SBI’s Shinsei offer lifts Japan’s financial shares on consolidation hopes

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TOKYO (Reuters) – Japanese financial group SBI Holdings’ unsolicited bid for Shinsei Bank on Friday sparked a rally in Japanese financial stocks in hopes it could accelerate consolidation of struggling Japanese banks.

FILE PHOTO: A woman walks past a Shinsei Bank logo at her branch in Yokohama, south of Tokyo, June 23, 2010. REUTERS / Issei Kato

SBI, headed by Yoshitaka Kitao, formerly of Masayoshi Son of Softbank Group, has publicly stated that it will aim to become Japan’s fourth largest banking group and has already acquired stakes in several Japanese regional banks.

As Shinsei Bank has so far not approved the move, investors believe its unsolicited offer to increase its stake to a near majority could turn into a hostile offer.

SBI already owns about 20% of Shinsei, a small Tokyo-based lender that took over a collapsed bank during Japan’s financial crisis in the late 1990s. The government still holds a stake of around 18%.

The Tokyo Stock Exchange banking index rose 1.62%, above gains of 1.3% across Topix. Shinsei Bank jumped 20.8% as SBI offered 2,000 yen per Shinsei share, a premium of 39% from Thursday’s close, for a total of 116.4 billion yen (1.06 billion of dollars).

Shares of regional banks, including those in which SBI already has a stake, rose sharply. Shizuoka-based Suruga Bank rose 5.0% while Sendai-based Jimoto Holdings, of which SBI is the largest shareholder, gained 4.4%.

“Hopes for further consolidation seem to be driving all of this,” said Taku Ito, chief portfolio manager at Nissay Asset Management.

SBI Holdings also gained 7.6%, its biggest gain since March 23 of last year, while the stock brokerage index rose 2.9%.

Japanese financial stocks, particularly bank stocks, have underperformed for many years, burdened by a declining population and interest rates close to zero or negative. Most of them trade below their book value.

SBI, the financial unit of the SoftBank group until the tech company’s exit in 2006, owns the country’s largest online brokerage firm, online bank and asset manager.

But some investors fear that SBI may overpay.

“I’m a little surprised to see SBI paying so much to acquire Shinsei. I can’t visualize a great synergy, ”said Yasuo Sakuma, chief investment officer at Libra Investments.

Reporting by Hideyuki Sano; edited by David Evans


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