Special Feature: CEO Message

Special Feature : CEO Message

Capital Policies and Public Fund Repayment

2017Shinsei Bank continued to record profits in the fiscal year ended March 31, 2018 and, in turn, has made progress in accumulating capital. In addition to increasing profits and accumulating capital to repay public funds, we seek to receive the ongoing appreciation from capital markets by receiving high ratings for our business model, combining in a well-balanced manner rises in shareholder returns and fostering trust in our management approach.

Key concepts

  1. Strong governance based on the concept that the Board of Directors should be share holder centric in their thinking
  2. Accumulating capital to repay public funds while raising shareholder value

70% or more of the Directors of Shinsei Bank are outside directors, and the Bank places a very strong emphasis on responding to the expectations of capital markets and shareholders. The Board of Directors therefore engages in earnest discussions, while business execution undergoes a strict series of tests and challenges right up to the implementation stage. To meet the capital market expectations over shareholder returns while being required to accumulate capital to pay back public funds, top management must in the near term manage capital in a manner that strikes a balance between these two contradictory objectives. Over the medium-to-long term, however, these two objectives should become consistent, as these involve raising both returns on capital and value per share. In other words, it is important that we gain favorable evaluations from capital markets regarding our growth oriented business model that is able to accumulate capital to repay public funds while simultaneously raising value per share as the original preferred shares issued by the Bank for public funds have now been converted into common stock.

In light of this, we have increased "core profitability by prioritizing management resources toward strong-suit fields through business selection/concentration" over the past few years, which has enabled us to both accumulate capital and raise our total payout ratio. Going forward, in addition to these ongoing efforts, we aim to realize even higher returns on capital via measures that include pursuing nonorganic growth strategies as well as seeking to boost capital market evaluations by gaining favorable ratings for our business model and further improving trust in management.

Message to Our Stakeholders

The importance of financial functions that support corporate and individual activities is unlikely to change. Amid changes in society and customer needs, however, bank functions and approaches will likely change as financial functions are redefined more broadly. The Shinsei Bank Group will work to maximize shareholder value by deftly identifying these changes and, in turn, becoming a financial group that stays a step ahead.

Key concepts

  1. Be the first to identify and meet changing needs
  2. Society (S): Supplement financial system deficiencies

The Shinsei Bank Group has established a superior position businesswise compared to other financial institutions based on its ability to flexibly identify and address unmet needs within society. We have a role to play in supplementing areas that are lacking in financial systems in any era.

A variety of different sectors rather than simply relying on existing bank and nonbank businesses are entering into our financial operations. To be certain, while banks are a specific means of financing via deposits and have a duty to protect depositors, specific social interest in banks is waning. Banks and other financial institutions should meet the needs of various customers while undertaking a wide range of tie-ups and alliances. Against this backdrop, the financial institutions that survive will likely be those that do not strictly adhere to traditional business models. We intend to be the first to implement such measures to ensure that the Shinsei Bank Group is a financial group that is able to meet the expectations of our stakeholders.

Going forward, we ask for the continued understanding and support of all stakeholders.

July 2018
Hideyuki Kudo
Hideyuki Kudo
President and Chief Executive Officer

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