OITA (Kyodo) Howa Bank, a second-tier regional based in Oita Prefecture, will apply to the Financial Services Agency later this year for an injection of 9 billion yen in public funds to help strengthen its depleted capital, according to bank sources.

With approval at an extraordinary shareholders’ meeting in late September, the bank will make the application as soon as possible under a law that took effect in August 2004.

The law is aimed at supporting a realignment of regional financial institutions with public funds. Howa would be the first bank to seek application of the law.

If approved, Howa would become the first bank to take public funds since the government imposed a refund cap of 10 million yen in April 2005 on the principal and interest earned on nearly all deposits in the event a financial institution fails.

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