Rakuten to Merge Fintech Units Amidst Financial Challenges
Rakuten Group Inc. has unveiled plans to restructure its financial divisions, merging its banking, brokerage, credit card, and insurance operations into a unified unit. The reorganization is aimed at bolstering efficiency and enhancing the company's financial services by promoting collaboration across its Fintech Business. Rakuten Bank Ltd. is expected to play a central role in this consolidation, which is slated for completion by October.
The decision comes as Rakuten faces financial challenges, highlighted by a $2.2 billion net loss for the year ended December and its fifth consecutive annual loss. This financial strain is partly attributed to the company's costly venture into the mobile business. As part of its strategic shift, Rakuten may abandon plans to list shares of Rakuten Securities, one of Japan's largest online brokerages, as it seeks to stabilize its finances.
The restructuring is subject to necessary approvals from regulatory authorities. Shares in Rakuten and its banking arm experienced an uptick following the announcement, with the banking unit's stock rising by 6.8%. The reorganization also aligns with the group's intention to optimize resource allocation and improve the earning power of its financial services, which reported a combined operating profit of ¥122.9 billion in 2023. Rakuten Bank, a publicly traded unit in which Rakuten Group owns a 49% stake, boasts over 15 million accounts, the highest among Japanese online banks.
