TOKYO — Japanese electronics retailer Nojima is set to begin procedures for selling its 18.52% stake in the embattled Suruga Bank, Nikkei has learned.
The two companies have clashed over the appointment of directors, and if repairing relations proves difficult, Nojima will start the procedures for selling its share of Suruga Bank, a regional bank based in Numazu, Shizuoka Prefecture. Nojima has already informed Suruga Bank and the Financial Services Agency, which has issued approval for major shareholders. It is unknown at this time when and to whom Nojima would sell.
Nojima reached a basic agreement with Suruga Bank in May 2019 to form a business alliance. In October that year, it bought the Suruga Bank shares owned by the founding family for about 14 billion yen ($128 million). In May 2020, the retailer formally entered into a capital and business alliance to support the bank’s restructuring.
To accelerate the rebuilding of the bank, Nojima wants to appoint nine candidates as directors, giving it a majority on board, including the president, who would also be representative director. However, the current management of the bank is reluctant to accept Nojima’s proposal, and it is likely that it will be rejected at the board meeting on Thursday.
Suruga Bank made a counterproposal for Hiroshi Nojima, a member of the retailer’s founding family, to be promoted from vice chairman to chairman, but that is unlikely to be accepted.
In April 2018, the Financial Services Agency launched an emergency inspection into Suruga Bank over investment irregularities involving women-only shared houses. Suruga Bank is the lender for a chain of shared houses called Kabocha no Basha (Pumpkin Carriages), operated by Smart Days. The bank has been involved in wrongdoing, including altering documents to smooth the screening of loan applications. In October 2018, the Financial Services Agency issued a business improvement order, including the suspension of some businesses.
The inappropriate loans exceeded 1 trillion yen — equaling 60% of all of its loans. In the process, deposits flowed out, and the balance of deposits decreased by 924 billion yen,one-fifth of the total held in the year ended March 2019.
