Chemical Banking Corp. said Friday it sold half its stake in CIT Group for $430 million, which will help fuel the bank's redeployment of capital into core businesses.

The sale to CIT's majority owner, Dai-Ichi Kangyo Bank Ltd., reduces Chemical's holding to 20%. Dai-Ichi Kangyo has an option to buy that 20%, thus gaining 100% control of the New Jersey-based finance company, within five years.

Analysts speculated that Chemical would have preferred to sell its entire 40% stake, but that Dai-Ichi Kangyo was hampered by the loan-loss and liquidity problems afflicting all major Japanese banks.

Still, Chemical is nearing the end of an affiliation with CIT that dates back to its acquisition in 1983 by Manufacturers Hanover Corp. Dai-Ichi Kangyo bought 60% of CIT in 1990 for $1.28 billion, and Manufacturers merged with Chemical at the end of 1991.

Chemical executives have been been "anxious to extricate themselves from their position," said Lawrence W. Cohn, a banking analyst with PaineWebber Inc. "There's been a lot of frustration at Chemical because this is an asset that clearly tied up a lot of capital."

Chemical has indicated it plans to apply the proceeds from divestitures to credit cards, capital markets, syndicated lending, and consumer banking.

The New York bank said it expects the partial CIT selloff and the recent sale of retail bank branches in central and southern New Jersey to PNC Bank Corp. to free up $500 million to $600 million of capital for other uses.

The bank also is currently negotiating the sale of its 66% stake in Banco Chemical Portugal, a Portuguese banking unit.

"It's part of a long-standing plan to become more focused in their use of capital," said Charles W. Peabody, a banking analyst with UBS Securities Inc. "They're either redeploying capital toward businesses where they can earn a higher return, or using it to buy back stock."

The New Jersey and CIT deals together yielded net after-tax gains totaling $25 million, Chemical said, which will be reflected in fourth- quarter results.

For the first nine months, CIT posted an 11% rise in net income, to $167.8 million. Assets on Sept. 30 stood at $17.2 billion, up from $16 billion at yearend 1994. The annualized return on average assets was 1.47%, the return on equity 12.14%.

"Dai-Ichi Kangyo Bank has been a supportive parent for the past six years and their increased ownership demonstrates their confidence in and commitment to CIT's business strategies," said Albert R. Gamper Jr., CIT Group president and chief executive.

Mr. Gamper, a onetime Manufacturers Hanover executive, said he anticipates "another year of record results," noting that CIT has expanded in recent years into consumer finance and venture capital.

"This additional investment in CIT gives DKB the ownership position from which it will be able to help CIT continue to grow its high quality and profitable business," said Hisao Kobayashi, chairman of CIT and representative of Dai-Ichi Kangyo in the Chemical transaction.

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