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Tuesday January 23, 5:12 PMJapan's OMC,Marui to combine credit card operationsTOKYO, Jan 23 (Reuters) - Japanese credit card issuer OMC Card Inc. and retailer Marui Co. will effectively combine their credit card operations, aiming to cut system costs as regulatory changes weigh on their earnings outlook.Credit card companies face an increasingly tough business environment as their revenues are expected to fall due to tighter lending rules. System-development costs are also on the rise as the number of cardholders grows. OMC Card, an affiliate of retailer Daiei Inc. , and Marui, said on Tuesday the two firms would set up a joint venture in March to handle most credit card operations such as application processes, the issuance of cards and settlements. Operations such as marketing and accounting will remain at each company. OMC Card spokesman Toshiharu Kawauchi said the firms aim to have more companies join in the venture to cut system costs even further. He added that OMC and Marui could eventually hold a stake in each other to strengthen their ties. "Our earnings are expected to decrease as regulatory changes on interest rates will impact our cash advance businesses," Kawauchi said. The companies also plan to eventually operate computer systems together. OMC Card will take an 80 percent stake in the venture, Procent Inc., while Marui will take the remainder. Marui is well-known for its department stores, but its credit card and consumer finance services operations generate nearly half of its operating profit. Japan's parliament last month approved a bill to cut the maximum interest rate that can be charged on loans to 15-20 percent, which will eliminate a grey zone between two conflicting lending laws currently in place. Credit card firms Orient Corp. , Credit Saison Co. and UC Card Co. also announced in September that they would combine computer systems, while consumer lenders such as Aiful Corp. are moving to restructure operations through outlet closures and job cuts. OMC Card and Marui combined now have more than 12 million cardholders. They said they aim to boost that number to 30 million in the future through the venture. The joint venture will be capitalised at 150 million yen. Before the announcement, shares in OMC Card closed down 2.6 percent at 970 yen, while Marui ended down 1.8 percent at 1,496 yen. The benchmark Nikkei average was down 0.09 percent. |
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