Deal for $1.18 Billion Puts Lender on Map as a Top Money Manager.
TOKYO
TOKYO
Sumitomo Trust & Banking Co. is acquiring Citigroup Inc.'s Nikko Asset Management business in a deal that values the firm at 112.4 billion yen ($1.18 billion) and which will make the Japanese lender one of the largest players in the global asset management business.
The deal is the latest in a string of sales by Citigroup aimed at shoring up a balance sheet stricken by bad loans. The U.S. government has become its largest shareholder in the wake of the financial crisis that has rocked many banks around the world.
Bloomberg News/Landov
Sumitomo Trust & Banking Co. agreed to buy Citigroup's Japanese asset management unit
Sumitomo Trust, Japan's largest listed trust bank, said it will buy up to 98.55% of the asset manager, with the balance held by Nikko employees. Citigroup said it will receive 75.6 billion yen for its 64% stake.
The deal will boost Sumitomo Trust's assets under management to about 35 trillion yen. Nikko Asset Management, which is Japan's third-largest fund manager by assets, overseas roughly nine trillion yen.
Sumitomo Trust, which had been in exclusive talks with Citigroup over the deal for the past month, likely has its sights set on managing more of Japan's household assets of about $15 trillion.
"We are not planning to change [Nikko Asset Management's] business model" of being an independent fund manager, Sumitomo Trust executive Tetsuo Okubo said. The bank also will keep the fund manager's current top management, including Chairman and Chief Executive Timothy F. McCarthy.
Sumitomo Trust said it aims to take its new subsidiary public in the future, possibly in a few years. Nikko Asset Management has more than 500 employees world-wide.
The deal is expected to close Oct. 1
Citi has already agreed to sell retail brokerage Nikko Cordial Securities and most of wholesale brokerage Nikko Citigroup Securities to Sumitomo Mitsui Financial Group Inc. for 545 billion yen. Citi also agreed to sell NikkoCiti Trust and Banking Co. to the trust banking unit of Nomura Holdings Inc. for 19 billion yen.
Nikko Cordial is the major distributor of Nikko Asset Management products. Sumitomo Trust's Mr. Okubo said the bank hopes to cooperate with SMFG and discuss future plans, including the possibility of SMFG investing in Nikko Asset Management.
Separately, Sumitomo Trust said it plans to raise 109 billion yen through the sale of preferred shares to strengthen its capital base.
The bank also said its fiscal first-quarter net profit fell 5.8%, dented by increased credit costs. Group net profit totaled 12.20 billion yen in the three months to June, down from 12.95 billion yen a year earlier.
Revenue declined 6% to 211.42 billion yen from 224.96 billion yen.
The deal is the latest in a string of sales by Citigroup aimed at shoring up a balance sheet stricken by bad loans. The U.S. government has become its largest shareholder in the wake of the financial crisis that has rocked many banks around the world.
Bloomberg News/Landov
Sumitomo Trust & Banking Co. agreed to buy Citigroup's Japanese asset management unit
Sumitomo Trust, Japan's largest listed trust bank, said it will buy up to 98.55% of the asset manager, with the balance held by Nikko employees. Citigroup said it will receive 75.6 billion yen for its 64% stake.
The deal will boost Sumitomo Trust's assets under management to about 35 trillion yen. Nikko Asset Management, which is Japan's third-largest fund manager by assets, overseas roughly nine trillion yen.
Sumitomo Trust, which had been in exclusive talks with Citigroup over the deal for the past month, likely has its sights set on managing more of Japan's household assets of about $15 trillion.
"We are not planning to change [Nikko Asset Management's] business model" of being an independent fund manager, Sumitomo Trust executive Tetsuo Okubo said. The bank also will keep the fund manager's current top management, including Chairman and Chief Executive Timothy F. McCarthy.
Sumitomo Trust said it aims to take its new subsidiary public in the future, possibly in a few years. Nikko Asset Management has more than 500 employees world-wide.
The deal is expected to close Oct. 1
Citi has already agreed to sell retail brokerage Nikko Cordial Securities and most of wholesale brokerage Nikko Citigroup Securities to Sumitomo Mitsui Financial Group Inc. for 545 billion yen. Citi also agreed to sell NikkoCiti Trust and Banking Co. to the trust banking unit of Nomura Holdings Inc. for 19 billion yen.
Nikko Cordial is the major distributor of Nikko Asset Management products. Sumitomo Trust's Mr. Okubo said the bank hopes to cooperate with SMFG and discuss future plans, including the possibility of SMFG investing in Nikko Asset Management.
Separately, Sumitomo Trust said it plans to raise 109 billion yen through the sale of preferred shares to strengthen its capital base.
The bank also said its fiscal first-quarter net profit fell 5.8%, dented by increased credit costs. Group net profit totaled 12.20 billion yen in the three months to June, down from 12.95 billion yen a year earlier.
Revenue declined 6% to 211.42 billion yen from 224.96 billion yen.
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