(Provisional Translation)
June 30, 2010
Financial Services Agency

Administrative Actions on Shinsei Bank, Ltd.

1.Shinsei Bank, Ltd. [hereinafter referred to as “Shinsei”] fell considerably short of its profit targets for the business year ended in March 2010, set in the Business Revitalization Plan. In addition, there was not sufficient sign of improvement in business operations, while a Business Improvement Order [July 28, 2009] was issued ,based on Article 20, Paragraph 2 of the Act on Emergency Measures for Early Strengthening of Financial Functions [hereinafter referred to as "the Early Strengthening Act"] and Article 26, Paragraph 1 of the Banking Act in the business year ended in March 2009.

As for　Shinsei's losses stemming from its real estate investment and loan, the Financial Services Agency　[hereinafter referred to as “FSA”] recognizes that Shinsei should have improved its risk management.

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 the Early Strengthening Act. Therefore, the FSA today issued a Business Improvement Order to Shinsei based on Article 20, Paragraph 2 of the Early Strengthening Act and and Article 26, Paragraph 1 of the Banking Act.

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

• [1]Shinsei must review the Business Improvement Plan created after the issuance of the Business Improvement Order [July 28, 2009] based on Article 20, Paragraph 2 of the Early Strengthening Act and Article 26, Paragraph 1 of the Banking Act, and submit a Business Improvement Plan to the FSA by July 30, 2010. The plan should contain measures to establish a responsible business setup for the improvement of its operations and fundamentally improve Shinsei's profitability.

  In formulating the above Business Improvement Plan, based on the grounds for the actions above, Shinsei must incorporate effective and specific measures to enhance its risk management and to establish a sustainable and stable revenue base.

  (Note) In formulating the above Business Improvement Plan, Shinsei must pay attention to section 1.(2) of “To improve Corporate Governance of Capital Injected Major Banks with Public Funds”(April 4,2003,by the FSA)and incorporate the following measures.

  • (i) Retirement of the President and the person who have management responsibility substantially equivalent to the President.

  • (ii) Clarification of responsibility of each board member.

  • (iii) Cost reduction including review of salary system, control of employees' bonuses and reduction of workforce.

  • (iv) Payment suspension of board member's bonus

• [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 2010, until it is confirmed that the plan has been fully implemented.