Ito-Yokado Co. said Friday it plans to launch its IY Bank in mid-May in the hope that it will swing into the black within two years.
The profit target is attainable as the Ito-Yokado group's Seven-Eleven brand will make IY Bank "stand out," Ito-Yokado President Toshifumi Suzuki said after the Financial Services Agency gave preliminary approval to the banking subsidiary.
The FSA requires banks established by nonbanking businesses to be profitable within three years.
IY Bank is capitalized at 20.25 billion yen and is 51-percent owned by Ito-Yokado, with its convenience store subsidiary, Seven-Eleven Japan Co., holding 49 percent.
It will provide 24-hour service through a network of automatic teller machines at the group's retail outlets. These will allow limited services, including deposits, withdrawals and cash remittances.
It will install some 3,650 machines in fiscal 2001 and will increase the number to 7,150 within five years.
As IY Bank plans to increase its capital to 60 billion yen during fiscal 2001, the Ito-Yokado group is expecting investment from the Bank of Tokyo-Mitsubishi, Sanwa Bank, Hitachi Ltd., NEC Corp. and other firms.
But Toyota Motor Corp. said Friday it turned down Ito-Yokado's request to invest in IY Bank after what Toyota President Fujio Cho said was a "comprehensive examination" of the request.
Toyota's decision apparently reflects its long-standing policy of avoiding full involvement in finance businesses.
The Ito-Yokado group is the second nonfinancial business to obtain preliminary approval from the FSA for the new type of bank after Sony Bank Corp. acquired similar approval in March.
Sony Bank, which will begin operating in June, will offer virtual bank accounts, to be opened on the Internet by personal computer users, and will not maintain physical branches.