Special Feature : President's Conversation with Investors

We invited Mr. Hideichiro Nishimura from Nomura Asset Management Co., Ltd. and Mr. Hiroyuki Hanaoka from JPMorgan Asset Management (Japan) Ltd. to discuss with Mr. Shigeki Toma, President & CEO of Shinsei Bank, the Shinsei Bank Group's growth strategy, development of products and services unique to Shinsei Bank, and the capital and shareholder return policies. Mr. Toyoki Sameshima of BNP Paribas Securities (Japan) Limited, a banking sector analyst, participated in the discussion as the moderator.

Special Feature : President's Conversation with Investor

Developing Products and Services Unique to Shinsei Bank

Sameshima:With respect to the development of products and services that are unique to Shinsei Bank, can you please talk about products and services for individual customers?

Toma:In housing loans, fierce interest rate competition is underway involving megabanks and regional banks. If Shinsei Bank, whose fundraising costs are higher than megabanks and regional banks, competes head on against them, what will result is clear. As a result, we decided to focus on the creation of new segments. First, we launched a housing loan that supports working women and families with children. This is a housing loan that features sick child care service and housekeeping service coupons, and through this feature we have differentiated this housing loan from the housing loans of other banks. Rather than competing on interest rates, we have changed our approach to compete with other banks by creating products with high value added. In the discussions with branch staff members I mentioned earlier, a topic that was often raised was smart phones. While the trend of online banking transactions using PCs is generally unchanged, transactions using smart phones have noticeably increased. Therefore, we plan to improve our smart phone banking services so that our customers can do everything from their smart phones. With regard to the T-Point service offered in partnership with Culture Convenience Club Co., Ltd. ("CCC"), while there are other banks who are offering the same service, no other bank is promoting it as aggressively as Shinsei Bank. At this stage, the types of transactions for which we are award T-Points are limited, such as opening accounts at our bank. However, we are considering the financial services we can offer together with CCC to the approximately 48 million T-Point members. In our services at branches, the Futakotamagawa Branch has an innovative approach. To match the customer profiles of the area where there are many high net worth housewives, the Branch has deployed only female staff members to make it easier for female customers to have consultations.

Sameshima:What about products and services for institutional customers?

Toma:Because our relationships with institutional customers were severed once when the former Long-Term Credit Bank of Japan failed and the margin on interest income became thin after the Bubble period, we have not aggressively pursued transactions with institutional customers since the launch of Shinsei Bank. However, what we are going to do from now on is to provide cash flow finance to corporate customers. We will grant loans to entrepreneur companies or companies in new business areas. In addition to collateral and transaction history, we also ask questions about the characteristics of their business, their strengths, their backgrounds, and if they are confident of making their business work. We then assess their business and look to support the growth of our customers. We take pride in the idea that our approach in creating relationships with customers is different from the banks in the past. You may call it a "niche" business, but I believe that we will be able to cultivate new areas through this approach.

Nishimura:What are the prospective industries that are likely to contribute to an increase in revenues?

Toma:Renewable energy, healthcare and Private Finance Initiatives* (PFI) Special Features Data Section Management Structure Review of Operations President's Conversation with Investors Message from the Management Financial Highlights SHINSEI BANK, LIMITED Annual Report 2014 18 are likely to grow. We are also looking into specific technologies such as smartphone glass, thin films and liquid crystal for smart phones. In some of these areas, Japan has over 90% market share in the world, has patents and some of the technologies have become de facto industry standards.

  • *Use of private funds and technologies for the construction, maintenance and management of public facilities.

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