SBI Shinsei Bank outlook stable despite $2.2b repayment deal

On 7 March, it agreed to repay JPY330b in public funds to the Japanese government.

SBI Shinsei Bank maintains stable outlook amidst agreement to gradually repay JPY330b (approximately over $2.22b) in public funds to the Japanese government.

On 7 March 2025, SBI Shinsei agreed that all 12 shares of its common shares held by the government will be converted to preferred shares.

Then, the bank will repay JPY100b ($674.45m) to the government as a special dividend through its retained earnings and a JPY50b ($337.23b) capital injection from its parent, SBI Holdings, Inc.

The government will hold the remaining JPY230b ($1.55b) public funds in the form of preferred shares, and the bank will gradually repay the government through an annual regular dividend of JPY4.02 starting from fiscal year ending March 2026 (fiscal 2025).

These transactions will conclude the bank's rehabilitation program that was initiated in 1998 and 2000 when public funds were injected into the former The Long-Term Credit Bank of Japan, Limited.

SBI Shinsei has stable asset quality, capital, and moderate profitability, says Moody’s Ratings.

But these strengths are counterbalanced by its modest capital, somewhat riskier loan book focused on consumer lending and structured finance, its rapid loan growth, and a weaker deposit base compared to larger and more established domestic peers, the ratings agency warned.

The repayment will pave the way for SBI Shinhan’s independent strategy and business focus, including a potential relisting under the ownership of SBI Holdings, Inc.

“Whilst the strategic direction is credit positive, if the bank repays public funds at a much faster pace than expected without accumulating enough capital or additional parental support, it can lead to downward pressure on its BCA and ratings,” Moody’s warned.

(US$1 = JPY148.27; 20 March 2025, Google)