Mid-sized Japanese lender Shinsei has unveiled
a loss of ¥140.1 billion ($1.52 billion) for the 12 months to 31
March, down only marginally from a loss of ¥143 billion the
previous year and confirmed rumours it has scrapped its proposed
merger with rival Aozora, following a breakdown in merger

The Shinsei-Aozora merger, announced last July
(see RBI 616), would have created
Japan’s sixth-largest banking group with around ¥18,000 billion in
assets and 55 branches.

While private equity groups Cerberus and JC
Flowers are major shareholders in the two banks, owning 32.5
percent and 55 percent of Shinsei and Aozora respectively, the
banks are both heavily backed by the Japanese state, with a 23
percent share of Shinsei and around 22 percent of Aozora.

Shizuka Kamei, Japanese banking minister
said:” Since we have injected tax payers’ money into them, we
should monitor and guide them. I think we should intensify our
oversight and guidance while respecting their autonomy.”

Looking ahead, Shinsei said it would return to
profit this year and forecast net earnings of ¥12.5 billion for the
12 months to March 2011.

In the year to March 2010, Shinsei’s net
interest margin improved by only 1 basis point to 2.47 percent but
cost-cutting measures contributed to a 10.2 percentage point
reduction in its cost-income ratio to 59 percent./

But Shinsei’s non-performing loan ratio soared
to 6.7 percent from 2.51 percent the previous year.