Aiful Corp, Japan's largest consumer lender, said it will cut about 1,900 jobs and close 1,520 outlets, a month after new laws in the country capped interest rates that non-bank lenders can charge.
Aiful will ask its employees, including temporary staff at the group, to resign voluntarily by Sept. 30, and halve its consumer finance branches and outlets, the lender said in a statement filed to the Tokyo Stock Exchange.
Japanese and overseas consumer finance companies are increasingly reorganizing their operations in Japan after legislation was passed on Dec. 13 to lower the maximum rate finance companies can charge to 20 percent, from 29.2 percent.
Citigroup Inc, the biggest US bank, said this month it will close about 80 percent of its consumer finance branches in Japan.
"Business circumstances are getting tougher by the revision of the laws," said Yoshitaka Fukuda, the company's chief executive officer, in the statement.
"We will try to make a drastic reform of the cost structure through the reorganization," Fukuda added.
Aiful, Acom Co, Takefuji Corp and Promise Co, Japan's four biggest consumer lenders, in November posted a combined quarterly loss of ?801 billion (US$6.6 billion) after raising provisions to cover rule changes. The non-bank financials section of the 33 industry groups in Japan's TOPIX index was the worst performing last year, down more than 30 percent.
"It's surprising consumer lenders are turning back so rapidly after their gradual expansion over decades," said Toru Komatsu, who advises fund managers as chief executive of Komatsu Portfolio Advisors Co.
"A huge revolution in the industry could be happening, involving overseas players in Japan, and we have to watch it carefully," Komatsu added.
Citigroup said on Jan. 9 it is shutting about 270 branches and 100 loan machines, leaving its consumer-finance unit with 50 branches and 700 automated loan machines in Japan. Acom said on Nov. 8 it would cut 700 jobs and close 135 outlets.
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