(Provisional Translation)
September. 2, 1999
Financial Supervisory Agency

Results of the Inspection on the Regional Banks II (56 banks)



Results of the Inspection on the Regional Banks II (56 banks) are as follows:

 

1. Assessment as of September 30, 1998
2. Credit Quality Assessment



 (billion yens)
Category I (unclassified credits) :

 39,309.5
Category II (credits subject to specific risk management) :

 5,818.3
Category III (doubtful) :

 716.4
Category IV (loss) :

 84.8

Total

 Credits 45,936.0

(Note) Round off to 100 million yens.
For further imformation, please contact:

Mr.Fujimoto
Evaluation Division, Inspection Department
Financial Supervisory Agency 03- 3506- 6069

(Provisional Translation)

Results of the Inspection on the Regional Banks II (56 banks)


The Financial Supervisory Agency (FSA), in collaboration with the Local Finance Bureau of the Ministry of Finance and the Bank of Japan, carried out an intensive inspection on the Regional Banks II, on the basis of the banks' self-assessment report as of end-September 1998. Results of the inspection are as follow (see appendix for details):


1. Results of the credit-quality-assessment (as of end-September 1998; after the write-off /allowance)

(billion yens)

  Classification Total credits
I II III IV
Assessment by the FSA (a) 39,309.5 5,818.3 716.4 84.8 45,936.0
Self-assessment (b) 40,488.3 5,167.5 272.0 2.7 45,936.0

(a) - (b)

 -1,178.8 650.8 444.4 82.1 ---
Note  : "Credit" refers to the collective term of the following: loans and bills discounted, securities loaned, foreign exchanges (those due from foreign banks, foreign bills bought or receivable), customers liabilities for acceptances and guarantees, accrued interest, and suspense payments.

 
(Reference) Results of the credit-quality-assessment of the Tokyo Sowa Bank, the Kokumin Bank, the Kofuku Bank (as of end-September 1998), and the Namihaya Bank(as of end-March 1999)

(billion yens)

  Classification Total credits
I II III IV
Assessment by the FSA (a) 3,515.0 1,175.9 567.6 175.8 5,435.0
Self-assessment (b) 4,097.3 1,166.4 170.9 --- 5,435.0

(a) - (b)

 -582.3 9.5 396.7 175.8 ---

 
2. Adequacy of Write-off/Allowances (as of end-September 1998)

(billion yens)

Amount of the write-off /allowance based on the FSA assessment
(1)		 Amount of the write-off /allowance based on self-assessment
(2)		 Additional amount of the write-off /allowance required
(1) - (2)
838.8 335.1 500.7
Note : "Write-off/allowance amount based on the FSA assessment (1)" is calculated on the base of the write-off/allowance standards employed by the banks.

 
(Reference) Adequacy of write-off/allowances of the Tokyo Sowa Bank, the Kokumin Bank, the Kofuku Bank (as of end-September 1998), and the Namihaya Bank(as of end-March 1999)

(billion yens)

Amount of the write-off /allowance based on the FSA assessment
(1)		 Amount of the write-off /allowance based on self-assessment
(2)		 Additional amount of the write-off /allowance required
(1) - (2)
492.3 41.6 450.4

 

Summary of the operation

Objective Inspection of soundness of asset ,Y2K,etc.
Inspected Banks 56 banks:

Sendai Bank, Ibaraki Bank, Tsukuba Bank, Wakashio Bank, Bank of Kansai, Hanshin Bank, Hiroshima-Sogo Bank, Fukuoka Chuo Bank, Howa Bank

------ inspected by the Financial Supervisory Agency

North Pacific Bank, Yamagata Shiawase Bank, Fukushima Bank, Daito Bank, Tochigi Bank, Higashi-Nippon Bank, Niigata Chuo Bank, Taiko Bank, Nagano Bank, Ishikawa Bank, Fukuho Bank, Chubu Bank, Gifu Bank, Aichi Bank, Daisan Bank, Bank of Kinki, Taisho Bank, Nara Bank, Wakayama Bank, Shimane Bank, Setouchi Bank, Ehime Bank, Fukuoka City Bank, Bank of Nagasaki, Kyushu Bank, Miyazaki Taiyo Bank, Minami-Nippon Bank, Yachiyo Bank

