Citigroup, the world's largest financial firm, has agreed to sell its asset management arm to Legg Mason in exchange for the Baltimore firm's brokerage business in a deal worth $3.7bn (€3bn).

As part of the deal, Legg Mason will also pay Citigroup $1.5bn in common and preferred shares, and about $550m in the form of a five-year loan facility provided by Citigroup Corporate, a subsidiary of the bank.