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Japan Japan is an island country in East Asia. Located in the Pacific Ocean off the northeast coast of the Asia, Asian mainland, it is bordered on the west by the Sea of Japan and extends from the Sea of Okhotsk in the north to the East China Sea ...
ese
financial institution A financial institution, sometimes called a banking institution, is a business entity that provides service as an intermediary for different types of financial monetary transactions. Broadly speaking, there are three major types of financial ins ...
that provides a full range of financial products and services to both institutional and individual customers. It is owned by SBI Group and headquartered in Chuo,
Tokyo Tokyo, officially the Tokyo Metropolis, is the capital of Japan, capital and List of cities in Japan, most populous city in Japan. With a population of over 14 million in the city proper in 2023, it is List of largest cities, one of the most ...
. It results from the 2000 rebranding of the former
Long-Term Credit Bank of Japan The , abbreviated LTCB in English and in Japanese, was a Japanese bank 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 a ...
, under new ownership.


History

SBI Shinsei Bank is the successor of the Long-Term Credit Bank of Japan (LTCB), which had a government monopoly on the issuance of many long-term debt securities. Following the collapse of the
Japanese asset price bubble The was an economic bubble in Japan from 1986 to 1991 in which real estate and stock market prices were greatly inflated. In early 1992, this price bubble burst and the country's economy stagnated. The bubble was characterized by rapid acceler ...
in 1989, the bank was riddled with bad debts: the government nationalized it in 1998, and it was delisted from the
Tokyo Stock Exchange The , abbreviated as Tosho () or TSE/TYO, is a stock exchange located in Tokyo, Japan. The exchange is owned by Japan Exchange Group (JPX), a holding company that it also lists (), and operated by Tokyo Stock Exchange, Inc., a wholly owned sub ...
. After several proposed mergers with domestic banks, LTCB was sold to an international group led by US-based
Ripplewood Holdings Ripplewood is an American private equity firm based in New York City that focuses on leveraged buyouts, venture capital, late stage venture, growth capital, management buyouts, leveraged recapitalizations and other illiquid investments. Ripplewo ...
in March 2000 for ¥121 billion ($1.2 billion U.S.), 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 remained a key shareholder of the company until August 2019, when the Japanese government acquired the shares held by his fund. As part of the deal, the Japanese government insisted that LTCB maintain existing loan accounts for at least three years. The final purchase agreement 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 is a Japanese commercial bank that offers service in 19 branches in Japan and in 2 overseas representative offices (as of July 2012). Originally based on the Japanese operations of the Bank of Chōsen, it was known from 1957 to 1977 as Nippon F ...
, 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 had 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 Swift or SWIFT most commonly refers to: * SWIFT, an international organization facilitating transactions between banks ** SWIFT code * Swift (programming language) * Swift (bird), a family of birds It may also refer to: Organizations * SWIFT, a ...
(LTCBJPJT). SBI 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 is a department store chain with a significant presence in Japan. It operates a network of branches in various countries and has a long history dating back to 1830 when it was founded in Osaka by Ihei Sogō. The company is known for its retail ...
(July, 2000) and the Dai-Ichi Hotel. This created a furor in Japan: politicians especially criticized
Goldman Sachs The Goldman Sachs Group, Inc. ( ) is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered in Lower Manhattan in New York City, with regional headquarters in many internationa ...
, which advised on the sale of LTCB, for not warning the government of the risks inherent in the defect security provision. SBI Shinsei then raised ¥230 billion in an
IPO An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...
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 The is a Japanese government agency and an integrated financial regulator responsible for overseeing banking, securities and exchange, and insurance sectors in order to ensure the stability of the financial system of Japan. The agency operates ...
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 is a Japanese commercial bank that offers service in 19 branches in Japan and in 2 overseas representative offices (as of July 2012). Originally based on the Japanese operations of the Bank of Chōsen, it was known from 1957 to 1977 as Nippon F ...
have entered into negotiations to integrate their operations in the summer of 2010, with an eye toward an 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 2010, the bank sold its headquarters building near
Hibiya Park Hibiya Park (, ) is a park in Chiyoda, Tokyo, Japan. It covers an area of 161,636.66 m2 (40 acres) between the east gardens of the Kōkyo, Imperial Palace to the north, the Shinbashi district to the southeast and the Kasumigaseki government distri ...
and its operations center in
Meguro is a Special wards of Tokyo, special ward in the Tokyo, Tokyo Metropolis in Japan. The English translation of its Japanese self-designation is Meguro City. The ward was founded on March 15, 1947. Meguro is predominantly residential in character ...
in order to avoid falling below targets again due to investment writedowns during the
subprime In finance, subprime lending (also referred to as near-prime, subpar, non-prime, and second-chance lending) is the provision of loans to people in the United States who may have difficulty maintaining the repayment schedule. Historically, subpr ...
crisis in the United States. Shinsei moved its headquarters to the
Nihombashi is a business district of Chūō, Tokyo, Japan, which sprung up around the bridge of the same name that has linked two sides of the Nihonbashi River at this site since the 17th century. The first wooden bridge was completed in 1603. The curren ...
area of Chuo City in January 2011.


Services

Shinsei Bank divides its business into three components: retail banking, institutional banking and consumer/commercial finance.


Retail banking

Shinsei offers a number of unique services as part of its basic "PowerFlex" savings account, including: * "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 Bank is a Japanese regional bank established on June 11, 2001 out of the reorganization of then bankrupt Tokyo Sowa Bank (founded in 1949 as Tokyo Shokusan Mujin - Mutual Loan Company) by Lone Star Funds. In 2014, the bank was purchased by Taiwan's ...
and Jibun Bank). * 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 Oracle Financial Services Software Ltd. Formerly 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.


Institutional banking

Shinsei combines its
commercial Commercial may refer to: * (adjective for) commerce, a system of voluntary exchange of products and services ** (adjective for) trade, the trading of something of economic value such as goods, services, information or money * a dose of advertising ...
and
investment bank Investment is traditionally defined as the "commitment of resources into something expected to gain value over time". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broade ...
ing 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 is a continent located entirely in the Northern Hemisphere and mostly in the Eastern Hemisphere. It is bordered by the Arctic Ocean to the north, the Atlantic Ocean to the west, the Mediterranean Sea to the south, and Asia to the east ...
through subsidiaries in
London London is the Capital city, capital and List of urban areas in the United Kingdom, largest city of both England and the United Kingdom, with a population of in . London metropolitan area, Its wider metropolitan area is the largest in Wester ...
and
Frankfurt Frankfurt am Main () is the most populous city in the States of Germany, German state of Hesse. Its 773,068 inhabitants as of 2022 make it the List of cities in Germany by population, fifth-most populous city in Germany. Located in the forela ...
.


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 finance Personal finance is the financial management that an individual or a family unit performs to budget, save, and spend monetary resources in a controlled manner, taking into account various financial risks and future life events. When planning ...
company), Showa Leasing (commercial and consumer leasing), Shinsei Business Finance (unsecured lending) and Shinsei Property Finance (mortgages).Shinsei Bank , Small Business – Group Company Profiles


References

* ''Saving the Sun : A Wall Street Gamble to Rescue Japan from Its Trillion-Dollar Meltdown'' by Gillian Tett, ISBN 9781844136124 *

" ''Business Week'', June 13, 2005.


External links


Official English websiteOfficial website
(Japanese) {{Authority control Banks of Japan Financial services companies based in Tokyo Private equity portfolio companies Japanese companies established in 1952 Banks established in 1952 Companies in the Nikkei 225