Becoming a consolidated subsidiary of MUFG — the listing an independent lender would not give up (2008)

Under a megabank, with the independent’s sign still up

The heart of this decision is that the bank took hold of a consumer lender not by absorbing it whole but at the distance of a consolidated subsidiary. The high returns of consumer finance were wanted. But taking in completely a trade whose reputation had been damaged — by the wiretapping scandal among others — snagged on the bank’s brand and on public opinion. Consolidating at 40.04% of the voting rights, while leaving the listing and the separate identity in place, was a compromise that took in the earnings while keeping a distance. Acom kept the independent lender’s sign above its door and gained a megabank’s funding power.

The compromise had its price, and it showed in the numbers that followed. Overpayment refunds after the revised lending law were still heavy, and Acom posted a net loss of ¥202.6bn for the year to March 2011. Even so, the group’s funding strength, and the bank-loan guarantee business gained through the DC Cash One merger, later grew credit guarantees into one of Acom’s main pillars. Unlike Sumitomo Mitsui, which three years later made Promise a wholly owned subsidiary and erased its listing, MUFG and Acom chose to keep the listing alive. At what distance should a bank hold a consumer lender — here is one answer to that question.