Glossary

Please click initials you are looking for

A

ABI (Asset-backed Investment)

At Shinsei Bank, ABI refers to a former product program which included loans backed mainly with infrastructure, real estate, businesses, and business assets as collateral.

Advisory

Shinsei Bank's advisory business proposes solutions to meet customers' diverse needs in areas such as M&A, corporate restructuring, and fundraising in Japan and overseas.

ALM (Asset Liability Management)

ALM refers to the comprehensive management of the market risks and liquidity risks that exist in the Bank's balance sheet (i.e. assets and liabilities) as a result of its business operations. ALM aims to optimize interest rate income from the Bank's balance sheet and economic value by monitoring interest rate conditions and asset/liability duration, including off-balance items such as derivatives on the Bank's account, and adjusting for risks in assets/liabilities and derivatives transactions in consideration of the change in values of assets, liabilities, and periodical profits or losses due to market fluctuations.

Asset Management

In a broad sense, Asset Management refers to Shinsei Bank's overall asset management business, but in a narrower sense it refers to the investment trust business and investment advisory business. Shinsei Bank offers a variety of unique financial products and services for both institutional and individual (including high-net worth) customers, primarily through the Global Markets Group and the Individual Group (retail banking Business).

B

Business Incubation

Business Incubation offers not only loans and capital, but also management solutions such as human resources, supplementary functions, and business planning and strategy support to customers aiming to start, or customers who have recently started, a business.

C

Capital Adequacy Ratio

This is the ratio of "Total capital" (*2) to "Risk assets" (*1) at the end of the period, which represents the bank's financial strength and soundness.

Capital adequacy ratio = Total capital (Tier I + Tier II - Items to be deducted) / Risk assets
(on-balance-sheet items * risk weight + off-balance-sheet items * risk weight)

  • *1Risk assets are the sum of on-balance-sheet items multiplied by risk weight and off-balance sheet items multiplied by the same.
  • *2Total capital is the sum of Tier I capital such as capital stock, capital surplus, retained earnings, surplus, net income after deducting scheduled payout to outside parties, and Tier II capital such as general reserve for loan loss, subordinated debt and bonds, deducting items to be deducted.

Capital Markets Business

Capital Markets business refers to capital markets-related transactions, including derivatives and trading, in order to meet customer needs for investment, risk hedging, fundraising, etc.

Cash Basis Net Income

Cash basis net income is calculated by excluding amortization of acquired goodwill and intangible assets (referred to as consolidation goodwill and other intangibles in our financial statements), net of tax benefit, from net income under Japanese GAAP.

CLO (Collateralized Loan Obligations)

CLOs are debt-collateralized securities with leveraged loans (LBO), corporate loans, and corporate bonds as the underlying assets.

Consolidated Capital Adequacy Ratio

The consolidated capital adequacy ratio is the ratio of "total capital" over "risk assets." "total capital" is obtained by subtracting "deductions" from the sum of basic items (Tier I). mainly composed of equity capital.and supplementary items (Tier II).composed of subordinated bonds and other debts.

Consolidated Net Income, Cash Basis Net Income

Cash basis net income is calculated by excluding impairment and amortization of goodwill resulting from acquisitions of subsidiaries and other intangible assets, net of tax benefits, from consolidated net income - and represents the bottom-line profit for the relevant fiscal year.

Coverage Ratio

This is an indicator to know how much of the non-performing loans (problem claims disclosed under the Financial Revitalization Law) are preserved by collateral /loan loss reserves.

Coverage ratio = Loan loss reserves and collateral/guarantee etc. against problem claims / Problem claims

Credit Guarantee Business

Credit Guarantees represent a guarantee to repay a loan made by a partner financial institution on behalf of the borrower, in the case that the borrower becomes unable to make repayments, in return for a fee. In the Shinsei Bank Group, Shinsei Financial is focused on this business, offering comprehensive support to partner financial institutions including advice on advertising strategies and product design as part of its service.

Credit-linked Loan

Credit-linked Loans are structured loans which incorporate derivatives linked to the credit risk of a company other than Shinsei Bank (the borrower). They are offered as an investment product to customers.

