Nippon Credit Bank will not hesitate to ask the government to buy back loss-incurring loans if necessary, top executives said Monday, as the newly privatized bank began its first day of operations.
Ownership of the formerly nationalized NCB was transferred to a consortium led by Internet investor Softbank Corp. on Friday. The bank held shareholder and board meetings Monday, appointing a new management team as well as a new operating policy.
Tadayo Honma, a former executive director of the Bank of Japan, was appointed president of the new NCB. Other executives include Softbank President Masayoshi Son, Kokei Higuchi, president of Tokio Marine & Fire Insurance Co., and Yoshihiko Miyauchi, chairman of Orix Corp.
Softbank has a 48.88 percent stake in NCB, while Orix and Tokio Marine have 14.99 percent each. Among foreign investors, Cerberus Group owns 5.01 percent, Pacific Capital Group has 4.01 percent and Lehman Brothers owns 2.50 percent.
The new management said it plans to rename the institution Aozora Bank in January.
NCB’s new start came after months of intense public debate over the treatment of loans taken over from failed financial institutions.
The government and the buyer’s group left intact a controversial clause in the sales contract that allows the Softbank consortium to ask the government to buy back any NCB loan portfolio whose value falls by 20 percent or more within three years of the bank’s sale.
The clause came under fire as sowing the seed for an additional use of taxpayer money. But Softbank’s Son defended the buyer’s position during a news conference at the bank’s head office in Tokyo’s Chiyoda Ward.
“It is a complete misunderstanding to think that the public burden will be increased (because of our exercise of the clause),” Son said. “The bank was under state control until Friday, which means that problem loans belonged to the government — or the public — in the first place.”
Honma, meanwhile, vowed to continue a traditional style of lending to corporations while expanding into new areas of business, such as financing for startups and investment banking.
“We will continue to place a great importance on traditional lending to our existing clients,” Honma said. “In addition, we would like to consider how we can respond to new needs of our corporate clients.”
The new bank will also set up a special auditing committee to prevent investors in the bank from abusing NCB as a fundraising channel — a major point of concern during the negotiation over NCB’s sale.
The committee is comprised of four directors who do not belong to companies invested in the bank, as well as four auditors. The members include: Kazuo Ikeo, professor of economics at Keio University; Fumikatsu Tokiwa, special adviser to Kao Corp.; and Makoto Naruke, former head of Microsoft’s Japan operations.
Banks drop teller fee
The Bank of Tokyo-Mitsubishi, Mitsubishi Trust & Banking Corp. and Nippon Trust Bank said Monday they will eliminate the 105 yen fee they charge for withdrawing cash from each other’s automated teller machines, effective next Monday.
The three Mitsubishi group banks, which plan to integrate by October 2001 under a holding company called Mitsubishi Tokyo Financial Group Inc., have a combined 3,700 ATMs at about 970 outlets nationwide.
However, the 105 yen fee will stand during weekdays for withdrawals made after closing hours, they said.
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