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SCMP Reporter

American Express (Amex) is closing in on its goal of cracking China's huge, but largely untapped, credit-card market,  announcing yesterday a partnership deal with Industrial and Commercial Bank of China (ICBC).

Terms of the  deal are still being worked out.  Amex and ICBC plan to set up a working group to negotiate the details.

A key issue  is whether  customers who use their credit cards overseas will be able to settle their accounts in yuan or in US dollars, according to a  spokeswoman.

While the agreement marks a milestone for Amex,  analysts said profitability would depend on how the final agreement was written.

'Amex, for many years, has been meeting with Chinese banks and trying to come up with some sort of co-operative card business that made sense,' independent financial consultant Stephen Harner said. 'I wonder, from Amex's perspective, whether the terms got better from the ones they have rejected time and again, or whether they feel under pressure to join Citibank and HSBC,' which have launched card partnerships in China.

Amex group president David House  said the terms were  similar to those in agreements the company had struck with banks in other countries.

The card will be  available at  ICBC's 24,000 branches, with a goal of reaching at least four million customers within 10 years.

Mr House said Amex would provide back-office services and management knowledge, while ICBC would market the card through its branch network.

The two companies are targeting  Shenzhen, Guangzhou, Shanghai and Beijing for the launch of the card later this year.

Although foreign banks will not be permitted to issue their own credit cards in China until 2007, Mr House said  American Express  was pressing   the China Banking Regulatory Commission (CBRC) to grant earlier access. Last year, the CBRC said it was studying  foreign entry and would issue rules on bank cards soon.

The mainland has more than 500 million bank cards but only one million credit cards, generating revenue of less than US$20 million, according to a report  last year by consulting firm McKinsey & Co.

ICBC chairman Jiang Jianqing said the bank expected to earn 10 billion yuan in revenue this year from intermediate services, of which 3.3 billion yuan would be from  consumer services such as credit cards.



Amex in mainland card deal with ICBC