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Citigroup Looks to Increase Nikko Stake

The big bank may boost its ownership of the scandal-plagued Japanese brokerage to one-third.

Citigroup (C) - Get Citigroup Inc. Report appears to be plotting a renewed push in Japan.

The U.S. banking giant is in talks to increase its stake in Japan's

Nikko Cordial

brokerage, according to published reports over the weekend. Citigroup currently owns about 5% of Nikko, but would end up owning at least one-third of the brokerage if the deal goes through. A

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report citing anonymous sources valued the transaction at $2.8 billion.

Both Citigroup and Nikko have been plagued by scandal in Japan in recent years. Regulators there forced Citigroup to shut down its merchant banking business in 2004 because of multiple infractions, but the bank has worked to mend fences with regulators. It recently said it was thinking of listing its shares on the the Tokyo Stock Exchange.

Nikko last December revealed it would have to restate profits for its past two fiscal years because it had booked profits inappropriately from derivatives transactions. The Tokyo Stock Exchange said it would decide next month whether to delist Nikko because of those irregularities.

Citigroup shares ended Friday up 18 cents at $53.77.