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Shinsei Bank:Institutional Banking Group Evolution

Merrill Lynch Japan ConferenceSeptember 9, 2005

Consumer and Commercial Finance Business

Robert Luton, General Manager Akimasa Tsuchiya, General Manager

Shinsei Analyst Day 2005October 6, 2005

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Forward Looking Statement

The following materials 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.

Unless 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.

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

These 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.

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Consumer and Commercial FinanceDiscussion Agenda

• Why Did Shinsei Target Consumer & Commercial Finance Market As 3rd Pillar?• The Trend Of CCF’s Contribution To Shinsei With 1st Half Highlights• How Does Shinsei Oversee & Operate CCF Group Companies?• What Is Shinsei’s Strategy To Grow CCF Earnings Near & Long Term?

• What Is The Vision For APLUS?• What Are The Drivers Behind APLUS FY05 Earnings Improvement?• What Specific APLUS/Shinsei Integration Steps Have Been Completed?• What Evidence Is There That Supports APLUS’ Core Growth Plan?

• What Is The Vision For Showa?• What Are The Drivers Behind Showa FY05 Earnings Improvement?• What Specific Showa Integration Steps Have Been Completed?• What Evidence Is There That Supports Showa’s Core Growth Plan?

• What Synergies Have Been Identified For APLUS & Showa & Where Is There Progress?

• A Comment On Future Industry Consolidation• Q&A

Consumer & Commercial Finance Strategy

APLUS Focus

Showa Focus

Closing

Emphasis Today On Largest Platform Companies Within CCF

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Why Consumer and Commercial Finance?

ConsumerSolutions

Small & Medium Business Solutions

Specialty Property Solutions

Customer

Perspective

RiskManagement

InnovativeTechnology

Financial Stability

New Ideas & History of Execution

Shinsei Brand

ConsumerSolutions

Small & Medium Business Solutions

Specialty Property Solutions

Customer

Perspective

RiskManagement

InnovativeTechnology

Financial Stability

New Ideas & History of Execution

Shinsei Brand

All of These Markets Stand to Benefit from the Same Core Competencies Already Proven Effective at Shinsei’s Retail & Institutional Banking Businesses

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Consumer and Commercial Finance:Significant Growth Contributor

Consumer And Commercial Finance Already A Key Contributor To Shinsei Growth

Shinsei Leadership APLUS President Sugiyama appointed Shinsei Vice Chairman – Shinsei’s Yamamoto appointed new APLUS President

Family-Controlled Shinki appoints Shinsei’s Tsunemine To Presidency

Showa Lease Accepts Two Outside Directors From NorinChukin Bank As First Step To Possible Leasing Cooperation

Shinsei Financial SupportShinsei Supports Shinki ¥15B Public/Private Bond Issuance

JCR Extends Showa Lease J1-Rated CP Program to ¥110B

Continual progress with SIT-supported operation and process management

Core growth from enhanced marketing, diversified channels, Shinsei-wide cross-sell and sales force effectiveness

Targeted M&A where appropriate

2005 1H Highlights

2005 2H Outlook

CCF Revenue Contribution

25%

Note: Management accounting basis

CCF Consolidated Revenue / Shinsei Total Consolidated Revenue

0

10

20

30

40

50

FY2003A FY2004A

5%

45%

FY2005E

• Increasingly A Significant Growth Driver

• Shinsei Expertise Fully Leveraged• “Basics” & Group Synergies

Showing Early Impacts

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Shinsei Delivers Value Through a Dedicated Team Aligned by Functional Expertise

ConsumerSolutions

Small & Medium Business Solutions

Sales Force Mgmt

Brand / PR

Underwriting

Risk Data Analytics

LT Migration To Flexible And Open

Architecture

People Development

Career Mobility

Platform Expansion

Major Alliances

Funding Expertise

Expense Control

Specialty Property Solutions

FINANCE RISKMARKETING IT/OPERS HR M&A

CONSUMER & COMMERCIAL FINANCE

(Shinsei Sales Finance)

(Shinki)(APLUS) (Showa Leasing)

(Shinsei Business Finance)(Life Housing Loan)

(Shinsei Property Finance)

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

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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

Revenues

Expenses

Tax

Income

Stabilize core revenue sourcesIn-depth profitability analysisOptimize product and channel mix

ST cost basicsLT infrastructure migrationST & LT dramatic COF improvementStabilize credit & ensure discipline

Fully utilize NOL position over near term

SG&A

Funding

Credit

Volume

Margin

Fees

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What is the APLUS Vision?

