Citigroup said it would buy out minority shareholders in scandal-hit Japanese brokerage Nikko Cordial Corp for $4.6 billion, as part of the financial giant’s push into the world’s second-largest economy.

Citigroup spent about $8 billion to buy a 68 per cent stake in Japan’s third-largest securities firm earlier this year, its biggest-ever Asian acquisition. Since then, the US bank has been increasing its presence in Japan and looking to repair its image after it fell foul of Japanese regulators.

Citigroup, the largest US bank by market value, said it would offer its own shares to buy the remaining 32 per cent it does not own in Nikko.The deal may be the first use of a new law in Japan that allows a foreign company to use its own shares as currency when buying a Japanese company.

Branch network

Citigroup is one of several foreign banks and other financial firms, such as London-based HSBC Holdings looking to target Japan’s millions of wealthy individuals and the country’s estimated $13 trillion in household financial assets.

Citigroup has been expanding its Japanese retail bank branch network and making efforts to retool its image, which was tarnished when regulators shut down its private banking operation three years ago.

Nikko has also had problems, thanks to an accounting scandal, but a Japanese fund manager welcomed Citigroup’s purchase and said it could help invigorate Japan’s financial sector.