The Financial Reconstruction Commission approved Thursday a capital injection of 260 billion yen in public funds into Nippon Credit Bank, which resumed operations this month after 21 months under government control.
On Sept. 1, NCB was sold to a consortium comprising Softbank Corp., Orix Corp. and Tokio Marine & Fire Insurance Co. The bank applied for the injection on Sept. 5.
After the infusion, NCB's capital-to-asset ratio, which measures the soundness of a bank, is expected to rise to 13.43 percent by the end of March, the FRC said.
A capital-to-asset ratio of 13.43 is high compared with other Japanese banks.
At a news conference later in the day, FRC Chairman Hideyuki Aizawa said the actual injection will take place Oct. 4, adding that the FRC will closely monitor NCB's management.
"Since the government will use 260 billion yen of taxpayers' money, we expect this step to ensure the stability of the nation's financial system and revitalize the economy," Aizawa said.
Under a similar rationale, Shinsei Bank -- formerly the Long-Term Credit Bank of Japan -- received a 240 billion yen capital injection after the state sold it to a consortium led by U.S. investment group Ripplewood Holdings LLC.