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The Sapporo High Court on Thursday overturned a lower court acquittal of two ex-presidents of the now-defunct Hokkaido Takushoku Bank, giving them each 2 1/2-year prison terms for approving loans that led to the Sapporo-based bank’s collapse in 1997.

Judge Kotaro Nagashima also scrapped a not-guilty decision on the borrower in the case. Yoichi Nakamura, 66, the former head of Sapporo-based resort-hotel developer Therme group, was sentenced to 18 months in prison.

Hokkaido Takushoku Bank — or Takugin — ex-Presidents Hiroshi Yamauchi, 79, and Sadamasa Kawatani, 71, and Yoichi Nakamura, 66, of Therme were found guilty of aggravated breach of trust under the Commercial Code.

None of the three defendants was present at Thursday’s court session but their lawyers said they will file an appeal with the Supreme Court. They have two weeks to file.

Nagashima said in his ruling that both Yamauchi and Kawatani had committed breach of trust when heading the bank by continuing to provide what was effectively no-collateral loans totaling 8.6 billion yen to Nakamura’s Therme group between 1994 and 1997. He said the two men had continued to give the failing Therme loans to keep it afloat, which would cover up the fact that it couldn’t pay back any of its loans.

Prosecutors had appealed the Sapporo District Court 2003 acquittal of the three men.

The district court said that aggravated breach of trust charges could not be made against the defendants, dismissing the prosecution’s argument that the two bankers had continued to extend loans to hide the fact that they had been irresponsible in giving money to the firm in the first place.

Takugin, a commercial bank with a nationwide network, collapsed in November 1997 with a mountain of bad loans that had been amassed during the bubble period.

Its collapse, together with the failure of Yamaichi Securities Co. the same month, triggered a financial-industry crisis that led to a long slump in the economy.

Yamauchi, Kawatani and Nakamura were arrested in March 1999.

Counsel for the two bankers had argued in both cases that the men had acted to benefit the bank and their decisions were justified under the circumstances. Nakamura claimed he intended to repay the loans.

In their appeal, the prosecution said it was obvious Yamauchi and Kawatani approved the loans to protect themselves.

According to both the district and high court, Yamauchi and Kawatani caused Takugin losses by lending the 8.6 billion yen to the Therme group.

The prosecutors said the bankers knew Therme could not pay after the collapse of the bubble, but continued to provide loans without collateral. The Therme group’s development project later collapsed.

Yamauchi became bank president in 1989 and Kawatani in 1994.

Takugin was the first of several big Japanese banks to go bust in the late 1990s. Its 97 years in operation came to an end when the government intervened in November 1997.

Takugin was then taken over by North Pacific Bank, a Sapporo-based regional bank, and Chuo Trust and Banking Co., which is now Chuo Mitsui Trust & Banking Co.

As for other irrecoverable loans, Resolution and Collection Corp., the state-run debt collector that took over the bank’s problem loans, has filed five damages suits and won lower court orders in three of them for damages totaling 6.3 billion yen.

In March, the Sapporo High Court ordered 10 former Takugin executives, including Yamauchi and Kawatani, to pay a combined 650 million yen in damages to RCC.

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