Business / Corporate

Sumitomo Mitsui to buy Citigroup's Japan retail operation

Bloomberg, Kyodo

Sumitomo Mitsui Financial Group Inc.’s main lending arm agreed to buy Citigroup Inc.’s Japanese consumer-banking business to expand services for wealthy individuals in the country.

SMBC Trust Bank Ltd., a subsidiary of Sumitomo Mitsui Banking Corp., will purchase scandal-tainted Citibank Japan Ltd.’s retail banking operations, including ¥2.4 trillion ($20 billion) in deposits from about 740,000 customers, around 1,600 employees and 32 branches, the lenders said in a joint statement Thursday. The transaction is subject to regulatory approvals and expected to close in October next year, they said, without giving the financial terms of the deal.

The purchase comes as Sumitomo Mitsui seeks to get more business from high-net-worth individuals in a country with about $14 trillion in household financial assets and generate more fee income. Last year, it agreed to acquire Societe Generale SA’s private-banking unit in the country and started SMBC Trust. The Japanese lender formed a private-banking venture with Barclays Plc for affluent clients in 2010.

Sumitomo Mitsui may pay about ¥40 billion to acquire Citigroup’s Japanese retail-banking operations, people with knowledge of the matter said earlier this month.

Citigroup also continues to pursue the possible sale of its Diners Club credit card business in Japan, the company said in a separate statement the same day.

Citibank, a longtime leading foreign bank in Japan, has ¥3.8 trillion in deposits in the country, including ¥1 trillion denominated in foreign currencies, which will likely help SMBC raise funds for overseas investment.

Citigroup has maintained nearly 1.9 million ATMs globally, including those of allied financial institutions.

Account holders of SMBC Trust as well as Citibank will be able to withdraw cash using the network for at least two years after the acquisition, according to sources. SMBC may need to modify its own system to continue offering the service thereafter.

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.

Coronavirus banner