Japan's SMFG to buy 5% of Jefferies for $380 million -sources

TOKYO (Reuters) -Sumitomo Mitsui Financial Group Inc plans to buy 5% of Jefferies Financial Group Inc shares for about $380 million, seeking to strengthen its securities business in the United States, two sources familiar with the matter said.

Japan’s second-biggest lender by assets said in a statement it was considering capital ties with New York-based Jefferies and would make an announcement when a deal was agreed.

Under the planned deal, SMFG would also be able to lend to Jefferies’ customers in the United States, according to the sources who declined to be identified as the information has not been made public.

The move is part of SMFG’s effort to create a foothold in the United States where its unit SMBC Nikko Securities has a small presence.

SMFG currently doesn’t have any capital alliance with financial firms in the United States, according to the bank. While its predecessor bank invested in Goldman Sachs Group Inc in 1986, it has already severed the capital tie-up.

In contrast, its bigger rival Mitsubishi UFJ Financial Group Inc invested $9 billion in Morgan Stanley after global financial crisis in 2008. MUFG owns about 20% of the Wall Street bank.

Spurred on by limited business opportunities at home where interest rates are ultra low and the population is rapidly ageing, SMFG has announced a raft of deals this year – primarily in Asia.

This month, it announced plans to buy a 74.9% stake in Fullerton India for $2 billion.

SMFG also agreed last month to invest in Philippine bank Rizal Commercial Banking Corporation, and in April it said it would invest in Vietnam’s biggest non-bank lender FE Credit.

($1 = 110.4700 yen)

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