Citigroup, which opened its first branch in Japan in 1902, has steadily built its retail operations in the country since entering the business segment in 1982.
However, because it did not have a local bank and its Japanese branches were merely branches of the US entity Citibank NA, expanding the network was a time-consuming and cumbersome process.
For example, each branch it opened required the approval of the Financial Services Authority, the Japanese financial regulator.
By setting up a local bank, Citibank will be able to expand its branch network as much as it wants and as quickly as it wants. Becoming a local bank will also allow Citibank to offer its users deposit insurance.
Douglas Peterson, chief executive of Citibank in Japan, emphasised that the bank would grow organically, rather than through M&A.
“I think Japan is just going to explode over the next few years. We want to be part of that growth,” he said.