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OSAKA — Resona Holdings Inc. shareholders were split Friday into those who excused the banking group for being bailed out with taxpayers’ cash and those who demanded former executives take further responsibility.

Resona Holdings President Kenji Kawada apologized to shareholders for a forecast that, like last year, the soon-to-be-nationalized banking group will be unable to make dividend payments in the current fiscal year.

“Every year for the last five years, management promised things were about to get better,” said one shareholder during the meeting at the group’s headquarters in Osaka’s Chuo Ward.

He asked why Resona Bank, created in March through the merger of Asahi Bank and Daiwa Bank, had to apply for public funds less than three months after its launch. “How come former president (Yasuhisa) Katsuta isn’t here? He should bow and apologize.”

But others, including some from local businesses who rely on the bank for loans, refrained from making a direct attack.

“I bought (Resona component) Daiwa Bank stocks at 1200 yen 10 years ago,” said an electrical appliance store owner from Osaka. “I mean to hold on to my stocks, even if they become worthless paper. I won’t give up on Resona. It’s absolutely necessary for Osaka’s future.”

Behind the split is a confusion of differing interests that threatens the banking group’s attempts to present a unified strategy, said Noboru Yanai, newly appointed outside director to Resona Holdings.

“The government is our majority stakeholder, looking out for the public’s interests, then there are individual and institutional investors.” he said. “The public further has at stake different things, depending on whether you’re talking about depositors or taxpayers.”

Kawada emphasized that the bank will not abandon small and midsize businesses or raise interest rates. However, he did not elaborate on how he would continue lending in an area in which bankruptcy levels remain high, while still raising the profits required to make dividend payments to the government.

“Lending to individuals and small and midsize companies is our raison d’etre,” Kawada said. “Nothing has changed there. Indeed, we would like to speed up lending to small businesses.”

The exchange may be typical of Japan’s regional economies, where local businesses have hurried to finance troubled banks that in turn continue to prop up community businesses.

One shareholder expressed anger at Financial Services Minister Heizo Takenaka for “changing the rules so quickly,” resulting in the banking group’s capital adequacy falling below regulatory requirements.

Another expressed distrust toward Tokyo, saying, “I worry that new management, most of whom are from the Tokyo area, will not fully understand what is going on in Osaka.”

According to another shareholder, these comments ignore the implications of the government’s plan to invest 1.96 trillion yen in Resona Holdings in July, making the government, and by proxy, the people of Japan, the banking group’s largest shareholder through the purchase of newly issued shares at 52 yen.

If the banking group is unable to pay back the state, the people will ultimately foot the bill.

Resentment among the Japanese public remains strong, especially as the injection will be made in a way that has allowed existing shareholders to see the stock price rise to 80 yen a share. Shareholders have not taken responsibility for Resona Holdings’ performance and are effectively passing the buck on to taxpayers, according to some economists.

Resona Holdings’ largest holders of common stock include life insurers Dai-ichi Mutual Life Insurance Co. and Asahi Mutual Life Insurance Co.

As of the end of May, preferred shares that the nation’s banks issued to the state in exchange for taxpayers’ money in the late 1990s had netted an unrealized loss of 549.4 billion yen.

While Resona Holdings has outlined cost cuts, it has not come up with any new revenue-raising plans. Kawada said Resona is doing its best, with bankers shouldering hefty pay cuts that place the group’s average annual salary at about 4.6 million yen — roughly the equivalent to the national average salary for a company employee.

Currently, 76 percent of Resona Bank’s revenue comes from loans.

During the meeting, shareholders approved the banking group’s new management team, which includes 6 outside directors. No retirement pay will be made to former bank executives.

Asset review on tap

Resona Holdings, Inc. has chosen Tohmatsu & Co. to conduct a much-anticipated review of the banking group’s assets, Resona Holdings Chairman Eiji Hosoya said Friday.

The results of the reassessment are expected to resolve doubts about whether Resona Holdings is solvent and allow the banking group’s new management to draft a viable business plan.

The government agreed to inject Resona with 1.96 trillion yen at the end of May, based on assertions by the Financial Services Agency, auditor Shin Nihon & Co. and Resona Holdings that the group was solvent.

“We need to know for sure what level (Resona’s) capital strength is before we can take the next step toward business development,” Hosoya said.

“I want to watch and make sure that Resona stays on a realistic track,” said newly appointed outside director Noboru Yanai.

FSA gives approval

The Financial Services Agency said Friday it has approved a business restructuring plan put forward by Resona Holdings Inc. and Resona Bank.

The approval allows the holding firm, Japan’s fifth-largest banking group, and its core banking unit to reduce taxes when filing registrations with the government to raise their depleted capital bases.

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