Jefferies has approved Sumitomo Mitsui Financial Group (SMFG) raising its stake in the US investment bank to 20 percent, according to people familiar with the matter. The Japanese bank has been steadily expanding its international presence in recent years, with this move marking another significant step.
SMFG, Japan’s second-largest bank, first acquired a 5 percent holding in Jefferies in 2021. That position was raised to around 15 percent in 2023 as part of its efforts to remain competitive against bigger rivals both at home and abroad.
The latest agreement will allow SMFG to increase its stake further, with plans to buy more shares on the open market. These shares could later be converted into non-voting common or preferred stock, sources said.
Possible Announcement Before Friday
The deal could be made official before the US markets open on Friday, although neither Jefferies nor SMFG provided comment when asked.
On Thursday, Jefferies’ shares rose 5.8 per cent, reaching their highest level since February. In Tokyo, SMFG also saw gains, rising by nearly 2 per cent in morning trading.
While a larger stake in the future has not been ruled out, regulatory hurdles become much more complex once ownership crosses 20 per cent.
Joint Venture Discussions
Alongside the investment, discussions are taking place around a joint venture in Japan. This venture would cover equity research, sales, trading, and equity capital markets, according to people close to the talks.
The plan could see SMBC Nikko — SMFG’s securities arm — work together with Jefferies’ Japanese division. SMBC Nikko has been trying to recover from a market manipulation scandal in 2022, making a tie-up with Jefferies strategically valuable.
Strategic Push by Japanese Banks
The timing is crucial for Japanese banks, which have been moving aggressively into the US to capture more cross-border deals and expand in debt and equity markets.
Japanese firms have been involved in many of the largest global mergers and acquisitions of 2025, with volumes expected to set new records.
SMFG’s chief executive, Toru Nakashima, recently admitted in an interview that “investment banking is a weakness for us, and we have fallen behind other Japanese megabanks”. He described the partnership with Jefferies as “the only way forward”.
The two financial groups have already expanded their cooperation across Europe, the Middle East, and Asia Pacific.
Assessing the Move
SMFG’s decision to deepen its stake in Jefferies highlights the growing push by Japanese banks to expand beyond domestic borders and secure a larger role in global finance. The move also signals confidence in Jefferies’ growth strategy.
However, cultural differences and regulatory barriers could make future expansions or a potential takeover more complicated. Jefferies’ employees are reportedly cautious about new ownership, and crossing the 20 per cent threshold would invite stricter oversight.
In the short term, the partnership looks set to benefit both groups, especially in Japan’s recovering equity markets. Long-term success, however, will depend on how well they can balance regulatory challenges with cross-border growth ambitions.
