Chinese and U.S. regulators are negotiating a pact aimed at encouraging Chinese financial institutions to buy into small and medium-sized banks in the United States, bankers briefed on the plan told Reuters today.

Two senior Chinese bankers said they had been invited this year by U.S. officials, investment bankers and financial advisers to look at several potential investments in U.S. banks, mostly in financial trouble.

“The trend is already there,” said one Chinese banker. “Now they’re going to make this into an agreement to show there’s a change in official attitude toward Chinese investments in the U.S. banking system,” said the banker, who declined to be identified due to the sensitive nature of the matter.

Chinese bankers have complained that it’s been difficult for them to set up branches or invest in American banks.due partly to U.S. regulators’ tough supervision and strict approval process for financial deals.

But the global financial landscape has been revamped by the credit crisis, and cash-rich Chinese banks are now bigger players on the world scene and are scouting around for investment targets. For instance, Industrial and Commercial Bank of China is now the world’s biggest bank by market value, while Citigroup Inc, once the world’s No.1 bank, is worth the same as a second-tier commercial bank in China.

A Sino-U.S. memorandum of understanding (MOU) to encourage Chinese banks to invest in U.S. lenders is in the making, and China’s banking regulator has sought feedback from big domestic banks, bankers told Reuters.

The MOU would be part of a new strategic framework that ranges from climate change to international cooperation, Hong Kong’s South China Morning Post reported today..

The hope is to announce a deal during President Barack Obama’s current visit to China, the newspaper said, citing unnamed mainland bankers briefed on the matter.