U.S. giant Citibank and HSBC Holdings Plc, the world's second-biggest bank by market value, have become the first foreign banks to win approval to issue credit cards in China, state media said on Thursday.

Bank executives were not immediately available for comment, nor were officials at the China Banking Regulatory Commission.

The banks were expected to be formally notified after the one-day New Year holiday, the International Finance News said, quoting an official at the Shanghai branch of the banking regulator.

HSBC would issue the cards in conjunction with local partner Bank of Shanghai, in which it has an eight percent stake, the newspaper said.

Citigroup Inc. unit Citibank would team up with Shanghai Pudong Development Bank, it added. Citigroup has a 4.62 percent stake in the listed Chinese lender.

While Citibank and HSBC are upbeat at the prospect of finally being allowed to offer local-currency credit cards in China, other banks are more cautious.

Britain's Standard Chartered Bank has said rules and regulations covering credit cards in China are still too vague for them to consider entering the field.

Last month, banking regulatory chief Liu Mingkang said the country was still working on rules to allow foreign banks to issue their own credit cards in China.

China has about 560 million bank cards, most of them deposit-backed debit cards, industry sources say.

Analysts say less than one percent of bank cards are true credit cards, partly because there is no unified credit appraisal system to help banks separate the creditworthy from the risky.

Bank of China issued China's first credit card, the Great Wall card, in 1986. China's shuttered banking industry is expected to be fully open to foreign lenders by 2007.

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