China's national social security signed the agreement with Bank of China on Wednesday to buy a 3.9 percent stake in the lender for ten billion yuan (1.2 billion dollars), said spokesman Wang Zhaowen .
The social security fund has about 190 billion yuan in funds and was set up in 2000 to take over most of the pension obligations of state-run companies.
A consortium led by the Royal Bank of Scotland, which included Merrill Lynch and Hong Kong-based business tycoon Li Ka-Shing, last year agreed to buy a 10 percent stake in Bank of China for 3.1 billion dollars.
The Bank of China also sold a 5.0 percent stake to Singapore's Temasek Holdings for just over 1.5 billion dollars and Swiss banking group UBS invested 500 million dollars in the Beijing-based lender in an agreement announced in September last year.
The investments come as the Bank of China, the nation's largest foreign currency lender, prepares to list on the Hong Kong stock exhange this year.
It filed preliminary documents last week with the Hong Kong exchange for its H-share offering.