Citigroup Inc. will reduce its equity stake in Nikko Cordial Corp. to 4.9 percent from the current 11.3 percent, the two companies announced Wednesday.
The U.S. financial giant will remain the biggest shareholder in the major brokerage.
Now that Nikko Cordial has strengthened its capital base, Citigroup will reduce its stake in order to reallocate the capital to other operations, Citigroup CEO Charles Prince said in a joint statement.
The deal will enable Nikko Cordial to expand its presence in private equity investment and other businesses, said Junichi Arimura, Nikko Cordial president and CEO.
With Citigroup's stake falling below 5 percent, Nikko Cordial will no longer be subject to U.S. Federal Reserve Board regulations.
The two firms also said they will each give about 20 billion yen to Nikko Citigroup Inc. to boost its investment banking business.