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China says Citi, 3 others set for debit card debut
2007-06-07
Chinese regulators expect Citigroup (NYSE:C), HSBC Holdings (0005.HK)(HSBA.L) and two others to become the first foreign banks to issue local-currency debit cards to consumers in the world's fourth-largest economy, a senior banking regulator said on Thursday. Citigroup, HSBC and Bank of East Asia (0023.HK) confirmed on Thursday that they had applied to the Shanghai branch of the China Banking Regulatory Commission for approval to issue debit cards, while Wang Huaqing, assistant to the chairman of the CBRC, said Standard Chartered (STAN.L) (2888.HK) was expected to apply soon. This follows a commitment by China in late May, as part of its "strategic economic dialogue" with the United States, to allow foreign-invested banks to offer yuan-denominated credit and debit cards under their own brands. Foreign banks are initially likely to get approval for local-currency debit cards, with permission for dual-currency credit cards expected to come soon after that, analysts said. "Currently, we are receiving applications only for debit card issuance instead of credit card issuance, due to current Chinese banking rules," the CBRC's Wang told reporters on the sidelines of a banking summit in Shanghai, China's financial hub. Wang declined to indicate when foreign banks would begin issuing debit cards, saying only that the approval process was going very smoothly so far and that a final decision would be up to CBRC's Beijing headquarters. REGULATORY APPROVAL The four were also the first foreign banks to win Beijing's approval for local incorporation earlier this year, and all four launched business operations at their wholly owned China units in April. Foreign banks not incorporated domestically are not allowed to issue any type of bank cards independently, while those with domestically incorporated Chinese units must still apply to regulators for approval. Debit cards in China allow the user to withdraw cash from automatic teller machines (ATMs) or to make payments directly to merchants that are bank partners, within the amount deposited in the account. Citigroup and Bank of East Asia have said they were in talks with China Unionpay for a partnership in debit card services. China Unionpay, the sole operator of China's interbank transaction network, which is backed by the central bank, controls the country's bank payment system and ATMs. Foreign banks including HSBC and Citigroup have issued joint cards with local partners in China over the past few years. The number of co-branded credit cards carrying the logos of HSBC and its partner Bank of Communications (3328.HK) (601328.SS) has surpassed 2.4 million, an HSBC spokeswoman said on Thursday. China's domestic banks, such as China CITIC Bank (601998.SS) (0998.HK) and Industrial and Commercial Bank of China (601398.SS) (1398.HK), have been aggressively expanding their credit card operations as a platform for boosting their retail banking business. (For details click on ) (Additional reporting by Jason Subler in BEIJING)
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