Citigroup has shortlisted several Japanese firms as buyers for its 33-branch Japanese retail bank as part of its global efforts to streamline operations.

Dow Jones/Tokyo

 

Citigroup has shortlisted several Japanese firms, including the country’s second biggest lender, Sumitomo Mitsui Financial Group, as buyers for its retail bank in the country, according to people with knowledge of the matter.

The US bank put its 33-branch Japanese retail bank with deposits of about ¥3.9tn ($36bn) on the block last month, as part of its global efforts to streamline its operations to ease regulators worries that the bank was becoming too big to manage.

First bids were due on September 12. SMFG, Sumitomo Mitsui Trust Holdings and Mitsubishi UFJ Financial Group  and Shinsei Bank have passed the first round and were shortlisted on Friday, the people said. Citi aims to select a buyer by the end of this year or early next year.

Citi may sell its Diners Club branded credit card unit in Japan along with its retail bank, another person said. Citi was seeking a price of around ¥30bn ($275.6mn) though some bids came below that, the person said.

A sale of the retail unit, whose customers are mainly wealthy or foreign residents, would leave Citi to focus on its remaining businesses in Japan: corporate banking, transactions business, investment banking and trading. The sale has raised concerns among its regular customers that they will lose access to Citi’s global transaction networks.

The presence of just Japanese bidders in the shortlist shows how challenging for foreign players to run the retail business in Japan, where years of low interest rates and weak loan demand have weighed on profits.

HSBC Holdings has quit retail banking in Japan and Standard Chartered has scaled back in the country, leaving the country with a loans and savings market that is dominated by local players.

Citi doesn’t disclose how many retail customers it has in Japan or how much it earns at the retail unit. But for some Japanese lenders, Citibank Japan’s ¥1tn deposits in foreign currencies and its relatively wealthy customer base are attractive, analysts and industry officials say. It remains unclear, however, how many customers will stay after Citi’s sale as it isn’t certain at this point whether or how much the remaining customers can get an access to Citi’s global network.

 

 

 

 

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