Citigroup Inc offered 1,350 employees at its consumer finance unit in Japan early retirement with two months’ pay as the company withdraws from the business, a proposal the workers’ union called unacceptable.
CFJ KK, Citigroup’s local consumer finance unit, made the offer in a memo that was distributed to all employees on Monday and provided to Bloomberg News by Akihito Kawamura, chairman of CFJ’s labor union.
Citigroup’s Tokyo-based spokeswoman Atsuko Yoshitsugu declined to confirm the document, which was addressed from Masanori Hogi, CFJ’s chief administrative officer.
“We can’t accept this offer,” Kawamura said in an interview yesterday in Nagoya, central Japan, calling two months’ pay insufficient. “We’ve asked all employees not to accept this, and we plan to negotiate with management.”
Citigroup, the biggest US bank by assets, will close all of its 32 consumer finance branches and 540 automated loan machines in Japan and transfer capital to more profitable areas, the company said on June 6.
The New York-based firm is revising global operations after reporting losses and writedowns from the US subprime mortgage crisis totaling US$42.9 billion, more than any other bank, according to data compiled by Bloomberg.
Employees have until July 15 to apply for the plan, the memo said.
“CFJ ensures employees are treated fairly and made aware of the options open to them,” Citigroup’s Yoshitsugu said, declining to comment further.
The company has been scaling back its consumer finance business in Japan for the past three years. Citigroup said in January last year that it would shut about 80 percent of its consumer finance branches in the country, a month after new laws capped the interest rate that local non-bank lenders can charge.
Japan passed legislation in 2006 to lower the maximum rate to 20 percent, matching the highest rate for banks, from 29.2 percent. Lawmakers said they aimed to end abusive lending practices and ease the debt burden of consumers.
Citigroup said last month it would close two UK loan operations, eliminating about 700 jobs, and stop offering certain home and personal loans. It is also shedding jobs at its investment banking business in Japan. Nikko Citigroup Ltd will fire as many as 170 of its 1,700 employees, two Citigroup officials, who declined to be identified, said earlier this year.
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