Citibank Gets the Nod From China
The US-based Citibank announced that China has approved of the bank offering credit cards in China. Citibank will launch the program later this year, and it is the first non-Asian bank to offer credit cards in China. BBC reports:
“This approval represents a significant milestone in the continued expansion of Citi’s business in China, a priority market for Citi,” said Stephen Bird, chief executive officer for Citi Asia Pacific.
Until now, Hong Kong’s Bank of East Asia was the only ‘foreign’ bank to offer credit cards in China.
Citi has offered ‘co-branded’ credit cards with Shanghai Pudong Development Bank (SPDB) since 2003.
Citibank has branches in 13 Chinese cities.
Citibank has already established a strong position in China with their consumer and corporate banking options. With the popularity of credit cards on the rise, there is speculation that China’s recent approval may signal an opening in the banking market. Business Week adds:
The announcement yesterday came as the WTO, acting on a U.S. complaint, probes the legality of China’s refusal to let foreign companies issue their own bank cards denominated in its currency, or to permit companies such as Visa Inc., American Express Co., MasterCard Inc., Discover Financial Services and First Data Corp. to process card transactions in China.
“It’s perhaps not a coincidence that this is coming at this point when this case is going on,” said Fredrik Erixon, director of the Brussels-based European Centre for International Political Economy. “But I think it’s more connected to changes on the ground in China, in its policy on competition in banking in China, where we see a cautiously gradual opening.”
Credit cards are becoming more popular among China’s 1.3 billion people as rising incomes stoke consumer spending. Chinese banks issued 268 million credit cards as of Sept. 30, up 20 percent from a year earlier, according to the central bank.
Citibank said in a statement from Shanghai that the Chinese government’s consent followed preliminary regulatory approval in January 2012 for the lender to set up a joint-venture securities firm in China with Orient Securities Co. Ltd. Citi Orient Securities Co. Ltd. will be involved in investment banking in the Chinese domestic market, including securities underwriting and sponsoring and any other business as approved by China Securities Regulatory Commission.