LITTLE more than 18 months ago, Australian banks such as market leader Commonwealth Bank and ANZ were aggressively expanding into China and being welcomed as significant investors in the country's relatively young, though fast-developing financial institutions.

Yesterday, one of the offshoots of a sector that has access to the equivalent of $1.66 billion in foreign exchange reserves showed that there are two sides to an investment "partnership", when it emerged as a shareholder in Australia's three largest domestic banks.

Industry sources confirmed a report by the Financial Times in London that China's State Administration of Foreign Exchange had acquired through a Hong Kong subsidiary, SAFE Investment Company, small parcels of shares in ANZ, Commonwealth and National Australia Bank.

It is believed SAFE has invested the equivalent of several hundred million Australian dollars purchasing stakes of less than 1% in each of the bank's share capital, seeking to get a better return on its money than it could on local currency markets.

In the case of ANZ, the most active and biggest investor of the domestic banks in the Chinese financial services industry, it is believed that SAFE recently bought $200 million of shares — about 0.3% of the issued stock.

ANZ is capitalised at more than $52.4 billion, so SAFE's investment is tiny compared with the shareholdings of the major institutions and superannuation funds, which make up a significant proportion of the bank's register.

For Commonwealth and NAB, which are valued at $76 billion and $60 billion respectively, SAFE's share buying has been on a proportionally smaller scale — although the Chinese buyer is not obliged to publicly disclose the size of its investments until they get above the 3% mark.

Neither ANZ, Commonwealth or NAB were in a position to comment yesterday on the identity of their new shareholder or the precise scale of its investments.

However, recently appointed ANZ chief executive Michael Smith, a banker well known in Asian business circles through his previous employment with HSBC, revealed a few weeks ago that the bank had gained its first mainland Chinese shareholder, but did not disclose the name.

"We've seen these reports for a while now, and there may be some credence to them given that we know China is actively promoting a policy of overseas investment," said Shane Oliver, who helps manage the equivalent of $113 billion at AMP Capital Investors in Sydney.

"It seems to be more of a portfolio stake rather than a strategic move to influence the businesses of these companies," he said.

With BLOOMBERG