Citigroup To Sell Japan-Based Nikko Citi Trust, Report Says

November 30, 2008 8:08 a.m. EST

New York, NY (AHN) - U.S. banking giant Citigroup Inc. (NYSE: C) is reportedly preparing to sell its Japanese trust banking unit NikkoCiti Trust and Banking Corp, according to the reports on Sunday.

Citigroup has been planning to reduce expenses to raise enough capital and to bolster the U.S. government's confidence after receiving $20 billion in capital infusion and $306 billion as a guarantee on its bad mortgage assets.

The New York-based banking firm has plans to sell its Japan-based banking unit for about 40 billion yen ($416.7 million), according to the Nikkei business newspaper.

NikkoCiti Trust & Banking, which could be up for sale next week, provides services including delivering securities and settling trades, and calculating prices of investment-trust units, the business newspaper reported.

Several Japanese trust banks may bid for the business including Mitsubishi UFJ Trust and Banking Corp., Sumitomo Trust & Banking Co. and Mizuho Trust & Banking Co., according to the report.

Early this month, Chief Executive Officer Vikram Pandit had decided reduce by a record 52,000 jobs to 300,000 worldwide, according to a presentation posted on the firm's Web site. The company is targeting expenses of between $50 and $52 billion in 2009.

Last week, the U.S. government, under the federal plan to stabilize the lender, announced that it would funnel in $20 billion in cash infusion. The capital is in addition to $25 billion it received early last month from the U.S. government as a part of $700 billion under Troubled Asset Relief Program (TARP), which was passed in October.

Citigroup is likely to hand out pink slips to employees by asking them to voluntarily retire at its Japanese brokerage division Nikko Cordial Securities Inc., which was acquired by the bank earlier this year.

The firm is also expected to reduce expenses at its Japanese operations.