Comparison And Research Of Regulatory Systems For Foreign Banks' M&A In China And The U.S.

Banks' cross-border M&A is the product of the globalization of the finance. Motivated by the profits, many large banks set out to merge and acquire banks in other countries in order to enter their banking markets. Most of the banks' cross-border M&A used to take place among developed countries, therefore many of these countries have formed regulatory systems with their own characters in last century's more intensive trend of M&A. The U.S. is the country with the most active foreign banks' M&A, and also the soundest regulatory system.Compared to most countries in the world, China opened its banking market much later. However, after China entered the WTO, foreign banks, particularly big international banks, started to emerge in this market. And even more, purchasing the shares of Chinese banks has developed the most important method of foreign banks' investment in China. Facing the foreign banks' positive M&A activities, China is still in the first stage of setting its regulatory system. Besides the rough structure of regulations and approval system, some other aspects of the regulatory system are even left out. With the purpose to develop the banking market more healthily, the problem in China's current regulatory system can not be ignored, and requires more research and actions concerning it.This paper uses the method of comparative study, which researches and compares many important aspects of the regulatory systems for foreign banks' M&A in both China and the U.S. First, Section I provides a general introduction of the regulatory systems in China and the U.S. separately, pointing out the development of both countries' regulatory principles, and their current regulatory systems as well as the characters. From Section II, four specific aspects of the regulatory system, which are regulation structure, regulatory agencies, approval considerations, and anti-trust review system, are discussed each per section with order. Each of these four sections starts with analysis of relative regulations and practices in the U.S., then follows with situation in China, and ends up with the shortcomings and developing prospects in China's system based on the comparison. The last section, Section VI, suggests some reforms to China's regulatory system for foreign bank's M&A, on the basis of previous discussion and the current M&A activities within China. These suggestions include how to frame regulation structure and what kind of measures would be useful to improve the regulatory system, especially to construct a functional anti-trust review system.