William Rhodes, Citigroup's vice chairman for Asia, made the comment at the World Economic Forum in Beijing on Friday. The planned stake purchase, the maximum allowed by China's regulators, was announced by Pudong bank last month without a timetable for the sale.

The U.S. lender is "actively" talking with other financial institutions in China and applying to open more branches in China to expand its reach in the world's most populous nation, Rhodes said.

Citigroup is betting that a tie-up with one of China's smaller banks will help it expand more quickly in the world's fastest-growing major economy than forging ties with one of the country's larger lenders. Citigroup, the largest minority shareholder in Pudong bank, bought 5 percent of the Shanghai-based bank in January 2003 for US$27 million.

Citigroup is scrambling to catch up with HSBC Holdings Plc. which has spent about US$5 billion investing in China's financial industry and become the largest investor.

HSBC, which was founded in Shanghai in 1865, bought controlling stakes in three Chinese banks, an insurer and a fund management company during the past four years. Citigroup, by comparison, holds only a minority stake in Pudong bank, the nation's second-biggest publicly traded lender. Citigroup operates five branches, one sub-branch, and two representative offices in China, compared with 12 branches of HSBC.

Shares of Pudong bank have gained 22 percent this year, compared with a 6 percent decline in the benchmark Shanghai Composite Index.Enditem

(Source: Shenzhen Daily/Agencies/Photo: Google)