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Sunday 16th of May 2010
May 14, 2010    

Japan’s Shinsei Bank and Aozora Bank call off merger

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by Kay Murchie

Japan’s Shinsei Bank and Aozora Bank have cancelled a proposed merger after Shinsei reported a net loss of 140 billion yen (£1 billion) for the year - its second straight year of being in the red.

The deal, which would have created the country’s sixth largest bank, was cancelled after changes were considered in the business environment since the merger was announced in July 2009.

Shinsei, which is one-third owned by US buyout firm JC Flowers and one quarter owned by the Government, saw its shares fall 4.5% to 106 yen following the news.

Both banks are descended from lenders that were bailed out in Japan’s banking crisis in the 1990s. Shinsei, which translates as ‘new life’, has not yet fully paid back the public bailout money it received at the time.

The bank said it now plans to focus more on the retail business than investment banking and signalled that it was looking to shore up its capital this year.

The bank’s president, Masamoto Yashiro, told a news conference: “We would like to raise capital during this financial year, though the amount will not be that big“.

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Tags: Aozora Bank, , cancel, capital raising, , , , Shinsei Bank