(Reuters) – Citigroup Inc (C.N) has agreed to sell its Japanese retail banking operations to Sumitomo Mitsui Banking Corp (SMBC), as the U.S. bank retreats from unprofitable businesses around the world.
The acquisition price was not disclosed. Sources with knowledge of the deal had told Reuters that SMBC, a unit of Sumitomo Mitsui Financial Group Inc (8316.T), would acquire the business for about 40 billion yen ($333 million).
“This decision furthers Citi’s global strategy of focusing our resources where we feel we have a competitive advantage, which includes our Institutional Clients Group businesses in Japan,” said Citibank Japan CEO Peter Eliot in a statement.
SMBC will acquire the Citibank Japan retail banking operation’s 1,600 employees and 32 branches and merge it with its private banking subsidiary SMBC Trust Bank, the companies said. Citibank Japan has about 740,000 retail customers and 2.44 trillion yen ($20 billion) in deposits, according to a joint statement.
The companies said customers of Citibank Japan will continue to have access to Citi’s global ATM network, one of the most popular services among Japanese customers, after the SMBC acquisition.
SMBC said Citibank Japan’s affluent customer base is very attractive. “Its customer base is different from that of Japanese banks,” SMBC Senior Managing Director Nobuaki Kurumatani told reporters at a briefing.
He also said Citibank Japan’s 1 trillion yen worth of foreign-currency deposits from customers is also very valuable for his bank as it aggressively expands overseas lending and needs more stable dollar funding sources.
The companies said the deal was expected to close in October 2015 subject to regulatory approvals.
Citigroup said in October it was pulling out of consumer banking in 11 markets, including Japan, to cut costs. Its Japanese consumer banking business has been hurt by weak loan demand and falling interest margins.