Taiwan's Chinatrust Commercial Bank will become the first ever foreign financial to buy a Japanese lender after the group reportedly sealed a deal to purchase privately-owned Tokyo Star Bank.
According to the Nikkei Business Daily, Taipei-based Chinatrust will buy Tokyo Star for 52bn yen ($519m, £338.1m, €392m) from US investment fund Lone Star and other shareholders.
The acquisition is expected to be completed by September or October this year and is subject to regulatory approvals.
Lone Star became the largest shareholder in Tokyo Star Bank in 2011 after Advantage Partners, a Japanese private equity firm, surrendered the ownership of the group due to trouble in repaying their debt.
Other than Lone Star, Tokyo-based Shinsei Bank and French Bank Credit Agricole are other shareholders of the Tokyo Star.
Investor Appetite for Tokyo Star
Tokyo Star is the descendant of Tokyo Sowa Bank, which collapsed in 1999. It has 31 offices in Tokyo metropolitan area, Sapporo, Sendai, Nagoya, Osaka, Kobe, Hiroshima and Fukuoka.
Chinatrust, on the other hand, has assets worth more than 1.89tn Taiwan dollars, making it one of the largest commercial banks in Taiwan.
It was set up in 1966 and has a network of 214 offices in Taiwan, Japan, the US, Canada and other Asia countries.
Tokyo Star posted a 68.2% increase in net income at the end of March 2013, compared to the previous year.
In April, the media speculated that Taiwan's largest issuer of credit cards, Chinatrust, was seeking a deal with Tokyo Star, as Japan's property market was forecasted to be boosted by Prime Minister Shinzo Abe's efforts.
Privately-owned Tokyo Star focuses on mortgages alongside corporate lending in industries such as health care and shipping.
The acquisition is also predicted to help Chinatrust to bridge the gap between corporate customers in Taiwan and the world's third largest economy.
The Japan Times News reported in December last year that Tokyo Star is in talks with Chinatrust Bank, which is a unit of CTBC Financial Holdings, for a possible acquisition.