12 0 2 Annual Report & CSR Report to Design the Future Applying Financial Expertise Applying Financial
Annual Report & CSR Report 2012 Development Bank of Japan Inc. Development Bank of Japan Inc. 100-0004, Japan 9-1, Otemachi 1-chome, Chiyoda-ku, Tokyo http://www.dbj.jp/en This report is printed on paper certified by the Forest Stewardship Council (FSC) as being made from sustainably Council (FSC) as being made from Stewardship by the Forest is printed on paper certified This report is printed with vegetable ink. All the electricity used in printing and binding this The report managed forests. resources. (600 kWh) was supplied by green report Profile (As of September 1, 2012)
Established: October 1, 2008 (The Japan Development Bank [1951] and the Hokkaido-Tohoku Development Finance Public Corporation [1956] were merged to form the Development Bank of Japan in 1999) Legal basis: The Development Bank of Japan Inc. Act (Act No. 85 of 2007) President: Toru Hashimoto Number of employees: 1,147 (As of March 31, 2012) Capital: ¥1,198,316 million (100% owned by the Japanese government) Address: 9-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-0004, Japan URL: http://www.dbj.jp/en Number of offices: Branch offices, 10; representative offices, 8; overseas representative office, 1; and overseas subsidiaries, 2 Subsidiaries and affiliated companies: Consolidated subsidiaries, 17; non-consolidated subsidiaries, 23; and affiliated companies, 15 (As of March 31, 2012) Main business: The provision of long-term funding (investment and loans) Purpose: To conduct business activities utilizing the methods of combining investments and financing and other sophisticated financial methodologies, thereby contributing to the smooth supply of funds to those who need long-term business funds, as well as to the sophistication of financial functions.
n Scope of business operations: As well as such basic businesses as investment, lending and guarantee of obligations, DBJ carries out businesses in which it develops new financial techniques.
n DBJ raises funds in a stable manner by borrowing from the government’s Fiscal Investment and Loan Program (FILP) and by issuing government-guaranteed bonds, as well as corporate bonds (without government guarantees), and by taking out long-term loans from the private sector. Total assets: ¥15,563.2 billion (As of March 31, 2012) Loans: ¥13,704.9 billion (As of March 31, 2012) Capital adequacy ratio: 18.30% (As of March 31, 2012) Issuer ratings: Aa3 (Moody’s Investors Service, Inc.), A+ (Standard & Poor’s Corp.), AA (Rating and Investment Information, Inc.), AAA (Japan Credit Rating Agency, Ltd.)
Note: Information above is on a non-consolidated basis.
Development Bank of Japan Inc. Published in September 2012 by the Public Relations & Corporate Social Responsibility Office, Corporate Planning & Coodination Department
Forward-Looking Statements URL: http://www.dbj.jp/en This Annual Report & CSR Report contains statements concerning management policies and future operating results. Such statements are not guarantees. Please be aware that future performance is subject to various changes in conditions in the operating environment. Contents
Message from the President ...... 2
Special Feature / Toward the Future Prosperity of Japan ...... 4
Corporate Philosophy ...... 26 Logo and Corporate Color ...... 26 DBJ’s Target Business Model ...... 28 DBJ's Roles ...... 28 Overview of DBJ’s Second Medium-term Management Plan ...... 29 History of DBJ ...... 30 Privatizing DBJ ...... 32 Overview of Operations in Fiscal 2011 ...... 34 Operating Results ...... 34 Overview of Consolidated Operating Performance ...... 36 Overseas Business ...... 38 Group Companies ...... 39 Topics ...... 40
DBJ’s Businesses ...... 41 Integrated Investment and Loan Services ...... 42 Investments and Loans ...... 44 Consulting/Advisory Services ...... 55 Crisis Response Operations ...... 59 Initiatives Related to the Great East Japan Earthquake ...... 62 Making Use of Information Functions ...... 66
CSR Report ...... 71 Implementing CSR Management ...... 73 CSR through Investment, Loan and Other Businesses ...... 78 Environmental Management ...... 101 Business Continuity Plan (BCP) ...... 104 Fostering Human Resources and Creating a Comfortable Work Environment ...... 106
Intellectual Asset Report ...... 109 Intellectual Asset Management ...... 110 Financial Platform That Enables DBJ to Meet the Needs of the Times . . 114
Management Structure ...... 115 Corporate Governance ...... 116 Compliance ...... 121 Risk Management ...... 122 Client Protection Management System/Declaration on Personal Note: Figures contained herein are rounded . . . Information Protection/Policy for Managing Conflicts of Interest 126 down. Accordingly, the total of each Disclosure ...... 128 column of figures may not equal the total of the individual figures. In this report, a “0” indicates figures ...... Corporate Data 129 of less than the indicated unit. A “—” indicates the absence of an Financial Condition ...... 143 amount.
Annual Report & CSR Report 2012 1 Annual Report & CSR Report 2012Annual Report & CSR Report 2012 Message from the President the from Message 22
C F Issues Japan Faces and DBJ’s Role in industries in the affected region. As a designated financial Resolving Them institution for crisis response operations, we met current The Japanese economy faces a number of pressing issues. financial demands providing financing for crisis response Following the Great East Japan Earthquake, these include operations amounting to approximately ¥1 trillion (as of the need for restoration and reconstruction, as well as March 31, 2012). In addition, on its own initiative DBJ electrical power supply problems. Also of growing con- responded to capital funding needs by forming restoration cern is the hollowing out of industry, owing to yen appre- funds in cooperation with regional banks in the affected ciation. The economy also confronts structural issues, area, thereby putting in place a detailed support structure. such as deflation, a lower birth rate and an increase in As part of our efforts to rebuild the industrial structure the average age. Furthermore, we face concerns about and support growth fields, we established the DBJ Smart the impact of the European debt crisis on international Japan Program to support our own financing activities financial and capital markets and the world economy. to boost global competitiveness and target community In light of these issues and the expected changes in development and the environment and energy fields, the socioeconomic environment, DBJ will continue work- among others. In growth fields in particular, in addition to ing toward Japan’s socioeconomic development in the having a financial aspect, our efforts focus on nurturing ways described below, by leveraging its characteristics: a the seeds of success. Given Japan’s lower birth rate and long-term perspective, large size, integrated investment increase in the average age, encouraging the participation and loans, and a neutral standpoint. of women has become essential to supporting economic First, by supplying risk capital in an appropriate man- activity. Recognizing this situation, we set up the Women ner, DBJ’s financial function is to help reinforce Japan’s Entrepreneurs Center (DBJ-WEC). Specific center activities financial markets. At the same time, to counter the hol- commenced in June 2012, when we held a business lowing out of Japanese industry we are helping to rebuild competition targeting female entrepreneurs. the industrial infrastructure and aiding the reconstruction Going forward, DBJ will continue playing the roles of the Japanese industrial structure. Furthermore, DBJ is referred to earlier as it contributes to addressing the issues supporting growth in fields that should help to expand faced by the Japanese economy. Japan’s economic frontiers. In addition, we are taking an active role in providing a Meeting Our Corporate Social safety net for financial markets, responding expeditiously Responsibilities and proactively to such events as financial crises and the We believe that a company’s corporate social responsi- Great East Japan Earthquake. bilities center on a commitment to creating social value While filling these roles, as a joint stock company we through its operations. We meet this responsibility through manage DBJ as an autonomous entity, introducing initia- business activities that address a host of societal needs tives that are designed to boost our profits. and issues, and via our financial services. Accordingly, our business endeavors themselves form the base of our CSR Specific DBJ Initiatives activities. We plan to continue increasing our CSR efforts Based on these precepts, in the preceding fiscal year by increasing our sensitivity to societal needs and raising DBJ formulated its second medium-term management the level of the solutions that we provide. plan, which is a three-year plan designed to respond appropriately to current issues such as the Great East July 2012 Japan Earthquake. At the same time, the plan targets the reconstruction of the Japanese industrial structure and aims to proactively support growth fields. DBJ responded to the Great East Japan Earthquake by Toru Hashimoto fully leveraging its accumulated expertise and networks President & CEO and making a full-fledged effort to support general Development Bank of Japan Inc.
Annual Report & CSR Report 2012 3 6 8 . . 10 12 14 . . . P P P P P
Promoting Investment and Loans That Address Global That Address and Loans Investment Promoting and Public- Neutral a Long-Term, from Issues Environmental Perspective Minded of the Quality or Improve That Maintain Initiatives Supporting Consulting Finance, through in Japan Welfare and Healthcare of Information and Provision Stable, Long-Term Supply of Energy to Core Industries to Core of Energy Supply Long-Term Stable, and Utilization Estate Development, Real Supporting Schemes, Including Financing Various Liquidization through Securitization Providing Investments and Loans to Ensure a and Loans to Ensure Investments Providing Transportation and Loans to Increase Investments Providing Transportation and Upgrade Build and Efficiency, Capabilities and Addressing Time Over Deteriorated That Has Infrastructure Issues to Environmental and Responding the Aging Population
Urban Sector Our Initiatives to Address the Issues Our Clients Face to Address the Our Initiatives Estate) Sector Toward the Future Prosperity of Japan of Prosperity Future the Toward Energy Sector Environmental Transportation Initiatives in the Healthcare and Business Sector Welfare Sectors Initiatives in the Initiatives in the Initiatives in the Initiatives in the Development (Real Annual Report & CSR Report 2012 Special Feature Special 4
C F C F 5 24 18 20 22 16 . . . . . P P P P P Annual Report & CSR Report 2012 Supporting Foreign Companies Investing in Japan and Japanese and Japanese in Japan Companies Investing Foreign Supporting High Where Markets in Overseas Companies Expanding Be Expected Can Growth of Large- Times in Even Perspective Long-Term Our Maintaining Far- That Have Emergencies and Other Disasters Scale Natural of Safety as a Provider Role Our Fulfilling Impacts, Reaching Dynamic and Proactive That Are Nets Providing Optimal Solutions by Forming Networks That Networks Forming by Solutions Optimal Providing Bodies, Economic Connect Local Companies and Government Institutions and Other Chambers of Commerce Organizations, Supporting Increases in Clients’ Corporate Value through Value Corporate in Clients’ Increases Supporting Restructuring That Contribute to Business Methods Financial Competitiveness Increasing Thereby and Industry Revitalization, Time during Our and Expertise Gained Experience Leveraging Appropriate to Provide Institution Financial as a Policy-Based and Build and Loans to Help and Investments Solutions Infrastructure Social Enhance contribute to the future prosperity of Japan. the future prosperity of contribute to Initiatives Initiatives Initiatives Initiatives Operations Community In accordance with this philosophy, we provide financial services to provide financial services with this philosophy, we In accordance Revitalization Revitalization Crisis Response Restructuring and Overseas Business future: We apply creative financing to resolve client issues, as we work to as we work client issues, to resolve financing We apply creative future: DBJ’s corporate philosophy is “Applying financial expertise to design the to design expertise “Applying financial is corporate philosophy DBJ’s Social Infrastructure Initiatives Targeting earn the trust of our clients and help them achieve their future prosperity.” them achieve their future of our clients and help earn the trust
. 2% 2% .
.
. Initiatives Initiatives 8 billion, accounting for 17 for accounting 8 billion, . 79–80 in the Energy Sector Energy in the As of March 31, 2012, our balance of loans of in our balance 2012, As 31, March of Annual Report & CSR Report 2012Annual Report & CSR Report 2012 See pages DBJ supports the growth Japaneseof industry itsthrough investments and loans resource for development,storage and other oil initiatives Against the backdrop of global warming, we warming, global of Against the backdrop also support efforts clients’ and encourage to energypromote renewable power, solar from wind, biomass and other sources gas,the electric sector heat and water power, totaled ¥2,357 of total loans, total of industry by 66
C F C F 77 trillion
Annual Report & CSR Report 2012Annual Report & CSR Report 2012 water sector (As of March 31, 2012) tric power, gas, heat and Balance of loans in the elec- ¥2.3 Energy Toward the Future Prosperity of Japan of Prosperity Future the Toward - - - 9 bil . We also . We . 7% of total loans, total of by 7% . 81 Initiatives in the in the Initiatives
Transportation Sector Transportation As of March 31, 2012, our balance of loans of our balance 2012, As 31, March of See page Annual Report & CSR Report 2012Annual Report & CSR Report 2012 lion, accounting for 21 for accounting lion, industry . DBJ is involved in a wide range of initiatives in initiatives a wide of in range DBJ is involved the development trans and of improvement portation infrastructure (including railroads, airports, buses airlines, and roads) part a wide of of range take the formation in projects a long-term from perspective,sup to port companies among multiple collaboration a positionfrom neutrality of the transportationin infrastructure sector (to transportation totaled providers) ¥2,977 88
C F C F 99
trillion
Annual Report & CSR Report 2012Annual Report & CSR Report 2012 sector (As of March 31, 2012) Balance of loans in the transportation infrastructure ¥2.9 Toward the Future Prosperity of Japan of Prosperity Future the Toward Transportation
- - - 3 bil . . . We have participated have . We 8% of total loans, total of by 8% . Initiatives Initiatives 82–83 (Real Estate) Sector (Real Estate) In fiscal 2011, we introduced we the DBJ Green In fiscal 2011, loans of our balance 2012, As 31, March of in the Urban Development Urban Development in the Annual Report & CSR Report 2012Annual Report & CSR Report 2012 See pages DBJ’s long-term financing of real estate long-term real DBJ’s of financing proj ects began the 1960s in estate real market securitization Japan’s in itsfrom striv beginnings early and continue our leveraging by market this invigorate to ing expertiseaccumulated and networks Certification,Building is which designed to support financial provide environmental for and socially considerate initiatives estate the real in sector totaled ¥1,615 11 for accounting lion, industry . 1010
C F C F 1111
trillion
Annual Report & CSR Report 2012Annual Report & CSR Report 2012
(As of March 31, 2012) Balance of loans to the real estate sector ¥1.6 Estate Toward the Future Prosperity of Japan of Prosperity Future the Toward Real -
. - - 2 billion .
