The Commonwealth Bank of Australia (CBA) announced Thursday an investment of 625 million yuan (US$75.3 million) in Hangzhou City Commercial Bank (HZCCB), a regional lender in east China's Zhejiang Province.
The two sides signed a strategic co-operative agreement, involving CBA's purchase of a 19.9 percent stake in HZCCB.
The maximum allowable share holding for a single foreign bank is 20 percent, according to China's current regulations.
The agreement will come into being upon approval by the China Banking Regulatory Commission (CBRC), said CBA.
Under the agreement, CBA will offer technical assistance to HZCCB through a structured capability transfer program in key areas such as marketing, credit management, information technology and marketing.
"Enhancing HZCCB's skills in these areas will enable us to improve the management level, offer highly competitive services, and continue to grow profitably," said Ma Shiyong, chairman of HZCCB.
This is the second time CBA, Australia's second-biggest lender, has invested in a regional bank in the mainland.
In September 2004, it won approval to buy 11 percent of Jinan City Commercial Bank (JNCCB) in east China's Shandong Province, with an option of increasing that stake to 20 percent in 2008.
CBA officials refused to reveal any additional details since the agreement is still awaiting approval.
HZCCB ranks third in terms of comprehensive competitiveness among China's 112 city commercial banks, according to a survey conducted by "The Banker" magazine in 2005.
Before the CBA purchase of the 19.9 percent stake, the main shareholders of HZCCB were the local government and private companies, accounting for 45 percent of total capital stock.
Supporting local economies and millions of small and medium-sized enterprises, HZCCB had about 38.2 billion yuan (US$4.6 billion) in total assets in 2004 with an increasing profit margin of 43.58 percent.
Hangzhou, home to over 6 million people, was named China's top investment location by Forbes in 2004.
(China Daily April 22, 2005)