Bank of China (BOC) said Thursday that it had entered into a partnership with French private bank LCF Rothschild to take a stake in a branch of the celebrated banking dynasty.
BOC would acquire 20 percent of La Compagnie Financiere Edmond de Rothschild, saying the move would bring the bank expertise in financial products. Their French counterparts said the partnership would open up the lucrative Chinese market.
Both sides described the deal as an encounter between healthy institutions far removed from the financial crisis which has hit the likes of Lehman Brothers
"This has nothing to do with the current stock market situation," said a spokesman for the French bank, which is controlled by Benjamin de Rothschild.
"We are trying to develop our position in China because it is a gigantic market. Bank of China has 115 million customers and one million of them have more than US$100,000 in cash in their accounts.
"Those people want to transform the cash in financial products - and that's where we can step in."
Xiao Gang, Bank of China's chairman, said: "This partnership forms part of Bank of China's global development strategy. We expect to further strengthen our asset management operations and product design capabilities in private banking business, and widen the product and service offerings to our clients."
Bank of China will pay 236 million Euro to buy a 10 percent stake in the Rothschild bank from the Quebec Deposits and Investment Bank and acquire a further 10 percent through the issue of new shares.
This is the first move by a Chinese bank to extend its operations to the euro zone.