The Wall Street Journal-20080130-Citi-s Peterson to Lead Nikko Cordial

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Citi's Peterson to Lead Nikko Cordial

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TOYKO -- Citigroup Inc. completed its $14 billion acquisition of Tokyo-based Nikko Cordial Corp. and named the head of its local unit as president of Japan's third-largest brokerage.

Douglas Peterson, 49 years old, will succeed Shoji Kuwashima. He will also serve as the head of Citigroup Japan Holdings Ltd., the local arm of the New York-based financial-services group.

The closing marks the latest milestone in Citigroup's transformation of its Japan business. When Mr. Peterson moved to Tokyo in 2004, the bank was suffering from problems that ultimately led to the revocation of its private-banking license here.

Since then, Mr. Peterson has worked to repair relationships with regulators, obtained a local banking license and overseen the listing of Citigroup's shares on the Tokyo Stock Exchange. Citigroup moved to acquire Nikko Cordial, with which it has an investment-banking joint venture, after the Japanese brokerage was hit by accounting problems.

The deal, which initially raised eyebrows here, is the biggest acquisition of a Japanese company by a foreign company. It also marks the first time a foreign company used its own shares to pay for a deal, under a structure permitted in May after changes to the law took effect.

Mr. Peterson said Citigroup will release details of its integration strategy over the next six weeks. He added that the Nikko Cordial name will likely remain. Citigroup has maintained strong local brands -- like Smith Barney in the U.S. and Banamex in Mexico -- after some previous acquisitions.

Mr. Peterson also said Citigroup would seek to streamline its operations by consolidating overlapping functions -- one of the most delicate tasks ahead -- though he declined to specify which ones. For example, Citigroup currently has three securities operations in Japan that could be consolidated.

Citigroup shares traded in Tokyo rose 3% to 2,895 yen ($27).