Credit Trading

Credit Trading offers balance sheet optimization solutions, including purchase of loan receivables from current creditors or an investment in (purchase of) monetary claims held by the customer. Shinsei Bank also invests in monetary claims such as loans and leases sold in the secondary market for nonperforming loans, aiming to make profits by securing a greater return than the initial investment through servicing or resale of the receivables.

D

Deferred Tax Assets (Net)

This is calculated by deducting deferred tax liabilities (*2) from deferred tax assets (*1), which are recognized as a result of inter-period tax allocation (i.e., the so-called "tax effect accounting").

  • *1This is the capitalized amount of tax consequences in future accounting terms that are likely to result in lesser tax as a result of resolving temporary differences or setting off tax loss carryforwards with taxable income.
  • *2This is the amount posted as liabilities, being tax consequences in future accounting terms that are likely to result in greater tax as a result of resolving temporary differences.

Derivative

Derivative is a collective term referring to transactions that are derived from or linked to other underlying transactions such as interest rate, bond, foreign exchange, and equity transactions. They are also called "financial derivatives" since most of the transactions originate from financial products.

E

Exposure

Exposure refers to an amount of assets or an amount of money that is exposed to foreign exchange, price fluctuations or other risks as a result of loans and investments.

F

Not available

G

(Grey Zone) Interest Repayments

Prior to the interest rate reduction implemented as part of the revisions to the Money Lending Business Law, the interest rates on some consumer finance products offered by the Shinsei Bank Group's subsidiaries exceeded the upper limit stipulated by the Investment Law. Following a ruling by the Supreme Court in January 2006, customers who paid more than the upper limit stipulated by the Investment Law have been allowed to request a refund of the extra interest paid. Accordingly, consumer finance companies have recorded reserves in order to cover losses on (grey zone) interest repayments. However, losses from a portion of the "grey zone" interest repayment liabilities at Shinsei Financial are indemnified by GE under the purchase agreement made when Shinsei Bank acquired the company.

H

Healthcare Finance

Healthcare Finance refers to financing.primarily non-recourse loans.as well as financial advisory on management strategies and M&A for senior care facilities and nursing homes.

I

Installment Sales Credit (Shopping Credit)

Installment Sales Credit (Shopping Credit) is a service that allows customers to pay for goods or services in installments without using a credit card. Shinsei Bank group offers this service primarily through APLUS FINANCIAL.

J

J-REIT

J-REIT stands for Japanese Real Estate Investment Trust.

K

Not available

L

LBO Finance (Leveraged Buyout Finance)

LBO finance is a type of M&A finance based on the assets or future cash flows of a company to be acquired. It is used when a company or an investment fund acquires another company. At Shinsei Bank, LBO Finance is included in Specialty Finance.

M

MBO Finance

MBO stands for Management Buyout. It is a type of LBO finance offered when a company's management buys its own company co-working with an investment fund and others. At Shinsei Bank, MBO Finance is included in Specialty Finance.

N

Net Assets

This is calculated by deducting "liabilities" and "minority interests in subsidiaries" from "Total assets," which represents, in other words, the total of capital account on the balance sheet such as "capital stock," "preferred stock", "capital surplus," "retained earnings," and "unrealized gain/loss on available-for-sale securities."

Net Credit Costs

Net credit costs are the sum of reserves for loan losses set aside (credit costs) according to the credit standing of borrowers, reversal (gains) of reserves for loan losses, and recoveries of written-off claims resulting from their disposal.

Net Income

This is calculated by deducting "General and administrative expenses" and "Credit cost" from "Total revenue," adding "Other income (e.g., profit/loss on disposal of real properties)" (Net income before tax) and deducting "Taxes and Tax effects."

Net Income = Total revenue - General and administrative expenses - Credit cost + Other income - Taxes, etc.

Non-recourse Loan

Non-recourse loans are loans for which repayment is made solely from the cash flows generated from specific businesses or assets (typically, but not always real estate), with no recourse to the sponsor.

O

Ordinary Business Profit (Loss)

MBO stands for Management Buyout. It is a type of LBO finance offered when a company's management buys its own company co-working with an investment fund and others. At Shinsei Bank, MBO Finance is included in Specialty Finance.

P

Portfolio

A portfolio refers to a group of various components. An asset portfolio, for example, refers to a collection of various assets such as real estate, cash deposits, and equities.