. Initiatives Initiatives 84–86, 101–103 Business Sector . in the Environmental Environmental in the As of March 31, 2012, we had we provided such 2012, As 31, March of In fiscal 2004, DBJ began envi employing Annual Report & CSR Report 2012Annual Report & CSR Report 2012 See pages ronmental ratings in its basedronmental in financing ratings on four over for knowledge cultivated have we decades companies, the with 310 more than to financing ¥491 to amounting total cumulative Beginning with antipollution measures imple antipollution with Beginning DBJ 1960smented 1970s, the late and in early invest in has provided ¥3 more than trillion
ments and loans projects environmental for past the over 40 years 1212
C F C F 1313
Annual Report & CSR Report 2012Annual Report & CSR Report 2012 billion Loan Program (As of March 31, 2012) Cumulative amount of DBJ Environmentally Rated ¥491.2 Toward the Future Prosperity of Japan of Prosperity Future the Toward Environment -
. 9 billion, up 9 billion, . . As as well Initiatives Initiatives . 87–89 Welfare Sectors in the Healthcare and Healthcare in the As of March 31, 2012, our balance of loans of in our balance 2012, As 31, March of 7% from the preceding from fiscal year 7% . Annual Report & CSR Report 2012Annual Report & CSR Report 2012 See pages 4 logical standards healthcare of area each of and consulting finance, through Japan in information the dissemination of services consulting providing the include that development business of support plans to improvements hospital in management, DBJ studies and conducts a variety research of into issues medical the healthcare sector stood at ¥46 DBJ and is improving engaged maintaining in access,the quality including cost and techno 1414
C F C F 1515
%
Annual Report & CSR Report 2012Annual Report & CSR Report 2012 4.7 (As of March 31, 2012) Up in the healthcare sector Year-on-year increase in loans Toward the Future Prosperity of Japan of Prosperity Future the Toward Healthcare - - - We also provide . We 90–92
. . Through solutions total such as
. Restructuring and Restructuring Revitalization Initiatives Revitalization Through debtor-in-possession financing, Annual Report & CSR Report 2012Annual Report & CSR Report 2012 See pages ating change in the corporate business the corporate change in ating climate, needs business for growing are and industry restructuring that revitalization and corporate bolstering by enhances value com corporate tic demandtic and shifts demand the in structure, stringentincreasingly and competition acceler petitiveness DBJ helps supply the short-term cash that flow is essential revitalization to buyout financing and mezzanine financing assistto and capital acquisitions corporate restructuring these, DBJ supports business restructuring and revitalization In an environment marked by sluggish by domes marked In environment an 1616
C F C F 1717
Annual Report & CSR Report 2012Annual Report & CSR Report 2012
Provided DIP financing in 2001 Japan’s first Toward the Future Prosperity of Japan of Prosperity Future the Toward Restructuring - - . 5 billion .
. Initiatives 93–94 . For development the and fur Social Infrastructure Infrastructure Social As of March 31, 2012, DBJ’s balance of loans of balance DBJ’s 2012, As 31, March of Annual Report & CSR Report 2012Annual Report & CSR Report 2012 See pages ther sophistication of Japan’s economy andther sophistication Japan’s of DBJimprovements applies quality life, to of its experience and expertise support to the efforts the and improve its of build to clients social infrastructure gas, infrastructure social for (electric power, telecommunications, transportheating, water, estate)and totaled real ¥7,521 Since the era of reconstruction of the era Since following II, DBJ has War supportedWorld the develop ment and advancement Japanese of economy and society 1818
C F C F 1919
trillion
Annual Report & CSR Report 2012Annual Report & CSR Report 2012
(As of March 31, 2012) and real estate sector power, gas, heating, water, ¥7.5 Balance of loans in the electric telecommunications, transport Toward the Future Prosperity of Japan of Prosperity Future the Toward Infrastructure - - - - - . We have have . We
. To this end, this stimulate we . To Initiatives 95–98 . Furthermore, close DBJ rela maintains As of March 31, 2012, a cumulative total of total a cumulative 2012, As 31, March of Community Revitalization Revitalization Community Annual Report & CSR Report 2012Annual Report & CSR Report 2012 See pages tionships with regional financial institutions, com the insights into excellent have which DBJ solutions providesa long- from optimal term perspective a designed are that realize to prosperous lifestyle economies,regional local infrastructures build and construct wide-ranging networks as we tacklestrive the variety to issues of the facing regions regions their operatepanies in that M&A banking a regional created network that institutions infor with financial links regional community achieve revitalization to ing institutions busi had entered into financial 101 mation on corporate M&A on corporate mation activities, thereby trust-basedenhancing and help relationships DBJness with alliances 2020
C F C F 2121
Annual Report & CSR Report 2012Annual Report & CSR Report 2012 institutions
(As of March 31, 2012) financial institutions Cumulative number of allied Cumulative number of allied 101 Toward the Future Prosperity of Japan of Prosperity Future the Toward Network . - - - . . At the same are we time, . At Initiatives 38, 99 Overseas Business Business Overseas We are building an overseas an risk building manage are We As of March 31, 2012, more than 35 coun 35 more than 2012, As 31, March of Annual Report & CSR Report 2012Annual Report & CSR Report 2012 See pages tries targeted were investments for and loans Since its company a joint-stock Since to conversion Octoberin 2008, DBJ has enthusiastically embraced international business ment structure, bases, preparing operating personneltraining forward and moving with infrastructurecore expand to our working network trust with worthy partners and domestic and overseas financial institutions 2222
C F C F
2323
countries
Annual Report & CSR Report 2012Annual Report & CSR Report 2012 (As of March 31, 2012) 35 More than More than - Number of countries target ed for investments and loans Toward the Future Prosperity of Japan of Prosperity Future the Toward Overseas 59–65, 100 Response Operations Response Initiatives Targeting Crisis Targeting Initiatives Annual Report & CSR Report 2012Annual Report & CSR Report 2012 See pages DBJ began response crisis as a operations designated institution on October financial 1, 2008. when East the Great March 2011, Since struck,Japan Earthquake poured we have all support to the resto- initiatives our energy into and reconstructionration of the disaster-strick- crisis implementing to en region. In addition responses targeting affected clients directly DBJ is makingand indirectly by the disaster, a proactive effort support to increases the in production needed of materials for restoration and reconstruction. 2424
C F C F 2525 expertise Annual Report & CSR Report 2012Annual Report & CSR Report 2012 Support Consolidating useful knowledge and financial Reconstruction Toward the Future Prosperity of Japan of Prosperity Future the Toward Corporate Philosophy, Logo and Color Corporate Philosophy
Corporate Philosophy Applying nancial expertise to design the future We apply creative nancing to resolve client issues, as we work to earn the trust of our clients and achieve their future prosperity.
Commitment to Stakeholders Action Guidelines • Commitment to Clients, Society, • Customers First Investors and Employees • Professional • Global & Local • Speed & Teamwork
Intention Intellectual The Core Competencies Assets at the Center of DBJ-Specific Financial Expertise Networks
Logo and Corporate Color
Our ”Earth” logo consists of four colors that represent four themes and embodies our corporate philosophy of working with clients to realize their goals.
Each Color Represents Two Aspects of DBJ Corporate Values: Action Guidelines: • Long-Term Perspective • Customers First • Neutrality • Professional • Public-Mindedness • Global & Local • Reliability • Speed & Teamwork
26 Annual Report & CSR Report 2012 Corporate Philosophy, Logo and Color Corporate Philosophy
Commitment to Stakeholders, Action Guidelines and Core Competencies
Commitment to Stakeholders Action Guidelines n Commitment to Clients n Customers First Using creative finance, DBJ will resolve its clients’ DBJ will operate from our clients’ viewpoints, addressing challenges and help them enhance their economic and their challenges and sharing pleasure in their success. social value. n Professional n Commitment to Society With discernment and creative skill, DBJ will be a unique All business will be based on harmony among the three financial platform providing integrated investment and factors of society, the environment and the economy in loans both in Japan and abroad. order to contribute to a sustainable, affluent society. n Global & Local n Commitment to Investors DBJ will maintain a long-term viewpoint, considering DBJ will maintain transparency while raising corporate the needs of the times, the world and the region. value over the long term. n Speed & Teamwork n Commitment to Employees Relying on skilled teamwork, DBJ will act rapidly and Seeking out and training employees who share in good faith, building strong foundations for clients’ its corporate philosophy and possess high ethical trust. standards, DBJ will strive to create an open and creative work environment.
Core Competencies Intention The fundamental stance at the core of our corporate values: long-term perspective, neutrality, public-mindedness and reliability. Intellectual Expertise in fields including industry Assets research, credit analysis, financial technology and R&D, based on skills gathered over many years of experience. Networks Networks created with clients, local gov- ernments and other financial institutions.
Logo and Corporate Color
The shade of blue in “DBJ” represents a prosperous future, youthfulness and growth potential.
Annual Report & CSR Report 2012 27 DBJ’s Target Business Model, Roles DBJ’s Target Business Model
We work to resolve the issues clients face by providing specialized financial services involving integrated investment and loans.
Loans Investment Provision of medium- and long-term Provision of mezzanine and nancing, as well as project nancing equity nancing and other forms of structured and subordinated nancing Integrated Investment and Loan Services Consulting/Advisory Services Arrangement of structured nancing, provision of M&A advisory services, applying DBJ’s industry research function and expertise in environmental and technology evaluations
DBJ’s Roles
DBJ has continued to offer distinctive financial services through its integrated investments and loans, and will fulfill four key roles in financial and capital markets as it addresses the changes that are expected to take place in the socioeconomic environment.
Financial institutions (banks, securities companies, etc.), and other investment companies
Collaboration in providing investments and loans
DBJ
Provision of risk capital, partnerships: (1) Reinforcing the functions of financial and capital markets (long-term perspective, large amounts, integrated investments and loans, neutrality)
(4) Providing a safety net Business domains managed by (2) Supporting industrial for financial markets autonomous corporate decisions restructuring
Asset Management • Crisis response financing • Industry restructuring and Clients, revitalization, other activities • Purchase of CP Expertise, • Investment pursuant to Human Resources, • Regional restructuring Act on Special Measure Information • Community infrastructure for Industrial enhancement, other Revitalization (3) Providing financial support in growth fields • Support for growth industries (environment-related, healthcare, others) • Support for overseas development, promotion of financing for inbound business to Japan • Technical sophistication, other
Raising Times of crisis Normal times Fund-
Fund-raising backed by government Expansion of autonomous fund-raising infrastructure credit (Two-step loans) Capital
Integrated capital management
28 Annual Report & CSR Report 2012 Overview of DBJ’s Second Medium-term Management Plan Overview of DBJ’s Second Medium-term Management Plan (Announced May 25, 2011)
After embarking on a new stage as Development Bank Based on the achievements made and the challenges of Japan Inc. on October 1, 2008, throughout our First confronted under our First Medium-term Management Medium-term Management Plan, “Challenge 2010,” which Plan, and in light of the unprecedented economical and covered two and a half years to the fiscal year ended March social restoration and reconstruction challenges caused by 31, 2011, we focused on establishing integrated invest- the Great East Japan Earthquake, we have launched our ment and loan services and building a foundation of core Second Medium-term Management Plan “Endeavor 2013” strengths with the aim to further solidify our business base. to cover the next three fiscal years through March 31, 2014.
Basic Policies of Endeavor 2013, the Second Medium-term Management Plan (Fiscal Years from April 1, 2011, to March 31, 2014)
1. The Great East Japan Earthquake resulted in an unprecedented level of complex catastrophe. It is essential that disaster recovery measures be: (1) implemented on a step-by-step basis according to each stage towards recovery, and (2) tailored to meet specific needs of varying regions and different disaster categories. As we position crisis response as one of our major roles, we are committed to expending every effort to support restoration and reconstruction from the devastating damage caused to our economy and society. To this end, we will leverage our rich financial experience in regional, industrial, energy and infrastructure development projects accumulated through our unique financial capabilities in providing long-term debt and equity capital. 2. In addition to responding to the disaster, we are committed to building a solid foundation on which to grow by steadily implementing the growth strategy set forth in “Endeavor 2013”: namely, (1) to focus on strategic priorities among existing business, (2) to further diversify our financial service, and (3) to enhance investment in human capital.
