Pedestrians walk past a Sumitomo Mitsui Banking Corp branch in Tokyo. Sumitomo Mitsui Financial Group will announce an agreement to buy Citigroup’s Japanese consumer-banking business as soon as next week.
Bloomberg
Tokyo
Sumitomo Mitsui Financial Group will announce an agreement to buy Citigroup’s Japanese consumer-banking business as soon as next week, people with knowledge of the matter said.
The lending unit of Japan’s second-biggest bank by market value will purchase the operations from Citibank Japan for about ¥40bn ($330mn), said the people, who asked not to be named as the discussions are private.
Sumitomo Mitsui Banking Corp is one of at least five local banks that began bidding for the assets in September, as Citigroup sells consumer-banking operations around the world to focus on faster-growing markets. The Japanese lender is seeking to get more business from wealthy individuals in a country with about $14tn in household financial assets.
“The deal shows Sumitomo Mitsui’s aggressive stance on pursuing M&A for growth,” Nana Otsuki, a banking analyst at Bank of America Corp in Tokyo, said by phone today. “There’s a risk that some customers may walk away unless Sumitomo Mitsui can maintain the same quality of service that Citigroup offers through its global franchise.”
Tokyo-based Sumitomo Mitsui plans to inherit all of Citigroup’s retail banking employees, branches and client assets in Japan, the people said. The US firm earlier gave Sumitomo Mitsui the right of first refusal to buy the business.
Citigroup remains in talks with Sumitomo Mitsui Trust Holdings to sell its Japanese credit-card unit, according to the people. The New York-based bank’s Citi Cards Japan unit owns the Diners Club brand in Japan.
While other Japanese companies are interested in acquiring the card unit, Citigroup currently has no plan to negotiate with them or start a fresh round of bidding, the people said.
Spokesmen for Sumitomo Mitsui, Citigroup and Tokyo-based Sumitomo Mitsui Trust declined to comment on the negotiations.
Shinsei Bank, Isetan Mitsukoshi Holdings and JCB Co will jointly seek to acquire the card business and are ready to start talks, the Nikkei newspaper reported earlier.
Sumitomo Mitsui has been expanding its wealth-management operations in Japan to generate more fee income. Last year, it agreed to acquire Societe Generale SA’s private-banking unit in the country.
The Japanese lender formed a private-banking venture with Barclays for affluent clients in 2010.
Citigroup is exiting 11 consumer-banking markets with poor returns, including Japan, where it wants to focus on corporate and investment banking, markets and transaction services, it said in October.