Governance Problems in Citigroup Japan

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:


Case Code : BECG043 For delivery in electronic format: Rs. 500 ;
For delivery through courier (within India): Rs. 500 + Rs. 25 for Shipping & Handling Charges


Corporate Govenance
Case Length : 14 Pages
Period : 2001-2004
Pub. Date : 2004
Teaching Note : Not Available
Organization : Citigroup
Industry : Financial Services
Countries : Japan, US


In September 2004, Federal Services Agency (FSA), the financial regulatory body of Japan, announced the closure of Citigroup's Private Banking business in Japan starting from September 30, 2005 onwards. Independent investigations conducted by FSA revealed major violations of law by the Private Banking unit. It was involved in activities which were permitted to be performed by only securities companies and not banking companies. The case details the irregularities in Citigroup's Japanese operations and highlights the importance of good governance. It also examines the measures taken by Citigroup to fix these problems and analyzes the efficacy of these measures.


The importance of good governance in a financial services company

The need for proper internal control measures and transparency in the dealings of a financial firm

Need for coordination and close supervision of the foreign operations by a global financial services organization

The importance of maintaining corporate integrity without succumbing to the temptation of short term benefits

Study the role of regulatory agencies in Japan


  Page No.
The Withdrawal 1
Background Note 2
Problems in Citigroup Japan 3
The Irregularities 5
The Action Taken 6
The Aftermath 6
Exhibits 8


Citigroup, Corporate Governance, Private Banking, Illegal Conduct of Business, Money Laundering, Financial Services Agency, Lack of Internal Control, Management Control System, Business Improvement Plan

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