Citigroup up in Tokyo debut after CEO quits

By David Dolan and Kiyoshi Takenaka

TOKYO (Reuters) - Shares in Citigroup Inc rose 5 percent in their debut on the Tokyo Stock Exchange on Monday, a day after the U.S. bank's head resigned to take responsibility for spiraling losses on subprime-related investments.

Charles Prince stepped down after four years as Citigroup's chief on Sunday after the bank said it might suffer an $11 billion write-down for subprime losses, on top of $6.5 billion it wrote off three weeks ago.

Listing in Tokyo will allow the bank to use its shares to buy out minority shareholders in its brokerage unit, Nikko Cordial Corp, and is part of a campaign to raise its investor profile and become a major player in local retail banking.

Citigroup has been on a push to rehabilitate its reputation in Japan, which was tarnished three years ago when regulators shut down its private banking operations for violation of banking laws.

But the high-profile listing was overshadowed by Prince's departure. The bank cancelled a news conference about its plans to expand in Japan. A spokeswoman for the bank declined to comment on the reason for the cancellation.

At a bell-ringing ceremony at the Tokyo Stock Exchange, Douglas Peterson, Citigroup's chief executive in Japan, said the listing was a "natural next step" in its commitment to Japan.

"In this year alone, we've formed a comprehensive strategic alliance with Nikko Cordial, localized our banking operation and now, today, listed on the Tokyo Stock Exchange," he said.

Nikko Cordial Corp is Japan's third-largest brokerage.

Peterson later declined to answer questions as he made his way past a group of reporters after the ceremony.

Even as Citigroup weathers rising subprime losses, its strategy of targeting millions of affluent Japanese is unlikely to change, said Graeme Knowd, a banking analyst at CLSA Asia-Pacific Markets in Tokyo

"I think Japan, for them, has been relatively successful." Knowd said. "Citigroup is still the only foreign bank that has a large retail presence here."

THE BELL TOLLS

Prince, 57, made Japan a major part of his quest to boost the bank's overseas profits. His push for success in the world's second-largest economy also appeared to have a personal element.

In 2004, when Japanese regulators shut down Citigroup's private banking business, the California native made a public bow of apology -- the traditional sign of remorse used by Japanese executives.

"That was by far the worst day of my life in a professional sense," Prince recalled in a Wall Street Journal interview in July.