APLUS is a successful merchant-based consumer finance company with an increasing level of higher-margin direct cross sell

Build upon a strong customer and business franchiseMore than 5 million card holdersOver 750 co-branded card partnerships, including TSUTAYA

Significant growth potentialNear-term growth• Expand & enhance sales force

effectiveness via training, measurement & reward systems

• Cross-sell existing customer base with direct consumer solutions

• Revisit low/no profit merchant relationships for revision/termination

Long-term growth• Renegotiate key merchant tie-ups for

long-term profitability• Tie-up with Shinsei retail banking for

delivery of card & credit line solutions• Examine consumer auto lease market

together with Showa Leasing

Leveraged Growth Opportunity…Large Payoff from Small Improvements in Key Performance Measures (e.g. merchant activation, card cashing ratios)

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Under Shinsei, APLUS Will Deliver Sustainable Earnings Growth

Revenues

Expenses

Key sales leadership hire (10+ Yrs)In depth profitability analysis underway…greatly improved transparency on critical product/merchant-specific profitabilityRenegotiating key merchant alliances with view to long-term profitabilityFocused effort to improve sales force training & effectiveness leveraging e-sales technology

Credit rating upgrade (BBB+)ST/LT borrowing rates down 129bpSuccessful fixed dividend preferred offeringCommercial paper program launched

Cost of Funding

New mindset by Shinsei to use scale & leverage for lower costsLong-term planning to migrate IT-intensive back office to flexible, low-cost, open systems

SG&A

Leverage fresh start after non-core asset dispositionApply better science to underwritingRemain disciplined – particularly regarding diversification

Cost of Credit

APLUS is Well Positioned to Deliver Sustained Earnings Growth for the Near Term Built Upon an Increasingly Lower Cost Base

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Key Platform Performance –Acquisition To Date (1 Yr) - APLUS

Shinsei OversightSep ‘04 New Accounting & Reserve Standards, More Conservative Income & Expense Recognition, Shinsei StandardsDec ’04 Rating Upgrade, With Shinsei Support, APLUS LT Debt Upgraded To BBB+ By JCRJan ’05 Completed 100-Day Integration Building “Bridges” Between APLUS & Shinsei In All Key Functional AreasFeb ‘05 ¥241B Capital Infusion, Well Subscribed 3rd Party @ 4% FixedMar ’05 ¥400B Refinancing, Renegotiating Bank Lines, New ¥200B CP Line EstablishedSep ‘05 New Audit Committee, Established Audit Committee Similar To ShinseiSep ’05 Risk Policy APLUS Adopts Credit Authority & Risk Policy For Greater ControlShinsei Personnel = New President, #2 & Head Of Sales, CFO, #2 Finance, and Marketing Leader3Q ’05 Basel II – Preparation & Analysis Necessary For BIS Underway

APLUS PerformanceMar ’05 APLUS Management Reorganization Creating Clear Fiduciary Roles (CFO, CRO & Reducing Direct Reports To President) Mar ’05 Privacy Law Preparation APLUS Set High Standard For Readiness Before April 1st

Effective DateJun ‘05 Insurance RFP, 30+ Firms Participated, Expanding Insurance XSell Solutions To Benefit Customers & APLUS2Q ‘05 IT/Operation Projects Underway, Projects Relating To Documentation, Automating G/L, Expense Processing2Q ’05 Profitability Analysis – Project Nearly Complete Clarifying Merchant & Product Level Profitability2H Outlook Positive – Mid-Year Indicators On Plan For Full-Year Targets(cannot comment on specific merchant tie-ups) –Good Progress With Key Merchants To Optimize Programs For Long-Term Mutual Gain

B/S Cleanup, Efficient Infusion & Borrowing Pave Way For FY05 Earnings

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Mix Of New Business Improving While Long-Term Investments Underway

