The Bank of China Expands in the U.S.

In late 2012, the state-controlled Bank of China became the first Chinese lender to participate in the sale of U.S. commercial mortgage-backed securities (CMBS) by joining with other banks to help lend the $950 million needed to build a 43-story building in Manhattan.  The loan obligations were then packaged as bonds for sale to investors.

The Bank of China cannot issue CMBS directly because it is not a licensed U.S. broker-dealer; however, it sees a profit on each loan it facilitates via CMBS.  Since 2009, the bank’s commercial property loans in the U.S. have increased four times over, with the Bank taking advantage of its large pool of available capital as well as a rebound in the general CMBS market.   It has many projects in the U.S., with Manhattan being a popular location for projects.  For example, the Bank’s latest securitization project has it teaming up with Goldman Sachs and Deutsche Bank to put forth $900 million towards commercial property in Times Square.  The Bank’s prospects for growth appear to be excellent, as evidenced by it recently becoming the third-largest foreign property lender in the United States.