Citigroup gets $7.8 Billion for Japanese unit


With the stress test results coming out, it is a wonderful thing for Citigroup that it has been able to sell its Japanese brokerage unit to Sumitomo Mitsui, and at a good price of $7.8 billion.

Here’s an excerpt of the FT story:

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Citigroup on Friday sold its Japanese brokerage and some parts of its local investment bank to Sumitomo Mitsui Financial Group (SMFG) as part of a deal worth Y774.5bn ($7.8bn) that will boost the troubled US bank’s capital.

Japan’s third largest bank is paying Y545bn for Citi’s Japanese securities business, which is mainly comprised of Nikko Cordial Securities, and a further Y28.5bn for Japanese-listed securities held by Citi.

Additionally, Citi is to receive Y201bn in cash by either retaining excess cash held in Nikko Cordial or by receiving repayment of debt owned by the Japanese brokerage to Citi.

The acquisition of Nikko Cordial, which catapults SMFG to the top ranks of Japanese securities companies, is a further step in the re-ordering of Japan’s financial landscape.

This deal will reduce assets and raise capital, all very much necessary for Citgroup as it is the bank where all eyes will be focused when the stress test results are made public.

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