SMFG to reach accord soon with Citigroup on acquiring Nikko Cordial

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TOKYO, April 28 Kyodo -
Sumitomo Mitsui Financial Group Inc. will shortly conclude a basic agreement
with Citigroup Inc. to acquire Nikko Cordial Securities Inc. and the bulk of
Nikko Citigroup Ltd. for about 500 billion yen, sources familiar with the
matter said Tuesday.
The major Japanese banking group and the U.S. financial giant are expected to
announce the deal by the end of this week, they said.
SMFG is aiming to strengthen its brokerage operations through the deal. It
would mark the first acquisition of one of Japan's top three brokerage houses
by a major Japanese bank.
SMFG has close business ties with Daiwa Securities Group Inc., another of the
country's major securities house. By acquiring Nikko and further deepening its
relationship with Daiwa, SMFG is hoping to create a financial group with
brokerage business as strong as current industry leader Nomura Holdings Inc.,
the sources said.
The total assets under the management of the nation's third-largest Nikko
Cordial and second-largest Daiwa would exceed those of Nomura.
Japan's three biggest banking groups -- SMFG, Mitsubishi UFJ Financial Group
Inc. and Mizuho Financial Group Inc. -- joined the bidding for Nikko Cordial
conducted by cash-strapped Citigroup recently. SMFG, which reportedly submitted
the highest offer, has been granted preferential negotiating rights to buy the
brokerage house.
SMFG and Daiwa Securities Group jointly own Daiwa Securities SMBC Co., a
brokerage firm specializing in services for corporate clients. As for
businesses targeting individual investors, SMFG has a medium sized brokerage
house, SMBC Friend Securities Co.
The Daiwa group has appeared reluctant about bank-led industry realignment, the
sources said.
But Daiwa Securities Group Director Nobuyuki Iwamoto suggested his intention to
strengthen relationships with SMFG at a press conference on Tuesday, when the
brokerage firm reported a net loss of 85.04 billion yen for the year that ended
in March. ''We intend to talk with the aim of maximizing our profits as a
business partner,'' Iwamoto said.
SMFG announced April 9 that it will raise up to 800 billion yen through a
public offering, a move seen as aimed at securing funds for the purchase of
Nikko Cordial.
==Kyodo