Sumitomo Mitsui Financial Group on Friday laid out plans to become Japan's biggest credit card issuer, saying it would establish a new holding firm for four companies and merge three of them.

The reorganization will also make it one of the biggest players in Japan's overall consumer credit sector, an industry battered by new rules that have lowered caps on interest rates and court demands to repay interest deemed too high.

SMFG, Japan's third-largest bank, has been the most aggressive of Japan's three largest banks in pushing into the consumer finance business, looking to corner the market even as other players exit.

It said it will merge OMC Card Inc, Central Finance Co and unlisted Quoq Inc in April 2009. The newly formed company will remain listed.

It currently holds roughly 33 percent of OMC Card, 23 percent of Central Finance and 31 percent of Quoq.

Shares in OMC and Central Finance have rocketed since the first reports of the planned reorganization broke, with OMC finishing up 14 percent from Wednesday's close at 492 yen and Central Finance rising 26 percent to 315 yen.

Sumitomo Mitsui Card Co, which is part of the SMFG group, will also be placed under the same holding firm and eventually share the same systems and processing operations but retain its own brand.

The newly merged firm and Sumitomo Mitsui Card will have an annual credit card transaction volume of 9.5 trillion yen, topping 9.1 trillion yen for Mitsubishi UFJ Financial Group, which has Mitsubishi UFJ Nicos and Jaccs under its wing.

SMFG plans to hold 66 percent of Sumitomo Mitsui Card and between 40 and 50 percent of the newly merged firm. The merger ratio has yet to be decided.

(Additional reporting by Taro Fuse)

Japan