Citi to be first western bank to issue credit cards in China
07 February 2012
With China Banking Regulatory Commission granting it approval to launch its credit card business, Citigroup will become the first western bank to issue credit cards in mainland China. The entry into the lucrative Chinese market comes after it won preliminary approval last month to set up a joint-venture securities firm with Shanghai-based Orient Securities, and licensed for investment banking business.
China's credit card market has started growing more rapidly in recent years following a slow start due to lack of payments infrastructure, with the number of cards in issue recorded by the Chinese central bank reaching 268 million by September, over five times the level at the end of 2006, according to Citi.
Though the use of credit cards by consumers lags behind the number in issue, the growth potential of the market is enormous, according to the bank, as processing improves and more merchants accept the cards.
Even as the market remains restricted to a single card-processing company, Union Pay, all card-based transactions registered growth exceeding 50 per cent by value to Rmb10.4 trillion (approximately Rs81 trillion / $1.6 trillion) according to the 2010 annual report from the People's Bank of China.
According to Stephen Bird, chief executive of Citi in Asia, the approval, announced yesterday, was a milestone in the bank's China growth.
Chief executive of Citi China, the locally incorporated bank, Andrew Au, added that the ability to issue credit cards should help improve Citi's ranking in the country. He said, the ability to offer retail and commercial cards provided Citi with a strong competitive edge, further meeting the needs of its expanding customer base.