Key Measures under Endeavor 2013, the Second Human Resources and Medium-term Management Plan Business Process
uImplementing integrated investment and loan services uStrengthening investment in • Provide optimal financing products and services that best suit human resources customer needs • Strategic allocation of • Primary focus on medium risk investments and loans human resources (strategic uFocusing on strategic priority industries and segments priorities and new business • Concentrate on restoration and reconstruction efforts in response to development) the Great East Japan Earthquake in the near term • Training professionals • Focus on following areas to promote Japan’s long-term growth equipped with skills required sStrengthening existing business: energy, logistics and in strategic business transportation, urban development • Fostering young professionals sSupporting industries with growth potential: environment, healthcare uBusiness process sIndustry reorganization and revival management and risk sInfrastructure, regional development management uAccelerating expansion in global markets • Enhancing business process • Facilitate our customers’ growth strategies in overseas markets and risk management system • Focus primarily on Asia, strengthen structured finance that properly helps drive uDiversifying sources of funds strategic business decisions • Strengthen capabilities to raise funds relying on its own credit standing • Utilize securitization etc. uStrengthening non-asset business • Diversify fee-based revenue streams
Annual Report & CSR Report 2012 29 History of DBJ History of DBJ
Here, we introduce DBJ’s history of supporting the reconstruction of post-war Japan
Reconstruction and High-growth infrastructure Development Improvements to quality independence of the development of international of life and stable supply of economy To expand and reinforce the competitiveness and social energy In 1951, the Japan Development energy and transportation development loans As corrections to the imbalance activities that underpin the Bank was established and Aiming to hone international of economic growth and industrial infrastructure, the commenced accommodation competitiveness in accordance standards of living, the Japan Japan Development Bank served loans to facilitate the with the transition to an open Development Bank began as the driving force that powered development of the power economic system, the Japan to focus on antipollution new economic expansion. In supply, which forms the basis Development Bank focused on measures, regional and urban addition, it provided loans for of the economy and industry, support for industrial system development and other social local development to correct and the rationalization, improvements and independent elements in addition to industrial regional disparities. modernization and cultivation of technological development. development. Against the Established in 1956, the coal, steel, marine transportation It also emphasized social backdrop of the first oil crisis, Hokkaido Development and other major industries. development through it provided investment and Finance Public Corporation was regional development, urban loans for energy alternatives to restructured in 1957 to form the redevelopment, logistics fossil fuels, as well as efforts to Hokkaido-Tohoku Development modernization, pollution conserve energy, to ensure stable Finance Public Corporation and prevention and other measures in energy supplies. It also supported began providing investments and a bid to relieve the problems of efforts to develop land into large- loans to promote industry in these high-level growth. scale commercial sites. two regions of northern Japan.
Economic Economic recovery Rapid growth Stable growth bubble Post-bubble Structural reform
1951–1955 1956–1965 1966–1971 1972–1984 1985–1995 1996–2000 From 2001 October 1, 2008: Development Bank of Japan Inc. established
Kawasaki Steel Corporation: Construction of Chiba Steelworks (Chiba Prefecture) (currently JFE Steel Corporation)
Modernization of steelmaking Asahi Chemical Industry Co., through construction of the first Ltd. (currently Asahi Kasei Sony Corporation: Trinitron postwar blast furnace Corporation): Construction of color television factory the Fuji Plant for production of Promotion of home-grown Cashmilon acrylic staple fiber (Shizuoka Prefecture) technologies through commercial application of new technologies Promotion of the synthetic fiber industry
Shinjuku new urban center: Toyota Motor Corporation: Shinjuku Mitsui Building and Modernization of facilities others (Tokyo) through procurement of New urban center formation imported machinery (Aichi Prefecture) Kawasaki Kisen Kaisha, Ltd.: through redevelopment of purification plant site Modernization of the domestic The Tonegawa Maru tanker automobile industry through Built tanker that was indispensable refurbishment of production for the import of energy and raw facilities materials
30 Annual Report & CSR Report 2012 History of DBJ
Source: DBJ website: http://www.dbj.jp/en, etc.
Development of lifestyle Creation of a vibrant and Financial solutions that Providing integrated invest- and social infrastructure affluent society and stable support communities, ment and loan services and and a smooth industrial economy the environment and conducting crisis response transformation The Japan Development Bank technology operations Pressing needs arose for focused on such important areas In 1999, the Japan Development Development Bank of Japan Inc. increased domestic demand as ongoing improvements to Bank and the Hokkaido-Tohoku was established on October 1, and an industrial structural social capital, environmental and Development Finance Public 2008, as a special stock company shift, against a background of other measures, and support Corporation were dissolved through conversion to a joint-stock aggravating trade friction with for venture businesses. In and the Development Bank of company. By applying its distinctive other countries. The Japan addition, it swiftly implemented Japan (DBJ) was established. DBJ financial services through inte- Development Bank focused reconstruction loans in the wake focuses its operations in three grated investments and loans, DBJ on support for social capital of the Great Hanshin-Awaji areas: community development, addresses the various issues that improvement, creative techno- Earthquake and loans in response environmental conservation and clients face. At the same time, we logical development, an industrial to the financial environment to sustainable societies and the fulfill our unique role by serving as transformation and other issues. stabilize the financial system by creation of new technologies and a designated financial institution for In the 1990s, it stressed environ- functioning as a safety net. industries. In these ways, DBJ crisis response operations, respond- mental and energy measures and contributes to the sustainable ing to financial crises and helping regional economic stimulation development of Japan’s economy. to meet the restoration and recon- with the aim of making Japan a struction challenges presented by lifestyle superpower. the Great East Japan Earthquake.
Economic Economic recovery Rapid growth Stable growth bubble Post-bubble Structural reform
1951–1955 1956–1965 1966–1971 1972–1984 1985–1995 1996–2000 From 2001 October 1, 2008: Development Bank of Japan Inc. established
Nakayama Joint Power Yamagata JR Chokko Tokkyu Generation Co., Ltd.: The Former Niigata Tekkosho Co., Ltd. Holdings: Yamagata Shinkansen Independent power producer (IPP) power generation Through such methods as DIP Improvements to regional railway operations (Osaka Prefecture) financing, mergers and acquisitions, infrastructure V-Lease Corporation In step with relaxation of and business revitalization funds, By applying the expertise it has regulations, project finance support DBJ supports local companies, cultivated to date, DBJ entered for Japan’s first steelmaker to enter helping communities maintain the business of operating leases the power generation business excellent supplies of technical for aircraft engines, of which core expertise and employment parts are produced by Japanese opportunities. companies involved in heavy industry. Through this business, we aim to promote the further development of the Japanese airline industry. Pacific Convention Plaza Yokohama: Pacifico Yokohama (Kanagawa Prefecture) Construction and maintenance of hotels, international conference facilities, etc., in the Minato Mirai Toyo Tires Turnpike 21 area of Yokohama (formerly the Hakone Turnpike) DBJ established Japan’s first Hankyu Corporation: infrastructure fund in collaboration Earthquake reconstruction work with Australian investment bank (Hyogo Prefecture) Macquarie Bank, involving equity Recovery work on traffic investment to facilitate business infrastructure destroyed by transfer transactions for the former earthquakes Hakone Turnpike.
Annual Report & CSR Report 2012 31 Privatizing DBJ Privatizing DBJ
Development Bank of Japan Inc. Established as a Joint-stock Company (Privatized) on October 1, 2008 Development Bank of Japan Inc. was established on establishment, took over all assets of the Development October 1, 2008, under the terms of the Development Bank of Japan (the “predecessor”) as investment in kind, Bank of Japan Inc. Act (Act No. 85, 2007; the ”New DBJ with the exception of assets transferred to the government Act”) approved by the Japanese Diet on June 6, 2007, as under the provisions of Article 15, Paragraph 2, of the part of the Act on Promotion of Administrative Reform Appendix to the New DBJ Act. Under Article 15, Paragraph for Realization of Small and Efficient Government (Act No. 1, of the same act, DBJ also assumed all rights and obliga- 47, 2006; the ”Administrative Reform Promotion Act”) tions of the predecessor, with the exception of assets trans- approved by the Japanese Diet in May 2006, and the fun- ferred to the government under Article 15, Paragraph 2, of damental reform of policy-based finance. DBJ, upon its the Appendix to the New DBJ Act.
Highlights of the New DBJ Act
Provision of Credit Predecessor New DBJ The object of the New DBJ Act is to maintain the foundations of the investment and financing functions Loans Yes Yes of long-term business funds as the Development Bank of Equity Yes Yes Japan Inc. by conducting business activities utilizing the investments methods of combining investments and financing and other sophisticated financial methodologies with the goal of Debt guarantees Yes Yes realizing full-scale privatization. Foreign exchange; No No money exchange Fund-raising In addition to borrowing and bond issuance, as a comple- Yes mentary measure, DBJ is now able to accept negotiable Bond issuance Yes (including bank debenture bonds) deposits and issue bank debentures for institutional investors. Fiscal Loan Fund bonds + Transitional Measures Borrowings Fiscal Loan Fund private-sector In terms of fund-raising, DBJ depends largely on borrowing borrowings from the government and government-guaranteed bonds. Yes To facilitate a smooth transition toward independent fund- Checkable deposits raising following full privatization, measures have been and small-lot deposits enacted to allow DBJ to issue government-guaranteed that are covered by Deposits No bonds and borrow from the Fiscal Loan Fund. Upon the deposit insurance for the safe custody establishment of the new DBJ, the act provided for long- of deposits are not term borrowing from the private sector. accepted.
Revision to the New DBJ Act (June 2009)
Since its establishment, DBJ has been engaged in crisis act was promulgated and went into effect on July 3, 2009. response operations as a designated financial institution. Under the New DBJ Act, DBJ was to have achieved full However, to reinforce DBJ’s financial structure through gov- privatization within five to seven years after its establish- ernment capital contribution and enable DBJ to introduce ment. With the act’s revision, the target date was extended more broad-ranging initiatives in response to the global finan- to five to seven years after March 31, 2012. DBJ was to have cial and economic crisis that commenced in autumn of 2008, become fully privatized within approximately five to seven the Act for Partial Amendment of the Development Bank of years of April 1, 2012. At the end of fiscal 2011, the govern- Japan Inc. Act (“revision to the New DBJ Act”) was passed ment was planning a review of DBJ’s organization, which into law by the Japanese Diet on June 26, 2009, and the was to have included the future of government-held shares.
Note: Please refer to pages 136–142 for details of the New DBJ Act, the revision to the New DBJ Act and the Act for Extraordinary Expenditure and Assistance to Cope with the Great East Japan Earthquake.
32 Annual Report & CSR Report 2012 Privatizing DBJ
Act for Extraordinary Expenditure and Assistance to Cope with the Great East Japan Earthquake (May 2011) On May 2, 2011, in response to the damage caused by the (to March 31, 2015) the period for government capital con- Great East Japan Earthquake, the Act for Extraordinary tribution in order to facilitate DBJ’s implementation of crisis Expenditure and Assistance to Cope with Great East Japan response operations. Furthermore, the target date has been Earthquake (Act No. 40 of 2011; the Act for Extraordinary extended to five to seven years from April 1, 2015. The Expenditure), which included the partial revision to the New government is now planning a review of DBJ’s organization, DBJ Act, was passed into law by the Japanese Diet. which will include the future of government-held shares, The revision to the New DBJ Act in Accordance with the by the end of fiscal 2014. The government will continue to Act for Extraordinary Expenditure extended by three years hold its shares until then.
Revision to the New DBJ Act in Accordance with the Act for Extraordinary Expenditure
The Amendment of the Development Bank of Japan Inc. Act (based on establishment of the Act for Extraordinary Expenditure and Assistance to Cope with the Great East Japan Earthquake) was passed at an Upper House plenary session of the ongoing 177th ordinary session of the Diet. The act was revised to facilitate implementation of DBJ’s crisis response operations with regard to the damage resulting from the Great East Japan Earthquake. The main thrust of the revisions is as follows. uTo strengthen DBJ’s financial base in order to facilitate a smooth response to crisis response operations, the period during which the government may make additional capital contributions to DBJ has been extended by three years, until March 31, 2015. Furthermore, the period for requiring the redemption of delivery bonds has similarly been extended by three years, to June 30, 2015. uIn addition to extending the period for repayment of capital contribution and redemption of delivery bonds, the act extends the disposition period for government-held shares in DBJ. Whereas existing provisions stipulated a target of “approximately five to seven years after April 1, 2012,” the revised act states that the government must dispose of all of its shares in DBJ by ”approximately five to seven years after April 2015.” uIn view of the certain level of government involvement in DBJ, such as the government holding in excess of one-third of its outstanding shares at any given point, to ensure the proper implementation of crisis response operations, its organizational structure, including crisis response operations and the future of government- owned shares, are to be reviewed and necessary measures are to be taken. The target deadline for such activities is revised to the end of fiscal 2014.
