In a bid to provide more innovative card products for the rapidly growing Chinese markets, US finance giant Bank of America Corporation and China Construction Bank have agreed to enter into a joint venture to launch a new credit card.
The two companies are planning a rapid rollout to leverage Bank of America’s credit card expertise combined with China Construction Bank’s (CCB) market strength. The rollout would be implemented in two stages.
In the first stage, CCB will create a stand-alone credit card unit, merging its current operations into this new unit, in addition to forming an advisory committee to determine and develop the unit’s business structure. Bank of America will serve on this committee and provide advisory services on the unit’s development.
The second phase will see the credit card unit convert into a Chinese-foreign credit card joint venture, to be registered in China. This phase will occur after new joint venture regulations are enacted by the Chinese government and subsequent regulatory approvals are obtained.
Under the terms of the deal, Bank of America will acquire 37% of the joint venture and will launch co-branded credit cards.
This collaboration represents the third customer program offered jointly by the two banks.
For Bank of America, this is a strategic collaboration in one of the fastest growing economies in the world, said Kenneth Lewis, Bank of America chairman and CEO. It allows us to deepen our alliance with CCB while also positioning Bank of America to participate in the market’s future growth once new regulations are enacted.