Administrative Actions on Aozora Bank, Ltd.(2)

1.In view of a sharp decrease in loans to small- and medium-sized enterprises [hereinafter referred to as “SMEs”] for the business year ended in March 2009, the Financial Services Agency [hereinafter referred to as “FSA”] does not recognize that Aozora Bank, LTD. [hereinafter referred to as “Aozora”] complied with the second sentence of Paragraph 1, item (v) of the Public Notice of the Financial Reconstruction Commission, the Ministry of Agriculture, Forestry and Fisheries, and the Ministry of Labor, No. 2 of 1998. The Public Notice was “about setting standards for the business rationalization, clarification of business responsibility, clarification of shareholders' responsibility and facilitating loans and other credit provisions with regard to the underwriting of nonvoting stocks.”

The FSA also does not recognize that Aozora took effective measures sufficiently to implement its lending program for fiscal 2008. Therefore, the FSA recognizes that it is the“case where these who submitted Business Revitalization Plans are(were) not recognized to be willing to properly fulfill them”defined in“Administrative actions to capital injected banks regarding follow-up” (September 30,1999, by the Financial Reconstruction Commission).

The FSA recognized the need to take administrative actions on Aozora in order to ensure the fulfillment of the bank's Business Revitalization Plan, pursuant to the provision of Article 20, Paragraph 2 of the Act on Emergency Measures for Early Strengthening of Financial Functions [hereinafter referred to as "the Early Strengthening Act"]. Therefore, the FSA today issued a Business Improvement Order to Aozora based on Article 20, Paragraph 2 of the Early Strengthening Act and Article 26, Paragraph 1 of the Banking Act.

2.The contents of the Business Improvement Order are as follows.

• [1]Aozora must submit a Business Improvement Plan to the FSA by September 11, 2009. With regard to lending to SMEs, the plan should contain specific measures to achieve its target of lending to SMEs described in its progress report.

  • (Note) In formulating the above Business Improvement Plan, Aozora must conduct in-depth analysis of the cause of the decrease in lending to SMEs, clarify the position of lending to SMEs in its lending operations and submit an effective and specific improvement plan.

• [2]Aozora must implement the new Business Improvement Plan steadily.

• [3]Aozora must report to the FSA on the progress made in implementing the plan within two months after the end of every quarter, starting from the end of September 2009, until it is confirmed that the plan has been fully implemented.