The refusing decision was announced after Shinsei held a board meeting Thursday, raising the prospect of a rare hostile takeover bid in the Japanese financial sector. In addition, Shinsei is planning to seek approval for launching a defense against SBI in an extraordinary meeting next month.
At the board meeting, Shinsei decided on a counterproposal, calling for SBI to remove the limit on its share purchase, a condition that SBI is unlikely to accept as under the Japanese law, obtaining a majority stake in a bank needs regulatory approval.
SBI, which is aspiring to become the fourth Japanese megabank, in early September launched a tender offer to shareholders of Shinsei Bank, aiming to raise its stake in Shinsei from the current 20 percent to a maximum of 48 percent.
The financial group is offering 2,000 yen (17.5 U.S. dollars) per Shinsei share, higher than about 1,900 yen the stock was trading at on Thursday.
If the tender offer goes smoothly, SBI wants to replace some or all of the current Shinsei management, which SBI regarded them failing to bolster the bank's profitability, and premises to deal with the repayment of massive public funds the bank's predecessor received two decades ago.
Shinsei's predecessor, the Long-Term Credit Bank of Japan (LTCB) was collapsed in 1998 and received 370 billion yen (3.34 billion dollars) in public funds. Japanese Prime Minister Fumio Kishida once worked for LTCB prior to entering politics.
In late September, SBI acquiesced to Shinsei and extended the tender offer period until Dec. 8 from Oct. 25 after the bank threatened to launch part of its defense measures.
Shinsei's planned defense, which still awaits shareholder approval, is to issue new shares to existing shareholders to dilute SBI's holdings.
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