The state-run Resolution and Collection Corp. said Wednesday it has reached an out-of-court settlement with three former managers of the defunct Tokuyo City Bank over dubious loans it extended in 1991.

Former Tokuyo President Kunio Otani, Senior Managing Director Hajime Washio, and former Chairman Kei Hayasaka have agreed to pay a combined 90 million yen, the RCC said.

It is the first time the public debt-buying entity has reached a settlement with former managers of a failed financial institution, and financial observers said the agreement is likely to influence talks being conducted with 31 other failed institutions.

Tokuyo, a second-tier regional bank that was based in Sendai, Miyagi Prefecture, collapsed in November 1997.

The RCC said Otani and Washio were responsible for approving 1.6 billion yen in loans to a Sendai-based real-estate firm in October 1991.

The loans, all of which turned sour, were provided through a Tokuyo real estate affiliate without sufficient collateral, the RCC said.

Hayasaka was also responsible because he neglected to supervise Otani and Washio, the commission said. Hayasaka agreed to pay 45 million yen, Otani 30 million yen and Washio 15 million yen.

When the bank went under, the RCC bought 113.5 billion yen worth of loans it had extended to corporate borrowers. The body had collected 69.5 billion yen, about 60 percent of the total, by the end of March.

With the latest settlement, the RCC concluded its efforts to determine the responsibility for Tokuyo’s failure.

“The RCC is, however, determined to fight in court if former managers of failed institutions refuse to negotiate for settlements,” RCC Managing Director Kazuo Mura, who is in charge of such negotiations, told reporters.

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