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SBI's Shinsei bid lifts Japan financial shares on consolidation hopes

SBI's Shinsei bid lifts Japan financial shares on consolidation hopes

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

TOKYO : Japanese financial group SBI Holdings's unsolicited bid for Shinsei Bank sparked a rally in Japanese financial shares on Friday on hopes it could accelerate further consolidation among struggling Japanese banks.

SBI, led by Yoshitaka Kitao, formerly of Softbank Group's Masayoshi Son, has publicly said it would aim to become Japan's fourth largest banking group and has already bought stakes in several Japanese regional banks.

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

SBI already owns about 20per cent 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 an about 18per cent stake in it.

Tokyo Stock Exchange's bank index rose 1.62per cent, above 1.3per cent gains in broad Topix. Shinsei Bank jumped 20.8per cent as SBI offered to 2,000 yen per Shinsei share, a 39per cent premium over Thursday's closing, for a total of 116.4 billion yen (US$1.06 billion).

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

"Hopes of more consolidation appear to be driving all this," said Taku Ito, chief portfolio manager at Nissay Asset Management.

SBI Holdings also gained 7.6per cent, its biggest rise since March 23 last year, while securities brokerage index added 2.9per cent.

Japanese financial shares, particularly bank shares, have underperformed for many years, burdened by a shrinking population and near-zero or negative interest rates. Most of them trade below their book value.

SBI, the financial unit of SoftBank Group until the tech firm exited in 2006, owns the country's largest online brokerage, an online bank and an asset manager.

But some investors worry SBI may be overpaying.

"I am a bit surprised to see SBI paying that much to acquire Shinsei. I cannot visualise a big synergy," said Yasuo Sakuma, chief investment officer at Libra Investments.

(Reporting by Hideyuki Sano; editing by David Evans)

Source: Reuters

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