Canada's Scotia eyes bigger stake in Chinese bank

A customer walks into the Scotiabank on Spring Garden road in Halifax, Nova Scotia in this March 3, 2009 file photo.

BEIJING (Reuters) - Bank of Nova Scotia (BNS.TO) hopes to raise its stake in Xi'an City Commercial Bank by the end of the year to close to 20 percent from 1.3 percent now, an executive at the Canadian lender said on Wednesday.

Scotia is aiming to increase its stake as part of a capital restructuring by the Chinese bank, which is headquartered in Xi'an, capital of the northwestern province of Shaanxi.

"We've had good discussions with our partners and regulators and, in line with the subscription agreements we initially signed back in 2004, we hope by the end of the year progress will be made to see our stake increase in the bank," Brendan King, Scotia's vice-president for Greater China, told Reuters.

A single foreign investor may own no more than 20 percent of a Chinese bank. Total foreign investment is capped at 25 percent.

"Other banks have gone up to the legal maximum -- 19-20 percent -- and that's an area that would certainly be a goal of ours," King said on the sidelines of a Canadian financial forum in Beijing.

Bank of Nova Scotia made its initial investment alongside the International Finance Corp, the private-sector arm of the World Bank, but King indicated that it alone would hold the increased stake.

King has a seat on the board of Xi'an City Commercial Bank, one of more than 100 city banks in China, which together hold about 6.5 percent of total banking assets. (Reporting by Simon Rabinovitch; Writing by Alan Wheatley; Editing by Muralikumar Anantharaman)