Tomoko Otake is a senior writer with a strong interest in health, medical and social issues. A native of Nara Prefecture, she obtained an M.A. in journalism from The University of Montana.
For Tomoko Otake's latest contributions to The Japan Times, see below:
Sep 4, 2000
Jun 16, 2000
May 25, 2000
Mar 7, 2000
Feb 2, 2000
Staff writer Major consumer finance companies, despite their soaring profits and superb risk assessment skills, still lack one thing: a positive image. Hiroki Jinnai, president of top consumer moneylender Promise Co., is well aware of that weakness. And it is exactly why he wants the firm's planned joint venture with Sanwa Bank to reflect more of the bank's image and not that of his company. "I think there are disadvantages in putting the image of Promise first," Jinnai said in a recent interview with The Japan Times. Promise, the nation's third largest consumer moneylender, made a joint announcement with Sanwa Bank and Sanwa-affiliated credit loan company Aplus Co. in December that the firms would jointly set up a new consumer loan firm to target individuals with an annual salary of between 5 million yen and 8 million yen -- slightly higher than Promise's core clientele, whose annual income averages between 2 million yen and 5 million yen. Sanwa Bank will own 50 percent of the venture, Promise 40 percent and Aplus the remainder. The new firm, to be set up in April, plans to offer loans with an interest rate of 15 percent to 18 percent, which is lower than the rate Promise charges but higher than Sanwa's. By law, banks are not allowed to charge more than 15 percent, while consumer loan companies can charge up to 40.004 percent. Starting on June 1, however, the ceiling will be reduced to 29.2 percent. "Banks have never charged more than 15 percent, while consumer finance companies have charged more than 20 percent (on consumer loans,)" Jinnai said. "No one has captured a group of customers who borrow loans with interest rates of 15 to 18 percent. We would like to fill that void." While Jinnai refuses to disclose the loan products the new firm will sell when it begins operations by the end of this year, he said he is hopeful that the joint venture will succeed by riding on Sanwa's brand image. For Sanwa, the joint venture will be beneficial as well, bank officials told a news conference in December. The new unit will offer the major city bank a chance to enter the lucrative consumer loan industry, a niche that many banks have shied away from, presumably for fear of being associated with the likes of loan sharks. One of the factors behind the bad image of consumer moneylenders is the excessive lending they carried out in the 1980s. The industry has been blamed for "sara-kin hell," or salaried-man finance hell -- the practice of overlending that led to a surge in personal bankruptcies. But Jinnai claims that modern-day consumer finance companies operate with morality. They have also acquired expertise in using statistics to set appropriate credit levels for each customer, they claim. For example, when a person applies for a loan, the firm checks the applicant's credit history in detail. The loan firm first calls up an in-house database to see if the applicant has previously borrowed money from the firm and, if so, checks the person's data. The in-house credit evaluation system classifies borrowers into 352 groups by taking into account such factors as the area in which they live, the composition of their family, their housing and the kind of health insurance they hold. The entries are detailed and also indicate whether the borrower rents or owns a house, who holds the title on the properties, and whether the loans on it have been paid. The applicant's job security is also checked, with the number of years at his or her current workplace being used to evaluate risk. The firm then calls up an industry-wide database that lists the applicant's credit history with other consumer finance firms. Eventually, the applicant is put into one of 1,760 risk groups. It is this degree of expertise that banks crave. Banks, which have traditionally had a heavy reliance on collateral, still lag behind consumer financiers in credit evaluation skills. They are also inexperienced in offering small-scale loans like consumer finance companies do. But times have changed. Banks, with many of their corporate clients turning to capital markets to raise funds, are increasingly shifting their attention to retail customers. A similar joint venture plan announced in September by Sakura Bank, midsize consumer moneylender Sanyo Shinpan Finance Co., Nippon Life Insurance Co. and am/pm Japan Co., signals that more banks might follow the path beaten by Sakura and Sanwa. A sophisticated customer database is apparently the key to the new company's success. There are currently four such databases, including one operated by consumer financiers, one by the banking industry and another by credit loan companies. The consumer finance industry version -- which is capable of updating all credit information on a real-time basis -- is the most advanced. But it remains uncertain whether the Promise-Sanwa venture will have access to any of the credit information accumulated by the consumer finance industry. "There is a voice in our industry that says the fruit of our labors should not be given to outsiders," Jinnai said. "In that case, we will just have to build a good database on our own."
Feb 2, 2000
Jan 31, 2000
Staff writer Top executives of Mitsui Trust & Banking Co. and Chuo Trust & Banking Co. were inundated with questions from reporters Monday as they announced the reversal of an earlier decision regarding the leadership structure of a bank to be set up through a merger of the two firms in April. When the two trust banks initially announced the merger plan in January 1999, the officials explained that a Chuo executive would become president of the new bank and that a Mitsui official would take the chairman's post. On Monday, however, the banks said they had changed their minds. From the date of their merger, April 1, Mitsui President Kiichiro Furusawa will take the position of president, while Chuo President Hideie Hirakawa will assume the role of vice president. The officials refused to elaborate on the internal negotiations that led to the decision, repeating that it was decided "after serious discussions between top officials from both banks." But the turnaround is prompting speculation that Mitsui Trust became frustrated with their apparent disadvantageous position in the merger deal and demanded the top post. When Mitsui Trust announced it would merge with Chuo Trust about a year ago, the members of the prestigious Mitsui corporate group were saddled with huge bad loans and suffering from falling stock prices. But thanks in part to capital injections of public funds in March, Mitsui has recovered. In the fiscal 1999 midyear results released in November, the bank claimed 34.3 billion yen in net business profits -- the third highest among the nation's seven trust banks and four times the figure reported by Chuo. In Monday's news conference, the top officials repeated that the move was intended to strengthen the new bank's sales and planning activities in response to the rapidly changing business environment, citing last year's announcements of major mergers by city banks. At one point, Mitsui's Furusawa became visibly upset because of repeated questions about what had prompted the decision and said, "Personnel decisions are not based on logic or reason." The new bank's management will be reshuffled after an annual shareholders' meeting in June. While Furusawa and Hirakawa are to remain in their prospective positions, Hisao Muramoto, a former Finance Ministry bureaucrat who was chairman of Chuo Trust until June, is tapped to become the new bank's chairman. In another move likely to boost Mitsui's say in the new bank, a second Mitsui official will join Hirakawa in a joint vice presidential capacity. The banks also announced that they will reduce the number of directors from the combined total of 44 at present to 18, with a further downsizing of the board of directors in mind. They will accelerate restructuring, cutting the number of regular manned branches from 166 to 100. To replace them, they will open smaller, less costly branches, such as outlets inside department stores. The workforce will also be significantly reduced. The two banks had originally planned to reduce their combined workforce from 10,000 to 8,300 by March 2005, but they now plan to slash the combined total to 7,000 by the same time.
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