Shanghai Pudong Development Bank (SPD Bank) late Wednesday confirmed it was in talks to sell a stake and conduct strategic cooperation with China Mobile Ltd. and its subsidiary.

In a statement filed to the Shanghai Stock Exchange, the mid-sized bank said trading of its shares would remain suspended as plans needed further consideration.

The bank, partly owned by Citigroup Inc, halted trading of its shares on Friday as it announced that it may bring in a new strategic investor.

China Mobile also said in a statement Wednesday that it was in preliminary discussions on a potential subscription of new shares in Pudong Development Bank.

The world's biggest mobile phone operator by number of subscribers said it could not give a timetable of the subscription and the transaction may or may not proceed.

Shanghai Securities News cited a note from Guotai Junan Securities as saying Saturday the SPD Bank would raise about 40 billion yuan (5.86 billion U.S. dollars) through the sale of 2.2 billion shares, or a 20-percent stake, to China Mobile.

Shares of SPD Bank have under-performed recently as investors feared that its low capital adequacy ratio following last year's excessive lending growth could restrict expansion opportunities, the research note said.

The deal would help raise the lender's core capital adequacy ratio by 4 percent to more than 10 percent, it said.

Its core capital adequacy ratio was 6.76 percent at the end of September last year, below the 7 percent required by the China Banking Regulatory Commission. Its capital adequacy ratio was then 10.16 percent, a little over the regulator's bottom line of 10 percent.

She Minhua, an analyst at Haitong Securities, said China Mobile could not only help SPD Bank raise its capital adequacy ratio, but help it achieve strong growth in mobile phone banking.