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Shinsei bank 1.5b dollar loss

TOKYO, May 5 – Japan\’s Shinsei Bank, successor to a troubled state-run lender, is expected to report a net loss of some 140 billion yen (1.5 billion dollars) for the year ended March, a newspaper said Wednesday.

The warning, which comes as Japan tries to shake off protracted economic troubles, follows sizable losses for Shinsei from investments in real estate and overseas transactions, the Nikkei business daily reported.

Shinsei was Japan\’s first lender to be bought by a foreign fund after its forerunner, Long Term Credit Bank, a major power behind Japanese economic expansion, collapsed under a pile of bad debt in the late 1990s.

A Financial Services Agency inspection had found Shinsei suffering a roughly 140 billion yen shortfall in loss provisions, the newspaper said.

Shinsei\’s president, Masamoto Yashiro, is to be replaced by an Isuzu Motors director, Shigeki Toma, as part of a shake-up following the losses, the newspaper said.

The bank will also officially confirm the termination of merger talks with Aozora Bank when it releases earnings results on May 14, it said.

Shinsei and Aozora, which have been hit hard by the global financial crisis, announced in July a planned merger of equals that would have created the nation\’s sixth-biggest commercial bank.

Negotiations eventually ground to a halt, with Shinsei seeking to expand its retail operations while Aozora is more keen on working with regional banks, news reports said.

Aozora was also formerly a long-term credit bank, which was bailed out with public money during Japan\’s banking crisis of the 1990s and later sold to private investors.

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