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Citigroup to exit retail banking in 11 markets, including Japan

35 Comments
By KEN SWEET

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35 Comments
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Gee, you mean residents of Japan and the companies who serve them have to comply with Japanese law? SHOCKING. That's exactly how it should be.

I don't know what business you think it is of the Japanese regulators what I choose to do with my own money in other jurisdictions. The Japanese regulators regulate those businesses operating in Japan, but if I take my business overseas and overseas operators want to serve me (in accordance with their laws), then why do you think the Japanese regulators have a right to stand in the way? The regulators don't police me, they police business operators only. And I'm doing nothing illegal by having some money in foreign jurisdictions, and doing what I like with it.

How else would people know who is good and who is bad?

People shouldn't be falsely led to believe that regulators have 100% fullproof insights with respect to that. They don't. This is one reason why I choose to have some money outside of the Japanese jurisdiction.

-1 ( +0 / -1 )

GW

keep the blinders on if you wish.

Which blinders? I'm actually quite familiar with the business of the oil industry in Japan, thank you very much. You?

fxgai

my idea is to go a bit easier and let the customers sort out the rotten apples from the good ones

Very bad idea. A whole lot of people get screwed by bad operators in your idea. How else would people know who is good and who is bad?

Regulations exist in the financial services world for a very good reason - given the extreme profit motivation, a heck of a lot of operators cannot resist the urge to ruin their customers in the pursuit of extra profits for themselves. It's been proven time and again, for decades and decades, all over the world.

The regulator has a blacklist on it's webpage of overseas financial service providers (including reputable ones) that don't comply with it's rules, and they contact these businesses and warn them not to serve residents of Japan.

Gee, you mean residents of Japan and the companies who serve them have to comply with Japanese law? SHOCKING. That's exactly how it should be.

-3 ( +0 / -3 )

keep the blinders on if you wish..............

0 ( +1 / -1 )

GW

LOL!! I know! This has & IS still going on now, read the news even J-companies are doing LOTs of investing outside Japan because THEY KNOW the market is shrinking, common knowledge!

Your specific cited case is unrelated to your point. It has nothing to do with regulations and everything to do with economic conditions, which were very poor in the wake of 311. You know this. These sorts of transactions happen all the time in the oil business, all over the world. Oil interests move in and out of markets all the time.

-2 ( +0 / -2 )

pandabelle

1) Is almost 3 years old 2) doesn't say anything at all like what you are wanting to say. did you read it? EM sold most of it's stake in refining capacity due to reduced demand for refined products in Japan. Surely this was due to the poor economic climate after 3/11?

LOL!! I know! This has & IS still going on now, read the news even J-companies are doing LOTs of investing outside Japan because THEY KNOW the market is shrinking, common knowledge!

1 ( +2 / -1 )

Pandabelle,

Who defines a reputable operator?

Why, the customers. Regulators get it wrong often enough.

there needs to be equal regulation for all players.

Absolutely, but rather than over-regulating each and every operator to be fair, and consequently burdening the entire system with extra costs, my idea is to go a bit easier and let the customers sort out the rotten apples from the good ones. There is nothing stopping any operator from doing more than the regulations require if they think customers want it.

Reputations matter for businesses. Just because they were regulated a little lighter I don't think they'd all start scamming their customers for short term gains. Regulations can still be designed to punish such behaviour. Yes there might be some extra risk for customers but I'd rather take an "ambulance at the bottom of the cliff" approach than a "build a great wall of china up at the top" alternative being pursued.

You can open accounts with overseas providers if they will let you.

Some however choose to refuse to open accounts for residents of Japan, and it's due to pressure from the Japanese regulator.

The regulator has a blacklist on it's webpage of overseas financial service providers (including reputable ones) that don't comply with it's rules, and they contact these businesses and warn them not to serve residents of Japan. Many operators (being reputable) elect to comply, and this cuts down options for us residents of Japan. Does it make it harder or easier to find a reputable operator to open an account with? It's harder, because the reputable names won't have a piece of residents of Japan.

Another situation is where the operator has a subsidiary in Japan, they won't let you open the account with their overseas subsidiary (so you only have the option of using a Japanese language, over-regulated service, rather than a native English one that is more flexible).

A lot of providers won't open accounts for, say, US passport holders though.

