Citibank in ATM access pact with China's UnionPay

9/13/2005 10:21:22 AM

SHANGHAI (MarketWatch) -- Citigroup Inc.'s (C) unit Citibank has formed a strategic alliance with China's UnionPay Co., allowing mainland China's bank-card holders to withdraw foreign currency using Citibank's automated teller machines worldwide, the companies said Tuesday.

The alliance is the first of its kind between China UnionPay Co. and an international bank on a global basis. The Chinese bank-card association launched China UnionPay card acceptance in Hong Kong and Macau in 2004, as well as Singapore, Korea, and Thailand earlier this year, the companies said in a statement.

Chinese holders of CUP cards will now have the convenience of withdrawing foreign currency without using dual-currency cards, William Rhodes, senior vice chairman of Citigroup and chairman of Citibank, said at a press conference Tuesday.

As part of the agreement, Citibank's international cardholders will be able to use their cards at "foreign-enabled" China UnionPay ATMs when in China, the companies said.

The agreement comes as more and more Chinese citizens travel overseas.

China's yuan isn't a freely convertible currency, and Chinese citizens are allowed to exchange only limited amounts of yuan for hard currency when they are traveling outside the mainland for business or pleasure. They can withdraw the equivalent of CNY5,000 in foreign currency per person each day, China UnionPay said.

Citibank announced the alliance with China UnionPay on the same day that it opened its new "flagship" branch for China in Shanghai. The bank said Monday it also got approval to open a branch in the western city of Chengdu, expected to open in late 2005.

Citigroup has branches in Beijing, Shanghai, Guangzhou, Shenzhen, and Tianjin, it said in a statement Monday.

Citigroup has "several other" applications to open branches in other areas of China, Rhodes said at another press conference Tuesday, but didn't mention which areas these were.

Rhodes reiterated Tuesday that Citigroup is in talks with Shanghai Pudong Development Bank Co. (600000.SH) on raising its stake in the Chinese lender to 19.9% from 4.62% currently.

Foreign banks have been stepping up their investments in Chinese banks in the past year to gain more exposure to the growing and potentially lucrative market.

In addition to Citigroup holding a stake in Pudong Development Bank, Citibank and the Chinese lender have jointly launched a dual-currency credit card.

Credit cards are "going to become one of the most important consumer bank opportunities in China," Rhodes said. "I think you should watch what we're going to do in particular in that area," he said, but didn't elaborate.

-Edited by Sharon Buan