The Financial Services Agency (FSA) has conducted the special inspections for the banks' fiscal year ending March 2004. The results of these inspections are summarized below.
1.		Outline of the Special Inspections
		(1)   Bank s Inspected: 11 Major Banks (Sumitomo Mitsui Banking Corporation (SMBC), Sumitomo Trust and Banking, Chuo Mitsui Trust and Banking, Mizuho Bank, Mizuho Corporate Bank, Mizuho Trust and Banking, Bank of Tokyo-Mitsubishi, Mitsubishi Trust and Banking Corporation, UFJ Bank, UFJ Trust Bank, and Resona Bank) (2)   Perio d of Inspections: Commenced on January 27, 2004, and completed with notification of inspection results to individual banks on April 23, 2004. (3)   Meth od of Examination: As in the previous rounds of the special inspections, the inspections checked the classification of large borrowers whose stock prices, external ratings and other indicators had been experiencing significant changes, at a respective main bank to obtain appropriate classification which reflects the latest business condition of the debtor on a real time basis.      The special team for examining reconstruction plans examined the borrowers' reconstruction plans in cooperation with the special inspection team. The results of the examination have been reflected in the classification of borrowers.     (Note)   The special team consists of members including an expert for corporate reconstruction specially hired from the private sector and a professor specializing in the field of Commercial Law, in addition to FSA inspectors, a number of which are certified lawyers, accountants, and real estate appraisers. The team was established in December 2002. (4)   Total number/amount of borrowers/credits:       133 borrowers,     10.5 trillion yen of credits       (Note)   The number of borrowers inspected in the follow-up of special inspections for the interim period ending September 2003 was originally 161 (with total credit amounting to 13.1 trillion yen). It increased to 169 due to corporate separation, etc.     (a)   Number/Amount of borrowers/credits inspected in previous follow-up of inspections: 123 borrowers,      10.2 trillion yen From among the 169 borrowers inspected in the follow-up of the special inspections for the interim period ending September 2003, 46 borrowers with little need of further follow-up inspections, including those that had gone bankrupt or been removed from banks' balance sheets, were excluded. (b)   Number/Amount of borrowers/credits inspected for the first time: 10 borrowers,      0.3 trillion yen Borrowers were selected by the same criteria which were used in the special inspections for the fiscal years ending March 2002 and 2003.
2.		Results of the Special Inspections
	The migration of inspected debtors between different borrower classifications, and the provisional estimate of the amount of write-offs and provisions reflecting the borrower classifications after the inspections, are summarized below.
		(1)   Migration of debtors between classifications (vis-à-vis end-September, 2003)     (Note 1)   Figures for the four industries (construction, real estate, wholesale and retail, and other financial services) are indicated in brackets. (Note 2)   ''Those removed from the B/S'' stands for borrowers whose entire credits had been collected or sold off in the fiscal year ending March 2004. (Note 3)   Figures do not necessarily add up due to rounding. (Re ference) Comparison between the results of the current special inspections and those of the previous follow-up of special inspections (for interim period ending September 2003)     (Note)   The notes of the above chart (1) are also applied to this chart. (2)   Losses from the disposal of NPLs concerning borrowers inspected     (Note)   Figures are aggregated from raw data presented by banks on a voluntary basis. (3)   Provisions for loan losses to borrowers categorized ''need special attention'' (regarding borrowers inspected)     (Note 1)   Figures are aggregated from raw data presented by banks on a voluntary basis. (Note 2)   The rate of provisions is calculated as the rate of provisions to the uncovered portion of credits. (Note 3)   Figures in brackets indicate estimates assuming the use of conventional methods before application of DCF method.

Distribution of Borrower Classifications (PDF: 9KB)

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