Citi gets green light to launch credit cards in China
07 February 2012 | 4197 views | 0
Citi is set to become the first non-Asian bank to issue credit cards in China after getting approval from the country's regulator.
The US bank expects its local unit to start offering both retail and commercial cards later this year following an okay from the China Banking Regulatory Commission.
The decision makes Citi only the second foreign bank, after Hong Kong's Bank of East Asia, entitled to issue credit cards. China normally requires outside banks to co-brand with local players and to process payments through China UnionPay.
Stuart Eizenstat, former deputy Treasury secretary under President Bill Clinton told Bloomberg that the Citi concession is likely a response to last year's decision by the World Trade Organisation to investigate a US complaint about access to China's market.
The WTO agreed to investigate after US companies, including MasterCard and Visa, argued that they were being cut out of the massive Chinese payment processing market.
"I have no doubt that the WTO case is a major reason why China has issued this license. By this action, they are trying to take the 'sting' out of any adverse ruling," Eizenstat told Bloomberg.
Citi says it will also continue its co-branded credit card venture with Shanghai Pudong Development Bank (SPDB), which began in 2003.
Stephen Bird, CEO, Citi Asia Pacific, says: "This approval represents a significant milestone in the continued expansion of Citi's business in China, a priority market for Citi."
Citi has been steadily building its presence in China, expanding to three new cities and opening 12 branches last year. Last month it also received regulatory approval to establish a joint-venture securities firm with Orient Securities Company.