Nippon Credit Bank and Bankers Trust Co. of the United States will hold between 1 billion yen and 2 billion yen in each other’s shares, and Bankers Trust will also acquire an option to buy additional NCB shares worth 15 billion yen in three years, NCB announced Sept. 30.
The mutual capital participation, based on their business cooperation accord concluded in April, is expected to help stabilize NCB management, which is presently implementing restructuring efforts, and also consolidate Bankers Trust’s position to exploit Japan’s looming financial deregulation.
If Bankers Trust exercises its option in three years, it could obtain between 3 percent and 4 percent of NCB shares and become one of the five largest shareholders of NCB, the smallest of Japan’s three long-term credit banks. Since April, Bankers Trust has purchased NCB shares worth between 1 billion yen and 2 billion yen, although the exact amount has not been made available. Under the latest agreement, NCB will buy Bankers Trust’s shares at the same value by the end of this year, NCB said.
Under the agreement, Bankers Trust will also obtain the call option in overseas markets this year, based on the assumption that NCB’s rehabilitation from its credit crisis goes smoothly. The option will allow Bankers Trust to buy NCB shares in three years at a predetermined price.
The option will allow Bankers Trust to buy NCB shares at a rate lower than the market rate in three years if the stock price turns out to be higher. Bankers Trust can acquire between 3 percent and 4 percent of NCB’s shares if it fully exercises its call option.
The latest accord is a followup to the wide-ranging business deal signed by the two banks in April that also called for cooperation in the asset securitization business and international services.
NCB, reeling under accumulated bad loans that resulted from the burst of the bubble economy, is now conducting restructuring efforts. It aims to restore its financial health by strengthening its ties with the U.S. bank to survive the “Big Bang” sweeping deregulation of Japan’s financial markets.
The accord was reportedly reached when NCB Chairman Hiroshi Kubota and President Shigeoki Togo visited the U.S. earlier this month to hold talks with top executives of Bankers Trust. The news was greeted favorably by Japan’s financial authorities. Finance Minister Hiroshi Mitsuzuka praised the cross-shareholding agreement, saying it would help stabilize operations at NCB.