Injection For Japanese Regional Banks

The Japanese Financial Services Agency (FSA) has announced that it had approved an injection of public funds into three regional banks, marking the first time the government's current bank
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The Japanese Financial Services Agency (FSA) has announced that it had approved an injection of public funds into three regional banks, marking the first time the government’s current bank recapitalization scheme has been utilized since its introduction in December 2008.

A spokesperson for Mizuho, a Japanese global bank that has relationships with all three banks, stated that: “The recapitalization has been mainly for safety purposes, and a desire to expand their businesses. This will have no effect on our business with these banks.”

Under the scheme, which is intended to facilitate lending to small and medium sized enterprises, three regional banks will reportedly receive capital injections of a total of JPY121 billion (USD1.23 billion). Out of the total, North Pacific Bank, which is a unit of Sapporo Hokuyo Holdings Inc. will receive JPY100 billion, Minami-Nippon Bank is set to receive JPY 15 billion and Fukuho Bank will get an injection of JPY6 billion.

The current recapitalization scheme makes available a total of JPY12 trillion for lenders that need the funds. Lenders such as regional banks are having to meet the needs of small and medium sized firms as they struggle with the effects of the current global recession on Japan’s export markets.

The fund injections will be carried out at the end of March, after the three banks have held extraordinary general shareholders’ meetings.

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