Foreign giants including HSBC Holdings were considering buying stakes in small city banks in China as they seek faster entry into the opening market, the Financial News said.

The government has encouraged the country��s 112 city commercial banks, small players in a banking sector that is dominated by the big four State lenders, to seek foreign investors and grow bigger through mergers.

HSBC and Dutch group ING intended to buy stakes in Beijing City Commercial Bank while Bank of East Asia was interested in Guangzhou City Commercial bank, the newspaper said.

German investment and development group DEG was in talks with Nanchong City Commercial Bank, a small lender in the southwestern province of Sichuan, the newspaper said.

Last month, China��s bank regulator approved a plan by Canada��s Bank of Nova Scotia and the World Bank��s International Finance Corp. (IFC) to buy a 5 percent stake in northwestern China��s Xi��an City Commercial Bank.

China has been trying to revamp its banking sector and whip its lenders into shape to compete with foreign rivals, who are to gain full access to the market after 2006 as part of pledges the Chinese Government made to join the World Trade Organization.

Source: Shenzhen Daily-Agencies