------ inspected by the Local Finance Bureau of the Ministry of Finance

Sapporo Bank, Shokusan Bank, Kita-Nippon Bank, Towa Bank, Keiyo Bank, Kanagawa Bank, First Bank of Toyama, Shizuoka Chuo Bank, Bank of Nagoya, Chukyo Bank, Biwako Bank, Tomato Bank, Saikyo Bank, Tokushima Bank, Kagawa Bank, Bank of Kochi, Saga Kyoei Bank, Kumamoto Family Bank, Okinawa Kaiho Bank

------ examined by the Bank of Japan
On-site inspection
period		 from October 15, 1998 to April 16, 1999
Average number of
inspection days
per bank		 17.4 days /bank
Average number of
inspectors per bank		 8.2 inspectors/bank
Average number of
inspected debtors
per bank		 2,333 debtors /bank
Average sampling rate 55.3%
Note: All classified credits (categoriesII, III and IV) were inspected exhaustively, while unclassified credits (category I) were inspected on the sampling basis.
Standard of
classification
Category I : credit exposures which have not been classified as category  II, III or IV.
Category II : credit exposures for which an adequate specific risk management is needed.
Category III : credit exposures with serious concerns in terms of their ultimate collection.
Category IV : credit exposures which have been judged to be non-collectable or of no value.

APPENDIX

1. Accuracy of self-assessment results

(billion yens , %)
  Classification Total
credits
I II III IV
Assessment by the FSA (a) 39,309.5 5,818.3 716.4 84.8 45,936.0
Self-assessment (b) 40,488.3 5,167.5 272.0 2.7 45,936.0

(a) - (b)

 -1,178.8 650.8 444.4 82.1 -----

(a) - (b) / Credit

 ----- 1.4 1.0 0.2 -----
Note : "Credit" refers to the collective term of the following: loans and bills discounted, securities loaned, foreign exchanges (those due from foreign banks, foreign bills bought or receivable), customers'liabilities for acceptances and guarantees, accrued interest, and suspense payments.




2. Adequacy of write-off /allowance results

(billion yens, %)
Credits
(1)		 FSA assessed
write-off/
allowance
amount (2)		 Self-assessed
write-off/
allowance
amount (3)		 Additional
amount of the
write-off/
allowance
required
(4)=(2)-(3)		 Insufficiency
ratio
(4) / (1)
45,936.0 838.8 335.1 500.7 1.09
Note : 'The FSA assessed write-off/allowance amount (2)' is calculated on the basis of banks' write-off/allowance standards.

REFERENCE

1. Allowance ratios (self-assessment basis)

(1) General allowance ratio

1) Credits to "Normal" debtors
Average 0.14%
(Allowance ratio) (Number of banks)
less than 0.10% 29 banks
0.10% ~ less than 0.20% 14 banks
0.20% and over 13 banks

 
2) Credits to "Need Attention" debtors
Average 0.89%
(Allowance Ratio) (Number of banks)
less than 0.50% 14 banks
0.50% ~ less than 1.50% 33 banks
1.50% and over   9 banks
(Note ) More than half of credits to "Need Attention" debtors are classified as category I.

  

(2) Average allowance ratio for credits to "In Danger of Bankruptcy" debtors, classified as category III.
Average 49.63%
(Average allowance ratio) (Number of banks)
less than 40.00% 14 banks
40.00% ~ less than 60.00% 16 banks
60.00% and over 26 banks
(Note ) For each credits to “In Danger of Bankruptcy" debtors, classified as category III, banks are required to make specific allowances instead of general allowances.

 
2. Details of credits classified as category II
A Details of credits classified as category II, according to category of debtors(before write-off/allowance)
(billion yens)
Debtor category

Credit amount

(Ratio)
Need Attention 4,487.4 ( 77.1%)
In Danger of Bankruptcy 753.6 ( 13.0%)
Effectively Bankrupt 320.6 ( 5.5%)
Bankrupt 247.4 ( 4.3%)
Others 0.9 ( 0.0%)
Total 5,818.2 (100.0%)

 
B Details of credits to “Need Attention" debtors classified as category II (before write-off/allowance)

(billion yens)
 

Amount

 Security for credits
secured by
collateral or
guarantees		 not secured by
collateral or
guarantees
  Loans to debtors in legal bankruptcy ---- ----- -----
Past due loans 25.7 12.5 11.0
Loans in arrears by 3 months or more 35.3 19.9 13.3
Restructured loans 190.4 54.9 133.2
Loans whose disclosure is required
by the Zenginkyo standard		 255.6 91.7 161.7
Disclosure unrequired loans 4,229.2 1,910.4 2,315.8
Total 4,487.4 2,005.1 2,479.6
(Ratio) (100.0%) (44.7%) (55.3%)

Back
Return