Rail Exec Turned Bank Reformer Hosoya Dies - Wall Street Journal (blog)

By Atsuko Fukase

Resona Holdings Inc. Chairman Eiji Hosoya, who brought about changes to Japan's often-staid banking industry by using his experience to help with the privatization of the sprawling national rail network, passed away at his home on Sunday.

The 67-year-old successfully turned around the lender after the government under the Koizumi administration in 2003 lured him in to run the then troubled bank, which was saddled with hefty bad loans.

As a senior executive at East Japan Railway Co. , Mr. Hosoya previously made a name for himself by transforming struggling railways into several private rail companies including the profitable East Japan Railway Co.

Nearly a decade ago, hobbled by bad loans, Resona was taken over by the government with a ¥1.96 trillion bailout, putting two-thirds of its voting rights under state control. The bank also had the onerous task of repaying ¥3.12 trillion in government funds.

Switching from longtime rail executive to a different track: finance, his first six months at the bank were the most challenging, Mr. Hosoya once said.

"Since I came from an outside industry, it was difficult to measure how aggressively I should gear up for reform and figure out up to which point I would face resistance," the chairman said in an interview with The Wall Street Journal two years ago, saying he could make tough decisions more easily, as he didn't have connections to the banking industry.

Mr. Hosoya's reforms were fresh to Japan's financial world: he extended operating hours at all of Resona's branches, keeping some open until 7 p.m., at a time when other banks were in the practice of shutting down their branches at 3 p.m.

He sent his employees to hotels and department stores to learn how they can serve their customers. "Japanese banks tend to provide services in a bureaucratic way, so it took about three years to change this culture," he said. Mr. Hosoya also worked to promoted women. The number of female senior managers at the bank is around 90, up from seven when he first took over.

His efforts weren't just limited to the corporate culture but also to the bank's financial condition. Resona-—now Japan's No. 4 bank by revenue–has shrunk its government debt to ¥870 billion from more than ¥3 trillion.

Using Wells Fargo of the U.S., which has a strong domestic network and boosts profitability via cross sales, as a business model, Resona targets regional midsize firms and individual customers.