Citigroup Considers Sale of Retail-Banking Business in Japan Move Would Shift Focus to Citigroup's Other Businesses in Japan
Citigroup Inc. C +0.61% is considering the sale of its retail-banking business in Japan, where the U.S. financial giant has had a presence for decades as a leading Western bank, people familiar with the matter said Tuesday.
The New York company is considering a possible auction to sell the retail business, they said. The move would leave Citigroup to focus on its remaining businesses in Japan: corporate banking, investment banking and trading. Japanese loan growth has remained weak recently, amid interest rates close to zero.
Citigroup, one of the world's most sprawling global banks, has been scaling back since the financial crisis, trying to become simpler and easier to handle. The bank suffered a setback earlier this year when the U.S. Federal Reserve balked at Citigroup's dividend and share-buyback plans, citing the difficulty the firm was having measuring how a stressful scenario would affect all of its global operations.
The bank has also said it wants to home in on areas that have "the highest growth potential" for consumer banking, eschewing some smaller cities and slower-growth countries.
Since Michael Corbat became chief executive of the bank in late 2012, Citigroup has jettisoned its retail operations in countries including Honduras, Turkey, Romania, Uruguay and Paraguay. This summer it agreed to sell its consumer-banking businesses in Greece and Spain.
Citibank Japan Ltd. currently has 33 branches for the retail operations across the country and has deposits of 3.9 trillion yen ($39 billion). In the past decade, Citigroup had already shrunk its operations through divestitures of units following regulatory punishments and a series of restructurings in Japan.
In 2004, Japanese Financial Services Agency, the country's financial watchdog ordered Citigroup to shut its private-banking operations in the country, citing improper trading practices and lax anti-money-laundering procedures.
Citigroup's CEO at the time, Charles Prince, bowed in apology over the situation. Citigroup also said then that it would be taking the measures necessary to enhance its governance and internal-controls systems.
In 2007, Citi also closed most of its consumer-finance branches in Japan after suffering hundreds of millions of losses in the unit hit by legal changes that required it to repay overcharged interest rates in the past to borrowers and cut the maximum interest rates on loans. A spokesman at the time described the move as a "repositioning...to compete effectively."
After the financial crisis in 2008, the bank also sold its retail brokerage unit—then called Nikko Cordial Securities—to Sumitomo Mitsui Banking Corp. and its asset-management unit to another Japanese trust bank.