Citigroup considers Tokyo listing

Citigroup is considering listing on the Tokyo Stock Exchange as part of its strategy to expand its operations in Japan, where it recently announced it would double the number of retail outlets and triple the size of its corporate banking business.

Citigroup said on Monday a TSE listing was a possibility, although no decision had been made.

The US bank last month outlined a plan to significantly strengthen its operations in Japan, where it is setting up a financial holding company and localising its banking business.

A listing by Citibank would be a major coup for the TSE, which has seen a steady stream of foreign company de-listings over the past decade. The number of foreign listings on the TSE has fallen from a peak of 125 at the end of 1990 to just 25 at the end of last year.

“The TSE would welcome a Citigroup listing. It would raise our image,” the TSE said on Monday.

The possible listing of Citigroup comes as the Japanese government has become increasingly concerned that Tokyo could lose its position as the leading financial centre in the region and has set up committees to look into measures to revive Tokyo as a financial centre.

It has also begun to broaden links with international rivals. Last month TSE signed a business agreement with the New York Stock Exchange. It has also reportedly held talks about taking a stake in the London Stock Exchange.

The exchange has also launched a campaign to advertise the benefits of a Tokyo listing, particularly to Asian companies.

The TSE concedes that the costs of having to have their financial statements translated and retaining lawyers to file them are not matched by the benefits to foreign companies of a Tokyo listing.

“Listings were popular around 1986 and 1987 but shareholders did not increase,” the TSE said.

This is not a problem restricted to the TSE.

“There is a global trend for trading to be focused in the home markets so people are questioning the value of secondary markets,” said David Sneider, a partner at Simpson, Thacher and Bartlett, the law firm.

“There is no trading (of foreign stocks) by institutional investors because buying a foreign stock on the TSE is actually contrary to their interests because they get the best price in the market that has the greatest liquidity. And for individuals, it’s a bit more cumbersome but they can probably do it. So by listing you don’t really get more investors,” he said.

The government is adopting measures, which it believes will make it easier for foreign companies to list in Tokyo.

Rules were eased last December to simplify the listing procedures for foreign companies, which are already listed on a well-established exchange, such as the New York Stock Exchange.

Foreign companies will also in future be able to submit financial statements in English and the government is poised to deregulate Japanese Depository Receipts.

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