Citigroup seeks to exit Japanese retail banking : source

Wed Aug 20, 2014 6:28am EDT
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By Taiga Uranaka

TOKYO (Reuters) - Citigroup Inc (C.N: Quote) is preparing to sell its Japanese retail banking operations, a source with direct knowledge of the matter said on Wednesday, as it waves the white flag on a venture plagued by regulatory troubles and anemic lending.

The company which pioneered 24-hour ATMs in Japan and was the only foreign bank to make a major push into its retail banking sector is throwing in the towel after failing to gain enough scale to justify its costs.

Citigroup has also signaled a desire to refocus its overseas strategy on growth markets and away from saturated mature markets such as Japan, where it has been doing business for more than a century.

Citi has approached Japan's top three lenders, Mitsubishi UFJ Financial Group (MUFG) (8306.T: Quote), Mizuho Financial Group (8411.T: Quote) and Sumitomo Mitsui Financial Group (SMFG) (8316.T: Quote) about a sale, as well as regional banks, said the source, who was not authorized to discuss the matter publicly.

A Citigroup spokesman declined to comment. Representatives at MUFG and Mizuho also declined to comment while a representative at SMFG was not immediately available.

The U.S. bank will keep corporate and investment banking and trading businesses in Japan, the source added.

Industry officials say it may be difficult to find a buyer for a modest retail banking operation with weak loan demand and falling interest margins, and which has had regular run-ins with regulators.

"The company has been penalized three times by regulators so there are issues with compliance that would make us cautious," a senior financial industry executive said. He asked not to be named because of the sensitivity of the matter.   Continued...

A pedestrian passes a logo of Citigroup in Tokyo April 20, 2009. 
 REUTERS/Yuriko Nakao