ING Groep NV Friday disclosed the purchase of a 19.9% stake in Bank of Beijing for 1.78 billion yuan ($215.1 million or €165.4 million), as foreign banks compete to buy into the fast-growing Chinese market.

At the same time, the World Bank’s investment branch, International Finance Corp., intends to acquire a 5% stake in the bank, ING and the Chinese bank said. Details of the IFC deal weren’t revealed, though a person familiar with the matter told Dow Jones Newswires that IFC is purchasing the stake for 447 million yuan.

These deals together will bring more than two billion yuan to the lender and increase foreign shareholding to just under 25%.

Bank of Beijing, with assets of about 200 billion yuan and 116 branches, is one of the most appealing China’s city banks. Its prominent position in the Chinese capital, which will host the 2008 Olympic Games, makes it a particularly attractive target. The bank is one of China’s more than 100 city banks. Originating from urban credit cooperatives, the city banks created in the 1990’s have been used to promote local government enterprises, the situation which will change with the entrance of foreign stakeholders, regulators say.

Foreign banks are examining acquisition opportunities in China, attracted by lending opportunities in the country’s rapidly growing economy -- though they still remain careful because of high bad-debt levels and poor risk-management systems. HSBC Holdings PLC last year bought a 19.9% stake in Bank of Communications for $1.7 billion. Standard Chartered PLC last year acquired a similar stake in Bohai Bank. Though an individual foreign investor can’t possess 20% or more of a Chinese bank, and total foreign shareholdings may not exceed 25%, according to the Wall Street Journal.

Banking analysts say European banks have enough capacity to make investment in China due to their recent experience acquired developing business in Eastern Europe.