Principal Transactions

Principal Transactions generally refer to a bank's proprietary investments. Shinsei Bank proactively makes proprietary investments in the Credit Trading and Private Equity businesses in order to meet customers' needs for corporate restructuring, business succession, and growth funds.

Private Equity

In general, Private Equity refers to privately-placed shares and shares that are not traded in stock exchanges or over-thecounter markets. Private equity investments can be classified into venture capital, which are investments in growing companies, and investments to acquire control of mature companies in order to implement restructuring. Shinsei Bank is proactively engaged in venture capital investments, investing in up to 5% of total shares with representative rights of customers planning a public share offering, as well as making buyout investments related to business divestments from mature companies.

Problem Claims Ratio

This is calculated by dividing Claims disclosed under the Financial Revitalization Law by Total exposure outstanding, which represents the proportion of Non-performing loans to the Total exposure outstanding.

Problem claims ratio = Problem claims disclosed under the Financial Revitalization Law / Total exposure outstanding

Problem Claims under the Financial Revitalization Law

Problem claims disclosed under the Financial Revitalization Law, are categorized as "Claims against bankrupt and quasi-bankrupt obligors (hasan kosei saiken oyobi korera ni junzuru saiken)", "Doubtful claims (kiken saiken)", and "Substandard claims (youkanri saiken)" on total exposure to the obligor (loans, accrued interest, foreign exchange claims, customers liabilities, suspense payment; for "Substandard claims," loans are the only item subject to the requirement) according to the obligor's financial fundamentals and business performance.

  1. Claims against bankrupt and quasi-bankrupt obligors:
    Claims against obligors under bankruptcy and similar claims, as provided for under the Bankruptcy Law, the Corporate Reorganization Law, the Civil Rehabilitation Law and similar laws.
  2. Doubtful claims:
    Claims against obligors that are not yet in bankruptcy but have experienced deterioration in their financial condition and operating performance and for which there is a high probability of contractual defaults on principal and interest payments.
  3. Substandard claims:
    Loans past due for three months or more and restructured loans, excluding those categorized as claims against bankrupt and quasi-bankrupt obligors or doubtful claims.

Project Finance

Project Finance refers to loans to finance specific projects for which the principal source of repayment is the cash flow generated from the project itself. Project Finance is often used for medium-to-long term projects in energy, natural resources, and infrastructure. At Shinsei Bank, Project Finance is included in Specialty Finance.

Q

Not available

R

Ratio of Net DTA to Tier I

This is an indicator that shows the proportion of net "deferred tax assets" to Tier I capital, or the core shareholders' equity.

Ratio of Net DTA to Tier I = Net deferred tax assets / Tier I capital

Revised Money Lending Business Law

The key points of the Revised Money Lending Business Law which was enacted and issued in December 2006 are: (1) optimizing control of the money lending business (tightening entry requirements etc.), (2) reducing excessive lending (implementation of the designated credit bureau system and income-linked lending limitation), and (3) controlling the interest rate system (reducing the upper limit of the interest rate under the Investment Law to 20% p.a.). The Law was enforced in a phased manner and was fully enforced in June 2010.

Risk Monitored Loans

This is a generic term referring to "Loans to bankrupt obligors" (hatan-saki saiken), "Non-accrual delinquent loans" (entai saiken), "Loans past due for three months or more" (san-ka-getsu ijou entai saiken) and "Restructured loans" (kashidashi jouken kanwa saiken), which are required to be disclosed under Article 21 of the Banking Law and its enforcement regulations.

