Shinsei Bank
Encyclopedia
is a Japan
ese commercial bank
headquartered in Chiyoda
, Tokyo
.
bank, the Long-Term Credit Bank of Japan
, which had a government monopoly on the issuance of many long-term debt securities. Following the collapse of the Japanese asset price bubble
in 1989, the bank was riddled with bad debts: the government nationalized it in 1998, and it was delisted from the Tokyo Stock Exchange
. After several proposed mergers with domestic banks, LTCB was sold to an international group led by US-based Ripplewood Holdings
in March 2000 for ¥121 billion, the first time in history that a Japanese bank came under foreign control. Investor Christopher Flowers
also played a major role in the buyout syndicate and remains a key shareholder of the company today.
As part of the purchase and sale agreement, the government included a to the effect that Shinsei could demand within the next three years that the government purchase any claims which had fallen by twenty percent or more from book value. A similar provision was afforded Aozora Bank
, the successor of LTCB's similarly beleaguered sister company Nippon Credit Bank.
LTCB was relaunched as "Shinsei Bank" (literally "Newborn" or "New Life" Bank) in June 2000, with new management and services. Many of Shinsei's managers have previous experience working for foreign financial institutions in Japan, such as CEO Thierry Porte (formerly of Morgan Stanley) and CIO Jay Dvivedi (formerly of Citibank). Shinsei continued to use the Long-Term Credit Bank SWIFT code (LTCBJPJT).
Shinsei used the defect warranty provision to dispose of all the worst debts owed to the bank. Several companies which had used LTCB as their primary bank went bankrupt as a result, including Sogo
(July, 2000) and the Dai-Ichi Hotel. This created a furor in Japan: politicians especially criticized Goldman Sachs
, which advised on the sale of LTCB, for not warning the government of the risks inherent in the defect security provision.
Shinsei then raised ¥230 billion in an IPO
on February 20, 2004. The purchase of Shinsei thus turned a profit of over ¥100 billion within four years. The success of the IPO intensified criticism of Shinsei, however: the government was estimated to have lost ¥4-5 trillion on the deal between lost investments and forced purchases of bad debt, and the profits from the deal even escaped Japanese taxation through the use of a foreign investment partnership. In April 2004, the bank exchanged its long-term credit banking license for a standard commercial banking license.
The Financial Services Agency issued an improvement order to Shinsei on June 29, 2007 after the revenues of the company fell dramatically below targets.
On April 25, 2009, it was announced that Shinsei Bank and Aozora Bank
have entered into negotiations to integrate their operations in the summer of 2010, with an eye toward a eventual merger, however the talks collapsed in May 2010 amid disputes over capitalization and business strategy, as well as the abatement of the 2008 financial crisis.
In 2008, the bank sold its headquarters building near Hibiya Park
and its operations center in Meguro in order to avoid falling below targets again due to investment writedowns during the subprime crisis in the United States. Shinsei moved its headquarters to the Nihombashi area of Chuo City
in January 2011.
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Shinsei Bank divides its business into three components: retail banking, institutional banking and consumer/commercial finance.
The Shinsei banking system is based on the FLEXCUBE software developed by i-flex solutions
.
Shinsei also gears many of its services toward resident foreigners in Japan, with English-language online banking and telephone support, as well as no requirement for a personal seal in order to open an account.
and investment banking operations into an "Institutional Banking" division which engages in a broad range of commercial lending and equity investment. The IB division is affiliated with four subsidiary companies: Shinsei Investment Management, Shinsei Securities, Shinsei Servicer and Shinsei Trust and Banking. Shinsei also does considerable investment business in Europe
through subsidiaries in London
and Frankfurt
.
company), Showa Leasing (commercial and consumer leasing), Shinsei Business Finance (unsecured lending) and Shinsei Property Finance (mortgages).
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
ese commercial bank
Commercial bank
After the implementation of the Glass–Steagall Act, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S...
headquartered in Chiyoda
Chiyoda, Tokyo
is one of the 23 special wards in central Tokyo, Japan. In English, it is called Chiyoda ward. As of October 2007, the ward has an estimated population of 45,543 and a population density of 3,912 people per km², making it by far the least populated of the special wards...
, Tokyo
Tokyo
, ; officially , is one of the 47 prefectures of Japan. Tokyo is the capital of Japan, the center of the Greater Tokyo Area, and the largest metropolitan area of Japan. It is the seat of the Japanese government and the Imperial Palace, and the home of the Japanese Imperial Family...
