News Release


Progress of the Credit Card Business Strategy of Sumitomo Mitsui Financial Group(1/1)

 

Sumitomo Mitsui Financial Group, Inc.

(Code: 8316)

Sumitomo Mitsui Banking Corporation

Central Finance Co., Ltd.

(Code: 8588)

OMC Card, Inc.

(Code: 8258)

Sumitomo Mitsui Card Co., Ltd.

QUOQ Inc.

 

 

 

Progress of the Credit Card Business Strategy

of Sumitomo Mitsui Financial Group

 

 

TOKYO, September 29, 2008 - Sumitomo Mitsui Financial Group, Inc. (乬SMFG乭,President: Teisuke Kitayama), Sumitomo Mitsui Banking Corporation (乬SMBC乭, President: Masayuki Oku), Central Finance Co., Ltd.(乬CF乭, President & Director: Tatsuo Tsuchikawa), OMC Card, Inc. (乬OMC乭, President and COO: Shinji Ebata), Sumitomo Mitsui Card Co., Ltd. (乬SMCC乭, President: Koichi Tsukihara) and QUOQ Inc.(乬QUOQ乭, President: Shinpei Nihei) hereby announce the progress of their business strategy to 乬establish the number one credit card business entity in Japan , as follows:

 

 

1.   Merger of CF, OMC and QUOQ

 

As separately announced in the press release entitled 乬Conclusion of Merger Agreement乭issued by CF, OMC and QUOQ today executed an agreement of their merger on April 1, 2009 (the 乬Merger乭), pursuant to the resolutions of the meetings of their respective boards of directors held today. (Hereinafter the company formed by the Merger shall be referred to as the 乬Merged Company乭).

 

Upon the Merger, the industry乫s top class credit card company, on a par with SMCC will be born within SMFG group. The group乫s credit card businesses will be consolidated into a framework based on a two-company system consists of SMCC and the Merged Company, which have different strengths.

 

The Merged Company will maintain its independence as a listed corporation, while keeping a sense of unity as a member of SMFG group. Also, as a core company within SMFG group which stands on a par with SMCC, the Merged Company will develop business through its expertise and agility in the markets where its strength has been built in affiliation with the retail and credit sales businesses.

 

<Outline of the Merged Company>

Trade Name

: Cedyna Financial Corporation

Description of Business

: Credit card business, installment credit business, financing business and others

Location of Head Office

: Nagoya -shi, Aichi

Representative

: Tatsuo Tsuchikawa, Representative Director and Chairman
Hiromichi Funahashi, Representative Director and President

  Shinpei Nihei, Representative Director and Vice President

  Shinji Ebata, Representative Director and Vice President

  Yoshiki Hama, Representative Director and Vice President

 


2.   Additional Investment by SMFG in OMC

 

With a view to further clearly defining the Merged Company乫s position as a core credit card company within the group, SMFG will subscribe for OMC乫s ordinary shares through a third party allotment, and will also acquire convertible bond-type bonds with stock acquisition rights to be issued by OMC through a third party allotment.

 

(1)  Issuance by OMC of Ordinary Shares

i)    Number of new shares to be issued :              66,666,600shares

ii)   Total issue price:                                           JPY 15,999,984,000

iii)   Party to which shares are allotted:                   SMFG

iv)  Pay-in date:                                                   October 14, 2008

 

Upon the issuance of the ordinary shares as specified above, the ratio of the voting rights held by SMFG to the total number of voting rights in OMC will become approximately 48.8%.

 

(2)  Issuance by OMC of Convertible Bond-Type Bonds with Stock Acquisition Rights

i)    Total amount of the bonds:                            JPY 13,000,000,000

ii)   Party to which the bonds are allotted:               SMFG

iii)   Pay-in date:                                                   October 14, 2008

 

All of the convertible bond-type bonds with stock acquisition rights to be issued as specified above (the 乬CBs乭) will be converted into ordinary shares on the effective date of the Merger or the following day.  If the CBs are converted at the initial conversion price, the ratio of the voting rights held by SMFG to the total number of voting rights in the Merged Company is expected to become approximately 48.6%.

 

Through the issuance, OMC and the Merged Company will increase their capital and thereby strengthen their financial base.  Use of proceeds is planned to be funds for investment in systems in connection with the Merger, funds for improvement of the business infrastructure, and so on. For further details, please refer to the announcement released today by OMC entitled 乬Notice Regarding Issuance of New Shares and Convertible Bond-Type Bonds with Stock Acquisition Rights through Third Party Allotment.乭

 

3.   Establishment of Intermediate Holding Company

 

Subject to the permission and approvals of the relevant authorities, SMFG will establish SMFG Card & Credit, Inc. (乬FGCC乭) on October 1, 2008.

 

As separately announced in the press release entitled Organizational Restructuring for Promotion of the Credit Card Business Strategy of Sumitomo Mitsui Financial Group,乭 issued by SMFG today, subject to the permission and approvals of the relevant authorities, FGCC will become an intermediate holding company which holds shares in SMCC, CF, OMC and QUOQ through a corporate split from SMFG and SMBC as well as the share exchange between SMFG and FGCC.

