Citigroup, whose revised 24.1 billion yuan bid for Guangdong Development was recommended to the State Council for approval by the Guangdong provincial government, may still be required to include domestic institutions from two rival consortiums led by French bank Societe Generale and state insurer Ping An Insurance, the sources said.

'It's been a very long, drawn-out process and there's been at least five or six rounds of bidding,' Moody's Investors Service banking analyst May Yan said.

China Banking Regulatory Commission chairman Liu Mingkang also supported the bid by Citigroup, which recruited former United States president George Bush to lobby on its behalf.

One factor that helped Citigroup's bid was its willingness to allow Guangdong Development chairman Li Ruohong to stay with the bank for another term, the sources said.

The deal is expected to be signed at the end of the month and formally announced in the middle of next month.

The government, in part to avoid criticism that state-owned assets are being sold too cheaply to foreign interests, has invited domestic institutions from the losing consortiums, including steel giant Baosteel and state refiner Sinopec Corp, to take part in the Citigroup-led acquisition, the sources said. Both firms were involved in Societe Generale's bid.

The bidding for Guangdong Development began more than a year ago, when Citigroup was reported to be seeking a 40 per cent stake as part of a consortium that would take 85 per cent of the bank. The bid partners included US private equity fund Carlyle Group, which originally planned to take 9.9 per cent, later cutting it to 4.9 per cent.

Societe Generale separately wanted to buy 24 per cent, with the French Development Agency buying a further 1 per cent.

The groups had to revise their bids as banking rules restrict foreign ownership of a Chinese bank to 25 per cent, with no one institution allowed more than 20 per cent. In December, the Citigroup-led consortium submitted its 24.1 billion yuan offer, beating Societe Generale's 23.5 billion yuan bid and Ping An's 22.6 billion yuan offer.

Carlyle has since dropped out and Citigroup is looking to replace it with a passive investor after mainland government opposition to its proposal to bring in Associates First Capital, a wholly owned subsidiary.

Guangdong Development, Citigroup, Ping An and Societe Generale refused to comment yesterday.

None of the bidders have announced the members of their consortiums. Citigroup has reportedly joined with China National Cereals, Oils & Foodstuffs, China Life Insurance, the country's biggest insurer, and State Grid Corp.

Societe Generale's group reportedly count Jilin Investment, Dalian Shide Group and Canada's largest institutional fund manager, Caisse de Depot et Placement du Quebec, as well as Baosteel and Sinopec.

Bank of China (Hong Kong) is reported to be partnering Ping An.

Guangdong Development's net profit declined 74 per cent and its non-performing loans increased 25 per cent to reach 16.6 per cent of loans in 2004, the last year the bank published financial figures.