Abstract

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.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• The importance of good governance in a financial services company.

Keywords

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