Chinatrust Bids for Tokyo Star Bank

TOKYO (Nikkei)--Taiwan's Chinatrust Commercial Bank presented an official proposal to acquire Tokyo Star Bank to shareholders of the embattled midtier bank on Thursday, The Nikkei reported in its Friday morning edition.

Most of the shareholders, which include U.S. equity firm Lone Star Funds, Shinsei Bank (8303.TO) and France's Credit Agricole group, are believed to have indicated their support for the bid.

The acquisition price will not be finalized until due diligence is completed, but the proposal puts the price tag for almost all shares in Tokyo Star Bank at roughly Y50 billion.

Pending a final agreement with shareholders, the deal will be reviewed by the Financial Services Agency. Once this hurdle is cleared, Chinatrust will become the first foreign bank to acquire a Japanese bank. Previous foreign takeovers of Japanese banks mainly involved investment funds, such as Cerberus Group and Ripplewood Holdings LLC -- now RHJ International.

Tokyo Star Bank, whose branch network covers such major cities as Osaka, Nagoya and Fukuoka, traces its origins to Tokyo Sowa Bank, which went belly up in 1999. The bank was acquired by a Japanese investment fund via a special purpose company in 2008. This fund ran into a problem paying back loans from Lone Star Funds, Shinsei Bank and others following the Lehman shock. This led to these lenders coming into possession of Tokyo Star Bank shares.

Holding more than Y4 trillion in deposits, Chinatrust is one of the biggest commercial banks in Taiwan. It has overseas branches in Japan, mainland China, India and other Asian countries.