Legal Basis for Revision to the New DBJ Act
FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019~
* Owing to the Revision to the New Preparation Period Transition Period DBJ Act in Accordance with the (Government-af liated (Special stock company with shares Act for Extraordinary Expenditure, nancial institution) held by the government) the disposition of DBJ shares was scheduled for within ve to seven years from April 2015. June 2007 October 2008 June 2009 May 2011 End of FY2014 The government plans to review New DBJ Act Privatization Establishment of Revision to the (Target) (conversion to the Act for New DBJ Act in Government the organizational and other goes into effect a joint-stock Partial Accordance with review of DBJ’s aspects of DBJ at the end of 2014. company) Amendment of the Act for organization Based on the review, it will take the New DBJ Act Extraordinary Expenditure necessary measures from the standpoint of maintaining a Shareholder 100% government 100% government constant level of participation in DBJ, including the possibility of holding more than one-third of Company form Government-af liated nancial institution Joint-stock company (special stock company) (special public corporation) DBJ’s shares at any given time. The government shall not Business Based on former DBJ Act Based on New DBJ Act dispose of its shares in DBJ until Government-guaranteed bonds, FILP agency bonds, Independent funding, government-guaranteed the necessary measures described Fund-raising independent nancing bonds and FILP agency bonds above have been taken.
Annual Report & CSR Report 2012 33 Overview of Operations in Fiscal 2011 Overview of Operations in Fiscal 2011
Operating Results
Financial-Economic Environment cies toward the end of the fiscal year, as the sense of risk During the fiscal year ended March 31, 2012, confusion waned in both cases, as well as due to the Bank of Japan’s over the Greek debt crisis continued from the previous introduction of looser monetary policies. year and evolved into concerns of a broader European debt The Nikkei stock average, in the ¥9,000 range on March crisis. These fears spread out into the real economy, caus- 31, 2011, fell to the ¥8,000 neighborhood by September ing the European economy to decelerate sharply. Plagued 30. By the end of the fiscal year, however, the Nikkei had by a stalemate over fiscal and monetary policies, the U.S. rebounded to around ¥10,000. economy showed stronger signs of faltering on the road to Demand shortfalls continued to put downward pressure recovery. on prices, but the year-on-year decrease in consumer prices In the corporate sector, supply chains that were inter- (excluding perishable goods) was small, affected by high rupted by the Great East Japan Earthquake were restored energy prices. Operating Results and production activities returned to normal in the first half of the fiscal year. However, the recovery remained gradual, Progress and Results of DBJ Group Operations as more rapid deceleration in the world economy and Review of the Year Ended March 31, 2012 ongoing yen appreciation caused exports to fall off in the Since its establishment on October 1, 2008, the core of second half. DBJ’s business has remained the same as that conducted by For households, the number of people in employment its predecessor. As a highly specialized financial institution, returned to pre-disaster levels but income conditions we sought to resolve clients’ issues by providing integrated remained problematic. In the household sector, consumer investment and loan services. sentiment improved in line with progress on restoration and Below is an overview of these activities during the fis- reconstruction following the Great East Japan Earthquake. cal year ended March 31, 2012. The figures provided for This factor, plus measures to support automobile purchases, the loans, investment and consulting/advisory services prompted a return in consumption to pre-disaster levels. described below are on a non-consolidated basis. Housing starts remained generally flat. On the financial front, as the impact of the European Loans debt crisis spread, uncertainty about the financial system We provided senior loans through traditional corporate prompted heightened efforts to hedge risks. However, loans, non-recourse loans and other types of structured owing to EU support measures this uncertainty appeared to financing as well as a variety of other loans that employ be nearing resolution toward the end of the fiscal year. advanced financial methods. During the year ended March In Japan, the fund-raising environment worsened shortly 31, 2012, we provided ¥2,849.0 billion in loans, including after the Great East Japan Earthquake, but monetary easing loans for crisis response operations. helped to improve this situation. For details regarding business loans in response to the Long-term interest rates (yields on 10-year Japanese gov- financial crisis, please refer to the section on page 60 enti- ernment bonds) remained at around 1%, as investors fled tled “Results of Crisis Response Operations.” to the relative safety of Japanese government bonds. Owing to the delayed recovery in the world economy Investment and low interest rate policies in the United States, the dif- We work to resolve client issues involving business expan- ferential between Japanese and U.S. interest rates shrank sion and support strategies and the formation of financial and yen appreciation continued to the neighborhood of 75 infrastructures. We achieve these goals by supporting yen to the U.S. dollar. The yen also appreciated to around the creation of funds, as well as mezzanine, equity and 97 yen to the euro on the back of the European debt crisis. other financing methods, providing appropriate financing The yen depreciated to some degree against both curren- based on a long-term perspective. During the year under
34 Annual Report & CSR Report 2012 Overview of Operations in Fiscal 2011
review, in tandem with regional financial institutions in the regional communities and assign advisors to support these disaster-afflicted area, we established the Great East Japan activities. During the year, investment and loan commissions Earthquake Reconstruction Fund to support the restoration and fees from M&A and other advisory services amounted and reconstruction of companies affected by the Great East to ¥7.8 billion. Japan Earthquake, and we provided risk capital through this fund. Owing to these activities, ¥78.0 billion was allocated Subsidiaries to investing activities during the year. In August 2011, we invested in Hitachi Capital Securities Co., Ltd., to enhance the financial methods that we have Consulting/Advisory Services available to meet increasingly diverse customer needs, Consulting and advisory services utilize the networks cre- including those for disaster response and reconstruction. ated by DBJ’s predecessor. Through these services, we help To clarify the connection with DBJ, on October 1, 2011, clients of all sizes grow more competitive in a host of indus- the company’s name was changed to DBJ Securities Co.,
tries. We provide consulting on projects that help invigorate Ltd. Operating Results
Loans and Investments and Fund-Raising Conditions (Flow)
(Billions of yen)
For the Year Ended For the Year Ended March 31, 2011 March 31, 2012
Loan and investment balance 2,116.6 2,927.0
Loans*1 2,034.4 2,849.0
Investment*2 82.2 78.0
Funds raised 2,116.6 2,927.0
Fiscal Investment and Loans 513.4 801.4
Of which, FILP agency bonds*3 300.0 500.0
Of which, government-guaranteed bonds (domestic) 79.5 179.0
Of which, government-guaranteed bonds (overseas)*4 133.8 122.4
Corporate bonds (FILP bonds)*4, 5 80.0 263.1
Long-term debt*6 320.1 1,170.7
Recovery, etc. 1,203.0 691.7
Notes: 1. Figures, including those for corporate bonds, are on a management accounting basis. 2. Figures, including those for securities, money held in trust and other assets (funds), are on a management accounting basis. 3. Includes industrial investment and borrowings. 4. Of government-guaranteed bonds and corporate bonds denominated in foreign currencies, appropriated government-guaranteed bonds and corporate bonds are converted to yen at market rates according to the conditions at the time of settlement. 5. Does not include short-term corporate bonds. 6. Long-term debt borrowed from Japan Finance Corporation in conjunction with crisis response operations during the fiscal year ended March 31, 2011, amounted to ¥138.7 billion and during the fiscal year ended March 31, 2012, amounted to ¥959.7 billion.
Annual Report & CSR Report 2012 35 Overview of Operations in Fiscal 2011
Overview of Consolidated Operating Performance
Consolidated Financial Highlights
(Billions of yen)
For the Year Ended For the Year Ended March 31, 2011 March 31, 2012
Total income 363.8 330.2
Net income 101.5 77.3
Total assets 14,845.2 15,579.8
Loans 13,031.4 13,645.4
Securities 1,165.5 1,176.6 Overview of Consolidated Operating Performance Total liabilities 12,435.2 13,118.8
Borrowed money 8,576.4 9,170.5
Debentures and corporate bonds 3,629.3 3,671.8
Total equity 2,409.9 2,461.0
Common stock 1,181.1 1,187.7
Capital adequacy ratio (BIS standard) 20.50% 18.56%
Ratio of risk-monitored loans (Banking Act base) 1.28% 1.47%
Return on equity 4.31% 3.18%
Return on assets 0.67% 0.51%
Number of employees 1,203 1,270
Consolidated operating performance during the year under whereas net fees and commissions dropped ¥0.4 billion, review is described below. to ¥8.9 billion, down year on year, but net other operat- ing income rose ¥2.2 billion, to ¥2.9 billion. However, DBJ Consolidated Income and Expenses recorded net other income of ¥14.4 billion, expanding During the period, DBJ posted total income of ¥330.2 bil- ¥10.1 billion, owing mainly to income on recovery of bad lion, down ¥33.6 billion from the previous fiscal year. Of debts, in line with a change in accounting standards. this amount, interest income generated ¥277.3 billion, DBJ posted extraordinary income of ¥10.9 billion, up down ¥21.5 billion, and fees and commissions fell ¥0.5 bil- ¥1.6 billion, for the year stemming from gain on settlement lion, to ¥9.4 billion. Other operating income dropped ¥7.1 of the substitutional portion of the governmental pen- billion, to ¥5.5 billion, while other income dropped ¥4.4 bil- sion program due to return of corresponding plan assets. lion, to ¥37.8 billion. Consequently, income before income taxes and minority Total expenses were ¥220.0 billion, falling ¥39.4 billion. interests came to ¥110.2 billion, up ¥5.8 billion from the This amount included interest expenses of ¥155.5 billion, previous fiscal year. down ¥16.7 billion, expenses on fees and commissions of After posting current income taxes of ¥21.4 billion, ¥21.1 ¥0.5 billion, falling ¥0.0 billion, other operating expenses of billion more than in the preceding fiscal year, deferred ¥2.6 billion, dropping ¥9.3 billion, and general and admin- income taxes amounted to ¥10.4 billion, up ¥9.5 billion, istrative expenses of ¥37.8 billion, which rose ¥1.1 billion, and minority interests in net income dropped ¥0.5 billion, as well as other expenses of ¥23.4 billion, which decreased to ¥0.9 billion. As a result, consolidated net income came to ¥1.4 billion. ¥77.3 billion, ¥24.2 billion less than in the previous term. Net interest income fell ¥4.8 billion, to ¥121.8 billion,
36 Annual Report & CSR Report 2012 Overview of Operations in Fiscal 2011
Consolidated Assets, Liabilities and Equity Total equity at the end of the period was ¥2,461.0 bil- As of March 31, 2012, total assets amounted to ¥15,579.8 lion, up ¥51.0 billion from one year earlier. The primary billion, up ¥734.6 billion from one year earlier. Of that reason for this rise was higher net income. This increase amount, loans were ¥13,645.4 billion, improving ¥613.9 stemmed from the ¥6,170 million redemption of delivery billion, and securities rose ¥11.0 billion, to ¥1,176.6 billion. bonds in December 2011 and ¥424 million in March 2012. In addition to a response to the financial crisis, the increase Also, in June 2012, at the DBJ’s General Meeting of in loans reflects higher provision of loans to electric power Shareholders a resolution was passed to award dividends on companies, given the subdued market reception to issuance common stock. This dividend had a record date of March of electric utility bonds. 31, 2012, and a total amount of ¥50.0 billion, for dividends Call loans and bills bought amounted to ¥89.5 billion per share of ¥1,147, resulting in a payout ratio of 50.01%. at the end of the term, an increase of ¥27.6 billion, and The unrealized gain on available-for-sale securities that reverse repurchase agreements were ¥152.8 billion, up DBJ holds independently, as well as shares in listed compa- from zero the previous year. These figures represent the nies that DBJ owns through funds, came to ¥19.3 billion, up Overview of Consolidated Operating Performance temporary investment of excess cash on hand. ¥6.1 billion compared with the preceding term. This amount Total liabilities as of March 31, 2012, stood at ¥13,118.8 includes valuation gains on shares in listed companies. billion, ¥683.5 billion more than a year earlier. Of this amount, debentures and corporate bonds came to ¥3,671.8 Status of Risk-Monitored Loans billion, an increase of ¥42.4 billion, and borrowed money DBJ is not subject to the provisions of the Banking Act or was ¥9,170.5 billion, rising ¥594.0 billion. the Act on Emergency Measures for the Revitalization of The increase in borrowed money mainly reflected the Financial Functions (Act No. 132 of 1998), but it car- borrowings (two-step loans) from the Japan Finance ries out independent assessments of liability classes and Corporation to fund crisis response operations related to asset categories based on the Financial Services Agency’s the Great East Japan Earthquake, as well as borrowings Financial Inspection Manual. According to these results, from commercial financial institutions. on a consolidated basis, DBJ’s holdings of risk-monitored Also, acceptances and guarantees came to ¥128.5 bil- loans as prescribed by the Banking Act total ¥199.9 billion, lion, down ¥16.5 billion. accounting for 1.47% of total loans.
