JC Flowers-backed Shinsei Bank to buy Cerberus' Aozora

JC Flowers & Co owns a 32.5 per cent stake in Shinsei, while Aozora is 50.5 per cent owned by Cerberus Capital Management. Together the lenders will have assets of 18tr yen ($186bn), according to Reuters.

Both banks have suffered heavy net losses over the last financial year, with Shinsei’s standing at 142bn yen ($1.5bn), and Aozora’s at 242.6bn yen ($2.5bn). This has mostly been put down to troubled foreign investments during the financial crisis. It is thought that the deal between the two banks could allow them to strengthen their business and grow.

According to Reuters, the merged entity could apply for help from the Japanese government, which injected over 600bn yen into the two lenders during the country’s 1990s banking crisis. Both lenders were nationalised and later sold to the US funds.

JC Flowers, which paid 425 yen ($4.43) per share for its stake in Shinsei in 2007, is said to be sitting on a big loss from the investment. Aozora’s share price has also apparently dropped dramatically from the 325 yen ($3.38) Cerberus paid per share in 2008.

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