American Express 2004 Annual Report Download - page 19

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to launch American Express-branded cards in 2005. Partnering with institutions as large and
prestigious as MBNA and Citibank illustrates the significant potential of this business for
American Express and our partners.
The new paradigm in the United States, in which we have both a proprietary card-issuing
business and now a network business with bank partners, is a major change for our com-
pany and for the payments industry. However, our overall strategy remains the same. First,
we want to continue to have the strongest proprietary card business in the industry, deliv-
ering performance superior to any other issuer. Second, we want to be the network of
choice for high-spending cardmembers. Achieving these complementary goals will serve
to generate additional spending on the American Express network, increase the number of
American Express-branded cards in the marketplace, and drive more business and profits
to merchants who accept our cards.
In addition to pursuing new opportunities in our network business, we have also filed a
lawsuit against Visa, MasterCard and a number of large banks seeking compensation for
business lost over many years as a result of the anti-competitive practices of the card asso-
ciations.
American Express has been in the network business outside the United States for several
years now, partnering with banks to issue American Express-branded cards accepted on
our global merchant network. We have a good understanding of the keys to success, and
we have found that having a vibrant network business also serves to strengthen our pro-
prietary card business.
GNS is already an important part of the American Express franchise and a key part of our
growth strategy. GNS partners have added more than eight million bank-issued cards since
1997. As this card base has grown, GNS partners have added more than three million new
establishments to the American Express merchant network around the world. Cards-in-
force and spending on GNS cards have grown dramatically. Outside of the United States,
one of every two new cards acquired in 2004 was a bank-issued card, and GNS partners
brought nearly one of every three new merchants into the American Express network.
In 2004, we signed 14 new GNS partnerships with financial institutions. In addition to
MBNA and Citibank in the United States, we also signed a landmark agreement with the
Industrial and Commercial Bank of China (ICBC), the largest bank and the leading issuer
of credit cards in China. With more than 20,000 branch locations, ICBC has tremendous
distribution reach. Through this agreement, ICBC is issuing the first-ever American Express-
branded cards in China. China’s domestic card market, which until earlier this year was
closed to foreign card companies, is still in its early stages of development, but it presents
tremendous potential for growth. Other GNS signings during the year included CorpBanca
in Chile and Westpac in Australia.
AXP
AR.04
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