Administrative Actions on Shinsei Bank, Ltd.

1.Shinsei Bank, Ltd. [hereinafter referred to as “Shinsei”] booked a net deficit (loss) for the business year ended in March 2009, falling considerably short of its profit targets for the year, set in the Business Revitalization Plan.

As for Shinsei's losses resulting from declines in stock prices of its subsidiaries and related companies at home and abroad and securities-related losses and a rise in credit costs, both stemming from its investment and financing operations at home and abroad, which were the main cause for the net loss, the Financial Services Agency [hereinafter referred to as “FSA”] recognizes that they were in part due to changes in financial market conditions at home and abroad. However, the FSA also recognizes that Shinsei should have improved its risk management and business judgment concerning its investment and financing as well as business operations at home and abroad.

The FSA recognized the need to take administrative actions on Shinsei in order to ensure the fulfillment of the bank's Business Revitalization Plan, pursuant to the provision of Article 20, Paragraph 2 of the Act on Emergency Measures for Early Strengthening of Financial Functions [hereinafter referred to as "the Early Strengthening Act"]. Therefore, the FSA today issued a Business Improvement Order to Shinsei based on Article 20, Paragraph 2 of the the Early Strengthening Act and Article 26, Paragraph 1 of the Banking Act.

2.The contents of the Business Improvement Order are as follows.

• [1]Based on the grounds for the actions above, Shinsei must submit a Business Improvement Plan to the FSA by September 11, 2009. The plan should contain measures to fundamentally improve Shinsei's profitability, including effective and specific measures to establish a sustainable and stable revenue base, by enhancing its risk management and corporate governance.

  • (Note 1) In formulating a Business Improvement Plan, Shinsei must pay renewed attention to the facilitation of credit provisions stipulated under Article 5, Paragraph 1, item (iv) of the Early Strengthening Act.

  • (Note 2) The above Business Improvement Plan must include the Business Improvement Plan submitted based on the previous Business Improvement Order (June 28, 2007)

• [2]Shinsei must implement the new Business Improvement Plan steadily.

• [3]Shinsei must report to the FSA on the progress made in implementing the plan within two months after the end of every quarter, starting from the end of September 2009, until it is confirmed that the plan has been fully implemented.