According to a report from Reuters, Citibank is looking to sell its retail banking division in Japan. One of the only foreign banks to have opened up retail banking services in Japan, the firm operates 33 branches in the country with around $35B in deposits as of the end of March. Based on deposits, Citibank ranks as 30th among 64 top-tier regional banks in Japan, but suffers from having the last ranked loan book with an outstanding balance of only about $3.5B.
Not being affected are Citi’s corporate, investment banking and trading businesses which will remain active in Japan. As reported in July, Japan’s domestic retail FX industry is by far the largest in the world. However, it suffers from a lack of local liquidity sources due to few banks located in the country providing commercial lending to both Japanese and foreign entities. The result is a gap in banks with yen and foreign currency exposure to provide market-making liquidity locally.
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Among the largest global FX players, one of Citibank’s achievements has been the ability to enter new countries and gain market share as a liquidity provider of local currencies. Although primarily focusing on the more lucrative corporate banking space, Citibank has also been known to try and establish a retail presence when entering new markets. In terms of Japan, although exiting from the retail space, by holding its commercial presence, it should provide the bank the ability to continue being an important provider of FX liquidity in the country.