The agreement marks the first time a policy bank in China has signed such a deal with a Japanese bank.

BTM will introduce its clients to CDB, including Japanese firms doing business in China.

CDB, meanwhile, will offer renminbi loans on preferential terms, said a CDB spokesman. The loans would primarily be for infrastructure and key construction projects.

The source declined to provide details, but industry insiders suggested the loans' interest rates would be better than rates offered by commercial banks.

CDB will also share its customer resources with BTM, and recommend projects and clients to the bank.

China's policy banks often grant medium- and long-term loans, and focus on infrastructure projects and pillar industries.

The banks will also enhance co-operation in agent services - such as settlement and clearing, project financing and personnel training.

The agreement will help BTM expand business in China, especially in corporate-client operations, sources at BTM's Tokyo headquarters said.

BTM was recently listed in Banker magazine as one of the world's top 10 banks.

BTM has established five branches and three representative offices in China, including Dalian and Beijing. The Dalian branch in April was approved to do renminbi business in China.

BTM has also formed partnerships with some State-owned and private banks in China to conduct settlement and account transactions.

The agreement will help CDB attract more quality clients, and offer infrastructure project loans to foreign firms with operations in China, a CDB spokesman said.

(China Daily August 30, 2002)