UPDATE 1-Citigroup to exit Brazil card venture, sources say
* Disagreement over capital hike could end venture
* Citigroup struggles with scale issues in Brazil
* Rivals uninterested in Citigroup's venture stake (Adds market share details, share performance)
By Tatiana Bautzer and Guillermo Parra-Bernal
SAO PAULO, Nov 23 (Reuters) - Citigroup Inc has put its stake in a Brazilian credit card processing joint venture with Elavon Inc up for sale, two sources with direct knowledge of the plan said, after a disagreement over additional funds for the loss-making unit.
Relations between Elavon and Citigroup, partners for five years, have soured after Brazil's central bank said the joint venture needed more cash and the U.S. bank declined to come up with any additional funds, said the sources, who declined to be named because the talks were confidential.
The joint venture, known as Elavon do Brasil, has failed to gain traction in a burgeoning payment processing market dominated by Cielo SA and Rede, a unit of Itaú Unibanco Holding SA. While Cielo, Rede and peer GetNet Serviços own a combined 98 percent of the market, Elavon has managed to capture a share of only 1 percent.
One source said the Citi-Elavon venture needs about 200 million reais ($52 million) in new capital. But with Brazil mired in recession, Citigroup does not want to deploy more money in the country and is unwilling to reallocate capital from its other operations there, the source said.
Over the past three years, Citigroup has tempered its ambitions in Brazil. Helio Magalhães, who became Citigroup's Brazil chief executive officer in 2012, reversed his predecessor's strategy of seeking to take market share from larger rivals, in order to focus on wealthy customers and corporate banking. Continuación...