China's Bank of Communications (BoCom) signed an agreement in Beijing on Wednesday to purchase 10 percent stake of Changshu Rural Commercial Bank for 380 million yuan (52.5 million U.S. dollars) in cash.
The investment makes BoCom the largest shareholder of the local lender. The stake will help it have a better understanding of the rural financial market so as to consolidate its position in the country's affluent Yangtze River Delta.
According to the agreement, BoCom will provide more financial services to rural areas through Changshu Rural's channels. Meanwhile, BoCom will help Changshu Rural improve management, upgrade its risk control mechanism and enhance service quality.
Established in November 2001 in the eastern Jiangsu Province, one of the country's richest regions, Changshu Rural generated more than one billion yuan in net profit in the past six years. Its assets totaled 28.7 billion yuan by the end of 2007.
HSBC Holdings Plc holds a roughly 19 percent stake in BoCom, the country's fifth largest lender.
(Xinhua News Agency January 17, 2008)
