Rakuten Revives FinTech Consolidation Plan to Combat Rising Rates and Intensifying Competition
Rakuten Group and its banking unit, Rakuten Bank, have agreed to reopen negotiations regarding the reorganization of their financial technology businesses, less than two years after shelving a similar proposal.
The companies have executed a Memorandum of Understanding (MOU) to integrate Rakuten Bank, Rakuten Card, and Rakuten Securities into a unified group structure. The target effective date for the reorganization is set for October 2026.
Strategic Pivot Amidst Macro Shifts
While a previous attempt to reorganize the FinTech segment was abandoned in September 2024, Rakuten leadership cites a rapidly changing business environment as the catalyst for revisiting the deal.
Key drivers for the renewed discussions include Japan’s shifting interest rate environment, which has increased funding costs, and aggressive retail expansion by major banking groups and digital competitors. Rakuten stated that the current fragmented structure is no longer optimal for competing in an era of "zero cash" and generative AI.
“Rakuten Group has reassessed the need to re-optimize the group structure... to strengthen collaboration among businesses, accelerate data integration and the utilization of AI, and establish a framework that expedites consideration of group-wide FinTech strategies,” the company stated in the filing.
Deal Structure and Exclusions
Under the proposed reorganization, the entire FinTech business would likely be integrated into one group, though Rakuten Bank is expected to maintain its listing on the Tokyo Stock Exchange Prime Market.
Notable details regarding the scope include:
- Inclusions: Rakuten Bank, Rakuten Card, and Rakuten Securities.
- Exclusions: Rakuten Insurance and crypto-asset operator Rakuten Wallet are currently assumed to be out of the scope of this specific integration.
- The Mizuho Factor: The companies noted that the specific participation of Mizuho Bank and Mizuho Securities—which hold minority stakes in Rakuten Card (14.99%) and Rakuten Securities (49.00%), respectively—remains undecided and subject to future discussion.
Governance and Minority Protections
Given that Rakuten Group is the controlling shareholder with a 49.26% stake in Rakuten Bank, the transaction faces scrutiny regarding the protection of minority shareholders. Rakuten Bank is down more than 20% over the past five days at the time of writing.
Rakuten Bank has established an independent Special Committee comprising outside directors and auditors to evaluate the fairness of the deal. The bank has also retained Daiwa Securities and Goldman Sachs Japan as financial advisors, and Deloitte Tohmatsu as a third-party valuation institution.
Hiroshi Mikitani, Chairman and CEO of Rakuten Group, has recused himself from Rakuten Bank’s board deliberations regarding the merger to avoid conflicts of interest.
The companies aim to finalize a definitive agreement and obtain necessary regulatory approvals in the coming months to meet the October 2026 deadline.
Norbert Gehrke
