Retail Banking Group

Shinsei Analyst Day 2005October 6, 2005

1

Table of Contents

CREATING A UNIQUE BANKING EXPERIENCE ------------------------- 2

CUSTOMERS --------------------------------------------------------------------------- 13

CHANNELS --------------------------------------------------------------------------- 18

PRODUCTS ------------------------------------------------------------------------- 28

STAFF ------------------------------------------------------------------------------- 32

IMAGE -------------------------------------------------------------------------- 34

KEY MEASURES ------------------------------------------------------------------- 45

CONCLUSION ------------------------------------------------------------------------ 53

CREATING A UNIQUEBANKING EXPERIENCE

3

March 2000 – Where We Started

Shinsei Bank is formed when the Long Term Credit Bank (LTCB) is privatized.

The Old LTCB Individual Banking was:Funding engine for corporate loan businessSold debentures Not defined as a profit-earning business propositionHad no need to focus on customer service

Customer base: Concentration of high net worth individuals65% of customers over age of 50

Image: upscale bank for wealthy individuals to park retirement money

24 branches across Japan, adjunct to centers of corporate banking, mainly Tokyo and Osaka

4

Retail Banking in Japan

An under-served market

ATM services are inconvenient and expensiveMost banks do not offer 24hx7days ATM accessBanks may charge up to 210 yen per withdrawal

Cumbersome and difficult – Lots of forms and waitingin queues

The post office still dominates

Very low penetration of investment products

5

Shinsei Style

AccessibleAlways available when I need it [24hx 7days]

Easy & convenientIs easy to deal withBanking that ‘wows’

ResponsiveAlways understands andanticipates my needs

Delivers valueOffers the best solution for me

A set of values that defines Shinsei in customer terms.

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

6

Accessible – 24hx7days

7

Easy and Convenient- Extended Hours & Saturdays

8

Responsive - Instant Account Opening

9

Delivers Value

NO FEE - ATMS & Funds Transfers*

* Customers with a/c balance of ¥10M or more at the end of the previous month are allowed to make domestic fund transfers through PowerDirect free of charge (refundable) up to 30 times per month. Otherwise, up to 5 domestic fund transfers are free (refundable).

10

The story so farDespite the backdrop of a struggling economy we have successfully established a unique and thriving retail banking business:

A great brand franchise – with almost limitless potential

A tremendous team of people at all levels

A proven and flexible “bricks and clicks” business model

Robust and constantly improving business processes

Technology advantage – the ability to aggregate risk on a real-time basis

A fast growing customer base

Strong revenue growth

A sustainable profit-growth trajectory

11

We have chosen how we want to position ourselves

A Mega bank? A Niche bank?

A “New kind of bank”

Totally customer centricInformedResponsiveAccessibleA trusted business partner

Big but not mega

A leader not a follower

Fast and flexible

12

Vision and Mission

OUR VISIONWe are creating a new type of Bank

OUR MISSIONTo be the Only One for our Customers

OUR VALUEWe Care!

OUR MOTTOOur Customers’ success is our success

CUSTOMERS

14

Customers - Key success factors

Acquisition momentum - we have a compelling value proposition

Efficient acquisition - remote channels to acquire customers more efficiently

Targeted acquisition – segmentation/relationship potential based

PowerWelcome and Customer Development process - to optimize customer activity

Customer Care – to improve customer loyalty and retention

15

Retail Bank Profileas of June 2005

83.2%

95.6%

33.5%

8.5%

32.7%

16.5%0.0%

63.9%

67.9%

61.8%

0.3% 4.4% 2.6%

23.5%

5.5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Customers Assets Liabilities Off B/S Revenue (FY2004)

Mass Retail Mass Affluent HNW

16

Customer Segmentation

Created 7 demographic segments based upon internal analysis of the customer base

Split by age bands to improve targeting within the segments

74 sub-segments in total

Going forward we will add a psychographic dimension to the segments (eg Retirees Baby Boomers)

They will be continuously refined as we learn with the benefit of external input

17

Customer Segmentation

Q1(Y101K+) Maintain Optimize Optimize Optimize Optimize

Q2(Y51-100K) Maintain Optimize Optimize Optimize

Cultivate

Cultivate

Cultivate

Medium/High

Optimize

Q3(Y21-50K) Maintain Cultivate Cultivate Cultivate

Q4(Y11-20K)

Cost Manage/Exit Cultivate Cultivate Cultivate

Q5(Y0-10K)

Cost Manage/Exit Cultivate Cultivate Cultivate

Low Low/Medium

Medium High

Cus

tom

er C

urre

nt V

alue

Relationship Potential Indicator

CHANNELS

19

Channels – Key success factors

“Bricks and Clicks” – the Customer chooses

Physical channelsCreating a “sales culture”Strong sales process managementFocus on consultative sales

