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Citigroup Considers Sale of Retail-Banking Business in Japan Move Would Shift Focus to Citigroup's Other Businesses in Japan

Citigroup Inc. C +0.61% is considering the sale of its retail-banking business in Japan, where the U.S. financial giant has had a presence for decades as a leading Western bank, people familiar with the matter said Tuesday.

The New York company is considering a possible auction to sell the retail business, they said. The move would leave Citigroup to focus on its remaining businesses in Japan: corporate banking, investment banking and trading. Japanese loan growth has remained weak recently, amid interest rates close to zero.

Citigroup, one of the world's most sprawling global banks, has been scaling back since the financial crisis, trying to become simpler and easier to handle. The bank suffered a setback earlier this year when the U.S. Federal Reserve balked at Citigroup's dividend and share-buyback plans, citing the difficulty the firm was having measuring how a stressful scenario would affect all of its global operations.

The bank has also said it wants to home in on areas that have "the highest growth potential" for consumer banking, eschewing some smaller cities and slower-growth countries.

Since Michael Corbat became chief executive of the bank in late 2012, Citigroup has jettisoned its retail operations in countries including Honduras, Turkey, Romania, Uruguay and Paraguay. This summer it agreed to sell its consumer-banking businesses in Greece and Spain.

Citibank Japan Ltd. currently has 33 branches for the retail operations across the country and has deposits of 3.9 trillion yen ($39 billion). In the past decade, Citigroup had already shrunk its operations through divestitures of units following regulatory punishments and a series of restructurings in Japan.

In 2004, Japanese Financial Services Agency, the country's financial watchdog ordered Citigroup to shut its private-banking operations in the country, citing improper trading practices and lax anti-money-laundering procedures.

Citigroup's CEO at the time, Charles Prince, bowed in apology over the situation. Citigroup also said then that it would be taking the measures necessary to enhance its governance and internal-controls systems.

In 2007, Citi also closed most of its consumer-finance branches in Japan after suffering hundreds of millions of losses in the unit hit by legal changes that required it to repay overcharged interest rates in the past to borrowers and cut the maximum interest rates on loans. A spokesman at the time described the move as a "repositioning...to compete effectively."

After the financial crisis in 2008, the bank also sold its retail brokerage unit—then called Nikko Cordial Securities—to Sumitomo Mitsui Banking Corp. and its asset-management unit to another Japanese trust bank.

Allergan, Seeking to Fend Off Hostile Bid, Approaches Salix Potential Deal Comes As Botox Maker Fends Off Offer From Valeant

Allergan Inc. AGN +0.66% has approached Salix Pharmaceuticals Ltd. SLXP +6.17% and at least one other company about a potential acquisition, as the Botox maker seeks to fend off a $53 billion hostile takeover from Valeant Pharmaceuticals International Inc., VRX.T +1.46% according to people familiar with the matter.

It isn't clear where any talks with Salix stand, but one of the people said Allergan could strike a takeover deal with the company or another unknown party as early as next month.

Salix, which has a market value of $8.8 billion, is in the process of merging with a unit of an Italian company, Cosmo Pharmaceuticals COPN.EB +6.12% SpA. The roughly $2.6 billion tie-up would move the North Carolina company's domicile abroad -- one of a slew of recent so-called inversion deals aimed at least in part at lowering taxes.

If Allergan were to proceed with a takeover of Salix, it's not clear whether Allergan would also buy Cosmo, or whether such a deal would itself be an inversion.

Either way, signs that Allergan is getting close to launching a large takeover of its own adds another layer of intrigue to one of the year's biggest and most colorful takeover dramas. Valeant and activist investor William Ackman, who owns a big Allergan stake, have been pursuing a cash-and-stock takeover of Allergan since April. In the face of Allergan's opposition to a deal—which it considers underpriced and too risky—Valeant and Mr. Ackman are trying to call a special meeting of Allergan shareholders in order to remake the company's board.

Allergan has said it is eyeing a sizable acquisition of its own, while refusing to name potential targets. A deal the size of a Salix takeover, which with a premium could exceed $10 billion, could make it harder for Valeant and Mr. Ackman to acquire Allergan, given that would make it a more expensive and complicated proposition.

This wouldn't be the first time this year that a company that's been targeted by an acquirer has tried to strike a deal of its own. In February, Jos. A. Bank Clothiers Inc. agreed to buy retailer Eddie Bauer in the middle of a contentious and drawn-out takeover battle between Jos. A. Bank and rival Men's Wearhouse Inc. MW +2.34% Jos. A. Bank ultimately agreed to be acquired by Men's Wearhouse and terminated its deal with Eddie Bauer, though the price to do so pushed up the price tag for Men's Wearhouse.

This would also mark the latest installment in an unusual deal-topping trend at a time when merger activity is booming after years in the doldrums. Increasingly, outside parties are announcing intentions to buy companies already engaged in acquisitions of their own. In May, Pilgrim's Pride Corp. made an unsolicited takeover bid for Hillshire Brands Co., which had recently announced it was buying Pinnacle Foods Inc. Earlier this month, Cutrale Group and Safra Group offered to buy banana company Chiquita Brands International Inc. Chiquita is in the middle of trying to close a deal with Ireland's Fyffes PLC.

The talks Allergan is holding could collapse, and it is far from guaranteed they will result in any transaction.

Meantime, Valeant is getting close to securing the support of 25% of Allergan shareholders needed to call a special meeting, according to a person familiar with the matter.

Salix, of Raleigh, N.C., specializes in drugs for gastrointestinal conditions, such as travelers' diarrhea and ulcerative colitis. Such a portfolio could be attractive to Allergan, which since last year has been marketing its signature product—Botox, known mainly as an anti-wrinkle injection—as a treatment for overactive bladders.

In July, Salix announced an agreement to merge with a unit of Cosmo Pharmaceuticals SpA and locate the combined company in Ireland for tax purposes. On Tuesday, Salix, which projects about $1.6 billion in revenue this year, announced that it had received early termination of the waiting period for U.S. antitrust review, which is a condition required for the deal to close.

Allergan, of Irvine, Calif., had $6.3 billion in total revenues last year from Botox as well as other remedies including the Latisse eyelash treatment and Restasis drops for chronically dry eyes.

*ICHAN TELLS CNBC HASN'T SOLD A SHARE OF APPLE