Fund with Daishi Bank(Nikkei Kinyu)

Sep 7th, 2004

Collaboration on Delinquent Loan Disposal (Nikkei Kinyu newspaper)

The Daishi Bank Ltd. will collaborate with the real estate and finance service venture group, RISA Partners on delinquent loan disposal. The Daishi Bank will sell the non-performing enterprises’ credited loans to a corporate recovery fund RISA sets up. It was determined to quickly revitalize the finance management by minimizing the bad credit balance and by avoiding to completely lift the embargo on the “payoff” system (a provision to limit the guaranteed reimbursable fee on credit to endowment principal of 10 million yen and its interest.)

At the end of March, 2004 financial period, the Daishi Bank’s delinquent loan balance was at 167 billion yen; a 20% decrease from the previous year. The delinquent loan ratio (the percentage of delinquent loan in all loan) at the end of June was at 6.16%, but with this collaboration with RISA, they plan to quickly bring it down to 5%.

RISA will establish the “Niigata Corporate Recovery Fund.” The investments will be made towards small and medium enterprises in Niigata that are on the verge of bankruptcy. The fund will be divided in to groups of a few companies.

Daishi Bank will sell off the loan credits upon approval from their clients. The sales process has already begun and they plan to sell the credits of over 10 companies in this period. The sales will be made at actual cash value price, and if the allowance for bad loan is sufficient, then there is no problem; if not, the bank will bear additional loss.

The fund will be operated and managed by RISA; the loan collection will be conducted by its group company, IR Loan Servicing Inc (Chiyoda, Tokyo.) From the stand point of a new creditor, RISA embarks on rebuilding the non-performing businesses through restructuring and bring them to profit-making status.

The fund will be consists of capitals from RISA, IR Loan Servicing, and institutional investors; and not the Daishi Bank. Selling bad credits to its self-invested fund will not lead to decreasing of bad credit balance on a consolidated basis. Future capital participation would be considered at a later date.

RISA was established in 1999. The president, Mr. Atsushi Imuta, is a former banker of LTCB (Long Term Credit Bank of Japan.) Services include delinquent loan mobilization and real estate investment business. Sales at 2003 February period was at 2.7 billion yen. Recovery funds are already established with Hiroshima Bank, Kita-Nippon Bank, and Shiga Bank, and this one with the Daishi Bank is the forth. The Daishi bank explained that this collaboration was realized because RISA “puts the highest priority on recovery.”