BOC, Temasek join hands

BEIJING - Bank of China Ltd (BOC) and Temasek Holdings Pte may invest as much as 20 billion yuan ($2.9 billion) to build a rural-banking business in China, said two people with knowledge of the matter.

The companies are in talks about setting up as many as 400 rural banks, the people said, declining to be identified because the discussions are private. Bank of China, the country's third-largest lender by market value, would own a controlling stake in the joint venture, they said.

Bank of China, which pulled out of rural banking in the late 1990s, is returning to a market that's attracted HSBC Holdings Plc and Citigroup Inc as the government pushes to improve the living conditions of China's 700 million rural dwellers. The majority of the 118 countryside lenders set up since 2006 had become profitable by June 30, according to the China Banking Regulatory Commission.