GE may sell Japan consumer finance unit: report

TOKYO (Reuters) - General Electric Co (GE.N) has sounded out financial institutions about acquiring or taking a stake in its Japanese consumer lending unit amid an industry-wide slump prompted by tighter domestic regulation, the Financial Times reported on Tuesday.

Efforts to sell or find investors for the unit, called Lake, are still at an early stage, the newspaper said.

"Much has changed in the Japanese consumer finance market over the last few years and we continue to evaluate various alternatives that are in the best interest of our business's long-term success," said Mariko Terao, a spokeswoman for GE's consumer finance unit in Japan.

Terao declined to comment on whether or not GE was considering lowering its stake in the unit.

A new lending law approved by parliament in December will lower Japan's maximum legal interest rate to between 15 and 20 percent, depending on the size of the loan, from the current ceiling of 29.2 percent.

The change is the latest threat to the once-mighty consumer finance industry, which has been already battered by scandals and borrower lawsuits over excessive interest charges.

GE has closed 60 percent of its 115 manned personal loan branches in Japan and said it will cut up to 400 jobs by the end of this year as the stricter rules have eaten away at profits.

GE is not the only foreign player to cut back on consumer finance in the world's second-largest economy.

Citigroup Inc (C.N) earlier this year closed about 80 percent of its consumer finance branches and more than 10 percent of its automated loan machines, citing the bleak industry outlook.

However, some domestic players have been looking to increase their presence in the industry.

Last month consumer lender Promise Co Ltd (8574.T) launched a $1 billion takeover bid for smaller rival Sanyo Shinpan Finance Co Ltd 8573.T, a deal that puts Promise on par with industry leader Aiful Corp (8515.T).