Travelers Buys Into Japan Brokerage
TOKYO (AP) _ Travelers Group Inc. said Monday it will take a one-quarter stake in Nikko Securities Co., Japan’s third-largest brokerage house, in one of the most aggressive moves to date in the Japanese market by an American financial powerhouse.
The New York-based Travelers will pay $1.6 billion for its stake in Nikko, becoming Nikko’s biggest shareholder. taking over from top Japanese lender Bank of Tokyo-Mitsubishi Ltd. Nikko will buy a smaller stake in Travelers Group, worth about $483 million.
In April, Travelers unveiled plans to merge with Citicorp in an $82 billion deal which would create the world’s largest financial services company.
``Our creating a partnership with Nikko will allow us to be more productive not only in this marketplace but all around the world,″ said Sanford Weill, chairman and chief executive officer of Travelers Group, speaking at a press conference in Tokyo.
The deal marks the latest move by a major Wall Street firm to strengthen its position in Japan in the midst of a major effort to liberalize the Japanese financial industry by 2001. The reforms, dubbed the ``Big Bang,″ are expected to open up a pool of personal financial assets worth an estimated $9 trillion.
In February, Merrill Lynch and Co. hired 2,100 former employees of the failed Yamaichi Securities Co. to staff 33 retail outlets nationwide. Fidelity Investments Co. has announced similar plans.
As part of their strategic alliance, Travelers and Nikko plan to link their worldwide securities sales and trading businesses. They will also set up a jointly owned Tokyo-based securities company with working capital of more than 140 billion yen, or $1 billion.
The Japanese venture, to be called Nikko Salomon Smith Barney Ltd., will incorporate the investment banking, consumer product and research operations of Nikko Securities, one of Japan’s ``Big Three″ brokers.
It will be headed by Yuji Shirakawa, currently president of Nikko Research Center. Toshiharu Kojima, chief executive of Salomon Smith Barney in Japan, will become co-chief executive of the venture, along with a Nikko Securities official.
Separately, the Tokyo Stock Exchange launched an investigation Monday over possible insider trading involving Nikko shares after the price of its stock jumped Friday, an exchange official said.
Nikko shares closed at 436 yen ($3.16) Friday, up 20 yen (14 cents) from Thursday’s close, after rising by as much as 10 percent. A total of 8.59 million Nikko shares were traded on Friday, nearly six times the volume traded Thursday.
The official, speaking on condition of anonymity, refused to provide other details.