Italian banking firm Intesa Sanpaolo has signed an agreement to purchase a 19.99% stake in China's Qingdao City Commercial Bank, for a total consideration of $135 million.

Qingdao City Commercial Bank (QCCB) is located in Shandong, a province that is playing an important role in the growth of the Chinese economy. The city of Qingdao is the province’s main economic centre and QCCB is the second largest bank in the town in terms of branches, with a market share of approximately 6% in deposits and loans.

Under current Chinese regulations, foreign investment in Chinese domestic banks is capped at 25%, with a single foreign investor allowed no more than a 20% stake.

As a result of this transaction, Intesa Sanpaolo will become the first Italian banking institution to make a direct investment in a Chinese bank. Intesa Sanpaolo has been operating in China since 1981, when it opened a representative office in Beijing.

In more recent years, the bank has strengthened business relationships with the country through establishing a joint venture, Shanghai Sino-Italy Business Advisory Company (SIBAC), formed with Simest, a company focused on the promotion of Italian business abroad, and Bank of China.