Citigroup's Citibank NA unit agreed to pay 1.5 times the net asset value of the investment in Pudong Development Bank Co., said a general manager at Shanghai State-Owned Assets Operation Co., which owns the stake. He declined to be identified. Grace Guo, a Shanghai-based Citibank spokesman, said the three parties will issue a statement today.

The purchase is the fourth time China has allowed a foreign bank to buy a stake in one of its lenders, which are seeking foreign investors to fortify capital and improve management.

Citigroup, the world's largest financial institution by market value, is extending its Chinese operations as the nation prepares to fully open its financial services industry by 2006. It spent US$12.5 billion last year to buy Grupo Financiero Banamex-Accival, becoming the No. 2 lender in Mexico.

In the next few years, China's economy may grow at least 50 percent more rapidly than the U.S. or Europe, adjusted for inflation, said Marshall Front, chairman of Front Barnett Associates LLC, which manages US$1.5 billion and owns more than 1.3 million shares of Citigroup.

"In an economy like that, there's going to be enormous opportunities for establishing both retail and commercial businesses," he said.

Citigroup, which has had a presence in China since 1902, employs 300 people in the country.

(eastday.com January 2, 2002)