OCBC Bank is stepping up its aggressive push into the Greater China market.

Even as it negotiates to buy a Hong Kong bank stake that could cost over $5 billion, it unveiled a $383 million investment to bolster its position on the mainland.

Singapore's second-largest lender said yesterday that it has entered into a deal to raise its stake in China's Bank of Ningbo from 15.34 per cent to 20 per cent.

It will do so by subscribing to up to 207.5 million new ordinary shares in the Shenzhen-listed bank through a private placement at 8.85 yuan apiece.

The investment will cost about 1.8 billion yuan, or S$383 million, and will be funded through internal resources, OCBC said.

OCBC chief financial officer Darren Tan said in a statement that the partnership with Bank of Ningbo has been a "strategically important" one for the bank since 2006, enabling it to reap significant benefits.

"In particular, the partnership has been instrumental in enabling us to gain deeper insights into the Chinese market, and has resulted in collaboration in many areas such as product, business and talent development," he said in a statement yesterday.

"We remain confident in the long-term growth prospects of Bank of Ningbo and the Chinese market, and believe that our partnership will continue to be mutually beneficial."

Bank of Ningbo has a market value of about $5.5 billion and a nationwide network of 200 branches and sub-branches, covering 10 cities, including Ningbo, Suzhou, Shanghai, Shenzhen and Beijing.

OCBC's increased shareholding in Bank of Ningbo is consistent with its long-term strategy of deepening its presence in its core overseas markets of Malaysia, Indonesia and Greater China, Mr Tan added.

"China's growing connectivity with the region and the rest of the world, in terms of trade, wealth and capital flows, and the increasing internationalisation of its currency translate into excellent prospects for OCBC to grow and develop our business there."

Indeed, this strategy is also driving OCBC's pursuit of a stake in Hong Kong's Wing Hang Bank.

The bank said last Monday that it was in exclusive talks with the major shareholders of Wing Hang, the Fung family and BNY International Financing Corp, to buy over their combined 45 per cent stake.

If successful, the deal is expected to cost OCBC about $5.8 billion, or 1.7 times Wing Hang Bank's 2013 estimated book value.

Investors have punished OCBC shares amid concerns that the bank will have to raise capital to fund the deal and in the process dilute their shareholdings.

This additional investment in Bank of Ningbo seems to have further fanned those flames - yesterday, OCBC shares fell three cents to a one-year low of $9.70.

But Fitch Ratings senior director Ambreesh Srivastava said OCBC had likely weighed the pros and cons and determined that this was a good opportunity.

"Whether or not they had raised their stake in Bank of Ningbo, if the Wing Hang deal does come through, OCBC would have to raise funds anyway so in the overall scheme of things, $383 million is not very significant.

"Furthermore, they have been in partnership with Bank of Ningbo for seven years already so by now they would know if it is a good investment, and it is not often that you get a chance to raise your stake in a Chinese bank."