Profit and Loss Surrounding the Conversion to a Joint-Stock Company (Consolidated)
(Billions of yen) For the Six- For the Year For the Year For the Year Month Period Ended Ended Ended Ended March 31, 2010 March 31, 2011 March 31, 2012 March 31, 2009 Gross operating profit 45.8 121.8 136.7 133.6 Net operating profit (after addition to the general provision (75.6) 86.7 100.0 95.7 for loan losses) Income before income taxes and (118.1) 51.1 104.3 110.2 minority interests Total income taxes (13.5) (10.8) (1.3) (31.9)
Net income (128.3) 39.8 101.5 77.3
Total dividend amount* — 10.0 50.0 37.3
* Record dates correspond to the total amounts of dividends for those respective fiscal years.
Annual Report & CSR Report 2012 37 Overview of Operations in Fiscal 2011
Overseas Business
Since its conversion to a joint-stock company in October International Finance Corporation (IFC) 2008, DBJ has worked to make a full-fledged entry into A member of the World Bank Group and an international international business, creating an overseas risk manage- financial institution, conducting investment and loan opera- ment structure, preparing operating bases, training person- tions primarily in developing countries nel and moving forward with core infrastructure. At the China Development Bank same time, we are working to expand our network with Policy-based financial institution (converted to joint-stock trustworthy partners. Through these efforts we are promot- company in 2008) handling financing for infrastructure and ing domestic and overseas financial institutions. core industries in China As one aspect of its efforts to build bases overseas, China International Investment Company (the CITIC Group) DBJ established DBJ Singapore Limited as a wholly owned Corporate group with a wide-ranging financial service net- subsidiary in December 2008, and another wholly owned work throughout Asia, including China
Overseas Business subsidiary, DBJ Europe Limited, commenced operations in IE Singapore November 2009. Government institution that supports internationalization By maintaining intensive collaboration with its overseas and provides overseas investment for Singaporean companies offices, DBJ is able to provide global financial services that Bangkok Bank meet broad-ranging client needs, as well as support for cli- A major Thai bank that works with Japanese regional banks ents’ overseas operations. to provide lending denominated in local currency to small and medium-sized regional Japanese companies Operations at Overseas Locations New York Representative Office DBJ Asia Financial Support Center Opens Covering the Americas, the New York Representative Office In June 2011, DBJ opened the DBJ Asia Financial Support monitors financial, industrial and economic trends as well Center to provide local information and offer consulting as economic policies and urban and infrastructure develop- services to regional banks supporting efforts by medium- ment and other trends. The office provides information to sized companies and other entities in their regions to pro- Japanese companies and other entities that are planning mote business in other parts of Asia. to commence operations in North America and South The center’s roles are to liaise with regional banks America, as well as overseas companies that are considering throughout Japan and help meet the various needs of local entry into the Japanese market. medium-sized companies and other entities to develop their operations in Asia. We achieve this by leveraging the DBJ DBJ Singapore Limited Group’s information network, which includes public finan- Established: December 2008 cial institutions in Asian countries. Capital: S$1,000,000 As of May 31, 2012, 64 regional banks were members. Business: Investments and loan support and advi- By country, 60% of inquiries were related to three countries: sory services China, Thailand and Vietnam. By type of inquiry, 60% were Address: 9 Raffles Place, #30-03 Republic Plaza, investment- or cash-related. DBJ will continue working to Singapore 048619 strengthen the transmission of information related to Asia. CEO & Managing Director: Takashi Sugiyama Membership in the Long-Term Investors Club DBJ Europe Limited The Long-Term Investors Club (LTIC) was established in 2009 Established: November 2009 as the global platform for cooperation among financial insti- Capital: €7,500,000 tutions in charge of long-term investment in various coun- Business: Investments and loan support and advi- sory services tries, reflecting the change in financial environment after the Address: Level 20, 125 Old Broad Street, London Global Financial Crisis. With members numbering 15 institu- EC2N 1AR, U.K. tions from all over the world including DBJ, LTIC promotes CEO: Takeshi Kiriyama in areas such as information sharing in long-term financing, academic studies and research and co-investments. Business Tie-Ups with Overseas Institutions In July 2012, DBJ joined LTIC as the first financial institu- To enhance its financial services, DBJ leverages its business tion from Japan. alliances with the following overseas institutions.
38 Annual Report & CSR Report 2012 Overview of Operations in Fiscal 2011
Group Companies
The DBJ Group, comprising DBJ and its subsidiaries and affili- gies by providing funds and utilizing DBJ’s international and ates, provides a variety of services to meet its clients’ needs. domestic networks as well as assigning human resources.
Japan Economic Research Institute Inc. Outline of DBJ Investment Advisory Co., Ltd. Japan Economic Research Institute, which is wholly capital- Established: December 2009 ized by DBJ, is a research institution that primarily conducts Capital: ¥68 million surveys and provides consulting services. Business: Operations related to DBJ’s value-added Operating with a long-term perspective and from a equity investment standpoint of fairness and neutrality, the institute generates Address: 1-9-1, Otemachi, Chiyoda-ku, synergies from its three fields of research—the public, solu- Tokyo 100-0004, Japan tions and international arenas—and targets the public and President & CEO: Hiroshi Murakami private sectors. The company meets clients’ research and Group Companies consulting needs from a comprehensive viewpoint. DBJ Securities Co., Ltd. DBJ converted Hitachi Capital Securities Co., Ltd., to a sub- Outline of Japan Economic Research Institute Inc. sidiary in August 2011 in a move to augment the financing Established: December 1989 methods available to it to meet increasingly diverse client Capital: ¥480 million needs. Given DBJ’s increasing involvement with the com- Business: Research, consulting and advisory services pany, in October 2011 the company’s name was changed to Address: 2-2-1, Otemachi, Chiyoda-ku, Tokyo DBJ Securities Co., Ltd. 100-0004, Japan DBJ Securities provides a securities function to comple- President: Takashi Ando ment the DBJ Group’s investment and loan functions, thereby increasing the number of financial solutions that DBJ Capital Co., Ltd. the Group can offer its clients. Since 1996, the DBJ Group has invested in venture compa- nies that can be expected to achieve high rates of growth, Outline of DBJ Securities Co., Ltd. in an effort to support the creation of new industries in Established: October 1998 Japan. In June 2010, DBJ Capital Co., Ltd., got off to a new Capital: ¥500 million start involving the reconfiguration of its system for manag- Business: Securities business ing investment assets. Address: 2-15-12, Nishi-Shinbashi, Minato-ku, DBJ Capital aims to contribute to the growth and devel- Tokyo 105-0003, Japan opment of firms requiring capital by leveraging its expertise President & CEO: Hiroshi Sakamaki in evaluating technology and business and its venture busi- ness investment experience. DBJ Asset Management Co., Ltd. Established as a real estate fund investment company in Outline of DBJ Capital Co., Ltd. December 2006, in July 2012 DBJ Asset Management Co., Established: October 2005 Ltd., made a new start as an asset management company (Commenced operations on June 30, 2010) wholly owned by DBJ. Capital: ¥99 million In line with DBJ’s corporate philosophy, going forward Business: Investment in venture companies the company will operate as a quality and highly reliable Address: 2-6-2, Otemachi, Chiyoda-ku, asset management company serving the needs of long- Tokyo 100-0004, Japan term investors. Centering on the real estate business, the President & CEO: Akira Ogasawara company will respond to diverse demands for risk capital as it works to contribute to the development and increasing DBJ Investment Advisory Co., Ltd. (DBJ-IA) sophistication of financial functions in Japan. DBJ-IA was established to promote added-value creative equity financing (the “Value for Growth” Investment Outline of DBJ Asset Management Co., Ltd. Program) to support growth strategies from a medium- to Established: December 2006 long-term standpoint emphasizing relationships of mutual Capital: ¥100 million trust with entities receiving investment funds. Business: Real estate fund investments, etc. DBJ-IA aims to contribute to such entities’ growth and Address: 2-2-2, Otemachi, Chiyoda-ku, Tokyo development by helping them achieve their growth targets 100-0004, Japan in terms of M&A, capital and domestic and overseas strate- President & CEO: Masataka Ito
Annual Report & CSR Report 2012 39 Topics Topics
Apr. lEstablished the Tohoku Revival Reinforcement May lAmendment of the Development Bank of Japan Inc. Act, based Office as an initiative on establishment of the Act for Extraordinary Expenditure and to support the restoration and Assistance to Cope with the Great East Japan Earthquake passed reconstruction of the Tohoku region, into law (See pages 33 and 141.) which was devastated by the Great lPassing of supplementary budget for fiscal 2011 (May 2, 2011), in which East Japan Earthquake (See page 62.) ¥2.5 trillion was earmarked for Japan Finance Corporation crisis response lEstablished the DBJ Green operations targeting medium-sized and large companies Building Certification targeting lFormulation of Endeavor 2013, the second medium-term management environmentally and societally plan (See page 29.) friendly real estate (See page 51.)
lOpening of the DBJ Asia Jun. Financial Support Center (See pages 38 and 57.) Jul. lOpening of the Comprehensive Special Zone Support lFormation with the Japan Auto and Counseling Center to promote industry’s increased
2011 Parts Industries Association of international competitiveness and support community the Supply Chain Support Limited revitalization from a financial perspective Partnership (See page 64.)
Oct. lEstablishment of the DBJ Smart Japan lJoint formation with Aug. Program to ensure the Nov. lEstablishment of the regional banks of sustainability of the Japanese Women Entrepreneurs the Great East Japan economy amid a changing Center and holding of new Earthquake Reconstruction Fund external environment (See business plan competition targeting (See page 64.) page 52.) female entrepreneurs (See page 57.) lAnnouncement of Capital lSigning of the Principles for Investment Planning Survey Financial Action towards a (Nationwide and by Region) survey Sustainable Society (Principles results (See page 67.) for Financial Action for the 21st Century) (See page 103.)
lExhibited and conducted presentation at Japan’s largest environmental exhibition, Eco-Products 2011 Dec. (11th consecutive year) (See page 76.) lOpening of Special Zones for Reconstruction Support and Counseling Center support regions affected by the Great East Japan Earthquake lSettling of investment and loan plans for the fiscal year ending March 31, 2013 The result of the draft budget compiled for the fiscal year ending March 31, 2013 (Cabinet decision on December 24, 2011) was for aggregate investment and financing of ¥1.85 trillion, comprising ¥850 billion in fiscal investments and loans and ¥1 trillion to be funded independently by DBJ.
Jan. lNew Financing Employing DBJ Disaster Preparedness lCreation of the DBJ Visionary Hospital Program to support Ratings introduced in May initiatives by excellent hospitals (See page 52.) Global Risk Report 2012, published lReceipt of two awards, for Great East Japan Earthquake by the World Economic Forum Reconstruction Fund Formation and Opening of the DBJ Asia Financial Support Center, in the Regional Economic Promotion Division at the 2012 ADFIAP annual meeting (See page 77.)
lHolding of First DBJ Women Entrepreneurs New Business Jun. Plan Competition award ceremony (See page 57.)
40 Annual Report & CSR Report 2012 DBJ’s Businesses
To resolve the various issues that society faces and become its clients’ most supportive Integrated Investment and Loan Services . . . . 42 financial institution, DBJ supplies long-term Investments and Loans ...... 44 funds, supports the formation of business and takes a host of other approaches to ensure Consulting/Advisory Services ...... 55 that useful projects operate smoothly. We are committed to creating financial markets Crisis Response Operations ...... 59 that allow funds to be raised more efficiently, and, in recent years, we have developed and Initiatives Related to the Great East Japan Earthquake . 62 introduced new financing methods to expand the functions of financial markets. Making Use of Information Functions . . . . . 66
Annual Report & CSR Report 2012 41 DBJ’s Businesses Integrated Investment and Loan Services
DBJ provides seamlessly integrated investment and loan services. We assist clients with their financing needs by taking a position of neutrality and a long-term perspective that extends over all their activities, and by employing leading-edge financial methods.
n We offer integrated investment and loan solutions that range from senior loans to mezzanine and equity financing. n DBJ also provides a host of services (e.g., M&A advisory and CSR support services) that help raise corporate value. n In collaboration with its Group companies, DBJ provides finely tuned services to meet individual clients’ needs.
DBJ DBJ Green
Integrated Investment and Loan Services Environmentally Building Debtor-in- Rated Loan Certi cation Program Possession Financing DBJ Enterprise Structured Disaster Financing Resilience Rated Loan Program Syndicated Equity Loans Loans DBJ Visionary Provision of medium- and Hospital long-term nancing, as well as structured nancing and other forms of structured subordinated Mezzanine Financing nancing DBJ Employee’s Hybrid Financing Investment Health Management Rated Loan Program Provision of mezzanine Asset Financing and equity nancing Interest Rate (Real Estate) Subsidy Programs Asset-Based Lending LBOs ／MBOs
Integrated Investment and Loan Services
M&A Advisory Services Consulting/Advisory Services Arrangement of structured Public nancing, provision of M&A Practical Application Asset advisory services, applying DBJ’s Support Center industry research function and Management for Technology expertise in environmental and technology evaluations DBJ Asia Financial Women Regional Health Support Entrepreneurs Checks Center Center (DBJ-WEC)
Note: DBJ-designated analysis is required for investment and loan services.
