Ping An Insurance Co. plans to become China's first insurer to enter the fledgling but potentially huge credit card market through a deal with a local bank, industry sources said. China's No.2 life insurer is working with Shenzhen Commercial Bank to issue a co-branded credit card early next year, pending regulatory approval, the sources said.
Late last month, Ping An Insurance agreed to buy an 89.24 percent stake in Shenzhen Bank for 4.9 billion yuan ($613.5 million). The credit card project will be conducted through Ping An Bank, the insurer's flagship banking unit. The partners will issue a local currency-denominated credit card carrying the Ping An logo and brand, the sources said. Shenzhen Commercial Bank has a regulatory licence to issue bank cards.
Briefing reporters on Ping An's first-half earnings in Hong Kong on Wednesday, Chief Executive Louis Cheung said the insurer would use Shenzhen Bank as a vehicle for selling products including credit cards. But he gave no timetable for the credit card initiative or reveal details.
"Ping An Bank doesn't have a licence for card business but Shenzhen Bank has. However, Shenzhen Bank hasn't issued any type of credit card yet due to a lack of capital and expertise," said a Shanghai-based banking expert involved in the situation."In the end, they agreed to develop a credit card which will mainly target the existing millions of Ping An insurance clients," the source said.
Ping An has more than 40 million insurance clients around China and a national market share of over 16 percent.
International consultancy McKinsey & Co. has estimated credit card profits in China could hit $1.6 billion by 2013, compared with virtually nothing at present in the world's fourth-largest economy, where consumers have traditionally relied on cash.
Ping An Bank, established in July 2005 and based in Shanghai, is a Sino-foreign joint venture in which HSBC Holdings Plc. holds 27 percent and the Ping An Group the remainder. HSBC also owns a near fifth of Ping An Insurance.
According to local banking regulations, foreign banks and joint venture banks are not so far allowed to issue credit cards on their own, but they can work with local partners to develop co-branded cards. Insurance companies are not so far allowed to issue any type of bank card on their own.
"Ping An and Shenzhen Bank aim to launch the card early next year, but it will mainly depend on banking regulators, who may be concerned whether insurance firms can be allowed to tap the card business, even indirectly," said a second source involved in the joint card project.
Before its alliance with Shenzhen Bank, based in the southern Chinese city of Shenzhen where Ping An is headquartered, Ping An approached China's fifth-largest commercial lender, Bank of Communications , about the possibility of a card issuance project, the sources said. But Bank of Communications, in which HSBC holds nearly 20 percent, declined to cooperate with Ping An because of competition and technology issues, the sources said. Bank of Communications has been issuing co-branded credit cards with HSBC since 2005.
The world's two largest payment services providers, MasterCard Inc. and VISA International, have agreed to support the Ping An card but will not invest, the sources said.
Source:佚名