SBI Shinsei Bank, descended from one of the most prestigious banks in Japan, has decided to play its trump card of going private in an effort to roll back its negative legacy of having been rescued with public money.
The bank has concluded that it will not be able to repay about ¥350 billion in public funds if it stays on the same track. It is trying to find a way out by relinquishing the status of a publicly traded company, but a thorny path still lies ahead.
SBI Shinsei Bank dates back to former Long-Term Credit Bank of Japan, which helped Japan achieve economic growth from the ashes in the aftermath of its World War II defeat. In October 1998, LTCB went bankrupt and was placed under temporary state control, weighed down by huge nonperforming loans, a consequence of massive lending exposure to real estate companies during the speculation-driven bubble economy period in the late 1980s.