THE Bank of Beijing said yesterday it plans to set up a joint venture fund management company with Bank of Nova Scotia to diversify its portfolio.

The city commercial bank will form the 300-million-yuan (US$43.86 million) venture in Beijing, with the Canadian bank holding 33 percent. Bank of Beijing will keep the remaining stake if it can't find another investor, the lender said in a statement to the Shanghai Stock Exchange.

The Beijing-based bank was a pioneer among the country's 114 city commercial banks in setting up a fund management arm to boost income.

Bigger rivals like Shanghai Pudong Development Bank and Agricultural Bank of China have already strengthened their fund management operations amid the country's growing demand for wealth management products.

Bank of Beijing is now endeavoring to expand its income avenues and influence.

The bank had earlier decided to pay 127.5 million yuan for a 19.99 percent stake in the smaller Langfang City Commercial Bank.

The Beijing bank yesterday reported a first half profit of 2.9 billion yuan, up 121.5 percent from last year.

The bank has branches in Shanghai, Tianjin and Xi'an. It plans to open a Shenzhen branch at the end of the year and two more outlets are in the pipeline.

Meanwhile, Beijing-based China Minsheng Banking Corp said it will set up a 35-million-yuan rural bank in Cixi, Zhejiang Province. Minsheng will hold a 35 percent stake in this bank.