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Citibank Japan to withdraw from retail banking business: sources

August 19, 2014

Citibank Japan Ltd. is arranging to sell its retail banking business as Japan's loose monetary policy has kept interest rates ultralow and squeezed the bank's profit margin, industry sources said Tuesday.

The company will maintain its corporate banking business including settlement, currency trading and assistance for overseas business expansions, according to the sources.

Citibank has already contacted some Japanese financial institutions including major Japanese banks about the sale. Bidding procedures are expected to begin in September or later, and the company aims to complete the sale by the end of March next year if it can obtain approval from the Financial Services Agency.

The bank's deposits in Japan amount to some 3.8 trillion yen, in more than 30 branches and offices, mainly in large urban areas, and the relatively affluent customer base could be a lure for Japanese financial institutions.

International Banking Corp. entered the Japanese market in 1902, and eventually became a wholly owned subsidiary of Citibank. The bank was the first to offer telephone and online transactions in Japan and lured depositors with free services at its some 100 automated teller machines as well as other ATMs operated by major Japanese banks and financial institutions.

In December 2011, the bank was ordered by the FSA to suspend some of its operations for failing to sufficiently explain the risks of its financial products to customers.

To restore compliance for its retail banking division, the company appointed Kazuya Jono, former senior managing director of Sumitomo Mitsui Banking Corp., as its president. But he was later replaced by Peter Eliot, president of Citigroup Japan Holdings Corp. as business remained sluggish.

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Source: Japan Economic Newswire

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