Citigroup Inc. has sold its 2.71 percent stake in Shanghai Pudong Development Bank for an after-tax gain of about $349 million, as the company maneuvers to build its own business in China.
The $668 million sale was made via a block trade to unnamed institutional investors, the New York-based bank said in a statement Monday.
Citigroup and the state-owned Shanghai plan a new "strategic arrangement" for their cooperation that will involve using Citi's worldwide networks and credit lines to support SPDB's global expansion, it said.
Last month, Citi's Chinese subsidiary received regulatory approval to become the first U.S.-based bank to issue its own credit cards in China. The business will include both consumer and commercial cards, and is expected to launch before the end of the year.
Until now Citi was restricted to issuing cards through a joint venture with SPDB. That business will be taken over by the Chinese bank.
China's growing middle class is a prime target for lenders, and the market is gradually opening after years of lobbying by foreign governments and financial institutions for a loosening of restrictions.
Citi also recently got approval to set up a joint-venture securities firm in China with Orient Securities Company Ltd. The venture, Citi Orient Securities Co Ltd., will be based in Shanghai, and will focus on investment banking in the Chinese domestic market.
Citi has branches in 13 Chinese cities.