Citigroup Inc. has agreed to offer private banking services in Japan with Shizuoka Bank Ltd., in a move to expand business in a market that some analysts say could be as large as $12 trillion.

The agreement would give Citigroup access to Shizuoka customers with $300,000 or more on account.

Because of the potential richness of the market, other U.S. financial services companies have also been expanding their private banking activities throughout Japan. Like Citigroup, they hope to woo Japanese investors who have about $12 trillion sitting in low-yeld deposit accounts, including postal savings accounts.

Chase Manhattan Corp last year reached a deal with Sumitomo Trust and Banking Co. to jointly develop dollar-denominated retail investment funds that will be distributed by Sumitomo.

Also last year, Merrill Lynch & Co. acquired a network of offices from Yamaichi Securities Ltd. after Yamaichi went bankrupt. And Putnam Investment, the Boston-based mutual fund company, has a deal with Nippon Life Insurance Co. to develop mutual funds.

"Citi and others have recognized there is a tremendous amount of financial assets and wealth in Japan and are trying to find a way of tapping into it," said Lawrence Cohn, a banking analyst at Ryan, Beck & Co.

Under Citigroup's agreement with the $73 billion-asset Japanese bank, which is based in Shizuoka, just south of Tokyo, the two will issue automated teller machine cards that can be used at Citigroup machines worldwide and at other machines that accept Citigroup cards.

The two would also jointly market fund-management products, including high-interest foreign exchange accounts, to Shizuoka's high-net-worth customers.

Citigroup, the largest financial services company in the United States, has expanded rapidly in Japan over the last decade and is now the largest foreign financial company there. It has more than $20 billion in local assets, and 25 branches in Nagoya, Tokyo, and Osaka.

Citigroup also runs a joint securities venture with Nikko Securities Co., in which it acquired a 25% stake last year. This month it agreed to buy a 19% stake in Nikko Beans, the Japanese on-line brokerage firm that offer securities trading, research, mutual funds, and insurance.

Citigroup also is seeking to buy the Japanese franchise for the Diners Club travel and entertainment card from Fuji Bank Ltd.

A Citigroup spokesman in New York said the company already employs a staff of 200 in its private banking activities in Japan.

"We are making a substantial effort to build across the board in Japan and are prepared to look at similar arrangements on a case by case, market by market basis," the spokesman said.

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