Bank of America (BoA) and China Construction Bank (CCB) have announced an agreement on a memorandum of understanding to jointly enter into a new credit card collaboration. The two companies are planning a two-stage roll-out of the collaboration to leverage BoA’s leading credit card expertise combined with CCB’s market strength.

In the first stage of the plan, CCB would create a stand-alone credit card unit, merging its current card operations into this new unit. CCB would also form an advisory committee to determine and develop the unit’s business structure. Bank of America would serve on this committee and provide advisory services on the unit’s development.

The second stage would involve converting the credit card unit into a Chinese-foreign credit card joint venture, registered in China. Bank of America would acquire 37 percent of the joint venture and would begin launching co-branded credit cards. At the time of the second stage, both companies would have board of director representation and be a part of the company’s senior management team. The second stage would occur after new joint venture regulations are enacted by the Chinese government and subsequent regulatory approvals are obtained.

This is third customer program offered jointly by the two banks following the successful launch of their free ATM withdrawal and remittance services last year. In June 2005, Bank of America became a 9 percent shareholder of CCB and began providing advice and assistance to CCB in such areas as consumer banking, treasury services, governance and risk management designed to enhance the Chinese bank’s performance.

With a 20 percent market share, CCB is the second largest credit card issuer in China, issuing a total of 6.34 million credit cards, of which 3.22 million cards were issued in 2006. Total retail sales volume was RMB40.467 billion and the average purchase amount was RMB14,600, the highest among all Chinese competitors. (PRNewswire)