Japan’s Shinsei to set path in three years to repay $3 billion public funds
By Makiko Yamazaki and Yuki Nitta
TOKYO (Reuters) - Japan’s Shinsei Bank Ltd will in three years have a plan in place to repay $3 billion in public funds as it taps synergies with its new parent to enhance its capital base, its new chief executive said.
The midsize lender, controlled by online financial conglomerate SBI Holdings Inc, still owes the government 350 billion yen ($2.9 billion) in public money its predecessor bank received decades ago.
“Our biggest mission is to boost profits and expand capital to prepare for repayment,” CEO Katsuya Kawashima, a former SBI executive, told Reuters in an interview.
Potential revenue drivers include structured finance, Kawashima said, an area of Shinsei’s strength that SBI hopes to leverage for its partnerships with regional banks in a push to become Japan’s fourth-largest banking group.
SBI has also been exploring the possibility of taking Shinsei private to repay the amount.
“It’s difficult right now to narrow down which options would be best,” Kawashima said, adding that the bank will need to prioritise its growth strategy.
As a result of the public money owed, the government still owns about 20% of Shinsei.
For the government to recoup the full amount lent by selling shares on the market, Shinsei stock would need to go up to 7,450 yen, from around 2,300 yen now. Shares of the firm have long underperformed over years of low interest rates in Japan.
SBI took effective control of Shinsei in December through a $1 billion tender offer that raised its stake in the bank to 48% from about 20%.
($1 = 122.6400 yen)
(Reporting by Makiko Yamazaki and Yuki Nitta; Editing by Himani Sarkar)
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