Sumitomo Trust & Banking Co. is making final arrangements to buy Nikko Asset Management Co., a local unit of U.S. financial giant Citigroup Inc., for over ¥100 billion after obtaining preferential rights for the acquisition, sources said Friday.
The two parties will try to ink the formal agreement sometime next week, the sources said. Sumitomo, which already has an asset management subsidiary, will try to expand its business by acquiring Nikko Asset Management.
The bank's management has determined that the acquisition would also generate great synergy effects with its main trust investment business.
Sumitomo Trust, which has midsize STB Asset Management Co. under its wing, also hopes to curb management expenses through the deal to address recent declines in fund management fees as a result of increased competition.
The sale of the Japanese asset management unit is part of Citigroup's restructuring program.