Bank of America is planning to establish a wholly owned unit in China, in a bid to tap the country's flourishing wealth management and banking industry, unnamed sources told Reuters.

The same people, who declined to be identified as an official announcement has yet to be made, said that the US bank is preparing to incorporate with a Chinese partner and is likely to file for a local partner with Chinese regulators in the next few months.

Since BoA bought Merrill Lynch in a deal that was completed at the start of this year, the combined group has leapfrogged UBS to become the world’s biggest wealth manager by assets, although the Swiss firm arguably remains the world’s top international player, as BoA/Merrill is currently a predominantly domestic firm.

The range of businesses Bank of America can adopt, particularly in the retail front, is limited by the bank's current strategic partnership with China Construction Bank, which offers mostly retail banking services, the news service said.

The sources told the news service, however, that it could initially focus on its wealth management products and target China's high net worth market under its existing Merrill Lynch brand in the country. Bank of America took over Merrill Lynch in January this year.

Under the current joint venture laws in China, foreign banks can own just 33.3 per cent of the venture, with majority holdings to be placed in Chinese hands.