Photo/Illutration A building housing the main branch of Shinsei Bank in Tokyo (The Asahi Shimbun)

SBI Holdings Inc. launched a public tender offer to acquire a near-majority stake in Shinsei Bank and make it a consolidated subsidiary to form a general financial group.

SBI, which is already Shinsei Bank’s top shareholder with a roughly 20 percent stake, announced on Sept. 9 that it will spend about 110 billion yen ($1 billion) to raise its stake in the bank to 48 percent.

The major online financial-service provider decided to launch the tender offer after Shinsei Bank refused to agree to SBI’s proposals for a capital and business alliance. The tender offer could become a hostile takeover depending on how the bank responds.

It is extremely rare for a Japanese financial institution to launch a takeover bid without giving the target company advance notice.

SBI began buying shares of Shinsei Bank on Sept. 10.

As of 11 a.m., the bank’s share rose to the daily limit of 1,740 yen.

SBI plans to ask Shinsei Bank to convene an extraordinary general shareholders meeting and nominate Hirofumi Gomi, a former commissioner of the Financial Services Agency, as a candidate to become bank chairman. SBI said it obtained approval from Gomi.

Shinsei Bank said in a statement that SBI did not notify the bank of its tender offer in advance and that the bank’s board of directors has not endorsed it.

The bank added it will inform its shareholders of its response to the tender offer as soon as it decides once it analyzes it.

SBI has gradually increased its stake in Shinsei Bank since April 2019. They and three other companies jointly established Regional Revitalization Partners Co. in August 2020 to provide support for local financial institutions. SBI has also formed a capital and business alliance with eight regional banks.

But SBI has yet to forge an alliance with Shinsei Bank on securities, an area of business where SBI anticipates further synergies between the two companies.

SBI intends to integrate their operations by effectively putting the bank under its umbrella.

Shinsei Bank is the successor to the Long-Term Credit Bank of Japan, which went bankrupt in 1998 and received public funds for its corporate rebuilding.

The bank has yet to establish when it can finish repaying an outstanding debt of about 350 billion yen.

SBI concluded that it would be difficult for Shinsei Bank to reform itself since it has failed to achieve many targets in its management plan and its profits have dwindled.

SBI will not acquire more than a 48 percent stake in the bank, since it needs to obtain multiple regulatory approvals if it is to exceed 50 percent.

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