Mizuho Financial Group Inc. is expected to become the top shareholder of consumer credit company Orient Corp. by raising its stake to about 26 percent by converting preferred shares, sources said Wednesday.
Mizuho currently owns about a 5 percent stake in Orient on a common stock basis. The planned conversion of some preferred shares it now owns would lower the stake of Orient's current top shareholder, trading house Itochu Corp., to 24 percent from the current 32 percent.
By forming closer ties with Mizuho, Orient aims to recover its deteriorated loan business, which took a blow from the effects of new lending regulations that oblige lenders to limit loans to one-third of the borrowers' annual income.
Mizuho also seeks to strengthen its own consumer credit business for individual customers by sharing the customer base with Orient.
Mizuho bought preferred shares in Orient in 2002, rescuing the consumer lender from its business downturn, and the two companies formed comprehensive business ties in 2004.
For fiscal 2009, which ended March 31, Orient's group net profit plunged 44.2 percent from a year earlier to ¥8 billion, as its lending balance fell as a result of stricter screening for approving loans to meet tighter lending rules.