Information Technology and Innovation at Shinsei Bank

5913 words 24 pages
9-607-010
REV: OCTOBER 4, 2007

DAVID M. UPTON VIRGINIA A. FULLER

Information Technology and Innovation at Shinsei Bank
Jay Dvivedi looked once more at the proposal in his email inbox, sighed and closed his laptop for the night. He owed his boss, Shinsei CEO Thierry Porte, a response and he knew that he would need to send it in morning. One of the heads of Shinsei’s business units had approached Porte directly with a proposal for a new, off-the-shelf customer relationship management (CRM) system for his business. He wanted to fund it and implement with his own personnel, but he needed approval from Porte. Before Porte responded he had requested input from Dvivedi. When Dvivedi discussed the idea with his team the opinion was divided. The
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private equity fund, Ripplewood Holdings, with Goldman Sachs representing the Japanese government. Masamoto Yashiro, former president of Exxon Japan who had just retired after heading Citicorp Japan, was persuaded to join the American investors in acquiring the bank. The government initially favored selling the bank to a Japanese financial institution or an industrial company, but Ripplewood eventually won the bid. On March 1, 2000, LTCB became the first Japanese bank with foreign ownership.

“New Birth”
The name of the bank was changed to “Shinsei,” and Yashiro became CEO. In the first few months, Yashiro moved quickly to establish a new organization and build the bank’s business in three main areas: commercial banking, retail banking2, and investment banking. LTCB had previously generated most of its revenues from corporate loans, but Yashiro was eager to move out of this low-margin business. “The asset quality [of our loans] was extremely poor, the number of corporate and individual accounts had shrunk by 40%, the traditional business – corporate lending – was very unprofitable, and the bank’s IT infrastructure and operational capability were significantly inferior even relative to our local competition,” said Yashiro. Fortunately, the bank had received JPY 240 billion in public funds, and was able to start business with a strong capital ratio3 of 12.2%.

2 Banking services for individual

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