Shinsei : Institutional Banking Group Evolution Differentiation Through Merrill Lynch Conference Innovation September 9, 2005 Thierry Porté President and CEO

Japan Investment Conference 2006 January 20, 2006 1 Forward Looking Statement

9The following materials may contain statements that constitute forward-looking statements, plans for the future, management targets, etc. relating to the Company and its subsidiaries. These forward-looking statements are based on current assumptions of future events and trends, which may be incorrect. Actual results may differ materially from those in the statements as a result of various factors.

9Unless otherwise noted, the financial data contained in these materials are presented under Japanese GAAP. The Company disclaims any obligation to update or to announce any revision to forward-looking statements to reflect future events or developments. Unless otherwise specified, all the financials are shown on a consolidated basis.

9Information concerning financial institutions other than the Company and its subsidiaries are based on publicly available information.

9These materials do not constitute an invitation or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contract or commitment whatsoever.

2 Differentiation Through Innovation

Agenda

1. A different kind of Japanese Bank

2. Institutional Banking

3. Consumer and Commercial Finance

4. Retail Banking

5. Conclusion

3 More Global than the Local More Local than the Global Banks

‰ Shinsei is now uniquely positioned in Japan as a hybrid commercial and investment bank.

‰ We have the relationships and lending capabilities of traditional Japanese banks AND a line of products on par with those of global banks in Japan.

Going Forward… Hybrid

Foreign Banks Shinsei

Mega Banks Small Old Large LTCB

Variety of Products Regional Banks Commodity Number of Customers

4 3 Pillar Strategy

‰ Our strategy is based on 3 core customer-centric business lines supported by world-class infrastructure, risk management and corporate governance

Institutional Banking 9 Unique hybrid commercial and Retail Banking model 9 Attractive and innovative value 9 Value-added solutions to targeted Institutional proposition customers Banking 9 Strong brand development 9 Integrated teams of product specialists and relationship 9 Highly efficient bricks and clicks Retail distribution model managers for quick and efficient Banking delivery Customers Consumer and Commercial Finance 9 Business scale increase via Consumer acquisitions and 9 Implementation of Shinsei’s expertise Commercial and know-how 9 Synergies with Institutional / Retail Finance Banking businesses

Risk Management Corporate Governance Modern IT Platform

5 Shinsei Solutions to Meet Customer Needs

Customer Needs Shinsei Solutions

Institutional Customers Institutional Customers

Assets Liabilities Business Reorganization Institutional Securitization Commitment Line Asset Management Banking Structured Depo Loans, Leasing Risk Management Investment Trust Loan Syndication

Cost Effective Funding Credit Trading Property Finance Consumer M&A Advisory Private Equity Balance Sheet Improvement and NRL, Project / Leveraged Finance Business Expansion, M&A Commercial Finance Forex, CP, Derivatives

Individual Customers Individual Customers

PoweredOne Structured Depo Higher Returns 24x7 Free ATM Services Lower Costs Retail Banking PowerSmart Flexible Housing Loan Ease of Use

Convenience Extended Banking Hours, Online Banking Pre-selected Range of Products Investment Trusts, Annuities

6 Shinsei Corporate Governance

‰ Highly transparent management and strong monitoring function 9 Adoption of company with committees board model from June 2004 9 Clear separation of business execution function from strategy development and monitoring function 9 17 Directors, including 13 outside directors 9 14 Statutory Executive Officers, including two directors ‰ Three Committees (Nomination, Compensation, Audit) comprised of a majority of outside directors ‰ Effective practice of internal audit 9 Report to both CEO and Audit Committee, independent of the audited business units 9 Received the Institute of Internal Auditors Japan (IIAJ) Chairman's Award in September 2005

7 Shinsei Human Capital

‰ Equal opportunities employer Unique Blend of Talents Shinsei staff as of December 2005 ‰ Seniority-system abolished Ex-LTCB: 50% Mid-career: 40% ‰ Specialized skills and experience promoted New Grads: 10% Male vs Female: 53% vs 47% Japanese vs non-Japanese: 94% vs 6% ‰ Continuous learning culture % of female managers: 16%

‰ Active mid-career hiring

‰ Unique blend of backgrounds and cultures

8 Shinsei IT

‰ Low cost, standard off the shelf components ‰ Leveraging the internet to move work to the lowest cost location possible ‰ Collaborating with virtual teams in India, Singapore, Malaysia ‰ Standard re-usable building blocks to ensure speedy and timely delivery ‰ Totally paperless process ‰ Control by machines to reduce friction in operations ‰ Standard processes to improve productivity ‰ Leverage technology to make process repeatable and scalable

