Shinsei Bank
No other Japanese bank is more deserving of this year’s award than Shinsei Bank, which has shown its rivals the path toward renewed financial health and profitability.
In an industry beset by crisis for more than a decade due to a recession-prone economy, unwise lending decisions and much diminished equity holdings, foreign-owned Shinsei Bank stands out clearly. In 2002, it turned a profit for the third consecutive year and achieved a fairly decent ROE of 15.6%.
More crucially, Shinsei Bank has gone to great lengths to clean up its balance sheet and strengthen its capital base. The volume of non-performing loans – a prime source of Japanese banking woes – was brought down to Ą223bn ($1.8bn) in March 2003 from Ą1100bn in March 2002. The bank also raised Tier 1 capital by 7.4% during the period. The result of these measures is that the bank is now one of Japan’s healthiest.
Shinsei Bank has wisely shifted its revenue base away from corporate lending via the creation last year of an investment banking arm and expanded its position in the retail market by accumulating Ą600bn in deposits.
“In March 2003, we marked the third anniversary of the founding of Shinsei Bank,” said CEO Masamoto Yashiro. “The biggest change in the transformation of the bank was our leadership’s shift from being volume oriented to developing a self-reliant profit mindset. The change has enabled us to reduce the level of our non-performing loans dramatically, realise rich opportunities open to us and build a new banking business model, with the revenue from fee-based solution businesses accounting for 50% of the total revenue (it was only 15% three years ago). We are greatly honoured by The Banker’s recognition of our achievements with the award of Bank of the Year 2003 for Japan.”
