BEIJING (Dec. 19,2007): Citigroup Inc. and four other banks will become the first foreign institutions allowed to issue credit cards on their own in China once they meet regulatory standards, the government said.

Foreign banks are eager for a share of China's booming credit card market as the government lowers regulatory barriers to meet World Trade Organization commitments. Foreign banks have been allowed to issue cards since 2004 but until now were required to work through local partners.

"After they have satisfied technical standards, the banks can officially start bank card services," said Qi Jianming, a deputy director of the China Banking Regulatory Commission, in comments posted Tuesday on a government Web site. He gave no timetable for granting such approval.

Credit cards were almost unknown in China in the 1990s, but demand has grown explosively as incomes and consumer spending by its 1.3 billion people rise rapidly.

The number of credit cards in China jumped to more than 40 million last year from fewer than 3 million in 2003, according to the consulting firm McKinsey & Co.

Beijing is gradually opening the market as it tries to modernize its state-owned banks, which lag behind foreign rivals in their ability to offer such consumer services.

Banks affected by the latest change will be Citigroup, Britain's HSBC Corp. and Standard Chartered Bank Ltd., and Hong Kong's Bank of East Asia Ltd. and Hang Seng Bank Ltd., according to Qi.

All previously received permission to set up Chinese subsidiaries in a required step to handle business in China's currency, the yuan.

Qi did not say whether the cards could be dominated in yuan, but that is the step that banks have been seeking. Beijing restricts transactions using the yuan, which does not trade on international markets.

The CBRC did not immediately respond to requests by phone and fax for additional information.

In 2004, Citigroup's Citibank and HSBC became the first foreign banks approved to issue credit cards through Chinese banks. American Express Co. issued a card later the same year.

McKinsey estimates that revenues for card issuers could rise to as much as US$5 billion by 2010 if Beijing sticks to its commitments to lower barriers to competition in the market.