.
History
Shinsei Bank is the successor of a trustTrust company
A trust company is a corporation, especially a commercial bank, organized to perform the fiduciary of trusts and agencies. It is normally owned by one of three types of structures: an independent partnership, a bank, or a law firm, each of which specializes in being a trustee of various kinds of...
bank, the Long-Term Credit Bank of Japan
Long-Term Credit Bank of Japan
, abbreviated LTCB in English and in Japanese, was founded in 1952 under the direction of the Shigeru Yoshida government to provide long-term financing to various industries in Japan. Along with the Industrial Bank of Japan and the Nippon Kangyo Bank, it was one of the major financiers of the...
, which had a government monopoly on the issuance of many long-term debt securities. Following the collapse of the Japanese asset price bubble
Japanese asset price bubble
The was an economic bubble in Japan from 1986 to 1991, in which real estate and stock prices were greatly inflated. The bubble's collapse lasted for more than a decade with stock prices initially bottoming in 2003, although they would descend even further amidst the global crisis in 2008. The...
in 1989, the bank was riddled with bad debts: the government nationalized it in 1998, and it was delisted from the Tokyo Stock Exchange
Tokyo Stock Exchange
The , called or TSE for short, is located in Tokyo, Japan and is the third largest stock exchange in the world by aggregate market capitalization of its listed companies...
. After several proposed mergers with domestic banks, LTCB was sold to an international group led by US-based Ripplewood Holdings
Ripplewood Holdings
Ripplewood is an American private equity firm based in New York, New York that focuses on leveraged buyouts, late stage venture, growth capital, management buyouts, leveraged recapitalizations and other illiquid investments....
in March 2000 for ¥121 billion, the first time in history that a Japanese bank came under foreign control. Investor Christopher Flowers
Christopher Flowers
J. Christopher Flowers is a private equity investor and investment manager focused on the financial services industry. He is the chairman of J.C. Flowers & Co.Flowers was born in California and grew up in Weston, Massachusetts...
also played a major role in the buyout syndicate and remains a key shareholder of the company today.
As part of the purchase and sale agreement, the government included a to the effect that Shinsei could demand within the next three years that the government purchase any claims which had fallen by twenty percent or more from book value. A similar provision was afforded Aozora Bank
Aozora Bank
is a Japanese commercial bank that offers service in 19 branches in Japan and in 5 overseas representative offices.-History:Aozora Bank is the successor of the Nippon Credit Bank , which was founded in 1957 under a special government trust banking license alongside the Long-Term Credit Bank of...
, the successor of LTCB's similarly beleaguered sister company Nippon Credit Bank.
LTCB was relaunched as "Shinsei Bank" (literally "Newborn" or "New Life" Bank) in June 2000, with new management and services. Many of Shinsei's managers have previous experience working for foreign financial institutions in Japan, such as CEO Thierry Porte (formerly of Morgan Stanley) and CIO Jay Dvivedi (formerly of Citibank). Shinsei continued to use the Long-Term Credit Bank SWIFT code (LTCBJPJT).
Shinsei used the defect warranty provision to dispose of all the worst debts owed to the bank. Several companies which had used LTCB as their primary bank went bankrupt as a result, including Sogo
Sogo
Sogo Co., Ltd. is a department store chain that operates an extensive network of branches in Japan. It once owned stores in locations as diverse as Beijing in China, Causeway Bay in Hong Kong, Taipei in Taiwan, Jakarta, Medan, Bandung & Surabaya in Indonesia, Kuala Lumpur in Malaysia, Singapore,...
(July, 2000) and the Dai-Ichi Hotel. This created a furor in Japan: politicians especially criticized Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
, which advised on the sale of LTCB, for not warning the government of the risks inherent in the defect security provision.
Shinsei then raised ¥230 billion in an IPO
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
on February 20, 2004. The purchase of Shinsei thus turned a profit of over ¥100 billion within four years. The success of the IPO intensified criticism of Shinsei, however: the government was estimated to have lost ¥4-5 trillion on the deal between lost investments and forced purchases of bad debt, and the profits from the deal even escaped Japanese taxation through the use of a foreign investment partnership. In April 2004, the bank exchanged its long-term credit banking license for a standard commercial banking license.
The Financial Services Agency issued an improvement order to Shinsei on June 29, 2007 after the revenues of the company fell dramatically below targets.
