Citigroup eyes Japanese loans

Citigroup intends to build up its consumer credit business in Japan as part of its aggressive expansion programme in the world’s second-largest economy.

Citigroup, which this year acquired Nikko Cordial, Japan’s third largest broker, for Y1,037.2bn ($8.5bn) and which plans to double the number of Citibank retail branches in Japan to 60 during the next few years, wants to expand its credit card business, Doug Peterson, the group’s most senior representative in Japan, told the Financial Times.

The expansion in mainstream consumer credit comes only months after Citigroup scaled back its Japanese consumer finance business, which lends to people with poor credit histories, closing 80 per cent of its branches.

Citigroup was also forced to close its private banking business in 2004, after breaches of Japanese banking law.

The restructuring of its consumer finance business this year followed a decision by the Japanese government to reduce the maximum interest rate cap on consumer loans from 29.2 per cent to 20 per cent.

That decision, and a Supreme Court ruling that has led to a series of lawsuits by borrowers claiming they had overpaid interest on their consumer loans, has battered Japan’s Y24,000bn consumer finance sector.

Mr Peterson suggested that mainstream consumer credit was an area where Citigroup would seek to grow in its latest expansionary phase in the Japanese market after its substantial investment in the Japanese financial sector.

“I think the consumer borrowing market is going to be very different [to] today’s ... It is something we would want to watch very carefully and [to] participate in.”

Mr Peterson said Citibank could use its existing credit card business to provide a moreintegrated service to offer a range of consumer loans.

“There is a need for many customer segments in Japan to have convenient ways to borrow money and clearly in many parts of the world that need is fulfilled [by] credit card loans,” he said.

Citibank offers shopping credit and credit card loans by its Diners Club Card and Citibank Card.

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