KARACHI, June 13: The world's second-largest bank--The Industrial and Commercial Bank of China (ICBC) -- has entered into an agreement with the National Bank of Pakistan (NBP) for co-operation in establishing its presence in Pakistan, S. Ali Raza, President of NBP told Dawn on Wednesday.

“A Memorandum of Understanding (MoU) will, hopefully, be signed this month,” said the NBP President in reply to queries regarding reports that ICBC was eyeing Pakistan for extending financial support to Chinese companies investing in the country.He said being a listed company on the Hong Kong Stock Exchange, the Bank had to complete certain formalities before moving forward.

ICBC, with $41 million in assets and 18,000 branches stood out as world’s second largest bank.

A banking sector analyst said chairman of ICBC board, Jiang Jianqing, along with his delegation, had visited the country last week and held meetings, among others, also with Prime Minister, Shaukat Aziz.

“The Chinese banking giant is currently looking into two models,” NBP’s S. Ali Raza says. One choice that ICBC was thinking over was to establish its presence by acquisition of existing banks or opening its own branches and the second option under consideration was to work with the NBP as local currency provider for the bank’s investment in giant infrastructure and other projects.

The NBP President explained that suppose investment in a refinery was to be made up to $150 million; NBP would arrange finances of $100 million of the equity stake to be taken by ICBC.

Banking sector analysts thought that the ICBC may have taken initiative to gain the first mover advantage to be the largest financier to Chinese companies, who would be setting up projects for production of Chinese goods in the Special Economic Zones to be set up near Lahore. The government had expressed its intention to establish such zones, in the federal budget announced last Saturday.