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GE May Sell Japan Consumer Finance Unit: FT

Reuters
Monday, 20 Aug 2007 | 8:04 PM ET

General Electric has sounded out financial institutions about acquiring or taking a stake in its Japanese consumer lending unit amid an industry-wide slump, the Financial Times reported on Tuesday.

Efforts to sell or find investors for the unit, called Lake, are still at an early stage, the newspaper said.

GE announced earlier this year that its consumer finance arm would close 60% of its manned personal loan branches in Japan and shed up to 400 employees amid an industry-wide slump prompted by tighter regulation.

A new lending law approved by parliament in December will lower Japan's maximum legal interest rate to between 15% and 20%, depending on the size of the loan, from the current ceiling of 29.2%.

The change threatens revenues in the once-mighty consumer finance industry, already battered by scandals and borrower lawsuits over excessive interest charges.

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