In another vote of confidence for its operations in Japan,
is adding to its stake in
Tokyo-based Nikko said Monday it will sell a 50% stake in its trust subsidiary,
Nikko Trust & Banking
, to Citigroup. While small, the move comes on top of a 1998 deal by Citi predecessor
for a roughly 20% stake in Nikko, which was valued at about $1.6 billion.
"They're clearly succeeding in what they're doing with Nikko," says Richard Bove, banks analyst at
, adding that in past conference calls, Citigroup has been enthusiastic about increasing its presence in Japan. In early September, Citigroup inked a
deal to purchase consumer lender Associates First Capital for over $30 billion.
For Nikko, which is struggling with Japan's economic downturn, the deal is a shot in the arm as weak stock prices and lower investment fees make for a tough environment. In a news release, Nikko said the deal represents an effort to strengthen its ties with Citigroup.
Citigroup owns, they did it because of confidence in the joint venture," says Bove. "Sandy Weill doesn't put money in anything that doesn't work. Their last two acquisitions increased their position in Japan."
The value of the deal wasn't disclosed, though reports in Japanese media estimated the value at about $86 million. Citigroup wasn't immediately available for comment. Shares of Citigroup were up 75 cents to $48.95.