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Citigroup is selling its Japanese operations for retail banking to Sumitomo Mitsui Banking Corp. (SMBC) since the United States bank has expressed its lack of interest in unprofitable businesses all over the globe.
In October, the Citigroup said that they are pulling out 11 consumer banking markets to cut costs, including Japan. The consumer banking business in Japan has been hit by the falling interest margins, weak loan demands and tough competitions, not to mention that most big foreign banks have left already. Citi's foreign deposits will provide SMBC a sure-fire way to fund its further expansion, mainly overseas lending.
While the trade has been agreed upon, the specific acquisition value has not been disclosed yet. All sources that are said to have knowledge about this business deal had shared to Reuters that SMBC will acquire the business for a price of 40 billion Chinese money, approximately $333 million US dollars. Both companies said that this deal will be closed on the last quarter of 2015, but is still subject to several regulatory approvals.
CEO Peter Eliot of Citibank Japan said, "This decision will further Citi's strategy of refocusing resources where there is a strong competitive advantage; our Japan's institutional clients group of businesses is one of those."
The SMBC will, likewise, acquire Japan's Citibank's 32 branches and 1, 600 employees and merge it with SMBC's private banking subsidiary Trust Bank. Japan's Citibank has approximately 2.44 trillion yen deposits and 740, 000 retail customers. After the acquisition, the Citibank Japan's customers will continue to gain access to Citi's ATM network- the company's one of the most used services, especially amongst the Japanese public.
