Citibank Japan Ltd. Annual Report For the Fiscal Year Ended March 31, 2014 www.citibank.co.jp Table of Contents Message from the CEO 1 Company Overview 2 Our History 5 Management Strategy 6 Business Outline 8 Risk Management Framework 17 Compliance Framework 19 Diversity and CSR Activities 20 Citibank Japan Ltd. Financial Information under Japanese GAAP 21 For the Fiscal Year Ended March 31, 2014 1. Matters Related to Principal Business 22 2. Financial Statements 40 3. Market Value Information 56 4. Major Shareholders 61 5. Disclosure Items Based on Pillar 3 of Basel III 62 Message from the CEO To Our Valued Customers, On June 1, 2014, I assumed the role of President & CEO of Citibank Japan Ltd. It is a great honor to lead this company and proudly serve our clients as we have been doing over our 112 year history. Over that time Citibank Japan has built a reputation for providing innovative and high quality services to our retail, corporate and institutional customers. I am determined to work with our employees to further strengthen our business and continue to improve the quality of our products and services for our customers in Japan and around the world. Fiscal year 2013 has seen moderate recovery in the Japanese economy, as several measures aimed at boosting the Japanese economy have taken effect. This has brought with it both opportunities and challenges for Japanese individuals and corporations. Citibank Japan is well positioned to help our customers succeed in such an environment. Citibank Japan is financially strong and well capitalized, and as a part of Citi is a member of a global financial services group that does business in more than 160 countries and jurisdictions. Citibank Japan is committed to being a bank that meets local market expectations, with a strong compliance and governance framework; to serving Japanese consumers, corporations, governments and institutions; and to making our contribution as part of Japan's society and economy. Thank you very much for your continued patronage and support. July 2014 Peter B. Eliot Representative Director, President & CEO Citibank Japan Ltd. Citibank Japan Ltd. 1 1 Company Overview Company Profile Company Name Citibank Japan Ltd. (“CJL”) Head Office Address Shin-Marunouchi Building, 5-1, Marunouch 1-Chome, Chiyoda-ku, Tokyo, 100-6520 Bank Code 0401 Head Office Branch Code 730 Telephone Number 0120-039-104 or 03-6897-5000 Commencement of Operations July 1, 2007 (International Banking Corporation, a predecessor to Citibank, opened its Yokohama branch in October 1902) Business Overview As one of Citi's core businesses in Japan, CJL is engaged in banking services through the retail banking business and the corporate banking business. Number of Employees 1,835 (As of March 31, 2014) Number of Branches (including head office) 38 (Tennozu, Okinawa, 33 for Retail Banking, 3 for Corporate Banking) Directors and Statutory Auditors* Director, Chairman Masatsugu Nagato Representative Director, President Peter B. Eliot Representative Director Anthony P. Della Pietra, Jr. Representative Director Naoki Inoue Director Shirish Apte Director Phee Boon Kang Director Ryozo Hayashi Director Tatsuo Tanaka Statutory Auditor (full-time, outside) Mamoru Sato Statutory Auditor (outside) Toshiaki Kawashima Statutory Auditor Toshiaki Oikawa (*) Chronological order of appointment for the same title Executive Officers CEO Peter B. Eliot Chief Operating Officer Anthony P. Della Pietra, Jr. Chief Strategy & Planning Officer, Head of Business Strategy & Planning Division and Head of Retail Naoki Inoue Banking Division Head of Corporate Banking Division Gerald Keefe Head of Transaction Services Division Ravi Saxena Head of Markets Division Kii Ko Head of Corporate Treasury Division Nelson Thackery Co-Head of Business Strategy & Planning Division Tetsuo Matsugaki Head of Legal Division Yasuto Hashinaga Head of Compliance Division Koichi Tanaka Head of Finance Division Susan Aziz Head of Risk Management Division Chae-ll Lee Head of Human Resources Division Minoru Kondo Head of Operations & Technology Division Shankar Ramasami Chief Auditor Yuichi Ito Head of Retail Banking Planning Department, Retail Masahiko Sawairi Banking Division Deputy Head of Business Strategy & Planning Hiroaki Nigo Division and Head of Management Coordination Unit (As of July 1, 2014 except for Number of Employees) 2 2 Citibank Japan Ltd. Organizational Structure Financial Summary (From 09/2011 to 03/2014) (Billions of Yen) 09/2011 03/2012 09/2012 03/2013 09/2013 03/2014 Total Assets 4,070.7 4,336.5 3,970.7 4,374.5 4,536.0 4,513.9 Deposits 3,198.2 3,510.4 3,241.9 3,541.5 3,906.9 3,636.0 Total Net Assets 265.3 265.0 263.6 262.8 262.1 256.3 Capital Stock 123.1 123.1 123.1 123.1 123.1 123.1 Capital Adequacy 26.46% 28.77% 29.51% 28.47% 28.62％ 25.72％ Ratio Credit Ratings Moody's S&P Fitch Rating Outlook Rating Outlook Rating Outlook Citibank Japan Ltd. Long Term A3 Stable A Stable A Stable Short Term P-2 A-1 F1 Citigroup Inc. Long Term Baa2 Stable A- Negative A Stable Short Term