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Citigroup sells NikkoCiti Trust

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Published July 1, 2009 at 11:45 AM
Citigroup-125x100.jpgCitigroup Inc. (NYSE:C) is selling NikkoCiti Trust and Banking Corp.  to Nomura Trust & Banking Co. Ltd. for ¥19 billion ($197.1 million) as it slims down to pay back the government's $45 billion government rescue.

The divestiture is part of a larger strategy for Citi to completely withdraw from the Japanese banking market, which is consolidating aggressively. On Wednesday Shinsei Bank and Aozora Bank announced a merger while Mitsubishi UFJ Financial Group Inc. and Morgan Stanley (NYSE:MS) announced a joint venture. Citigroup has already sold Japanese brokerage Nikko Cordial and Sumitomo Mitsui Financial Group and plans to sell Nikko Asset Management and telemarketer Bellsystem24 Inc. in Japan as well.

But divesting in the current marketplace isn't easy due to the lack of financing and bidders with cash on hand. In fact, Nomura is paying 24% less than Mitsubishi UFJ Financial offered to pay under a deal that was scrapped in May, according to Bloomberg.

Citigroup has been slimming down for over a year now. Here are the deals that the bank has done since April 2008, according to The Deal Pipeline (subscription required):

  • In April 2008, Diners Club International Ltd. was sold to Discover Financial Services Co. (NYSE:DFS) for $165 million.
  • In April 2008, CitiCapital Assets were purchased by GE Capital Corp. for an undisclosed price.
  • In July 2008, Citibank Privatkunden AG & Co. KGaA was acquired by Credit Mutuel-CIC for for $7.7 billion.
  • In October 2008, Citigroup Global Services Ltd. was sold to Tata Consultancy Services Ltd. for $512 million.
  • In December 2008, Citi Technology Services Ltd. was sold to Wipro Technologies for $127 million.
  • In January 2009, a 51% of Smith Barney was sold to Morgan Stanley (NYSE:MS) for $2.75 billion.
  • In February 2009, Citigroup sold a 13.4% portion of its Brazilian credit card company Redecard SA for $984.80 million.
  • In May 2009, Nikko Cordial Securities Inc. brokerage and parts of the Nikko Citigroup Ltd. investment bank were sold to Sumitomo Mitsui Financial Group Inc. for about $5.6 billion.
There are still several other deals not yet completed. James von Moltke is in charge of Citigroup's asset sale effort. Here are some details of where those deals stand at the moment:

Citigroup to sell 94% stake in Bellsystem 24:
Bidders could include Permira and Bain Capital. The deal could be worth $1.5 billion to $2 billion, according to Reuters.

Citigroup to sell Nikko Asset Management:
Bidders include Bank of New York Mellon Corp. (NYSE:BK), Sumitomo Trust & Banking Co. and T&D Holdings Inc. The deal could top $1 billion, according to Reuters.

CitiFinancial consumer finance:
CitiFinancial has reduced its asset book by one-third and its branch network by a quarter, Citi CEO for South Asia Mark T. Robinson told The Business Standard. The bank restructured its private-label credit card business, along with consumer finance units, for divesting.

Primerica Financial Services:
Bidders for the unit could include JC Flowers & Co. LLC, Blackstone Group LP (NYSE:BX) and TPG Capital, according to The Deal Pipeline.

Monex Group:
Citigroup plans to sell its 26% stake in Japanese online broker Monex Group Inc. The stake may ring in at $144 million. Mitsubishi UFJ, Mizuho Financial Group and Sumitomo Mitsui Financial Group may be interested in the stake, an analyst told Reuters.

For the full list of Citigroup assets on the block, check out The Deal Pipeline. - Maria Woehr

Also see:
Morgan Stanley, Citi JV slowed by IT
Citi's Pandit to be purged?
Bair's defeat and Beltway politics
Citi hires M&A chief in Von Moltke

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