Bank of China (BOC) said Friday a car financing joint venture with it being the majority shareholder will soon go into operation.

The state-owned lender, through its insurance arm, will take a 50-percent stake at the JV, teaming up with French automaker PSA Peugeot Citroen and a domestic auto producer, the BOC said in a statement.

Preparations for the JV have achieved "significant" progress, it said, citing that "members of the new firm's board and management are waiting to be appointed."

The JV is to provide financing services for both distributors and buyers of Citroen-brand cars.

Decades of economic boom has helped a fast-growing number of Chinese materialize their dreams of owning a sedan. Still many people are planning to buy cars with bank loans amid a new concept of consumption.

China Banking Regulatory Commission (CBRC), the nationwide banking watchdog, issued rules in September, 2003 to give the nod for commercial banks to open special car financing businesses.

And Bank of China began making market research in the business just in the following month, decided to get involved in the field early in 2004 and reached an agreement to set up a JV with PSA Peugeot Citroen last September, according to bank spokesman Wang Zhaowen.

The JV will be the first car financing company partly invested by a Chinese bank.

Bank of China had extended an accumulated 40 billion yuan (about 4.9 billion US dollars) of vehicle loans by the end of last year, with a non-performing rate of 5 percent.

Pointing to this, Wang said car financing is showing a "fast, healthy" developing trend.

China has set up six auto financing companies including five solely foreign-funded firms and one sino-foreign joint venture.

Source: Xinhua