UPDATE 4-Daiwa to buy corpfinance arm of UK's Close Bros

* Daiwa SMBC to pay $114 million for corporate finance unit

* Division posted a loss for six months to end-Jan

* Daiwa SMBC approached Close Brothers last year - source (Adds comment from Daiwa, background, updates share price)

By Junko Fujita and Olesya Dmitracova

TOKYO/LONDON, May 18 (Reuters) - Japan's Daiwa Securities SMBC Co said on Monday it would buy the corporate finance unit of Britain's Close Brothers Group (CBRO.L), joining a push by Japanese investment banks to sign cross-border deals.

Daiwa Securities SMBC, an investment banking venture between Daiwa Securities Group (8601.T) and Sumitomo Mitsui Financial Group (8316.T), will pay 75 million pounds ($114 million) for Close Brothers Corporate Finance, the buyer said in a statement.

Before the sale is completed, Close Brothers will contribute 8 million pounds of working capital to the division. Daiwa SMBC expects to complete the transaction at the end of June.

"This is an important acquisition for the firm and a significant day in our 45 year European history," said Eishu Kosuge, the head of Daiwa SMBC's European subsidiary.

The purchase will increase the firm's locally originated European business and help diversify its earnings which have largely been commission-driven, he added.

The Japanese investment banking industry has been taking advantage of the global financial crisis to acquire stakes in big Wall Street firms or by buying some of their Japanese operations.

Last year rival Japanese brokerage house Nomura (8604.T) bought the Asia, Europe and Middle East operations of bankrupt U.S. investment bank Lehman Brothers.

London-listed Close Brothers, founded in 1878 as a merchant bank to provide farm mortgages in Iowa, has built its business in the past two decades with a string of acquisitions, including the purchase of Hill Samuel's corporate finance unit in 1996.

The corporate finance unit posted adjusted operating loss of 2.9 million pounds in the six months to the end of January.

"I would expect over the year as a whole that we would do better than that, but that's not a forecast," said Stephen Aulsebrook, who will remain the unit's chief executive.

"The restructuring business that we started to take on in massive volumes... is now starting to come into successful transaction fees and our run-rate at the moment is significantly better than it was in the first half," he told Reuters.

The corporate finance unit, which posted an adjusted operating profit of 10 million pounds for 2008, is working on 55 restructuring mandates.

Close Brothers shares were flat at 628.5 pence at 1321 GMT, underperforming the Dow Jones Stoxx banking index .SX7P, which was 3 percent stronger.

GROWTH FOR DAIWA, FOCUS FOR CLOSE

Daiwa SMBC approached Close Brothers last autumn to discuss the purchase, a source close to Close Brothers said. Daiwa SMBC already has an alliance with U.S. advisory firm Sagent Advisors.

Mitsubishi UFJ Financial Group (8306.T), Japan's largest bank by assets, is planning to set up a joint investment banking venture in Japan with Morgan Stanley (MS.N) after the Japanese bank injected money into the U.S. bank.

Sumitomo Mitsui Financial Group, Japan's third-largest bank, is set to buy Citigroup's (C.N) Japanese broker and key investment banking units for $5.9 billion and is reorganising its investment banking businesses, including Daiwa SMBC.

Close Brothers said it would now focus on developing its three larger divisions -- banking, asset management and securities. It is due to issue a trading update for the three months to April 30 on Thursday. ($1=.6577 Pound)

(Editing by Andrew Callus)