FSA to suspend some Citibank Japan operations

December 03, 2011

By KANAME OHIRA / Staff Writer

The Financial Services Agency will order Citibank Japan Ltd. to partially suspend its operations after concluding the bank failed to properly inform customers about the risk of losses from investment trusts.

The financial regulator decided Dec. 2 to impose the sanction by the end of the year. A two-week to one-month suspension of functions related to the sale of new financial instruments is in the cards. General banking services such as the withdrawal of deposits will not be affected.

During an inspection through June, the FSA found that Citibank Japan, the Japanese arm of U.S.-based Citigroup Inc., was not doing enough to ensure its employees provided customers with in-depth information on the risks of investment trusts. It also concluded that contract forms were not sufficiently informative, sources said.

The Banking Act obligates banking institutions to provide full explanations of the financial instruments they sell.

It will be the second time Citibank Japan has been sanctioned since it was incorporated in its current form in 2007. Citigroup plans to replace Citibank Japan's management, including CEO Darren Buckley, and promote a Japanese executive to replace him as chief operating officer.

Citigroup traces its operations in Japan to 1902. As of the end of September, the group had 38 branches across Japan, including in the Tokyo metropolitan area, Osaka, Nagoya, Fukuoka and Sapporo.

A predecessor to Citibank Japan was the subject of an administrative disposition in 2004 for legal infringements at a division responsible for providing services to wealthy customers. That division subsequently withdrew from Japan.

Citibank Japan was ordered to suspend part of its operations for a month in 2009 after its operational setup was found to be insufficient to prevent money laundering.

By KANAME OHIRA / Staff Writer
  • 1
submit to reddit
Citibank Japan was the subject of an administrative disposition for non-observance of law in 2004. (Asahi Shimbun file photo)

Citibank Japan was the subject of an administrative disposition for non-observance of law in 2004. (Asahi Shimbun file photo)

Toggle
  • Citibank Japan was the subject of an administrative disposition for non-observance of law in 2004. (Asahi Shimbun file photo)

More AJW