Bank of America Corp., the second-largest U.S. bank, has agreed to pay $2.5 billion for a minority stake in China Construction Bank, sources said on Friday, marking the largest single foreign investment in China's banking sector.

Bank of America has been looking to expand abroad after reaching the 10 percent maximum share of deposits in its home market. China Construction Bank, the country's biggest property lender, was eager to sign up a foreign investor ahead of a planned $5 billion IPO later this year.

Bank of America's purchase would account for 7 to 8 percent of China Construction's expanded share capital after its planned IPO overseas, or 9 percent based on its current share capital, the sources told Reuters.

Bank of America would also invest $500 million in the Chinese lender's planned IPO, sources familiar with the situation said. The U.S. bank would have the option to lift its stake in the state-controlled bank to 19.9 percent, the sources said.

Singapore state investment agency Temasek, meanwhile, was also in talks to buy a minority stake in Construction Bank, sources said on Friday. Temasek said it did not comment on market speculation.

A China Construction spokesman said the bank would hold a news conference on Friday morning at its Beijing headquarters, but declined to give further details. Bank of America spokesman Bob Stickler declined to comment.

Kenneth Lewis, Bank of America's chief executive, will on Friday sign the agreement in Beijing with China Construction Bank Chairman Guo Shuqing, The Wall Street Journal reported earlier.

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