* Takefuji says to be bought by Korea's A&P Financial
* Acom warns of Y203 bln net loss, vs consensus Y165 bln
* Promise sees Y96 bln net loss, Aiful estimates Y32 bln
* Japan consumer lenders hit hard by interest repayment
* Acom, Aiful also set aside loan-loss reserves after quake
(Recasts, adds comments, details)
By Chris Gallagher and Junko Fujita
TOKYO, April 28 Korean consumer lender A&P
Financial will start turning around business at failed Japanese
peer Takefuji Corp at a time when Japan's three biggest consumer
lenders are warning of combined losses of about $4 billion,
squeezed by a government order to repay overcharged interest to
Takefuji said on Thursday that A&P Financial has agreed to
buy it. The price was not disclosed.
Rebuilding Takefuji will be a tough task due to the
repayment of overcharged interest and a cap on lending rates,
which has darkened the outlook for the overall consumer lending
Acom , Promise and Aiful forecast
combined losses of about $4 billion on Thursday for the year
ended March 31, walloped by mounting claims for reimbursement of
Acom and Aiful also said they were forced to set aside
reserves to cover bad loans related to last month's massive
earthquake, while Promise booked a 41.4 billion yen ($503
million) charge to write down goodwill related to its purchase
of money lender Sanyo Shinpan in 2007.
Japan's consumer lenders are struggling to survive after a
regulatory crackdown in 2006 that cut the maximum interest rate
they can charge and a court ruling paving the way for borrowers
to seek reimbursement of past interest payments above the new
The industry, which offers unsecured loans to individuals
and owners of small businesses, has also been hit by additional
rules introduced last year including one that restricts the
amount an individual can borrow to one-third of their annual
Takefuji has been looking for an investor to keep it in
business after failing in September with about $5 billion in
The money to be injected by A&P Financial is expected to be
used to rebuild Takefuji's lending business. It will also likely
be spent on repaying overcharged interest to customers and other
liabilities, though Takefuji did not announce how much A&P
Financial would inject into it.
"Takefuji may be in a more advantageous position than the
others because it has no further risk of having to repay
overcharged interest," said Junichi Shimizu, a credit analyst at
"However, it needs to find ways to fund its future
business," he said.
Takefuji's liabilities, including the repayment of
overcharged interest and borrowings, is expected to be cut
significantly, market expects said.
On the other hand, Takefuji's outstanding loans totalled
around 75 billion yen as of last October, Takefuji's court
appointed trustee told reporters in March. Junichi Shimizu, a
credit analyst at Deutsche Securities, expects the amount has
fallen to about 50 billion yen, about 5 percent of Acom's.
"That's too small to continue the business," said Shimizu,
adding that it needs to expand its exposure significantly or
shrink the operation to stay in business.
Takefuji struggled to raise money while it was still in
business because it did not have backing from Japanese banks.
For its rivals, by contrast, Acom is backed by Mitsubishi UFJ
Financial Group and Promise by Sumitomo Mitsui
Financial Group .
A&P Financial was chosen from bidders that included Cerberus
Capital Management , TPG and Japan's J Trust
, according to sources with direct knowledge of the
Acom, which is more than one-third owned by Mitsubishi UFJ,
said it now estimates a net loss of 202.6 billion yen ($2.5
billion) for the financial year just ended, four times larger
than its previous outlook for a 50.9 billion yen loss.
Acom's new estimate compares with an average forecast of a
164.8 billion yen net loss in a poll of six analysts by Thomson
Promise estimated a 96 billion yen net loss for the year
ended March 31, compared with the average forecast of five
analysts for a 99.7 billion yen loss. Aiful sees a 32 billion
yen net loss, triple the average estimate from two analysts of a
10 billion yen loss.
Promise and Aiful had previously not issued full-year
Before the news on Thursday, shares of Acom ended down 0.3
percent and Aiful lost 2.1 percent, while Promise jumped 3.6
percent. The benchmark Nikkei average rose 1.6 percent.
($1 = 82.220 Japanese Yen)
(Reporting by Chris Gallagher; Editing by Nathan Layne and