The Financial Services Agency has urged Chubu Bank to boost its depleted capital and improve operations, prompting the second-tier regional bank to begin support talks with a company, banking industry sources said Saturday.

Chubu Bank plans to increase its capital through a third-party allotment during the current fiscal year, which ends on March 31, to raise its capital adequacy ratio to the 8 percent level, the sources said.

The FSA apparently ordered the bank, based in the city of Shizuoka, to take swift corrective action after an inspection last year revealed the need for the bank to write off more bad loans and increase its loan-loss reserves, the sources said.

The bank then allocated 4.9 billion yen for loan-loss reserves, causing its capital adequacy ratio to fall to 3.05 percent, below the safety threshold of 4 percent required for banks specializing in domestic operations.

Chubu Bank is the third bank found to be suffering such a capital shortfall as a result of FSA inspections conducted in the second half of last year.

The other two are Ishikawa Bank, a Kanazawa-based second-tier regional bank that collapsed Dec. 28, and Fukushima Bank, a regional bank that announced in December it had been ordered to implement rapid corrective action.

Chubu Bank has already entered talks with a firm affiliated to a domestic securities company to help it increase its equity capital and negotiations are progressing, the sources said.

Chubu Bank is also considering asking clients and major shareholders for cooperation.

With more than 40 outlets mainly in Shizuoka Prefecture, Chubu Bank had 536 billion yen in total assets and 509 billion yen in outstanding deposits as of the end of September.