According to a filing with Japan's finance ministry, Citigroup raised its stake in Japanese brokerage Nikko Cordial Group from 61% to a critical 68% this month. In April, Citigroup bought 61% of its voting stock for $7.7B, and ultimately plans to convert Japan's #3 brokerage into a fully-owned subsidiary. The current purchase takes Citigroup's stake above a key threshold -- 2/3 -- giving it protection against veto moves by minority holders. It can now merge or sell units without the consent of other shareholders. The move gives the U.S. bank more power to push through changes at the ailing brokerage and move forward with its plans to bolster its foothold in the world's second biggest economy. Citigroup bought 37 million shares for ¥1,700 per share in a private placement, and 32 million shares on the market between June 5-6 for less than ¥1,700 per share, a spokeswoman said. Several large shareholders still refuse to sell. Citigroup shares are down 4% YTD, and up 7.4% over the past year.
Sources: Reuters, Bloomberg, Dow Jones Newswire
Commentary: Nikko Cordial : Citigroup May Fail to Gain Full Control Of Company • Citigroup Plays Japanese Poker • Why I'm Holding Onto Nikko Cordial
Stocks/ETFs to watch: Citigroup Inc. (NYSE:C), Nikko Cordial Group ADR (OTC:NIKOY). Competitors: Mitsubishi UFJ Financial Group (NYSE:MTU), Nomura Holdings (NYSE:NMR), Daiwa Securities Group (OTC:DSECY). ETFs: iShares S&P Global Financial Index Fund (NYSEARCA:IXG), iShares Dow Jones US Financial Services (NYSEARCA:IYG), Financial Select Sector SPDR (NYSEARCA:XLF)
Conference call transcript: Citigroup Q1 2007
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