Daiwa Securities to acquire Orix Bank for ¥370 billion ($2.3 billion), its largest acquisition in nearly two decades, to expand commercial lending

Daiwa Securities Group will buy Orix's banking unit and integrate it with its Daiwa Next Bank unit. The Tokyo-based firm will finance the purchase with its own funds.

Lending has become a more attractive business in Japan as inflation returns to the economy, leading to higher interest rates and loan profitability. The deal seeks a 'virtuous cycle' of deposit and loan growth.

Daiwa shares fell as much as 6.9% on Tuesday morning in Tokyo, while Orix shares jumped 12%. This is Daiwa's largest acquisition in almost two decades, following its stake-building in Aozora Bank two years ago.