42 Annual Report & CSR Report 2012 DBJ’s Businesses Integrated Investment and Loan Services
Loans Loan Amounts Provided (Non-consolidated)
DBJ provides financing to meet the diverse (Billions of yen) 4,000 needs of its clients. 3,682.0
l Provides medium- and long-term loans 3,000 2,849.0 l Offers unique high-value-added financial services (environmentally and socially responsible investment, 2,034.4 2,000 disaster countermeasures and safety measures and rating-linked financing for technology commercializa- 1,000 tion) l Responds to diverse needs by offering non-recourse 0 loans and develops and provides financing offering Integrated Investment and Loan Services Year ended Year ended Year ended collateral and structural flexibility (debtor-in-possession March 31, 2010 March 31, 2011 March 31, 2012 financing, inventory collateral, intellectual property Note: Figures, including those for corporate bonds, are on a management accounting basis. rights as collateral, etc.)
Investment Investment Amount Provided (Non-consolidated)
(Billions of yen) DBJ provides investment funding, based on 160 a long-term perspective, to meet specific needs
and address a host of issues that clients face. 120 111.1
82.2 78.0 l We provide investment to assist businesses in terms 80 of their revitalization, restructuring, growth strategies,
international competitiveness and infrastructure opera- 40 tions. We provide such funding through mezzanine
financing, as well as through equity and other funding. 0 Year ended Year ended Year ended March 31, 2010 March 31, 2011 March 31, 2012
Note: Figures, including those for securities, money held in trust and other assets (funds), are on a management accounting basis.
Consulting/Advisory Services M&A Advisory and Consulting Agreements (Cumulative) (Agreements) 320 Through its advisory support services, 269 DBJ helps clients become more competitive and 239 240 invigorate regional economies. 215
160 l Provides M&A advisory services l Makes proposals that apply its expertise in industry research and ability to develop new financial technologies 80 l Arranges structured and other types of financing 0 As of March 31, As of March 31, As of March 31, 2010 2011 2012
Annual Report & CSR Report 2012 43 DBJ’s Businesses Investments and Loans
DBJ provides medium- and long-term loans, meeting a range of funding requirements. In addition to senior financing through traditional corporate loans, we offer project financing, non-recourse loans and other types of structured financing, as well as a variety of other loans that employ advanced financial methods. We provide investment funding to meet specific needs, based on a long-term perspective, to resolve the myri- ad issues that clients face. For example, DBJ provides investment to help clients expand their operational bases, meet long-term growth strategies and shore up their financial structures. We offer funding support, mezzanine financing and financing that employs equity and other methods. The case study section on pages 78 through 100 introduces DBJ’s “CSR through Investment, Loan and Other Businesses.”
Investments and Loans Loan Procedures
DBJ is ready at all times to discuss with its clients optimal comprehensive due diligence of the businesses of its client financial solutions, as well as the specific terms and conditions companies, including assessment of their present business DBJ can offer, including interest rates and loan maturities. status, project plans and profitabilities. Financing terms are discussed after DBJ has conducted
Financing Conditions • Loan Amounts • Interest Rates Loan amounts are determined through consultation DBJ sets interest rates in line with loan periods and based on client financing plans. risk. Fixed- and floating-rate loans are both available. • Loan Terms DBJ also considers the application of various interest Appropriate loan maturities are set in consultation rate subsidy programs. with our client companies according to factors such • Collateral/Guarantees as repayment plans, business profitability and the Loans may require collateral and guarantees, depend- expected life of equipment or facilities. ing on due diligence results.
Note: Please be aware that, based on due diligence results, DBJ may not be able to provide the loans that prospective borrowers anticipate.
Medium- to Long-Term Loans
By leveraging the long-term financing expertise it cultivated of the business that requires funding, and then proposes a as a policy-based financial institution, DBJ provides loans to medium- to long-term repayment plan. As part of our effort clients to match their medium- to long-term financing needs. to meet varied needs, a grace period may be implemented. When providing funds, clients first look at the profitability
We provide a broad range of information to our clients.
Through our long history of opera- DBJ puts its wide-ranging We provide information gener- tions, we have accumulated substan- networks to use to help clients ated through our various studies tial expertise and experience that expand their operations. and research activities, as well as we apply when offering advice to reports, publications and other address the issues our clients face. information from overseas.
44 Annual Report & CSR Report 2012 DBJ’s Businesses
Mezzanine Financing
Mezzanine financing is an intermediate financing method Mezzanine financing has the benefit of providing risk that is between typical senior bank loans and equity finance capital that may be difficult to obtain through senior loans. in terms of risk. Such financing also prevents dilution of the voting rights of Although mezzanine financing is riskier because its pay- existing shareholders. Redemption and exit methods can be ment is subordinated to senior loans, it plays an important set to be flexible. role in markets such as the United States, which have a From a long-term perspective, DBJ helps clients resolve broad range of investors with diverse investment appetites. their balance sheets issues through total financing solutions Mezzanine financing helps to secure the economics of the that range from structuring and arrangement to providing investment by setting adequate interest rate and dividend risk capital. levels to correspond to the intermediate risk. Depending on
clients’ financing plans and capital policies, flexible mez- Types of mezzanine financing Investments and Loans zanine financing can be set. In recent years, demand for • Subordinated loans, subordinate bonds mezzanine financing has grown in association with business • Preferred shares, classified shares acquisitions, spinoffs of subsidiaries and business units, • Hybrid securities, hybrid loans, etc. business succession and listed companies that are delisting.
Case Studies: Mezzanine Financing
Case 1: Resolving an Undercapitalization Issue
Before capital expansion After capital expansion
Objective Debt Debt Conventional restructuring methods involve Assets Assets posting extraordinary losses, which is problematic for companies that are undercapitalized. This Preferred shares issue was resolved by raising capital through the Capital Capital issuance of preferred stock.
Case 2: Supplementary Method of Financing a Business Acquisition
Parent company Recipient company
Debt Objective Assets Debt (LBO loan) Target Provide supplementary nancing to overcome a shortfall between the Non-core business Mezzanine purchase price and the amount available business Acquisition of Capital non-core business Capital through equity funding and loans (MBO)
Case 3: Avoiding Dilution of Voting Rights during Business Succession
Former company (current company) New company (recipient)
Objective Debt Debt Business succession Prevent the dilution of successor’s voting Assets Note: Successor acquires Assets rights when nancing is provided for common stock business succession Capital Preferred shares Capital
Annual Report & CSR Report 2012 45 DBJ’s Businesses
Equity
In an environment characterized by growing needs for the fiscal 2010, DBJ enhanced its “added-value creative equity operational selection and focus of group businesses, the financing to support corporate growth strategies (“Value formulation of growth strategies and the heightening of for Growth” Investment Program).” This approach aims corporate governance, equity has become more important to realize the corporate growth strategies (M&A, capital than ever before. and overseas) of the Japanese entities receiving the equity Through equity investment, DBJ helps clients address investment. Its aim is to support corporate value enhance- the issues they face and supports their long-term develop- ment over the medium to long term. ment. After making equity investments, DBJ provides total Through equity investment, DBJ shares in its clients’ solutions involving its networks and strengths in informa- growth and successes, contributing to a more prosperous tion, industry research and financing technologies, help- future.
Investments and Loans ing clients maximize their long-term corporate value. In
Client Needs DBJ’s Solutions Results
• Growing needs for • Inject growth capital • Resolve clients’ issues operational selection and Capital injections into individual companies, • Help clients grow over the focus SPCs, various funds, etc. long term and maximize • Formulation of growth • Globalization measures corporate value strategies for globalization Encourage companies from overseas to take • Growth strategies making part in the Japanese market, support Japanese use of the capital markets companies’ efforts to expand overseas (M&A, initial public offerings, • Provide solutions after making investment etc.) Provide total solutions involving DBJ’s networks and strengths in information, industry research and financing technologies
uu Structured Financing, Financial Technologies
Syndicated Loans
This type of loan involves multiple arrangers that are com- institutions involved in the transaction to be increased, and bined into a syndicate. The agreement with the client is clarity of borrowing terms is ensured. based on a single contractual document, and financing is As part of its services, DBJ actively structures loans, cen- provided cooperatively according to a single set of terms. tering on term loans. DBJ invites a wide range of financial Having a single arranger in the point negotiating posi- institutions to participate, making use of its neutral stand- tion reduces the administrative burden. Conducting settle- point. Structuring loans to include some items from its own ment operations through an agent reduces the administra- lending menu, such as the DBJ Environmentally Rated Loan tive burden. Large amounts can be raised expeditiously. Program, helps raise the value-added level of services it pro- Appointing an arranger allows the number of financial vides.
Financial Financial
Appointment Institutions Institutions Market
Financial Financial Clients Arrangement Arrangers Institutions Institutions
Financial Financial Institutions Institutions
46 Annual Report & CSR Report 2012 DBJ’s Businesses
Structured Financing
In 1998, DBJ pioneered project financing in Japan. From l Securitization these beginnings, our accumulated expertise in this area, Through finance methods such as liquidation and secu- centering on energy and infrastructure projects, has pro- ritization of receivables focusing on their future cash pelled us to our current position as one of Japan’s leaders in flows, and through whole business securitization in project financing, including private finance initiatives (PFIs). which debts are repaid through future cash flows gener- Since its privatization (conversion to a joint-stock com- ated by a particular business, DBJ supports its clients’ pany) in 2008, DBJ has maximized its unique characteristics finance strategies and helps optimize their funding. A to meet Japanese companies’ increasingly diverse and method known as whole business securitization enables global needs. We provide all-around support by offering cli- certain businesses to securitize their entire operations, ents in Japan and overseas with project finance, PFIs, object backed by future cash flows. We help clients raise funds
finance, securitization and various other financial products in optimal ways that match their financing strategies. Investments and Loans and optimal financing methods (senior loans, mezzanine loans, equity, etc.). l PFIs and PPPs Since the facilitation of the PFI Act* in 1999, DBJ has l Project Financing accumulated expertise by taking advantage of its strong We have a wealth of expertise in helping companies in relations with public-sector entities. The support we have the energy and infrastructure sectors—primarily with provided to numerous clients in this category has turned regard to large-scale projects—find project financing that us into an industry leader in PFIs. Taking advantage of they can repay through project cash flow, without relying this store of knowledge, we provide numerous types of on specific corporate creditworthiness or collateral value. support to help clients who are considering PFI/PPP Such finance solutions we provide help them raise funds initiatives in Japan and overseas to resolve the issues and support their efforts to control risks. they face. l Object Financing * Act on Promotion of Private Finance Initiative DBJ helps clients determine optimal financing methods that take advantage of the cashflow-generating char- acteristics of assets with special features, such as ships, airplanes and railcars, as well as supporting their efforts to control risks.
Project Financing Example: Electric Power Generation Project
Electric power supply Sponsor A Funding contract (15 years) Electric Power Power Plant G Generation Company Sponsor B Special-Purpose Trading Company F Company (SPC) Fuel (coal, gas) Banking Syndicate Financing supply contract
Construction contract Operational repair and maintenance contract
Plant C Factory E
Plant D Plant delivery contract Technical guidance contract
Annual Report & CSR Report 2012 47 DBJ’s Businesses
Asset Financing (Real Estate)
DBJ’s involvement in the long-term financing of real estate Our track record, expertise and networks in this arena operations began in the 1960s. We have participated in enable us to provide non-recourse loans and a host of other Japan’s real estate securitization market from its early solutions. beginnings and continue striving to invigorate this market.
Liquidization Financing Development Financing Example 1: Sell rental real estate that a client owns to Example: Use investor financing to develop idle owned a special-purpose company, raising capital real estate into income property efficiency Example 2: After selling owned real estate that a client is 1. Realizes profits from development using to a special-purpose company, conclude • Enables funds to be raised for real estate development,
Investments and Loans new rental agreements and continue using which might be difficult for the company to do on its own the property in this manner • By securing required additional funding, helps in terms of diversity and the control of the risk of construction delays 1. Allows diversification of financing methods and cost overruns • Enables funds to be raised based on the property’s capacity 2. Controls risk by moving property off the balance sheet to generate revenue and cash flow • Maintains the company’s financial soundness • Preserves the credit availability of the originator (the origi- • Eliminates risk of fluctuations in real estate values nal owner of the asset) 2. Moves property off the balance sheet for better financial efficiency • Improves ROA • Allows planned recognition of unrealized gains or losses • Improves financial picture by reducing interest-bearing debt • Eliminates risk of variations in real estate values
DBJ’s Distinguishing Features in Asset Financing • Has extensive arrangement expertise on numerous projects, as well as a strong performance record in investment and loans • Retains a network of leading investors and financial institutions in Japan and overseas to help realize projects and arrange financing • Creates project-tailored solutions to meet clients’ needs, such as providing senior, mezzanine and equity financing • Maintains a neutral standpoint, enabling projects to progress smoothly by appropriately diversifying risk and helping involved parties realize profits
LBOs/MBOs
Leveraged buyouts (LBOs) are acquisitions of companies or require that funds be raised to acquire an operation. For businesses using borrowed money. If the company or busi- this reason, an MBO may take the form of an LBO. In the ness that is being acquired generates fixed cash flows, the event that borrowed funds alone are insufficient, the man- acquirer (typically, the sponsor providing equity) can pur- agement team may offer equity to a collaborative sponsor, chase the business or company for relatively little cash. For such as a buyout fund or partner. In recent years, MBOs this reason, the borrowed funds are considered the “lever” have been used more frequently by listed companies that that multiplies the return on the purchaser’s funds, which are delisting and by owner-operated companies. are constrained. As a financial advisor, DBJ ties together all MBO-related Management buyouts (MBOs) involve the acquisition by details, arranges investment and mezzanine financing, and the existing corporate management of a company’s shares works out joint equity financing with sponsors. The ability or operations. As the existing management team typically to handle this range of activities allows DBJ to offer has a limited amount of cash available, MBOs generally LBO/MBO solutions.
