The Sumitomo Mitsui Financial Group Inc. has been granted preferential negotiating rights for Nikko Cordial Securities Inc. by troubled U.S. financial giant Citigroup Inc., sources familiar with the matter said Saturday.
The major banking group is expected to hold negotiations with Citigroup on a more detailed assessment of the assets of the securities house with an eye to reaching an agreement next month or after, the sources said.
The acquisition would likely allow SMFG to sharply expand the scope of its securities business. SMFG has close business ties with Daiwa Securities Group Inc.
The sources said SMFG offered the highest bid, around ¥500 billion, of Japan's three major banking groups, exceeding the offer of runnerup Mitsubishi UFJ Financial Group Inc.
Citigroup invited bids for Nikko Cordial and the bulk of Nikko Citigroup Ltd. on Monday.
Some elements are expected to remain in flux, given the possibility of additional conditions being attached, such as a business partnership with Citigroup's Japanese operations once the sale of Nikko Cordial is complete, the sources said.
On April 9, SMFG announced that it will raise up to ¥800 billion through a rights issue. It has also indicated a stance to reinforce its corporate merger and acquisition strategy including the purchase of Nikko Cordial.