US citizens indeed seem to do it toughest, but Japan's residents are only marginally better off.

1 ( +1 / -0 )

fxgai

all the requirements on reputable operators strike me as being exceedingly onerous.

Who defines a reputable operator? You can't simply say "oh you're a big bank, we know you" and lower regulations on them. It's anti-competitive. As long as there are bottom feeders in the financial services industry - and there are plenty of those - there needs to be equal regulation for all players.

Another issue I have struck is when as a resident of Japan attempting to open an account with overseas financial services providers of my own choice. In not one but several instances I've found this is not possible, thanks to the Japanese regulator's view that if those overseas operators provide me services, they would be in violation of Japanese law

I honestly don't know what you are talking about here. You can open accounts with overseas providers if they will let you. The issue is at their end, not in Japan. A lot of providers won't open accounts for, say, US passport holders though.

-3 ( +0 / -3 )

Pandabelle, I'm fine with a certain level of disclosure, and deceipt without saying is a no-no, but all the requirements on reputable operators strike me as being exceedingly onerous. Rather than be so bleedingly prescriptive about everything I'd prefer they left some things up to discretion and the freedom of individuals to choose for themselves.

Another issue I have struck is when as a resident of Japan attempting to open an account with overseas financial services providers of my own choice. In not one but several instances I've found this is not possible, thanks to the Japanese regulator's view that if those overseas operators provide me services, they would be in violation of Japanese law. Protecting people is a noble idea but I don't think it should come at the detriment of others and certainly not my individual freedom.

1 ( +2 / -1 )

fxgai,

I think it's good that customers are kept fully informed of what they are getting into. Less regulation sounds wonderful and perhaps that works well for most financial services but there are a LOT of financial predators out there.

-2 ( +0 / -2 )

There will be changes but I think the current system will stay...

https://www.citibank.co.jp/en/news/2014/news10141401.html

Citi announced, as part of its third quarter 2014 corporate earnings which has been made public in the United States that it plans to accelerate the transformation of its Global Consumer Banking (GCB) business by streamlining the GCB's footprint to 24 markets.

Citigroup intends to exit from its consumer businesses in 11 markets. As a result, Citi is exploring a sale of Citibank Japan Ltd.'s Retail Banking Division and Citi Cards Japan, Inc.

There is no change to the products and services that Citibank Japan provides to its retail banking customers as a result of this announcement. Consumer operations, including all branches, call centers and online banking will continue to operate as they do today.

While no decision has yet been made to proceed with any transaction, Citi is committed to finding the best possible outcome for all customers.

0 ( +0 / -0 )

There will be changes but I think the current system will stay...

https://www.citibank.co.jp/en/news/2014/news_101414_01.html

0 ( +0 / -0 )

GW,

That article:

1) Is almost 3 years old 2) doesn't say anything at all like what you are wanting to say. did you read it? EM sold most of it's stake in refining capacity due to reduced demand for refined products in Japan. Surely this was due to the poor economic climate after 3/11?

I can assure you that EM/RDS are both very active in Japan still.

-2 ( +0 / -2 )

Pandabelle, maybe it depends where you are from originally and what specific products you buy here, but in my personal experience I feel the regulator is excessive in it's requirements and takes actions "in the interest of protecting people" like me which I have never asked for and do not want, either.

I am someone who is more than happy to work something out for myself and accept whatever consequences may come of it. In exchange I'd like the regulator to ease up, and make it cheaper for businesses to provide services to me, so that I can get what I want for less money. The only losers would be the uncompetitive businesses and perhaps a few regulators.

2 ( +2 / -0 )

click & learn

http://dealbook.nytimes.com/2012/01/29/exxon-mobil-to-sell-its-japanese-arm-for-3-9-billion/?php=true&type=blogs&_r=0

???? Did you even try to comprehend the article? Not exclusive to Japan. Not even exclusive to Exxon Mobil.

As to this, not exclusive (11 markets) to Japan nor Citibank.

