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Citigroup to delay Japan units merger until 2010

Citigroup to delay Japan units merger until 2010
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First Published: Wed, Dec 17 2008. 06 39 PM IST
Updated: Wed, Dec 17 2008. 06 39 PM IST
Tokyo/New York: Citigroup Inc. said it will push back the merger of two Japanese units until 2010 to delay integration costs, as the US bank cuts costs worldwide after suffering heavy losses from the global credit crisis.
The decision comes after a person briefed on the matter said Citigroup was combining its corporate and investment banking businesses in a bid to become more efficient and reduce costs.
The New York-based banking giant is also the focus of increasing scrutiny from federal banking regulators, The Wall Street Journal reported on Wednesday, since the government became Citigroup’s largest shareholder last month in a bid to rescue the struggling firm.
Regulators are becoming involved in discussions with the company about its strategic direction, including possible acquisitions, the newspaper reported.
In Japan, Citigroup had intended to bring together brokerage Nikko Cordial Securities and investment bank Nikko Citigroup by March 2009, but it said this month it would delay the merger.
The combination will now likely take place in 2010, Douglas Peterson, Citigroup’s top executive in Japan, said on Wednesday.
There are reasons from a “technology point of view” and a “cost point of view” for “delaying and spreading out this project”, he said.
The merger “was not the most important priority for the technology team in the next six-nine months”, he said.
The bank still plans an initial public offering for Nikko Asset Management Co., its majority owned Japanese fund management business, Peterson said.
Citigroup is trying to become more efficient—the bank was created over two decades through a series of acquisitions—but has been struggling to break down divisions between businesses.
It has suffered more than $50 billion (Rs2.36 trillion) of credit losses and writedowns since the credit crunch began last year.
Citigroup has also said it will cut 52,000 jobs globally, or about 15% of its workforce, by early next year to reduce costs.
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First Published: Wed, Dec 17 2008. 06 39 PM IST