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Profits of Nikko Cordial Corp. plunged in the 2006 business year, according to the firm’s financial statements released Tuesday, affected by the brokerage’s involvement in an accounting scandal.

Nikko Cordial’s pretax profit dropped 32.9 percent in the year to March 31 to 100.4 billion yen from the previous year, while its group net profit fell 11.2 percent to 78.1 billion yen on sales of 516.6 billion yen, down 8.5 percent.

“The investment banking business suffered the most from the incident,” said Osamu Morita, Nikko Cordial’s chief financial officer, referring to the discovery that the firm falsified information on its 2004 earnings report. “Because of the incident, we declined to take the lead manager positions for companies opting to go public.”

Nikko Cordial admitted in December it padded profits by manipulating transactions among affiliated companies.

Pretax profit for its investment banking business plunged to 2.2 billion yen in the January-March period, down from 10.7 billion yen in the same period last year.

Nikko Cordial said it cost 2.7 billion yen for the company to revise the 2004 financial statements and fees for a special committee to investigate the incident.

The release of Nikko Cordial’s 2006 financial statement comes as Citigroup Inc.’s public tender offer will close Thursday. The U.S. financial giant launched the tender offer last month to purchase Nikko Cordial shares at 1,700 yen per share.

“I hope the (Citigroup’s) tender offer will succeed,” Morita said. “It is a good opportunity for our business.”

Investors have been split on whether to accept the tender offer and it is unclear whether Citigroup will be successful in getting a majority of the brokerage’s outstanding shares.

Bermuda-based Orbis Investment Management Ltd., which has a 6.9 percent stake in Nikko Cordial, has said it will not accept the offer because the price is too low.

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