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Citigroup buys Nikko stake
August 28, 2001: 10:50 a.m. ET

U.S. firm acquire 50% of Japan's Nikko Trust, changes name to NikkoCiti
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NEW YORK (CNNfn) - Citigroup Inc. has agreed to acquire a 50 percent stake in Nikko Trust and Banking Corp., a unit of Japan's third-biggest brokerage house, Nikko Securities Ltd., the company said Tuesday.

Under terms of the agreement, expected to close Aug. 31, NikkoCiti Trust and Banking Corp. will operate as a joint venture focusing on trustee administration and the custody business for public funds, pension funds and other institutional clients in Japan currently serviced by Citi Trust and Banking Corp., the company said.

The alliance would make Nikko's trust banking unit more competitive by enabling it to offer value-added services such as Citigroup's multi-currency custody services to Japanese clients, a Nikko spokesman told Reuters Tuesday.

Nikko, which is 20 percent owned by Citigroup and has a market capitalization of $166.9 million, declined to unveil the value of the deal, but Nikko's spokesman said the sale would not have a major impact on its earnings.

Akira Hirano, currently president of Nikko Trust, will become co-president of the company along with Stephen Turner, chief of Cititrust Worldwide Securities Services in Japan.

"We believe that, by combining Citigroup's global network and service strengths with Nikko Trust's local expertise and client access, we have created a platform from which to offer trust and custody services to Japanese and non-Japanese clients that is unparalleled in Japan," Hirano said.

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The news comes as Japanese brokerage houses are stepping up efforts to diversify revenue streams to make themselves less dependent on commission revenue, which is vulnerable to stock market swings.

Nikko Securities, whose shares have lost about 26 percent since May, is set to adopt a holding company structure in October. Last month, the company reported a 96 percent drop in net results as commission revenue was hit hard by the sluggish Tokyo stock market. graphic

From staff and wire reports


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