The Temasek Holdings Ptd Ltd., the investment arm of the Singaporean government, is reported to buy 5 percent stake of the Bank of China (BOC) which is to seek stock market listing in Hong Kong.

Thursday's edition of the China Securities Journal, run by the Xinhua News Agency, gave an answer to Temasek's China strategy in the fast-growing and increasing competitive banking market.

According to the newspaper, the name of Temasek was found in BOC's 400-page application documents to be delivered to the Hong Kong Stock Exchanges in early 2006.

To gain a foothold in the Chinese banking market, Temasek announced in August to invest 1.466 billion US dollars for a 5.1 percent stake of the China Construction Bank (CCB), and 3.1 billion US dollars for a 10 percent stake of the BOC, said the newspaper.

Though Chinese authorities encourage Chinese banks to seek foreign partnerships so as to build up their capital and improve management before China fully opens its banking industry to foreign competition in late 2006, the total foreign investment is limited to a maximum of 25 percent.

Temasek was finally allowed to buy only 5 percent stake of the BOC, said the newspaper.

Economic observers said the case of Temasek reflects a light change in the policy of Chinese banks in seeking foreign partnerships.

The change might also influence the public bidding of another state-owned Chinese bank -- the Industrial and Commercial Bank of China -- which also plans to list its shares overseas.

Source: Xinhua