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2010年9月12日 (日)

振興銀ペイオフ 乱脈許した金融庁の重い責任

The Yomiuri Shimbun (Sep. 12, 2010)
FSA partly to blame for Incubator Bank failure
振興銀ペイオフ 乱脈許した金融庁の重い責任(9月11日付・読売社説)

The scandal-ridden Incubator Bank of Japan, which had come under fire for its lax lending practices and arrests of its executives, finally collapsed as it filed for bankruptcy protection Friday.

The Financial Services Agency this time opted not to implement rescue measures with public funds as it has done in the past for other failed banks. It instead invoked for the first time ever the limited deposit protection system, which covers up to 10 million yen in deposits plus interest.

Most of the deposits at the bank are below that cap, and so will be refunded in full. We urge the bank's depositors to remain calm. Financial authorities should exercise proper oversight so that refunding will proceed smoothly. They also should address corporate borrowers' funding problems with utmost care.

The Incubator Bank was established in 2004, led by Takeshi Kimura, a former Bank of Japan official who was the brains behind the policies of Heizo Takenaka, former state minister in charge of financial policy.

Risky business

The bank tried to raise profits by attracting deposits with high interest rates and extending loans to promising small and medium-sized companies. But it was only a matter of time before such a management model broke down.

Megabanks and other financial institutions began to enter the field of financing for smaller companies that the Incubator Bank relied on. The high interest rates that the bank set to lure clients weighed down the bottom line. The bank desperately took an expansionary course through such measures as buying up loans from nonbanks and extending big loans in a reckless manner. Such slipshod management, which widely diverged from the bank's official business philosophy, proliferated.

As such, it was no surprise that Kimura, who had been the bank's chairman, and other executives were arrested and indicted over alleged obstruction of FSA inspections.

What must not be forgotten is that Takenaka, who approved the establishment of the bank with few future prospects, and the financial authorities, which neglected to expose the bank's lax management for a long time, bear grave responsibilities. Takenaka should explain what developments led to the bank's problems.

The government and the Bank of Japan have stressed that the invoking of the 10 million yen deposit protection system is unlikely to affect Japan's financial system.

Contagion unlikely

The Incubator Bank is different from ordinary banks in that the bank handles only time deposits for the purpose of fund management. The bank does not handle bank transfers or other financial settlement services that are closely related to people's daily lives. It had few fund transactions with other financial institutions. So the possibility that its collapse will set off a negative chain reaction is extremely low.

Even with the enforcement of the 10 million yen deposit protection system, only 3 percent of the bank's depositors face getting less than full refunds on their accounts.

Public funds were injected into Ashikaga Bank, which failed in 2003, because the extent of the possible impact on regional economies was taken into consideration. If the Incubator Bank, whose failure is attributed to its lax management, were rescued with the use of public funds, the authorities would not have obtained the understanding of the public. With these circumstances taken into account, we believe invoking the deposit protection system was appropriate.

The deposit protection system, which had long been treated as off-limits despite its creation in 1971, has now become a reality. Depositors must have a keener sense of self-responsibility. They also must strictly assess the management of each financial institution.

(From The Yomiuri Shimbun, Sept. 11, 2010)
(2010年9月11日01時43分  読売新聞)


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