UPDATE 1-Citigroup to record $400 mln gain on Redecard IPO

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NEW YORK, July 16 (Reuters) - Citigroup Inc. (C.N) on Monday said it expects to record a $400 million gain in the third quarter from its sale of 41.75 million shares of Redecard SA (RDCD3.SA) as part of the Brazilian credit card transaction processor's initial public offering.

Citigroup, the largest U.S. bank, said it sold its shares on July 11, reducing its stake in Redecard to 25 percent from 31.9 percent. Redecard handles MasterCard transactions in Brazil, Citigroup said.

Last week, Redecard sold 4.07 billion reais ($2.15 billion) of shares in the IPO. About 90 percent of proceeds were to go to banks that were cashing out, including Citigroup. (Reporting by Jonathan Stempel; additional reporting by Terry Wade in Sao Paulo)