Updated from 3:32 a.m. EDT
reached a definitive agreement Friday to sell its Japanese domestic securities business, conducted principally through Nikko Cordial, to
for about 545 billion yen ($5.6 billion), company officials said.
Citigroup said the total cash value of the deal to the bank is $7.9 billion.
In a statement, Citigroup said the transaction is expected to generate about $2.5 billion of tangible common equity for the bank. Citigroup said it expects to recognize an after-tax loss of about $200 million from the sale.
The sale is expected to close by the end of the fourth quarter.
In connection with the transaction, Citigroup will provide Sumitomo Mitsui with access to its global networks in corporate and investment banking.
Citigroup said its ownership interests in Nikko Citigroup Ltd., Nikko Asset Management, and Nikko Principal Investments Japan aren't part of the transaction.
The deal makes Sumitomo Mitsui the first Japanese bank to buy a top brokerage in Japan.
Nikko Cordial, which Citigroup acquired just a year ago, is Japan's third-largest brokerage with managed assets of 25 billion yen ($260.4 million) and 111 branches.
After reporting a quarterly loss of $8.29 billion, Citigroup last month reorganized into two entities, Citicorp and Citi Holdings. The first is focused on traditional banking around the world, while the second holds the company's riskier assets and tougher-to-manage noncore ventures, including Nikko Cordial.
Analysts have said that CEO Vikram Pandit's reorganization allows Citigroup to sell or spin off the Citi Holdings assets to raise cash.
Citigroup already had begun scaling back its presence in Japan to cope with the global financial crisis. In December, it agreed to sell NikkoCiti Trust and Banking to
in an all-cash deal worth 25 billion yen.
Mitsubishi UFJ was reported to be one of the suitors for Nikko Cordial.
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