Remote channels The Internet is “strategic”Full functionality & capabilityGrowth in transaction (incl Mutual Funds)Growth in income

20

Expanding Presence

PowerDirectPowerCall

ATMs

BANKSPOT

Financial Center

Platinum Center

Remote Distribution

Physical Distribution

Financial Centers (SFC)Provide full banking services focusing on consultation to mass affluent customer segment

Platinum CenterDevelop and enhance relationships with wealthy customers

ATMs deploy in strategic locations to build brand visibility and minimize off-us transactions

BankSpots “mini-branches”, primarily in Tokyo and Osaka, providing both self-service and consultation

21

Current Branch Network

30 Financial Centers provide nationwide coverage of major metropolitan centersCarefully selecting new locations with the highest commercial/business concentration and easy access from terminal stations

GinzaShinsaibashi Ginza Corridor

Kyobashi

Shinjuku South

Co-located with Starbucks Cafe

22

Sales Productivity – Revenue

0

10

20

30

40

50

60

FY2002 FY2003 FY2004

(Annual Revenue/Sales Staff : JPY Million)

23

Productivity :Share of Door - Mutual Funds

Shinsei Bank sales staff are far more productive than competitors – A common theme across product categories

3.35

1.3

1.89

0.63 0.49

0

1

2

3

4

0 100 200 300 400 500 600 700 800

Shinsei Bank BOTM SMBC UFJ Mizuho # of Branch

Efficiency Index The Share of Door Index compares Market share with share of branches

Source: Institute for Financial Affairs Research Center FY2004

24

Remote Channels

Prior to June 2001, we had no web site, no Internet banking, and a phone center that operated from 9-5 on weekdays onlySince then, we have largely surpassed the local competition

24x7x365 telephone bankingProduct salesBalance inquiriesCustomer service

PowerDirect Internet BankingReal-time balances and transaction dataAbility to transact almost all productsFree funds transfer service (up to 5 or 30/month)—best offer in the market

Remote channels—the Internet and phone—are now primary channels for customers to open new accounts and do transactions

25

Customer Contact

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Apr-05 May-05 Jun-05 Jul-05

WebCall CenterATMBranches

6 Month Average Monthly Data

Rapid customer growth has been possible essentially through remote channels.

26

Acquisition

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

FY2001 FY2002 FY2003 FY2004

Remote Channels Branch

27

Sales Volumes

0

200

400

600

800

1,000

1,200

FY2003 FY2004

Remote Channels Branch

(Billion Yen)

PRODUCTS

29

Products – Key success factors

Needs based profiling

Solutions based

Continuous Innovation – eg Powered One Plus/Powered Teiki Plus

Speed to market

30

Philosophy

“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

31

Product Offerings

- Japan Trend Select <Bull> - INVESCO OTC&Develop Open- Japan Trend Select <Bear> - HSBC India Open- Japan Bond Bear - Global High Income Stock

- Fidelity Japan Growth - W.Pincus- Daiwa value equity - JF Asia active- 225Index(Nikkou) - HSBC China- 225Index(T&D)

- Daiwa J-REIT - Emerging Sovereign Open- Fidelity Balance - High Yield Corporate Bond Open - Upside10

- Securities - J-World CB - Schroders Equity - Manu Solution- Life Plan 70 - Fidelity US-REIT A

- Dual - Life Plan 50 - Fidelity US-REIT B - Sirius Harmony(7/10)Currency - PowerChance - MSCI Index world portfolioDeposit

- SPJT - Nissay /Putnam Income - Foreign - Foreign - GS US neutral - Galileo

Currency Currency - GS Japan Neutral - Life plan 30Savings Time Deposite - CITI Australia - Global Sovereign

- PowerLink -FX- - Europian Income - Sirius Harmony(5)

- New Adagio- Power Pocket Overdraft - Power Life - MMF - Mass freedom - Yen SA - Yen - PowerLink225 - Sonata

Savings Time Deposit - Yen - PowerSmart HLTime Deposit - Powered One Plus

Short <3Years

- Platinum Life - New Adagio

- ManuSolution

Hig

hM

iddl

eLo

w

3Years< Medium < 7Years 7years< Long

Ri s

k

Tenor

STAFF

33

“Our People Are The Difference”Career Excitement Center

Winning the Talent War

“We hire customer focused people, and train the daylights out of them”

Shinsei Business School

April 2004

Sales Management

Management & Leadership

Sales Skills

Solutions

Branch Training

90 Player/trainers

Sales Skills daily

Innovative Fridays

Internal Communications

Shinsei Daily Celebration

Daily Sales Call

Daily “Why Shinsei?”

