Banking News
- Deutsche Bank, Huaxia to issue card
Date: 14-Feb-2007 Sources: (Shenzhen Daily)
HUAXIA Bank and Deutsche Bank aim to issue a co-branded credit card in China in May, sources said, a move that will help Germany's top lender expand its access to the country's fast-growing retail banking business.
Banking sources close to Huaxia said yesterday that Deutsche Bank was assisting Huaxia in setting up a joint credit card center in Beijing, and preparations for launching the card had almost been completed.
Huaxia is presently applying to the banking regulator in the regard, the sources said.
'Huaxia set May as its internal target month to issue the card. There should be no problem for the bank to win regulatory approval soon,'said one source who was briefed on the situation.
'It's not only about just one card, but a whole new business that Huaxia has been eager to do for many years,'said the source, adding the co-branded card would be Huaxia's first credit card since the bank was established in Beijing in 1992.
Deutsche Bank bought nearly 10 percent of Huaxia for about US$235 million in late 2005, when the two partners cited credit cards as one area of their cooperation.
If approved, the co-branded card would make Deutsche Bank the fourth foreign lender to issue a card in partnership with a Chinese bank.
Foreign financial firms are not allowed to issue any type of bank cards in China independently. Citigroup Inc., HSBC Holdings Plc. and Hong Kong's Hang Seng Bank have already issued their co-branded cards in China.
Other foreign banks, including Bank of America and Royal Bank of Scotland, are working on similar plans to issue cards with Chinese partners.
Deutsche Bank declined comment, while Huaxia Bank was not immediately available for comment.
Credit card usage only started becoming widespread in China's big cities several years ago, and the size of the industry remains small compared to those in developed nations.
But the government is encouraging merchants to accept cards as well as cash, partly to improve payment services before the Beijing Olympics in 2008 and the World Expo in Shanghai in 2010.
Domestic banks are also keen to grow fee-driven businesses such as card issuance and wealth management services amid government measures to slow loan growth and avoid an economic overheating.
The sources said top Huaxia executives in Beijing told its local branch managers at a recent internal meeting that profit growth of Huaxia branches in first-tier cities, such as Shanghai, should reach about 80 percent this year.
To accomplish the goal, branch managers had been asked to focus on small and medium-sized enterprise clients and fee-based operations, the sources said.
'Wealth management business will definitely be the next area that Deutsche Bank and Huaxia want to grow jointly after cards,'said another source close to the Beijing-based lender.
'But so far there have been no any other concrete plans yet as the cooperation is very much focused on credit cards now,'said the source.
The sources said Deutsche Bank and Huaxia planned to set up a 50/50 joint venture to run their co-branded card business when regulators lift current investment restrictions.
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