Citigroup’s plans to exit retail banking in Japan—after more than 100 years in the business—haven’t been formally announced, but the writing is on the wall. Not only have the bank’s plans been widely reported in recent days, so have the names of potential suitors and, today, at least one buyer that is (reportedly) definitely interested.
Tokyo’s Shinsei Bank is “planning to bid” for Citi’s Japan assets, the Nikkei business daily reported without citing specific sources. Citigroup has approached nine Japanese banks about the deal, Nikkei said, including the “big three” of Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho. Nikkei first broke the news about Citi’s asset sale, and none of the banks it names have denied the report, including Shinsei.
Why is Citigroup quitting a market it has been in since since 1902? Citi’s departure follows other foreign banks like HSBC, Société Générale, and Bank of America Merrill Lynch, which have failed to eke out decent profits in retail banking in recent years, thanks to super-low loan rates stemming from prime minister Shinzo Abe’s economic stimulus, heavy competition between local banks for customers, and Japanese consumers’ reluctance to park their cash in higher-yielding investment products that carry more risk than simple deposit accounts.
Despite having 4.7 trillion yen ($45.6 billion) in total assets, Citibank Japan earned just $12.9 million last year—less than CEO Michael Corbat’s $14.5 million annual salary.