Bank of America Friday signed a $2.5 billion deal to buy a nine percent stake in China Construction Bank (CCB), the largest investment by a foreign financial investor.

Bank of America earmarked another $500 million for an Initial Public Offering by CCB, China's leading property lender, expected later this year.

Under the agreement, Bank of America has the option to increase its stake to 19.9 percent at the price of the shares in the CCB's IPO, nearing the 20 percent ceiling set by China's banking regulator for investment by a single foreign bank.

Bank of America board chairman Kenneth D. Lewis and China Construction Bank chairman Guo Shuqing signed the deal here.

Guo hailed the deal as a "win-win" situation. Lewis echoed his remarks, saying that the agreement would create long-term benefits for both sides, in view of the fact that China was one of the worlds' fastest growing economies with 1.3 billion consumers.

Bank of America, the third-largest US banking group, will also hold a seat in the CCB's board of directors and send about 50 people to the CCB to provide consultancy services.

China is in the midst of overhauling its state banks ahead of the World Trade Organisation-mandated opening of the financial market to foreign rivals by the end of 2006.

In line with the agreement, Bank of America would provide "strategic assistance" for the CCB in many areas, including corporate governance, risk management, information technology, financial management and human resource management.