Sumitomo Mitsui to buy brokerage from Citigroup
TOKYO — Sumitomo Mitsui is taking over Citigroup’s Japan brokerage businesses, both sides said Friday, as part of a bigger plan to restructure the struggling U.S. bank. The deal is Japan’s first acquisition of a leading brokerage by a bank.
Sumitomo Mitsui Financial Group Inc. will acquire Nikko Cordial Securities Inc. and some parts of Nikko Citigroup’s Japan operations for about 545 billion yen ($5.6 billion).
“It is an important step in the execution of Citigroup’s strategy,” Citigroup Inc.’s Vice Chairman Stephen Volk told reporters at a Tokyo hotel. “In executing our new strategy, we remain committed to our businesses in Japan, where we have over a century of experience.”
Volk said Citigroup will lose about $200 million on the transaction compared to what it had spent to acquire Nikko Cordial a year ago. It is Japan’s third-largest brokerage with managed assets of 25 billion yen ($260.4 million) and 111 branches.
The deal, intended to be completed by Oct. 1, also includes a cash transfer to Citigroup related to assets of the brokerage totaling some 201 billion yen, both sides said.
The widely expected move, which also includes the purchase of most of Nikko Citigroup’s securities operations, is part of the ailing U.S. bank’s global restructuring. Citigroup has said it is looking into selling its Japan brokerage operations.
The deal will make Sumitomo Mitsui the first Japanese bank to buy a top brokerage in Japan.
Two other of Japan’s “megabanks” — Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. — had also been wooing Nikko Cordial. But they lost out in the end.
Sumitomo Mitsui can hope to expand its brokerage operations by acquiring Nikko Cordial, which operates in both individual and corporate sectors in Japan. The acquisition will allow Sumitomo Mitsui to come close in size to the nation’s industry leader Nomura Holdings.
Sumitomo Mitsui President Teisuke Kitayama said the huge amount of individual savings in Japan provides an attractive market for financial products and needs for individual investments are growing.
“This deal marks a turning point in creating a new financial business model,” he said.
Sumitomo Mitsui can also hope to gain some of Citi’s expertise in global financing through the deal and will also maintain a partnership between Citigroup and Nikko Cordial.
The acquisition will not include some operations in Nikko Citigroup’s securities business, Nikko Asset Management and other units, it said, and is an effort to best streamline the efficiency of Citigroup’s overall business.
Douglas Peterson, a Nikko Citigroup director, said Citigroup boasts a century of history doing business in Japan and will continue to run its banking, credit card and other operations here.
“I am confident Citi will thrive in Japan for another 100 years,” he said.
After reporting a quarterly loss of $8.29 billion, Citigroup last month reorganized into two entities, Citicorp and Citi Holdings. The first is focused on traditional banking around the world, while the second holds the company’s riskier assets and tougher-to-manage noncore ventures, including Nikko Cordial.
Analysts have said that CEO Vikram Pandit’s reorganization allows Citigroup to sell or spin off the Citi Holdings assets to raise cash.
Citigroup has already begun scaling back its presence in Japan to cope with the global financial crisis. In December, it agreed to sell NikkoCiti Trust and Banking Corp. to Mitsubishi UFJ Trust and Banking Corp. in an all-cash deal worth 25 billion yen.
Related News
Citigroup completes sale of Japanese brokerage in $8.7 billion dealOctober 1st, 2009 Citigroup closes $8.7B sale of Japanese brokerageTOKYO — Citigroup Inc. has completed the sale of its Japanese brokerage to Sumitomo Mitsui Banking Corp.
Chola Insurance to target Japanese, Korean firms for businessAugust 4th, 2009 CHENNAI - Non-life insurer Cholamandalam MS General Insurance (Chola MS), a joint venture between city-based Murugappa Group and Japan's Mitsui Sumitomo Insurance Group, Tuesday said it will continue targeting Korean and Japanese firms operating in India for selling its products. "Our strategy in India will be to expand the retail business, bring the technical knowhow in risk management from Japan to the country and train Chola MS employees in Japan and Singapore," Toshiaki Egashira, president and chief executive of Mistsui Sumitomo Insurance, told reporters here.
Japan's top bank posts better-than-expected profit, but its rival Mizuho stays in the redJuly 31st, 2009 Japan's top bank posts better-than-expected profitTOKYO — Japan's biggest bank Mitsubishi UFJ Financial Group Inc. posted a jump in quarterly profit, driven by a stock market rally, while its rival Mizuho stayed in the red on mounting derivative losses and bad loans.
