Provisional Translation
April 12, 2002
Financial Services Agency

Results of the Special Inspections on Major Banks

The Financial Services Agency (FSA) carried out special inspections mainly focusing on borrowers whose market reputations had been significantly changing. The aim of the special inspections is to ensure an appropriate classification of borrowers as well as sufficient level of write-offs and provisioning on a timely basis, reflecting the borrowers’ business conditions and market signals against them. The overall results of the special inspections are summarized as follows:

1. Outline of the Special Inspections


: 13 Major Banks (Dai-ichi Kangyo Bank, Fuji Bank, Bank of Tokyo-Mitsubishi, Asahi Bank, UFJ Bank, Sumitomo Mitsui Banking Corporation (SMBC), Daiwa Bank, Mitsubishi Trust Bank, Yasuda Trust Bank, UFJ Trust Bank, Sumitomo Trust Bank, Chuo Mitsui Trust Bank, Industrial Bank of Japan (IBJ))


 of Inspections
: Commenced on October 29, 2001, and the Inspection Results are notified to individual banks on April 11, 2002 (End of Inspection).


ts of Inspections
: Classification of large borrowers whose stock prices, external ratings and other indicators had been experiencing significant changes, were inspected primarily at the main banks of these borrowers (i.e. banks playing a leading role in extending credits to the borrowers). Coordinated works were carried out with the banks’ external auditors.


Summary of the Inspection Results

- Total number/amount of borrowers/credits:

  149 borrowers, 12.9 trillion Yen
  [Of which, borrowers belonging to the four industries (*):   98 borrowers, 10.5 trillion Yen]

- Number/Amount of borrowers/credits downgraded:

  71 borrowers, 7.5 trillion Yen
  [Of which, borrowers belonging to the four industries:   47 borrowers, 6.3 trillion Yen]

- Number/Amount of borrowers/credits re-classified
  as “in danger of bankruptcy” or below:

  34 borrowers, 3.7 trillion Yen
  [Of which, borrowers belonging to the four industries:   26 borrowers, 3.3 trillion Yen]

- Total loss due to the disposal of Non-Performing Loans (NPLs):

  1.9 trillion Yen
  [Of which, borrowers belonging to the four industries:   1.7 trillion Yen]

  - Distribution of the Borrowers Classifications:    [See the Attachment]

Note) 1.

The “Four (4) Industries” means: Construction, Real Estate, Wholesale and Retails, and Other Financial Industries.
2. Figures on the classification of borrowers are the comparison between the results of special inspections and those of self-assessments by individual banks as of end-September, 2001 (i.e. interim closing of accounts for the fiscal year 2002). It must be noted that even though inspectors initially judged to downgrade certain borrowers taking into account their financial conditions, such borrowers are not included in the above figures on downgraded borrowers if they had not eventually been downgraded due to the establishment of a business rehabilitation plan, etc.
3. Figures on the “total loss due to the disposal of NPLs” is the aggregated amounts of direct disposal of NPLs during the latter half of the fiscal year 2002 and of the increment of allowance for loan losses as of end-March, 2002.
For further information, please contact:
Evaluation Division, Inspection Bureau
Tel: 03-3506-6000

Distribution of the Borrower Classifications