 

FGCC will be responsible for development of the group乫s unified strategies and policies as well as for establishment of an integrated alliance between SMCC and the Merged Company, and will seek to realize 乬the economies of scale as a whole group乭 and to maximize 乬top-line synergy through the utilization of each party乫s strengths,乭 the two aims of the group乫s card business strategy.

 

Furthermore, to smoothly promote alliance between the two companies, each of SMCC and the Merged Company will dispatch personnel to FGCC, and will also exchange personnel among themselves.

 


<Outline of the Intermediate Holding Company>

Trade Name

: SMFG Card & Credit, Inc.

Description of Business

: Management and control of subsidiaries and affiliates etc.

Location of Head Office

: Chiyoda-ku, Tokyo

Representative

: Takeshi Kunibe, Representative Director and President

 

<The structure of the intermediate holding company scheme>

 

 

 

 

 

 

 

 

 

 

 

 


4.   Promotion of Business Strategies

 

CF, OMC, QUOQ, SMCC, SMFG and SMBC have developed the business strategy agreed upon by them in February and now entered into 乬Additional Agreement on Developing Credit Card Business Strategy.乭

 

(1)  Systems

 

As an optimal system configuration for maximizing the economies of scale, SMCC and the Merged Company have agreed on a policy of developing their next systems on the basis of the SMCC乫s plan currently under its review with due consideration to functions of the Merged Company, and have started partial development.

 

Specifically, the two companies will integrate mission-critical systems such as systems for sales, billing and other core accounting processes into the next systems.  In addition, the two companies will proceed with integration of a wide range of peripheral systems including membership screening systems, delinquency management systems and call center systems.  Thus, SMCC and the Merged Company will sequentially implement updates for the next generation systems and the integration of their systems.

 

Furthermore, the parties intend to work to share their systems for connection with outside networks and implement coordination of their systems before the integration of their systems.  The two companies are aiming to start sharing of some of their systems during fiscal year 2009, to achieve early realization of the economies of scale.

 

Through these measures, the costs for developing the next systems would be reduced  remarkably as compared with the case where each company independently invests in development of its new systems.  In addition, SMCC and the Merged Company expect to reduce the operating costs of their respective systems by around 20-30% when the next systems become available.

 

(2)  Other Business Strategies

 

In terms of business promotion activities, the alliance established among SMCC, CF, OMC and QUOQ has been producing a number of positive outcomes through initiatives such as referral among themselves to one anothers business partners and joint offering of products and services, according to their clients needs.  In addition, the parties will further promote collaboration with SMBC, including collaboration between CF and SMBC in the Tokai region centered on Nagoya for the customer referral business as announced on June 30, 2008.

 

SMCC and the Merged Company intend to drastically consolidate their processing operations and acquiring operations along with the systems integration, and will seek to achieve cost synergy ahead of such schedule through the sequential integration including joint processing of the credit card applications and centralization of the card application screening procedures.

 

5.   Medium-term Target

 

As a result of the promotion of the above-described credit card business strategy, the parties will promptly respond to growing card shopping markets and the changes in business environment caused by amendment of laws and regulations. They will proceed with a reform of the business structure, having in view an early realization of business synergy through solid partnership between SMCC and the Merged Company, as well as synergy in the Merged Company.  Through such efforts, we target to increase the aggregate card shopping turnover of SMCC and the Merged Company in fiscal 2011 by 50% or more compared with fiscal year 2007, and to realize operating profit of JPY 60 billion in  fiscal year of 2011.

 

 

 

Actual

Results for fiscal year of 2007

 

 

 

Plan for fiscal year of 2011

 

 

SMCC

Merged

Company

 

SMCC

Merged

Company

Card shopping turnover

(JPY trillions)

6.9

5.2

1.7

 

11.0

8.1

2.9

Installment credit turnover

(JPY billions)

787.1

-

787.1

 

734.0

-

734.0

Balance of outstanding cash advances

(JPY billions)

740.3

181.6

558.7

 

688.0

154.0

534.0

Operating revenue

(JPY billions)

472.2

168.3

303.9

 

492.0

216.0

276.0

Operating profit/(loss)

(JPY billions)

(1.6)

16.9

(18.5)

 

60.0

30.0

30.0

* The Merged Company乫s actual results for fiscal year of 2007 were sum of the actual amounts for each item recorded by CF, OMC, and QUOQ.

 

6.   Earnings Forecast

 

(1) SMFG

 

There will be no revision to the earnings forecast for the fiscal year ending March 2009 in connection with this matter.

 

(2) CF

 

There will be no revision to the earnings forecast for the fiscal year ending March 2009 in connection with this matter.

 

(3) OMC

 

There will be no revision to the earnings forecast for the fiscal year ending March 2009 in connection with this matter.


(Reference : Whole Image of SMFG乫s Credit Card Business Strategy)

 

 

懭墌: Diversification of consumers乫 preferences and needs

 

 

 

 

 

 

 

 

 

(Reference : Profiles of the Parties)

 

 

  仜 Profile of Sumitomo Mitsui Financial Group, Inc.

Trade Name

Sumitomo Mitsui Financial Group, Inc.