-1 ( +1 / -2 )

pandabelle,

"big oil" has been ditching Japan? what does this even mean?

click & learn

http://dealbook.nytimes.com/2012/01/29/exxon-mobil-to-sell-its-japanese-arm-for-3-9-billion/?_php=true&_type=blogs&_r=0

The names may still be on stations, but foreign investments are being sold in the oil biz here, its one of those macro indicators that's in decline, ie not as much oil/gas being sold so foreign interests have been getting OUT of Japan, cutting their investments

1 ( +2 / -1 )

GW

You should pay more attention, lots of foreign concerns are just sick & tired of the BS that's needed to do business here, toss in that the population & economy are now headed south & we will be seeing more & more of this, big oil etc has already been ditching Japan, the writing is sadly on the wall in rather large font.

People have been saying these things about Japan for decades. Literally decades. It's always heading south, things always getting so bad. It wasn't true 20 years ago and it isn't true now.

"big oil" has been ditching Japan? what does this even mean?

fxgai

Guess what? I only read very little of it - surprised? My suspicion is that your typical Japanese native doesn't read much of it either. But still this huge volume of useless documentation is required to be created anyway, at what cost I don't know

Same anywhere, and I doubt anybody reads all that stuff in any place. I don't know why you think it's different overseas, because it's not.

-3 ( +0 / -3 )

GW, I hear you. All in all I feel Japan is still one of the best places in the world to live, and this bureaucratic nonsense that goes on is just one of the unfortunate negatives (and perhaps inevitable for any great place at some point?). A big flush of the system could finally offer the opportunity of a fresh start and far brighter future, but there's sure a lot of deadwood to be chopped.

JA_Cruise, yeah no immediate changes but depending on who buys them out (if anyone wants to) there may no longer be any point to keeping the account open. Why have two accounts with the same megabank? One Japanese article I saw about it suggested that banks considering the purchase think it's a dog and want to get paid (rather than pay) to take it on. Also the articles suggested that to keep offering the same services as now, the buyer might have to keep paying Citi fees for access to it's overseas network etc, which doesn't sound like it makes much sense to me.

4 ( +5 / -1 )

They are selling their retail banking services, but will continue to provide the normal services as they have been up until now. So as it stands now, you don't have to necessarily get your money out and look for another bank to put in. My guess is a megabank will buy them out and will keep the same branches and outlets as is and just change names.

0 ( +0 / -0 )

Great, this sucks, been using citi for ages............

What now folks, so who is the best of the worst, for banks in Japan for ease of online use, bilingual forms etc

pandabelle,

You should pay more attention, lots of foreign concerns are just sick & tired of the BS that's needed to do business here, toss in that the population & economy are now headed south & we will be seeing more & more of this, big oil etc has already been ditching Japan, the writing is sadly on the wall in rather large font.

Japan & its overly bureaucratic ways simply are making Japan not worth the bother & I am sure I am not the only one that is now openly wondering whether putting down deep roots here was worth it, sure doesn't look like it in 2014 that's for damned sure!

4 ( +5 / -1 )

Pandabelle,

But residents of Japan would be better served if Citibank remained an option in the niches where they are strong and cost competitive.

As for customer service and physical locations, I don't care, since I rarely ever visit a branch. These days most everything can be done on the internet, it's only when my personal details change that I actually go talk to someone in a bank. E.g. less than once a year on average.

It sure is easy to blame regulators for your failure as a business, though - that's part and parcel of the Wall Street playbook. Never your business's fault, always regulations on the market that are the problem. Hogwash.

I don't know specifics of citibank's demise here beyond what's reported in the media, but I strongly disagree about regulations.

Have you ever bought a mutual fund etc here? It's amazing the huge swath of Japanese literature that I receive explaining in excruciating detail all I need (according to the Japanese regulators) to know about the financial products when I buy them.

Guess what? I only read very little of it - surprised? My suspicion is that your typical Japanese native doesn't read much of it either. But still this huge volume of useless documentation is required to be created anyway, at what cost I don't know, all "for the protection of the vulnerable saver/investor".

This is just one example I felt keenly myself, I'm pretty sure there are lots of others.

Regulations are neccessary, but Japan goes way too far requiring customers to be bludgeoned with so much useless documentation.

5 ( +6 / -1 )

HSBC lost a lot of money in Japan, but the main catalyst behind the withdrawal was FSA related, i.e. the FSA blocked some of their business plans to protect the likes of Nomura.

Citibank has been repeatedly spanked by the FSA as well. Some of this may have been justified.