  1. Loans to bankrupt obligors:
    Loans for which accrued interest is not accounted in revenue on the ground that collection or repayment of principal or interest can no longer be anticipated due to its delay for a considerable period of time, or other reasons, falling under any of the following:
    • Loans to obligors who have filed a claim for commencing procedures under the Corporate Reorganization Law/Civil Reorganization Law.
    • Loans to obligors who have filed a claim for liquidation under the provision of the Commercial Law or similar laws.
    • Loans to obligors who have filed a claim for legal liquidation under the provision of foreign law.
    • Loans to obligors against whom suspension of business has been imposed by the clearing house.
  2. Non-accrual delinquent loans:
    Loans for which accrued interest is not accounted in revenue, other than "loans to bankrupt obligors" and loans providing grace periods for repayment of interest with the purpose to support the obligors' corporate rehabilitation.
  3. Loans past due for three months or more:
    Loans whose repayment of principal or interest has been delayed for three months or more from the day following the due date excluding those categorized as "Loans to bankrupt obligors" or "Non-accrual delinquent loans."
  4. Restructured loans:
    Loans excluding those categorized as "Loans to bankrupt obligors.", "Non-accrual delinquent loans," or "Loans past due for three months or more," with lending terms that have been changed in favor of the borrower, including reducing interest rates, providing grace periods for repayment of principal or interest and forgiving a portion of the debt with the purpose of supporting the obligors' corporate rehabilitation.

Risk Weighed Assets

Risk weighed assets are an amount equivalent to the volume of "credit risk" and "market risk" of the Bank's assets/transactions and "operational risk" involving operational errors.

ROA(Return on Asset)

This is the ratio of "Net Income" to "Total Assets" (simple average of the beginning and the ending period), which represents the efficiency of assets in generating profits.

ROA = Net income / (Total assets at the BOP* + Total assets at the EOP*) / 2

  • *BOP - beginning of period
  • *EOP - end of period

ROE(Return on Equity)

This is the ratio of "Net Income" to "Shareholders' Equity" (simple average of that at the beginning and end of the term), which represents the efficiency of shareholders' equity in generating profits.

ROE (fully-diluted) = Net income / (Shareholders' equity at the BOP* + Shareholders' equity at the EOP*) / 2

  • *BOP - beginning of period
  • *EOP - end of period

Note: Shareholders Equity includes the balance of Preferred Share.

S

Ship Finance

Finance for the shipping industry. Shinsei Bank primarily provides shipping companies with funds for ship acquisition.

Specialty Finance

Specialty Finance at Shinsei Bank refers to M&A finance, LBO finance, project finance and other types of finance that focus on the cash flows and value generated by businesses and assets. It is a type of structured finance.

Structured Finance

Structured Finance refers to finance requiring special structures. In general, it takes the form of project finance or non-recourse finance which focuses on the cash flows or value generated by a specific project or asset. Shinsei Bank is primarily active in real estate finance, project finance, M&A finance, and corporate restructuring finance through the Structured Finance Sub-Group.

Syndicated Loan

Syndicated loans are loans provided jointly by a syndication of multiple financial institutions (lender group) based on a single loan agreement.

T

Tier I Capital

This is calculated by deducting other unrealized gain/loss on securities portfolio, scheduled dividend payouts etc. to outside parties and so forth from capital account. It is, in other words, the bank's core capital that consists of "capital stock," "capital surplus," "retained earnings," and "net income after deducting scheduled payouts to outside parties", among others.

Tier I Capital Ratio

This is the ratio of Tier I capital to risk assets at the end of the period, which represents the bank's financial strength and soundness. This ratio excludes Tier II capital such as deferred tax assets.

Tier I ratio = Tier I Capital / Risk assets
(on-balance-sheet items * risk weight + off-balance-sheet items * risk weight)

Total Revenue

This item is categorized for our bank's internal control purposes, and is the sum of "Net interest income," "Net fees and commissions," "Net trading income," and "Net other business income." "Net other business income" includes "income on monetary assets held in trusts", "net gain/loss on sales of equity", "net gain/loss on foreign exchanges" and "net gain/loss on fixed income securities such as JGBs."

Total Revenue = Net interest income + Net fees and commissions + Net trading income + Net other business income

Treasury

Treasury is normally the function in a company which is responsible for ALM (asset and liability management). At Shinsei Bank, Treasury basically refers to the function (Sub-Group) responsible for cash flow management including collateral management, transactions through transfer pricing (FTP, the interoffice fund transfer price), issuance or buyback of (subordinated) corporate bonds, liquidity planning, management of overseas subsidiaries that issue capital securities, as well as ALM for the entire Group.

U

Not available

V

Not available

W

Wealth Management

Wealth Management refers to the financial services that Shinsei Bank offers to high-net worth customers. The Bank offers a variety of differentiated wealth management services tailored to customers' needs.

X

Not available

Y

Not available

Z

Not available

Related Links