US financial services major Citigroup, smarting under the impact of the devastating financial marker crisis, has finally opted to sell its Japanese brokerage unit Nikko Cordial, to raise over $5-9 billion, media reports said.
Citi is planning to auction Nikko Cordial, which the troubled financial services group had acquired for about $13 billion in cash and shares, as part of the company's strategy to sell off non-core assets, the Financial Times reported.
The report said Citi has already had informal talks with potential bidders, including three of Japan's largest banks and has sought formal offers for Nikko Cordial in order to finalise a bidder before April-end, the report said.
While Citi declined to comment on the issue, the report quoted people close to the situation as saying that Citi expects Nikko Cordial to fetch the fund-starved banking major between $5 billion and $9 billion.
A sale of the securities unit, even at a price far below the $13 billion it paid for its acquisition, is expected to give Citi an accounting gain as the original take-over, included other operations of Nikko Cordial that were spinned off in a reorganisation. (See: Citi makes final $14 billion offer for Nikko)
Nikko Cordial, like the German retail bank and US brokerage unit that Citi sold earlier, is one of its best businesses. (See: Citigroup sells German unit to France's Credit Mutuel for $7.8 billion)
Analysts, however, doubt any Japanese bank might be interested in acquiring the third-biggest broker in the country at a time when competition is heating up in one of the world's biggest capital markets. They say Citi may lose more than it gains by selling it at an unknown price.
The sale comes at a time when Morgan Stanley and Mitsubishi UFJ Group, Japan's largest bank, are merging their Japan brokerage businesses to take on an enlarged Nomura and Daiwa Securities. Nomura is integrating the Japan operations of Lehman Brothers. (See: Nomura to buy Lehman's banking, equities units in Europe, Middle East)