SHENZHEN Development Bank said yesterday it had received official approval in principle to sell part of the bank to foreign strategic investors.

　　The State-owned lender, one of China's four domestic listed banks and the smallest of its 10 commercial banks by deposit base and loan portfolio, said it was negotiating with potential foreign partners, but gave no names.

　　"Our bank has recently contacted and talked with several foreign institutions on cooperation and introducing foreign strategic investors," Shenzhen Bank said in a statement.

　　"The move is to implement the Shenzhen Municipal Government's strategy to promote reforms and development of State enterprises in line with new conditions after China joined the WTO," the statement said without elaborating.

　　China News Service, citing unidentified Chinese bank sources, said last week U.S. private equity fund Newbridge Capital would buy 15 percent of the bank for 1.5 billion yuan (US$180 million) and become its biggest shareholder.

　　But analysts said it was unlikely the government would allow a foreign investor to become a bank's biggest shareholder.

　　State media have also linked Shenzhen Development Bank to HSBC (Hong Kong and Shanghai Banking Corp.) and JP Morgan Chase.

　　All parties have declined to comment.

　　Shenzhen Development Bank's listed A shares, reserved for domestic investors, have risen 33 percent since June 20, outperforming the market by 27 percent on the rumored tie-ups.

　　China has no specific rules on foreign acquisitions of stakes in banks yet, but the central bank has submitted some to the State Council for approval, the Shanghai Securities News said yesterday.

　　The government was drafting a broad set of regulations on foreign investment in listed companies, it said without giving details.

　　HSBC and Hong Kong's Shanghai Commercial Bank became the first foreign commercial banks to invest in a mainland bank by buying minority stakes in the Bank of Shanghai last December.

　　(SD-Agencies)