Taiwan's CTBC gets approval to buy Tokyo Star Bank

The JPY52 billion ($530 million) deal was agreed last October. However, Taiwan's Financial Supervisory Commission (FSC) put it on hold in March while it investigated executives at CTBC Bank who were found to have hid control of a Shanghai-based company from board members.

CTBC had to pay a NT$10 million ($332,000) fine and the FSC sait it would not approve any deals until the company made changes to its internal controls and disclosure systems.

The deal was allowed to go ahead after CTBC Bank ended its dealings with the Shanghai company and improved it internal controls.

The acquisition is part of CTBC's efforts to further expand its presence in Northeast Asia, allowing it to increase its bases of operation and gain access to more overseas clients. With a branch already in Tokyo, CTBC has signed memorandums of understanding with several Japanese banks in recent months, including Miyazaki Bank and Bank of Kyoto.

Tokyo Star has 31 branches in across Japan's major cities. The bank has a strong presence in the retail market and offers loans to individuals and self-employed business owners.

When CTBC's interest in the asset was first reported at the end of last year, local media noted that the acquisition would come under close scrutiny from Japan's Financial Services Agency. The regulator is keen to see mid-size banks steer clear of the risky lending policies that endangered them during the global financial crisis.

Lone Star is Tokyo Star's largest shareholder with a 33% stake. Others include Shinsei Bank, Crédit Agricole and Aozora Bank. They assumed control of the bank in 2011 after the previous owner, Advantage Partners, defaulted on debts tied to its acquisition three years earlier.

Tokyo Star was created out of Tokyo Sowa Bank when the latter was first acquired by Lone Star from the Japanese government for JPY40 billion in 2001.

Lone Star had sold a third of Tokyo Star Bank in 2005 via an IPO with Advantage acquiring the rest in 2007. Advantage then took Tokyo Star private the following year by launching an offer for all of the bank's shares.

Advantage borrowed JPY170 billion to complete the acquisition. A combination of deflation, competition and citizens' inability to repay loans during the global financial crisis saw Tokyo Star rack up significant losses, to the extent that it was unable to make payments to creditors.

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• Topics
• Greater China
• Financing
• Buyouts
• Exits
• China
• Advantage Partners
• Financial Services
• buyout
• Exit