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Citigroup to sell Monex stake

CITIGROUP plans to sell its 26 percent stake in Japanese online broker Monex Group Inc as part of the struggling United States bank's efforts to raise cash, the Yomiuri newspaper reported yesterday.

Shares in Monex, Japan's second-largest online brokerage in terms of customer accounts, fell 8 percent on the report, cutting the value of Citigroup's stake to 14.1 billion yen (US$144 million).

Citigroup, which has received US$45 billion of US taxpayer-funded capital injections since October, appears to have already sounded out several financial institutions on the Monex stake, the Yomiuri reported.

Yoshito Shimoyama, a spokesman at Nikko Citi Holdings Inc, Citigroup's holding company in Japan, declined to comment.

Citigroup is also trying to sell Nikko Cordial, a bricks-and-mortar retail broker with 109 branches across Japan.

Japan's top three banks - Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group Inc - have shown an interest in buying Nikko Cordial, sources told Reuters.

The three banks may also jump at the chance to buy a stake in Monex, but would likely make it a first step toward seeking majority control, said Azuma Ohno, a brokerage industry analyst at Credit Suisse Securities.

Mitsubishi UFJ owns 51 percent of Securities Co, the fifth-largest online broker in Japan.

If the price is right

"If it thinks Monex is cheap, it might be interested in buying to expand its current operations," Ohno said.

Neither Sumitomo Mitsui nor Mizuho have an online brokerage unit, and buying a stake in Monex would allow them to make an entry into the market.

But the potential sale of the Monex stake comes as Japan's online brokers struggle to maintain profitability with the benchmark Nikkei average hovering near a 26-year low.

Net income at Monex Group, formed in 2004 through a merger of Monex Inc and Nikko Beans, fell 88 percent to 687 million yen in the nine months through to December from a year previously.


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