Bloomberg News

SMBC Nikko Said to Be Dropped From Japan International Bond Sale

October 17, 2011

Oct. 18 (Bloomberg) -- SMBC Nikko Securities Inc. will be eliminated as a lead manager for Japan International Cooperation Agency’s bond sale following a probe into insider trading, according to two people with knowledge of the matter.

JICA, as the state-run agency is known, will announce the decision today, the people said yesterday, declining to be identified as the matter is confidential. Daiwa Securities Group Inc. and Mitsubishi UFJ Morgan Stanley Securities Co., which were hired with SMBC Nikko earlier this month, will manage the 20 billion yen ($260 million) bond sale to individual investors, one of the people said.

SMBC Nikko spokesman Kiyoo Kuniyoshi yesterday declined to comment on JICA’s decision. The brokerage said on Oct. 6 that it is being investigated by Japan’s Securities and Exchange Surveillance Commission for a possible insider trading violation by an executive.

“We are fully cooperating with the commission’s investigation,” SMBC Nikko said in an e-mailed statement that day, declining to comment further.

The brokerage is a unit of Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest banking group by market value. Sumitomo Mitsui shares fell 2.1 percent to 2,143 yen as of 9:13 a.m. in Tokyo, outpacing the Topix Bank Index’s 1.1 percent decline.

Nissan Financial Services Co., a financial unit of Nissan Motor Co., dropped SMBC Nikko from a planned bond sale, according to an Oct. 6 statement from Mitsubishi UFJ Morgan Stanley. The statement didn’t elaborate on the reason for the exclusion. Mitsubishi UFJ, Citigroup Inc. and Goldman Sachs Group Inc. will still manage the next sale, the statement said.

--Editors: Chitra Somayaji, James Gunsalus

To contact the reporters on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net; Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net


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