Concerning the Kyoto Kyoei Bank
October 14, 1997
Bank of Japan
- We have today been informed by the Kyoto Kyoei Bank and the Kofuku Bank of the following:
- (1) The Kyoto Kyoei Bank has faced a severe managerial situation for some time, and it has become apparent, through recognition of the bank's financial condition in a recent inspection by the Ministry of Finance, that the amount of assets that has to be written off significantly exceeds its capital. There is no prospect of the bank being able to extricate itself from the situation it faces through its own efforts.
- (2) As a result of discussions among relevant parties on the future of the Kyoto Kyoei Bank, basic agreement has been reached on transferring its business to the Kofuku Bank, on the condition that financial assistance, including purchase of nonperforming assets, will be requested of the Deposit Insurance Corporation.
- (3) In order to clarify managerial responsibility, the President of the Kyoto Kyoei Bank, Mr. Yoshinaga, will resign.
- (4) The Kofuku Bank, which will assume the business of the Kyoto Kyoei Bank, will draw up and implement a new plan, that will include the enhancement of its capital base and the improvement of efficiency, in order to prepare for financial system reform as well as strengthen its managerial base to cope with the impact of the business assumption.
- Although it is truly regrettable that we have seen yet another financial institution fail, the fact that a resolution scheme has been so promptly agreed upon through discussions among the relevant parties should be highly evaluated from the viewpoint of protecting depositors and ensuring financial system stability.
In order to maintain the credibility in the Japanese financial system, the Bank of Japan stands ready to hold discussions with the relevant parties so that the resolution scheme can be made concrete as quickly as possible, and also to provide cooperation to ensure smooth implementation of the plan.
- Deposits at the Kyoto Kyoei Bank will be transferred to the Kofuku Bank and will be fully protected. Thus, there is no need for depositors to be concerned and we strongly hope that they will act sensibly.
- Until the business transfer to the Kofuku Bank, the Kyoto Kyoei Bank will continue business as usual. The Bank of Japan will take all necessary measures to ensure financial system stability, including the provision of funds pursuant to Article 25 of the Bank of Japan Law.