[TOKYO] Citigroup is expanding its investment banking team in Japan as the Wall Street firm bets that the country’s deal fee pool will finally rebound after a two-decade slump.
Japan was one of the few countries selected by the New York headquarters as key for dealmaking, where the firm wants to make strategic investments, including hiring bankers involved with merger advisory and securities underwriting, Masuo Fukuda, head of Citigroup’s investment banking business in Tokyo, said. The plan is to grow the team by 15 per cent, he said, though he declined to give actual numbers.
“Our global head was convinced,” Fukuda said, referring to Citigroup’s head of banking and executive vice-chair Vis Raghavan. “I gave them all the reasons, logics and data set, and they felt this is a change.”
The optimism reflects a gradual change in a country reviving after decades of struggling with deflation and a weak stock market since its asset bubble burst in the early 1990s. Companies are paying more attention to shareholder returns due to pressure from authorities and investors, spurring opportunities for investment banks to advise on mergers and acquisitions, capital raisings and buyouts that create value. That has also sparked a scramble among firms to hire bankers.
Citigroup’s expansion in Japan comes as the US bank undergoes a broad years-long restructuring that it initially anticipated would cull 20,000 jobs globally. chief executive officer Jane Fraser is trying to streamline the sprawling lender’s operations and lift profitability.
Still, while Japan’s share in the global fee pool for the investment banking business could expand from last year’s estimated levels of around 4 per cent, a big surge is not expected, Fukuda said.
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“5 per cent plus is possible” this year or next, though it will be hard for Japan’s share to rebound to levels of 10 to 15 per cent from two decades ago, said Fukuda, who joined Citigroup in 2022 after more than a decade of stints at Evercore, Mizuho Financial Group and SMBC Nikko Securities.
Fukuda, who is also the vice-chairman of Citigroup Global Markets Japan, said the hiring in Tokyo started in December, targeting various levels of bankers. “Hopefully we can finish it by the middle of this year,” he said. The local securities unit had 900 employees at the end of 2023, based on filings, outnumbering most other non-Japanese rivals.
Dealmakers in the country are anticipating a busier 2025 after more than US$230 billion in mergers and acquisitions last year. The wave of transactions has pushed Citigroup to sixth position for Japan-related merger advisory so far in 2025, after it ended below the top ten slot last year, according to data compiled by Bloomberg.
The bank is involved with some of Japan’s largest deals, including Bain Capital’s purchase of a stake in a Japanese supermarket company from Seven & i Holdings. BLOOMBERG
