Barclaycard: looking for the right East Asian bride.

With smothering competition in the US and the UK, and Europe displaying its legendary resistance to credit card borrowing, Barclaycard's move to investigate opportunities in East Asia is a sound one. Finding the right partners for this venture will be the main determinant of Barclaycard's success.

Barclaycard, Europe's largest credit card issuer, is examining opportunities to launch its credit cards in East Asia. Among the opportunities under review is leverage of its sponsorship of the Premier League as an entry strategy.

Barclays saw 2002 pre-tax profits fall by 6% to GBP3.2 billion because of rising bad debt provisions. However, Barclaycard was one of the strongest growing divisions, increasing pre-tax profits last year by GBP111 million to GBP615 million.

Effectively running as an international credit card specialist internal to the Barclays group, Barclaycard already operates in 62 countries. It has 11 million customers, 9 million of which are in the UK. It has 1.2 million cards in issue in Germany and operates in Spain, France, Greece and Italy. The company also runs credit card books in parts of Africa and the Caribbean.

Barclays has earmarked the division for further expansion this year. There has been repeated speculation that Barclaycard will look at a US acquisition, possibly a US monoline issuer. However, such an acquisition would be expensive and, with regulators carefully watching these companies, the risk would be high.

Saturation and excruciating competition in the UK and US markets have made organic growth difficult. European markets are difficult to conquer with revolving credit card products, as the combined resistance of consumers, regulators and interbank organizations stifle growth.

Asia is one region where expansion should still be possible at a relatively low cost. Consumers there are increasingly happy to spend more and credit cards have been receiving a progressively more warm welcome as a payment and borrowing tool.

Upper market cards have been provided by a number of international competitors like HSBC and Citibank across East Asian markets for a number of years. The real opportunities lie in retail credit cards. However, these cannot be tapped without significant local knowledge and a good network of distribution inroads. It will therefore be crucial for Barclaycard to find the right partners if its Asian plans are to go ahead.