Color Your Life e-letter

Weekly Power Go

National Monthly & Qtr Sales

IMAGE

35

Brand AwarenessIn the 4 years since new retail banking business launch, brand awareness on Shinsei Bank has significantly increased as compared with the other competitors, and reached 97% in June 2005.

0

10

20

30

40

50

60

70

80

90

100

Shinsei Bank Citibank Sony Bank BOTM

2001.11 2002.06 2003.06 2004.07 2004.12 2005.06

Source: Asatsu-DK Survey

36

Brand Image Perception

Findings through Awareness and Image SurveyShinsei Bank is perceived as unique and innovative, and responsive to customer needs.

BOTMShinsei Tokyo Star Citibank(Score as of June 2005) 99%

48%

41%

3%

6%

10%

3%

5%

92%

7%

11%

10%

11%

9%

3%

3%

81%

1%

1%

16%

13%

4%

2%

3%

97%

2%

2%

29%

20%

22%

8%

8%

Brand Awareness

Stable Business/ Sound Management

Good/Favorable Image

Innovative

Unique

Advanced Internet Service

Will choose even if branch located

in the distance

Responsive to Customer Needs

Source: Asatsu-DK Survey

37

CUSTOMER AND MEDIA RECOGNITIONThe Asian Banker

The Asian BankerBest Retail Banks by Country

Japan – Shinsei BankHong Kong – HSBC (Hong Kong)Indonesia – Bank Central AsiaSingapore – DBS Bank Vietnam – ANZ Bank

Awards for Excellence in Products and ProcessesBest Retail Banking Branch Innovation Award– Shinsei Bank

38

CUSTOMER AND MEDIA RECOGNITIONRetail Banker International

Retail Banker InternationalBenchmark intelligence on consumer financial services

Recognising the best in the worldPublished: December 8th, 2004Issue: Retail Banker International - RBI524The winners of RBI’s Retail Bank of the Year awards were announced during the Retail Banking Forum in London on 7 December. In this special feature, RBI lists the winners of all the awards and profiles the victors in the major national and sub-regional markets around the world

Country and Sub-Regional Award Winners 。Retail Bank of the Year – JapanShinsei BankA year of strong retail banking growth was capped by Shinsei’s acquisition of Aplus, one of Japan’s leading consumer finance companies. The deal is part of Shinsei’s strategic plan to actively expand its non-bank business and at the same time to generate higher returns and profitability in each of its three key business lines - retail banking, non-bank consumer finance and institutional banking.As a result of the deal, Aplus - which has a nationwide distribution network - has become a leading component of Shinsei’s "non-bank" business. The main task of Aplus has been to enhance the competitiveness of the group’s shopping credit unit - at the same time, the deal will lead to significant cost savings when a common IT platform will be implemented using Shinsei’s technology.Apart from the Aplus acquisition, Shinsei boosted net income by 25.2 percent in fiscal year 2003 (which ended in March 2004) by diversifying its revenue sources and lowering its reliance on interest income - some 56 percent of total customer funding comes from retail customers - up 6 percent on fiscal 2002. Net profits were up 5 percent on the previous financial year.Non-performing loans dropped 58.3 percent, and there was also a corresponding drop in bad debt provisions. Return on equity for fiscal 2003 stood at 9.4 percent, up from 8.1 percent in fiscal 2002.

39

CUSTOMER AND MEDIA RECOGNITIONNikkei Survey on Financial Institutions

Nikkei Survey on Financial Institutions- Consumers in Three Largest Metropolitan areas (Tokyo・Osaka・ Nagoya）

Shinsei bank 「Ranked first by users’ satisfaction for the 2 years running」 （2004 / 2005）

The year ２００５

•「Consulting service ・ Teller Counter service・Business hours」 （1st）

•「Products・Services」 （1st）

•Ranked in the Top 3 in all the items

40

CUSTOMER AND MEDIA RECOGNITIONSurvey on Financial Institutions

Ranked first by users’ satisfaction survey (Consumers in Three Largest Metropolitan areas)

20’s 30’s 40’s 50’s 60’s

1st 城南信用金庫

2nd イーバンク銀行

UFJ銀行

ｼﾞｬﾊﾟﾝﾈｯﾄ銀行

三井住友銀行

東京三菱銀行

東京三菱銀行

イーバンク銀行

Sony Bank 城南信用金庫 東京三菱銀行

3rd

4th

5th

.The Nikkei Kinyu (The Nihon Keizai Shimbun), September 6&7, 2005

郵便貯金

住友信託銀行CITIBANK

東京三菱銀行

イーバンク銀行

ｼﾞｬﾊﾟﾝﾈｯﾄ銀行

城南信用金庫

東京三菱銀行

郵便貯金

41

CUSTOMER AND MEDIA RECOGNITIONNext to Disney Land / Disney Sea!

