Bank of China (3988.HK) and Temasek’s (TEM.UL) banking tie-up will open its first two branches in China in January, a source close to the situation said on Wednesday, boding well for the Singapore state investor to tap strong potential in China’s rural areas.

The joint venture, which now has 100 staff, would raise its headcount to 14,000 in the longer term as it plans to establish a 400-branch network across China over the next few years, the source said.

“The opening is consistent with the Chinese government’s policy, which is to allow foreign firms to offer banking services in rural areas,” said the source.

 

The venture, which will target village banking, has received licences from mainland authorities to open 30-50 branches in several provinces including Hubei and Jiangsu. The first two will be located in Hubei, said the source, who asked for anonymity due to the sensitive nature of the matter.

 

A Temasek spokesman declined to comment. 

 

Village banks are rural financial institutions that are licenced to collect deposits and provide small loans.