ROYAL Bank of Scotland has revealed it will issue one million credit cards in China this year and is hatching plans to move its Direct Line model into the Communist-run nation's nascent general insurance market.

Both of these moves are being made through Royal's previously controversial alliance with Bank of China, sealed when the Edinburgh-based institution announced in August last year that it was paying about dollars1.6bn (GBP900m) for a near-5per cent stake in its partner.

As well as pursuing potentially lucrative joint ventures with China's second-largest bank, Royal is also sitting on a paper gain of about dollars3bn (GBP1.6bn) on its investment in Bank of China in spite of the City's initial scepticism. Sir Fred Goodwin, chief executive of Royal Bank of Scotland, said during a visit to Beijing: "We are very interested in general insurance in China. The Direct Line model would plug straight into China.

"The barrier at the moment is legislative, regulatory."

On whether Direct Line would travel as a brand to China, Goodwin said: "If Direct Line happened to be the brand that worked in China, there would be no-one happier than me to see red phones (everywhere)."

Although Royal will have to wait for legislative change allowing banks to own general insurers, it already has senior people on the ground in Beijing preparing the way.