BEIJING, June 5 -- The government is encouraging the country's small and medium-sized banks to attract strategic investors from overseas to learn from advanced management ideas and techniques to improve their core competitiveness, the top banking regulator said Saturday.

    Addressing an annual national meeting on city commercial banks, Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC), said China has already made important progress in introducing strategic overseas investment.

    To date, nine city commercial banks, including those in Shanghai, Nanjing, Xi'an, Jinan, Beijing, Hangzhou, Nanchong, Tianjin and Ningbo, have introduced strategic overseas investment, according to the commission.

    Overseas investment accounts for about 5 percent of the overall equity of those city commercial banks, the commission said.

    Australia's ANZ Banking Group said Friday it has won final government approval to buy a 20 percent stake in Tianjin City Commercial Bank for US$120 million.

    ANZ, Australia's third-largest bank, will provide expertise and a US$5 million development fund to the bank, based in the northeastern municipality of Tianjin, according to an ANZ statement.

    Commonwealth Bank of Australia has won approval from CBRC to inject more capital into Jinan City Commercial Bank to maintain its stake at 11 percent, Qiu Yunzhang, chairman of the Jinan bank, said Friday.

    The Australian bank agreed to pay about US$17 million for its stake in 2004 with the option to raise it to 19.9 percent by May 2008.

    Chongqing City Commercial Bank is also close to choosing a foreign strategic investor, its president, Wang Chongyi, said Saturday.

    "The final deal will be done in about a month. We'll be choosing from a dozen bidders," Wang said. He said Lehman Brothers is advising the bank, based in southwestern China, but declined to reveal more.

    The introduction of overseas investment contributed to marked improvement of those banks' corporate governing structures, management ideas and internal control as well as performance, said the chairman.

    By the end of last October, 19 overseas investors had become shareholders of 16 banks in China with their investment totaling US$16.5 billion, or about 15 percent of the total capital of Chinese banks.

    Seventy-one foreign banks from 20 countries or regions had set up 238 business branches with a total of US$84.5 billion in financial assets in China, the commission said.

    The figure accounts for about 2 percent of the total capital of Chinese financial institutions.