This undated file photo shows the headquarters of Suruga Bank Ltd. in Numazu, Shizuoka Prefecture, in central Japan. (Mainichi/Makoto Imazawa)

Troubled Suruga Bank in tie-up talks with Shinsei Bank

TOKYO - Suruga Bank Ltd., which suffered huge losses stemming from an illicit lending scandal, is in final negotiations with Shinsei Bank Ltd. to have the latter acquire a stake of several percent of Suruga.
Under the tie-up deal, which emerged on May 13, the banks would cooperate over a wide sphere including home loans. Suruga will aim to stabilize its business and recover trust while receiving support from Shinsei. The banks intend to announce the deal on May 15, at the time of a news conference on their financial results for the 2018 fiscal year that ended in March.

A probe covering about 1.7 trillion yen in investment property loans at Suruga found multiple instances of illicit practices by Suruga employees, including falsification of screening documents. Officials plan to announce the results of the probe in line with the business and capital tie-up.

Suruga registered massive losses from unrecoverable loans to the owners of "Kabocha no basha" shared houses. In its midterm results for the financial period that ended in September 2018, the bank registered a deficit for the period of over 100 billion yen. It had been searching for a partner to tie up with after judging that it had suffered major damage through loss of trust, and that it would be difficult to recover by itself.

Shinsei, whose primary source of revenue is from loans to individuals, is thought to have judged that there was merit in a tie-up with Suruga as a bank that similarly has extended many loans to individuals.

(Japanese original by Yuki Takahashi and Naoko Furuyashiki, Business News Department)

Source: https://mainichi.jp/english/articles/20190514/p2a/00m/0bu/006000c