Citigroup to sell Nikko Asset Management to Sumitomo Trust.

TOKYO, July 29 Kyodo

Citigroup Inc. and Sumitomo Trust & Banking Co. have hammered out the outline of an agreement under which the U.S. financial institution will sell its arm Nikko Asset Management Co., the third-biggest Japanese asset management firm, to the Japanese bank, sources familiar with the matter said Wednesday.

The cost of the acquisition will come to around 100 billion yen, the sources said, adding the two sides may announce the accord possibly on Thursday.

The sale of the Japanese asset management unit is part of Citigroup's restructuring program to scrap non-core businesses.

In May, the cash-strapped banking giant decided to sell its Japanese brokerage arm Nikko Cordial Securities Inc. and part of its Japanese investment bank unit Nikko Citigroup Ltd. to Sumitomo Mitsui Financial Group Inc.

Nikko Asset has 8.8 trillion yen in assets under management. The acquisition will make Sumitomo Trust & Banking one of the biggest asset management firms in Japan.

Sumitomo Trust will seek to take Nikko Asset Management public after it places the Tokyo-based asset manager under its wing.

There is a strong possibility that Sumitomo Mitsui Financial Group will move to funnel money into the capital base of Nikko Asset because Nikko Cordial Securities has been a major marketer of Nikko Asset's financial products, the sources added.