China's national social security fund has signed a deal with the Bank of China (BOC) to buy a five percent stake in the state-owned commercial bank, reports Friday's Beijing News.

BOC spokesperson Wang Zhaowen was quoted as saying that the social security fund will pay about 10 billion yuan (about 1.25 billion U.S. dollars) for the shares and will have a member on the board of directors.

The social security fund is buying into BOC as a strategic investor and will take part in its corporate governance, the report said, adding the shares will be locked for three years.

The stake in BOC will provide a secure investment for the social security fund, Wang said.

The national social security fund was established in 2000 and has about 190 billion yuan in funds.

According to media reports, the fund has invested about 115 billion yuan in the financial markets.

In related development, the report said the social security fund will soon invest 15 billion yuan in the Industrial and Commercial Bank of China (ICBC), China's largest state-owned commercial bank.

The fund's spokesperson Li Keping was quoted as saying that negotiations with the bank have been going smoothly and that the two sides have agreed on major issues.

The Chinese government has been pushing for a much bigger social security fund, as it strives to expand the social security network to cover more underprivileged people and cope with the aging population.

Source: Xinhua