Aozora Bank Ltd., a lender controlled by U.S. buyout fund Cerberus Capital Management LP, may be unable to repay public funds it owes this year because of its stock price slump, the bank's chief executive officer said.
"I think it's going to be tough to do this year, as a practical matter," Federico Sacasa said in an interview Thursday. The bank said in May 2007 it expected to repay within a year money received in a government bailout.
Tokyo-based Aozora still owes the government ¥228 billion in public funds that were injected into its collapsed predecessor, Nippon Credit Bank Ltd., which was nationalized in 1998, bank documents show. The government will let Aozora repay the bailout after its share price rises to around ¥488, Sacasa said.
Sacasa, 57, said Wednesday that Aozora is on course to meeting its full-year profit target of ¥44 billion, even as the bank reported net income fell 75 percent to ¥9.3 billion in the quarter that ended on June 30.
"We have to get the stock up to ¥488," Sacasa said. "We have the capital, we have the liquidity — it's the format, which requires the stock price."
Financial regulators ordered Aozora to improve operations last week after net income plunged 93 percent in the year that ended on March 31 because of losses on subprime-mortgage related investments. Sacasa and other executives accepted pay cuts to take responsibility for the decline, the bank said in June.