April 15, 2007

NEWS: BoA Goes to China

America's credit card giant, Bank of America Corp., recently announced plans to pair up with China Construction Bank Corp. to offer credit cards to Chinese consumers. As of today, the plans are for China Construction to generate a stand-alone credit card division under BoA's guidance, with BoA creating an advisory committee to develop the business structure of the business. After some time, the banks will switch the division to a Chinese foreign-language joint credit card venture that is solely Chinese.

BoA is slated to own 37% of the venture as the launching pad for the co-branded cards. It will buy out total control of the venture once it gains approval from the Chinese government as to how to regulate the joint venture in a satisfactory fashion. BoA views the venture as a fortuitous collaborative effort with one of the fastest-developing economies in the world market, with clear benefits to BoA in the form of having a stake in Chinese market growth. Per a spokesperson, credit card volume in China leapt a full 70% in 2006, proving that the market is ripe for growth. China Construction is the second-largest issuer in China currently, with a 20% market share. In 2006, it issued 3.22 million cards in 2006, bringing its total number of open accounts to around 6.34 million. BoA bought a 9% share in China Construction in 2005, guaranteeing a double investment in the venture's success.



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