Taiwan's Chinatrust to buy Tokyo Star Bank for $530m

The announcement confirms earlier reports regarding the proposed transaction. The deal, which is still subject to regulatory approval, 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.

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.

Dallas-based 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.

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.

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.

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• Topics
• North Asia
• Buyouts
• Greater China
• Exits
• Financials
• Japan
• Advantage Partners
• Lone Star Funds
• Taiwan (China)
• buyout
• Exit
• Financial Services