| 1. |
After
conducting a financial inspection of the Nippon Credit Bank, Limited, the Financial
Supervisory Agency determined that the estimated net value of the Bank's assets was
negative as of 31 March 1998 and ordered the Bank to consider what measures it could take
to recapitalize itself and restore its financial soundness and report back to the Agency.
However, almost one month has now passed, and the Bank has yet to outline a realistic path
to achieve recapitalization.
|
| 2. |
Bearing this
situation in mind, as Prime Minister acting on behalf of the Financial Revitalization
Commission until its establishment(*1), I have decided to place the Bank under special
public management (temporary nationalization) from today in accordance with Article 36 of
the Law Concerning Emergency Measures for the Revitalization of the Functions of the
Financial System. At the same time, I have made a decision that the outstanding shares of
the temporarily nationalized bank are to be acquired through the Deposit Insurance
Corporation, in accordance with Article 38 of the Law.
(*1) The Financial
Revitalization Commission will be established on 15 December and will assume such
responsibilities as financial crisis management under the Law Concerning Emergency
Measures for the Revitalization of the Functions of the Financial System.
|
| 3. |
Even after
being placed under special public management, the nationalized Bank will continue its
normal operations, basically as before. However, in accordance with the Law, the Bank will
be subject to certain special procedures for banks placed under special public management,
including the appointment of a new board of directors, the formulation and adoption of a
sound credit policy and restructuring plans and the determination of the price of
outstanding shares. Moreover, immediately following the decision to place the Bank under
special management, the Commissioner of the Financial Supervisory Agency issued a
management improvement order under Article 26 of the Banking Law in order to prevent
deterioration of the quality of the Bank's assets. As such, the Bank is required to manage
its business in a sound manner even before the appointment of a new board of directors.
|
| 4. |
Furthermore,
based on the Law, the Deposit Insurance Corporation will provide the nationalized Bank
with the funds necessary for its daily operations and is to offer special financial
assistance. As a result, all deposits taken, bank debentures issued and interbank
transactions, as well as derivative transactions conducted by the Bank, are to be settled
orderly, and these obligations are to be fully protected. In addition, those loans which
have been provided by the Bank to sound borrowers in good faith are to be maintained.
Therefore, depositors and market participants are strongly urged to be reassured and
remain clam.
|
| 5. |
The
Government of Japan will continue to take all possible measures to protect depositors and
others, to maintain order in the financial system and to stabilize financial markets both
in Japan and abroad. |
