Temasek Holdings Ltd., the investment arm of the Singaporean government, revealed it has already purchased a five percent stake in the Bank of China (BOC) for $1.52 billion.

Temasek spokesperson He Xiaohua told Xinhua Friday that Temasek has finalized the deal with the Bank of China, which is to seek stock market listing in Hong Kong.

He said Temasek is delighted to have the chance to invest in the BOC. As a long-term shareholder, Temasek will work closely with the BOC and its other shareholders for the bank's further development.

It is reported that a senior official with the BOC has also confirmed the purchase.

At the end of Aug. 2005, Temasek and the BOC had jointly announced that Temasek would invest 3.1 billion US dollars in the bank for a 10 percent stake.

But Temasek's planned investment in the BOC was soon postponed by China's banking authorities which ruled that Temasek would own an "unacceptably large stake in China's banks".

With Temasek finally allowed to buy a 5 percent stake of the BOC, economic observers said the case reflects a change in the policy of Chinese banks in seeking foreign partnerships.

Though Chinese authorities have been inspiring Chinese banks to seek foreign partnerships in order to build up their capital and improve management before China fully opens its banking industry to foreign competition in late 2006, the total foreign holdings is limited to a maximum of 25 percent.

Those limits are apparently aimed at preserving the state control of major lenders, industrial observers say.

To gain a foothold in China's fast-growing and increasing competitive banking market, Temasek once purchased a 4.55 percent stake of China's Minsheng Bank for 100 million dollars. Temasek than announced the investment of another 300 million dollars in Minsheng for the additional 5.45 percent stake.

In July last year, Temasek announced it had purchased a 5.1 stake in the China Construction Bank for 1.4 billion dollars.