GE’s Japan Leasing Business Draws Interest From Shinsei

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Shinsei Bank Incoming CEO Hideyuki Kudo
Hideyuki Kudo, incoming chief executive officer of Shinsei Bank Ltd. Photographer: Akio Kon/Bloomberg

Shinsei Bank Ltd. is interested in bidding for General Electric Co.’s leasing assets in Japan as it seeks to diversify away from traditional lending, its incoming chief executive officer said.

The Japanese bank, which already owns Showa Leasing Co., wants to examine how GE’s operation would fit into its existing business before deciding whether to make a bid, said Hideyuki Kudo, who takes over from CEO Shigeki Toma next month.

“GE’s businesses are of high quality and stable,” Kudo, 51, said in an interview on May 26. “If the door is open for us, we intend to participate in the auction in a very aggressive manner.”

Shinsei, partly owned by private-equity investor J. Christopher Flowers, has been branching out into areas such as consumer finance as Japan’s low interest rates crimp loan profitability. GE plans to seek bids for its Japanese leasing operation, which has 500 billion yen ($4 billion) of assets and 1,000 local employees, as soon as in July, people with knowledge of the matter said this week.

It wouldn’t be the first time Shinsei did a deal with GE. The bank bought a consumer-finance unit of the U.S. company for $5.4 billion in 2008.

GE is seeking to divest about $200 billion of financial assets and return the company to its industrial roots. It plans to sell all of the Japanese assets in one go, said the people.

Others Interested

Mitsubishi UFJ Lease & Finance Co., Sumitomo Mitsui Finance & Leasing Co. and Orix Corp. are among companies that have said they’re interested in buying the assets. GE’s Japan finance arm does commercial lending as well as leasing of automobiles, office equipment and construction machinery.

Shinsei is also looking for opportunities to buy consumer-credit companies in Southeast Asia and China to expand the business abroad, Kudo said.

“The domestic consumer-finance market will become saturated in the medium to long term,” he said. “It’s the type of industry where its always better to expand where economies are growing. Acquisitions, joint ventures with high capital contributions or setting up our own companies are options.”

Shares of Shinsei rose 0.4 percent to 247 yen at 9:21 a.m. in Tokyo Friday. They gained 17 percent this year, compared with a 19 percent increase in the benchmark Topix Index.

Shinsei is among Japanese lenders that were rescued by the government after bad loans mounted following the bursting of a property and stock-market bubble in the 1990s.

While Shinsei still owes the government 216.9 billion yen, Resona Holdings Inc. and Aozora Bank Ltd. have said that they plan to complete bailout repayments as soon as next month. Shares of Shinsei remain lower than the 463 yen price that would allow the government to break even on a sale.

“I’m fully aware that we’re lagging behind,” said Kudo. “It’s important to achieve stable profits in order to repay the bailout,” he said, without giving a specific timeframe.

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