include Citigroup Inc., announced Tuesday that it has reached a preliminary agreement with the Japanese government to buy Long-Term Credit Bank of Japan Ltd. for $1.1 billion.

After becoming insolvent, Long-Term Credit Bank was taken over by the Japanese government in October 1998. Its purchase by New York-based Ripplewood and its investors, which also include GE Capital, would make it the first foreign-owned Japanese bank.

Ripplewood and Japanese officials said they will try to negotiate a final agreement in the next two months. In the preliminary deal, the government agreed to inject $2.3 billion into the bank and to buy back loans that decrease by 20% or more in value within the next three years.

Ripplewood, a four-year-old company , pledged in the agreement that it would not sell or collect on the bank's loans for three years "unless compelling reasons otherwise require."

In their business plan, Ripplewood and its partners said they would expand the bank beyond corporate lending. -- Dan Weil

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.