Citigroup to sell its Japan retail banking to Sumitomo Mitsui Banking Corp

Retreating from unprofitable businesses around the world, Citigroup Inc has agreed to sell its Japanese retail banking operations to Sumitomo Mitsui Banking Corp (SMBC). SMBC will acquire the Citibank Japan retail banking operation's 1,600 employees and 32 branches and merge it with its private banking subsidiary SMBC Trust Bank. 

"This decision furthers Citi's global strategy of focusing our resources where we feel we have a competitive advantage, which includes our Institutional Clients Group businesses in Japan," said Citibank Japan CEO Peter Eliot in a statement.

Sources with knowledge of the deal had told Reuters that SMBC, a unit of Sumitomo Mitsui Financial Group Inc, would acquire the business for about 40 billion yen ($333 million).

The companies said the deal was expected to close in October 2015 subject to regulatory approvals.

SMBC will acquire the Citibank Japan retail banking operation's 1,600 employees and 32 branches and merge it with its private banking subsidiary SMBC Trust Bank, the companies said. Citibank Japan has about 740,000 retail customers and 2.44 trillion yen ($20 billion) in deposits, according to a joint statement.

The entities specified that customers of Citibank Japan will continue to have access to Citi's global ATM network, one of the most popular services among Japanese customers, after the SMBC acquisition.

SMBC said Citibank Japan's affluent customer base is very attractive. "Its customer base is different from that of Japanese banks," SMBC Senior Managing Director Nobuaki Kurumatani told reporters at a briefing.

He also said Citibank Japan's 1 trillion yen worth of foreign-currency deposits from customers is also very valuable for his bank as it aggressively expands overseas lending and needs more stable dollar funding sources.

Citigroup said in October it was pulling out of consumer banking in 11 markets, including Japan, to cut costs. Its Japanese consumer banking business has been hurt by weak loan demand and falling interest margins. ($1 = 120.3700 yen).

Photo: Japan Times