Citigroup Inc.'s Chinese subsidiary is set to become the first U.S.-based bank to issue its own credit cards in China.
The New York-based bank said Monday it received regulatory approval to launch a credit card business in China. The business will include both consumer and commercial cards, and is expected to launch before the end of the year.
At the same time, Citi said its existing card business there, which is operated jointly with Shanghai Pudong Development Bank, will be taken over by the Chinese bank.
The approval follows preliminary regulatory approval last month for Citi to establish a joint-venture securities firm in China, together with Orient Securities Company Ltd. The entity, Citi Orient Securities Co Ltd, will be based in Shanghai, and will engage in investment banking business in the Chinese domestic market.
Banks and card processing networks have long eyed the Chinese market as a potential source for growth, but regulators have been slow to open to foreign countries. Only the Bank of East Asia, based in Hong Kong, is currently able to issue credit cards in mainland China.
While economic growth is slowing in China, its economy expanded by a 9.2 percent last year. Its growing middle class is a prime target for lenders.
Citi would not yet say if the cards will carry a logo from Visa Inc. or MasterCard Inc. Both payment processing networks have been aiming to expand their reach into China and bolster their overseas business.
Citi has branches in 13 Chinese cities.
In midday trading, Citi shares slipped 38 cents to $33.06. The stock has traded between $21.40 and $49.60 in the past 52 weeks.