China is opening up its five largest banks to a new round of foreign investments, allowing foreign companies to invest into major banks with higher holdings, Australian officials who visited China recently revealed.

Australian Treasurer Joe Hockey and Treasury Secretary Martin Parkinson, who were in China last week, said it was Zhou Xiaochuan, the country's central bank governor, who first floated the development during their meeting.

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The possible sell-down was also confirmed by Chinese Finance Minister Lou Jiwei and Chairman Xu Shaoshi of the National Development and Reform Commission when Chinese and Australian officials discussed possible areas for investment.

Hockey told reporters the development was encouraging for Australian banks that are looking for ways to further penetrate the Chinese market. He stressed though that the announcement came as a surprise to the Australian delegation.

The country has previously permitted foreign investors to buy into China's major banks - Industrial and Commercial Bank of China (ICBC), Bank of Communications, Agricultural Bank of China, Bank of China and China Construction Bank - although they were only allowed minor stakes.

Parkinson said the Australian delegation was told that China will soon implement changes to foreign investments, particularly in the opportunity to invest into the five largest banks.

"Based on our understanding, what the Chinese officials were saying was that they are going to allow larger institutional stakes," Parkinson told reporters in Beijing.

Rumors about a fresh round of equity sales in the country's top five banks have been circulating since last year but no official confirmations were made until the announcement made by the Australian officials.

The Chinese government currently is the largest shareholders of the top five banks.

Experts said buying into the country's major banks is a lucrative business. In 2006, Goldman Sachs paid USD2.58bn for a 4.9% stake in ICBC. The firm tripled its money after ICBC went public in Hong Kong.

TagsChina Foreign Investment, China bank Investments, China Investments in Major Banks