Tokyo, June 27 (Bloomberg) -- Shinsei Bank Ltd., the first Japanese bank bought by foreign investors, said it asked retailer Daiei Inc. to repay 100 billion yen ($832 million) of loans as it bids to cut lending to struggling companies.
``We have not received a satisfactory repayment plan from Daiei and are continuing discussions,'' said Shinsei spokesman Yoshihide Nakagawa. ``We requested a repayment plan last May.''
Japan's third-biggest retailer, which received 520 billion yen in debt relief to avert collapse this year, may have to ask nine other banks, including UFJ Holdings Inc. and Mizuho Holdings Inc., for more loans so it can pay Shinsei, the Nihon Keizai newspaper reported earlier today.
Shinsei, whose shareholders include Ripplewood Holdings LLC and General Electric Co., aims to cut its 1.1 trillion yen of bad loans by three-quarters before a planned February share sale. It dispatched 150 staff to work with delinquent borrowers.
The bank's tough stance contrasts with that of Japan's biggest lenders, which granted more than a trillion yen of debt rescheduling and waivers to construction companies and retailers in recent months.
``Shinsei is doing the right thing and acting like real bankers,'' said Edwin Merner, president of Atlantis Investment Research Corp., which manages $600 million. ``When will the city banks begin to act like banks, not welfare or charity organizations?''
Mizuho and UFJ in May said they planned a 432 billion yen debt reorganization for developer Daikyo Inc., while Aoki Corp., a builder of bridges and dams, received pledges for 188 billion yen in debt waivers from Daiwa Bank Holdings Inc. and Mizuho earlier this month.
Shares Suspended
Kobe-based Daiei, which owed 2.1 trillion yen at the end of February, struggled to boost sales as Japan's household spending slumped for nine years, held back by three recessions.
The company said it's not asking other banks for funds to pay Shinsei.
``We're not at the stage where we have to ask the main lenders to shoulder the loan,'' said spokesman Mitsuru Sano.
Daiei shares have been suspended for four days while it completes a capital reduction exercise. The retailer will cut the number of outstanding shares by 99 percent as part of its three- year revival plan.
Daiei shares rose 53 percent this year, closing yesterday at 119 yen. The company forecast group net income of 120 billion yen in the year to February 28, rebounding from a 333 billion yen net loss in the year-earlier period.
Repayment plan
In February, Daiei repaid 90 billion yen, representing 30 percent to 40 percent of outstanding loans, to lenders other than Shinsei, the retailer said.
Shinsei wants Daiei to pay back as much as 40 billion yen of loans as per its arrangement with other lenders, the Nihon Keizai said, without specifying a deadline. The remainder of the loans would be repaid within several years, the paper said.
Shinsei, the former Long-Term Credit Bank of Japan Ltd., has sold 710 billion yen of loans to the government under terms of a 2000 takeover. That agreement expires in March, at which time the lender aims to have non-performing loans comprise less than 5 percent of total lending.
Shinsei posted net income of 61.2 billion yen for the year ended March 31. Japan's seven biggest banks reported a record 4.07 trillion yen of net losses in the same period after writing off loans to developers, retailers and other struggling companies.
`Acting Weird'
Reducing bad loans will make it easier for Shinsei's owners to sell shares and profit from their original 120 billion yen investment. Ripplewood, a New York-based fund, is the biggest shareholder. Deutsche Bank AG, Citigroup Inc. and ABN Amro Holding NV also own stakes.
``Shinsei is considered to be someone acting weird in the closely tied banking industry,'' said Seiichiro Iwamoto, who manages 100 billion yen in investments at Fuji Investment Management Co. ``The industry tends to procrastinate on such problems, and it's interesting that a bank like Shinsei takes drastic measures to try and resolve its bad loan problem.''