Asia: Japan bails out Resona Bank

Global Finance, Sep 2003 by Platt, Gordon

Resona Bank, Japan's fifth-largest bank, received a government bailout in June to replenish its dwindling capital.

Deposit Insurance Corporation of Japan acquired an undisclosed majority interest in the Osaka-based bank for $16.65 billion. The Financial Services Agency estimated that the government would hold more than 70% of the bank's voting rights.

The bank submitted a restructuring program that could eliminate 4,000 of its 20,000 employees by March 2005. Salaries and bonuses will be cut by 30%. Resona's top executives were replaced.

This was the first public-fund injection into a major Japanese lender in four years. Auditors maintained that new regulations did not allow the bank to count deferred tax assets as part of its capital to the extent it had planned.

-Gordon Platt