Nikko Asset to ask firms to unwind cross-shareholdings - Nikkei
May 15 (Reuters) - Nikko Asset Management, Citigroup Inc's (C.N: Cotización) fund management arm in Japan, will urge about 2,000 firms, in which it has stakes, to unwind their cross-shareholding agreements as these investments result in valuation losses, the Nikkei business daily reported.
Japanese banks generally take big stakes in their clients as a way to cement business ties, a tradition of "cross-shareholding" that critics say weakens corporate governance.
The asset manager plans to add rules to its internal guidelines requesting companies in which it invests to disclose and explain their cross-shareholdings, the Nikkei said without citing any sources.
Specifically, it will ask them to submit plans for unwinding their cross-shareholdings, with unnecessary holdings to be unloaded over a few years, the business daily said.
Nikko Asset will not push companies to wind down cross-shareholdings this year because it may result in massive losses as stock prices are still depressed, the paper said.
But it could vote against re-election of directors at general shareholders meetings if there is little progress by starting of next year, or if the firms repeatedly offer implausible excuses, the business daily added.
Nikko Asset has about 9 trillion yen ($94.19 billion) in assets under management.
($1=95.55 Yen) (Reporting by Amiteshwar Singh in Bangalore; Editing by Anil D'Silva)
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