According to a Minsheng statement, the stake purchase will be divided into three phases: Minsheng will initially buy 5.4 million shares for $96 million, or a 4.9-percent stake. Before March 31, 2008, the bank will increase its ownership to 9.9 percent. By June 2009, it may increase its holdings to 20 percent, becoming the largest single shareholder in UCBH.

The deal could be the first strategic investment in a U.S. bank by a Chinese mainland financial institution and would give UCBH stronger exposure to the mainland market.

"This deal will serve as Minsheng's platform to explore the overseas market," said Gu Junlei, a banking analyst with Orient Securities. But Gu also added that the acquisition will have limited impact on Minsheng's financial status.

As 77.16 percent of UCBH's loans are related to the real estate business, the bank's returns largely depend on the U.S. property market, according to Gu. UCBH's weak presence in the trade and financial sector differs from the strategic development goal of Minsheng.

Minsheng's deal follows China Development Bank's stake-purchase in Britain's third largest lender Barclays Bank PLC in July.

"More and more Chinese banks will take stakes overseas as they expand overseas business," said Wu Yonggang, an analyst with Guotai & Junan Securities. "It is also an effective way to deal with the appreciation of the renminbi."

On the same day, Minsheng also announced it would purchase 2.342 billion yuan worth of shares of Shaanxi International Trust & Investment Corp. Ltd. and become the largest shareholder of the listed northwestern financial institution.

Liberalizing the Interest Rate

In a bid to liberalize the interest rate, the People's Bank of China, the central bank, launched the "Forward Rate Agreement" starting from November 1 this year.

The agreement is a cash-settled forward contract between two parties on a short-term loan. It does not involve real transfer of principal and is settled according to the profit or loss resulting from the difference in the agreed rate and the benchmark market rate at maturity.

This new product would ensure that investors have more tools to hedge against interest rate risks and would enrich the financial derivatives market, according to the central bank.

The only two derivatives available now are bond forwards and interest rate swaps.

Numbers of the Week 18% China's net imports of crude oil in the first eight months of 2007 soared more than 18 percent to 108.22 billion tons. China brought in 110.4 million tons of crude oil while exporting 2.18 million tons, according to data from the General Administration of Customs. 461 million The number of mobile users reached 461 million by the end of last year, with an annual average growth rate of 22.3 percent since 2002, according to the National Bureau of Statistics.

"It will help investors pre-set the interest rates at a level acceptable to them, thus fixing risks," said Wang Yungui, Deputy Director of the International Payment Department with the State Administration of Foreign Exchange.

IPO Effort

In the era of IPOs, companies, big and small, are rushing to launch IPOs in the burgeoning mainland stock market.

China Reinsurance Group, the country's largest reinsurance company, claimed its restructuring plan has been approved by the Chinese Government, paving the way for its public listing.

The new company, to be known as the China Reinsurance Group Co. Ltd., held its first shareholders' meeting on October 10. The new shareholding company has a registered capital of 36.15 billion yuan, with the Ministry of Finance and the Central Huijin Investment Corp. as the co-founders.

China Reinsurance Group, which takes an 80-percent share of China's reinsurance market, previously said it would introduce strategic investors from home and abroad in the future and shoot for public listing "at an appropriate time."