A typical Japanese bank looks a bit like the dowdy, paper-shuffling office of a shoddily run company. There are plenty of bowing clerks. But don’t count on conveniences like 24-hour ATMs.
Step into Shinsei Bank for a totally different look — and perhaps Japan’s new banking experience. Even its name means “new life.”
In one corner is a Starbucks Coffee counter wafting with the aroma of roasted beans. In another corner is an Internet cafe, where chic people quietly huddle over computers, some sipping lattes.
Nowhere are the usual paper-shufflers. The ATMs are open 24 hours and require no fee.
Most of the ATMs at Japanese banks shut down at 5 or 9 p.m. and charge 105 yen for withdrawals after office hours. The fee climbs to 210 yen for a different bank’s ATM.
Shinsei Bank is the first major bank in Japan to ever fall under a foreign takeover. But it has defied the skeptics, benefiting grandly from the serious image problems that old-style banks are now battling.
Burdened with mountains of bad debt, which the government estimates at 43 trillion yen, Japan’s once mighty banks are in deep trouble, possibly even in need of a public bailout.
Their mismanagement is widely blamed, both here and abroad, for a decade-long slowdown in the world’s second-largest economy.
Shinsei Bank posted a 61 billion yen profit for the business year that ended last March, at a time when three of the Big Four banking giants were sinking into losses.
The bank recorded 26 billion yen in profits for the first half of the current business year and is preparing an initial public offering before the end of the year.
For conservatives, Shinsei Bank’s success is worrisome, possibly heralding more takeovers. The bank has become synonymous with “hagetaka” or “vultures” — the way Japanese are referring to foreign investors these days.
Shinsei Bank opened in June 2000 after an international investment consortium led by Ripplewood Holdings of the United States took over the failed Long-Term Credit Bank, which toppled and became nationalized in 1998 under the weight of massive loans gone sour.
Ever since the government promised to tighten the monitoring of bad debt at the banks last year, fears have been growing about a financial crisis that may land another bank in foreign hands.
Japanese authorities are widely believed to favor Sumitomo Mitsui Banking Corp., one of the Big Four, over a consortium led by Cerberus, a U.S. investment fund, in an ongoing bid for stakes in Aozora Bank, which opened after a 1998 public bailout of the bankrupt Nippon Credit Bank.
Ripplewood Chief Executive Tim Collins believes Shinsei Bank Chief Executive Masamoto Yashiro is a patriot victimized by unfair criticism.
“He has done an amazing job, in my judgment, of revitalizing that institution,” Collins said. “I don’t understand how that remotely resembles hagetaka. It just doesn’t make any sense to me.”
Yashiro learned the ropes of Western retail banking as head of Citibank Japan in the 1990s, including the new computer systems that are far nimbler than the antiquated computers common at Japan’s established lenders.
The sleeker look of Shinsei Bank also brings to mind American banks. Office operations are tucked away in back rooms, and customers open accounts at spacious desks.
Shinsei Bank sends a monthly account statement in the mail American-style. Japanese banks use cumbersome notebooks that are updated at ATM machines.
“The mind-set of the employees of this bank had to go through a dramatic change from the past,” Yashiro said.
He was stunned when he asked one of his veteran Japanese managers whether the bank had made money last month and got the reply that calculations were made only twice a year.
“I said how could you do business when you don’t know whether or not we made money,” Yashiro said. “Profit is seldom if ever talked about in Japanese companies.”
Yukiko Ohara, an analyst with Credit Suisse First Boston Securities in Tokyo, warns that the same bad-debt problems that plague the old banks could start creeping up on Shinsei Bank.
“But Shinsei Bank moves fast and it does something different from the other banks,” she said. “At least its management is determined.”
Although reprimanded by the government for holding back on lending, Shinsei Bank is gradually winning over Japanese who see its approach as simply smart policy.
Many Japanese have long suspected banks of lending to money-losing “zombie” companies with connections, while scrimping on lending to innovative but powerless ventures.
Shinsei Bank savings accounts called PowerFlex have climbed to 250,000 in a year.
“I like the way Mr. Yashiro thinks,” said Seiichi Toda, a 55-year-old engineer who has an account at Shinsei Bank. “With the other banks, it’s impossible to figure out what they’re thinking.”
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