Long-Term Credit Bank asked to be nationalized — sold a year later for $9.43M

The Long-Term Credit Bank of Japan had lent aggressively to real estate developers in the 1980s; when property prices collapsed in the early 1990s, it was left with a mountain of bad loans the franchise could not outgrow. On 23 October 1998, just hours after new financial stabilization legislation took effect, the bank formally asked to be nationalized — the first government takeover of a bank in Japan since World War II. Its shares had already fallen to a record low of 17 cents, and the Tokyo Stock Exchange suspended trading in them before the open.

The government ran the bank for a year as 'New LTCB'. On 28 September 1999 a foreign consortium led by Ripplewood Holdings agreed to take it over — the first foreign-led acquisition of a major Japanese bank. The new owners paid $9.43 million to the Deposit Insurance Corporation for the shares, and the government planned to inject $2.26 billion into the reformed bank on the condition that the new owners continued lending to its troubled borrowers.

The arithmetic of the resolution: the state absorbed the bad-loan problem at nationalization, spent a year making the bank saleable, and transferred the franchise for a nominal sum — the $2.26 billion injection accompanying the sale. What had been one of Japan's pillar banks was disposed of for the price of a Tokyo apartment, with the taxpayer's capital coming in through the same door.