CITIGROUP Inc. has reached a deal to sell its once-prized strategic foothold in China’s banking sector for US$3 billion, making it the latest big Western bank to sell off its Chinese bank holdings.

    New York-based Citigroup will sell its 20 percent stake in China Guangfa Bank to China Life Insurance Co. for about 19.7 billion yuan (US$3 billion).

    The move marks a shift from Citigroup’s strategy in 2006, when it successfully fended off a rival bid from France’s Societe Generale and bought the Guangfa stake for US$620 million.

    The deal will help the U.S. lender free up capital to expand other activities in China, said a source familiar with the sale. The sale, which is expected to close in the second half of this year, won’t have a material impact on Citigroup’s forthcoming earnings report in April.

    China Life will more than double its stake in Guangfa from 20 percent after the purchase. Other main shareholders in Guangfa include State Grid Corp. of China and CITIC Trust Co., each also owning a 20 percent stake.

    China Life said in a securities filing Tuesday that besides buying Citigroup’s stake, it is also buying shares in Guangfa owned by IBM Credit, a unit of International Business Machines Corp., lifting its holding in Guangfa to 43.7 percent.

    China Life agreed to pay about US$554 million for the IBM Credit stake.

    The sale comes after two failed attempts for Guangfa to go public the past years, which would have freed up investors including Citigroup to offload their shares in the stock market. (SD-Agencies)