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Japan's Shinsei and Aozora Banks agree to merge

Japan's Shinsei and Aozora Banks agree to merge

Japan's Shinsei Bank Ltd. and Aozora Bank Ltd. _ two money-losing midsize lenders with major U.S. stakeholders _ have agreed to merge, the companies said Wednesday.
The combined entity will be Japan's sixth-largest bank with assets of about 18 trillion yen ($186 billion), they said in a joint statement.
U.S. private equity firm J.C. Flowers & Co holds a 33 percent stake in Shinsei, while Cerberus Capital Management LP owns more than half of Aozora.
"As the business environment in Japan has rapidly evolved, it has become imperative for financial institutions to improve competitiveness by attaining sufficient scale and by strengthening their capital bases," the banks said.
The merger will become effective October 2010. The merger ratio is set at one to one, with Shinsei as the surviving entity. That means investors will receive one share of Shinsei stock in exchange for each Aozora share owned.
Norito Ikeda, a former president of Ashikaga Bank, will serve as the yet-unnamed bank's first president.
Hit by restructuring costs and fruitless overseas investments, Shinsei reported a net loss of 143 billion yen last fiscal year through March 31. Aozora was also deep in the red, posting a net loss of 242.5 billion yen.
The Japanese government bailed out the predecessors of both banks during Japan's last banking crisis in the 1990s, but neither has fully repaid the public funds received.
When speculation of a Shinsei-Aozora merger first surfaced last month, government officials signaled their approval. Takafumi Sato, head of the Financial Services Agency, said the potential deal would help stabilize the financial system.
The widely expected announcement came after the stock market closed. In trading Wednesday, shares of Shinsei and Aozora both rose 1.3 percent.


Updated : 2021-04-23 23:43 GMT+08:00