Citi, Visa still matter to China, and vice versa

Alibaba Holding

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The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.
By Ka Sing Chan
HONG KONG, Oct 27 (Reuters Breakingviews) - Beijing is granting key approvals to US financial giants as it looks for areas of pragmatic cooperation with Washington. For Citigroup C.N, the bank led by Jane Fraser, it is a licence to establish a wholly-owned securities company. For payments giant Visa V.N, led by Ryan McInerney, it is permission to begin preparations for a domestic bank card clearing institution. China's latest opening is long overdue but remains valuable.
     There's a realpolitik to the timing. The all-clear from officials comes just weeks after Xi Jinping's state visit to the US. McInerney and Fraser both joined the US delegation to China in May when President Trump said he raised Visa's market access plight with his counterpart. Since June, the Visa boss has chaired the US-China Business Council.
A decade ago, Visa would have benefited tremendously from a domestic clearing licence. Back then, mobile phones accounted for less than 10% of China’s retail payments. Today, payment apps operated by the likes of Alibaba 9988.HK and Tencent 0700.HK represent nearly 90% of spending in China. Visa's opportunity now lies less in displacing incumbents than in helping money move across borders. Its global network supports overseas travel, international e-commerce and digital-payment services such as tokenization, which helps secure transactions across merchants and markets. That reach is difficult for Chinese companies to replicate. Even the state-run UnionPay, which handles about 95% of the country's card spending, has forged partnerships with Visa in international remittances and tourism payments.
Though Citi fell behind its US rivals in China after exiting a joint venture with Orient Securities 600958.SS in 2019 and applying to operate on its own, the $200 billion lender is re-entering the onshore investment banking business at a time foreign firms' fortunes have been improving. The wholly-owned units of Goldman Sachs GS.N, JPMorgan JPM.N and UBS UBSG.S all posted sharp profit rebounds in 2025 as market activity recovered and overseas investors returned; Goldman logged a $219 million net profit on current exchange rates. By the end of June, foreign investors held 4.66 trillion yuan of Chinese equities, up 26% from December and 60% from the end of 2024, PBOC data shows. The new licence fills a gap in a franchise that is Citi's second largest internationally after the UK. It already banks many of the world's largest multinationals and asset managers. Those relationships should, on paper, give it an advantage over pure-play investment banks once the new venture is up and running.
Ultimately, the US duo can also support China Inc's global investment push. China still needs firms that connect it to global capital and commerce. The licences may have arrived late. The rationale for them did not.
     
CONTEXT NEWS
Citigroup Inc. said on October 23 it has received approval from the China Securities Regulatory Commission to establish a wholly-owned securities company in China.    
Visa Inc. has received approval to begin preparations for a domestic bank card clearing institution in the country, the People’s Bank of China said on October 13.

(Editing by Una Galani; Production by Aditya Srivastav)
((For previous columns by the author, Reuters customers can click on CHAN/ KaSing.Chan@thomsonreuters.com))