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Citigroup said it is "committed" to its Japanese brokerage unit Nikko Cordial Securities, rebuffing reports that the division is up for sale as Citigroup splits in two to rebuild capital.
Citigroup plans to keep Nikko Cordial, which it finished buying for about 1.6 trillion ($32 billion) a year ago, for at least another year, two company officials with knowledge of the matter said, declining to be identified.
"Nikko Cordial is an outstanding business with an excellent business model and a strong market position," Citigroup said. "Citigroup remains committed to maximising the value of Nikko Cordial over the next few years."
Several Japanese newspapers reported over the weekend that Citigroup might sell Nikko Cordial. The Yomiuri newspaper said Mitsubishi UFJ Financial Group and Mizuho Financial Group are seeking to acquire the brokerage, and that Mitsubishi UFJ would inform Nikko's executives of its intentions.
Tomohiro Kato, a spokesman for Mitsubishi UFJ, said the Japanese bank isn't in talks to buy Nikko Cordial. Masako Shiono, a spokeswoman for Mizuho, declined to comment.
Speculation about what assets Citigroup might sell comes after chief executive Vikram Pandit last week said he would undo a decade of acquisitions by separating the bank into two units. Pandit's reshuffle came after Citigroup racked up US$28 billion ($50.5 billion) of net losses over the past five quarters.
Profit at Nikko Cordial, formed in 1944, slipped to 12.1 billion for the six months ended September 30 from 20.2 billion a year earlier. Citigroup plans to eliminate about 1000 jobs at Nikko Cordial to restore earnings, two company officials said on December 10.
The Tokyo-based brokerage managed 28.2 trillion in client assets at the end of September.
Citigroup plans to form a new business called Citicorp to hold units it wants to keep, including branch banking, corporate lending, securities underwriting, transaction processing and private banking.
The bank will also create Citi Holdings for "non-core" businesses including CitiFinancial, Primerica Financial Services, brokerage, retail asset management, and a "special asset pool", consisting of the assets the US Government agreed to guarantee.
Nikko Cordial is among assets considered "non-core". Citigroup said last month it agreed to sell its entire stake in NikkoCiti Trust & Banking to Mitsubishi UFJ Trust and Banking for about 25 billion. The bank also agreed to sell shares in its Japanese private banking unit Nikko Antfactory KK to Norinchukin Bank and other investors.
- BLOOMBERG
