August 9, 2001
Financial Services Agency

An Administrative Order against the Branches of Citibank, N.A.Licensed in Japan

1. The following facts were found as a result of the inspection of the branches of Citibank, N.A.licensed in Japan(Citibank) conducted earlier by the Financial Services Agency(FSA)


Between August 1997 and December 2000, the Citibank had engaged in the business of acting as an intermediary for the sale and purchase of securities, as set forth in Article 2, paragraph 8, item 2 of the Securities and Exchange Law, and thereby violated Article 12 of the Banking Law and Article 65, paragraph 1 of the Securities and Exchange Law.


The legal and compliance function of the Citibank was found to be inadequate, as evidenced by the structuring and execution of inappropriate transactions which could be abused for intentional term-end window dressing by clients.


Furthermore, its internal control functions as a Japan branch, including its business management and risk management function was found to be inadequate.


Based on the foregoing findings, the FSA took the following administrative action today against the Citibank.


The business suspension order
Suspend all business of the Alternative Investment Strategies from August 10, 2001 to August 16,2001(pursuant to Article 27 of the Banking Law).


The business improvement order
Submit and implement the business improvement plan; that includes; fundamental restructuring of its procedure of operations and management; ensuring the senior management to commit to the improvement plan and improving legal and compliance function, etc(pursuant to Article 26-1 of the Banking Law)


further information, please contact with the following;
Banks Division
Supervisory Bureau, FSA
     Tel: 03 3506 6000
     Deputy Director: Masaaki KIDOKORO (ext.3323)
     Section Chief: Kiyomi ITO (ext.3752)