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 can 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. Visa has been promoting such cooperation to its commercial card issuers, including Citibank, Chase Manhattan Bank, and CoreStates Financial Corp., Mr. Levaro said. CoreStates Bank of Delaware, for example, has partnered with Barclays Bank of London to issue purchasing cards to employees of SmithKline Beecham PLC. "The pie is expanding at such a pace that the competition is probably healthy for the industry," Mr. Baumgartner said. The Nilson Report, an Oxnard, Calif. newsletter, estimates the worldwide commercial card market to be about 25% larger than the U.S. market, which is potentially $11 billion. "If you're going to be a major player in (commercial cards) and you're going to take on American Express and Diners, as First Bank has said it's committed to do, you need to think globally," said David Robertson, president of Nilson. "You need to anticipate the needs of your clients' employees who travel around the world." Peter Godfrey, head of card and electronic banking services for Midland Bank, said the knowledge and experience Midland gains from the First Bank alliance will give it a head start in entering the corporate and purchasing card markets. In a reciprocal arrangement, Midland, the third-largest credit card issuer in the United Kingdom, will market its own Visa corporate and purchasing cards to U.K.-based employees of U.S. corporations and receive cardholder data from Midland. Similarly, First Bank will issue corporate cards to the U.S.-based employees of U.K.-based corporations that are Midland clients and supply relevant information on spending and card usage to Midland. Cardholders will be billed in local currency and will be able to use their cards at any of the 12 million Visa merchant locations worldwide. First Bank will then provide its clients with comprehensive spending information, Mr. Baumgartner said; such data will help corporate travel managers negotiate pricing with suppliers and develop spending controls, he said.
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