TOKYO (Thomson Financial) - Mitsubishi UFJ Financial Group Inc (MUFG), Japan's largest banking group, will turn Mitsubishi UFJ Nicos Co into a wholly-owned unit to help the struggling credit card company turn its business around, the two companies said Thursday.
Under an agreement reached today, MUFG plans to take 100 percent ownership of Mitsubishi UFJ Nicos on Aug 1, 2008 through a share swap.
At present, Mitsubishi UFJ Nicos is a 68.89 percent-owned unit of Bank of Tokyo Mitsubishi UFJ, the core operating unit of MUFG.
The share swap ratio will be decided after consultation with outside entities.
As a first step, Mitsubishi UFJ Nicos will raise 120 billion yen by placing 400 million new shares to MUFG. The offering price is 300 yen per share, an 8.8 percent discount to the average closing price of Mitsubishi UFJ Nicos stock in the last three months.
The placement will be completed on Nov 6.
Mitsubishi UFJ Nicos will use the proceeds to finance its turnaround plans.
The company said it will increase the number of jobs it intends to cut by the end of March 2010 to 2,890 from 1,400. Its present payroll is 5,588.
The company will also transfer its consumer credit operations to Jaccs Co Ltd, another member of the MUFG group.
The credit card company said it now expects to post a net loss of 119.4 billion yen for the year to March 2008, reversing its earlier forecast of a net profit of 9.0 billion yen.
Non-bank lenders have faced a rapid deterioration in business conditions since the passage last year of a new law that lowered interest rate caps, triggering an avalanche of refund requests from customers.
(1 US dollar = 115.80 yen)
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