Buffeted by around $43-billion credit write-offs in the US, and Japanes regulations lowering the maximum interest rates that non bank lenders can charge in the country, Citigroup has decided to shut down its Japanes consumer finance business, CFJ. (See: Citibank's sub-prime losses beat combined losses of Indian banking sector).

Citigroup said in a statement that it would "reposition" its consumer finance business, CFJ K.K. (CFJ), in Japan, "consistent with its global priority to allocate capital and focus its businesses on the best growth opportunities." The repositioning of CFJ, would inviolve the closure of  "the 32 remaining sales distribution outlets and 540 unmanned automated loan machines, suspend marketing of its DIC consumer finance brand, and reduce new customer bookings" within a year.

The business would, however, continue to maintain its online presence.

Instead the financial group will also focus on leveraging CFJ's infrastructure and consumer lending expertise to support growth initiatives in stronger performing segments of consumer lending and other businesses throughout Japan.

The closures are part of new CEO Vikram Pandit's global capital restructuring plan to raise more than $400 billion in the next two to three years through the sale of assets mainly in the consumer finance division.

Pandit plans to focus on high-margin banking and securities businesses. Accordingly, the group will retains its investment bank, 31 retail bank branches and 110 retail brokerage outlets. Since last month, the group's  Japanese operations have been inder the uumbrella of a single holding company, Nikko Citi Holdings, after it acquired a majority stake in Japan's Nikko Cordial for $7.7 billion, in April 2007.

"Over the past several months, we have taken a series of significant steps globally to strengthen the balance sheet, improve risk management, and reorganize the company, which have put Citi on the path to future growth driven by its core businesses," the statement quoted Pandit, as having said.

In January, 2007 Citigroup had said that it would shut about 80 per cent of its consumer finance branches, within sa month of new regulations that capped interest rates for non-bank lenders. At that time, CFJ said it would shut down 270 outlets and 100 automated loan machines across Japan.

The JApanes parliament has brought lending rates down by nearly a third from 29.2 per cent to 20 per cent, with lending capped at one-third of a borrower's annual income.

Earlier in 2004, Citigroup had shut down its private banking business being charged by regulators of having failed to conduct proper checks against money laundering.

Citigroup had first entered Japan with a branch in Yokohama in 1902 and has 16,000 employees in the country. Reports say it had planned to reduce 10 per cent of positions at investment bank in the country  and 10 per cent of Nikko's 1,700 employees.