Citigroup to close Japan moneylending outlets

Citigroup to close Japan moneylending outlets


Citigroup will shut down its remaining Japanese consumer lending outlets and automated loan machines, as the subprime-hit bank continues its retreat from Japan's troubled moneylending industry.

Citigroup, which operates a consumer lender under the brand name Dic, said on Friday it would close its last 32 outlets and 540 unmanned loan machines and suspend marketing the brand.

Japan's once-mighty consumer finance industry has been crippled by tighter regulation lowering maximum interest rates, and legal rulings that have forced firms to repay previous charges now deemed illegally high.

Another U.S. firm, General Electric Co, has been looking to sell its Japanese consumer finance unit for about a year.

Media reports have said midsize lender Shinsei Bank is likely to buy the GE unit, which is known under the brand name Lake.

But Citigroup, which has suffered more than $45 bln in write-downs and credit losses since last summer, does not intend to completely exit the consumer finance business in the world's second-largest economy.

The U.S. bank said in a statement it would "reduce" new consumer lending. A spokeswoman for Citigroup in Tokyo, Atsuko Yoshitsugu, said the business would continue to have an online presence.

Many consumer lenders have fallen deep into the red, forcing some to tie up with Japanese banks for funding.

Others, such as Citigroup, have steadily pared down their branch networks. In 2002, the U.S. bank had 903 consumer outlets in Japan. By January 2007 the number had fallen to 320.

The remaining 32 outlets will be closed over the next 12 months, Citigroup said in a statement.

Another Citigroup spokeswoman, Chikako Oki, declined to comment on the unit's outstanding loan balance, its number of customers or annual revenues.

FINANCIAL MIRROR