CITIGROUP has absorbed Japan's third-largest brokerage Nikko Cordial and named a new leader to head the operation.

Nikko Cordial said Douglas Peterson was named as its CEO and president yesterday, replacing Shoji Kuwashima. Peterson will also serve as the head of Citigroup Japan Holdings Ltd, the local unit of the New York-based banking company.

Citigroup Inc exchanged 175.7 million shares of its stock for 290.1 million shares of Nikko Cordial Corp, the companies said in a joint statement.

The share swap - worth US$4.8 billion based on Citigroup's closing price on Monday in New York - was the final step in an acquisition process that started in April 2007. That's when Citigroup raised its stake in Nikko Cordial to 61.1 percent from 4.9 percent and took control of the Japanese brokerage.

In the last step, shares were swapped at the ratio of 0.602 Citigroup stock for each Nikko Cordial share, based on an agreement made in November, the companies said.

By becoming Citigroup's fully owned subsidiary, Nikko Cordial "will create Japan's leading comprehensive financial services group which covers both banking and securities businesses," it said, adding the deal would also add "more value" to the Nikko brand.

Citigroup has been working to streamline operations and cut costs after reporting a US$10-billion loss in the fourth quarter of 2007 because of unexpected subprime mortgage-related losses.

Nikko has more than 100 branches across Japan and the acquisition is expected to strengthen the US group's foothold by selling mutual funds and providing other financial services.

Citigroup lost its private banking license in Japan in 2004 after authorities accused it of failing to implement safeguards against money laundering, misleading customers about investment risks, and other violations.