Britain's Standard Chartered Plc. has signed a deal to take a 19.99 percent stake in Bohai Commercial Bank, a financial institution based in North China's Tianjin City.

Standard Chartered would pay out of existing cash reserves for the stake, a spokesman for the London-based bank said without disclosing the price.

The "framework agreement" was subject to approval by the China Banking Regulatory Commission, Standard Chartered said.

The preparatory plan for the establishment of Bohai Bank is also pending the approval by the banking regulator and the State Council.

The deal comes after other foreign banks such as HSBC and Citigroup have stepped up their investments in China in a bid to tap the vast potential of its domestic market. China allows foreign lenders to own up to 20 percent of homegrown banks.

Standard Chartered, which opened its first Chinese branch in Shanghai in 1858, was aiming to buy into a bank by the end of the year after dropping out of a bid to take a stake in Bank of Communications, China's fifth-biggest lender.

A couple of months ago, it said expansion in China was "at the heart of its growth strategy" and it intended to set up alliances in the country.

Despite its small size, Bohai Bank has been given a national license, which has been rarely granted in recent years.

Source: Shenzhen Daily/Agencies