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The Shanghai Pudong Development Bank (SPDB) launched a dual-currency credit card Wednesday in conjunction with US banking giant Citigroup.
The launch of the card, the first on the Chinese mainland in cooperation with a foreign bank, is the prelude to the setting up of a joint venture credit card company by the two banks when they are legally permitted to do so.
Under China's current laws, foreign banks are not allowed to conduct personal Renminbi business to Chinese residents, including credit cards.
But SPDB and the Bank of Shanghai got the green light to issue Renminbi credit card in co-operation with Citibank and the Hong Kong and Shanghai Banking Corporation (HSBC) respectively, with the foreign players providing technical and management assistance.
Both foreign banks have stakes in their Chinese partners.
Earlier reports said that the American International Group is seeking government approval to start its credit card business in China.
Feng Jing, deputy CEO of the SPDB credit card center said both her bank and Citibank hope to establish a joint venture credit card company to develop their business in China.
"But everything depends on regulatory and government approval," she added.
China offers a lucrative market for foreign banks, with its fast economic growth, but the still low number of cards in use - out of China's 500 million bankcards, less than 30 million are credit cards. Just 3 percent of purchases in China are made with bankcards.
Citigroup Chief Executive Officer Charles Prince said: "As consumer spending becomes an increasingly important driver of economic growth for China, credit cards will have an ever-increasing role to play."
He stressed that the two banks had an exclusive arrangement on credit card business.
Zhang Guangsheng, chairman of the SPDB, expected the credit card business to be profitable in two years.
The card will initially be available in Shanghai and later, across SPDB's nationwide network of 290 outlets.
(China Daily February 5, 2004)
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