TOKYO — Citigroup Inc., the world's biggest financial services company is making a $10.8 billion wager on Japan, where the brokerage ambitions of Wall Street rivals including Merrill Lynch & Co. have foundered.

Chief Executive Officer Charles Prince's offer for Nikko Cordial Corp., Japan's third-largest brokerage, would give Citigroup control of more than 100 retail branches and about $250 billion of assets. He'll need to avoid the fate of Merrill Lynch & Co., which in 2002 shut its Japan network after clients deserted.

Prince stands more chance of success than Merrill, whose takeover of failed brokerage Yamaichi Securities Co. in 1998 led to multimillion-dollar losses, said Shinsuke Amiya, Merrill's former head of investment banking. Nikko reported 15 straight quarters of profit, even after restating earnings following an accounting fraud exposed last year.

"Citigroup is acquiring Nikko while it's alive," said Amiya, who now runs Tokyo-based lender NIS Group Co. "It will be able to hold onto Nikko's clients."

New York-based Citigroup, Nikko's investment-banking partner in Japan since 1999, is bidding for the brokerage after former Nikko managers were accused of inflating profit, a charge that may cost the 89-year-old company its stock market listing.

Shares of Nikko plunged 28 percent in two days after the Tokyo Stock Exchange said Jan. 30 that it may remove the stock. The shares have since climbed 19 percent on speculation Nikko would be acquired. Citigroup owns 4.9 percent of Nikko Cordial.

"If Citigroup takes over Nikko, its success depends on how it manages to keep Nikko's top salespeople," said Atsuo Mihara, an economist at Tokyo-based Impulse Corp. and a former Nikko branch manager in Los Angeles.

"Citigroup may lose Nikko's retail clients, who are faithful to the salespeople. Rival brokerages will also try to hire them if Citigroup imposes U.S.-style operations."

Buying Nikko gives Citigroup an opportunity to burnish its reputation after regulators in 2004 ordered the firm to shut its private bank in Japan because it failed to comply with money- laundering rules.

"We plan to immediately accelerate growth in this the world's second-largest market," said Citigroup's Japan head, Douglas Peterson, in announcing the bid yesterday.

Prince has said he wants to generate more than 60 percent of earnings overseas, from 45 percent last year.

The U.S. firm may sell wealth management services to Nikko customers, targeting a growing class of wealthy retirees, said Yuuki Sakurai of Fukoku Mutual Life Insurance Co. in Tokyo.

Morgan Stanley scrapped its 10-month-old Japan retail brokerage arm in 2001, saying it would fire about 100 people and close its one branch in Tokyo. The withdrawal came after the unit lost 1.1 billion yen, the equivalent today of nearly $9.5 million.

Merrill began closing outlets after losing 24 billion yen — the equivalent today of more than $206 million — in the three years since it took over 33 branches and 2,100 employees from Yamaichi.