Bank of China (BOC), the country's largest foreign exchange bank, plans to further expand its business in Japan and South Korea by increasing its co-operation with major commercial banks in the two countries.

The bank signed a memorandum of understanding for co-operation with Japan's Sumitomo Mitsui Banking Corporation and South Korea's Korea Exchange Bank in Seoul on Monday, confirmed BOC senior official Du Chaohua.

Under the co-operation agreement, the three sides will provide preferential services for each other in the businesses of remittance, international trade settlement and foreign exchange, Du said.

The three sides will also provide training opportunities and exchange business information, he said.

Meanwhile, the high-level leaders of the three banks will meet regularly to discuss topics of common concern, he said.

"The move is aimed at further promoting economic co-operation among the three countries," he said.

Huang Jinlao, a researcher with BOC's International Financial Research Institute, said the signing of the agreement is merely a normal business activity. But it suggests BOC is gradually trying to become an international bank.

BOC spokesman Wang Zhaowen said that since 2000, the bank has mapped out an ambitious plan to turn itself into a large international bank with competitive advantages and relatively good corporate governance within three to five years.

The bank would further grow into one of the top international banks through mergers and acquisition within five to 10 years, he said.

Earlier this year, Wang said the bank tried to get listed on the stock markets before 2005.

During the first half of this year, BOC reported operating profits rose a year-on-year 27 per cent to 27 billion yuan (US$3.2 billion). The bank's pre-tax profits rose by 84.53 per cent year-on-year to 12.96 billion yuan (US$1.56 billion).

He said the strong profit growth was mainly because of the fast growth in renminbi deposits, renminbi loans and non-interest business, and the improvement of asset quality.

By the end of June, the bank's outstanding amount of renminbi deposits increased by 208.97 billion yuan (US$25.2 billion) compared with the end of last year.

The outstanding amount of renminbi loans increased by 165.4 billion yuan (US$19.9 billion) from the end of last year.

(HK Edition 08/21/2003 page7)