Sumitomo Mitsui Financial Group Inc.'s main lending arm agreed to buy Citigroup Inc. (C)'s Japanese consumer-banking business to expand services for wealthy individuals in the country.

SMBC Trust Bank Ltd., a subsidiary of Sumitomo Mitsui Banking Corp., will purchase Citibank Japan Ltd.'s retail banking operations that include 2.4 trillion yen ($20 billion) in deposits of about 740,000 customers, around 1,600 employees and 32 branches, the lenders said in a joint statement today. The transaction is subject to regulatory approvals and expected to close in October next year, they said, without giving financial terms of the deal.

The purchase comes as Sumitomo Mitsui seeks to get more business from high-net-worth individuals in a country with about $14 trillion in household financial assets and generate more fee income. Last year, it agreed to acquire Societe Generale SA (GLE)'s private-banking unit in the country and started SMBC Trust. The Japanese lender formed a private-banking venture with Barclays Plc (BARC) for affluent clients in 2010.

Sumitomo Mitsui may pay about 40 billion yen to acquire Citigroup's Japanese retail-banking operations, people with knowledge of the matter said earlier this month.

Citigroup continues to pursue the possible sale of its credit card business in Japan, the company said in a separate statement today. Citigroup is exiting 11 consumer-banking markets with poor returns, including Japan, where it wants to focus on corporate and investment banking, markets and transaction services, it said in October.

Shares of Sumitomo Mitsui closed 1.1 percent higher at 4,406 yen in Tokyo today before the announcement.

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