The Shanghai-based commercial lender said it had already obtained regulatory approval for the move, which it hopes will help it be more competitive after China joins the World Trade Organization.

"We would like to boost our capital and management skills by inviting foreign investors," a bank spokesman said.

The investors, most likely banks, would take about a 15 percent holding in the bank, he said.

China has a handful of banks in which foreign financial institutions have a minority stake, including the Bank of Shanghai and Xiamen International Bank.

The Bank of Communications would be the largest state bank to have foreign investors if the deal is clinched.

The mainland is expected to join the WTO by early next year at the latest and has promised a full opening of the banking sector for foreign banks within five years of its WTO entry.

In the light of this, mainland banks - including the big four state-owned banks - are aggressively undergoing comprehensive reforms including streamlining their operations and improving corporate governance.

Restructuring of ownership through seeking listings and inviting foreign equity investors is seen by economists as an efficient way for them to speed up the reforms.

The bank spokesman said a foreign investment plan would be completed before listing either domestically or overseas.

"We have to hire auditors and investment banks to evaluate assets before looking for foreign investors," he said.

He declined to give further details.

The bank said it had set up a working committee and done some preliminary research, but declined to say which institutions might be potential investors.

China's banking law requires special approval from the People's Bank of China, the central bank, if a single investor plans to take a stake of more than 10 percent in a domestic bank.

The central bank declined to comment.

The Bank of Communications spokesman said it would be some time before a deal with foreign investors was reached.

The bank Thursday said its domestic operations made profits of 2.6 billion yuan in the first half of this year, up 50 percent from a year earlier.

Outstanding yuan-denominated deposits were 463.57 billion yuan at the end of June, while it had foreign currency deposits of US$5.58 billion.

The bank's outstanding yuan-denominated loans were 315.72 billion yuan at the end of June while its foreign currency loans were US$2.32 billion, according to the Financial News.

(China Daily June 20, 2001)