Management Policy for Conflict of Interest (Outline)

Shinsei Bank, Limited

1. General Rules

1-1. Purpose

Shinsei Bank, Limited (hereinafter ďShinsei BankĒ) has established the Management System for Conflict of Interest for (1) managing conflict of interest that may unfairly impair the interest of customers based on the Banking Act and the Financial Instruments and Exchange Act, and (2) managing conflict of interest that may impair the interest of customers in business operations that have set the highest priority in the ďbest interestsĒ of the customers based on the Policy on Customer-Oriented Business Conduct publicly announced by Shinsei Bank at Shinsei Bank and Shinsei Group companies (hereinafter, ďShinsei GroupĒ). Shinsei Bank has also established Management Policy for Conflict of Interest which stipulates basic items of the Management System for Conflict of Interest.

Outline of this Policy shall be publicly announced as follows under the relevant laws and regulations, etc.:

2. Management of Conflict of Interest Based on the Banking Act and the Financial Instruments and exchange Act

2-1. Scope of Shinsei Group Companies

Shinsei Group companies subject to the management for conflict of interest by Shinsei Bank based on the Banking Act and the Financial Instruments and exchange Act shall be as shown in a separate table.

2-2. Categories of Transactions Which May Involve Conflict of Interest and Examples

(1) Categories of Transactions Which May Involve Conflict of Interest

Categories of transactions which may involve conflict of interest may include following: However, these categories merely show standards for making a judgment whether if there may be a conflict of interest or not. It does not necessarily mean that there is a conflict of interest if it is applicable to any one of the following. Also, additions or revisions, as required, may be made in future.

  • ⅰ ) When there is a conflict of interest between Shinsei Group and a Customer
  • ⅱ ) When there is a conflict of interest between Shinsei Groupís Customer and another Customer
  • ⅲ ) When it is similar to ⅰ ) or ⅱ ) above or when the interests of Customers are unfairly impaired in other ways

Shinsei Bank shall take general circumstances, including any influence on Shinsei Groupís reputation, into consideration to judge if conflict of interest is involved or not.

(2) Examples

Examples of transactions which may involve conflict of interest shall include following and other similar transactions:

  • ⅰ ) Examples of Categories under ⅰ ) (1) Above

    (a) When fundraising support services and/or advice, etc. on M&A are given with to a Customer who is in a conflicting or competitive relationship with principal investment of Shinsei Group

    (b) When advice, etc. are given for M&A to a Customer, to whom credit is given by Shinsei Group

    (c) When advice, etc. are given for fundraising support services and/or M&A to another Customer, who is in a conflicting or competitive relationship with a Customer

    (d) When advice, etc. are given to a Customer for fundraising support services and/or M&A and at the same time principal investment is made in the applicable Customer by Shinsei Group, assets are purchased from the applicable Customer and other transaction is carried out with the applicable Customer

    (e) When a Customer is assisted by Shinsei Group in the applicable Customerís financing and at the same time Shinsei Group intends to collect fund from the applicable Customer by means of fund raised through Shinsei Groupís assistance

    (f) When Shinsei Group makes a principal investment in a Customerís assets, for which Shinsei Group has information

    (g) When a wide range of services are rendered to a Customer by Shinsei Group and it is intended to limit participants of a transaction to Shinsei Group companies

    (h) When securities issued or established by Shinsei Group or an interested party are recommended or sold to the applicable Customer, or when Shinsei Group incorporates the applicable securities into the applicable Customerís assets, of which Shinsei Group is entrusted with investment by the Customer. In addition, when Shinsei Group back-finances the applicable Customer who invests in the applicable securities.

    (i) When Shinsei Group makes use of information of transactions with a Customer against the Customerís intention to pursue its own interests

  • ⅱ ) Examples of Categories under ⅱ ) (1) Above

    (a) When advice, etc. are given with regard to fundraising support services and/or M&A to a transaction in which more than one Customer are in conflicting or competitive

    (b) When Shinsei Group makes use of information of transactions with a Customer against the Customerís intention to pursue interests of another Customer

2-3. How to Manage a Transaction Which May Involve Conflict of Interest (hereinafter, ďSubject TransactionĒ)

If it is determined that a transaction is applicable to Subject Transaction, Shinsei Bank shall try to protect Customers appropriately through a selection or combination of methods below and other methods.