On April 25, 2009, it was announced that Shinsei Bank and Aozora Bank
Aozora Bank
is a Japanese commercial bank that offers service in 19 branches in Japan and in 5 overseas representative offices.-History:Aozora Bank is the successor of the Nippon Credit Bank , which was founded in 1957 under a special government trust banking license alongside the Long-Term Credit Bank of...
have entered into negotiations to integrate their operations in the summer of 2010, with an eye toward a eventual merger, however the talks collapsed in May 2010 amid disputes over capitalization and business strategy, as well as the abatement of the 2008 financial crisis.
In 2008, the bank sold its headquarters building near Hibiya Park
Hibiya Park
is a park in Chiyoda City, Tokyo, Japan. It covers an area of 161,636.66m2 between the east gardens of the Imperial Palace to the north, the Shinbashi district to the southeast and the Kasumigaseki government district to the west....
and its operations center in Meguro in order to avoid falling below targets again due to investment writedowns during the subprime crisis in the United States. Shinsei moved its headquarters to the Nihombashi area of Chuo City
Chuo, Tokyo
is one of the 23 special wards that form the heart of Tokyo, Japan. The ward refers to itself as Chūō City in English.Its Japanese name literally means "Central Ward," and it is historically the main commercial center of Tokyo, although Shinjuku has risen to challenge it since the end of World War II...
in January 2011.
Services
Retail banking
Shinsei offers a number of unique services as part of its basic "PowerFlex" savings account, including:- Free 24-hour ATM service, with locations in many Tokyo MetroTokyo Metrois one of two rapid transit systems making up the Tokyo subway system, the other being Toei. It is the most used subway system in the world in terms of annual passenger rides.-Organization:...
, KeikyuKeihin Electric Express Railway, also known as or, more recently, , is a private railroad that connects inner Tokyo to Kawasaki, Yokohama, Yokosuka and other points on the Miura Peninsula in Kanagawa Prefecture. It also provides rail access to Haneda Airport in Tokyo. means the Tokyo - Yokohama area. The company's railway...
and Kintetsu stations, as well as Seven-Eleven and Daily YamazakiDaily YamazakiDaily Yamazaki is a "konbini" or convenience store franchise chain in Japan established on December 21, 1977. The convenience store chain is owned by Yamazaki Baking Co., Ltd, Japan's largest baking company. Daily Yamazaki sells baked goods such as bread and pastry, and other confectioneries in...
convenience stores - "Cash back" for any ATM fees incurred when making withdrawals overseas
- Banking office hours until 7 PM in many locations (most Japanese banks close much earlier, often as early as 3 PM)
- Foreign currency deposits as part of the standard account package (unique to Shinsei and Tokyo Star BankTokyo Star Bankis a Japanese bank established on June 11, 2001 out of the reorganization of then bankrupt Tokyo Sowa Bank by Lone Star Funds....
) - Instant cash card issuance for customers opening new accounts in person with photo ID
The Shinsei banking system is based on the FLEXCUBE software developed by i-flex solutions
I-flex Solutions
Oracle Financial Services Software Limited is an IT solution provider to the banking industry. Oracle Financial Services is majority owned by Oracle Corporation...
.
Shinsei also gears many of its services toward resident foreigners in Japan, with English-language online banking and telephone support, as well as no requirement for a personal seal in order to open an account.
Institutional banking
Shinsei combines its commercialCommercial bank
After the implementation of the Glass–Steagall Act, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S...
and investment banking operations into an "Institutional Banking" division which engages in a broad range of commercial lending and equity investment. The IB division is affiliated with four subsidiary companies: Shinsei Investment Management, Shinsei Securities, Shinsei Servicer and Shinsei Trust and Banking. Shinsei also does considerable investment business in Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
through subsidiaries in London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
and Frankfurt
Frankfurt
Frankfurt am Main , commonly known simply as Frankfurt, is the largest city in the German state of Hesse and the fifth-largest city in Germany, with a 2010 population of 688,249. The urban area had an estimated population of 2,300,000 in 2010...
.
Consumer and commercial finance
Shinsei operates many of its services in this field through its subsidiaries APLUS (consumer finance), Shinki (owner of the NoLoan consumer financeConsumer finance
Alternative financial services in the United States refers to a particular type of financial service, namely sub-prime lending by non-bank financial institutions. This branch of the financial services industry is more extensive in the United States than in some other countries, because the major...
company), Showa Leasing (commercial and consumer leasing), Shinsei Business Finance (unsecured lending) and Shinsei Property Finance (mortgages).
External links
- Official English website
- Official website (Japanese)