Bank of Japan Corporation: Shinsei Bank, Limited (SKLKY) (1952 – )

Shinsei Bank, Limited (OTC PINK: SKLKY, SKLKF, TYO: 8303) was established in 1952, formerly known as The Long-Term Credit Bank of Japan, Limited (Japan Long-Term Credit Bank Co., Ltd.), which was reorganized in June 2000. For the current name, headquartered in Tokyo, Japan , with 5,349 full-time employees, it provides various banking and financial products and services for individual customers, enterprises, companies, public sector entities and financial institutions in Japan .

Shinsei Bank

Shinsei Bank, Limited (SKLKY):

Shinsei Bank, Limited is a leading diversified Japanese financial institution that provides comprehensive financial products and services to institutional and individual customers. Its headquarters are located in Chuo-ku, Tokyo.

Shinsei Bank provides Japanese yen/foreign currency deposits and structured deposits; housing loans, unsecured loans, credit guarantees, real estate-related non-recourse financing and corporate financing, project financing, and professional financing including M and A-related financing.

Shinsei Bank also provides investment trust, brokerage, life and non-life insurance, shopping credit and settlement, loan and collection, consulting, credit transactions, private equity, business succession financing, corporate restructuring and asset-backed investment services, and credit cards.

Shinsei Bank also provides individuals with financial transactions and services; healthcare finance and trust banking services; foreign exchange, derivatives, stock-related and other capital market businesses; and securities, asset management and wealth management businesses.

Shinsei Bank goes bankrupt:

In 1998, in the vortex of the Asian financial crisis, two bankruptcies in the East and the West shocked the world: the United States hedge fund Long-term Capital Management Corporation (LTCM) collapsed, and the Fed was eventually rescued by major Wall Street banks; the Japanese Long-Term Credit Bank (LTCB) It went bankrupt and was eventually “rescued by the state” and was taken over by foreign private equity funds.

In 1998, the Long-Term Credit Bank of Japan (the predecessor of Shinsei Bank), which was stuck in the quagmire of non-performing loans, was nationalized. However, other financial institutions in Japan refused to take over the bank, obviously because they were worried that the risk was too great. Until 2000, the bank was eventually acquired by Ripplewood, a US private equity fund led by Tim Collins. Tim Collins invited former Citibank Japan branch president Masaki Yasushi to serve as CEO; and changed its name to Shinsei Bank, which means “rebirth.”

Ripplewood owned Shinsei Bank for only $1.2 billion, and its bad debt insurance agreement with the Japanese government was complicated and controversial. By changing the lending model, introducing information systems, and innovating consumer financial services, Shinsei Bank has established a brand-new Japanese-style commercial bank with total assets close to US$60 billion and a capital adequacy ratio of over 21%. In 2003, Japan’s seven major banks wrote off bad debts of 560 million yen, resulting in a loss of 4.6 trillion yen (of which Mizuho Bank lost 2.4 trillion yen). Shinsei Bank was the only one to make money, with a net profit of 53 billion yen. .

But “new birth” means conflict and cost. When the new students cleaned up the loans on the account books, it triggered political controversy in Japan, and the relationship between the Financial Services Agency and it became increasingly tense. Xinsheng refused to forgive Sogo’s debt and transferred the loan to the government. Sogo went bankrupt. It also took the lead in the bankruptcy liquidation of Credit Corporation, Japan’s largest mortgage lender. Politicians and the press began to review the insurance agreement signed by the government and the Xinsheng, denounced it for “losing power and humiliating the country,” which put the Xinsheng and the Bacheng political base under pressure.

Former Citigroup CEO John Reid compares Hachijo Masaki with Carlos Ghosn who rescued Nissan, but as a Japanese, Hachijo Masaki is more missionary and ambitious than Ghosn, not only making his bank more efficient, It is also necessary to change the system and concepts of the entire banking industry. He also endured more pressure and harshness than Ghosn, and eventually became a national hero.

In early 2004, Shinsei Bank was successfully listed on the Tokyo Stock Exchange and raised US$2.36 billion. Private equity investors’ initial investment of US$1.2 billion increased to US$12 billion, achieving a 10-fold return. Japan’s financial reform is still painful and slow, but Masaki Yajo has no regrets about being the CEO of Shinsei Bank. Today, Shinsei Bank like Starbucks (many branches have Starbucks stationed in it) posted a slogan: Welcome to a brand new banking world!

Shinsei Bank, Limited (SKLKY) history:

  • The predecessor of Shinsei Bank is the Long-Term Credit Bank of Japan (LTCB), which has a monopoly on the issuance of many long-term government debt securities.
  • After the Japanese asset price bubble burst in 1989, the bank fell into heavy bad debt: the government nationalized it in 1998 and delisted it from the Tokyo Stock Exchange.
  • After several proposed mergers with domestic banks, LTCB was sold to an international group headed by U.S. Ripplewood Holdings for 121 billion yen ($1.2 billion) in March 2000. This is the historical bank of Japan. For the first time under foreign control. Investor Christopher Flowers (Christopher Flowers) played an important role in the acquisition of the group and has been a major shareholder of the company until August 2019 when the Japanese government acquired the shares of his fund.
  • LTCB was relaunched as “Shinsei Bank” (literally translated as “Newborn” or “New Life” Bank) with new management and services in June 2000. Many of Shinsei’s managers have worked in foreign financial institutions in Japan, such as CEO Thierry Porte (formerly Morgan Stanley ) and CIO Jay Dvivedi (formerly Citibank ). Shinsei continues to use the long-term credit bank SWIFT code (LTCBJPJT).
  • On February 20, 2004, Shinsei Bank raised 230 billion yen through an IPO.
  • In April 2004, Shinsei Bank replaced its long-term credit banking license with a standard commercial banking license.
  • On June 29, 2007, the Financial Services Agency (Financial Services Agency) issued an improvement order to Shinsei because the company’s revenue was substantially below the target.
  • On April 25, 2009, Shinsei Bank announced that it had begun negotiations with Aozora Bank, hoping to merge its businesses in the summer of 2010, with a view to the final merger, but due to capital and business strategy disputes, the negotiations failed in May 2010.
  • In 2010, Shinsei Bank sold its headquarters building near Hibiya Park and its Meguro operations center to avoid falling below its target due to investment write-downs during the US subprime mortgage crisis. Shinsei moved its headquarters to Nihonbashi District, Chuo City in January 2011.
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