Sumitomo Mitsui given priority in talks to buy unit from Citigroup+

TOKYO, April 25 Kyodo - Sumitomo Mitsui Financial Group Inc. has been granted preferential negotiating rights to buy Nikko Cordial Securities Inc. from troubled U.S. financial giant Citigroup Inc., sources familiar with the matter said Saturday.

The major Japanese banking group is expected to hold negotiations with
Citigroup on a more detailed assessment of the assets of Nikko Cordial --
itself a major securities house in Japan -- with an eye to reaching an
agreement sometime next month or after, according to the sources.
The acquisition, if realized, will likely allow SMFG to sharply expand the
scope of its securities business. SMFG has close business ties with Daiwa
Securities Group Inc., another major securities house in the country.
According to the sources, SMFG offered the highest bid of around 500 billion
yen among the three major Japanese commercial banks in a tender, exceeding the
offer made by runner-up Mitsubishi UFJ Financial Group Inc.
Citigroup invited bids for Nikko Cordial and the bulk of Nikko Citigroup Ltd.
on Monday.
Some elements are expected to remain in flux, given the possibility of
additional conditions being attached such as a business partnership with
Citigroup's Japanese operations after the sale of Nikko Cordial, the sources
said.
On April 9, SMFG announced that it will raise up to 800 billion yen through a
rights issue. It has also indicated a stance to reinforce its corporate merger
and acquisition strategy including the purchase of Nikko Cordial.
==Kyodo