Taiwan's Chinatrust buys Tokyo Star Bank – report

According to Nikkei, the deal is likely to be completed in September or October, once regulatory approvals have been obtained.

When Chinatrust'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, domestic GP Advantage Partners, defaulted on debts tied to its acquisition three years earlier.

Lone Star bought Tokyo Star - then known as Tokyo Sowa Bank - from the Japanese government in 2001. The bank was restructured and went public in 2005, with Advantage taking a majority stake in 2007 followed by full ownership a year later.

To complete the acquisition, Advantage borrowed JPY170 billion from more than 20 lenders as a combination of senior and mezzanine debt. 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.

Last November, Lone Star and its fellow shareholders hired Nomura to sell off the asset.

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• Topics
• Exits
• Financials
• North Asia
• Japan
• Lone Star Funds
• Exit
• Trade sale
• Financial Services
• Advantage Partners
• Taiwan (China)