TOYKO - Japan's Shinsei Bank said Thursday it has decided to reject a tender offer by major online financial group SBI Holdings Inc., setting the stage for what would be the first hostile takeover bid in the country's banking industry.

Shinsei criticized SBI for attempting to effectively control the management without taking a majority stake, describing it as "detrimental" to other shareholders. The medium-sized lender also said SBI's price in the tender offer was too low to reflect its true value.

After weeks of heightened tensions since the September launch of the unsolicited offer, Shinsei did not completely shut the door on SBI. It flagged the possibility of supporting the bid if certain conditions are met by SBI ahead of a Nov. 25 shareholders' meeting -- a scenario immediately rejected by the hostile buyer.

"The offer doesn't match the common interests of our shareholders," Shinsei Bank President Hideyuki Kudo told a briefing, adding the bank will seek a friendly bidder to counter SBI.

SBI is seeking to raise its stake from the current 20 percent to 48 percent, offering 2,000 yen ($17) per share. Shinsei shares ended at 1,916 yen on Thursday.

The financial group is aiming to become the fourth Japanese megabank, with its CEO Yoshitaka Kitao calling for the reorganization of regional banks in Japan.

After a board meeting on Thursday, Shinsei urged SBI to remove the limit on its share purchase and raise its offer price to an appropriate level from the current 2,000 yen, if it wanted to win the bank's support.