9 Shinsei International Strategy

Rationale Filter / Trigger International Opportunities I. Earnings Quality and Diversification ‡ Broaden the Shinsei franchise Core Competencies ‡ Generate opportunistic P&L Investments Japanese Client and Market II. Capital Deployment Knowledge ‡ Deploy a disciplined amount of Risk Capital, and diversify earnings stream Risk Assessment and Asset Partnerships Valuation ‡ Monetize Country Risk capacity (unused resource) Financial and Portfolio Investments Acquisitions III. Ongoing Development Business Transformation ‡ Maintain a continuing “window” on financial technology. Technology and Process Advisory Management ‡ Build affiliations with “like- minded” institutions, for synergy, including for Japan opportunities.

10 Differentiation Through Innovation

Agenda

1. A different kind of Japanese Bank

2. Institutional Banking

3. Consumer and Commercial Finance

4. Retail Banking

5. Conclusion

11 Relationships and Products Universe of Relationships

Corporates Financial Real Estate Public Sector Institutions

New Securitization Asset Classes

Loan Syndication

Capital Markets Distribution

Wealth Management Growth Areas Asset Management

Securitization

Non-recourse Lending

Credit Trading Stable Base

12 Relationships – Corporates

Segment the customer base and ensure that each relationship receives the appropriate level of service and time

Previously Principles of the New Organization # of Customers Industry Account Segmentation Only Segmentation Strategy Previously • 4,000+ customers covered by 200 RMs Industry 1 Custom tailored, per client Key perspective Industry 2 Currently • 2,000 customers Industry 3 covered by 164 RMs

Short list of core (Spend 90% of Time Here) Priority Industry 4 clients

Industry 5

Industry and needs Industry 6 focused organization Corporate and the remaining 2,000 + developing the rest customers are covered, of the business • No differentiation in terms but not as closely of time spent on (Spend 10% of Time Here) customers by RMs

13 Relationships – Real Estate Finance Unique needs of this sector require a completely integrated coverage approach Coverage Customer Needs Shinsei Solutions

Credit Product Team

Real Estate Stable and flexible Corporate Loan funding Syndicated Loan

M&A Improve Balance Construction Derivatives Sheet REIT Finance Securitization (CMBS/RMBS)

Expand Business NRL AMD & Wealth Hotel Domain Management Other Unit Product

Structured Product Team

‰ Real Estate Finance Division integrated with the real estate, construction, and hotel-related Corporate Banking Business Divisions, to form comprehensive Real Estate Finance Sub-Group (REFS).

‰ We can now increase product penetration into existing accounts and increase new accounts through development of innovative schemes (e.g. nursing home finance, apartment loan financing, MBS, etc.)

14 Relationships – Public Sector Finance

Over the next 10 years we will see more innovation in this sector than anywhere else in Japan. We have a great brand and are positioning to capitalize on it.

Customer Segments Customer Needs Shinsei Solutions

Bilateral Loans Government Constant raising of cheap Current Solutions funds Agencies Syndicated Loans

Non-Recourse Loans Diversify fund-raising Municipalities sources Bond Issuance

Securitization Growth Areas Affiliated Efficient balance sheet PFI

Corporations Ultra-long term Funds

‰ Created Public Sector Finance Sub-Group (PSF) in May 2005 ‰ PSF oversees, and centrally coordinates, the activities of all Public Sector RMs, both in the Headquarters and in the various branches

15 Relationships – Health Care

Healthcare Market Market Background Limited Competition

Total 164,490 ‰ Funding Needs Still a wide-open battlefield Total (¥T) 35 y Needed to Reconstruct the aging hospital facility ‰ No. of Firms y Needed to Change the equipment for new bed y Alliance with consulting firm Healthcare 9000 Mediva Corporations standard ‰ Star Bank ‰ Improving the credibility of hospital accounting y NRL to nursing care corp. 92000 Clinics y Implement of Hospital

Hospitals accounting standard ‰ RBS y Whole Business Securitization y Tendency to accept an external auditing Dental ‰ Orix Clinics y Wide range of businesses but 63000 ‰ Changing the banking standard of hospital with small transaction sizes valuation 330 ‰ City/Regional Banks Healthcare corps y From only secured by 160 y Bank Loans with nursing facilities real estate to the validity of the business planning Nursing Care Corps

