PING AN TO DISTRIBUTE CREDIT CARDS

Chinese insurer Ping An took one more step yesterday in its long-term plan to become a major financial services company in China with the announcement that it would be distributing credit cards via its newly acquired Shenzhen Commercial Bank, beginning as early as next year. The bank has about 1.5m retail customers and is licensed to issue credit cards, but has not previously done so. There are currently about 40m credit cards in issue in China. Ping An chief operating officer Louis Cheung Chi-yan said that the move would help Ping An achieve its aim of gaining more than 10% of its profits from non-insurance operations within five to 10 years. However, he conceded that it would be at least 10 years before the divisions of insurance, banking and asset management achieved “balanced” growth. Meanwhile, the Shenzhen government has agreed to purchase about 1bn yuan of non-performing loans from Ping An’s Shenzhen Commercial Bank at face value, which it is thought will remove a regulatory barrier to the bancassurer obtaining licences to operate in other cities. The move will also increase the bank’s capital adequacy ratio (CAR), which stood at just 3.3% at the end of last year. The China Banking Regulatory Commission has ordered banks to increase their CAR to 8% by the end of 2006. Ping An director Richard Jackson, once of Citigroup and a member of the Ping An team since March, told the UK Financial Times that Shenzhen Commercial bank would have a non-performing-loan ratio of between 8% and 8.5% after its restructuring.