The UFJ group will sell Aplus Co., an ailing consumer finance affiliate, to the HSBC group of Britain for about 100 billion yen, according to sources.
The banking group led by UFJ Holdings Inc., which has a 40 percent equity stake in the Osaka-based finance company, will conclude the deal in September, they said.
The UFJ group will remove unprofitable real estate-backed lending business from Aplus while selling profitable consumer loan and credit business to the British financial group, the sources said, adding the UFJ group will take over the Aplus credit guarantee business.
Aplus is one of the UFJ group's largest borrowers. The outstanding balance of loans extended by UFJ Bank and UFJ Trust Bank to the troubled firm totals 200 billion yen.
But the two core banking units of the UFJ group are not expected to suffer additional losses from their lending to Aplus because they have built up loan-loss reserves substantially, the sources said.
The UFJ group is stepping up the disposal of bad loans extended to large-lot borrowers before its planned merger with Mitsubishi Tokyo Financial Group Inc. in October 2005, observers say.