Citigroup Inc, the biggest US financial firm, plans to seek approval from the Tokyo Stock Exchange (TSE) for its shares to be traded on the bourse this year to help it expand in Japan.
Citigroup is "considering a listing on the TSE," said Atsuko Yoshitsugu, a Tokyo-based spokeswoman at Citigroup. "Japan is one of our key strategic markets and we are committed to it for the long term."
A Tokyo listing would make it easier for the firm to buy local companies as the world's second-biggest economy continues its longest recovery since World War II. Citigroup wants to expand in Japan's retail market where firms such as Mitsubishi UFJ Financial Group Inc, Japan's largest bank, are competing to tap US$13 trillion in financial assets held by individuals.
"Citigroup is appealing to Japanese investors," said Hisakazu Amano, who helps manage the equivalent of US$16 billion at T&D Asset Management Co in Tokyo. "The firm would raise its brand power and credibility in Japan by listing on the TSE."
Citigroup plans to incorporate its Japanese bank locally by July to expand its retail banking operations. The New York-based bank plans to double the number of retail outlets in Japan to 50 from 25 over several years to increase lending and services to individuals, Citibank Japan chief executive officer Douglas Peterson said at a press briefing in Tokyo on Jan. 29.
Overseas companies will be able to purchase Japanese companies by offering shares in a local subsidiary after law changes in May this year. Citigroup, which opened its first Japanese branch more than 100 years ago, has the largest branch network among foreign banks in Japan.
But it has faced difficulties in the country.
Citigroup lost some investment-banking business after an accounting scandal at its partner Nikko Cordial Corp. Six executives resigned after the broker, which could be delisted, was accused of padding profits. Citigroup has a 4.9 percent stake in Nikko.
"There's been some negative impact on the joint venture because of the publicity surrounding Nikko Cordial," Citigroup CEO Charles Prince said at a presentation in New York last month. "In terms of our ownership, that is something we have to continue to study."
The US bank said on Jan. 9 that it will shut about 80 percent of its consumer-finance outlets in Japan, a month after new laws in the country capped the interest rate non-bank lenders can charge. It boosted loan-loss reserves by US$375 million and said costs related to the closures would total US$40 million.
Citigroup would be the first overseas firm listed on the TSE in the last six years if the listing application is approved, the Nikkei Shimbun reported on Sunday.
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