A Citigroup (C)-led consortium has won the right to buy 85 percent of China's Guangdong Development Bank for $3.2 billion, beating rival groups led by ABN AMRO and Societe Generale, three sources close to the deal said.

The purchase would grant the world's top financial services company unusually large influence over a single medium-sized Chinese lender, at a time when local interests complain that foreign firms are acquiring stakes in Chinese banks on the cheap.

Six officials from the bank regulator, the central bank and the Guangdong provincial government made their decision during a closed-door meeting at Guangdong Bank's headquarters in Guangzhou late on Thursday, a source close to the Chinese bank and a second source familiar with the deal told Reuters on Thursday.

Bidders had been informed of the group's decision in Beijing on Friday, which now awaited final cabinet approval, said a third source who attended meetings in the capital aimed at briefing the parties involved.

The six-person group would submit minutes of Friday's meeting to the cabinet, or State Council, within days.

Citigroup will kick off exclusive negotiations with Guangdong Bank as early as next week on technical areas including staff benefits, IT support and new management, two sources said.

"Unless the exclusive negotiations fail unexpectedly, or the cabinet refuses to approve the deal, there's no longer any chance for other bidders," a senior executive close to Guangdong Bank told Reuters on condition of anonymity.

The Citigroup-led consortium includes major state-owned firms, including China National Cereals, Oils & Foodstuffs Corp., and at least one foreign investor, the second source said.

Citigroup aims to take nearly 50 percent of the bank, with the remainder going to its partners, all three sources said.

"Citigroup will take some board seats and have the right to appoint both the new chairman and president," the senior executive added. "And the bank will list shares eventually."

Citigroup and Societe Generale declined to comment on Friday. ABN AMRO officials were not immediately available for comment.

The meeting dragged on into the evening on Friday, as officials and banking executives pored over a final document that would be sent to the cabinet. A source familiar with the proceedings said the only way Citigroup would now fail would be if the cabinet vetoed the deal.

Beijing, struggling to clean up a banking sector saddled with $200 billion in sour debt, is pushing local lenders to seek foreign capital and expertise. Overseas investors want access to the $1.7 trillion in personal savings and a booming consumer credit sector that is still in its infancy.

Citigroup is trying to catch rivals with bigger investment footprints in China such as HSBC Holdings Plc and Bank of America Corp. (BAC).

It plans also to quadruple its 4.62 percent stake in Shanghai-listed Pudong Development Bank, which has agreed to waive exclusivity agreements with the U.S. firm and cleared the way for Citi's second investment in a Chinese lender.

Foreign lenders are now allowed to own 20 percent singly or 25 percent collectively of a Chinese bank, but are lobbying for restrictions to be eased. Citigroup's deal would thus require special permission from the State Council.

Partly because of that, Citigroup would buy its Guangdong Bank stake at more than twice book value -- more expensive than China Construction Bank's $9.2 billion IPO this year that was priced at slightly below two times book value.

"The price looks high but it's still a small dish for Citigroup," said Wu Yonggang, senior analyst with Guotai Junan Securities Co.

Analysts said Guangdong Bank, with nearly 500 branches concentrated in booming southern China, attracted heavy international interest because it was one of the last sizeable Chinese banks without a foreign partner.

"After the deal, there will be almost no more big ideal banking targets left," Wu said.

The six-person evaluating group comprised two people from the central bank, two from the China Banking Regulatory Commission and two from the Guangdong provincial government, both of whom supported Citigroup's bid during the meeting.

Citigroup, ABN AMRO and Societe Generale were finalists from an initial group of 20 candidates. DBS Group Holdings Ltd. had also been favored but dropped out of the bidding.

ABN AMRO teamed up with China's second-largest life insurer, Ping An Insurance, months ago. But the Dutch lender decided to quit the alliance over unspecified disagreements, leaving Ping An a solitary bidder, sources said.

"Ping An and SocGen will be 'back-up' choices ... in case Citigroup fails," the third source said.

Guangdong Bank was once considered one of the most financially shaky of the country's commercial banks but it is also the second-largest lender in the affluent southern province.

Sources said the bank will be transformed into "a new and clean bank," aiming for a capital-adequacy ratio of more than 9 percent in two years, versus nearly 23 percent at the end of 2003.