The Asian Development Bank (ADB) will help reform China's commercial banking sector on the city level by taking a minority stake in Hangzhou City Commercial Bank, an ADB report said on Thursday.

ADB will invest up to 30 million U.S. dollars in Hangzhou City Commercial Bank, one of the leading city commercial banks in China, equivalent to about five percent of the total outstanding shares, the report said, adding that the signing took place in Hangzhou on Thursday.

City commercial banks in China play a vital role in and around the cities they serve, especially in the development of small- and medium-sized enterprises. However, they have to address some significant issues before they can improve, including strategic risk, poor corporate governance, weak risk management, and low capital adequacy ratios

"Through this investment, ADB will be helping Hangzhou City Commercial Bank in developing corporate governance and internal control procedures, as well as in opportunities for commercial cooperation," said ADB Principal Investment Officer William Willms.

Hangzhou City Commercial Bank is the fourth largest commercial bank in Hangzhou, a city that thrives on private sector economy activity, with about 26,000 corporate customers and 1.5 million individual customers, said the report.

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