Banking News
- 5 foreign banks to issue credit cards
Date: 20-Dec-2007 Sources: (Shenzhen Daily)
CITIGROUP Inc. and four other banks would become the first foreign institutions allowed to issue credit cards on their own in China once they meet regulatory standards, the government said.
Foreign banks are eager for a share of China's booming credit card market as the government lowers regulatory barriers to meet World Trade Organization commitments. Foreign banks have been allowed to issue cards since 2004 but until now were required to work through local partners.
'After they have satisfied technical standards, the banks can officially start bank card services,'said Qi Jianming, a deputy director of the China Banking Regulatory Commission, in comments posted on a government Web site yesterday. He gave no timetable for granting approval.
Credit cards were almost unknown in China in the 1990s, but demand has grown explosively as incomes and consumer spending by its 1.3 billion people rise rapidly.
The number of credit cards in China jumped to more than 40 million last year from fewer than 3 million in 2003, according to the consulting firm McKinsey & Co.
The government is gradually opening the market as it tries to modernize the country's State-owned banks, which lag behind foreign rivals in their ability to offer such consumer services.
Banks affected by the latest change will be Citigroup, Britain's HSBC Corp., Standard Chartered Bank Ltd. and Hong Kong's Bank of East Asia Ltd. and Hang Seng Bank Ltd., according to Qi.
All previously received permission to set up subsidiaries on the Chinese mainland in a required step to handle business in yuan.
Qi didn't say whether the cards could be dominated in yuan, but that is the step that banks have been seeking. The government restricts transactions using the yuan, which doesn't trade on international markets.
In 2004, Citigroup's Citibank and HSBC became the first foreign banks approved to issue credit cards through Chinese banks. American Express Co. issued a card later the same year.
McKinsey estimates that revenues for card issuers could rise to as much as US$5 billion by 2010 if China sticks to its commitments to lower barriers to competition in the market.
Sponsor Results:
