Japanese online finance company SBI Holdings has decided to forge a capital tie-up with business lender Towa Bank, Nikkei newspaper reported.
Under the arrangement, the companies will take small stakes in each other.
Go deeper with GlobalData
This is the fifth capital tie-up by SBI, which has set up the “Regional Bank Union Concept” with Towa Bank, the report added.
SBI aims to enter into similar capital tie-ups with a total of 10 regional banks.
The move is aimed at promoting tie-ups with regional banks that are affected by the decline in population and negative interest rates.
Under the agreement, SBI will provide Towa Bank with access to its technology and financial services.
The Maebashi City-based Towa Bank will use these services to improve its customer service.
Additionally, Towa Bank aims to boost its profitability through its capital tie-up with SBI, which has strength in fintechs – a combination of finance and information technology (IT).
Established in 1918, Towa Bank has 94 outlets in Gunma Prefecture and other areas in Japan, according to the newspaper.
The lender had nearly JPY1.98trn ($18.89bn) in deposits and JPY1.45trn ($13.84bn) in loans as of March 2020.
Back in 2009, the Japanese government injected public funds worth JPY35bn into the troubled lender.
So far, the government has repaid JPY20bn, the Nikkei report added.
