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Citigroup Inc. Message Board

  • bluecheese4u bluecheese4u May 1, 2009 7:10 AM Flag

    Citi to Sell Nikko Cordial Securities to Sumitomo Mitsui Banking Corporation and

    Citi to Sell Nikko Cordial Securities to Sumitomo Mitsui Banking Corporation and to Forge Alliance with Sumitomo Mitsui Financial Group

    Citi (NYSE: C) today announced that it has reached a definitive agreement to sell its Japanese domestic securities business, conducted principally through Nikko Cordial Securities Inc., to Sumitomo Mitsui Banking Corporation (hereafter SMBC) in a transaction with a total cash value to Citi of ¥774.5 billion (US$7.9 billion at an exchange rate of ¥97.75 to US$1.00). The cash value is comprised of the purchase price for the transferred business of ¥545 billion, the estimated purchase price for certain Japanese-listed equity securities held by Citi of ¥28.5 billion, and ¥201 billion of cash derived either through the retention of excess cash in Nikko Cordial Securities or repayment of its outstanding indebtedness to Citi.

    The transaction is expected to generate approximately US$2.5 billion of tangible common equity for Citi at closing, with Citi expected to recognize an after-tax loss of approximately US$0.2 billion. On a pro forma basis for the transaction, Citi’s March 31, 2009 Tier 1 capital ratio would have increased by approximately 27 basis points. The transaction is expected to close by the end of the fourth quarter of 2009, subject to regulatory approvals and customary closing conditions.

    All of the operations and personnel of Nikko Cordial Securities and various other group companies (including Nikko Systems Solutions Ltd. and Nikko Business Systems Co., Ltd.), together with some of the operations and personnel of Nikko Citigroup Limited (including its domestic equity and debt underwriting business), will be transferred to SMBC as part of the transaction. Citi’s ownership interests in Nikko Citigroup Limited, Nikko Asset Management Co., Ltd., and Nikko Principal Investments Japan Ltd. are not included in the transaction. A total of about 7,800 employees will be included in the transaction.

    "This is a great outcome for Citi and Sumitomo Mitsui Financial Group, as well as for the employees and clients of Nikko Cordial Securities. This transaction is another step in the execution of the Citicorp/Citi Holdings strategy we announced earlier this year. We will continue to look for additional opportunities to maximize the value of businesses and assets as we rationalize and restructure Citi Holdings. I am also very pleased that Citi and our clients retain access to one of Japan’s leading securities firms for capital markets transactions, while SMFG will benefit from Citi’s global banking platform and international network. Citi has proudly served clients in Japan for more than a century, and we remain committed to this very important market,” said Citi CEO Vikram Pandit.

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