HONG Kong's Hang Seng Bank yesterday agreed to buy 20 percent in Yantai City Commercial Bank for 800 million yuan (US$103 million) and it will become the largest shareholder of the Shandong-based lender.

Hang Seng said in a statement that it will have the right to nominate directors and to recommend executives for senior management positions, including vice president and department heads, at the Yantai bank.

Hong Kong-listed Wing Lung Bank will also take a 4.99 percent stake in the Yantai bank, bringing the total foreign shareholding in the city bank to 24.99 percent, just shy of the maximum 25 percent holding in a Chinese bank by overseas lenders allowed by the China Banking Regulatory Commission.

The stake purchase still needs regulatory approval and that of shareholders of the Yantai bank.

The strategic investment in the city Bank will complement Hang Seng's existing foothold on the Chinese mainland as most of Hang Seng's outlets are in the Pearl River Delta and Yangtze River Delta regions, the Hong Kong bank said.

This latest deal will boost Hang Seng's total investment on the mainland to 7.3 billion yuan.