March 08, 2010

Sumitomo Mitsui Banking To Launch Corp Turnaround Unit

Sumitomo Mitsui Banking Corp. will establish a corporate turnaround company, which will spend up to about 30 billion yen to help the bank's midsize clients, according to Nikkei. Previously, banking groups were forbidden to own voting rights of 5% or more in a domestic company. But a legal revision in 2008 made it possible for them to own voting rights of 5% or more in unlisted firms trying to get back on their feet. The core unit of Sumitomo Mitsui Financial Group Inc. will soon set up a wholly owned corporate turnaround company with 100 million yen in capital. The subsidiary will invest in SMBC clients likely to recover in three to five years and that generate sales of 10-100 billion yen or so. The firm is expected to take a 20% or smaller stake in each. If it invests in a listed company, it will hold a stake of less than 5%.

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