Fukuho Bank, a small lender with 46 branches mainly in Fukui Prefecture, said Monday it has decided to examine a recapitalization plan using public funds.
The bank, headquartered in the city of Fukui, said it has yet to decide the amount of public money needed but hopes to receive the funds by the end of March to head off further financial deterioration.
On Sunday, financial sources said the regional bank would seek an injection of several billion yen.
Fukuho is the third regional to have announced such a move. North Pacific Bank, a unit of Sapporo Hokuyo Holdings Inc., based in Sapporo, and Minami Nippon Bank, based in the city of Kagoshima, have also said they are considering seeking public funds.
Their moves are in line with a legal revision by the government designed to facilitate lending to small firms by bolstering the balance sheets of financial institutions through fund injections.
"(The infusion of taxpayers' money) should ensure that we can provide financing whenever smaller businesses in our region need it," a Fukuho Bank official said.
The bank will hold an extraordinary shareholders' meeting in mid-March to seek approval for its plan to receive public funds in exchange for issuing preferred stock to the government.
Fukuho also operates in Ishikawa, Kyoto and Osaka prefectures.