16 New Solutions: Asset Management

Shinsei Bank’s unique Asset Management business model

【What we don’t do】 【What we do】 【Advantages for Shinsei Bank】 Unlike most competitors, STEP 1 Carefully analyze the we do NOT manage client investment needs of a client By focusing on distribution, assets ourselves, to find the optimal solution for we… because… the clients’ risk/return requirements 1. Avoid cost of maintaining 1. We do not believe that we, a portfolio management or any other asset STEP 2 operation management operation is Identify “best-in-class” portfolio 2. Reduce operational risk able to generate superior managers among the global performance in every asset universe of managers to solve the 3. Reduce management class. investment problems of our client complexity 2. We do not have internal STEP 3 4. Can fire poor managers pressure to sell what we Package the product in an and replace them with investor-friendly format in produce – so, there is no compliance with better ones conflict of interest. legal/tax/regulatory requirements

17 New Solutions: Wealth Management A JV between Institutional Banking Group (RBG) and Retail Banking Group (RBG) yields a number of synergies:

‰ Customer focus: Can service the needs of company owners/founders as well as wealthy individuals

‰ Full access to all of the bank’s products and clients

‰ RM/Sales teams: Provides natural linkage between retail sales and corporate RMs

‰ Infrastructure: Provides ability to leverage existing infrastructure (e.g. risk management, IT, compliance, securities and operations)

‰ Physical Branch Network: Maximizes use of regional presence

‰ Internet Capability: Leverages RBG’s internet services to serve JV customers and corporate customers

Retail Wealth Institutional Banking Management Banking Group JV Group

18 New Solutions: New Securitization Asset Classes

Achievements New Activities

‰ Market is shifting from ‘traditional ‰ Established a presence in the market securitization’ to ‘new frontier’ as one of the top players ‰ Currently working on transactions: Whole ‰ Asset Class: RMBS, CMBS, CLO, Business Securitization (WBS) Consumer Loan, Credit Cards, NPL • Hospitals Lease etc. • Pachinko Parlors • Nursing House ‰ FY 2000 – 2004 • Broad Band Telecom Total arrangement volume exceeded JPY 1.7 trillion ‰ Financial Instrument repackage is a (72 transactions) boost

New Securitization (WBS) ‰ ABS Market will grow accompanied with Traditional Securitization WBS

‰ We will continue to be the top player in the new market

19 Institutional Banking: Strong Growth with Varied Revenue Mix

Highlights during 1HFY2005 Revenue Breakdown by Products 1HFY200460 vs 1HFY2005 JPY Bn

‰ Non-recourse Real Estate Finance 52.6 9 Revenue increase of 26.1% 50 49.5 9 Balance up 14.4% to JPY 851.8 billion 11.2 Non-recourse loans 8.9 9 80 new deals closed 40 ‰ Corporate Lending 7.4 9.4 Forex, Derivatives, 9 Revenue increase of 21.4% Equity related 9.2 5.9 9 Loan balance grew 6.8% to over JPY 30 Credit Trading 2.6 trillion 8.6 2 ‰ Securitization 7.1 Corporate Loans* 9 Concluded 10 new deals with JPY 20 235.6 billion total issuance 8.2 8.1 Securitization

‰ Other 4.3 Principal Investment 10 3.7 9 Foreign exchange, derivatives and 3.3 3.3 Other Capital Markets*1 equity related capital markets revenue 1.3 1.4 1HFY2004 1HFY2005 increase of 28.3% 0 *1: Significant portion of this income relates to business activities in Shinsei Securities and Shinsei Trust *2: Includes balance sheet and specialty finance loans Note: Management accounting basis

20 Differentiation Through Innovation

Agenda

1. A different kind of Japanese Bank

2. Institutional Banking

3. Consumer and Commercial Finance

4. Retail Banking

5. Conclusion

21 Shinsei Delivers Value Through a Dedicated Team Aligned by Functional Expertise

We Do Not Operate As a Traditional “Affiliates Management Department”

CONSUMER & COMMERCIAL FINANCE

FINANCE MARKETING RISK IT/OPERS HR M&A

People Platform Funding Sales Force LT Migration Underwriting Development Expansion Expertise Mgmt To Flexible Risk Data And Open Expense Career Major Brand / PR Analytics Architecture Control Mobility Alliances

Consumer Small & Medium Specialty Property Solutions Business Solutions Solutions

(Shinsei Property Finance) (Showa Leasing) (APLUS) (Shinki) (Life Housing Loan) (Shinsei Business Finance) (Shinsei Sales Finance)

