General Electric will likely pick midsize lender Shinsei Bank to buy its Japanese consumer finance business, the Nikkei business daily reported on Thursday.
GE has been looking to sell the unit, Lake, for about a year as tighter government regulation has squeezed profits across Japan's once-mighty moneylending industry.
Shinsei, about a third owned by U.S. buyout firm JC Flowers & Co, has likely offered more than consumer lender Acom, which is also bidding for the unit, the paper said.
The bids are between 300 billion and 400 billion yen ($2.9-3.9 billion), the Nikkei said.
Consumer finance firm Promise, which is about 20 percent owned by Japanese bank Sumitomo Mitsui Financial Group, has dropped out of the bidding, and GE is likely to pick a buyer as early as June, the paper said.
A report by the Yomiuri daily earlier this month said Acom was in the lead for the bidding.
A spokeswoman for General Electric Consumer Finance in Japan said the firm was still negotiating with potential buyers.
"We are still engaged in discussions with interested bidders regarding the Lake portfolio and as such as we have no further details to share at this time," she said.
A spokesman for Shinsei, Donald Macintyre, declined to comment, as did a spokesman for Acom.
GE said last year it was actively looking for a buyer for Lake and expected to complete the sale by the end of the third quarter of 2008.
The U.S. firm is looking to unload the unit after Japan introduced new regulation lowering the maximum rate moneylenders are allowed to charge. Firms have also been forced to repay past charges deemed to be illegally high.
While the stricter regulation has pushed many moneylenders into debt and prompted industry consolidation, some Japanese banks see the turmoil as an opportunity to boost market share.
Shinsei already owns about two-thirds of both finance firm Aplus and consumer lender Shinki, and was said to have been a bidder for failed moneylender Credia.
Shinsei, which introduced 24-hour ATMs to a country where retail banking still lags behind the West, is looking to make similar changes to consumer financing.
The bank's president, Thierry Porte, has said Shinsei will build a "new model" for the industry.