Cash-strapped U.S. financial giant Citigroup Inc. has begun studying selling off its Japanese brokerage unit Nikko Cordial Securities Inc. to the country’s top banking groups in an auction that is expected to begin soon, sources said Tuesday.
The bidding is likely to end in a deal worth several hundred billions of yen, the sources said.
Mitsubishi UFJ Financial Group Inc., the nation’s largest banking group, has shown an interest in buying Nikko Cordial to strengthen its brokerage operations, the sources said.
Battered by the global financial crisis, Citigroup recently announced a plan to split the group into core profitable divisions focusing on banking and noncore units that are likely to be downsized or spun off.
While Citigroup has said it will decide how to treat the noncore units by the end of June, it is likely to be pressured to reach a quick decision on the fate of Nikko Cordial Securities amid rapidly deteriorating business conditions.
The U.S. financial group also plans to sell Nikko Asset Management Co., another key Japanese unit, which has also been classified as one of its noncore units, the sources said.
But observers cautioned that even if the auction for Nikko Cordial Securities does begin soon, it may still take time for the sale to be carried out as Japanese financial groups are also facing tight finances and losses on stock investments.