Bloomberg Printer-Friendly Page

Page 1 of 2

Aozoras Sacasa Said to Step Down; Replaced by Prince (Update3)

Email | Print | A

AA

By Finbarr Flynn and Takahiko Hyuga Feb. 10 (Bloomberg) -- Aozora Bank Ltd., the Japanese lender controlled by Cerberus Capital Management LP, will replace Chief Executive Officer Federico Sacasa with Deputy President Brian Prince, two people familiar with the plan said. The Tokyo-based bank will also appoint Yuji Shirakawa, 73, as chairman, the people said, declining to be identified before an announcement. Prince, 45, was previously an executive with Shinsei Bank Ltd. and Lehman Brothers Holdings Inc. in Tokyo. Aozora, the third-worst performer on Japans 84-company banking index in the past year, will cut its full-year earnings forecast after writing off most of its troubled overseas assets and boosting reserves for loans, a person familiar with the matter said. The bank, which has forecast a 27 billion yen ($300 million) loss for the year ending March 31, may post a 200 billion yen deficit, the Nikkei newspaper reported today, without saying where it got the information. Prince is very well regarded in the market and is much more familiar with Japan than his predecessor, said James Fiorillo, managing partner at Tokyo-based private equity advisory firm Ottoman Capital Japan. The writeoffs this year are a good move, he said. The Nikkei also said Sacasa would step down to take responsibility for the loss. Sacasa didnt return a phone call seeking comment. Aozora will join Japans biggest banks in lowering its earnings estimate. Mitsubishi UFJ Financial Group Inc. slashed its full-year forecast 77 percent on Feb. 6 after posting a third-quarter loss on rising bad loans and soured stock holdings. Mizuho Financial Group Inc. cut its profit estimate 60 percent after reporting a 145.1 billion yen loss in the third quarter. Shares Fall Aozora fell 0.9 percent to 106 yen as of 1:34 p.m. in Tokyo while the banking index gained 2.1 percent. Prince led Shinsei Banks drive to cut $20 billion of bad loans while serving as an executive. Aozora will seek to boost its retail deposits through alliances or mergers with other financial institutions, a person familiar with the matter said. Sacasa, 58, cut Aozoras full-year profit forecast on Nov. 14 for the third time since May. He is the second chief executive of a major Japanese bank to be replaced in the past three months after losses on overseas investments forced Shinseis Thierry Porte to step down in November. Sacasa was named CEO on Feb. 21, 2008, replacing Kimikazu Noumi. He joined Aozora in February 2007 as a senior managing executive officer. Sacasa previously held executive positions at Wells Fargo & Co. and Bank of America Corp. Shirakawa helped set up Nikko Salomon Smith Barney Ltd., an investment banking joint venture between Citigroup Inc. and Nikko Cordial Corp., in 1999 and served as chairman of the business, later renamed Nikko Citigroup Ltd. Aozoras profit fell 93 percent to 5.9 billion yen last year as it booked a 45.4 billion yen loss on collateralized debt obligations.

http://www.bloomberg.com/apps/news?pid=20670001&refer=&sid=avg4J_xqOsi4

2/12/2009

Bloomberg Printer-Friendly Page

GMAC Investment

Page 2 of 2

Japans financial regulator ordered the bank to improve business operations in July after it fell short of a profit target pledged to the government, which helped bail out the bank in 2000. Aozora said in December it has no more than 12.4 billion yen at risk in investments related to Bernard Madoffs investment funds. Madoff is alleged to have orchestrated a $50 billion fraud and is under house arrest after Federal Bureau of Investigation agents arrested him Dec. 11. Aozora is taking losses for a second year on its November 2006 investment in GMAC, the partly owned finance unit of General Motors Corp. Aozora wrote down the $500 million investment by 70 percent by Sept. 30 and will write it down by about 97 percent, a person familiar with the matter said. Shinsei, part owned by private equity investor Christopher Flowers, said last week it expects to post a full-year loss of 48 billion yen. Porte was replaced by Masamoto Yashiro, Shinseis chairman and former president. Ratings Outlook Moodys lowered Aozoras senior unsecured debt rating on Oct. 29 by one grade to A3, the fourth-lowest investment grade, with a negative outlook. Aozoras earnings, particularly from its domestic investment banking and global investment businesses, will remain volatile, Moodys said in a statement at the time. The negative rating outlook reflects continuing uncertainty in the banks revenue prospects, given an increasingly difficult operating environment in the domestic market. To contact the reporters on this story: Finbarr Flynn in Tokyo at fflynn3@bloomberg.net; Takahiko Hyuga in Tokyo at o thyuga@bloomberg.net Last Updated: February 9, 2009 23:48 EST

Terms of Service | Privacy Policy | Trademarks

http://www.bloomberg.com/apps/news?pid=20670001&refer=&sid=avg4J_xqOsi4

2/12/2009