A statement on the Hong Kong stock exchange yesterday said the investment is geared towards diversifying Bank of China Hong Kong Group's portfolio.
The shares were not purchased directly from the rival bank but through an independent third party and all of the money for the deal will come from Bank of China's internal resources
Despite the deal, Bank of China will be a sleeping and silent partner, with neither board representation on BEA nor say in its operation, but rather both banks will continue to be run independently.
Bank of East Asia is currently the largest independent regional bank in Hong Kong and its chairman and chief executive is David Li.
New businesses from BEA including fund management, credit cards and private banking are expected to be launched in China in 2008.