48 Annual Report & CSR Report 2012 DBJ’s Businesses
Asset-Based Lending
Asset-based lending (ABL) is a method of financing that As a front-runner in corporate revitalization financing, uses as collateral a company’s liquid assets, such as aggre- DBJ has gained abundant experience in the area of devel- gate movable property, inventory collateral and receivables. oping ABL schemes to support companies, while at the As financing methods become more diverse, expeditious same time securing their debt. Going forward, we plan to fund-raising, debt restructuring and the sale of surplus inven- apply this expertise to develop ABL schemes that provide tories also enhance the robustness of internal control systems. companies with growth capital.
ABL Client DBJ Collateral Transfer Valuation Inventory Provisional valuation of inventory, taking into account such factors as the Investments and Loans (Buyer) Liquidate Inventory gross margin calculated according to Sale Third-Party Sell inventories, primarily through past sales performance Borrower existing wholesale routes (Accounts Receivable) Valuation based on the diversity and Accounts Receivable reliability of individual receivables Collateral Transfer Management Monthly valuation of inventories and Pledge Cash and Equivalents accounts receivable
Debtor-in-Possession Financing
Non-performing loans emerged as a major problem belea- Later-stage DIP financing provides the funding that is guering the Japanese financial system in the late 1990s. needed to implement restructuring plans. By providing Against this backdrop, DBJ has developed a host of tools medium- to long-term financing to fund capital investment to help underperforming companies sustain or develop under different conditions than those for revitalization plans profitable areas of operation. One method of which DBJ is that are being implemented, an organization that is under a proponent is early debtor-in-possession (DIP) financing. rehabilitation can refinance its debt, providing exit financing This temporary financing method provides working capital more quickly than is possible via the legal liquidation process. that allows a company in bankruptcy to continue operations In 2001, DBJ provided the first DIP financing in Japan. during the period between a request for the application of Since that time, DBJ has worked to broaden the range the Civil Rehabilitation Act and the approval of rehabilitation of entities eligible for this financing and the methods of plans, thereby sustaining the valuable parts of its operations. employing it in response to varied needs.
Capital requirements Bankruptcy Bankruptcy ( priority obligation) ( priority obligation) Common debts
Working Restructured Funding for capital assets equipment and Exit other items nancing
DIP nancing
Procedural Decision to start Approval of plan Conclusion of plan application
Early stage Later stage
Annual Report & CSR Report 2012 49 DBJ’s Businesses
uu Certification and Unique Programs
DBJ Environmentally Rated Loan Program
Beginning with the antipollution measures implemented in incorporation of environmental ratings in financing menus. the late 1960s and early 1970s, DBJ has provided more than In fiscal 2007, we launched an interest rate subsidy program ¥3 trillion in investments and loans for environmental mea- based on environmental ratings to advance global warming sures over the past 40 years. countermeasures. In fiscal 2004, DBJ began its DBJ Environmentally Rated Employing the experience we gained through the DBJ Loan Program based on knowledge cultivated for over Environmentally Rated Loan Program, in fiscal 2010 we began five decades. DBJ developed a screening (rating) system offering a service to help regional banks develop evaluation that scores companies on the level of their environmental tools to use in performing their own environmental ratings. management and then applies one of three different inter- Through such initiatives, we aim to augment environmental Investments and Loans est rates reflecting that effort. This was the world’s first financing and encourage its proliferation in Japan. Overview of DBJ Environmentally Rated Loan Program Features • Varying interest rate levels based on environmental ratings • Screening sheet containing approximately 120 questions Evaluation of corporate credit risk, derived from the United Nations Environment Programme
Environmental screening collateral, etc. Finance Initiative (UNEP FI) evaluation of fair and neutral Financing Set interest rate level based on global environmental trends and an exchange of information Application client’s contribution to with the Ministry of the Environment environmental initiatives Convening of the Environmental Ratings Advisory Committee, seeking advice from outside experts and renewing annual visits (Ineligible) • Ratings determined through interviews with clients • Applicability to a wide range of clients
DBJ Enterprise Disaster Resilience Rated Loan Program
DBJ’s financing track record includes schemes to supporting lent disaster preparedness. Financing conditions are set on the the recovery of disaster-stricken areas through anti-disaster basis of the assessment. In this manner, we introduced the measures and financing related to disaster recovery. world’s first disaster preparedness-based financing method. In addition, from the standpoint of business continuity We revised our financing menus substantially in 2011 as a DBJ assists clients’ total enterprise risk management efforts, result of the Great East Japan Earthquake. Enterprise business including the formulation of business continuity plans (BCPs), continuity activities are assessed comprehensively, including the earthquake-proofing of facilities and the preparation of IT resilient strategies and systems for recovering in the event a backup systems. At the same time, DBJ provides new financ- crisis materializes. ing methods to assist disaster recovery, including recovery The DBJ Disaster Preparedness Rating (1) is an expression finance and alternative risk transfer finance. of the evaluation results and (2) promotes broad awareness In fiscal 2006, we introduced Financing Employing DBJ of the concept of BCM. Aiming to realize the goal of a “resil- Disaster Preparedness Ratings, which evaluate companies and ient Japanese society through disaster preparedness ratings,” select those engaged in high-level initiatives and anti-disaster in 2012 we changed the name of these ratings to the “DBJ and business continuity measures and provide them with Enterprise Disaster Resilience Rated Loan Program.” preferential interest rate financing as a reward for their excel- We will promote enterprise risk management and business continuity through the DBJ Enterprise Disaster Overview of the DBJ Enterprise Disaster Resilience Rated Loan Program. Resilience Rated Loan Program Features Evaluation of corporate credit risk, • Varying interest rate levels based on BCM Ratings collateral, etc. • Fair and neutral assessment of global crisis management Financing Set interest rate level based on trends BCM screening
Application client’s contribution to Based on information exchanges with the Japanese Cabinet anti-disaster/business Office, World Economic Forum, NPOs and other experts, continuity measures developed a screening sheet containing approximately 100 questions. We convene an Advisory Committee to elicit (Ineligible) advice from outside experts and renew visits each year. • Ratings determined through interviews with clients • Applicability to a wide range of clients
50 Annual Report & CSR Report 2012 DBJ’s Businesses
DBJ Employee’s Health Management Rated Loan Program
In April 2008, the Ministry of Health, Labour and Welfare social conditions as a backdrop, the DBJ Employee’s Health introduced a special health checkup system, and the Japanese Management Rated Loan Program aims to popularize and pro- Diet is discussing making it mandatory for businesses to mote the concept of health management. DBJ has applied to provide mental health checks. This is one example of the take on Ministry of Economy, Trade and Industry (METI) survey growing importance being placed on maintaining the health operations. As part of this effort, we use an evaluation system of corporate employees. As Japan’s working population is that we have developed to assess companies and select those expected to shrink, achieving higher levels of human produc- that are superior in terms of their consideration for employee tivity has become an issue of growing importance. With these health and offer them financing terms in line with their assess-
Overview of DBJ Employee’s Health Management ment levels. We have used a specialized method for introduc- Rated Loan Program ing an “employee’s health management rating,” making DBJ
Evaluation of corporate credit risk, the first in the world to offer such a financing menu. Investments and Loans collateral, etc. Health management screening Features Financing Interest rate level set based on • Varying interest rate levels based on employee’s health Application client’s contribution to health management ratings • Formation of “health management consortium” with management institutions focused on preventive healthcare and development of screening sheet to promote the Health (Ineligible) Management Project as an ancillary activity for METI • Ratings determined through interviews with clients • Applicability to a wide range of clients
DBJ Green Building Certification
Applying the expertise and networks accumulated over ment, refurbishment and other activities to clients who own many years of real estate financing, the DBJ Environmentally or manage real estate that is environmentally and societally Rated Loan Program and expertise in other environment- considerate (green buildings), through this certification related areas, DBJ inaugurated DBJ Green Building program, an advanced and unique initiative from a financial Certification in fiscal 2011. institution. DBJ also supports environmentally and societally In addition to providing support through investments considerate real estate operations among its clients and and loans to meet financial needs for real estate develop- provides support from such aspects as PR, IR and CSR.
Overview of the DBJ Green Building Certi cation
Evaluation For environmentally and societally considerate real estate, evaluation items include the three characteristics indicated below. Items
Ecology Amenity & Risk Management Community & Partnership
Reducing the burden buildings place on Comfort, safety and security Consideration for and communication the environment • Safety and security of people who with stakeholders • Building’s environmental use buildings • Relationships with the surrounding performance ++• Comfort and convenience for people environment and region • Energy savings, conservation of who use buildings • Communications between owners and resources, renewable energy stakeholders
Certification Clients scoring above a certain level are certified in one of four categories, depending on the status of their initiatives. Results
DBJ Green Building DBJ Green Building DBJ Green Building DBJ Green Building
Platinum Gold Silver Bronze
Buildings that are top class Buildings that are Buildings that are very Buildings that are superior in Japan for their extremely superior in their superior in their in their consideration for consideration for the consideration for the consideration for the the environment and environment and society environment and society environment and society society
Annual Report & CSR Report 2012 51 DBJ’s Businesses
DBJ Visionary Hospital Program
In recent years, hospitals have been the source of increas- ment and BCM evaluation system it developed to certify ing attention for the role they play as bases for safety and hospitals as DBJ Visionary Hospitals (namely, those that security in regional societies. In May 2012, we introduced have in place superior environmental consciousness, disas- the DBJ Visionary Hospital program to support the advance- ter prevention and business continuity measures), offering ment of medical functions, as well as to encourage proac- them a financing menu with financing terms set according tive environmental consciousness, disaster prevention and to their assessments. Through this measure, DBJ supports business continuity measures. For institutions that have had hospitals’ efforts to continue providing good healthcare in their hospital functions certified by the Japan Council for regional societies. Quality Health Care, DBJ uses the environmental assess- Investments and Loans Assessment of a Hospital functions certi ed by Medical Institution’s the Japan Council for Quality Hospital Functions Health Care (JCQHC)
Certi ed as a DBJ Visionary Hospital DBJ Environmentally Rated Loan Program DBJ Enterprise Disaster Resilience Rated Loan Program Financial screening by DBJ
Evaluation of medical Assessment of medical institution’s CSR institution’s nances and responses management
DBJ Smart Japan Program
To ensure the sustainability of the Japanese economy amid structure to provide funding in the areas of “raising com- changes in the external environment, such as post-disaster petitiveness to global levels,” “community development,” restoration and reconstruction, yen appreciation, the and “environment and energy” and has earmarked approxi- European financial crisis and the disruption of supply chains mately ¥500 billion for this purpose. that include overseas elements, DBJ has created a support
Raising Competitiveness to Global Levels Technology, overseas development and alliance, corporate revitalization and restructuring, sightseeing, medical and healthcare, etc. [Examples] ● Support for growth of companies aiming for a leading share of the global market ● Industry restructuring to boost international competitiveness ● International business development ● Establishment of tourism facilities to encourage overseas tourists to visit Japan ● Establishment of medical centers that serve the healthcare needs of a wide area
DBJ Smart Community Development Japan Special zone for reconstruction, comprehensive special zones, BCPs, investment in earthquake-proo ng and other disaster prevention measures, etc. Program [Examples] ● Community development in special zone for reconstruction in the disaster-stricken region ● Establishment of key facilities in comprehensive special zones ● Investment in earthquake-proo ng by companies that have received BCM Ratings ● Creation of eco-towns linked with corporate activities
Environment and Energy Support for renewable energy, the popularization of low-carbon products, etc. [Examples] ● Mega solar construction and other renewable energy projects ● Support for the popularization of low-carbon products using leases
52 Annual Report & CSR Report 2012 DBJ’s Businesses
Regional Areas Genki Program
Currently, facing the challenges of population constraints, and funding potential. Specifically, we have enhanced our financial limitations, environmental restrictions and global information support service through advice and sugges- competition, Japan’s regions must coordinate with one tions to regions. In addition, each DBJ branch focuses on its another and implement diverse regional development region’s distinctive fields and businesses based on its indus- schemes that capitalize on their respective strengths, com- trial structure and partners with regional financial institu- petitive advantages and latent potential. tions to offer financial support, including the execution of DBJ has arranged a unique initiative, the Regional Areas loans with more attractive interest rates than usual. Genki* Program, to support regional growth that capital- izes on each region’s respective strengths and information *The Japanese word genki implies a positive spirit and good health.
