Goldman, Allianz eye Chinese bank stake

US investment bank Goldman Sachs and German financial firm Allianz are in talks to buy a stake of more than $1 billion in one of China's biggest state-owned commercial banks, a news report said on Monday.

The talks with the Industrial and Commercial Bank of China are at an early stage, The Asian Wall Street Journal said on its Web site, citing unidentified sources. The report said it wasn't clear how large a stake the foreign firms would get in the bank, also known as ICBC.

A spokesman for ICBC said the bank has held talks with potential strategic partners but refused to release any details. The spokesman would give his name only as Xie.

Allianz, an insurance and banking conglomerate based in Frankfurt, Germany, that owns Dresdner Bank, refused to comment on the report.

State banks are looking for foreign partners to help them modernise operations and become more competitive as China prepares to open the industry to foreign competition by 2007 under commitments to the World Trade Organization.

Bank of America agreed last month to pay $3 billion for a nine per cent stake in China Construction Bank - another of China's "big four" state commercial banks.

Foreign investors in Chinese banks include HSBC Of Britain, Singapore's Temasek Holdings and American financial firm Newbridge Capital. Citigroup and Dutch lender ING Groep say they are looking for Chinese partners.

Goldman Sachs already has a 33 per cent stake in a Chinese securities firm, Gao Hua Securities Co. ICBC is China's biggest commercial bank by deposits.