TOKYO -- Japan's Sumitomo Mitsui Trust Bank is in exclusive talks with Citigroup to buy its credit card business here, with an eye toward finalizing a deal next month.
The decision to sell Citi Cards Japan, which offers the Diners Club as well as Citi brands, follows the U.S. financial giant's move last year to unload its retail banking arm in the country. With roughly 800,000 members, the credit card unit is small compared with Credit Saison and other major players here that boast tens of millions of cardholders.
The Japanese bank apparently suggested purchasing the credit card company for more than 50 billion yen ($412 million) last fall. The two parties will now settle on a specific figure. Sumitomo Mitsui Trust is also reviewing its technical capabilities in order to ensure a smooth system transition.
An alliance between Shinsei Bank, credit card company JCB and department store operator Isetan Mitsukoshi Holdings also showed interest in Citi's credit card business. But its size and stable operations helped Sumitomo Mitsui Trust win exclusive negotiating rights.
Sumitomo Mitsui Trust has a credit card service subsidiary, but the company is not well known. It hopes to win Diners Club fans over and expand products and services for the bank's existing customers. It will continue the services currently provided to Diners Club users.
Diners Club, the oldest credit card brand in the world, tends to attract high-income customers. It had roughly 5.7 million members worldwide and accounted for $25.5 billion in transactions, according to a 2013 survey.
Citi agreed to sell its Japanese retail banking business to Sumitomo Mitsui Banking at the end of last year as part of a global overhaul of its unprofitable sectors. With the upcoming deal, the U.S. bank will be bringing to a close a more than century-long history of retail services in Japan.