UPDATE: Bank Of China: Keen On Chinalco's Rio Deal - Xinhua

Bank of China Ltd. (3988.HK) wants to take part in the financing of Aluminum Corp. of China's US$19.5 billion purchase of Rio Tinto PLC (RTP) assets, the official Xinhua News Agency reported late Friday, citing bank Chairman Xiao Gang.

In an interview with reporters, Xiao said that his bank is less interested in investing in the international financial sector due to risks from the global financial crisis than it is about investing in resources, according to the report.

Investing in overseas scarce minerals right now is more appropriate than purchasing financial institutions and, due to the financial crisis, prices are relatively suitable, Xiao was cited as saying.

He said a deal like Chinalco's means the cashflow is very stable and the returns are visible, making it a good investment opportunity, which Bank of China wants to actively take part in.

Xiao said Temasek Holdings Pte. Ltd., which owns 4.13% of his bank, has pledged not to sell its holding at least in the first half of this year, Xinhua reported.

Royal Bank of Scotland Group PLC (RBS) earlier this year sold its entire 4.3% holding in Bank of China to shore up its capital amid the global financial crisis.

The Xinhua report said that top executives from Royal Bank of Scotland would be visiting Beijing next week and would meet with Bank of China.

In talking about Bank of China's investment outlook, Xiao was cited as saying the lender would invest or acquire other banks to expand its operations, rather than purely seeking a financial return, so it would be looking for an equal control or controlling interest in its target.

He said his bank isn't interested in taking part in HSBC Holdings PLC's (HBC) recently announced GBP12.5 billion rights issue nor would it bid for cash- strapped insurer American International Group Inc.'s (AIG) Asian assets.

In discussing AIG, Xiao said acquiring American International Assurance Co., AIG's Asian unit, wouldn't conform to Bank of China's business strategy.

Xiao said that Bank of China's deal to buy a 20% stake in French private bank La Compagnie Financiere Edmond de Rothschild, announced in September, is still undergoing regulatory review, according to the report.

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