Fleet Financial Group was close to a deal Friday for Sanwa Business Credit, the commercial finance unit of Japan-based Sanwa Bank Ltd., a source familiar with the negotiations said.

The unit, based in Chicago, could fetch $750 million to $1 billion. Spokesmen for the companies would not comment.

The talks are the latest sign that finance companies are attracting interest even as the bank merger market cools. Analysts said they expect consolidation among firms specializing in commercial finance to heat up as banks and specialty lenders work to diversify loan portfolios.

Sanwa Business Credit would bring Fleet a $6.4 billion portfolio of secured loans and equipment leases, particularly for computer and other high-tech items. Fleet Capital Corp., based in Boston, has $9 billion of assets.

Analysts said commercial finance is attractive because it tends to be less volatile than consumer finance. For one thing, it is easier to recover losses from commercial clients than from consumers, analysts said. "It's viewed as lower risk in a recession than consumer finance," said E. Reilly Tierney, an analyst at Fox Pitt Kelton.

Fleet would also be able to bulk up its much-praised fee generating operations, which make up 45% of total revenues. Through acquisitions, the Boston bank has cobbled together an array of consumer businesses-from Quick & Reilly Group to the credit card operations of Advanta Corp. Sanwa Business Credit would bring diversity to that mix, analysts said.

"This is exactly the deal you want management to focus on in this current environment," said Anthony Polini, an analyst at Advest.

Sanwa Business Credit has been on the block since last spring while its financially strapped parent sought to raise capital to help stave loan losses, analysts said.

Two other cash-seeking Japanese banks have also divested part of their U.S.-based commercial finance firms this year. Earlier this month, Dai-Ichi Kangyo Bank Ltd. sold a 30% stake in CIT Group through an initial public offering. Fuji Bank Ltd. spun off 40% of its Heller Financial unit in an IPO this summer.

The negotiations between Fleet and Sanwa were first reported in Friday's editions of The Wall Street Journal and The New York Times.

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