Japan: Slow pace of bank reform

Two unconnected events in the Byzantine world of Japanese banking indicate some progress, albeit slow, in the reform of this troubled sector.

In October, Tokyo Star Bank, a small regional bank, filed for an IPO on the Tokyo Stock Exchange. Tokyo Star Bank, formerly the collapsed Tokyo Sowa Bank, was restructured by US private-equity firm Lonestar, famous for turning around Shinsei Bank and earning huge profits from the resulting IPO. Although Tokyo Star is much smaller than Shinsei, Lonestar stands to profit handsomely also, divesting shares that it bought in 2001 from the government at a price several times that amount when the IPO prices later this month.

Also in October, the merger between Japanese banking groups Mitsubishi Tokyo Financial Group and UFJ Holdings was finally completed, creating Mitsubishi UFJ Financial Group, the world’s largest bank measured by its $1.67