FSA partly to blame for Incubator Bank failure

The Yomiuri Shimbun (Sep. 12, 2010)
FSA partly to blame for Incubator Bank failure
振興銀ペイオフ　乱脈許した金融庁の重い責任（9月11日付・読売社説）

The scandal-ridden Incubator Bank of Japan, which had come under fire for its lax lending practices and arrests of its executives, finally collapsed as it filed for bankruptcy protection Friday.
　乱脈融資や経営陣の逮捕など不祥事続きだった日本振興銀行が、ついに破綻(はたん)した。

The Financial Services Agency this time opted not to implement rescue measures with public funds as it has done in the past for other failed banks. It instead invoked for the first time ever the limited deposit protection system, which covers up to 10 million yen in deposits plus interest.
　金融庁は、従来の銀行破綻のように公的資金による救済策を取らず、預金の払い戻しを元本１０００万円とその利息に限るペイオフと呼ばれる仕組みを初めて発動した。

Most of the deposits at the bank are below that cap, and so will be refunded in full. We urge the bank's depositors to remain calm. Financial authorities should exercise proper oversight so that refunding will proceed smoothly. They also should address corporate borrowers' funding problems with utmost care.
　ほとんどの預金は、全額保護される。預金者には落ち着いた行動を求めたい。金融当局はペイオフが円滑に進むよう監視するとともに、借り手企業の資金繰りにも万全を期すべきである。

The Incubator Bank was established in 2004, led by Takeshi Kimura, a former Bank of Japan official who was the brains behind the policies of Heizo Takenaka, former state minister in charge of financial policy.
　振興銀は、竹中平蔵元金融相のブレーンだった日銀出身の木村剛前会長が中心となり、２００４年に設立された。

Risky business

The bank tried to raise profits by attracting deposits with high interest rates and extending loans to promising small and medium-sized companies. But it was only a matter of time before such a management model broke down.
　高金利を武器に資金を集め、成長性が高い中小企業への融資で収益を確保するとしていたが、この経営モデルが行き詰まるのは時間の問題だった。

Megabanks and other financial institutions began to enter the field of financing for smaller companies that the Incubator Bank relied on. The high interest rates that the bank set to lure clients weighed down the bottom line. The bank desperately took an expansionary course through such measures as buying up loans from nonbanks and extending big loans in a reckless manner. Such slipshod management, which widely diverged from the bank's official business philosophy, proliferated.
　頼みの中小企業金融にはメガバンクなどが本格参入し、集客目当ての高金利は経営を圧迫した。苦し紛れにノンバンクからの債権買い取りや無理な大口融資など拡大路線に走り、理念とかけ離れたずさんな経営が蔓延(まんえん)していった。

As such, it was no surprise that Kimura, who had been the bank's chairman, and other executives were arrested and indicted over alleged obstruction of FSA inspections.
　この結果、木村前会長らが検査忌避容疑で逮捕・起訴されたのも当然だろう。

What must not be forgotten is that Takenaka, who approved the establishment of the bank with few future prospects, and the financial authorities, which neglected to expose the bank's lax management for a long time, bear grave responsibilities. Takenaka should explain what developments led to the bank's problems.
　忘れてならないのは、将来展望のない振興銀の設立を認めた竹中氏と、ずさんな経営体制を長期間放置していた金融当局の重い責任だ。竹中氏は、問題の経緯を説明すべきである。

The government and the Bank of Japan have stressed that the invoking of the 10 million yen deposit protection system is unlikely to affect Japan's financial system.
　政府・日銀は、ペイオフ発動に踏み切っても、日本の金融システムに影響を与えることはないと強調している。

Contagion unlikely

The Incubator Bank is different from ordinary banks in that the bank handles only time deposits for the purpose of fund management. The bank does not handle bank transfers or other financial settlement services that are closely related to people's daily lives. It had few fund transactions with other financial institutions. So the possibility that its collapse will set off a negative chain reaction is extremely low.
　確かに、振興銀は一般の銀行と違い、預金は資金運用目的の定期預金のみで、国民生活に密接な銀行振り込みなどの決済業務を行っていない。他の金融機関との資金のやりとりも少なく、連鎖破綻の可能性は極めて低い。

Even with the enforcement of the 10 million yen deposit protection system, only 3 percent of the bank's depositors face getting less than full refunds on their accounts.
　ペイオフを実施しても、預金の一部がカットされる預金者は全体の３％にとどまる。

Public funds were injected into Ashikaga Bank, which failed in 2003, because the extent of the possible impact on regional economies was taken into consideration. If the Incubator Bank, whose failure is attributed to its lax management, were rescued with the use of public funds, the authorities would not have obtained the understanding of the public. With these circumstances taken into account, we believe invoking the deposit protection system was appropriate.
　０３年に破綻した足利銀行に公的資金を注入したのは、地域経済に配慮したためだ。放漫経営で倒れた振興銀を公的資金で救済すれば国民の理解は得られまい。そうした事情を考え合わせると、ペイオフ発動は妥当だろう。

The deposit protection system, which had long been treated as off-limits despite its creation in 1971, has now become a reality. Depositors must have a keener sense of self-responsibility. They also must strictly assess the management of each financial institution.
　１９７１年の制度創設から封印されてきたペイオフの実施が現実となり、今後は預金者の自己責任がこれまで以上に問われる。金融機関の経営を厳しく見分ける目を持つことが求められよう。

(From The Yomiuri Shimbun, Sept. 11, 2010)
（2010年9月11日01時43分 読売新聞）