Toyota Applies to Enter US Banking Market
Reviewed By Hitoshi URABE
"Toyota Applies to Enter US Banking Market"
(by Bloomberg News) International Herald Tribune
Toyota Motor Corporation submitted an application to establish a bank, a savings and loan association to be precise, in the state of Nevada. Laws and regulations governing financial institutions in U.S. are very complex, and so it is obvious Toyota has gone through extensive research before making the decision.
Toyota already owns other types of financial institution in U.S. In 1982, they incorporated Toyota Motor Credit Corporation (TMCC) to finance their dealers and provide leasing for the cars. In 1986, Toyota Motor Insurance Services, Inc., (TMIS) was established to facilitate vehicle protection plans and insurance products to their dealers. The services of the two companies were consolidated in 1999, under the brand name of Toyota Financial Services. The new banking institution just applied for, when its operations begin, would become another pillar in the company's financial framework in U.S.
Although many automobile manufacturers have credit and leasing companies, General Motors and BMW are the only two that maintain a banking subsidiary in U.S. They have proven to be effective in acting as the core of their financial services for the dealerships, managing daily cash operations while acting as a conduit for providing leasing and insurance services. In fact, GM's financial arm has recorded a net profit of 1.8 billion dollars last year. It has been reported that Toyota intends, eventually, to extend its regular banking services to the owners of their luxury cars, which would be a very effective way to select and limit their customer base to affluent sector.
Toyota has been often referred to as "Toyota Bank" in Japan. It is not that they are in the banking business, but people call it so out of certain envy because Toyota is so rich in cash and have no debts. They are not expected to start a bank shortly in Japan, one reason being that their chairman, Mr Okuda, is on the board of UFJ Holdings, the parent of UFJ Bank, which holds other institutions offering services such as trust and securities transactions. UFJ is one of the four mega-banks formed recently through consolidation. It, however, along with its competitors, is suffering from its shares being heavily depressed in the market, reflecting people's anxiety in its soundness.
Recent relaxation of financial regulations has promoted some unique financial services to appear. For example, Sony – yes that Sony – has established Sony Bank that operates solely on the web. Is it conceivable then, for Toyota to eventually establish a bank of their own, so as to become perhaps the healthiest bank, to regain confidence in Japan's financial sector at large?