LONDON -(Dow Jones)- HSBC Holdings PLC (HSBA.LN) and the Bank of Communications Co. Ltd. (BoCom) said Wednesday that they are in advanced discussions to transfer their existing joint credit card activities in China to a newly established joint venture company.
MAIN FACTS:
-The proposed new joint venture company will be an extension of HSBC's co-operation agreement with BoCom's Pacific Credit Card unit, which already has over 11 million cards in force.
-HSBC and BoCom entered into this agreement in 2004 following HSBC's acquisition of a stake in BoCom.
-The agreement enabled HSBC to provide technical and management support to the Pacific Credit Card unit operated under BoCom. It is intended that the unit will be transferred to the new company.
-The proposed joint venture is expected to be named Bank of Communications & HSBC Pacific Credit Card Company Limited.
-It is expected to have an initial registered capital of RMB2.5 billion ($368 million).
-BoCom will inject RMB2 billion for an 80 per cent stake in the joint venture, while HSBC will pay RMB1.158 billion for its 20 per cent interest in the share capital, including a premium (RMB658 million) to the par value of the shares.
-The consideration from HSBC will be satisfied from the HSBC Group's internal resources.
-HSBC has been a strategic investor of BoCom, China's fifth largest bank by total assets, since 2004.
-It holds a 19.01% interest in BoCom and, through various agreements, co-operates with BoCom on over 60 initiatives including renminbi trade settlement, payments and cash management services and credit cards.
-By London Bureau, Dow Jones Newswires; Contact Ian Walker; +44 (0)20 7842 9296; ian.walker@dowjones.com