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Business deals

SMFG to buy back credit card unit in swing to cashless

Japanese megabank will dissolve alliance with NTT Docomo

Sumitomo Mitsui Financial Group positions credit cards and other forms of cashless payments as a growth sector.

TOKYO -- Japanese megabank Sumitomo Mitsui Financial Group will turn a credit card business jointly operated with NTT Docomo into a wholly owned subsidiary, aiming for a stronger foothold in the cashless payment business.

NTT Docomo, a domestic cellphone carrier, acquired 34% of Sumitomo Mitsui Card in 2005 for 98 billion yen ($866 million) under a capital alliance that expires in March. Once SMFG buys back that stake, Cedyna Financial, an SMFG group company that issues co-branded credit cards for retailers, will be brought under Sumitomo Mitsui Card for what will in effect be a business integration.   

SMFG and NTT Docomo are negotiating the purchase price, and the reorganization could wrap up as early as April.

Sumitomo Mitsui Card and Cedyna Financial serve nearly 45 million card members combined, with an aggregate transaction volume of roughly 16 trillion yen annually. The business at the combined entity would exceed the approximately 14 trillion yen generated by domestic competitor Mitsubishi UFJ Nicos.

The business reshuffle will stop short of a full merger because Cedyna and Sumitomo Mitsui Card use different systems. Instead, the group will hold down costs by integrating business centers and other locations, and boost marketing capabilities by unifying product development and sales-planning functions.

Although the capital tie-up will be dissolved, NTT Docomo will maintain other strategic partnerships with SMFG, such as jointly developing smartphone-based financial services. The pair will continue to collaborate on iD, the electronic payment service that utilizes NTT Docomo's digital wallet.

As part of the larger push to promote cashless purchases, SMFG has also teamed with GMO Payment Gateway to create a unified network to process payment data from credit cards, electronic money and the like.

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