UTSUNOMIYA, Tochigi Pref. (Kyodo) Ashikaga Bank, which is undergoing rehabilitation under state control, filed three lawsuits Friday seeking a total of 4.6 billion yen in damages from three former presidents and 10 other former executives for losses allegedly incurred through their illegal activities.

The bank filed the lawsuits with the Utsunomiya District Court against the 13 — including former presidents Hisao Mukae, Yoshio Yanagita and Shin Iizuka — claiming they had made illegal dividend payouts and extended loans that were deemed irrecoverable, according to the regional bank, based in Utsunomiya.

The bank took the action following the recent submission of a report by an in-house fact-finding panel that looked into the former executives’ responsibility for the bank’s failure in November 2003.

The bank said the former executives had made illegal dividend payments of 1.1 billion yen to the holders of preferred shares by window-dressing the bank’s financial statements for fiscal 2000.

In the financial statements, the bank inflated its assets by minimizing the amount of loan loss reserves by means of lax loan assessments and by overbooking deferred tax assets, the bank said.

The bank then reported a 9.3 billion yen net profit for fiscal 2000, an act that amounted to window dressing, it said.

Deferred tax assets are added to banks’ equity capital with the expectation that tax will be refunded in the future, and there are often allegations that this financial entry is misused by banks to inflate their capital and help make their financial health look better.

The bank also said the former executives had extended loans to Shimoren, a construction materials trading company in Tochigi Prefecture, which later went bankrupt, and Arakawa Kanko Kaihatsu, a golf course operator in Saitama Prefecture, despite knowing the loans would not be repaid.

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