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June 23, 2022

Japan’s SMFG in talks to pick 10% stake in SBI

Japanese lender Sumitomo Mitsui Financial Group (SMFG) is in discussion to purchase a 10% holding in Tokyo-based online bank SBI, Reuters reported citing a Tokyo bourse filing by the latter company.

The deal, which aims to bolster the securities businesses of both companies domestically, is likely to be valued at more than $443m (JPY60bn).

The news was first reported by Nikkei Asia without disclosing the source of the information.

As part of the deal, SBI is expected to issue new shares. It may also pick a minority stake in SMFG, the report said.

Additionally, SMFG is expected to introduce SBI’s online securities business to its retail banking customers following the tie-up.

Both SBI and SMFG have already partnered to set up a digital stock exchange to offer a trading platform alternative to the Tokyo Stock Exchange.

SBI confirmed in the bourse filing that it is in talks to partner SMFG, including through a capital tie-up as suggested by certain media reports.

SMFG also said that it is exploring a partnership with SBI, but nothing has been finalised yet.

A new share issuance by SBI is expected to scale up its financial standing which has been weakened by its $1bn takeover bid for Shinsei Bank last year.

SMBC Nikko Securities, SMFG’s brokerage arm, has been under investigation after its executives were arrested for alleged market manipulation.

Last year, SMFG took a 74.9% stake in non-banking financial company Fullerton India Credit Company in a deal worth around $2bn.

The deal was green lighted by the Competition Commission of India.

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