Shinsei IR Day Growth Areas: Structured Finance Business Shinsei Bank, Limited February, 2017
Total Picture of the Institutional Business Establish a well-balanced revenue base with growth, stability, and potential . Create new values through group integration and collaboration with regional banks . Stable Revenue Areas Growth Areas Strategic Initiative Areas Growth Stability Potential Institutional business Principal transactions Real estate Structured finance finance Corporate Financial Business Project Specialty banking institutions succession finance finance etc. etc. Regional financial institutions Collaboration with regional banks Group member Individual Global markets companies business business Group integration 2
Structured Finance: History 2013 - Over 15 years of history since Shinsei Bank started Quantitative and qualitative Risk management framework based on lessons easing by the BOJ 2011 learned from the Lehman collapse The Great Launched project finance on a full scale operation after East Japan the heightened momentum for renewable energy Earthquake Project finance following the Great East Japan Earthquake Made a full scale launch in 2012 Know-how Resumed Specialty finance 2008 The Lehman Know-how collapse Started operation in the dawning non- Resumed Real estate finance recourse loan market in the early first decade of the 2000s. 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 - 2000 2004 2010 2013 2016 IPO on the First Implemented the Implemented the Implemented the Started “Shinsei Bank” Sec. of the Tokyo First Medium-Term Second MTMP Third MTMP Stock Exchange Management Plan 3 (“MTMP”)
Structured Finance: Shinsei Group’s Strengths Create added values from our unique positioning that is different from both megabanks and regional financial institutions Expertise and Flexibility and mobility high analytical skills that can be realized only based on by a small-sized bank extensive experience Risks that are not Markets that are taken by regional not captured by financial megabanks due institutions to their size Neutral position not Relationships with belonging to any regional financial major corporate groups institutions Networks with foreign investors 4
Syndication Business and Collaboration with Regional Banks Expand opportunity for earning profits through building win-win relations with regional financial institutions Profit-earning opportunity for regional financial institutions Contribute to revitalization of regional economies by Investment needs from offering new financing regional financial opportunities institutions Distribution Origination Structured Finance Syndication Business Structuring Profit-earning opportunity for the Shinsei Group Know-how of Shinsei Trust & Banking <Group Integration> 5
Market Overview: Real Estate Finance Non-recourse investments Real estate companies and REITs J-REIT market has been expanding significantly since 2011 The market size of real estate private-placement fund inverted and started to expand again in 2016 Distribution facility and hotel assets are growing rapidly recently Although the market is partially overheated, there are J-REIT as one of the exit strategies of real estate private many contributing factors: placement fund investments contributed to the growth Favorable fundraising environment backed by The market is expected to keep expanding supported by monetary easing for example a purchase by the BOJ Effects of government policies for the coming Olympic Strong and steady demand for funds from real estate games in Tokyo companies centered on medium-to-large seized developers Inbound investments by foreign investors Real estate private placement fund market (Japan ) J-REIT market Assets under management Asset size based on acquisition price (JPY trillion) (JPY trillion) 20 20 18.1 14.8 15.5 14.8 15 15 10 8.0 10 5 5 0 0 Source: Graph prepared by Shinsei Bank based on the research data from Source: Graph prepared by Shinsei Bank based on the research 6 Sumitomo Mitsui Trust Research Institute data from The Association of Real Estate Securitization
Strategies and Progress of the Third MTMP: Real Estate Finance Strategies Progress in FY2016 Real estate non-recourse finance: New deals executed from April to December (9 months) amounted to JPY 183.4 billion Real estate non-recourse finance: Execute approximately although we provided finance on a selective basis primarily in JPY200 billion in new deals every year by responding to assets of domestic and overseas offices, hotels, and distribution customer needs in a speedy and flexible manner, while warehouses. carefully considering market conditions as well as The asset balance decreased by approximately JPY50 billion determining its risk-return profile. Seek large scale deals by during the same period above through the sell-down as a disposal strategy of syndication business as well as a high level strengthening the syndication business. of prepayments in the market where property trading still remains Real estate companies and REITs: Accumulate the active. balance by expanding our market share, capturing J-REIT’s Real estate companies and REITs: Executed a number of new external growth and IPO opportunities. deals centered on J-REITs. We also successfully won those Boost profitability by winning deals we perform as an deals with Shinsei performing as an arranger. Deals for real estate companies such as developers trended steadily with the arranger. strong demand for funds. Plan Actual (Unit: JPY 100million) (Unit: JPY 100million) Real estate non-recourse Real estate non-recourse Down 4% Up 4% Real estate companies and REITs Real estate companies and REITs (annual average growth rate) (annual average rate) 10,000 10,000 7,500 7,500 Operating Operating asset balance asset balance 5,000 5,000 2,500 2,500 0 0 2016.3 2019.3 2016.3 2016.12 7
Market Overview: Project Finance Renewable energy power generation facilities implemented (Japan) Market size In the volume of origination, global project finance has Mega Solar (Output 1MW or more) been performing stably at over JPY20 trillion since （ MW ） 2010. Strong needs are expected to continue centered 40,000 on infrastructure projects. unintroduced In the domestic power generation facilities for 30,000 renewable energy, its unintroduced capacity remains 20,000 significant while the certificated capacity of mega solar power plants has hit a peak. In others such as wind and 10,000 biomass areas, their markets are still small but we expect them to grow in the medium-to-long terms. 0 2012.12 2013.6 2013.12 2014.6 2014.12 2015.6 2015.12 2016.6 Global project finance origination volumes Other Renewable Energies (JPY trillion) Trending stably at more than JPY20 trillion (wind, biomass, and others) （ MW ） 30 8,000 20 6,000 4,000 10 2,000 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2012.12 2013.6 2013.12 2014.6 2014.12 2015.6 2015.12 2016.6 Certified Capacity Introduced Capacity Source: Graph prepared by Shinsei Bank based on the data from Project Finance International ($1=JPY110) Source: Graph prepared by Shinsei Bank based on the statistical data from the Agency for Natural Resources and Energy 8
Strategies and Progress of the Third MTMP: Project Finance Strategies Progress in FY2016 Japan: New deals closed from April to December (9 months) amounted to JPY71.2 billion. (the same period for FY 2015: Japan: Diversify deals leveraging our market presence JPY13.8 billion) we developed through mega solar deals. We focus on: Mega solar deals continue to perform strongly and closed Deals requiring sophisticated risk analyses unlimited output deals by leveraging sophisticated risk analysis techniques. We also closed other two thermal power deals. In Alternate power source deals such as wind, addition, some deals in wind and biomass power generation are biomass, and thermal currently under consideration. Overseas: Develop and execute quality deals Overseas: New deals closed from April to December (9 months) leveraging our networks with Japanese sponsors and amounted to JPY51.3 billion (the same period for FY2015: overseas financial institutions JPY41.8 billion) Well-balanced originations geographically in the Asia and Europe regions, and Australia. Deals introduced by Japanese sponsors are increasing. Plan Actual (JPY 100 million ) Up 24% (JPY 100 million ) Up 40% (annual average (annual average growth rate) 4,000 growth rate) 2,000 3,000 2,000 Operating Operating 1,500 asset balance asset balance 1,000 0 1,000 2016.3 2019.3 2016.3 2016.12 9
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