BoCom, HSBC to set up China credit card JV

Oct. 29, 2009 (China Knowledge) - Bank of Communications Co Ltd<601328><3328>, the country's fifth-largest bank by total assets, said yesterday that its board of directors has approved a plan to set up a credit card joint venture with strategic investor Hongkong and Shanghai Banking Corp Ltd to tap the nation's underdeveloped credit card market.

The JV, which will be called Bank of Communications & HSBC Pacific Credit Card Co Ltd, will be headquartered in Shanghai and will have a registered capital of RMB 2.5 billion.

BoCom, in which HSBC holds a 19.01% stake, will contribute RMB 2 billion for an 80% stake in the JV, while the foreign bank will inject RMB 1.16 billion for the remaining 20% equity interest.

The planned JV will be an extension of HSBC's cooperation with BoCom's Pacific Credit Card unit, which had 11 million cards in circulation at the end of September.

However, the establishment of the JV is still subject to regulatory approvals, and the firms have not yet agreed on final terms and conditions.

In 2008, there were 142 million credit cards in circulation, 58% more than a year earlier, with only 0.11 credit cards per capita.