The Industrial Bank, one of China's 10 major share-holding commercial banks, has agreed to sell 24.98 percent of its stake to three overseas banks.

The bank signed an agreement with Hang Seng Bank, International Finance Company (IFC) and GIC Special Investment Wednesday in Fuzhou, capital of east China's Fujian Province.

According to the agreement, the three overseas banks will purchase 999 million shares or 24.9 percent of the Industrial Bank's stake with an investment of 2.7 billion yuan (US$324.98 million).

The three overseas banks will also beef up co-operation with the Industrial Bank in terms of risk management, financial management and retail business.

But the agreement has yet to be approved by shareholders and the China Banking Regulatory Commission.

Gao Jianping, chairman of the Industrial Bank, said introduction of the three international financial institutional investors will greatly improve the bank's corporate governance and business management.

The agreement will play a significant role in increasing the bank's competitiveness and realizing its strategic goal of becoming a world-class modern commercial bank, Gao said.

Many players in China's banking industry have been negotiating with potential overseas investors since China became a member of the World Trade Organization in December 2001 and promised to open the sector to global giants over five years.

By introducing overseas financial institutions as equity owners, Chinese banks are expected to obtain first-class management expertise to help them survive the mounting competition, said Zhang Liqun, a senior researcher with the Development Research Center under the State Council.

The overseas shareholders, in turn, will gain first-hand knowledge of China's banks, enterprises and the economy, which is crucial for their overseas operations, Zhang said.

Overseas banks have already speeded up their involvement in China's banking industry during the past several years, he said.

In September 2002 the IFC, the World Bank's private sector financing arm, and Canada's Bank of Nova Scotia signed a framework deal to invest in the small Xi'an City Commercial Bank of northwest China's Shaanxi Province.

Other banks with overseas shareholders holding stakes of up to 15 percent include Bank of Shanghai, Nanjing City Commercial Bank and China Everbright Bank.

The Bank of Communications, China's fifth largest commercial bank, is also talking with a number of overseas financial conglomerates to forge strategic alliance through a stake transfer.

The , the country's central bank, said foreign investors are now allowed to take less than 25 percent of a domestic bank's stake.