Citibank's Sunset in Japan?


Code : COM0101

Year :

Industry : Banking, Insurance and Financial Services

Region : Japan

Teaching Note: Not Available

Structured Assignment : Not Available

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Abstract: Citibank, the banking services unit of the world's largest financial services group, Citigroup, had been operating in Japan since 1902, and was considered the country's most successful private bank.

But on September 17 th 2004, it was ordered by The Financial Services Agency (FSA), Japan's financial services market monitoring authority, to shut down its private banking operations in the country, citing violation of the country's banking laws.

The bank was also banned from participating in government bond auctions. While the incident highlighted the dubious business practices followed by Citibank, it also initiated a debate on whether the severe penalty also meant trouble for other foreign banks too in Japan.

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Pedagogical Objectives:

  • To understand the growth strategies employed by Citibank in Japan to become the country's leading private bank
  • To discuss Citibank's serious violation of banking laws as found by the FSA, the bank's corporate culture, and the changing banking regulations and disclosure practices in Japan
  • To discuss whether the severe punishment of Citibank was justified given that the Japanese banking system itself had several drawbacks, whether the punishment meant a possible closure of Citibank in Japan, and the need for a change in its corporate culture at the global level.

    Keywords : Corporate Governance Case Study, Citigroup, Citibank Japan, World's largest financial services group, Financial Services Agency (FSA) Japan, Dubious business practices, Banking law violations, Citigroup private bank, Comprehensive wealth management services, Leading private bank, Corporate culture, Securities and Exchange Surveillance Commission (SESC), Japan, Regulatory investigations, Lawsuits and settlements, Japanese banking regulations and disclosure practices, Bank-centred economy

    Contents :
    Citibank in Japan
    The FSA Controversy
    Japanese Banking Regulations and FSA Getting Tougher

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