Sapporo Hokuyo Holdings Inc. is considering asking the Financial Services Agency for an injection of public funds amid deteriorating economic conditions, sources said Sunday.
If the deal is realized, Sapporo Hokuyo would be the first financial institution to receive taxpayers' money since Howa Bank, based in Oita Prefecture, in December 2006.
Although Sapporo Hokuyo, which holds North Pacific Bank, a regional bank in Sapporo, has relatively sound financial footing, it aims to strengthen its capital in advance by using a revised law on financial functions, the sources said.
The revised law is aimed at facilitating the financing of small and midsize companies through injecting public funds into financial institutions as a preventive measure.
The amount of public funds Sapporo Hokuyo could receive is expected to be tens of billions of yen, and the injection could take place as early as the end of March, the sources said.
Sapporo Hokuyo's move may encourage other regional banks to take similar actions amid increasing concerns over capital shortages due to the weakening economy and the turbulence of the stock market.
Sapporo Hokuyo expects to incur ¥27.5 billion in group net losses for the year to March due to increased losses stemming from bad-loan disposals.