Citigroup (NYSE: C) has finalized the sale of its Japanese brokerage form to Sumitomo Mitsui Banking Corp. as part of an $8.7 billion deal that advances Citi’s restructuring efforts designed to shrink the size of the company and generate new capital.
The cash and debt transaction was valued at 776 billion yen, which is about $8.7 billion in U.S. dollars. The deal involves 7,800 employees through the sale of Nikko Securities Inc and parts of Citibank’s Nikko Citigroup’s Japanese operations. The new entity is being titled Nikko Cordial Securities Inc. Sumitomo Mitsui is now the first Japanese bank to buy a top brokerage firm in Japan, marking a major realignment in Japan’s financial sector.
A ceremony commemorating the event was held on Thursday. At the event, Sumitomo Mitsui Banking’s Corp. President Masayuki Oku said that he hopes the new entity becomes a “model for integration of banking and brokerage businesses,” according to Kyodo news agency.
Citigroup has also sold its asset management arm in Japan, Nikko Asset Management Co., to another unit of the conglomerate, Sumitomo Trust & Banking Co.
Citigroup has received $45 billion in bailout money from the federal government and currently has over $300 billion in guarantees from the fed on underperforming assets. The federal government recently exchanged a majority of the bailout money provided for a 1/3rd stake in Citigroup.
Citibank stated that it will book an immaterial after-tax gain on the deal in the fourth quarter of this year. The sale was first announced back in May.
