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Citi closes sale of Nikko Cordial to SMFG

Citigroup completed the sale of its Japanese brokerage Nikko Cordial Securities to Sumitomo Mitsui Financial Group, one more step in the US bank's plans to shed non-core assets.

Citigroup said on Wednesday the sale to Sumitomo Mitsui (SMFG), Japan's third-largest bank, had a total cash value of $8.7 billion, including retained cash and debt payments.

Citigroup, the third-largest US bank, said it will book an immaterial after-tax gain during the fourth quarter.

The bank also said it would form an alliance with SMFG to gain access to its global corporate banking clients.

For SMFG, the purchase is a key defensive move because it prevents the bank's bigger rivals from getting stronger, while it would help Citigroup cushion the impact of bad loans and toxic assets, according to analysts.

Citigroup was forced to sell off assets globally to raise cash after suffering more than $85 billion in credit losses.

Nikko Cordial was part of Citi Holdings, a division that includes assets the bank is looking to shed or close over time.

In January, Citigroup decided to separate into Citicorp, housing its key banking business, and Citi Holdings, which included its brokerage, some consumer finance businesses, and other non-core assets.

The US government injected $45 billion in Citigroup and is the bank's largest shareholder, with a roughly 34% stake. (Reuters)