UPDATE 2-Bank of East Asia to issue first China debit card

(Adds comments from Citi, HSBC and Standard Chartered)

By George Chen

SHANGHAI, May 14 (Reuters) - Bank of East Asia (0023.HK), Hong Kong's fifth-largest lender by assets, will begin issuing debit cards in China next Tuesday, becoming the first foreign bank to win approval for debit card services.

Several foreign banks, including HSBC Holdings Plc (0005.HK) (HSBA.L), Citigroup Inc (C.N) and Standard Chartered Plc (STAN.L) (2888.HK), have also applied for approval to issue debit cards in the world's fastest growing major economy.

However, only Bank of East Asia has completed its preparations -- mainly related to information technology infrastructure and payment services -- and won final approval from Chinese regulators.

"We will target both our existing customers and new clients (in China) for the local currency yuan-denominated debit card issuance, which will be launched on May 20 in Beijing," the bank said in a statement on Wednesday.

"The bank has spent a big amount of financial and human resources in the preparations and the data centre for the card business will be based in Shenzhen," it added.

Foreign banks are required under Chinese rules to locate IT support and data centres for card operations in a mainland Chinese city, rather than operating via offshore data centres, due to concerns about financial security.

WORK UNDER WAY

HSBC, Standard Chartered and Citigroup have all said they were making similar preparations to comply with Chinese bank card rules, although their work had not yet been completed.

An HSBC spokeswoman said on Wednesday the bank planned to issue its first debit card in China within this year.

A Citigroup spokesman said in an e-mailed reply to a query: "We are very much looking forward to launching a debit card in China and we hope to be in a position relatively soon to provide more details on this subject."

In early 2007, China's banking regulator gave Bank of East Asia, HSBC, Standard Chartered and Citigroup the nod to launch locally incorporated businesses.

Only locally incorporated foreign banks are allowed to apply to issue debit cards in China. Foreign banks are otherwise limited to issuing co-branded credit cards, usually both U.S. dollar- and yuan-denominated, through local partners.

Both Citigroup and HSBC have issued dual currency-denominated credit cards in China through their local banking partners, although neither Bank of East Asia nor Standard Chartered offers such services in China.

The HSBC spokeswoman said the number of HSBC's co-branded credit cards with its partner Bank of Communications (3328.HK) (601328.SS) had exceeded 6 million.

Citigroup's co-branded credit card partner in China is Shanghai Pudong Development Bank (600000.SS), in which the U.S. bank also holds a nearly 4 percent stake.

Standard Chartered set up a customer data centre for its card business in Shanghai at the end of April and is in the final stage of preparations to launch its debit card in China, a bank spokeswoman said. (Editing by Edmund Klamann and David Holmes)