Wednesday, Nikko Citi Holdings Inc., a Citigroup, Inc. (C) subsidiary, announced that it has agreed to sell all shares of NikkoCiti Trust and Banking Corp. to Nomura Trust & Banking Co. Ltd. for 19 billion yen, or US$197.1 million all cash. On a separate note, the Financial Times on Tuesday reported, citing people close to the process, that ex-Citi Chairman Sir Win Bischoff has been tapped by the UK Financial Investments to become the new Chairman of Lloyds Banking Group Plc (LYG,LLOY.L).
The sale announcement confirms a Tuesday report in the Nikkei business daily that Citi is in final stage of talks to sell its Japanese trust bank, Nikko Citi Trust, to a Nomura Holdings Inc. (NMR) subsidiary for an estimated 20 billion yen or so. The acquisition by Nomura Trust and Banking Co. could be reached within the week, the report had stated.
Nikkei had also reported that both Citi and Nomura Trust appear to have reached an agreement, under which Citi would bear Nikko Citi's liabilities that stemmed from loans originated by the now-bankrupt SFCG Co.
The sale of the Tokyo-based division of is expected to close in the fourth quarter of 2009, subject to certain purchase price adjustment, regulatory approvals, and other closing conditions.
Nikko Citi Trust is a trust banking vehicle that provides fiduciary/trustee services to Investment Trust Management companies. Established in August 1993 as Nikko Trust Banking Corp., Nikko Citi Trust changed to its current name in 2001, following the transfer of 50% of its shares from Nikko Securities to Citigroup.
Nikko Citi Holdings CEO Douglas Peterson commented, "This transaction is in line with Citi's stated global priority to allocate capital and focus its resources on the best growth opportunities. Peterson added, "Citi will maintain a strong presence in securities services and transaction services in Japan. We see significant opportunity for these businesses in Japan, which play to Citi's key strengths."
Citi had earlier attempted to sell the Japanese trust bank to Mitsubishi UFJ Trust and Banking Corp., part of the Mitsubishi UFJ Financial Group, Inc. (MTU), which agreed last December on a 25 billion yen price. The bank, however, backed off in May, leaving Citi to search for a new buyer.
The latest sale adds to the U.S. financial services giant's efforts in scaling back its presence in Japan in order to cope with the global financial crisis. The firm has, reportedly, already divested its Japanese brokerage unit, Nikko Cordial Securities Inc., and key investment banking assets to Japanese financial service firm Sumitomo Mitsui Financial Group, Inc. (SMFJY.PK) for about US$5.9 billion.
Meanwhile, Bischoff, tipped off to become the next chairman of Lloyds, is a veteran British banker and a former chairman of Citigroup. Bischoff, who retired from Citi in February, was reportedly asked by UK Financial Investments or UKFI, which manages the government's bank stakes, to steer Lloyds through the process of integrating HBOS Plc (HBOS.L). The UK government has a 43.5% stake in Lloyds.
Last September, Lloyds TSB agreed to a government-brokered rescue of troubled mortgage lender HBOS for GBP 12.2 billion, or U$22 billion, to create a financial giant that would hold nearly 28% of Britain's mortgage market. The acquisition was completed in January this year, and left the firm in a financially bad shape.
UKFI, reportedly, had ousted Lloyds's Chairman Sir Victor Blank last month, as criticism mounted over his HBOS takeover decision. Blank was made Chairman of the Group's Lloyds TSB unit in May 2006.
The Financial Times noted further that Bischoff had been lined up to take over as Chairman of UKFI until last week. But, the lack of other suitable candidates, had led UKFI to come to its present decision.
C closed Tuesday's regular trading on NYSE at $2.97, down $0.05, on a volume of 108.8 million share volume.
NMR closed the same day on NYSE at $8.43.
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