China gives Citigroup the nod to offer credit card in China

Baltimore Star Monday 6th February, 2012

NEW YORK - Citigroup's Chinese subsidiary has been granted permission to offer its credit cards in China, becoming the first US based bank and the second foreign bank to receive the nod.

Currently only the Hong Kong based Bank of East Asia is allowed to issue credit cards in China, a major potential market that banks and card processing networks have been striving to enter given the country's high rate of economic growth and the increasing purchasing power of Chinese .

The announcement of approval coincides with the World Trade Organisation (WTO) taking up the legality of China not permitting foreign banks to issue their own credit cards or let international credit card organizations like Visa, MasterCard and the American Express among others to process credit card transaction.

The global organization was probing the issue on a complaint by the US.

The development will help the Citigroup to take control of the existing card business in China, which was so far being operated jointly with the Shanghai Pudong Development Bank.

Having got the regulatory approval, the New York-based bank said Monday it would be launching its credit card business by the year end, and will be offering both consumer and commercial cards.

The approval follows preliminary regulatory approval last month for Citi to establish a joint-venture securities firm in China, together with Orient Securities Company Ltd.

The new entity Citi Orient Securities Co Ltd, will be engaged in investment banking business in the Chinese market while being based in Shanghai.

While economic growth is slowing in China, its economy expanded by a 9.2 per cent last year. Its growing middle class is a prime target for lenders.

Citi, which has presence in 13 cities in China, did not reveal whether it is planning collaboration with any of the international credit card organizations.

Both Visa and MasterCard have been trying to expand their reach into China as part of efforts to boost overseas business.