HSBC Holdings could take a stake of more than 15 per cent in China's Bank of Communications and appoint two to three members of its board of directors, according to a mainland report.
In June 2001, the State Council and People's Bank of China approved Bank of Communications' plan to introduce up to two foreign investors on the condition that the total stake held by foreigners did not exceed 25 per cent.
If realised, the deal would considerably bolster its presence in the mainland financial sector.
HSBC has a 10 per cent stake in China's second-largest insurer, Ping An Insurance, which is expected to seek a listing in Hong Kong this year, and an 8 per cent stake in Bank of Shanghai.
For HSBC, the appeal of the mainland bank is that it has a national licence, a relatively low level of non-performing loans and has seen rapid growth in the past five years.
