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Source: www.asiaecon.org |

SUMITOMO MITUSUI MAY MAKE HISTORICAL STOCK SALE


Japan's third largest bank, Sumitomo Mitsui Financial Group (SMFG), has raised its plan of share sale from 800 billion yen to 923 billion yen ($9.4 billion), making it the biggest stock issue in Japanese corporate history.


Japan’s third largest bank, Sumitomo Mitsui Financial Group (SMFG), has raised its plan of share sale from 800 billion yen to 923 billion yen ($9.4 billion), making it the biggest stock issue in Japanese corporate history.

Sumitomo Mitsui is selling shares after agreeing last month to purchase Citigroup’s Nikko Cordial securities’ brokerage business in Japan for 545 billion yen. The bank and its two largest rivals have announced plans to raise more than 4.6 trillion yen since November as souring investments and bad loans forced them to book a combined loss of 1.22 trillion yen in the year ended March 31.

Citi and Sumitomo Mitsui Financial Group would facilitate new businesses opportunities with a special strengths that two companies together could create it, having unique products and services in strategical markets. Also, they have an alliance agreement to provide SMFG with access to Citi’s global networks in corporate and investment banking, including M&A and sales and trading services, while continuing the longstanding partnership between Citi and Nikko Cordial Securities in originating and distributing capital markets products to investors in domestically and worldwide.

The Tokyo-based bank today said in a document of Japanese finance ministry, that it planned to sell 235 million shares at ¥3,928 each, a 9.7 per cent discount to Friday’s closing price of ¥4,350 from Tuesday.

SMFG planning to increase cash with a massive share sale (over $9.4 billion). In the last whole year, Japan has developed a financial power that made average commercial banks were buying US assets and consolidating their securities’ businesses.

Nikko Citi Holdings’ CEO Doug Peterson said, “Citi has a proud history of delivering our global capabilities to clients in Japan, and we will continue to have a large local presence here, with market-leading investment banking and corporate banking platforms, the largest retail banking presence among foreign-owned banks and one of Japan’s top premium credit card businesses.”

Sumitomo Mitsui Financial Group and Daiwa Securities Group launched a joint venture ten years ago. Together, in April 1999, Sumitomo Bank and Daiwa Securities established Daiwa Securities SB Capital Markets (currently Daiwa Securities SMBC). The new firm linked the bank’s corporate client base with the investment services offered by the securities company. The venture was watched as a new business model for collaboration between banking and investment.

Although Japan’s economy is facing the worst recession since World War II, Sumitomo Mitsui has increased its capital raising on the back of the recent improvement in financial stocks globally led by strong demand from local as well as overseas investors.

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If the deal materialized, Sumitomo Mitsui would be the first Japanese bank to buy a top brokerage in Japan, the Nikkei said. Sumitomo was competing against rivals Mittsubishi UFJ Financial Group , the largest bank of Japan, and Mizuho financial Group for the Citi unit.

Source: www.asiaecon.org |


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