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Prosecutors on Wednesday indicted five former executives of the failed Tokyo Sowa Bank on charges of conspiring to falsely show the bank had adequate capital reserves.

Shoichi Osada, 77, chairman of the Tokyo-based second-tier regional bank when the suspected book manipulation took place, was indicted, along with Mizuho Kojima, 60, former president, and Masatoshi Fukui, 56, former vice president.

Prosecutors also indicted Hiroyasu Ebisui, 57, former senior managing director, and Tachiki Takahashi, 47, former managing director. They were arrested earlier this month.

The bank went bankrupt in June 1999.

According to the indictment, Osada and others extended 19 billion yen of the bank’s money to three companies via third-party consumer finance and other firms in 1997 and 1998. The loans were part of a fund earmarked for Tokyo Sowa’s new shares in a bid to show it had boosted its capital.

The executives are also charged with later filing a false financial statement regarding its capital basis.

The bank allocated the shares in September 1997 and March 1998 to 17 companies and five individuals.

In September 1997, Tokyo Sowa extended loans of 9 billion yen to one of its affiliates, a real estate firm, via four companies, the indictment said.

In March 1998, the bank provided 6 billion yen through 17 consumer credit companies and their subsidiaries to a real estate management company run by Osada’s relatives and 4 billion yen to a building management company affiliated with Tokyo Sowa, according to the indictment.

Tokyo Sowa desperately needed to boost its capital to inflate its capital-adequacy ratio at that time.

Under Financial Supervisory Agency regulations that took effect in April 1998, banks that operate solely in Japan are required to maintain a 4 percent capital-adequacy ratio or face disciplinary action, which varies according to the degree of capital depletion. That means their capital must be equal to at least 4 percent of risk-weighted assets, including loans.

The bank’s capital-adequacy ratio dropped to 2.85 percent as of March 1997 after bad loans were written off. However, with the allocation of new shares in 1997 and 1998, the ratio shot up to 5.29 percent a year later.