CHINA has given U.S. private equity fund Newbridge Capital approval to take a strategic stake in a key domestic listed bank, another step in the gradual opening of its shuttered financial sector to foreigners.

　　The medium-sized Shenzhen Development Bank, one of four China's listed lenders, announced the approval in a statement Friday and said the long-awaited deal would be completed as soon as possible.

　　The U.S. firm specializes in direct investments in emerging markets and had been tipped as Shenzhen bank's top choice for partnership because it had experience in privatizing state banks after buying a 51-percent stake in Korea First Bank in 1999.

　　"They are changing Korea First Bank from a corporate bank into a retail-oriented bank and the makeover has been quite dramatic," said Terry Chan, analyst at Standard & Poor's.

　　"Given their track record in Korea, they have a fair chance of adding value in Shenzhen bank."

　　The State-owned bank, the smallest of 10 commercial banks by deposit base and loan portfolio, had said it was seeking strategic parterships to help beef up capital and services to compete in a freer market now China is a World Trade Organization (WTO) member.

　　China's backward banking industry is deep in talks with foreign counterparts since the government promised to open the sector to overseas banks over five years on acceding to the WTO last December.

　　"After obtaining approval by relevant departments, it is agreed U.S. Newbridge Capital will become a strategic investor of our bank," said Shenzhen bank's statement in domestic newspapers. It gave no details and bank officials declined comment.

　　Shenzhen bank's A shares, reserved for domestic investors, fell 3.57 percent Friday to 13.77 yuan as investors took profits on shares which had risen 27 percent since Jun 20, when rumors of a foreign tie-up started swirling.