Deutsche Bank is set to become the largest shareholder in China's Huaxia Bank after agreeing to increase its stake in the mid-sized lender to 17.12 percent, the Chinese bank said Thursday.

Deutsche Bank will buy 171.2 million shares, or a 3.43 percent stake, from German private investment firm Sal Oppenheim Jr and Cie for 81.6 million euros (S$168.4 million), Huaxia said in a statement to the Shanghai Stock Exchange.

After the deal is completed, Deutsche Bank, which currently owns 13.69 percent of Huaxia Bank, will overtake state-run steel maker Shougang Group as the Chinese lender's largest shareholder.

The stake a single foreign investor can hold in a Chinese bank is capped at 20 percent while combined foreign ownership must not exceed 25 percent, according to Chinese regulations.

Although foreign banks have little influence in large state-run lenders in China, they have a relatively stronger foothold in small and mid-sized banks.

Deutsche Bank, Germany's largest bank, also has a 30 percent stake in Harvest Fund Management Co, China's second-biggest asset manager and holds a 33 percent stake in Zhong De Securities, a joint venture with Chinese brokerage Shanxi Securities.