OSAKA — Kofuku Bank said Monday that its capital-to-asset ratio may have fallen below the government-prescribed level of 4 percent when it closed its books at the end of March.
As a result, the Financial Supervisory Agency may take corrective action against the Osaka-based, second-tier regional bank as stipulated under the Banking Law.
If such steps are taken, the bank would be required to take measures including drafting a plan to improve its business operations.
However, if the firm can improve the adequacy of its capital level within a short time, FSA action could be averted, financial authorities said.
In Monday’s statement, the bank said it is currently taking steps to boost its capital base, including a new share offering, which indicates it is trying to avoid regulatory action.
Kofuku officials said they were unaware of any FSA action ordering them to take corrective measures, as was reported by the media the same day.
Media reports said the FSA’s planned action is based on the agency’s judgment that Kofuku will be undercapitalized if the bank increases its loan-loss reserves to required levels.
Kofuku’s capital-to-asset ratio stood at 4.98 percent at the end of September. The FSA has determined that banks that operate solely domestically must have a ratio of at least 4 percent to be deemed healthy.
The FSA conducted an inspection of the bank’s asset quality during the January-March period, but Kofuku officials claimed Monday they have not yet been notified of the results.