Growth: Card Business Growing SteadilyCredit card growth continues since acquisition up ~20% to over 5 millionUsage of credit card also improving with card shopping transactions up ~40% resulting in related shopping balances up ~25% and cashing balances up ~10%Consumer loan monthly volume up ~50% YOY with balance up ~20%

Investing For Long-Term Sales Effectiveness ImprovementsSales effectiveness improvement activities in progress in cooperation with Shinsei’s CCF and Retail Banking Key merchant relationships being strengthened for further growth and efficiencyShinsei IBG cross-selling applicable accounts for future card relationships as well as APLUS cross-selling Shinsei retail and private banking solutions to select customers

Plan On Track: Complementing Core Shinpan Business With Growing Card/Loan Business While Migrating Away From Less Desirable Sectors/Merchants

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What is the Showa Leasing Vision?

Showa Leasing is Shinsei’s commercial finance platform providing leasing, lending and other solutions to small and mid-size companies

Build upon existing origination partnersPreserve & expand Resona relationship where possibleAdd Shinsei relationship banker referral networkNew alliance partners (e.g. Norin Chukin / Kyodo Leasing)

(Showa Leasing)

Near-term growth• Renewed management focus on

domestic commercial customers after non-core disposition

• Introduction of Shinsei relationships as customers and origination partners

Long-term growth• Introduce new products and

solutions to expanding customer base

• Develop long-term origination partnerships and alliances

Revenue Sources Being Diversified and Expanded…Breakout Revenue Growth Only from Significant Alliance or Acquisition

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Keys to Showa Leasing’sEarnings Outlook

Revenues

Expenses

Key sales leadership Hire (25+ Yrs)Preserve existing Resona relationship – volume on planIntroduce Shinsei referral network – new volume ramping upIn depth profitability analysis underwayExplore new alliances for growth (e.g. Norin Chukin)

Credit rating upgrade (A-, J1)ST/LT borrowing rates down 48bpGrowing commercial paper program (¥110B)

Cost of Funding

Mostly stable SG&A other than basic cost managementKey to SG&A will be leverage/scale

SG&A

New Shinsei-experienced CRO leading credit assessment and risk diversification strategyLeverage fresh start after non-core asset disposition/reservingUse capital markets where needed

Cost of Credit

Showa Leasing Joins Shinsei Group With A Much Stronger Asset Base And Funding Cost Outlook – As An Industry Leader, Showa Leasing Is

Well Positioned For Growth-Focused Alliances

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Key Platform Performance - Acquisition To Date (1H) - Showa

Shinsei OversightMar ’05 Shinsei Personnel Includes #2 & Head Of Marketing, CFO, and CROMar ’05 Rating Upgrade, With Shinsei Support, Showa ST Debt Upgraded To A-/J1 By JCRMar ’05 ¥100B Refinancing, Renegotiated Bank Lines, New ¥60B CP Line Established (expanded to ¥110B in Sept)May ’05 J/V Discussions Announced – Shinsei Continuing Dialogue With Norin ChukinRegarding Kyodo Lease & Showa LeaseJun ’05 Completed 100-Day Integration Building “Bridges” Between Showa & ShinseiSep ’05 Systems Audit Complete – Action Plan In Place To Conform To Shinsei High Standards By Dec/MarSep ’05 Risk Assessment – Shinsei-like Risk Assessment Standards For Larger Exposures3Q ’05 Basel II – Preparation & Analysis Necessary For BIS Underway

Showa PerformanceMar ’05 Showa Management Reorganization Creating Clear Fiduciary Roles (CFO, CRO, etc.) With OB’s Focused On Relationship Management (to Resona, Itochu, Shinsei), Deemphasize “Planning” & “General Affairs”Creating Division Specializing In SyndicationsMay ’05 Established Compliance Similar to CCF and Shinsei’s OwnMay ’05 Drafted Functional Map As First Step Towards Business Process ReengineeringMay ’05 Saitama Resona Tie-Up Completed Referral Agreement (an extension of the Resona relationship)2H FY05 Aplus Auto Collaboration – Examining Tying Up To Provide Consumer Auto Leasing

Earlier Access Enabled Integration To Proceed Faster Than APLUS

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On Track To Sustain YOY Core Volume While Improving Origination Capability

Growth: Shinsei Group Extends Showa’s Origination NetworkNew leasing volume through cross-selling to Shinsei group customers up five-fold in six months – approaching ¥1B/monthVarious tailored vendor programs now being promoted to Showa’s targeted customer segments

Productivity: Sales Platform Being StrengthenedSales activity efficiency promoted by upgraded sales force automation (FY05 3Q)Sales effectiveness program under development in cooperation with CCF/Retail Banking

Partnering To Leverage Strengths Existing and potential partners have already confirmed their interest to leverage Showa’s strengths in the areas of auto leasing, off-lease equipment management, lease syndication/risk diversification strategies, and general profitability management.

