Those rules are changing. Hang Seng's deal, assuming it gets regulatory and shareholder approval, will make it the first foreign investor to own more than 15 per cent of a mainland bank since officials last month raised the maximum stake for foreign investors to 25 per cent and for any one investor to 20 per cent.

Bank of East Asia still remains uncommitted on the mainland. That might change, as talks with other banks are ongoing - but price remains a key factor. 'We failed in previous acquisition talks because we were too stingy,' said the bank's chairman, David Li Kwok-po, on Thursday.

One hopes that Hang Seng was not too generous. Certainly it did not snap up a bargain, paying about 1.5 times book price taking its acquisition into account. This puts it on a par with HSBC's purchase of 8 per cent of Bank of Shanghai and is more expensive than Citibank's 5 per cent of Shanghai Pudong Development Bank. Of course, both those deals involved banks based in a city that is far more of a banking centre than Fuzhou.

On the plus side, Industrial Bank is growing fast. More than half of its 240 branches are outside Fujian, while its loans increased 27 per cent last year, and then a further 62 per cent by September this year. Observers also stressed that the bank has little in the way of non-performing loans - 2.6 per cent of total lending at the end of September, down from 3.5 per cent at the end of last year.

However, the bank's loan growth and NPL rate are almost certainly related. Such rapid growth in its lending can have given little chance for borrowers to start defaulting. And while its home base, Fujian province, has never been home to much state-owned industry, Industrial Bank remains a majority state-owned bank, whose owner's interests may diverge from those of its other shareholders.

This point was inadvertently pointed out by a representative from the International Finance Corp, an offshoot of the World Bank which along with Singapore's GIC Special Investments is also buying a stake in Industrial Bank.

He noted that Industrial Bank's main shareholder, the Fujian government, wanted 'to transform the bank into one managed along private-sector lines, with increased private participation and best international practices'.

Creating a bank which is not private but acts as if it were could be tricky, especially as behaving like a privately owned business is never easy for government-owned entities.

As both the collapse of Gitic and the ongoing saga at the Zhuhai government-controlled Zhu Kuan Group show, local governments in China can have interests that conflict with those of the banks which supplied them with money.

Another aspect of the deal highlighted in coverage was its potential for credit cards and personal loans through a joint venture set up to handle this kind of business. Industrial Bank does not do any of this business now.

Developing that could be Hang Seng's job, although as its chief executive, Vincent Cheng Hoi-chuen, reminded reporters on Thursday, doing so will be dependent on regulatory approval.

There are also other barriers which may arise in the future. In theory, the implementation of market-opening measures agreed as part of China's World Trade Organisation membership package should see the financial sector rapidly liberalised after 2006 - to the benefit of both local banks outside the Big Four state-owned banks as well as foreign financial institutions.

However, given that China's financial regulators believe allowing foreigners unfettered access to the country's banking sector could threaten the Big Four, it is all but certain to restrict their activities through licensing, capital requirement and other measures.

As the WTO's national treatment rules require foreign and local banks to be treated the same, the businesses which may suffer most could well be domestic second-tier lenders such as Industrial Bank.

I wonder if Hang Seng will end up finding the easy part was getting in.

After it ponies up its cash, we should congratulate the current owners of Industrial Bank - not only will they have pulled in 2.5 billion yuan for 25 per cent of their bank, but they have also acquired a high-grade partner which can help their bank grow in ways it might have found hard by itself.

Well done.