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The failed Incubator Bank of Japan on Monday started the procedure for refunding depositors at some of its branches under the deposit protection plan, which caps the value of refund payments.

Resuming operations in the morning at 16 of its 114 outlets after filing for bankruptcy protection Friday, the bank began the process of refunding each depositor their deposits — up to ¥10 million plus interest earned — guaranteed by the nation’s deposit protection plan.

A total of 3,423, or 2.7 percent, of depositors with the lender for small businesses had deposits above the limit and may not get their full amount back, according to the government-backed Deposit Insurance Corp. of Japan, which on Sunday completed the process of checking the total amounts belonging to individual depositors in multiple accounts.

Refunds related to unprotected amounts will be decided after Deposit Insurance Corp. examines the bank’s asset components. There is a high possibility that some portions will not be returned and refunds are unlikely to be made for at least a year.

As of Friday, the bank held the deposits of 126,779 people totaling ¥582 billion, of which around ¥11 billion, or about 1.9 percent, will not be covered by the deposit protection plan.

Deposit Insurance Corp. has established a ¥600 billion credit line for Incubator Bank to ensure necessary refunds.

The bank is expected to hold a meeting to explain the situation to creditors later this week.

Incubator Bank was set up in 2004 as a specialized lender for small businesses by former Chairman Takeshi Kimura, a key adviser to financial services minister Heizo Takenaka in the government of Prime Minister Junichiro Koizumi.

The bank later saw its bad loans swell after reviewing its assessment of assets such as loans receivable, which it bought aggressively from a major commercial moneylender. Its debts exceeded assets by ¥180.4 billion as of Aug. 31, prompting the bank to file for bankruptcy protection.

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