Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

Equity Bottom-Up

Full details are finally starting to emerge of the extent of the destruction to once-proud <a href="https://www.smartkarma.com/entities/suruga-bank-ltd" target="_blank" data-smartkarma-citation="entities:6267:1">Suruga Bank Ltd (8358 JP)</a>‘s balance-sheet and reputation caused by its catastrophic involvement in the fraudulent ‘share house’ debacle and other property investment lending disasters.  FY3/2019 consolidated net losses exceeded ¥97.1 billion (US$892.6 million).  Roughly 60% of the bank’s entire ¥1.7 trillion investment loan portfolio is deemed to have been “inappropriate”, but not necessarily irrecoverable. The bank is cautiously guiding for consolidated net profits in FY3/2020 of ¥10.5 billion, but the dividend remains suspended indefinitely and much uncertainty remains.Heads continue to roll: at least 117 staff have been disciplined, according to media reports.  At the Board level, 5 senior Board members (including then-chairman Mitsuyoshi Okano and then-president Akihiro Yoneyama) resigned on 7 September 2018.  After the upcoming AGM at the end of June, only incumbent president Michio Arikuni is likely to remain of the current management team: all others are expected to step down, including four external directors, as the bank seeks to put even further distance between it and any lingering perception of influence from the Okano Family.Suruga Bank’s share price is currently drifting in the mid-¥400 range.  It is down over 65% YoY.  There is perhaps some comfort to any remaining loyal shareholders in the knowledge that the stock is down a ‘mere’ 19% in the last three months.  That said, potential ‘white knights’, including <a href="https://www.smartkarma.com/entities/shinsei-bank-ltd" target="_blank" data-smartkarma-citation="entities:16897:1">Shinsei Bank (8303 JP)</a>, are biding their time and not rushing to invest, suggesting they, too, expect the stock price to go lower still.  Caveat emptor (May the buyer beware!)

Full details are finally starting to emerge of the extent of the destruction to once-proud Suruga Bank Ltd (8358 JP)‘s balance-sheet and reputation caused by its catastrophic involvement in the fraudulent ‘share house’ debacle and other property investment lending disasters.  FY3/2019 consolidated net losses exceeded ¥97.1 billion (US$892.6 million).  Roughly 60% of the bank’s entire ¥1.7 trillion investment loan portfolio is deemed to have been “inappropriate”, but not necessarily irrecoverable. The bank is cautiously guiding for consolidated net profits in FY3/2020 of ¥10.5 billion, but the dividend remains suspended indefinitely and much uncertainty remains.Heads continue to roll: at least 117 staff have been disciplined, according to media reports.  At the Board level, 5 senior Board members (including then-chairman Mitsuyoshi Okano and then-president Akihiro Yoneyama) resigned on 7 September 2018.  After the upcoming AGM at the end of June, only incumbent president Michio Arikuni is likely to remain of the current management team: all others are expected to step down, including four external directors, as the bank seeks to put even further distance between it and any lingering perception of influence from the Okano Family.Suruga Bank’s share price is currently drifting in the mid-¥400 range.  It is down over 65% YoY.  There is perhaps some comfort to any remaining loyal shareholders in the knowledge that the stock is down a ‘mere’ 19% in the last three months.  That said, potential ‘white knights’, including Shinsei Bank (8303 JP), are biding their time and not rushing to invest, suggesting they, too, expect the stock price to go lower still.  Caveat emptor (May the buyer beware!)

Suruga Bank (8358 JP):  Purging the Augean Stables 2019: Part 7 - Executive Executions

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Event-Driven

In the beginning, Arthur Fonzarelli was cool.<figure class="editor-figure"><img src="https://static-prod.smartkarma.com/images/media/000/005/155/original/fonz.jpg?1453465588" class="editor-image img-responsive" data-smartkarma-image-id="5155"></figure> Then, after four seasons of hit sitcom Happy Days, the writers apparently felt things were a bit dull so they created a plot device to liven things up. It was time for Arthur Fonzarelli (the Fonze) to jump a shark.  Literally. So they made up a story whereby he answered a challenge to his personal courage by having him waterski - resplendent in his leather motorcycle jacket - over a ramp in front of a pen holding a Great White Shark."Jumping the…

In the beginning, Arthur Fonzarelli was cool. Then, after four seasons of hit sitcom Happy Days, the writers apparently felt things were a bit dull so they created a plot device to liven things up. It was time for Arthur Fonzarelli (the Fonze) to jump a shark.  Literally. So they made up a story whereby he answered a challenge to his personal courage by having him waterski - resplendent in his leather motorcycle jacket - over a ramp in front of a pen holding a Great White Shark."Jumping the…

Japan

COSMOS INITIA Co., Ltd. sells real estate properties mainly in Tokyo and Kinki areas. The Company also constructs, manages, maintains, and repairs multi-unit buildings and office buildings and provides real estate brokerage services.

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Cosmos Initia (8844 JP)

Suruga Bank (8358 JP): Purging the Augean Stables 2019: Part 7 - Executive Executions

Full details are finally starting to emerge of the extent of the destruction to once-proud Suruga Bank Ltd (8358 JP)‘s balance-sheet and reputation...

J. Brian Waterhouse

Jumping the Shark? Jumping the Sharp?

In the beginning, Arthur Fonzarelli was cool. Then, after four seasons of hit sitcom Happy Days, the writers apparently felt things were a bit dull...

Travis Lundy

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