Germany's biggest bank, Deutsche Bank, has signed an agreement to buy a close to 10 percent stake in the Bank of China.

The Beijing Times quoted sources at the Bank of China as saying that Deutsche Bank would become the second largest foreign shareholder of the Chinese bank after the deal.

The report also said the Bank plans to sell up to 25 percent of its shares to outside investors by the end of 2004.

Two of the country's big four state-owned commercial banks, the Bank of China and China Construction Bank, were selected by the central government in late 2003 to take ambitious reforms of the state-run banking sector.

Both banks are undergoing a restructuring process and introducing foreign strategic investors in preparation for a global stock offering in 2005.

The Bank of China previously said it would disclose the list of foreign investors around the end of 2004.