global presence, and an easier way to expand its presence in the US is to buy existing banking operations," said Dan Rosen, principal at the Rhodium Group, a New York-based economic research firm that specialises in China.

ICBC opened its first branch in the US in October 2008. The Chinese bank bought a 70 per cent stake in Bank of East Asia's Canadian unit for about C$80.3 million last year to gain a "strong platform to further expand our businesses and network across North America," Chairman Jiang Jianqing said then. ICBC last week opened five branches in Europe, doubling its presence in the region to nine countries.

The Federal Reserve will have to make a determination, under the Bank Holding Company Act, that China's central bank has enough information on ICBC operations to supervise its financial condition and compliance with the law, MacDonald said.

"Once they make that determination, the Fed will refer back to that for subsequent applications and won't have to revisit it every time," MacDonald said. "This opens up the market."