Feb. 19 (Bloomberg) -- Citigroup Inc., the biggest U.S. financial firm, may seek approval from the Tokyo Stock Exchange for its shares to be traded this year to help it expand in Japan.

Citigroup is ``considering a listing on the TSE,'' said Atsuko Yoshitsugu, a Tokyo-based spokeswoman at Citigroup. ``Japan is one of our key strategic markets and we are committed to it for the long term.''

A Tokyo listing would make it easier for the firm to buy local companies as the world's second-biggest economy continues its longest recovery since World War II. Citigroup is targeting Japan's retail market where firms such as Mitsubishi UFJ Financial Group Inc., Japan's largest bank, are competing to tap $13 trillion of financial assets held by individuals.

``Citigroup is appealing to Japanese investors,'' said Hisakazu Amano, who helps manage the equivalent of $16 billion at T&D Asset Management Co. in Tokyo. ``The firm would raise its brand power and credibility in Japan by listing on the TSE.''

Citigroup plans to incorporate its Japanese bank locally by July to increase its retail banking presence. The New York-based bank plans to double the number of retail outlets in Japan to 50 from 25 over several years to increase lending and services to individuals, Citibank Japan's Chief Executive Officer Douglas Peterson said at a press briefing in Tokyo on Jan. 29.

Law Changes

Overseas companies will be able to purchase Japanese companies by offering shares in a local subsidiary after law changes come into effect in May this year. Citigroup, which opened its first Japanese branch more than 100 years ago, has the largest branch network among foreign banks in Japan.

It has faced difficulties in the country though.

Citigroup lost some investment-banking business after an accounting scandal at its partner Nikko Cordial Corp. Six top executives resigned after the Japanese broker, which could be de-listed, was accused of padding profits. Citigroup has a 4.9 percent stake in Nikko.

``There's been some negative impact on the joint venture because of the publicity surrounding Nikko Cordial,'' Citigroup CEO Charles Prince said at a presentation in New York last month. ``In terms of our ownership, that is something we have to continue to study.''

Consumer Finance Closures

The U.S. bank said Jan. 9 it will shut about 80 percent of its consumer-finance outlets in Japan, a month after new laws in the country capped the interest rate non-bank lenders can charge. It boosted loan-loss reserves by $375 million and said costs related to the closures would total $40 million.

Prince visited Tokyo in October 2004 to apologize after the bank had to close its private-banking business due to rules breaches.

Citigroup would be the first overseas company listed on the TSE in the last six years should the share listing application be approved, the Nikkei newspaper reported on Feb. 18.

NYSE Group Inc. and the Tokyo Stock Exchange, the world's two largest equity markets, announced an agreement on Jan. 31 to jointly develop trading systems and said they may invest in each other as they expand internationally.

The TSE opened itself to overseas companies in 1973. Merrill Lynch & Co. and JPMorgan Chase & Co. are among the overseas financial firms with current listings in Tokyo.

To contact the reporters on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net.

Last Updated: February 19, 2007 03:28 EST