1st Bank Going International on Corporate Credit Cards
Meece, Mickey, American Banker
First Bank System Inc. has formed a strategic alliance with HSBC Holdings to extend the superregional's corporate credit card services internationally.
HSBC's London subsidiary, Midland Bank PLC, will be the first to issue cards modeled after First Bank's Visa corporate and purchasing cards and designed to serve U.S. customers operating in other countries.
The move makes Minneapolis-based First Bank one of the few U.S. credit card issuers with a global strategy.
"Our target market [for commercial cards] is Fortune 1,000 U.S.-based companies," said James Baumgartner, senior vice president and general manager of corporate payment systems for $32 billion-asset First Bank System. "A big percentage of those have international operations."
First Bank, which has issued more than 750,000 commercial cards and has relationships with 160 Fortune 500 companies, said it will seek additional alliances in major industrialized countries. About 95% of First Bank client companies have operations in the nations that, along with the U.S., are commercially and politically aligned in the Group of Seven - Britain, Canada, France, Germany, Italy, and Japan.
As part of its exclusive deal with HSBC Holdings, First Bank will first seek relationships with other HSBC affiliates in 23 countries. In countries where HSBC - the initials stand for the $300 billion-asset company's flagship, Hongkong and Shanghai Banking Corp. - does not have a presence, First Bank may enter partnerships with other financial institutions.
"The objective is to try to develop a syndicate of foreign banks that an issue the various. Visa commercial products, to ensure we're offering a consistent travel-and-entertainment and purchasing card product for multinational clients," said Mr. Baumgartner.
The principle is similar to syndicated commercial lending, in which a lead bank puts together as many as 20 to 30 participating banks.
Syndication in commercial cards "allows the corporation to deal with one provider, on a worldwide basis, and the provider in turn, through its partnerships, can deliver worldwide service," said Robert Levaro, senior vice president of corporate card products for Visa International. …