The move comes as domestic banks discover the card business not only extends their services but also serves as a profit source - one which is expected to spark a fierce battle between the banks after China's accession to the World Trade Organization.

"The credit card center will improve our efficiency and risk control. It also facilitates State-owned banks' financial innovation, thus enhancing our competitiveness and services in the card business," said Zhang Enzhao, CCB president.

The center will be responsible for all the bank's card business including card development, operation, credit control, marketing, customer service and data processing.

Earlier this year, Industrial and Commercial Bank of China separated its bankcard division and formed a wholly owned subsidiary called ICBC Peony Card Center with registered capital of 1 billion yuan (US$120 million).

Shanghai is already home to China UnionPay, the national payment system, and the credit card centres of China Merchants Bank and Guangdong Development Bank.

The city now plans to set up a bankcard industry base in Pudong to attract more domestic and overseas banks to establish or relocate their bank card centers in China's financial hub.

So far China has issued nearly 500 million bankcards, which have accumulated deposits totaling 573 billion yuan (US$69 billion).

Overseas banks, which cannot yet take part in the industry, are expected to be allowed to issue their own credit cards in China early next year when new regulations are finalized.

(China Daily December 19, 2002)