Staff from the Bank of America on Wednesday started working at the China Construction Bank (CCB), providing the state lender "strategic assistance" in all of its major business and management spheres, a CCB source said.
Bank of America signed an agreement with the CCB to invest 2.5 billion US dollars in the bank -- and it will earmark an additional 500 million US dollars for the CCB when the latter goes public later this year -- for a roughly 9 percent stake in the country's leading property lender.
It received an option to increase its stake in the coming few years to 19.9 percent at the price of the shares in the CCB's initial public offering, approaching the ceiling set by China's banking regulator for investment by a single foreign bank.
In line with their deal, the Bank of America will provide "strategic assistance" for the CCB in a number of areas, includingcorporate governance, risk management, information technology, financial management and human resources management.
The third largest US banking group holds a seat in the CCB's board of directors and plans to send about 50 people to the CCB toprovide various kinds of services.
CCB Board Chairman Guo Shuqing said Wednesday that his bank is looking forward to joining hands with Bank of America to consolidate its overall ability in management and services.
The CCB hopes to carry out "wide-ranging and in-depth" cooperation in key business fields with the Bank of America and learn from its sophisticated experience and skills, he said.
Guo referred to their cooperation as a "win-win" choice. "Afterthree months of consultation and exchanges, we have both enhanced our confidence about the future of cooperation," he said.
Guo's remarks were echoed by Gregory Curl, director of the Bankof America in the CCB. He said the Bank of America hopes to maintain a "long-term, mutually beneficial partnership" with the CCB.
China is in the midst of overhauling its state banks, includingthe CCB, the Industrial and Commercial Bank of China (ICBC), the Agricultural Bank of China (ABC) and the Bank of China (BOC), ahead of the World Trade Organization-mandated opening of the financial market to foreign rivals by the end of 2006.
The move also provides an earning opportunity for foreign banksthat are eager to capitalize on China's booming economy. They havebeen seeking strategic alliances with Chinese lenders, hoping to be well placed when the market is fully opened.
The CCB is widely perceived to be the first state lender to go public, in
Hong Kong according to local newspapers, followed by the BOC and ICBC.
