China's BoCom to buy securities firm stake -sources

SHANGHAI Jan 16 (Reuters) - China's Bank of Communications (601328.SS) plans to buy a stake in a local securities house as the country's fifth-biggest bank seeks to transform itself into a full-service financial conglomerate, two sources close to the situation said on Wednesday.

Bank of Communications Trust and Investment Co, in which Bank of Communications (3328.HK) holds an 85 percent stake, is in talks to buy as much as 33 percent of Fortune Securities Co, said the sources, who declined to be identified because they were not authorised to speak to the media before a deal was reached.

Hunan-based Fortune Securities, known as Caifu Securities in Chinese, is not related to Shanghai-based Huaxin Securities, whose company name is also Fortune Securities in English.

Wall Street bank Morgan Stanley (MS.N) signed a strategic cooperation pact late last year with Shanghai-based China Fortune Securities, which is controlled by several Shanghai firms.

The partners are seeking Beijing's support to set up an investment banking joint venture, Reuters reported on Dec. 7. (For details: [ID:nSHA89513])

Chinese commercial banks are not allowed to invest in the domestic brokerage sector, according to current Chinese banking rules, but trust firms are allowed to and many have already become partners of Chinese brokerages.

If the deal is successful, it would make Bank of Communications the first domestic commercial bank to invest in a Chinese brokerage, albeit indirectly.

HSBC Holdings Plc (HSBA.L) (0005.HK) holds a roughly 19 percent stake of Bank of Communications, and HSBC has repeatedly said it is interested in China's brokerage sector.

A Bank of Communications spokeswoman declined to comment while Hunan-based Fortune Securities could not immediately be reached for comment. (Reporting by George Chen; Editing by Anne Marie Roantree)