- Long-Term Credit Bank of Japan
Infobox Defunct company
company_name = The Long-Term Credit Bank of Japan, Ltd.
company_
slogan =
company_type =
fate =Bankruptcy ; acquired by Ripplewood
Predecessor = long-term financial divisions of Nippon Kangyo Bank andHokkaido Takushoku Bank
successor =Shinsei Bank
foundation =1952
defunct =1998 (bankruptcy)2000 (restructured)
location = flagicon|JapanTokyo ,Japan
industry =Financial Services
products =
key_people = Binsuke Sugiura, President
num_employees =
parent =
subsid = nihongo|The Long-Term Credit Bank of Japan, Ltd.|株式会社日本長期信用銀行|Kabushiki-kaisha Nippon Chōki Shin'yō Ginkō, abbreviated LTCB in English and nihongo|Chōgin|長銀 in Japanese, was founded in1952 under the direction of theShigeru Yoshida government to provide long-term financing to various industries inJapan . Along with theIndustrial Bank of Japan and the Nippon Kangyo Bank, it was one of the major financiers of the postwar economic development of Japan. After extensive problems with bad debt in the 1990s, the bank was nationalized in1998 and finally sold in2000 to a group led by US-basedRipplewood Holdings . Ripplewood restructured LTCB as a commercial bank,Shinsei Bank .History
The
Diet of Japan enacted a Long-Term Credit Bank Act in June1952 which became effective that December. LTCB was incorporated as a stock company ("kabushiki kaisha ") with headquarters in the Kudan district of north-central Tokyo. It opened branches in Osaka and Sapporo in 1953, and established agencies at various regional banks. LTCB was almost immediately profitable owing to the rapid expansion of the Japanese economy at the time. It declared its firstdividend in 1954 and was listed on theTokyo Stock Exchange in 1970.The company moved to the Tokyo Building in
Marunouchi in 1956 and established its first overseas office inNew York City in 1964, followed by offices in London, Sydney, Amsterdam, Los Angeles and other major financial centers. From 1972 onward LTCB was involved in a variety ofsyndicated loan s,private offering s and other financings for multinational businesses, in part owing to the "oil shock" which had slowed the domestic economy. In 1988, LTCB acquiredGreenwich Capital Markets , aConnecticut -based securities firm, thus giving LTCB a US-based securities business as well. By the early 1990s it was the largest handler of yen-denominated foreign debt (samurai bond s).As of 1989, LTCB was the ninth-largest company in the world in terms of assets. It moved to a new office building on the south side of Tokyo's
Hibiya Park in 1993.Following the collapse of the
Japanese asset price bubble , LTCB was troubled by a great deal ofbad debt s, principally from investments in hard-hit industries such as real estate, construction, housing finance, transportation and services. By December 1991 the company determined that its bad debts were in excess of ¥2.4 trillion (US$19.2 billion), and despite management changes in the mid-1990s, the situation did not improve.The
Asian financial crisis of 1997, which bankrupted several major Japanese financial services companies (most notablyHokkaido Takushoku Bank ), exacerbated the situation. The Diet injected an additional ¥176 billion into LTCB in March 1998, but a study commissioned later that year showed that at least ¥920 billion was needed to handle the bad debts. SBC (now part ofUBS AG ) began ajoint venture with LTCB during this period, which collapsed once the poor financial state of LTCB became apparent.LTCB briefly sought to merge with
Sumitomo Trust and Banking , one of the few stable Japanese banks at the time, but the latter discarded these plans after its investors reacted strongly to the proposal. TheKeizo Obuchi government, which had helped to broker the talks between the banks, then investigated thenationalization of LTCB, which became effective by an act of the Diet on October 23, 1998.Prosecutors opened criminal investigations of several LTCB executives owing to illegal payments of dividends in 1998 while the company was insolvent. Corporate planning head Takashi Uehara committed suicide in May 1999 shortly after his indictment was leaked to the public; Osaka branch manager Kazunori Fukuda followed suit days later. The company president Katsunobu Onogi and two others were arrested in June 1999: on appeal, Onogi was sentenced to three years in prison and four years' probation; the other two executives were sentenced to two years in prison and three years' probation. The executives were also sued for damages, but an initial judgment in the creditors' favor was overturned on appeal.
LTCB was purchased for ¥1 billion (US$9.5 million) in March 2000 by an investment partnership, New LTCB Partners CV, consisting of a consortium of foreign banks led by
Ripplewood Holdings , which had bid againstThe Chuo Mitsui Trust and Banking Co. for the acquisition of LTCB. The company was renamedShinsei Bank in June 2000. Although LTCB was delisted from the TSE upon its purchase, Shinsei, which was relieved of the bad debts of its predecessor, had a successfulinitial public offering at 2004 and remains in operation today as a commercial bank.Further reading
*Gillian Tett, "Saving The Sun" (Harper Business, 2003)
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