TOKYO (Reuters) -
Citigroup Inc (C.N) has offered early
retirement to the 1,350 employees of its Japanese consumer
finance unit, as the subprime-hit U.S. bank retreats from
consumer lending in the world's second-largest economy.

Citigroup made the offer on Monday in a memo distributed to
employees of the unit, CFJ KK, according to Akihito Kawamura,
chairman of the CFJ KK labor union.

Citigroup said earlier this month it would shut its
remaining 32 consumer lending outlets and 540 unmanned loan
machines in Japan, following several years of scaling back the

Employees will have until July 15 to apply for the early
retirement valued at two months worth of wages, Kawamura said,
adding the union did not agree with the offer.

"This is beyond comprehension," Kawamura told Reuters in a
telephone interview.

"Employees who worked at the company for two years and
those who worked for twenty years are both offered the same

He said the union would likely press the company to
increase the offer to two years worth of wages.

Citigroup spokeswoman Atsuko Yoshitsugu said: "CFJ ensures
employees are treated fairly and made aware of the options open
to them." She declined to comment further.

Japan's once-mighty consumer finance industry has been
crippled by tighter regulations that have lowered maximum
interest rates
, and legal rulings that have forced firms to
repay previous charges now deemed illegally high.

Many consumer lenders fell into the red, forcing some to
tie up with Japanese banks for funding.

Citigroup, which has suffered more than $45 billion in
write-downs and credit losses since last summer, previously
said it plans to focus its resources in areas with better
opportunities for growth.

In 2002, the U.S. bank had 903 consumer outlets in Japan,
but that had shrunk to 320 by January 2007.

The remaining 32 outlets will be closed over the next 12
months, Citigroup said in a statement earlier this month.

(Reporting by Nathan Layne and David Dolan; Editing by
Brent Kininmont)