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Nikko Cordial Denies Mulling Sale of Principal

Nikko Cordial, the Japanese unit of Citigroup, said it was not looking to sell its merchant banking unit, denying a report that it was in talks with Japan's Norinchukin Bank about a potential $3.4 billion deal.

The Nikkei business daily said earlier on Friday that Citigroup was negotiating to sell the unit, Nikko Principal Investments Japan, to Norinchukin Bank for more than 400 billion yen.

"It is absolutely not true that we are considering a sale of Nikko Principal Investments," Nikko Cordial said in a statement.

A highly placed source within Citigroup, who spoke to Reuters on the condition of anonymity, also said there were no talks to sell the unit.

"There is no truth to the story," the source said.

The newspaper had said Citigroup was looking to unload the unit to concentrate on its strategy of expanding its retail banking and securities business in the world's second-largest economy.

The Nikkei said that Norinchukin, a bank for Japan's agricultural cooperatives, would likely acquire about 80% stake in Nikko Principal, with the rest to be kept by Nikko Cordial.

A spokesman for Norinchukin, Koji Yuyama, declined to comment. Yuyama said a separate report, which quoted him as saying Norinchukin was in talks about the deal, was false.

A spokeswoman for Citigroup in Japan, Chikako Oki, also declined to comment. She declined to say whether or not a sale of the merchant banking unit would fit into the company's strategy for Japan.

Citigroup acquired Nikko Cordial in a $7.9 billion buyout in April. The acquisition came after an accounting scandal involving Nikko Principal nearly led to the brokerage's eviction from the Tokyo Stock Exchange.

Shares of Nikko Cordial closed 2.09% higher.