China Huijin Investments, which controls 78.15 percent of the Bank of China, has indicated it is not happy with the involvement of the Singaporean government investment vehicle, the South China Morning Post in Hong Kong reported.
"Huijin is BOC's major shareholder and at present it does not agree with Temasek becoming a strategic investor," the SCMP quoted a senior China Banking Regulatory Commission official as saying.
Under a deal announced in early September, Temasek was to have acquired a 10 percent stake in Bank of China for some 3.1 billion US dollars, with the accord seen as a major agreement to help in the bank's planned listing next year.
The SCMP report cited the respected Caijing business magazine as saying that the eight-man board of Huijin, the Chinese government's own investment vehicle which manages its holdings in the 'big four' banks, had voted down the proposal due to a number of reservations over the extent of Temasek's investments in China, including in other banks.
The SCMP report coincided with comments by Bank of China president A Li Lihui in the Financial Times against criticism of the Temasek deal and the bank's other planned partnership with British lender the Royal Bank of Scotland.
He told the Financial Times newspaper in Hong Kong that the involvement of the two would help with an overhaul of the bank's systems and operations ahead of its planned flotation next year.
"Temasek has been quite successful in making investments in a number of countries and have been instrumental in reforming and renewing banks that have been slightly problem-ridden," Li said in the Financial Times report.
"RBS is a very famous and very well run European bank," he added. RBS has agreed to pay 1.6 billion US dollars for a 5.1 percent stake in Bank of China.
Li said the deals - along with a 2.0-percent stake sought by UBS and the Asian Development Bank - would be the only ones with overseas investors and that they were "in line with international best practices."
The Bank of China hopes to raise some eight billion US dollars when it floats and Li told the Financial Tines that it had met its pre-listing targets, including slashing its bad loan ratio to 5.12 percent.