TOKYO — Nomura Holdings Inc. has reached an agreement to buy Citigroup Inc.'s Japanese trust banking unit for Y19 billion, the brokerage said in a press release Wednesday.
Nomura Trust and Banking Co. aims to complete the all-cash acquisition of NikkoCiti Trust and Banking in October this year, subject to regulatory approvals and deal terms. The acquisition is in line with the Nomura trust unit's move to focus on its fund trustee and administration services.
As of March 31 this year, NikkoCiti Trust and Banking had a 107 staff, capital of Y20 billion and trust assets of Y4.5 trillion. At that time, Nomura's trust unit had assets of Y19.5 trillion, staff of 261 and capital of Y30 billion.
Buoyed by a high savings rate and prudent credit system, Japanese megabanks and brokerages have been cherry-picking U.S. financial assets to boost their market reach in the face of a shrinking domestic base.
Mitsubishi UFJ Trust & Banking Corp. had already attempted to buy NikkoCiti Trust and Banking for Y25 billion, or around $260 million, in May, but the deal fell apart after it failed in its bid to buy Nikko Cordial, Citigroup's Japanese brokerage operations.
Citigroup agreed to sell Nikko Cordial Securities and part of Nikko Citigroup to Sumitomo Mitsui Financial Group, Japan's third-biggest bank by assets, for $5.6 billion.
The U.S.-based financial services group, which has received $50 billion in U.S. government aid, started the sales process of NikkoCiti trust last December as part of its restructuring efforts.
Citigroup is offloading other Japanese assets such as Nikko Asset Management, with Sumitomo Trust emerging as the likely buyer for around Y100 billion. It is also reportedly selling call service center Bellsystem24, currently owned by Nikko Principal Investments Japan, Citigroup's private equity arm, valued at around $1.5 billion.
Japanese financial service industry players have already been active in picking up cheap assets where they can.
As the credit crisis was unfolding last September, Nomura bought Lehman's Asian, European and Middle Eastern assets. Mitsubishi UFJ Financial Group also made a $9 billion investment in Morgan Stanley and just announced details of its joint venture with the U.S. firm that will extend MUFG's overseas corporate financial services leveraging Morgan Stanley's international network.
Merger and acquisition activity in the domestic banking sector is also on the boil; beleaguered Shinsei Bank and Aozora Bank also announced their planned merger Wednesday, scheduled for completion October 2010, which will create Japan's sixth-largest banking institution with assets worth Y18 trillion.