Shinsei CFO Gupta Said to Consider Leaving After Kamei Blasts Pay Levels

Shinsei Bank Ltd. Chief Financial Officer Rahul Gupta may resign following government criticism of the company’s compensation policy, a person with direct knowledge of the matter said.

Gupta, 50, is under pressure from the Financial Services Agency to step down, the person said, declining to be identified because the matter is private. Gupta joined Shinsei in 2005, and previously worked at Singapore’s DBS Group Holdings Ltd.

Former Financial Services Minister Shizuka Kamei last month called annual compensation in excess of 100 million yen ($1.1 million) for non-Japanese executives at Shinsei “exorbitant.” The bank, part owned by U.S. investor J. Christopher Flowers, on May 14 posted a second consecutive annual loss and said it will “overhaul” management.

Gupta’s annual compensation exceeds 100 million yen, the person said, declining to be more specific. Kamei, who resigned this month, didn’t single out any Shinsei managers in his comments about the bank’s pay policies. The government owned 24 percent of Shinsei as of March 31.

Shinsei is preparing to announce new management, said James Seddon, a spokesman for the Tokyo-based bank. He declined to comment on Gupta. Financial Services Agency spokesman Motoyuki Yufu declined to comment.

Photographer: Tomohiro Ohsumi/Bloomberg

A file photograph shows Rahul Gupta, chief financial officer of Shinsei Bank Ltd., speaking during an interview in Tokyo. Close

A file photograph shows Rahul Gupta, chief financial officer of Shinsei Bank Ltd.,... Read More

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Photographer: Tomohiro Ohsumi/Bloomberg

A file photograph shows Rahul Gupta, chief financial officer of Shinsei Bank Ltd., speaking during an interview in Tokyo.

The Yomiuri Newspaper earlier today reported Gupta and three other senior executives were in talks to resign. Shinsei shares fell 1.1 percent to 91 yen at the 3 p.m. close of Tokyo Stock Exchange trading.

Aozora Breakup

Shinsei in May ended 10 months of merger talks with Aozora Bank Ltd., controlled by Cerberus Capital Management LP, after the two banks failed to agree on business strategies and Aozora balked at Shinsei’s lower capital levels. Shinsei, which reported 283 billion yen in combined losses in the last two years, named Shigeki Toma to replace Masamoto Yashiro as chief executive officer in May.

Toma said this month senior officers will be stepping down because of the bank’s losses, and that the departures will help cut personnel costs. He declined to name which executives.

The incoming CEO reiterated a goal of raising as much as 100 billion yen in a share sale this year to boost capital. Toma wants to increase the bank’s Tier 1 capital ratio to 8 percent from 6.35 percent, the lowest among Japan’s eight nationwide lenders at the end of March. He plans to wait until the company’s share price rises above 100 yen before selling more stock.

Shinsei in the year ended March booked 104.7 billion yen in charges related to its consumer finance business, 70.2 billion yen in costs for its real estate business and 18.9 billion yen in losses and credit costs on overseas investments.

Fitch Ratings on May 11 cut Shinsei’s credit rating two levels to BB+, non-investment grade, citing an unclear business strategy and the risk that the quality of its assets may deteriorate.

To contact the reporter on this story: Finbarr Flynn in Tokyo at fflynn3@bloomberg.net

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