UPDATE 1-China's ICBC to buy 70 pct of HK bank's Canada unit

*ICBC to pay $73 million for 70 pct stake

*Bank of East Asia to buy out ICBC in ICEA Finance JV (Adds analyst quotes, background)

SHANGHAI/HONG KONG June 4 (Reuters) - Industrial and Commercial Bank of China (ICBC) 1398.HK, the world's largest bank by market value, said on Thursday it would purchase 70 percent of Bank of East Asia's 0023.HK Canadian unit, as it takes steps to expand overseas.

Under the deal, ICBC 601398.SS will pay HK$567 million ($73 million) for the stake, the two banks said in a statement to the Hong Kong stock exchange.

They also said that Hong Kong-based Bank of East Asia would buy out ICBC in ICEA Finance, their Hong Kong joint venture. In that deal, Bank of East Asia, which already holds 25 percent of the venture, would pay HK$372 million for the 75 percent in the venture held by ICBC, the companies said.

“We are selling the stake to ICBC because they have lots of customers, so this will enlarge the pie,” Bank of East Asia Deputy Chief Executive Samson Li said.

The deal is one of just a handful of major overseas purchases so far for ICBC. The bank previously paid about $5.6 billion for a 20 percent stake of South Africa's Standard Bank SBKJ.J.

“Chinese lenders are eager to expand overseas at a time when western banks are shrinking their business,” said Jin Lin, analyst at Everbright Securities Co. “ICBC and Bank of East Asia share a similar culture, which would make consolidation easier.”

The Bank of East Asia purchase comes even as Chinese regulators have taken a stricter stance on overseas acquisitions by major financial institutions since Ping An's 601318.SS failed investment in Belgian-Dutch firm Fortis NV FOR.BR and China Investment Corp's high-profile losses on stakes in Blackstone BX.N and Morgan Stanley MS.N.

In April, Bank of China 3988.HK601988.SS dropped a planned $336.6 million investment in French bank La Compagnie Financiere Edmond de Rothschild after failing to get regulatory approval.[ID:nSHA258048]

The last foreign bank purchase to get regulatory approval was China Merchants Bank's 600036.SS acquisition of Hong Kong's Wing Lung Bank Ltd last year. (Additional reporting by Samuel Shen; Editing by Rupert Winchester)