(Adds analyst comment, Citigroup stock price)

By Jonathan Stempel and Edwina Gibbs

WASHINGTON/TOKYO, Jan 9 (Reuters) - Citigroup Inc. (C.N: 株価, 企業情報, レポート) will close most of its Japanese consumer finance branches and suffer a $370 million fourth-quarter loss in that unit, hit by law changes that cut the maximum interest rates on loans.

The largest U.S. bank will take a $40 million fourth-quarter charge, including costs to close 270 out of 320 branches and 100 of 800 automated loan machines. Citigroup will also increase reserves by $375 million, as Japanese personal-loan firms face a flood of demands to repay interest charges that courts have deemed illegal. The bank's shares fell as much as 1.1 percent on Tuesday.