The Asian Development Bank (ADB) is investing US$75 million in Bank of China (BOC), one of the nation's Big Four state-owned banks, for a stake that cannot be sold in the coming three years, the two banks said Monday in a joint statement.

The deal is the latest in a series of strategic investments by foreign banks seeking footholds in the fast-growing and increasingly competitive Chinese banking market.

Chinese banks have been encouraged by authorities to seek foreign partnerships to build up their capital and improve management before China fully opens its banking industry to foreign competition in late 2006.

BOC said the entry of ADB, still pending regulatory approval, would help it streamline corporate governance. ADB will also provide technical support for the Chinese bank's internal control and anti-money laundering efforts.

The move shows the BOC has achieved "initial" success in pressing forward with reform partly by ushering in strategic investors, it said.

UBS, Switzerland's biggest bank, announced last month that it will invest 645 million Swiss francs (US$500 million) in a partnership with the BOC that will develop investment banking and securities products and services in China.

The new development comes on the heels of the Royal Bank of Scotland Group Plc and Temasek Holdings Ptd Ltd., the investment arm of the Singaporean government, each of which paid about 3.1 billion dollars for 10 percent stakes in the BOC.

Current limits cap equity stakes in a Chinese bank by any one foreign institution at 20 percent, with the total foreign holdings limited to a maximum of 25 percent.

Those limits are apparently aimed at preserving state control of major lenders, analysts say.

According to media reports, Goldman Sachs, American Express Co. and Allianz AG of Germany have already signed a deal to buy a 10 percent stake in China's biggest bank, the Industrial and Commercial Bank of China, for more than US$3 billion.

(Xinhua News Agency October 10, 2005)