Bank of China and Temasek’s joint banking venture will open its first two China branches in January, a source close to the situation said on Wednesday, posing competition for another joint venture, between AgBank and Standard Chartered .

The branch opening marks the latest effort by Singapore’s sovereign wealth fund, Temasek Holdings, to tap China’s solid growth by seeking opportunities to develop the mainland’s rural economy.

 

“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 tie-up, called “BOC Fullerton Village Bank” in Mandarin, would raise its headcount to 14,000 over the next few years from a workforce of 100 now, said the source, who had direct knowledge of the matter but who is not authorized to speak to the media.

 

It also plans to establish a 400-branch network across China in provinces such as Hubei and Jiangsu over the longer term, after receiving licenses from authorities to open 30-50 branches, the source said. The first two will be located in Hubei.

 

A Temasek spokesman declined to comment.

 

The branch opening will challenge the sector’s leader, Agricultural Bank of China.

 

“AgBank will be a major rival for us,” said the source.

 

AgBank and Standard Chartered <2888.HK> earlier this week deepened a strategic alliance under which the two plan to set up a joint venture. 

 

CEO Francis Rozario of Fullerton Financial, a wholly owned Temasek unit, has said that Fullerton and Bank of China plan to set up 40 pilot branches across China, including 3-5 in Jilin. 

 

Bank of East Asia <0023.HK> said in July that it had received permission to open its first village bank on the mainland. Village banks are rural financial institutions that are licensed to collect deposits and provide small loans.