22 Earnings Growth to Come from Execution on the “Basics”

Near-Term Earnings Growth From Lower Cost Business Model…Long Term Growth From Continuous Improvement From Front To Back

Volume 9 Stabilize core revenue sources Revenues Margin 9 In-depth profitability analysis Fees 9 Optimize product and channel mix

SG&A 9 ST cost basics Expenses Funding 9 LT infrastructure migration Credit 9 ST & LT dramatic COF improvement 9 Stabilize credit & ensure discipline Tax 9 Fully utilize NOL position over near term Income

23 Many Potential Synergies Within Consumer & Commercial Finance Business

Early identifiable gains from synergy Targeted work/cooperation begun

SHINSEI BANK SHOWA LEASING 9 Capital Markets 9 Consumer Auto Lease 9 Cross-Sell (credit card, 9 Consumer/Commercial personal loan, merchant Vendor Programs introduction) APLUS 9 IT APLUS SHINSEI BANK SHINSEI SALES FINANCE 9 Operational Synergies 9 Property Lending 9 Treasury / Capital Markets 9 Consumer Auto Lease SHINSEI SALES FINANCE 9 Cross-Sell SHINSEI PROPERTY FINANCE 9 Joint 9 Consumer/Commercial LIFE HOUSING LOAN Market 9 IT Showa Leasing Vendor Programs Research

SHINKI 9 Unsecured SME Lending 9 Real Estate Leasing 9 Cross-Sell / Bundled Solutions SHINSEI PROPERTY FINANCE 9 Insurance LIFE HOUSING LOAN Tie-up SHINSEI BUSINESS SHINKI FINANCE

Many Potential Revenue & Operating Synergies Identified within CCF…Systematic Execution Only After Ensuring Realizable Gains & Customer Continuity

24 Consumer and Commercial Finance: Significant Growth Contributor Highlights during 1HY2005

APLUS and Showa Leasing acquisitions have transformed CCF composition Contribution by Subsidiaries JPY Bn

‰ APLUS 60 9 APLUS revenue of JPY 40.4 billion and OBP of JPY19.2 billion represented 70.1% 50 and 69.1% of total CCF business revenue

and OBP respectively 40 40.4 9 APLUS declared first dividend for 11 years 30

‰ Showa Leasing 20 19.2 9 Showa Leasing revenue of JPY 12.1 billion 12.1 and OBP of 6.7 billion represented 21% 10 6.7 and 24.1% of total CCF business revenue 1.7 3.3 0.3 5.0 and OBP respectively 0 Revenue OBP Revenue OBP 1H FY2004 1H FY2005

‰ Other APLUS Showa Leasing 9 Good performance at other CCF Other subsidiaries subsidiaries during the 1st half of FY2005 Note: Management accounting basis

Note: Management accounting basis

25 Differentiation Through Innovation

Agenda

1. A different kind of Japanese Bank

2. Institutional Banking

3. Consumer and Commercial Finance

4. Retail Banking

5. Conclusion

26 “Shinsei Style”

A set of values that defines Shinsei in customer terms

‰ Accessible - Always available when I need it / [24 x 7]

‰ Easy & convenient - Is easy to deal with - banking that ‘wows’

‰ Responsive - Always understands / anticipates my needs

‰ Delivers value - Offers the best solution for me

Overall theme: Empowerment (Customers manage and control their banking needs)

27 Accessible – Extended Hours

28 Accessible - Internet

Bringing the bank to your home—24 hours a day

29 Easy & Convenient – No Waiting

30 Responsive - Understands My Needs

31 Delivers Value – The Best Solutions

32 Customers Have Recognized the Difference

Ranked # 1 in Customer Satisfaction for two consecutive years in Nikkei’s Financial Institutions Survey

2004 2005

1st 1st

2nd Johnan Shinkin Bank 2nd Bank 3rd Citibank 3rd Ogaki Kyoritsu Bank 4th Japan Net Bank 4th Japan Net Bank

5th eBank 5th eBank Bank of Tokyo 6th Ogaki Kyoritsu Bank 6th Mitsubishi

Nihon Keizai Shimbun Oct. 5, 2004 Nihon Keizai Shimbun Aug. 24, 2005

33 Customer Focus is Expressed Through the Brand Proposition “Color your life”

34 “Color your life” Concept

SHARE Information, dreams, worries, aspiration, future… with our colleagues, customers, families CARE Respond flexibly, speedily, hospitably, based on customers’ needs “IDEA-FULL” Proposals that say, “Why didn’t someone think of this before?” WAKUWAKU Exhilarating at every contact

