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Mar. 30, 2018
Sumitomo Mitsui Financial Group, Inc.
Sumitomo Corporation
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Finance and Leasing Company, Limited
Sumitomo Mitsui Auto Service Company, Limited
SMBC Aviation Capital Limited
SMFL Capital Co., Ltd.

Reorganization of the Joint Leasing Partnership of Sumitomo Mitsui Financial Group, Inc. and Sumitomo Corporation

Tokyo, March 30, 2018 -- Sumitomo Mitsui Financial Group, Inc. (“SMFG”, Head Office: Chiyoda-ku, Tokyo; President and Group CEO: Takeshi Kunibe), Sumitomo Corporation (“Sumitomo Corp”, Head Office: Chuo-ku, Tokyo; President and CEO: Kuniharu Nakamura), Sumitomo Mitsui Banking Corporation (“SMBC”, Head Office: Chiyoda-ku, Tokyo; President and CEO: Makoto Takashima), Sumitomo Mitsui Finance and Leasing Company, Limited (“SMFL”, Head Office: Chiyoda-ku, Tokyo; President: Masaki Tachibana), Sumitomo Mitsui Auto Service Company, Limited (“SMAS”, Head Office: Shinjuku-ku, Tokyo; President & CEO: Akira Tsuyuguchi), and SMFL Capital Co., Ltd. (“FLC”, Head Office: Minato-ku, Tokyo; President and CEO: Atsushi Kuroda) announced that, based on the basic agreement concluded between SMFG and Sumitomo Corp on November 6, 2017, the final agreement regarding the below matters was concluded subject to the approval of the relevant foreign and domestic authorities, after receiving the required authorization from their executive officers (SMFG), Management Council (Sumitomo Corp), and Board of Directors (SMFL, SMAS and FLC).

A)The reorganization (the “Reorganization”) of the joint leasing partnership of SMFG and Sumitomo Corp

B)SMBC Aviation Capital Limited (“SMBC Aviation Capital”, Head Office: Dublin, Ireland; CEO: Peter Barrett) receiving a USD 700 million capital injection underwritten by SMFL and SMBC and a subordinated loan of USD 300 million

1.Background of the Reorganization
As stated in the November 6, 2017, press release “Sumitomo Mitsui Financial Group, Inc. and Sumitomo Corporation Enter into a Basic Agreement Concerning the Reorganization of the Joint Leasing Partnership”, the purpose of the Reorganization is to position SMFL as a platform to realize both a material increase in the competitiveness and the sustainable growth of the SMFG and Sumitomo Corp strategic joint leasing partnership. The strategic joint leasing partnership consists of general leasing, auto leasing, and aircraft leasing businesses.
Specifically, the purpose of the Reorganization is to : (1) realize the full scale entry of SMFL into new business areas, (2) enhance medium- to long-term competitiveness of SMBC Aviation Capital based on the company’s strengthened capital structure, (3) realize synergies resulting from the merger of SMFL and FLC, (4) strengthen and develop integrated mobility service business (*) through SMAS acquiring  100% ownership of FLC’s auto lease business and (5) pursuit synergies resulting from an enhanced collaboration between the respective companies, acceleration of cross-selling initiatives, and the sharing of corporate infrastructure.
 
*Comprehensive mobility services business: providing one-stop services, with automobiles as its cornerstone, in connection to the movement of people and goods
 
2. Outline of the Reorganization
The respective ownership ratios of SMFG and Sumitomo Corp in SMFL will be adjusted to 50%, and the subject leasing firms (SMBC Aviation Capital, SMAS, and FLC) will be reorganized with SMFL acting as the platform. The outline of the Reorganization is illustrated below. Furthermore, as a result of the Reorganization, SMFL will cease to be a consolidated subsidiary of SMFG and become an equity method affiliate of the company. Furthermore, in line with the Reorganization, SMBC Aviation Capital will strengthen its capital structure via a USD 700 million capital injection and a USD 300 million of subordinated loan. Sumitomo Corp remains the largest shareholder in SMAS while making the company an equity method affiliate of Sumitomo Corp, SMFL, SMFG, and Hitachi Capital Corporation. SMAS will aim for further growth with strengthening its relationship with shareholders.

①    Current Framework
 

②    Revised Framework

 

3. Tentative Timetable

March 30, 2018today

Signing of the final contract

From April 2018

Review by the anti-trust authorities of the countries concerned

November 2018 – January 2019 (tentative)

Completion of the Reorganization


The above schedule is subject to change based on the progress made in regards to the filing of required notifications with and obtaining approval from the relevant regulatory authorities and the anti-trust authorities of the countries concerned, any other necessary preparations, or any other reasons.

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