Ripplewood to take over LTCB By Our Summaries Staff
Japan is reportedly ready to sell Long Term Credit Bank to Ripplewood, the US private equity group.
According to Japanese media reports, the deal could be approved by next Monday, and if Ripplewood does win the bid, it would be the first foreign company to gain control of a large Japanese financial institution.
The newspaper Nihon Keizai Shimbun said Ripplewood had offered ¥1bn ($9.7m) to buy the LTCB shares from the government and also to make a ¥120bn cash infusion. Ripplewood also promised it would set aside ¥300bn-¥500bn in loan-loss reserves, the paper said.
LTCB was nationalised last October after it struggled under the heavy burden of problem loans and ¥5 trillion of bad debt.
Ripplewood assembled a team including Paine Webber Group, ABN Amro, Citigroup and GE Capital to back its bid which earlier this week gained approval from Hakuo Yanagisawa, Japan's government minister in charge of banking reform.
If a deal with Ripplewood goes ahead this would mark another striking sign of corporate reform in Japan. Until recently, it was assumed that the Japanese government would be reluctant to sell a large Japanese bank to a foreign investor.
The sale of LTCB is now regarded as a particularly important test case, since the main rival to the Ripplewood bid has been a joint offer from Mitsui and Chuo Trust banks, two Japanese groups.
Some Japanese politicians have recently been pressing the Financial Reconstruction Commission to accept the Mitsui and Chuo bid. However, the FRC has said that their offers were likely to be considerably more expensive for Japanese tax payers, since the two banks are weak and would require additional injection of public funds to manage LTCB.