Yahoo Japan to take stake in online bank

TOKYO: Yahoo Japan Corp. will ally with Sumitomo Mitsui Financial Group (SMFG), Japan's third-biggest bank, to take a stake in the lender's online subsidiary Japan Net Bank, sources familiar with the deal said on Wednesday.

The tie-up would expand access to settlement and other banking services for users of Yahoo, Japan's biggest Internet portal, and comes after a tentative alliance between Yahoo and the smaller Aozora Bank fell apart last month.

The rapid spread of broadband Internet access in Japan has paved the way for a raft of new banking ventures in recent years, with traditional banks, Internet providers and even manufacturers such as Sony Corp. taking deposits online.

Japan Net Bank, which posted net profit of 1.13 billion yen ($9.6 million) last year, competes with larger virtual lenders such as Sony Bank and Seven Bank, a unit of 7-Eleven convenience store operator Seven & I Holdings Co.

One source said Yahoo Japan would form a joint venture later this year with SMFG's core commercial banking unit, Sumitomo Mitsui Banking Corp. (SMBC), which holds a 57 percent stake in Japan Net Bank. An announcement is planned for later this week, the source said.

A Yahoo Japan spokesman confirmed that it was discussing Internet banking operations with Sumitomo Mitsui and Japan Net Bank, but declined to comment on details.

The business daily Nihon Keizai reported that SMBC would transfer its stake in Japan Net Bank to the joint venture as part of the deal.

Yahoo Japan would take a 14 percent share of the venture initially and gradually raise its stake to 50 percent, which would give it an indirect 30 percent stake in Japan Net Bank, the paper said.

Japan Net Bank had deposits of 257 billion yen at the end of December, up from 207 billion yen in March. It remains a small player on the banking scene, however. Its total assets of 336 billion yen are 1/300th those of Sumitomo Mitsui.

Yahoo had been looking for a new banking partner since its alliance with Aozora collapsed. Yahoo and Aozora announced an online banking tie-up early last year, but differences over the venture's business model and the timing of its launch eventually scuttled the deal.