Mitsubishi UFJ Financial Group Inc. (8306.TO) is considering canceling its plan to buy Citigroup Inc.'s (C) trust banking unit in Japan, the Mainichi Shimbun reported Saturday.

The decision comes as the U.S. bank's Japanese trust business unit, NikkoCiti Trust & Banking Corp., is expected to share the responsibility for refunding overcharged loan interest at one of its major borrowers, SFCG Co., a bankrupt corporate financing firm, the Japanese daily reported.

Mitsubishi UFJ's trust banking subsidiary, Mitsubishi UFJ Trust & Banking Corp., said in December last year that it would buy NikkoCiti Trust from Citigroup International and Nikko Citi Holdings, Citigroup's local holding company for its Japanese securities business, for Y25 billion in April.

Mitsubishi UFJ was also among the bidders for Citigroup's Japanese brokerage operations, but Sumitomo Mitsui Financial Group Inc. (8316.TO) recently agreed to buy most of those operations for about Y545 billion.

-By Kazuhiro Shimamura, Dow Jones Newswires; 813-6895-7566; kazuhiro.shimamura@dowjones.com