Bloomberg News

SEOUL - Citigroup Inc. and Providian Financial Corp. are reportedly among the bidders for Korea Exchange Bank's credit card business, which would give the successful company a foothold in a market that is expected to expand more than 60% a year.

HSBC Holdings PLC, DBS Group Holdings Ltd., and Standard Chartered PLC are also in the race, said an official at the card company who asked not to be identified. Korea Exchange is selling its 51% stake and Olympus Capital Corp. its 43% stake, he said.

At stake is a unit with 5.7 million customers who spent $6.8 billion in the nine months to September, which is 5.8% of Korea's credit card market. The company also helps in back office processing of some rivals' card transactions.

"There is great potential in this market," said Won Kwan Hee, a banking analyst at Daeyu Regent Securities Co. "Card spending will continue to increase due to government incentives, their convenience and a lack of other payment systems in Korea."

A Citigroup spokesman declined to comment, as did officials at HSBC and Standard Chartered. Officials at San Francisco-based Providian could not be reached for comment.

Interest in Korea's credit card industry is keen. A group led by Warburg Pincus last month agreed to pay $362 million for 20% of LG Capital Services Co., a Korean credit card issuer, becoming the company's biggest shareholder.

LG Capital is the No. 1 card issuer in Korea, having issued 18.8% of the 52.6 million cards held by the nation's 47 million people. Cardholders spent $116 billion in the nine months through September, said the Korea Non-Banking Financing Association.

"Korea's credit card market is still in its infant stage and has more room for growth," said Lee Jae Hyun, a portfolio manager at Daehan Investment Trust Management Co.

UBS Warburg is advising the Korean bank on the sale, which comes as the lender cleans up a balance sheet devastated by Korea's 1998 recession, which saw many of its corporate customers fail.

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