July 1 (Bloomberg) -- Nomura Holdings Inc., Japan’s largest brokerage, said it agreed to acquire Citigroup Inc.’s Japanese trust banking unit for 19 billion yen ($196 million) to boost its asset administration business.

Nomura Trust and Banking Co. will buy all shares in NikkoCiti Trust and Banking Corp. around October after receiving regulatory approval, Nomura said in a statement filed to the Tokyo Stock Exchange.

Citigroup is dismantling its Japanese operations after a $45 billion U.S. government rescue, giving local firms an opportunity to bulk up in businesses where they’ve lagged behind. Nomura will pay about 24 percent less for the unit than Mitsubishi UFJ Financial Group Inc. offered to pay under an agreement that was scrapped in May.

“The transaction enables Nomura to increase the scale of its business,” said Yuri Yoshida, a Tokyo-based analyst at Standard & Poor’s. “Administering and managing clients’ assets generates a steady income flow.”

NikkoCiti Trust was formed in 1993 and has 107 employees. The Tokyo-based company had 2.8 billion yen of revenue for the year ended March 31, and posted a loss of 113 million yen.

Nomura Trust was also formed in 1993 and had 261 employees as of April 1. The bank had 23.2 billion yen of revenue for the year ended March 31, and posted a 555 million yen profit.

It had 19.5 trillion yen of trust assets as of March 31, while NikkoCiti Trust had 4.5 trillion yen, according to their financial statements.

Nomura Holdings posted a record 708.2 billion yen loss in the year ended March 31 and canceled its dividend for the fourth quarter as tumbling stock markets slashed revenue. It is spending more than $2 billion to integrate businesses acquired from Lehman Brothers Holdings Inc.

Nomura Chief Executive Officer Kenichi Watanabe said the brokerage is seeking to return to profit and resume paying dividends this year, according to shareholders who attended an annual meeting on June 25.

To contact the reporter on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

Last Updated: July 1, 2009 04:20 EDT