UPDATE 1-StanChart to add dealers in China for a bigger role

* StanChart to increase China dealers to 130 from 80

* StanChart applies to underwrite corporate bonds in China

* StanChart aims to become China bond market maker (Adds more details, background)

By Clare Jim and Samuel Shen

SHANGHAI, Sept 17 (Reuters) - Standard Chartered Bank plans to increase the number of dealers in China by about two-thirds in three to four years, as the Asia-focused British lender seeks a bigger role in the country's fast-growing bond and foreign exchange market, a senior executive said on Thursday.

StanChart (2888.HK) (STAN.L) plans to expand staff in its Shanghai dealing room to 130 from 80 currently, and is seeking regulatory approval to become a bond market maker in China as well as an underwriter of Chinese corporate debt, China head of global markets John Tan told Reuters.

"China's nascent bond market will be much, much bigger in size in the next three to five years. This is a very important market for us," Tan said in an interview in Shanghai.

Foreign banks including StanChart, Citigroup Inc (C.N) and HSBC Holdings Plc (HSBA.L) (0005.HK) are seeking opportunities in China's fledgling capital markets, as the government encourages bond sales to reduce the economy's reliance on bank lending.

China has allowed foreign banks to act as market makers in the country's interbank bond market and sell yuan-denominated bonds in Hong Kong and mainland China. The government will soon let them underwrite corporate bonds and conduct initial public offerings in Shanghai.

StanChart aims to become one of China's first foreign banks allowed to underwrite corporate bonds, part of efforts to meet growing demand from clients to tap capital markets, Tan said.

The lender is also seeking approval to act as a bond market marker, a role which would broaden StanChart's access to a variety of yuan-denominated fixed-income products. Rivals Citi and JPMorgan Chase (JPM.N) have already been granted such a licence.

To support expansion, StanChart China, already one of the biggest foreign lenders in the country, has this year expanded its capital base, Tan said.

The move comes amid the bank's other fund-raising plans. StanChart in June unveiled plans to raise up to 3.5 billion yuan ($512.5 million) selling yuan-denominated bonds in China.

Group Chief Executive Peter Sands said on Sept. 14 that StanChart will look into alternative listing options, when asked whether the lender would consider an IPO in Shanghai, joining HSBC and Bank of East Asia (0023.HK). (US$1=6.832 Yuan)