Citi has successfully completed the sale of Nikko Cordial Securities to Sumitomo Mitsui Banking Corporation. The transaction has a total cash value to Citi of JPY776 billion. The transaction is expected to result in Citi recognising an immaterial after-tax gain during the fourth quarter. Reportedly, a total of about 7,800 employees are included in the transaction.
The cash value is comprised of the purchase price for the transferred business of JPY545 billion, the purchase price for certain Japanese-listed equity securities held by Nikko Cordial Securities of JPY30 billion and JPY201 billion of excess cash derived through the repayment of outstanding indebtedness to Citi.
Citi also signed a strategic alliance agreement with Sumitomo Mitsui Financial Group as contemplated by Citi’s press release on May 1, 2009. The main focus of the alliance is to build upon the longstanding partnership between Citigroup Global Markets Japan and Nikko Cordial Securities to bring the very best financial products, services and advice to clients in Japan and globally. Citi’s Institutional Clients Group advised Citi on this transaction.
Earlier, it has been reported that Sumitomo, which owns STB Asset Management, is planning to curb asset management expenses with this purchase, as increased competition has eroded fund management revenue recently. As Nikko Cordial is the major sales channel for Nikko Asset Management, it is beneficial for Sumitomo to bring Nikko Asset Management under its umbrella.
