Morgan Stanley said on Monday it has acquired China's Nan Tung Bank, a deal that would give the Wall Street giant a coveted onshore commercial banking license in China ahead of U.S. investment bank rivals.

The deal, approved by the China Banking Regulatory Commission, allows Morgan Stanley to apply immediately to offer yuan-denominated products. It will also enable the U.S. bank to strengthen its China operation and offer a broader range of products and services.

Morgan Stanley did not disclose what it paid for the Zhuhai-based foreign-funded bank formerly owned by Bank of China subsidiary Nam Tung (Macao) Investment Ltd.

The bank has a single branch with less than 40 employees and is currently only allowed to deal in foreign currencies including the U.S. and Hong Kong dollars.

We want to build the leading, fully integrated financial services firm in China and the acquisition of Nan Tung Bank is another important milestone in our pursuit of that strategy, John Mack, Morgan Stanley's chairman and chief executive, said in a statement.

We are pleased to be the first among our peers to establish an onshore commercial banking platform in China, and believe it will help further strengthen our leadership position in this increasingly important market.

Morgan Stanley's traditional U.S. investment banking rivals including Goldman Sachs, Merrill Lynch and Lehman Brothers do not have licenses for commercial banking in China.

But several other international financial firms do, including Switzerland's Credit Suisse and France's Societe Generale.

Nan Tung Bank currently offers commercial banking products and services in foreign currencies to individual and corporate customers based primarily in the Pearl River Delta region of Guangdong Province.

These include deposits, home mortgage loans, corporate loans, foreign currency exchange and remittances, trade finance and credit facilities.

Morgan Stanley said it planned to use its global strength, industry expertise and multi-product capabilities to grow the business and help develop China's financial sector.

(With additional reporting by George Chen in Shanghai)