The State Administration of Foreign Exchange has given the go-ahead for China Minsheng to take a 4.9 per cent stake in the US lender, in a deal worth US$95 million (S$134.2 million), Xinhua news agency reported, citing a company statement.

The deal is the first tranche of China Minsheng's proposal to take a 20 per cent stake in the San Francisco-based firm, which is the holding company for United Commercial Bank, by the summer of 2009, the report said.

The bank primarily serves Chinese communities in the United States and American firms doing business in China, the report added.

The purchase is aimed at helping China Minsheng improve its asset management and develop a full range of financial services.

The plan is still thought to require approval from US regulators, at a time when Chinese banks are expanding their overseas presence and US banks are trying to gain greater access to the Chinese market.

Last October, Industrial and Commercial Bank of China reached a deal to spend US$5.5 billion on 20 per cent of South Africa's Standard Bank, in the largest Chinese acquisition in the financial field ever.

It also entered into agreements to acquire a controlling stake in Indonesia's Halim Bank in December 2006 and Macau's Seng Heng Bank in August 2007.

Recent reports have linked American giants, including Citigroup and Morgan Stanley, with a series of possible joint ventures in China, but there remains resistance to allowing foreign lenders greater access to the domestic market. -- AFP