Mature Market Yields Growth Only To Capable Sales Personnel And Value-Based Customer Relationships…Very Compatible With Shinsei Success Model

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Many Potential Synergies Within Consumer & Commercial Finance Business

Capital MarketsCross-Sell (credit card, personal loan, merchant introduction)IT

Consumer Auto LeaseConsumer/Commercial Vendor Programs

Property LendingJoint Market Research

Operational Synergies

SHINSEI BANKSHOWA LEASING

SHINSEI PROPERTY FINANCELIFE HOUSING LOAN

SHINKI

SHINSEI SALES FINANCETreasury / Capital MarketsCross-SellIT

Consumer Auto LeaseConsumer/Commercial Vendor Programs

Real Estate Leasing

Insurance Tie-up

Unsecured SME LendingCross-Sell / Bundled Solutions

APLUSSHINSEI SALES FINANCE

SHINKI

SHINSEI PROPERTY FINANCELIFE HOUSING LOAN

SHINSEI BANK

SHINSEI BUSINESSFINANCE

APLUS

Showa Leasing

Early identifiable gains from synergyTargeted work/cooperation begun

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

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Both Consumer & Commercial Finance Sectors Are In a Period of Consolidation

# Cons Fin Co’s 6,798 6,060 <5,000?

# Shinpan Co’s 139 105 <75?

# Leasing Co’s 218 158 <100?

# Shoko Co’s 4,839 3,003 <2,000?

Source: Tapals Website

Shinsei’s Consumer & Commercial Platforms / Management Well Positioned Within Their Industries to Participate in Future Industry Consolidation

19951995 20042004 2015?2015?

Shinsei’s Consumer & Commercial Finance Represents An Almost Unique Alternative To Target Company Management vs. Other Local Or Global Suitors

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Shinsei Group Revenue & Operating Synergies

INSTITUTIONALBANKING

RETAILBANKING

CONSUMER &COMMERCIAL

FINANCE

INFRASTRUCTURE TREASURY HERITAGE RISK MGMT

CUSTOMER & PARTNER REFERRAL

JOINT CUSTOMER SOLUTIONS

CCFPartners & Customers

Retail BankCustomers

InstitutionalCustomers

Three Complementary Businesses Built Upon a Foundation IncludingFlexible Technology, Customer Focus, and Common Values

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Consumer and Commercial Finance Takeaways

Consumer & Commercial Finance Is a Core Shinsei Business

Operated as a Division or Group – Not Satellites or Affiliates

Integration of APLUS & Showa Progressing Well

Funding Costs Down while Rate Exposure Reduced

Risk Management Improving

Better Transparency on Portfolio Profitability – Improving Mix

FY05 Financial Performance on Track to Achieve Targets

Solid Performance & Unique Approach Position CCF for Growth

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Appendix

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Consumer And Commercial Finance Subsidiary Summary & Growth Outlook

APLUS Shinki Shinsei Showa Shinsei Shinsei LifeSales Lease Business Property Housing

Finance Finance Finance Loan

President Yamamoto Tsunemine Hirai Matsushita Saitoh Nagashima Hirakawa

Shinsei 63%(a) 39% 100% 96% 75% 100% 100%Ownership Listed OSE Listed TSE 25% Nissin

Products & Shinpan Direct Shinpan Leasing SME Property Sub-PrimeServices Installment Unsecured Installment Installment Lending Develop Mortgage

Guarantees Consumer Rental Loans & FinanceServicing Loans Equity-

Loans

# Employees 2,178 681 60 518 33 80 56

FY05E vs. FY04ARevenue flat flat 25%++ ~10% 25%++ 25%++ ~10%

(a) Shinsei non-diluted ownership as of September 30, 2005 – will reflect convertible preferred class A within 12 months

