Citibank takes a swipe at Chinese mainland

Lender launches market's first credit card issued by foreign bank

Citibank (China) Co Ltd announced on Tuesday that it had issued a solely branded credit card in the Chinese mainland, becoming the first international bank to take this step in the potentially huge market.

Citibank said the first transactions using the card were conducted overseas by its Chief Executive Officer Andrew Au and in Shanghai by Consumer Banking Head Simon Chow.

Citi's credit card will be accepted worldwide, and will be available as a renminbi-denominated and US dollar-denominated card, it said.

China UnionPay is the card's partner in China, while MasterCard and Visa are its international partners.

Stephen Bird, chief executive officer of Citi Asia-Pacific, said the launch marks a significant development in Citi's growing presence in the Chinese market, after it became the first international lender to enter the mainland's retail banking sector in 2002.

In February, Citi announced it had won approval from the China Banking Regulatory Commission to launch its credit card business independently.

Bird said Citi is pursuing growth across multiple areas. "We are delighted to be once again breaking new ground in what is one of our most important markets globally. "

The lender said the Chinese market is expected to be the world's largest for credit card issuance within the next decade. Citi looks forward to building its bankcard business in a "sustainable" manner, Au said.

Its card business in the Chinese mainland includes both retail and a commercial card offering. Citi is the largest credit card issuer in Asia-Pacific, with more than 16 million card accounts and $20 billion in receivables.

"The credit card launch is a breakthrough for foreign banks, as they previously had to cooperate with Chinese partners to avoid restrictions on foreign banks issuing credit cards," said Guo Tianyong, banking research director at the Central University of Finance and Economics.

But the still quite limited network of these lenders in the Chinese mainland will pose a major challenge to them as they seek to develop their credit card business in the huge market, he said.

Citi in 2003 launched a credit card venture with Shanghai Pudong Development Bank, and was the fourth-largest shareholder in the bank, with a 2.71 percent stake as of March.

It sold all of its shares of SPDB in March at a discount of 10 percent, ending the "honeymoon" that had lasted for almost 10 years.

In 2006, Citi became a major strategic cooperation partner of China Guangfa Bank Co Ltd, the only national joint-stock commercial lender not to have listed, after purchasing a 20 percent stake in CGB and obtaining 100 percent operation and management rights over the domestic lender.

CGB said in 2011 it had decided to set retail banking as a priority of its business development over the next five years, expecting retail banking to account for as much as 50 percent of its total revenue.

wangxiaotian@chinadaily.com.cn

(China Daily 08/22/2012 page16)