Citigroup, the world's largest financial holding company, has announced a $3.4 billion deal with Legg Mason, under which it will swap its asset management wing for the Baltimore-based investment firm's broker-dealer unit.

According to the agreement, Legg Mason will pay $1.5 billion of its common and non-voting convertible proffered shares in exchange for Citigroup's global asset management business, a total of $437 billion in assets, and a five-year loan of $550 million from Citigroup's corporate and investment bank. In return, Citigroup will get Legg Mason's private brokerage and capital markets business.

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