Spanish lender Banco Santander has agreed to buy HSBC’s 8% stake in Bank of Shanghai as part of its strategy to increase its presence in Asia.

The investment is expected to cost Santander €470 million ($646.8 million). The deal also includes a technical and strategic cooperation agreement.

The deal comes at a time when several major US and European banks including Bank of America and Switzerland’s UBS have started shedding their Chinese holdings for a variety of regulatory and business reasons.

"Santander is also developing investment banking activities in China, mainly based on financing the substantial trade flows between the Asian giant and Latin America," Santander said in a statement.

According to Bank of Shanghai’s 2012 earnings statement the bank had 294 outlets and posted a profit of CNY7.5 billion.

HSBC said the sale of the Bank of Shanghai stake was part of a plan to sell off non-core assets, and that the bank remained committed to expanding in China.

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The transaction is subject to regulatory approval and is expected to be completed in the first half of 2014.