Aozora not Shinsei - official

[Mulboyne]

Aozora Bank Shelves Tokyo Listing

Wednesday, May 26, 2004 at 04:00 JST
TOKYO; Aozora Bank has dropped its target of being listed on the Tokyo Stock Exchange by the end of fiscal 2005 because of affluent capital, its president said Tuesday.

"We have enough shareholders' equity at present, and the current management's mission is how to use it to boost profitability," Hirokazu Mizukami said. (Kyodo News)

What bull. A stock exchange listing is a major strategic move and you don't back away because you decide you have "enough shareholder's equity" unless you are very bad at planning.
Listing in this case was supposed to be an exit strategy for Cerberus. Looks like the bank just isn't ready to make its income statement and forecasts public.

[Taro Toporific]

Aozora Bank Shelves Tokyo Listing
Looks like the bank just isn't ready to make its incone statement and forecasts public.

Yep, the bank ain't finished cooking the books. That's Japanese "category-free" accounting at it's finest! They'll have hell explaining where the money is cause the sharp-pencil boys keep re-labeling the category-slopbuckets they throw throw stuff into. Sheesh.

[Mulboyne]

WSJ: Mr. Prince Has Been There Before

Japan's Aozora Bank Ltd. named Brian Prince as chief executive Tuesday. Now he faces the daunting task of repairing one of Cerberus Capital Management LP's largest assets, which has been burned by exposure to Lehman Brothers, GMAC LLC and Bernard Madoff's alleged Ponzi scheme. Mr. Prince said he has a sense of déjà vu. Six years ago, he was helping J. Christopher Flowers revive another mid-tier bank, Shinsei Bank Ltd., by cleaning up its mountain of toxic assets. "The products may be different, but the issues are the same," Mr. Prince said in an interview. He said Aozora executives approached him to assess the bank's balance sheet because of his Shinsei experience. "They knew I could go up and down the balance sheet and identify problems, because I've done it before."

Aozora said it anticipates a worse-than-expected net loss of 196 billion yen ($2.14 billion) in the fiscal year ending March 31, reflecting write-downs on its investments. Federico Sacasa, 58 years old, stepped down to take responsibility after a year and a half on the job. The bank also said it was seeking retail-banking deposits, possibly with a company in need of some of its ample capital. Aozora wants to increase retail deposits to more than 50% of its funding base in the medium term, to reduce its dependence on issuing debentures in volatile markets. Analysts said that rebuilding Aozora may be a challenge because of the bank's exposure to real-estate-related loans and buyout debt. "The road back to profitability will be rocky," said Hironari Nozaki, an analyst at investment bank Nikko Citigroup.

For Cerberus, Aozora's plight comes at a time when its other portfolio companies, such as Chrysler LLC and GMAC, also are going through tough times. A fund managed by Cerberus owned 49.8% of Aozora as of Jan. 22. Aozora's struggle to repay public funds also serves as a lesson for the U.S. government, which announced a fresh financial-bailout package Tuesday. Like Shinsei, Aozora has a predecessor that was bailed out by the Japanese government a decade ago but is still struggling to pay back taxpayers. Aozora received 355 billion yen in public injections in 1998 and has repaid only 127.4 billion yen. The bank's shares closed at 107 yen on Tuesday, 81% below its IPO price of 570 yen in November 2006.

Mr. Prince, who grew up in Rochester, N.Y., initially came to Tokyo with Lehman Brothers in 1997 when Japan was in the grip of a financial crisis. Banks held more than $1 trillion in bad loans, and Western investment bankers made fortunes turning around nonperforming loans all over Japan. Mr. Prince joined Shinsei in 2000, just after it had been nationalized by the Japanese government and sold to private-equity funds J.C. Flowers & Co. and Ripplewood Holdings LLC. During his three years, he was in charge of aggressively writing off bad loans, and was known for a tough negotiating style that surprised struggling Japanese borrowers. His track record since then has been mixed. He invested in a ferry business on Lake Ontario, which failed three months after its launch in 2004. He then moved to Hegemon Capital, a private-equity firm specializing in investments in financial assets.

At Aozora, Mr. Prince has his work cut out for him. He must meet the bank's forecast to return to profitability in the fiscal year ending March 31, 2010. Since he joined the bank as chief operating officer in November, Mr. Prince has been working through the bank's balance sheet. Aozora said Tuesday that it has written down its investment in GMAC LLC, another Cerberus investment, by 36.4 billion yen, to just 3.2% of its original book value. It lost 46 billion yen on hedge-fund investments, including an 11.7 billion yen write-down on its indirect exposure to Madoff Securities. It recognized 9.6 billion yen of losses related to Lehman Brothers and 30.7 billion yen of losses on exchange-traded funds.

One thing going for Shinsei is that it has elbow room to slash valuations. Even after the write-offs, Aozora expects its capital-adequacy ratio to be more than 12% at the end of its fiscal year, higher than most of its peers. Mr. Prince said his priorities are to improve morale at the bank and bolster its domestic lending business. Over the long term, Aozora will continue to pursue its aim of being a central bank among regional banks, advising them on specialized lending products, and hopes that fierce competition abates as the financial crisis hits Japan's megabanks. "It's a good time to be focusing on Japanese clients," he said.