HSBC
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HSBC to Create Chinese Credit Card Joint Venture with Bank of Communications
HSBC (LSE: HSBA) announced that it is in advanced
discussions with China’s fifth largest bank, the Bank of Communications
(‘BoCom’) to create a new joint venture company for a Chinese based
credit card operation.
The deal will see HSBC invest approximately
£100m (RMB1.158bn) for a 20% stake in the joint venture, which will
focus on maximising opportunities in China's fast developing consumer
mass market
. HSBC has a 19% stake in BoCom.
In 2008 China's credit card market experienced a 58% increase in
circulation to 142 million credit cards, yet overall market penetration
remains low with only 0.11 cards issued per capita. As such the joint
venture will tap a market which is expected to see exponential growth
in the coming years particularly as, of the 1.8 billion cards issued in
China by 235 issuers in 2008, over 90 per cent comprised ATM or debit
cards with no revolving credit line.
The proposed joint venture is expected to be named Bank of
Communications & HSBC Pacific Credit Card Company Limited. The
consideration from HSBC will be satisfied from the HSBC Group's
internal resources.
HSBC has been a strategic investor in BoCom since 2004. HSBC
currently co-operates with BoCom on over 60 initiatives including
renminbi trade settlement, payments and cash management services and
credit cards. Once the joint venture has been agreed, the companies are
expected to transfer their existing joint credit card activities
in China into the newly established joint venture company.
The proposed new joint venture company will be an extension of
HSBC's co-operation agreement with BoCom's Pacific Credit Card unit,
which already has over 11 million cards in force. HSBC and BoCom
entered into this agreement in 2004 following HSBC's acquisition of a
stake in BoCom.
The transaction remains subject to agreement of final terms and
conditions and will be subject to regulatory approvals. A further
announcement will be made as and when appropriate.
Other HSBC news
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2009-11-10 - HSBC buys majority in Indonesia’s Bank Ekonomi for US$607.5 mln
2009-05-23
