UPDATE 3-China's ICBC, others buying more than 17.3% pct stake in troubled Bank of Jinzhou

* ICBC and Cinda to take a combined 17.3% stake in Bank of Jinzhou

* China Great Wall Asset Management also to take undisclosed stake

* Move shows latest state-led bid to rescue indebted smaller banks

* Bank of Jinzhou suspended trade in its shares earlier this year (Adds China Great Wall Asset Management statement)

BEIJING, July 28 (Reuters) - China’s Bank of Jinzhou won government-backed reinforcement on Sunday as three state-controlled financial institutions said they would take at least 17.3% in the troubled lender, whose shares have been suspended since April.

Industrial and Commercial Bank of China (ICBC) , the country’s largest lender by assets, and China Cinda Asset Management and China Great Wall Asset Management, two of China’s four largest distressed debt managers, said on Sunday they would take stakes in Bank of Jinzhou.

Concern has been growing about the bank since the Hong Kong-listed lender suspended trading in its shares earlier this year and saw its auditor quit. It said on Thursday it was in talks with multiple parties for possible investments.

ICBC’s ICBC Financial Asset Investment Co unit signed an equity transfer agreement to invest up to 3 billion yuan ($436 million) in a 10.82% stake of Bank of Jinzhou, it said in a statement filed to the Shanghai Stock Exchange.

Hours after the state lender’s announcement, Cinda said in a statement to the Hong Kong Stock Exchange that its wholly owned Cinda Investment Co would invest in a 6.49% stake in Bank of Jinzhou, though it didn’t give the value of the deal.

China Great Wall also said it would take a stake in Bank of Jinzhou, according to a statement sent to Reuters. It did not elaborate on the value of the deal or the size of the stake.

The investments come as regulators look to diversify their approach to supporting highly indebted smaller banks and contain financial risks.

China’s banking and insurance regulator has told the country’s biggest distressed debt managers to prepare contingency plans to take over or invest in high-risk small and medium-sized Chinese banks, Reuters reported on Friday.

“The investment is to serve country’s supply-side reform in the financial sector and enhance the bank’s capability to serve the real economy,” the ICBC said in its statement. The deal will be conducted with the unit’s own funds, ICBC added.

In May, a shock government-led takeover of little-known Baoshang Bank revived concern about the health of hundreds of small lenders as the slowing economy results in more sour loans, testing their capital buffers and draining their reserves.

“For Baoshang Bank, the government took a state takeover, while for Bank of Jinzhou, the government introduced some state-owned strategic investors,” said Dai Zhifeng, analyst with Zhongtai Securities Co.

“The latter approach is more market-oriented and showcased the determination of regulators to resolve problematic banks, while injecting confidence into the market,” Dai said.

$1 = 6.8785 Chinese yuan renminbi Reporting by Cheng Leng, additional reporting by Cate Cadell and Li Zheng Editing by Robert Birsel, David Holmes and Dale Hudson