Shinsei Bank drops poison pill defense

Japan's Shinsei Bank has dropped its defense against a takeover bid from online financial group SBI Holdings.

Shinsei announced the decision on Wednesday, saying it was cancelling a shareholders' meeting aimed at gaining approval for a so-called poison pill defense. The action involves issuing shares to existing investors to dilute the stake of the acquiring party.

SBI is seeking to raise its interest in Shinsei to up to 48 percent. But it has made it clear it will drop the bid if the bank goes ahead with the defense.

Shinsei now says its current management will step down around early February. It will then appoint former Financial Services Agency commissioner Gomi Hirofumi to the board, as recommended by SBI.

Shinsei's predecessor bank was one of several major lenders to receive public funds more than 20 years ago. The total debt now stands at around 350 billion yen, or about 3 billion dollars. Repaying this money would be one of SBI's main challenges if the takeover goes through.