TOKYO--Citigroup Inc. (C) is set to sell its Diners Club credit card business in Japan to Sumitomo Mitsui Trust Bank (8309.TO) later this month, according to a person familiar with the matter. The deal will likely be worth Y40 billion, the person said.

Citigroup has been scaling back local operations around the globe. It said in October it would exit the Japanese retail business along with similar operations in Costa Rica and Egypt.

In December, Sumitomo Mitsui Banking Corp., Japan's second-largest lender, said it would purchase Citi's Japanese retail operations, leaving the New York bank to focus on corporate banking, investment banking and other institutional businesses in the world's third-largest economy.

Separately, Sumitomo Mitsui Trust Bank, which has no direct relation to SMBC, has been in talks to buy Citi's credit card business in Japan.

Write to Atsuko Fukase at atsuko.fukase@wsj.com

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