RBS's Venture With The Bank of China
Royal Bank of Scotland's venture with the Bank of China into the world of credit cards attracted nearly a million users in the first twelve months.
It is a very clear indicator that the British bank's controversial $US1.6 billion investment is beginning to bear fruit.
China has only 15 million credit cards in circulation among its population of 1.3 billion, but usage is expected to soar to 90 million by 2010 as the economy booms and the country's middle class grows and grows.
On a visit to Chinas capital Beijing, RBS CEO Sir Fred Goodwin said the bank's second Chinese joint venture, in corporate lending and advisory services, had transacted $US1 billion worth of deals this year.
Another joint venture into wealth management is set to be launched in 2007. RBS said the link with the Bank of China was also benefiting Citizens, its US subsidiary, by helping US corporations operating in China as well as mainland students in the USA. While RBS declined to make public fundamental important financial data such as start-up costs, operating margins and earnings for its joint ventures. What they did reveal will help reassure the bank's institutional investors, who reacted with scepticism to the original idea, that the bank's commitment to China has revealed a positive note.
RBS last year led a consortium that paid $US3.1 billion for a 10% stake in Bank of China, the mainland's second-biggest lender with 118,000,000 retail clients and 12,000 branches in twenty eight countries.
RBS owns Direct Line insurance, which Sir Fred believes could be transplanted to China.
He signalled that RBS was looking to expand in Asia.