Of Special Interest
4th October 2011
SMBC tender for Promise
Sumitomo Mitsui Banking Corporation is to launch a tender operation for Promise Co, increasing its holding from 22% to 100% in the consumer lender. It is to bid ¥780 per share therefore costing ¥88.84bn (€856m £742m $1,156m Y7,379m). The offer is planned for 7th December. The news increased the Promise share price to ¥659, still well below the offer price.
Promise had forecast a first half profit of ¥17.5bn however changed this to a forecast loss of ¥195.4bn. The trend for banks to fully incorporate their loan affiliates is because the consumer lending law which set relatively low maximum interest rates and allowed customers to claim back interest over this amount for contracts entered into before the law was made applies only to non-bank consumer lenders. The extreme nature of the consumer lending law has caused the non-bank consumer loan companies many consecutive years of losses.
Sumitomo Mitsui Banking Corporation is the main operating subsidiary of Sumitomo Mitsui Financial Group.