Foreign and domestic banks are expected to take on each other in a head-to-head fight in the credit card business when the Chinese mainland's banking market is fully open on December 11.

Foreign banks are allowed to issue bank cards under their own names in a new rule which will take effect on that date if they incorporate locally in the mainland with a registered capital of one billion yuan (US$127 million).

Big overseas banks including HSBC, Standard Chartered Bank, ABN AMRO, Hang Seng Bank and Bank of East Asia have already said they welcome the new rule and are prepared to go local. However, not all foreign banks, especially smaller players from South Korea and Europe, are interested in offering retail yuan business.

Domestic banks responded calmly to the opening-up policy for foreign rivals. "Overseas banks bring expertise in product innovation and risk management which domestic banks can learn from," said Dicky Yip, executive vice president of Bank of Communications.

Yip, a veteran, moved to BoCom from HSBC when the London-based giant bought 19.9 percent in the fifth-biggest lender in the mainland. His view is echoed by Katherine Tsang from Standard Chartered.

"The mainland market is so big that it is impossible for universal competition," said Tsang, the bank's chief in China. Every bank has its own space, interest and advantage."

The two groups have different targets - overseas banks like to woo lucrative high-end clients while domestic lenders claw a bigger pool of small clients banking on their vast network.

More than 70 foreign banks are competing for a piece of the mainland market with a combined network of more than 210 outlets in the mainland, dwarfed by the domestic banks' 70,000-plus branch network. But the credit card sector offers a different picture as the business doesn't necessarily flourish on a branch network.

Source:佚名