Citigroup to shake things up?

April 30, 2007
By Ken Worsley

How much would it be worth to gain control of the third largest brokerage firm in the world’s second largest economy? Factor in that the buyer is the world’s largest financial institution and there are very few opportunities to break into a market that is famously closed and subject to its own set of rules and regulations.

This is why I had been saying that it didn’t really matter if the hedge funds demanded 1,700 or 1,900 yen per share; there was no way Citigroup would walk away from the Nikko Cordial deal. The firm’s tainted image? Lawsuits brought against former senior executives by the firm itself are taking care of that problem, and time should handle the rest.

Today, Michiyo Nakamoto of the Financial Times points out that Citigroup’s acquisition will force Nomura and Daiwa, Japan’s two largest brokerage firms, to change the way they do business. It’s about time for that, although we hope it won’t stop there. If Japan is to truly become the international finance center it wants to be perceived as, deregulation has some bumpy ground to cover. Citigroup might be able to push its competitors, but will they all be able to get together to push Kasumigaseki?

Filed Under Banking, Business, M&A