Vneshtorgbank, one of the largest Russian banks, plans to set up its first Chinese branch in Shanghai next year, the bank's top official said yesterday.

Andrey Kostin, chairman and chief executive officer of Vneshtorgbank told Xinhua in Beijing the Shanghai branch will also become the first Russian bank branch in China since 1917.

"We hope to win the approval from the Chinese regulators this year and open for business next year." said Kostin.

The China Banking Regulatory Commission said it will respond to the Russian bank's application "actively" as soon as possible.

According to Kostin, his bank's Shanghai branch will be largely involved in settlement, trade financing and loans in the first couple of years.

By 2010, the branch's assets are expected to reach 1 billion U.S. dollars, he said.

The Beijing office of Vneshtorgbank was set up 15 years ago and the bank plans to set up another office in northeast China's Shenyang City next year. It plans to develop the two offices into branches, Kostin said.

Kostin said Vneshtorgbank is willing to cooperate with Chinese banks in various segments, especially in high-tech and trade financing.

Under China's WTO commitment, China will fully open its banking sector to foreign banks by the end of this year.

Kostin said Vneshtorgbank will follow closely changes in China's banking sector and start local currency business serving Chinese individuals at a proper time.

The CBRC demands a foreign bank branch stay in the black for two straight years before applying for the yuan business.

China and Russia witnessed fast growth in bilateral trade and close economic cooperation over the past years.

Two-way trade reached 29.1 billion U.S. dollars in 2005, and 24.64 billion dollars in the first nine months of the year, up 18.8 percent year-on-year, Chinese official statistics show.