Citigroup to buy rest of Nikko in $4.6 bln deal

By David Dolan and Edwina Gibbs

TOKYO (Reuters) - Citigroup (C.N: Quote, Profile, Research, Stock Buzz) said it would buy out minority shareholders in scandal-hit Japanese brokerage Nikko Cordial Corp 8603.T for $4.6 billion, as part of the financial giant's push into the world's second-largest economy.

Citigroup spent about $8 billion to buy a 68 percent stake in Japan's third-largest securities firm earlier this year, its biggest-ever Asian acquisition.

Since then, the U.S. bank has been increasing its presence in Japan and looking to repair its image after it fell foul of Tokyo regulators.

Citigroup, the largest U.S. bank by market value, said it would offer its own shares to buy the remaining 32 percent it does not own in Nikko.

The deal may be the first use of a new law in Japan that allows a foreign firm to use its own shares as currency when buying a Japanese company.

Citigroup is one of several foreign financial firms, such as London-based HSBC Holdings (HSBA.L: Quote, Profile, Research, Stock Buzz) (0005.HK: Quote, Profile, Research, Stock Buzz), looking to target Japan's millions of wealthy individuals and the country's estimated $13 trillion in household financial assets.

The U.S. bank has been expanding its Japanese retail branch network and making efforts to retool its image, which was tarnished when regulators shut down its private banking operation three years ago.

Owning Nikko Cordial gives the U.S. firm full control of more than 100 brokerage outlets and a name well known to domestic investors.