Description of Principal Business

Management and administration of banks and other companies which it is permitted to hold as its subsidiaries under the Banking Law; and other businesses incidental to the foregoing

Date of Incorporation

December 2, 2002

Location of Head Office

1-2, Yuraku-cho 1-chome, Chiyoda-ku, Tokyo

Name and Title of Representative

Teisuke Kitayama, President

Amount of Capital

JPY 1,420,877 million (As of March 31, 2008)

Number of Employees

46,429 (Consolidated) (As of March 31, 2008)

Major Shareholders and Shareholding Ratio

The Master Trust Bank of Japan, Ltd. (trust account) (6.37%)

Japan Trustee Services Bank, Ltd. (trust account) (6.31%)

Nippon Life Insurance Company (1.99%)

(As of March 31, 2008)

 

 

 

  仜 Profile of Sumitomo Mitsui Banking Corporation

Trade Name

Sumitomo Mitsui Banking Corporation

Description of Principal Business

Banking business

Date of Incorporation

June 6, 1996

Location of Head Office

1-2, Yuraku-cho 1-chome, Chiyoda-ku, Tokyo

Name and Title of Representative

Masayuki Oku, President

Amount of Capital

JPY 664,986 million (As of March 31, 2008)

Number of Employees

17,886 (Non-Consolidated) (As of March 31, 2008)

Major Shareholders and Shareholding Ratio

Sumitomo Mitsui Financial Group, Inc. (100.00%)

(As of March 31, 2008)

 

 

 

  仜 Profile of Central Finance Co., Ltd.

Trade Name

Central Finance Co., Ltd.

Description of Principal Business

Credit card business, shopping credit business, loan business, guarantee business and money collection agency business

Date of Incorporation

January 28, 1960

Location of Head Office

20-27, Nishiki 3-chome, Naka-ku, Nagoya-shi, Aichi

Name and Title of Representative

Tatsuo Tsuchikawa, President & Director

Amount of Capital

JPY 23,254 million (As of March 31, 2008)

Number of Employees

2,231 (Consolidated) (As of March 31, 2008)

Major Shareholders and Shareholding Ratio

Sumitomo Mitsui Banking Corporation (14.29%)

Sumitomo Mitsui Financial Group, Inc. (8.78%)

Mitsui & Co., Ltd. (8.78%)

(As of March 31, 2008)

 

 


  仜Profile of OMC Card, Inc.

Trade Name

OMC Card, Inc.

Description of Principal Business

Credit card business

Date of Incorporation

September 11, 1950

Location of Head Office

16-4, Konan 2-chome, Minato-ku, Tokyo

Name and Title of Representative

Shinji Ebata, President & COO

Amount of Capital

43,343 million (As of February 29, 2008)

Number of Employees

1,273 (Consolidated) (As of February 29, 2008)

Major Shareholders and Shareholding Ratio

Sumitomo Mitsui Banking Corporation (32.29%)

The Daiei, Inc. (20.60%)

Acom Co., Ltd. (15.02%)

(As of February 29, 2008)

 

 

  仜Profile of Sumitomo Mitsui Card Co., Ltd.

Trade Name

Sumitomo Mitsui Card Co., Ltd.

Description of Principal Business

Credit card business, loan business, guarantee business, gift card business and ancillary businesses

Date of Incorporation

December 26, 1967

Location of Head Office

5-15, Imabashi 4-chome, Chuo-ku, Osaka-shi, Osaka

Name and Title of Representative

Koichi Tsukihara, President

Amount of Capital

JPY 34,000 million (As of March 31, 2008)

Number of Employees

1,989 (Non-Consolidated) (As of March 31, 2008)

Major Shareholders and Shareholding Ratio

Sumitomo Mitsui Financial Group, Inc. (66.0%)

NTT DoCoMo, Inc. (34.0%)

(As of March 31, 2008)

 

 

  仜Profile of QUOQ Inc.

Trade Name

QUOQ Inc.

Description of Principal Business

Credit card business, shopping credit business, loan business, credit guarantee business and money collection agency business

Date of Incorporation

April 5, 1978

Location of Head Office

5-27, Mita 3-chome, Minato-ku, Tokyo

Name and Title of Representative

Shinpei Nihei, President

Amount of Capital

JPY 4,750 million (As of March 31, 2008)

Number of Employees

1,233 (Non-Consolidated) (As of March 31, 2008)

Major Shareholders and Shareholding Ratio

Central Finance Co, Ltd. (20.00%)

Ginsen Co., Ltd. (17.08%)

Sumitomo Mitsui Banking Corporation (11.00%)

(As of March 31, 2008)

 


[Reference] Other press release issued by parties concerning this matter today :

 

- CF, OMC and QUOQ
乬Conclusion of Merger Agreement乭
*

- OMC

乬Notice Regarding Issuance of New Shares and Convertible Bond-Type Bonds with Stock Acquisition Rights through Third Party Allotment乭*

- SMFG and SMBC

Organizational Restructuring for Promoting the Credit Card Business Strategy of Sumitomo Mitsui Financial Group

 

*Only Japan ese version available at present. English translation to be published.

 

END

 

 

 

 

 




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