Goldman Sachs, Allianz and American Express agreed yesterday to invest $3.78 billion (€3.12 billion) in Industrial and Commercial Bank of China (ICBC), the country's largest bank, in the latest foreign bet on China's financial services sector.

In a joint statement, the companies said a deal had been signed, but they did not confirm reports that the trio had taken a 10 per cent stake in ICBC, which has about 20 per cent of China's banking market. The transaction is expected to be completed in May.

Goldman Sachs, in a filing with the US Securities and Exchange Commissions (SEC) yesterday, said it agreed to invest $2.58 billion for a 7 per cent stake. Subsequently, investment funds managed by Goldman will assume a substantial portion of that stake.

Allianz, the German insurance giant, said it was paying $1 billion for a 2.5 per cent stake. That confirmed information provided earlier by a banking source, who said Goldman would invest about $2.58 billion for a 7 per cent stake and American Express, the big US credit cards and travel services company, would chip in about $200 million.

Under the agreement, Goldman said it is restricted from selling its ICBC shares for three years. The final price will be based on ICBC's book value on December 31st.

The deal, which will give the Goldman-led group one seat on ICBC's board, sets the stage for the bank to sell shares to the public in the second half of this year or in early 2007.

ICBC has around 18,000 branches and offices, serving over 100 million retail customers and four million corporate clients.

Goldman said it also agreed to help ICBC to improve its risk management and internal controls, beef up treasury, asset management and investment banking operations and advise on bad-loan disposals. The non-exclusive agreement extends over five years.