Citigroup shuts down consumer finance operations in Japan

Buffeted by around $43-billion credit write-offs in the US, and Japanes regulations lowering the maximum interest rates that non bank lenders can charge in the country, Citigroup has decided to shut down its Japanes consumer finance business, CFJ. (See: Citibank's sub-prime losses beat combined losses of Indian banking sector).

Citigroup said in a statement that it would "reposition" its consumer finance business, CFJ K.K. (CFJ), in Japan, "consistent with its global priority to allocate capital and focus its businesses on the best growth opportunities." The repositioning of CFJ, would inviolve the closure of  "the 32 remaining sales distribution outlets and 540 unmanned automated loan machines, suspend marketing of its DIC consumer finance brand, and reduce new customer bookings" within a year.

The business would, however, continue to maintain its online presence.

Instead the financial group will also focus on leveraging CFJ's infrastructure and consumer lending expertise to support growth initiatives in stronger performing segments of consumer lending and other businesses throughout Japan.

The closures are part of new CEO Vikram Pandit's global capital restructuring plan to raise more than $400 billion in the next two to three years through the sale of assets mainly in the consumer finance division.

Pandit plans to focus on high-margin banking and securities businesses. Accordingly, the group will retains its investment bank, 31 retail bank branches and 110 retail brokerage outlets. Since last month, the group's  Japanese operations have been inder the uumbrella of a single holding company, Nikko Citi Holdings, after it acquired a majority stake in Japan's Nikko Cordial for $7.7 billion, in April 2007.