  • ⅰ ) Separation of a business organization responsible for the Subject Transaction and a business organization responsible for the applicable Customerís deal
  • ⅱ ) Change in conditions or ways of the Subject Transaction or the applicable Customerís deal
  • ⅲ ) Suspension of the Subject Transaction or the applicable Customerís deal
  • ⅳ ) Appropriate disclosure of information on possible risks that the applicable Customerís interests may be unfairly impaired incidental to the Subject Transaction (provided, however, that such disclosure does not infringe with confidential liability of Shinsei Group)

2-4. Management System for Conflict of Interest

(1) Establishment of a Division Responsible for the Management of Conflict of Interest

  • ⅰ ) Group Legal and Compliance Division, Shinsei Bank shall be the division responsible for the management of conflict of interest.
  • ⅱ ) The division responsible for the management of conflict of interest shall not be instructed by the manager of any other business organization for details of operations and shall maintain its independence in operations of the management of conflict of interest.
  • ⅲ ) The division responsible for the management of conflict of interest shall be responsible for the company-wide management system to specify transactions, which may involve conflict of interest, and to control conflict of interest.

(2) Responsibilities of the Division Responsible for the Management of Conflict of Interest

The division responsible for the management of conflict of interest shall discharge following responsibilities in a position independent from divisions responsible for businesses at Shinsei Bank and Shinsei Group companies: When the division responsible for the management of conflict of interest gives an instruction to Shinsei Group companies or when Shinsei Group companies make a report to the division responsible for the management of conflict of interest, such an instruction/a report shall be given/made through the division responsible for internal management at the applicable Shinsei Group companies.

  • ⅰ ) To instruct divisions responsible for businesses at Shinsei Bank and Shinsei Group companies to implement appropriate management of conflict of interest with regard to the Subject Transaction as well as to specify the Subject Transaction.
  • ⅱ ) To make semi-annual reports to the Group Executive Committee on transactions which may involve conflict of interest, as specified and managed. However, any item, which may have a considerable influence on the management or may considerably impair the interests of customers, shall be reported to the Group Executive Committee without delay.
  • ⅲ ) To receive reports on the management status, etc. of conflict of interest for Subject Transactions, including Subject Transactions of Shinsei Group companies, on a regular basis or from time to time, to verify implementation of appropriate management and to review procedures and systems for the management of conflict of interest, as required.
  • ⅳ ) If Customerís interests may be unfairly impaired, to instruct implementation of appropriate management of conflict of interest to divisions responsible for businesses at Shinsei Group, as required, or to review the Subject Transaction, etc.
  • ⅴ ) To give training, on a regular basis, to statutory executive officers and employees of Shinsei Group with regard to the management of conflict of interest on the basis of this Policy and management regulations for conflict of interest and to make sure that everybody appropriately understands about the management of transactions which may involve conflict of interest.

(3) Preparation and Conservation of Management Records of Conflict of Interest

The division responsible for the management of conflict of interest shall record and maintain actions taken to appropriately ensure specification of Subject Transactions and their management and Customer protection for five years from the date of preparation.

3. Management of Conflict of Interest in Business Operations that Set the Highest Priority in the ďBest InterestsĒ of the Customers

Shinsei Bank will strive to manage conflict of interest indicated in ďThe Policy on Customer-oriented Business ConductĒ and its ďAction PlanĒ publicly announced separately.

End

Subsidiary Financial Institutions, etc.
Subject to Conflict of Interest Management (as of September 3, 2018)

Company Name
Shinsei Trust & Banking Co., Ltd.
Shinsei Securities Co., Ltd.
Shinsei International Limited
Shinsei Investment Management Co., Ltd.
Shinsei Investment & Finance Limited
Showa Leasing Co., Ltd.
APLUS Co., Ltd.
APLUS Personal Loan Co., Ltd.
Zen-Nichi Shinpan Co., Ltd.
Shinsei Personal Loan Limited
Shinsei Financial Co., Ltd.
Nissen Credit Service Co., Ltd.
Shinsei Corporate Investment Limited
Other Shinsei Subsidiaries and Affiliates that filed their Special Business Activities for Qualified Institutional Investors