On Thursday, Citigroup (NYSE:C) announced that they would be selling their retail banking unit which is located in Japan to Sumitomo Mitsui Banking Corp. (SMBC). SMBC is headquartered in Chiyoda, Tokyo and is a Japanese multi-national financial services and banking company. The cost of this deal is unknown yet it also includes the sale of over seven hundred and forty thousand accounts which are estimated to be worth over 21 billion U.S. dollars. Other elements which will fall part of this deal include thirty two retail branches with over 1,500 employees as well as ATMs belonging to Citibank Japan. According to both companies, the wholly owned subsidiary of SMBC, SMBC Trust Bank Ltd., will acquire Citibank Japan and this deal is expected to close in October 2015 after the necessary regulatory approvals are obtained.
According to Bloomberg, it has been estimated that SMBC will pay over $333 billion (forty billion Japanese yen) to acquire the retail banking unit of Citigroup in Japan. SMBC is currently attempting to generate more profits and their aim is to serve the wealthier community in Japan. According to estimates by Bloomberg, these wealthy clients have over $14 trillion in household financial assets. Meanwhile, The Associated Press reported that Citigroup might also consider selling their credit card business in Japan. These sales are being done in order to allow Citigroup to focus more on investment and corporate banking and to streamline their global banking business. On the New York Stock Exchange on Wednesday, the stocks of Citigroup closed 2.46% up at $54.54 while the stocks of Sumitomo Mitsui Financial Group, Inc. traded up 1.08% on Thursday in Tokyo.
On Thursday, most global markets were closed for the Christmas holiday. Meanwhile, during late electronic trade on Thursday, stock-index futures in the U.S. were quoted higher. This suggests that when the markets open again on Wall Street on Friday, they should have a higher start. Approximately twelve hours before the opening of the markets, the futures for the S&P 500 index (SPX) as well as the Dow Jones Industrial Average (DJIA) were both quoted at levels which implied at least a 0.2% gain for both indices. Also on the upside were the futures for the Nasdaq 100 index (COMP) which indicated to an advance of 0.3%. Meanwhile on Wednesday, in a trading session that was shortened ahead of the Christmas holidays, the SPX closed almost flat while the COMP traded 0.2% higher. The Dow eked out a record close on Wednesday with a 6-point gain. This index closed at 18,030.21, closing at a record level for the 37th time this year.
On Friday, in Asian trading, the U.S. dollar (USD) traded largely unchanged against euro and the Japanese yen. Trading was quiet amid the holiday season and a reduced number of market participants which prevented major moves in the greenback. In late trading on Thursday in North America, the USD/JPY traded at ¥120.15 while on Friday, the currency pair traded at ¥120.19. Meanwhile, on Thursday, the EUR/USD traded at $1.2222 but moved to $1.2216 on Friday. After the initial movements on Friday morning trading, the greenback then became largely static. As a result of investor fears regarding the falling oil prices, the USD remained well supported above ¥120. Meanwhile, investors did not react to data out of Japan which showed that despite any efforts to increase inflation in Japan, inflation did in fact slow down in November. On Friday, the Japanese released government data which showed that Japan’s core consumer price index had declined to 0.7% in November. In October, the index rose 0.9%. Meanwhile, industrial production fell 0.6% from the previous month with economists expecting an increase of 0.8%. In other currency trading, the EUR/JPY traded at ¥146.82 from ¥146.83 on Thursday.
On Friday, futures of Brent crude oil gave up most of its early gains. This came in response to an increased supply glut as well as to the weak import data out of Japan which weighed on the commodity. Thanks to positive data out of the U.S. from earlier in the week, the contracts held above $60 a barrel. According to a report by the EIA (U.S. Energy Information Administration), crude inventories last week increased unexpectedly by 7.3 million barrels. This marked the highest level in December with analysts expecting a seasoned draw. Meanwhile in Japan, according to data from the Ministry of Economy, Trade and Industry, November crude imports declined 17.3% to 3.08 million barrels per day. On Friday, Front-month Brent crude was trading at $60.30, almost unchanged from its last settlement after reaching an intraday high of $60.62. Meanwhile in thin trading, the WTI front month contract in the U.S. traded at $55.92 a barrel, up 8 cents after reaching an intraday high of $56.23. For the week, U.S. crude is down 1% while Brent is down 1.8%.