Sumitomo Mitsui Banking Corp. will acquire a 15 percent equity stake in Promise Co. by July 13 and eventually boost it to 20 percent, Sumitomo Mitsui Financial Group Inc., the bank's parent, and the major consumer finance company said Monday.
The capital tieup to make SMBC the biggest shareholder in Promise is part of a business collaboration agreement between SMFG and the consumer finance firm, they said in a joint statement.
SMFG is the second of Japan's four major banking groups to conclude a capital tieup with a consumer loan company after Mitsubishi Tokyo Financial Group Inc., which announced a deal in March to buy a stake of more than 15 percent in Acom Co.
In addition to the capital tieup, the business collaboration accord calls for SMBC and Promise to expand their consumer finance business by marketing loan products with annual interest rates of 8 percent to 12 percent through SMBC.
SMBC and Promise will also establish a joint consumer finance company to promote loans with interest rates of 15 percent to 18 percent.
SMFG and Promise expect their collaboration to result in fresh loans to consumers to the tune of around 500 billion yen in the first three years of the alliance.