Diners Club sale draws interest from Japanese banks

Citigroup's Diners Club card brand in Japan is among assets drawing interest from lenders as the bank seeks bids for its retail operations in the country, people with knowledge of the matter said.

Sumitomo Mitsui Financial Group, Mizuho Financial Group, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Trust Holdings and Shinsei Bank are among banks preparing to submit preliminary bids, said the people, who asked not to be named. Citigroup is gauging interest in the consumer bank separately or as a package with the card unit, the sources said.

Citigroup, whose 33 branches in Japan represent less than 1 per cent of its global total, is scaling back in the country as near-zero interest rates, tepid loan demand and slowing economic growth hamper profitability. Japanese banks may be attracted to the credit unit to obtain wealthy Diners Club members, said Toyoki Sameshima, a senior analyst at BNP Paribas.

"Diners has status and brand value in Japan, and the profitability of the card business seems to be higher than other cards," Tokyo-based Sameshima said. "Credit cards are one of the few areas with growth potential in Japan."