P-2 A-2 F1 Citibank,N.A. Long Term A2 Stable A Stable A Stable Short Term P-1 A-1 F1 (As of July 1, 2014) For further details, please refer to Citigroup Credit Ratings at http://www.citigroup.com/citi/investor/rate.htm Citibank Japan Ltd. 3 3 Deposit Insurance CJL has its head office located in Japan and is a member of the Deposit Insurance Corporation (DIC). Pursuant to the Deposit Insurance System, non-interest-bearing Yen deposits for payment and settlement purposes accepted by CJL are protected in full per depositor; and interest-bearing Yen deposits accepted by CJL are protected up to a maximum of 10 million yen in principal plus related interest thereon per depositor. Bank Agency Service Name of Bank Agent Citigroup Global Markets Japan, Inc. (“CGMJ”) Offices of Bank Agent CGMJ Tokyo Headquarters Service Coverage Intermediary of certain produces offered by CJL’s Corporate Banking Division (yen/foreign currency deposits and remittance services) Foreign Bank Agency Service Name of Affiliated Foreign Citibank, N.A. Bank Offices of Bank Agent CJL Head Office and Osaka Branch Service Coverage -Intermediation for acceptance of deposits or installment savings -Intermediation for making of loans or negotiation of bills/notes -Intermediation for exchange transactions -Intermediation for issuance of bank guarantee and acceptance of bills/notes -Intermediations for other ancillary services（Letter of Credit related） Designated Dispute Resolution Organization for CJL Japanese Bankers Association (“JBA”) Contact for consultation and exchange of views: JBA Customer Relations Center 0570-017109 or 03-5252-3772 CJL has concluded a Basic Contract for Implementation of Dispute Resolution Procedure with JBA, the Designated Dispute Resolution Organization under the Banking Act. JBA runs the JBA Customer Relations Center as a contact point to which customers can go for consultation and inquiries or to which they can direct their opinions and complaints about banks. Refer to the JBA website for more information. http://www.zenginkyo.or.jp/adr/ * JBA Customer Relations Center’s services are available only in Japanese. 4 4 Citibank Japan Ltd. Our History 1812 City Bank of New York established. 1902 International Banking Corporation opened its first branch in Yokohama. 1923 International Banking Corporation opened Tokyo Branch (temporarily closed in 1941, reopened in 1946). 1973 First National City Corporation listed on Tokyo Stock Exchange (delisted in 1998 with the merger between Citicorp and Travelers Group). 1974 First National City Corporation holding company changed its name to Citicorp. 1977 Citibank N.A. launched Citicard Banking Centers, anchored by ATMs and CitiCard. The 24-hour ATMs are for the first time used for more than emergency cash. 1980 Decades of innovation and expansion lead to Citibank operations in 90 countries. 1991 Citibank Japan launches International Cash Card. 1998 Citicorp and Travelers Group merge to form Citigroup Inc. Citibank Japan starts internet banking. 2007 Citibank Japan Ltd. commences operations as a locally incorporated bank. Citigroup Inc.’s shares listed on the first section of the Tokyo Stock Exchange. 2010 Citibank Japan Ltd. opens three smart banking branches in the area of Tokyo and Nagoya. 2011 Citi expands its Japan Desk network around the globe, opening in cities such as Manila, Dubai and Sao Paulo. 2012 Citi celebrates its 200th anniversary globally and its 110th in Japan. Citibank Japan Ltd. 5 5 Management Strategy Citi’s Mission: Enabling Progress Citi works tirelessly to serve individuals, communities, institutions and nations. With 200 years of experience meeting the world's toughest challenges and seizing its greatest opportunities, we strive to create the best outcomes for our clients and customers with financial solutions that are simple, creative and responsible. An institution connecting over 1,000 cities, 160 countries and millions of people, we are your global bank; we are Citi. The four key principles—the values that guide us as we perform our mission—are: • Common Purpose One team, with one goal: serving our clients and stakeholders. • Responsible Finance Conduct that is transparent, prudent and dependable. • Ingenuity Enhancing our clients’ lives through innovation that harnesses the breadth and depth of our information, global network, and world-class products. • Leadership Talented people with the best training who thrive in a diverse meritocracy that demands excellence, initiative and courage. Citibank Japan Management Strategy Citibank Japan Ltd. (“CJL” or “Citibank Japan”) is a 100%-owned indirect subsidiary of Citigroup Inc. (“Citigroup” or “Citi”). It was established on July 1, 2007 by succeeding the operations of the Japan Branches of Citibank, N.A., thus becoming the first foreign bank in the Japanese market to locally incorporate its banking operations. The bank’s presence in Japan dates back to 1902, when the International Banking Corporation (a predecessor to Citibank) first opened a branch office in Yokohama.