China's fifth biggest lender, the Bank of Communications, has agreed to sell up to 20 percent of its shares to HSBC, expanding the global bank's footprint in a market hoarding US$1.3 trillion in savings.

The sale of such a stake, is believed to be worth around US$1 billion, and is said to be the largest by a local bank to a foreign investor.

It is also seen as vote of confidence in China's moves to overhaul the debt-laden banking sector.

The agreement follows months of approaches and negotiations.

HSBC, the world's second most valuable bank after Citigroup, got its start in Hong Kong and Shanghai in 1865.

It remains one of the most aggressive players in a restrictive arena due to open to foreign banks in 2007.

The Bank of Communications is itself now based in Shanghai. 

(CRI June 25, 2004)