Standard Chartered yesterday became the first foreign bank to invest in a new Chinese bank since 1949. The Asian-focused lender held a signing ceremony at the Great Hall of the People in Beijing to mark its US$123 million acquisition of 19.99 per cent of Tianjin-based Bohai Bank. The event was attended by Premier Wen Jiabao and British Prime Minister Tony Blair, who is in Beijing for the annual European Union-China summit and bilateral Sino-British talks. 'We chose to go into Bohai Bank because we thought it was the best opportunity available in China,' said Bryan Sanderson, the chairman of Standard Chartered. According to Standard Chartered China chairman Lance Browne, the deal took more than 18 months to conclude. Bohai is the first bank since 1996 to be set up with a licence to operate across the country. Its initial capital is five billion yuan. There are six Chinese entities with shares in the bank, including shipping giant Cosco and Shanghai Baosteel Group. The bulk of the lender is owned by various investment arms of the central and Tianjin governments, with the major 25 per cent stake held by Tianjin Teda Investment Holding. Yang Zilin, a 33-year veteran of the mainland's banking industry and former chairman of the Import-Export Bank of China, has been nominated as chairman of Bohai. 'Because this is a brand new bank, it doesn't have any so-called historical burdens,' Mr Yang said, referring to the enormous legacy of bad debt weighing down the country's financial system. Standard Chartered will have three directors on the 15-man Bohai board, including the chief risk officer. Under its World Trade Organisation accession agreement, China will open the banking sector to international competition by the end of next year, leading some analysts to question Standard Chartered's strategy of buying into a start-up bank. 'If you invest in an existing bank, you can capitalise on its branch network and existing clients, but I'm not sure why [Standard Chartered] would want to buy into a new bank as it will be allowed to do everything on its own by 2007 anyway,' said Kate Lin, a banking analyst at Fitch Credit Ratings. Standard Chartered executives said that under current government restrictions, foreign banks were allowed to invest directly in a total of two Chinese banks and added they were taking an interest in all other opportunities in the market. They declined to comment about rumours they were in talks to take a stake in China Everbright. 'We don't rule out other possibilities, but our main direction will be through our own branch network,' said Gareth Bullock, the bank's director of strategy. Mr Yang said there were plans to eventually list Bohai, but not in the short or medium term.