Aozora Bank confirmed a media report Thursday that it provided customer information to U.S. investment fund Cerberus Group, one of its top shareholders, on request between January and February 2002.
But the bank rejected the Nihon Keizai Shimbun’s claim that the action was illegal.
“In my understanding, there was nothing illicit” about the disclosure because a confidentiality agreement had been concluded, Aozora Bank President Hiroshi Maruyama told a news conference.
Cerberus holds a stake of around 11.5 percent in the bank and was the first bidder to express an interest in increasing its share when Softbank Corp. let it be known its intention to sell its 49 percent stake.
Financial Services Agency officials accused Aozora of violating client confidentiality by failing to gain the board of directors’ approval of the disclosures beforehand, he said.
The FSA is expected to ask related parties to submit a report on the issue, FSA sources said. If it finds any serious compliance problem, the FSA may impose administrative penalties on the bank.
“The allegations will not affect our discussion on whether or not Cerberus deserves a chance at leading the bank,” Maruyama said.
According to Maruyama, information on finances and clients was disclosed on two instances — in January and again in March.
The first disclosure followed requests from Softbank and Cerberus. The second request, for more detailed information, came from Cerberus alone. This request was, for the most part, rejected, despite a petition from former U.S. Vice President Dan Quayle, who serves as a special adviser to Cerberus, Maruyama said.
“The information was of the same character as the information disclosed to credit rating firms,” he said. “The issue is how much information you disclose at what point in time. I took the request for information as a reflection of the very serious bid (from Cerberus).”
Murayama’s decision-making process was that Cerberus was the only bidder, it already had a stake in Aozora and could be trusted.
Meanwhile, a confidentiality agreement was made prior to the disclosure, Maruyama said.
The information in question included the names of Aozora’s 200 largest borrowers, their outstanding loans and the bank’s assessment of those loans.
Regarding the 100 largest borrowers under special watch, Aozora also disclosed the amount of reserves set aside against potential losses, Maruyama said.
Aozora also disclosed the loan values of other borrowers without disclosing names, Maruyama said.
“A large amount of stocks were in consideration, and without more detailed information, there was no way that a price could be set on,” he said.
Meanwhile, the fate of Softbank’s 49 percent in Aozora Bank remained unclear as bank directors gathered to narrow the number of bidders.
The directors gathered to decide which of the four bidders would be “suitable.” The bidders include Cerberus, Hypovereins Bank of Germany, U.S. financial giant GE Capital Corp. and Sumitomo Mitsui Financial Group Inc.
Financial regulators have issued repeated statements over their concerns regarding foreign and nontraditional bidders for Aozora Bank, which has close links with regional banks nationwide.
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