In Lloyds case, their retail banking arm in Japan was profitable, the reason they pulled out was a combination of FSA moving the goalposts at the last minute, ruining a product launch that they had spent millions preparing for.

CBA I'm not sure of as much, but word is the FSA moved the goalposts on them as well when they were looking to launch a deposit related program.

You can't and shouldn't do business in such a regulatory environment.

All these banks though are likely still active in the corporate and institutional space, frankly that is where the money is to be made with much less regulatory risk.

3 ( +4 / -1 )

What the heck is up with all the thumbs down on my last post? It's completely factually correct. That's exactly why HSBC pulled out and this is why Citibank is pulling out. Go ask an average person about Citibank Japan - they're response will surely be "too high fees" and "very few locations". It sure is easy to blame regulators for your failure as a business, though - that's part and parcel of the Wall Street playbook. Never your business's fault, always regulations on the market that are the problem. Hogwash.

fxgai, there may be certain services where Citibank had an edge for regular consumers but that's quite limited compared to what the vast majority of retail consumers use banks for.

-4 ( +3 / -7 )

Another example of the banking industry losing sight of its fundamental function. They're pulling out of Japan because the USD13m in profit they made (from Japan alone) was simply not enough for them. They want to "concentrate resources" where the profit margin is higher, and they have no concern for the affected customers or employees.

With their wealthier retail client base, many of their corporate customers may turn out to be now-dissatisfied retail customers, and this may come to to bite them in the rear in their efforts to concentrate on corporate banking.

-2 ( +1 / -3 )

Pandabelle,

I use a Japanese megabank and a Japanese Net bank too, but Citibank is (soon to be "was" I fear) one of the best bank options for certain foreign currency related services. At least the last time I investigated, the Japanese megabanks will totally rip you off on currency conversions and foreign currency lifting charges. I recall that Shinsei was however competitive if not even cheaper, but never used them to know for sure.

I'm also under the same impression as Akula that the FSA needlessly makes Japan a difficult place to do business in. I don't think it's that they are targetting foreign banks, it's just that they like to make loads and loads of rules many of which are probably of dubious value but add to the cost of running a legal operation here. That's just the Japanese bureaucracy at work, not just the FSA.

6 ( +7 / -1 )

the banks involved have simply decided Japan was too much trouble as far as retail banking goes,

That's not the case with HSBC. They only moved into retail banking in Japan with their HSBC Premier service anyway, and had the misfortune of doing so just before the 2008 financial crisis. Like many other firms catering to the finance crowd, their business dried up as ex-pats in those positions moved away.

Citibank's problem in Japan is its high fees and poor integration with the Japanese banking network. That's Citibank's problem, not a regulation problem.

-5 ( +2 / -7 )

In the last few years Lloyds, Commonwealth Bank of Australia, HSBC and now Citi have all pulled out of retail banking in Japan.

One of the common factors in all cases has been the behaviour of the FSA making it as hard as possible for these banks to do business. It is best I not go into specifics, but faced with these hurdles, the banks involved have simply decided Japan was too much trouble as far as retail banking goes, and concentrated more on the corporate and institutional space which is more profitable.

4 ( +5 / -1 )

The rumors were true, back to crappy Japanese banking.

4 ( +8 / -4 )

That's OK - I get better customer service, lower fees, and more ATMs from my Japanese bank anyway.

My local bank has always been extremely helpful and friendly.

1 ( +4 / -3 )

It's peculiar that Japanese people have 1,600 trillion yen of financial assets, but the trend is for foreign banks to leave this country, rather than flock to it. This trend will end though. Because after Citibank is gone there will be no further non-Japanese retail banks left!

This is something that Abe should have his people take a look at, and think about.

2 ( +4 / -2 )

Why do international businesses shun Japan?

That should be "Why does Japan shun international businesses?".

4 ( +7 / -3 )

Why do international businesses shun Japan?

-2 ( +4 / -6 )

Sucks. Best bank customer service in Japan. I guess they will sell it to one of the big banks with soviet-style bureaucracy and customer service.

-1 ( +3 / -4 )

Thank goodness.

-5 ( +2 / -7 )

Well that sucks. Thanks very much for your stunning customer loyalty, Citibank...

7 ( +8 / -1 )

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