35 Launching "Color your life"

36 Brand Awareness is Amongst the Highest

In the 4 years since new retail banking business launch, brand awareness on Shinsei Bank has significantly increased as compared 100with the other competitors, and reached 96% in June 2005

90 2001.11 2002.06 2003.06 2004.07 2005.06 80

70

60

50

40

30

20

10

0 Shinsei Bank Citibank Sony Bank BOTM Source: Asatsu-DK Survey 37 “Bricks and Clicks”

‰ Empowering the customer – they choose the channel

Physical Distribution Platinum Center Financial Remote BankSpot Center Distribution Consultation ATMs PowerCall Revenue per transaction PowerDirect Cost per transaction Transaction

‰ For Shinsei – reach and efficiency

38 Customer Acquisition

65% of our customers open accounts through remote channels

160,000 Remote SFC 140,000

120,000

100,000

80,000

60,000

40,000

20,000

0 Q2/2001 Q3/2001 Q4/2001 Q1/2002 Q2/2002 Q3/2002 Q4/2002 Q1/2003 Q2/2003 Q3/2003 Q4/2003 Q1/2004 Q2/2004 Q3/2004 Q4/2004 Q1/2005 Q2/2005

39 Solutions for Our Customers

“IDEA-FULL”

Proposals that say, “Why didn’t someone think of this before?”

Simple and easy to use Customers transact on their own Covers a wide range of risk and tenor preferences, a mix of currencies and instruments (e.g. deposits, mutual funds and annuities) More complex products are available to sophisticated customers (e.g. hedge funds, structured products) A strong sales process backs each offering

40 “Our People Are the Difference”

Career Excitement Center Branch Training

Winning the Talent War 90 Player/trainers

“We hire customer focused people, Sales Skills daily and train the daylights out of them” Innovative Fridays

Shinsei Business School Internal Communications April 2004 Shinsei Daily Celebration

Sales Management Daily Sales Call

Management & Leadership Daily “Why Shinsei?”

Sales Skills Color Your Life e-letter

Solutions Weekly Power Go

National Monthly & Qtr Sales

41 Retail Banking: Continued Success

Stable and increasingly diversified revenue growth during 1HFY2005 Revenue Breakdown by Products 1HFY2004 vs 1HFY2005 JPY Bn

‰ Deposit related and forex related fees including structured deposit fees revenue decreased JPY1.5 billion to JPY 9.8 billion Deposit Related and Forex Fees 21.5 due mainly to favorable market conditions 30 21.2 for structured products last year

‰ Net fund transfer revenue increased 13.1% Net Funds Transfer Revenue (1) due to continued growth in retail deposits 20

and better spreads on USD balances 9.8 Deposit Related and Forex Fees ‰ Loan revenue increased significantly due to 11.4 a 36.4% growth in loan balances to reach 10 JPY 420.3 billion by period end. 6.9 Net Funds Transfer Revenue (1) ‰ Fee revenue from mutual funds and variable 6.1 annuities increased 16.6% to JPY 3.2 billion Asset Management 3.2 0 2.7 Loans ‰ Over 247,000 new retail customer accounts 0.9 1.5 were acquired during the first half of the year, 65% through remote channels 1HFY2004 1HFY2005 ‰ Retail accounts exceeded 1.5 million (1) Related to customer deposits and debentures

Note: Management accounting basis

42 Differentiation through innovation

Agenda

1. A different kind of Japanese Bank

2. Institutional Banking

3. Consumer and Commercial Finance

4. Retail Banking

5. Conclusion

43 Financial Performance

Shinsei’s strong financial performance validates the Bank’s unique and innovative business model

Revenue and OBP: Full Year JPY Bn Revenue and OBP: Half Year JPY Bn

200 181.0

200 150 123.9 150 130.5 107.6 100 100 72.8 84.9 50 50 63.8 55.1 34.3 40.2 0 0 FY2002 FY2003 FY2004 1HFY2004 1HFY2005

Revenue Ordinary Business Profit (OBP) Revenue Ordinary Business Profit (OBP)

44 A New Kind of Japanese Bank

Growth through differentiation

9Three pillar business strategy to develop diversified and growing quality earning streams 9Differentiation by focusing entirely on customer needs 9Leader in product and channel innovation 9World class IT and risk management capability 9Commitment to transparency and corporate governance 9Commitment to building shareholder value

We are already recognized and appreciated as an alternative to the traditional Japanese Bank

45