SHANGHAI, April 1 (Reuters) - Bank of China, the country's third-biggest lender by market value, said on Thursday it planned to invest up to 6 billion yuan ($878 million) in a state-owned firm building a high-speed railway linking Shanghai and Beijing.
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It said its Hong Kong-based unit, Bank of China Group Investment Ltd, has agreed to buy a 4.5 percent stake in Beijing-Shanghai High-Speed Railway Co using foreign currencies, "The investment is expected to generate reasonable return and will help the bank diversify its services," the Beijing-based lender said in a statement to the Shanghai Stock Exchange.
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"It will also help the bank win more businesses in China's large-scale railway investment and construction, which is in line with our development strategy."
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China last year unveiled a $586 billion, infrastructure-focused stimulus package that boosted railway investment by 67 percent in 2009. Beijing will continue to boost railway investment, which had lagged economic growth in the past decade.
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Planned investment in the 1,318-kilometre-long high-speed railway linking Beijing and Shanghai totals 220.9 billion yuan. The project, which started in April, 2008, will be completed within five years.
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Bank of China and state rivals such as China Construction Bank and Bank of Communications benefited from a government-directed lending spree last year aimed at reviving the economy, but they they plan to curb expansion in 2010 as Beijing starts to tighten monetary policies.
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Bank of China Group Investment is buying the stake from China Railway Investment Corp. The deal is yet to be approved by regulators, according to Thursday's statement.
