Citigroup to Sell NikkoCiti Trust

TOKYO -- Citigroup Inc. is selling a small business in Japan dealing with custody administration called NikkoCiti Trust and Banking Corp., two people familiar with the matter said on Sunday.

The move comes as the U.S. banking giant strives to stabilize its finances. Federal officials agreed on Nov. 23 to pour $20 billion of capital into Citigroup and absorb as much as $249 billion in potential losses on real-estate loans and securities held by the bank. But the rescue comes with strings. Citigroup executives are under pressure to further slim down the sprawling company.

In Japan, which was a key plank in Citigroup's overseas expansion, restructuring has been complicated by a recent acquisition. Citigroup closed the purchase of Japan's third-largest retail brokerage, Nikko Cordial Corp., in January for about $14 billion. The U.S. firm is now grappling with the delicate task of hiving off noncore businesses and consolidating its workforce.

Already, Citigroup has taken a number of sweeping measures, including closing its large Japanese consumer lending business. It has also sold its investment firm, called Nikko anfactory K.K., to Japanese bank Norinchukin and trading house Mitsubishi Corp.

It will seek volunteers to take early retirement at retail broker Nikko Cordial Securities Inc. in December and is cutting staff at Nikko Citigroup, its wholesale investment banking arm, people familiar with the matter said.

The auction of NikkoCiti Trust is expected to kick off Monday, the people familiar with the matter said. The price couldn't be determined on Sunday.

Tokyo-based NikkoCiti Trust's activities include the delivery and settlement of securities and the calculation of investment trust unit prices. According to its Web site, it has 136 employees. Citi's operations in Japan now includes a retail banking network, a retail brokerage and wholesale investment banking business, as well as a corporate banking and merchant banking operation and credit card business.

Japan's large trust banks, such as Mitsubishi UFJ Trust and Banking Corp. and Sumitomo Trust & Banking Co., are expected it be among the bidders.