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APLUS JPY Bn Showa Leasing JPY Bn

Income Statement and Balance Sheet 1)

Consumer and Commercial Finance: APLUS & Showa Leasing’s Summary of Financials

Income Statement and Balance Sheet

APLUS’ forecast of net income is 19 billion yenShowa Leasing’s net income budget is 7 billion yen

1)FY20042nd Half

Revenue from Operations 51 99 101 Revenue from Operations 197 n.aOperating Income 4 6 15 Operating Income 6 7Net Income 4 (260) 19 Net Income (62) 7

Mar-05 Mar-05(Actual) (Actual)

Cash and Equivalents 98 Cash and Equivalents 2Finance Receivables 485 Lease Assets 306Loan Guarantees 1,020 Other Lease Assets 43Others 64 Installment Receivables 140

Total Assets 1,667 Others 52Debt 385 Total Assets 543Loan Guarantees Liability 1,020 Debt 406Others 197 Others 114

Total Liabilities 1,602 Total Liabilities 520Shareholders' Equity 65 Shareholders' Equity 23Total Liabilities and Equity 1,667 Total Liabilities and Equity 543

FY2004(Actual)

FY2005(Forecast)

FY2004(Actual)

FY2005(Budget)

2)

1) Based on APLUS’ disclosed financials 1) Represents Shinsei’s internal budget2) The changes associated with the change of fiscal year, announced on September 28, 2005, are as follows. Total amount for 12 months is the same as the initial forecast.

April 2005-September 2005: Revenue from operations as 49.2 billion yen, Operating income as 6.3 billion yen, Net Income 7.7 billion yen.

October 2005-March 2006: Revenue from operations as 52.2 billion yen, Operating income as 9.3 billion yen, Net Income 11.3 billion yen

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Consumer and Commercial Finance: Acquisition Related Intangibles

Amortization of APLUS and Showa Leasing’s identified intangibles, net of deferred tax liabilities and amortization of consolidation goodwill is budgeted as 30 billion yen in FY200550% of total intangibles are expected to be amortized in the first 5 years

Showa Leasing JPY BnAPLUS JPY Bn

Net asset book value 22.6Fair value adjustments to assets and liabilites (1.6)Identified intangible assets 10.1Associated deferred tax assets (5.4)

Net asset fair value 25.6Minority interest (0.9)

Net asset fair value attributable to Shinsei 24.7Shinsei's investment 75.9

Consolidation goodwill (as of Mar-05) 51.2

Net asset book value (180.9)Fair value adjustments to assets and liabilities 3.9Identified intangible assets 70.9Associated deferred tax liability (30.4)

Net asset fair value before capital injection (136.4)Capital injection 241.0

Net asset fair value after capital injection 104.5Minority interest (Class D and E Preferred Shares) (49.6)

Net asset attributable to Shinsei 54.8Shinsei's investment 253.5

Consolidation goodwill 198.6

Consolidation goodwill amortization (2004/10 - 2005/3) (4.9)Consolidation goodwill outstanding (as of Mar-05) 193.6

Identified Intangibles & Consolidation Goodwill Calculation

Identified Intangibles & Consolidation Goodwill Calculation

Amortization Method

Amortization Method

Budgeted Total Intangible Amortization in FY2005 JPY Bn

1) Consolidation goodwill is amortized over 20 years using straight line depreciation

1)

1) UsefulLife

AmortizationMethod

Trade name 1.9 10 Years Straight LineExisting customer relationship 6.1 20 Years Sum of Year's DigitsMaintenance component contract 1.1Sublease contract 0.8Total identified intangible assets 10.1

Straight Line(remaining life of each contract)

FairValue

UsefulLife

AmortizationMethod

Trade name and trademarks 6.7 10 Years Straight LineCustomer relationships 12.3 10 Years Sum of Year's DigitsMerchant relationships 51.8 20 Years Sum of Year's DigitsTotal identified intangible assets 70.9

FairValue

Identified intangibles 8 1 9Related tax benefit (3) (1) (4)Consolidation goodwill 20 5 25Total intangible amortization 24 6 30

APLUS Showa Leasing Total