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Shinsei to purchase stake in Taiwan’s Jih Sun Financial

The local Jih Sun Financial Holdings Co. yesterday announced it will receive NT$11.3 billion in funding from Japan’s Shinsei Bank Ltd., becoming yet another local financial holding firm getting capital from an overseas investor.

Under the deal, Shinsei will acquire 31.8 percent of Jih Sun’s common stock and buy preferred shares to become the largest shareholder in the financial holding firm, which has 5,200 employees and 88 branches.

The fund is expected to arrive by the year-end or early next year, paving way for Shinsei to be elected into Jih Sun’s board of directors next year, it was reported.

It was also reported an unnamed overseas private equity fund will buy stake in Jih Sun, which will receive a total of NT$12 billion from the two investors. Altogether Shinsei and the private equity fund will hold a 35 percent stake in Jih Sun.

The acquisition will be Shinsei’s third-biggest transaction, according to data compiled by Bloomberg.

Shinsei bought consumer finance lender Aplus Co. in 2004 and Showa Leasing Co. in 2005. It also started a joint venture with Germany’s WestLB AG, Norddeutsche Landesbank Girozentrale, and U.S. investor J. Christopher Flowers to buy and recover German bad debt.

The bank’s net income rose to 76 billion yen (US$686 million) for the year ended March 31, from 67.4 billion yen a year earlier, Shinsei said yesterday in a preliminary earnings report.

Jih Sun Securities, the financial group’s brokerage unit, posted NT$1.4 billion net income for fiscal 2005, the biggest profit among brokers in Taiwan, the statement said.

As a whole, Jih Sun Financial had been struggling with its bad loan write-off efforts. Demand for additional funding to help with its disposition of problematic loans had prompted Jih Sun to look for a foreign partner.

Last year Jih Sun Financial raised NT$6 billion to help its subsidiary, Jih Sun International Bank, write off bad loans. Introducing foreign funds to its operations is part of Jih Sun’s overall strategy this year to strengthen financial results.

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