UPDATE 3-Shinsei headed for $1.1 bln annual loss – sources

* Y100 bln loss due to provisions for property loans-sources

* President Yashiro expected to resign – sources

* Shares rise 2.5 pct; loss in line with market expectations
(Updates with closing share price, adds analyst comment)

By Taro Fuse and Taiga Uranaka

TOKYO, April 14 (BestGrowthStock) – Japan’s Shinsei Bank (8303.T: )
will likely tumble to a net loss of about 100 billion yen ($1.1
billion) for the year just ended due to bigger provisions against
property loans, two sources with knowledge of the matter said.

The loss would mark the second consecutive year the bank has
missed its financial targets, a shortfall that would prompt
Japan’s financial regulator to order it to improve its operations
and result in the resignation of President Masamoto Yashiro, the
sources said.

Shinsei, one-third owned by U.S. buyout firm JC Flowers, has
officially forecast a net profit of 10 billion yen ($107 million)
for the year ended last month, swinging from a 143 billion yen
loss the previous year.

But the bank, prodded by an inspection by the Financial
Services Agency, will boost loss provisions against its roughly
900 billion yen portfolio of non-recourse property loans, the
sources said. It has also been hit by the performance of its
struggling consumer lending business, they said.

Shinsei declined to comment. The sources spoke on condition
of anonymity because they were not authorised to talk to the
media about the issue.

Shares of Shinsei ended up 2.5 percent at 124 yen,
outperforming a 0.1 percent gain in the Tokyo stock exchange’s
banking subindex (.IBNKS.T: ).

The market has been expecting a loss. The average of 3
analysts polled by Thomson Reuters I/B/E/S projects a loss of
87.5 billion yen.

Ehsan Syed, director at Fitch Ratings in Tokyo, said their
concern was how much Shinsei’s capital ratios would be affected.

Shinsei’s ability to “manage its high exposure to domestic
real estate and consumer finance” and to what degree the bank has
been able to clean up its legecy assets, including those
overseas, are also concerns, he said.

The Nikkei business daily, which earlier ran a similar
report, said that despite the loss Shinsei likely maintained a
capital adequacy ratio of 8 percent, the cut-off for globally
operating banks.

Shinsei has not yet fully paid back bailout money it received
following Japan’s banking crisis in the 1990s, requiring it to
meet its earnings targets under FSA rules.

The Nikkei also said that Isuzu Motors Ltd (7202.T: ) director
Shigeki Toma is a leading candidate to replace Yashiro.

Stock Trading

($1=93.20 Yen)
(Additional reporting by Supantha Mukherjee in Bangalore;
Editing by Michael Watson and Chris Gallagher)

UPDATE 3-Shinsei headed for $1.1 bln annual loss – sources