Mizuho books loss on stock plunge, looks for profit for full year on economic reboundJuly 31st, 2009 Mizuho books loss on stock plungeTOKYO — Major Japanese bank Mizuho Financial Group reported Friday a 4.49 billion yen ($47.3 million) loss for the fiscal first quarter, battered by the fallout from the global slowdown. Tokyo-based Mizuho had posted a 133.0 billion yen profit the same period the previous year.
Mizuho stays in the red as bad loans swell, derivatives trading produces lossesJuly 31st, 2009 Mizuho books loss as bad loans swellTOKYO — Major Japanese bank Mizuho Financial Group stayed in the red last quarter, posting a 4.49 billion yen ($47.3 million) loss as derivatives trading soured and bad loans surged. Tokyo-based Mizuho said Friday it was on track to return to profit this fiscal year after booking its first annual loss in four years the previous fiscal year.
Citigroup sells entire stake in Nikko Asset Management for $795M to Sumitomo TrustJuly 30th, 2009 Citigroup sells stake in Japanese asset managerNEW YORK — Citigroup Inc. said Thursday it is selling its entire majority stake in a Japanese asset management company to The Sumitomo Trust and Banking Co Ltd.
Japan megabank Sumitomo Mitsui's net profit up 25 percent in April-June as stock markets climbJuly 30th, 2009 Sumitomo Mitsui profit jumps 25 percentTOKYO — Major Japanese bank Sumitomo Mitsui Financial Group Inc. booked a 25 percent jump in quarterly profit as climbing stock prices and a slowly improving economy bolstered its bottom line.
Citigroup sells NikkoCitu Trust to Nomura Trust in scale back of Japan businessJuly 1st, 2009 Citigroup sells NikkoCiti Trust to Nomura TrustTOKYO — Nomura Trust and Banking Co. is acquiring NikkoCiti Trust and Banking Corp.
Daiwa Securities falls 12 percent after announcing public share offeringJune 29th, 2009 Daiwa Securities tumbles on share offering newsTOKYO — Shares of Daiwa Securities Group Inc., Japan's second-biggest securities company, plunged more than 12 percent Monday after the company announced plans to raise about 240 billion yen ($2.5 billion) in a public share offering
The news stunned investors who worried that the offering would dilute the value of existing shares. The Tokyo-based brokerage said after market close Friday that it will issue up to 345 million new shares from July 15 to July 21.
Citibank Japan cited for inadequate anti-money laundering measures, hit with sales suspensionJune 26th, 2009 Agency slaps Citibank Japan with sales suspensionTOKYO — Authorities ordered Citibank's Japan unit to suspend all sales operations at its retail banking arm for one month after it failed to improve anti-money laundering measures that target crime syndicates and other shadowy groups. The order Friday is the second time in five years that the Financial Services Agency has reprimanded Citibank Japan Ltd.
Mitsubishi UFJ to boost acquisition of Morgan Stanley's common stockMay 13th, 2009 Mitsubishi UFJ boosts swap of Morgan Stanley stockTOKYO — Japan's biggest bank, Mitsubishi UFJ Financial Group Inc., said Wednesday it will swap a larger amount of its preferred shares in Morgan Stanley for common stock to keep its voting rights stake of the U.S. bank above 20 percent.
Sumitomo Mitsui to buy Citigroup's Japan brokerage unitMay 1st, 2009 Sumitomo Mitsui, Citigroup reach deal on brokerageTOKYO — Sumitomo Mitsui is taking over Citigroup's Japan brokerage businesses, both sides said Friday, as part of a bigger plan to restructure the struggling U.S. bank. Sumitomo Mitsui Financial Group Inc.
Report: Sumitomo Mitsui at basic agreement to buy Citigroup brokerage unitsApril 28th, 2009 Report: Sumitomo Mitsui, Citigroup near dealTOKYO — Major Japanese bank Sumitomo Mitsui Financial Group Inc. has reached a basic agreement to buy a Japan-based brokerage unit from Citigroup Inc.
Reports: Sumitomo Mitsui most likely candidate to buy Citigroup Japan unitApril 25th, 2009 Reports: Sumitomo likely to buy Japan CitigroupTOKYO — Sumitomo Mitsui Financial Group Inc. has emerged as the most likely candidate to buy Citigroup Inc.'s Japanese brokerage unit after offering the highest bid worth $5 billion, reports said Saturday.
Japan's No. 2 bank Mizuho Financial expects first annual net loss in 6 yearsApril 23rd, 2009 Japan's Mizuho Financial forecasts annual net lossTOKYO — Mizuho Financial Group Inc., Japan's second-biggest bank, warned Thursday that it sank into the red last fiscal year amid mounting bad loans and steep stock market declines. The Tokyo-based lender slashed its earnings guidance for the 12 months through March 31, saying it expects a group net loss of 580 billion yen ($5.9 billion) — its first annual loss in six years.
Loading ...