The Bank of China (BOC) announced that it had signed a strategic investment and cooperation agreement with the Royal Bank of Scotland Group (RBS) Thursday, according to which RBS will acquire a 10 percent stake in BOC for 3.1 billion US dollars.

The transaction is subject to the government and other relevant regulatory approvals, said sources with the BOC.

As a key component of the strategic cooperation, BOC, one of the largest Chinese commercial banks, and RBS, Europe's second largest and the world's sixth largest banking group, will enter into broad cooperation in a range of areas including credit cards, wealth management, corporate banking and personal lines of insurance.

In addition, the two banks intend to establish a close cooperative relationship in major banking managerial areas, including corporate governance, risk management, financial management, human resources management and information technology.

According to the agreement, RBS will also appoint a representative to serve on the board of directors of BOC.

"RBS is an ideal partner," said Xiao Gang, chairman of BOC.

"The cooperation with RBS is a substantial step in BOC's joint stock reform, and is crucial to transforming the operational structure, enhancing the internal management, improving the competitiveness and promoting profitability," he said.

Wang Jianxi, Vice Chairman of Central Huijin Investment Co. Ltd., the major shareholder of BOC, said bringing in international strategic investors is an important step in the deepening of the reform of state-owned commercial banks in China.

"Through strategic cooperation with RBS, BOC will be able to further enhance its corporate governance and internal control. We are confident that the strategic cooperation between BOC and RBS will produce positive results for both sides,"he said.

"The RBS Board believes that the size and growth of China represents an important opportunity. The combination of BOC's brand, distribution and customer base with RBS' product and operational strengths and experience will be powerful in the Chinese market," said Sir George Mathewson, chairman of RBS.

Source: Xinhua