Shimane Bank (7150) said on 16 October it plans to sell about ¥60bn of securities between January and March 2027, booking a loss of about ¥6.5bn, and proposed a ¥10bn issue of Class C preferred shares to SBI Shinsei Bank.
From profit to a one-off loss
The sale turns the bank's consolidated forecast for the year to March 2027 from a profit into a loss. Ordinary income was previously forecast at ¥330mn and net profit at ¥270mn. It is now an ordinary loss of ¥5.96bn and a net loss of ¥5.98bn, or ¥750.45 per share. The bank calls the loss one-off and says its capital ratio should rise to about 8.5% by the end of March 2027. The forecast dividend is unchanged at ¥10 per common share for the year.
The bank also revised its 2028 medium-term targets. Net profit is now targeted at ¥1.2bn instead of ¥600mn, and the capital ratio at about 9% instead of about 7.5%. Core business profit is cut to ¥1.7bn from ¥2.2bn. The chairman and the president will each take a 30% pay cut for January to March 2027.
Separately, the bank raised its interim forecast for the six months to September 2026. Consolidated ordinary profit is now ¥260mn, up from ¥150mn, and net profit is ¥100mn, down from ¥120mn. The bank cites a gain on loan receivable transfers, higher securities interest and fee income, and lower expenses, which more than offset credit costs running above plan.
The preferred shares
SBI Shinsei would take all 10,000,000 Class C shares at ¥1,000 each. The shares carry no voting rights. The dividend is 12-month yen TIBOR plus 1.00%, capped at 8% and floored at 1.00%. In any year when common-share dividends total zero, the rate is plain TIBOR, with a floor of 0%. Payment is due on 25 December 2026, and the bank expects net proceeds of about ¥9.91bn, earmarked for lending to local businesses.
Holders can ask for common shares from 25 December 2031 to 24 December 2041, at a price reset each April and October within a band of ¥407 to ¥610. Any shares not retired are converted on 25 December 2041. From 25 December 2036 the bank may redeem the shares for cash, after confirmation from the Financial Services Agency, and says it intends to do so to avoid conversion.
Dilution and control
If every Class C share converted at the ¥407 floor, the bank would issue common shares carrying 245,700 voting rights, against 83,559 existing. That is about 294% of existing voting rights. It is a ratio to the current voting base, not a post-conversion ownership stake. The filing says conversion would be expected to change the controlling shareholder. That, with dilution above 25%, triggers a Tokyo Stock Exchange requirement for an independent opinion or a shareholder vote, which the bank will meet through the special resolution described below.
SBI Shinsei already holds 1,747,200 common shares, or 20.90% of voting rights, and has been the largest shareholder since 30 June 2026. The filing notes that the bank's managing director was an executive director at SBI Shinsei until 23 June. Two directors with a special interest did not take part in the board vote.
The bank judges the ¥1,000 price fair against an independent valuation range of ¥957.1 to ¥1,023.1 per share. Because unlisted shares have no market price, and it cannot fully rule out that the price could be treated as especially favourable, it will, as a precaution, seek approval by special resolution at an extraordinary shareholders' meeting on 24 December under the procedure for favourable-price issues. Class meetings of common, Class A and Class B holders must also approve the amendment to the articles. The record date is 31 October, and the bank plans to decide the meeting agenda at a board meeting in November. Issuance depends on all of these approvals.