Sony is to announce plans to float its highly profitable financial services division in what could be Japan’s biggest initial public offering this year.

The flotation of Sony Financial Holdings is expected to proceed despite the recent fragility of global equity markets and analysts said it should produce a company with a market value of close to 1 trillion yen (£4 billion). Subject to market conditions, the flotation is likely to take place towards the end of the year, with Sony selling a stake of about 30 per cent to 40 per cent of what is currently a wholly owned subsidiary.

Despite its high-tech pedigree, Sony has managed to build a substantial brand in financial services. Sony Financial Holdings has a life insurance business with more than 30 trillion yen in individual policies, a growing motor insurance business and one of the few Japanese online banks that are making any money.

It is understood that Sony Bank will also start offering online brokerage services within the next month that will exploit the boom in stock and foreign exchange investments by individual Japanese. Profits at Sony Bank leapt 79 per cent year on year over the April to June quarter, driven mainly by rising sales of financial products.

The flotation will represent the biggest single piece of corporate realignment at Sony since Sir Howard Stringer took over as its chairman and chief executive in 2005. Since then, he has pressed ahead with plans to meld the company’s hardware and content businesses into a more cohesive unit.

But Sir Howard has, until now, held back from spinning off the financial division, which has been a major contributor to group profitability in the face of huge losses emerging from the games business. In certain periods of Sony’s recent history, the financial services division has contributed more to group earnings than the core electronics business. But with the overall recovery of Sony Electronics now more convincingly on track, one analyst said that “the financial unit is looking increasingly out of place in Sony’s ambitions to be a one-stop-shop content and hardware entertainment group”.

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