Sumitomo Mitsui Financial Group Inc. and Daiwa Securities Group Inc. officially announced Thursday the termination of their capital tieup for Daiwa Securities SMBC Co., ending their 10-year brokerage joint venture.
The decision follows SMFG's agreement in May to buy Nikko Cordial Securities Inc. from Citigroup Inc. of the United States. The move is widely seen as having widened the differences in business strategies of SMFG and Daiwa Securities Group.
SMFG, a major banking group, currently holds a stake of 40 percent in the joint venture, while Daiwa Securities Group holds the remainder.
Under their latest agreement, Daiwa Securities Group will buy the SMFG stake by the end of this year and borrow ¥100 billion from SMFG's key banking unit, Sumitomo Mitsui Banking Corp., for the purchase.
SMFG will withdraw most of its executives and employees from Daiwa Securities SMBC on Oct. 1.
Daiwa Securities Group and SMFG agreed to maintain Daiwa Securities SMBC's wholly owned private equity investment unit, Daiwa Securities SMBC Principal Investments Co., as a joint venture owned 60 percent by Daiwa Securities Group and 40 percent by SMFG.
SMFG and Daiwa Securities Group will also explore the possibility of a new business alliance in the investment banking area.