Several banks have suspended their lending tieups with Aiful Corp. since the Financial Services Agency punished the company last week for illegal lending and strong-arm collection practices.
Banks are afraid their images are being hurt by their connections to Aiful and are trying to distance themselves from the major consumer loan firm, industry sources said, adding that if the banks stay away, it could affect earnings at Aiful.
The FSA on April 14 ordered Aiful to suspend lending operations at its outlets for between three and 25 days in May over the illegal activities.
Among regional banks, Toyama-based Hokuriku Bank halted dealing Wednesday with Aiful to provide unsecured loans and will remove leaflets advertising the loans from its branches. Tohoku Bank in Iwate Prefecture, Chugoku Bank in Okayama Prefecture and Fukuoka Bank discontinued their collaborations earlier this week.
Among the large banks, Resona Bank has stopped extending unsecured loans to small companies in cooperation with Aiful since Monday.
Sumitomo Trust and Banking Co., which has a joint venture with Aiful in business loans, has no plans to change its relationship with the consumer lender, a company spokesman said.
Aiful has tieups with about 40 financial institutions in consumer lending services and with about 60 institutions in business loans.