Citi has announced it is bringing together its banking and
brokerage operations in Japan in a bold bid to become the country’s
most competitive banking and securities group.
Its Japanese subsidiary, Citigroup Japan Holdings, will be merged
with Nikko Cordial Securities, the brokerage it bought early this
year for $4.8 billion (see A big
deal), to form a new holding group called Nikko Citi
Holdings. It is a significant move for the US-based bank,
particularly because it has been scaling back operations in other
areas of its business after a difficult 2007 (see News Digest).
The reorganisation will help Citi take advantage of better
synergies in its Japanese operations. It will bring retail banking,
consumer finance, cards, wealth management and retail brokerage
together under one roof, offering customers a much wider range of
products. In particular, it could help the bank cross-sell
investment products to retail customers, which is seen as an area
of huge potential growth. Japan has around $13 trillion in
household assets, over half of which are held in low-yielding
A spokesperson said: “In focusing on retail businesses locally,
Citi aims to capture the significant opportunities available in a
strong, rapidly growing market segment in Japan.”
A chequered few years
Citi says the restructuring “has the ultimate aim of creating
Japan’s leading banking and securities group”. The ambitious claim
comes after a chequered few years in the country for the US group –
at the start of 2007, it became the first high-profile casualty of
the Japanese government’s clampdown on consumer debt, taking a $370
million hit in the fourth quarter of 2006 (see RBI 565).
It responded by closing 270 branches and 100 automated loan
Its Japanese consumer finance unit, which now has 51 branches in
the country, posted an overall loss of $480 million in 2007, down
from a loss of $62 million in 2006.
The bank’s reorganisation in Japan is scheduled to be completed by
2009, and is part of a group-wide efficiency drive from new CEO
Vikram Pandit who is performing a review of the entire business
after a highly volatile second half of 2007.