The Wall Street Journal: Citibank sells Japan retail unit to Sumitomo Mitsui
TOKYO — When Japanese regulators accused the local retail unit of Citigroup Inc. C, +0.22% of improper lending practices in 2004 and ordered its private banking operations shut down, Charles Prince , then Citi’s chief executive, bowed deeply before reporters and pledged to overhaul the bank’s controls.
But the bank never fully got its hands around the issue and over the next decade faced punishments from Japan’s Financial Services Agency over anti-money-laundering controls and other problems. Many Japanese customers switched to other private banks.
On Thursday, Sumitomo Mitsui Banking Corp., Japan’s second-largest lender, said it would purchase Citi’s Japanese retail operations, leaving the New York bank to focus on corporate banking, investment banking and other institutional businesses in the world’s third-largest economy.
SMBC said it believed it could make the unit profitable, in part by leveraging the deal to give its customers access to Citigroup’s 1.9 million automated teller machines globally.
SMBC, the core banking unit of Sumitomo Mitsui Financial Group Inc. 8316, +0.83% SMFG, +0.41% will take over Citibank Japan’s retail business including its deposits, 740,000 customers, branches, 1,600 employees and network of automated teller machines in October 2015. The Japanese lender will pay Citi between ¥30 billion and ¥50 billion (between $ 250 million and $ 417 million) depending on the number of customers and deposits it inherits, according to people familiar with the matter. SMBC said it had no plan to cut jobs following the acquisition.
An expanded version of this report appears on WSJ.com.