Ranked Second by ’Users’ “Consumer Relation Index”Rank Brand Name Score Rank Brand Name Score

1 Tokyo Disney Land / Sea 87.68 21 Bakery Restaurant Saint-Marc 68.032 SHINSEI BANK 83.26 22 Freshness Burger 67.423 Tokyu Hands 82.60 23 Wacoal 67.064 Mos Burger 81.95 24 SHOP99 67.035 Louis Vuitton 77.72 25 Seijo Ishii (Supermarket) 66.706 Franc franc (Furniture & sundries) 76.87 26 Burberry 66.617 Yokohama Zoological Gardens Zoorasia 76.21 27 one's (Curtain) 66.468 Afternoon Tea TEAROOM 75.99 28 Japan Air Lines (JAL) 66.229 Seven-Eleven 75.54 29 DUO (Volkswagen dealer) 66.1310 The Daiso - 100YEN PLAZA 73.07 30 Excel Hotel Tokyu 66.0911 Singapore Airlines 72.38 31 Beard Papa's (Confectionery) 65.9712 Japan Post office 72.10 32 Sony Plaza 65.9613 Henri Charpentier (Confectionery) 71.45 33 All Nippon Airways (ANA) 65.9214 The Imperial Hotel 71.21 34 a.v.v (Apparel) 65.4215 Hermes 70.58 35 Kinokuniya (Book store) 65.2316 Bvlgari 70.28 36 ACTUS (Furniture) 64.7417 Coach 70.08 37 Create Super Drugstore 64.4018 Rolex 68.84 38 Subaru Store 64.3319 Starbucks Coffee 68.54 39 Tiffany 64.1920 MUJI 68.19 40 Triumph (Lingerie) 64.05

Research on “Store & Service Brand 500” by Nikkei Research

42

Image

43

Color Your Life

SHAREInformation, dreams, worries, aspiration, future…

with our colleagues, customers, families

CARERespond flexibly, speedily, hospitably, based on others’ needs

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

WAKUWAKUExhilarating at every contact.

44

“When I am feeling sad, or things don’t go my way, I always look up into the sky.

The big sky makes my troubles seem so small

This encourages me to paint my dreams across the big blue sky”

KEY MEASURES

46

Customer Database

We have achieved 1.5 Million customer mark.

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00Ju

ne

Sept

embe

r

Dec

embe

r

Mar

ch

June

Sept

embe

r

Dec

embe

r

Mar

ch

June

Sept

embe

r

Dec

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Mar

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June

Sept

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FY2001 FY2002 FY2003 FY2004 FY2005

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000(Trillion Yen) # of customers

Total AUMs

# of customers

47

AUM Composition

Debentures are being replaced by yen deposits and risk products

Apr-97 Apr-01

Apr-00

Apr-99

Apr-98 Mar-02

Jun-02

Sep-02

Dec-02

Mar-03

Jun-03

Sep-03

Dec-03

Mar-04

Jun-04

Sep-04

Dec-04

Mar-05

Jun-05

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Debenture Yen DepositYen Deposit Structured Depo. + FCY + MF + VA/FA

48

Cross Sell

Through active cross selling we have doubled the number of customers holding risk products in a year

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Apr-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05

# of customers

49

PowerSmart Housing Loan

0

50

100

150

200

250

300

350

Mar-02

Jun-02

Sep-02

Dec-02

Mar-03

Jun-03

Sep-03

Dec-03

Mar-04

Jun-04

Sep-04

Dec-04

Mar-05

Jun-05

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

(Billion Yen)

Monthly Fundings (Billion Yen)

# of customers

50

Revenue Growth

0

10,000

20,000

30,000

40,000

FY2002 FY2003 FY2004

(Million Yen)

51

Expense Growth

0

10,000

20,000

30,000

40,000

FY2002 FY2003 FY2004

(Million Yen)

52

OBP (Margin) Growth

(10,000)

(5,000)

0

5,000

10,000

FY2002 FY2003 FY2004

(Million Yen)

53

In ConclusionIn just 4 years we have successfully established a “New Kind of Bank”Looking forward, market conditions are increasingly positiveShinsei Retail is ideally positioned for rapid growth:

We have a unique and clearly defined business model which cannot be easily copied by our competitionOur brand proposition gives us differentiation and competitive advantageWe are centered around the customer in everything we doWe will continue to innovate and lead the market

We know what we have to do to be successful and we have clear strategies for all key aspects of the business:

CustomersBrand/MarketingProductsChannelsPeople

Retail is a key component of the overall Shinsei strategyOur financial results are strong Shareholder returns from Retail will continue to grow rapidly