Aozora Bank

Aozora Bank, Ltd.

Type	Public (TYO: 8304, FWB: AON)
Industry	Money Center Banks
Founded	April, 1957[1]
Headquarters	Tokyo, Japan[2]
Key people	Yuji Shirakawa, Chairman Brian F. Prince, President and CEO[3]
Products	Time deposits Investment trusts Individual annuity insurance Telephone banking services ATM alliances Personal loans Asset Management Consulting Services [4]
Revenue	¥114.4 B JPY (0.2% FY '05 to FY '06) [5]
Net income	¥81.5 B JPY ( 32.1% FY '05 to FY '06) [5]
Employees	1,359 (Bank only) [6]
Website	www.aozorabank.co.jp

Aozora Bank, Ltd. (株式会社あおぞら銀行, Kabushiki-gaisha Aozora Ginkō^?, lit. "Blue Sky Bank") is a Japanese commercial bank that offers service in 19 branches in Japan and in 5 overseas representative offices.^[2]

History

Aozora Bank is the successor of the Nippon Credit Bank (NCB), which was founded in 1957 under a special government trust banking license alongside the Long-Term Credit Bank of Japan (LTCB), based on the assets of Bank of Joseon in Japan. In December 1998, NCB was brought under government control in order to deal with its extraordinary amount of bad debt left over from the crash of the Japanese asset price bubble in the early 1990s: at the time, the bank was approximately ¥270 billion in debt.

An investor group led by Softbank, Orix and Tokio Marine & Fire Insurance Co. purchased NCB in 2000 for ¥80 billion.^[7] As part of this deal, the government included a "defect warranty provision" (瑕疵担保条項, kashi tanpo jōkō^?) to the effect that NCB could demand within the next three years that the government purchase any claims which had fallen by twenty percent or more from value. A similar provision had controversially been offered to the purchasers of LTCB, which had recently been similarly purchased from the government and renamed Shinsei Bank.^[7]

Aozora applied this provision conservatively in order to write off ¥400 billion in bad debts owed by about 100 companies, in contrast to Shinsei Bank, the contemporaneous successor of the Long-Term Credit Bank, which wrote off nearly three times as much and was criticized in political circles for doing so.

The sale of NCB to Softbank was viewed as a precedent for the licensing of Sony Bank, Seven Bank and other new banking platforms in Japan.^[7]

The bank was renamed "Aozora" in 2001. Softbank initially planned to make Aozora an investment bank for internet-related companies. However, Softbank was unsuccessful in obtaining the cooperation of the Financial Services Agency, and sold its 49% stake to Cerberus Capital Management in September 2003 for ¥101 billion.^[8] Aozora launched operations as a retail bank on April 1, 2006, and opened its first new branch in Nihonbashi on November 20.

Aozora Bank was listed as the No.1 unsecured creditor to Lehman Brothers with about $463 million USD in bank loans to the investment bank as it filled for Chapter 11 bankruptcy in Sept. 2008. By comparison, the second largest unsecured creditor was Mizuho Bank with $289 million, and third largest Citibank (Hong Kong branch) with $275 million.

In 2008 at the 2008 ALB Japan Law Awards^[9], Aozora Bank was crowned:

• In-House of the Year - Banking & Financial Services In-House Team of the Year
• In-House of the Year - Japan In-House Team of the Year

On December 16, 2008, Aozora Bank announced that it had 12.4 billion yen exposure to the Bernard L. Madoff ponzi scheme.^[10]

On April 25, 2009, Aozora Bank and Shinsei Bank announced negotiations to integrate their operations in the summer of 2010, with an eye toward an eventual merger. Banks had been hit by losses in the US subprime market.^[11] The talks collapsed in May 2010 amid disputes over capitalization and business strategy, as well as the abatement of the 2008 financial crisis.^[12]

Locations

Aozora headquarters in Tokyo

Aozora's head office is located in the Kudan area of Chiyoda City, Tokyo, near Yasukuni Shrine.

The bank has retail branches in Chiba, Fukuoka, Hiroshima, Kanazawa, Kyoto, Nagoya, Osaka (Namba and Umeda), Sapporo, Sendai, Takamatsu, Tokyo (Ikebukuro, Nihonbashi, Shibuya, Shinjuku and Ueno) and Yokohama.

Aozora also has representative offices in New York, Singapore, Seoul, Jakarta and Shanghai, and financing subsidiaries in the Cayman Islands, Hong Kong, Luxembourg, the United Kingdom and the United States.

References

1. ^ Corporate History. Retrieved on June 26, 2007.
2. ^ ^{a b} Company Profile. Retrieved on June 26, 2007.
3. ^ Directors and Auditors. Retrieved on November 21, 2009.
4. ^ Corporate Brochure 2006, Page Three. Retrieved on July 2, 2007.
5. ^ ^{a b} Aozora Bank Financial Results for FY2006, Page Two. Retrieved on June 26, 2007.
6. ^ Corporate Brochure 2006, Page Six. Retrieved on July 2, 2007.
7. ^ ^{a b c} Softbank Makes Deal for Nippon Credit
8. ^ Japan: Bank Stake Sale
9. ^ [1]
10. ^ Statement on Aozora’s Exposure to Madoff Securities. Retrieved on December 16, 2008.
11. ^ Shinsei Bank, Aozora Bank launch merger talks-Nikkei Shinsei, Aozora banks in talks. Retrieved on May 23, 2009.
12. ^ Shinsei, Aozora Scrap Merger; Government Vows More Oversight.