l Regional Areas Genki Program Investments and Loans
Hokkaido Area Tohoku Area Food industry
Tourism Clean innovation Environmental infrastructure Green network
Niigata Area
Food industry: value-added rice products and services Kanto-Koshin Area
Integration business of Hokuriku Area human resources and goods Manufacturing industry Manufacturing industry: globalization electronics, pharmaceuticals, Tourism textiles, plastics
Chugoku Area
Manufacturing industry Tokai Area
Strategic next-generation industry
Kyushu Area
Enhancing the regional Kansai Area competitiveness of the Kyushu region as the door to Asia Leading-edge manufacturing industries
Shikoku Area
Material industry and Minami-Kyushu Area industries contributing to the fundamental economic cycle Food, health and environment of the Shikoku region industry
Annual Report & CSR Report 2012 53 DBJ’s Businesses
uu Safety Nets and Public Programs
Interest Rate Subsidy Programs
Interest rate subsidy programs are schemes whereby finan- Japanese government or other organizations provide sub- cial institutions provide financing for specific businesses to sidies corresponding to all or part of the interest payments, promote specific industries. Alternatively, they may target thereby reducing the interest burden on the borrower. operators of specific businesses. Under these programs, the
Interest Rate Subsidy Program Menu • Interest rate subsidy programs that support the • Interest rate subsidy programs for the promotion of revitalization of regional communities environmentally conscious management (interest
Investments and Loans These interest rate subsidy programs are provided to rate 1% subsidy) businesses recommended by the national government These interest rate subsidies are for fixed investment and in line with the regional revitalization plans of regional the promotion of research and development to prevent municipal bodies certified by the national government. global warming, and target clients involved in businesses • Interest rate subsidy programs for the development of working toward the reduction of energy-derived CO2 regional telecommunications and broadcasting businesses emissions, that qualify for the DBJ Environmentally Rated These interest rate subsidy programs can be used by clients Loan Program, and that have pledged to improve unit pursuing regional telecommunications or broadcasting busi- CO 2 emissions or reduce overall CO2 emissions by more nesses in accordance with legally prescribed guidelines. than 5% within five years. • Interest rate subsidy system for internationally • Interest rate subsidy programs to fund domestic strategic comprehensive special zones, interest rate oil and natural gas development (continental shelf subsidy system for comprehensive special zones interest rate subsidy) targeting community revitalization These interest rate subsidy programs can be used by clients These interest subsidy systems target operations endorsed by involved in oil or natural gas development businesses in Japan. the national government in line with government plans for • Interest rate subsidy programs to fund fixed invest- comprehensive special zones of regional municipal bodies. ment for using natural gas and other resources (nat- • Interest rate subsidy system for special zone for reconstruction ural gas and other resources interest rate subsidy) This interest subsidy system targets operations endorsed These interest rate subsidy programs can be used by cli- by the national government in accordance with the recon- ents that are making fixed investment involving the use struction plans of regional municipal bodies designated by of natural gas and other resources. the national government in the areas identified in the Law • Interest rate subsidy programs to fund specific and for Special Zone for Reconstruction (227 towns and cities). other facilities related to the rationalization of energy • Interest rate subsidy programs for crisis response operations use and to promote the introduction of special equip- These interest rate subsidy programs can be used by clients ment (energy conservation interest rate subsidy) who have sustained damage during a crisis certified as These interest rate subsidy programs can be used by cli- such by the government and who meet program require- ents who are promoting the conservation of energy. ments. At present, such subsidies are being provided to • Interest rate subsidy programs to fund effective clients affected by the Great East Japan Earthquake and to resource use and other activities a special desk for consulting on measures to counter yen These interest rate subsidy programs can be used by cli- appreciation. ents who are using resources effectively.
Crisis Response Operations
Crisis response operations on the basis of the Japan Finance In the fiscal 2011 supplementary budget (passed on Corporation Act (Act No. 57 of 2007, later updated) con- May 2, 2011), ¥2.5 trillion was earmarked for JFC Great sist of the provision of necessary funds during such crises East Japan Earthquake crisis response operations targeting as disruptions in domestic or overseas financial markets or medium-sized and large companies. large-scale natural disasters. The Japan Finance Corporation This supplementary budget having been passed, as a des- (JFC) provides risk and other support from the Japanese ignated financial institution for the crisis response operations government via designated financial institutions as funds for DBJ set up a full-fledged structure to facilitate implementa- responding to crisis-related damage. tion of crisis response operations for clients affected both At the time of its establishment, DBJ was designated directly and indirectly by the disaster. In addition, DBJ is mak- as such a financial institution, as was Shoko Chukin Bank ing a proactive effort to support increases in the production Limited. In accordance with this designation, DBJ com- of materials needed for restoration and reconstruction in the menced its crisis response operations in October 2008. aftermath of the recent disaster. (See pages 59–65.)
54 Annual Report & CSR Report 2012 DBJ’s Businesses Consulting/Advisory Services
We offer consulting and advisory services and make use of networks with allied financial institutions. Through our consulting and advisory support services, we help clients become more competitive and contribute to the vigor of regional economies. Our consulting and advisory services are backed by the know-how we have built up through our structured and other types of financing, our M&A advisory services and our provision of expertise on industry research and environmental and technical evaluations. We apply this accumulated expertise to help clients resolve the issues they face. The advisory services case studies on page 92 introduce DBJ’s “CSR through Investment, Loan and Other Businesses” approach.
M&A Advisory Services Consulting/Advisory Services
As corporate development options diversify, M&A activity is competitive position. Amid growing interest in M&A activi- growing more prevalent amid the expansion business over- ties in Japan and overseas, DBJ provides advisory services seas—centered on Asia, both for businesses restructuring through its own networks. We offer comprehensive M&A operationally and for industry restructuring overall. Mergers solutions that match clients’ varied needs and management and acquisitions can be a method for achieving higher busi- strategies. ness efficiency, better employment stability and a stronger
Strategic Consulting • Comprehensive Business Strategies • Cohesive Domestic and Overseas Information Network We create operating and management strategies that DBJ maintains close relationships with regional finan- draw on the experience we have gained through many cial institutions, which have excellent insights into the years of providing loan and project support from a companies that operate in their regions, as well as neutral, medium- to long-term perspective. with Japanese and overseas financial institutions and • Information on a Wide Range of Business Partners accounting and legal firms. Such relationships enable DBJ is involved in business entities in a broad range of us to build information networks to accumulate accu- industries, and its business partners in Japan number rate information. We have created a banking M&A more than 3,500. Since 1984, we have provided loans network that links information on financial institutions for more than 700 foreign-capitalized companies, throughout Japan (regional banks and trust banks) enabling us to also provide a wide variety of informa- with information on corporate M&A activities. tion on overseas companies as well. • M&A Activities DBJ provides fundamental advisory services at every stage of a merger or acquisition, from planning through to implementation.
M&A Advisory Services
Consulting Matchmaking Execution
Analysis of Buy Side Buy Side Analyze nances, business Advise on management Select and analyze Connect with risks and other factors contract issues acquisition potential acquirer negotiations candidate Assess corporate value Formulation of Process CLOSING Consider optimal structure acquisition and Sell Side Sell Side management selling strategies Select and analyze Connect with Arrange for due diligence potential acquirer acquisition Performance Support preparation of candidate analysis contractual and other necessary documents Data gathering
Annual Report & CSR Report 2012 55 DBJ’s Businesses
Regional Health Checks Health Checks Conducted When diagnosing the health of local community-building Takigawa Hakodate (Hokkaido) (As of July 1, 2012) Goshogawara (Hokkaido) activities, DBJ begins by analyzing communities based on Tottori (Aomori Prefecture) Hirosaki (Aomori Prefecture) Kurayoshi Ayabe (Kyoto) publicly available data. We augment this trove of informa- (Tottori Prefecture) Hachinohe Mizuho (Aomori Prefecture) tion by conducting on-site surveys and local interviews, and Nakaumi-Shinjiko Economic (Gifu Prefecture) Morioka Zone (Tottori Prefecture, (Iwate Prefecture) Shimane Prefecture) Kashiwazaki then we make an independent diagnosis of the region’s (Niigata Sanjo Maniwa Prefecture) (Niigata Prefecture) (Okayama Prefecture) Nagaoka (Niigata health. We discuss our findings (issues and possibilities) Toyama Takahashi Prefecture) with the region’s constituents, including the issues that we (Okayama Prefecture) Suwa Region have uncovered through our interaction with members of Soja (Okayama Prefecture) (Nagano Prefecture) Fuchu Tajimi (Gifu Prefecture) their community. (Hiroshima Prefecture) Choshi (Chiba Prefecture) Chuyo Area Seto (Aichi Prefecture) Mutual awareness of regional issues and possibilities (Ehime Prefecture) Toyohashi (Aichi Prefecture) provides an opportunity for taking action, such as by for- Tosu (Saga Prefecture) Oita Wakayama Consulting/Advisory Services mulating a project. We have taken part in 36 such projects Shirahama (Wakayama Prefecture) Kagoshima Komatsushima to date. (Tokushima Prefecture) Uwajima Tamano (Ehime Prefecture) (Okayama Prefecture)
Kurashiki Okayama (Okayama Prefecture)
Practical Application Support Center for Technology
DBJ established the Practical Application Support Center for tions (new combinations) that include the consideration of Technology in February 2004 to help manufacturers real- technology management strategies to resolve global issues ize their potential for the commercialization of successfully and the creation of business models. We provide additional developed technologies. The role of this center is to diag- evaluations based on our expertise in operational screening nose whether companies have the management strength and help clients, including through consultations on busi- (technology management expertise) to create value in ness and financial strategies, consider optimal long-term technology. Through evaluation, survey analysis and the strategies and business plans. proposal of future business models from the perspective of From a neutral and specialized standpoint, DBJ serves as technology management, recommendations and technol- a good industry-related consultation partner to manage- ogy management training, we support companies in the ment, leveraging its overall base of knowledge related to manufacturing sector in the development of new value. manufacturing management to help clients enhance their For clients and other companies across a broad spectrum corporate value and contribute to the development of in the manufacturing sector, we support ecosystems (rela- Japanese manufacturing. tions between companies) from the viewpoint of innova-
Changes in the Manufacturing Business Environment Past Future
Technical expertise to take a global lead Ways to create value Values of products themselves Combination of diverse elements, including products and services
Valuable design expertise and ability to communicate with society Increasing performance and functionality Desired capabilities Overwhelming expertise in manufacturing technologies and quality Raising efficiency, lowering costs management capabilities Mass production Increasing uncertainty due to more-global and flatter markets The background of Catching up with Europe and the United Advances by companies from emerging markets the times States Dramatic advancement in ICT
Support for new value creation Practical Application Support Center for Technology Conduct surveys and provide recommendations on technology and industry vision for the future Analyze business models and support creation of ecosystems Help train and develop managerial level human resources
DBJ’s expertise DBJ’s networks • Screening • Independent network with technology advisors • Industrial research • Network with business partners throughout Japan • Finance • National, regional and research institute networks
56 Annual Report & CSR Report 2012 DBJ’s Businesses
DBJ Asia Financial Support Center
DBJ opened the DBJ Asia Financial Support Center in June cial institutions in Asian countries. We provide this informa- 2011 to provide local information and consulting services to tion to the companies via their regional banks. regional banks supporting efforts by medium-sized compa- With regard to its services, in June 2011 the center nies and other entities in their regions to promote business entered into a comprehensive agreement on collaboration in other parts of Asia. with Hitotsubashi University. Based on this accord, the two The center’s roles are to liaise with regional banks entities will work to strengthen the transmission of infor- throughout Japan and help meet the various needs of local mation related to Asia through collaboration in a host of medium-sized companies and other entities to develop their areas, including Asia-related joint research and personnel operations in Asia. Specifically, when local medium-sized exchanges. companies seek to expand their operations in Asia, we As of May 31, 2012, 64 regional banks were members provide their regional banks with necessary information on of the center. Breaking down inquiries by country, 60% investment and the current environment, including industry were in relation to China, Thailand or Vietnam, while 60% Consulting/Advisory Services trends. In addition, when companies are recommended to of the inquiries concerned investments or funding. DBJ will us by regional banks, we provide individual consulting ser- continue augmenting its ability to disseminate information vices by leveraging the DBJ Group’s information network, related to Asia. which includes development banks and other public finan-
Women Entrepreneurs Center (DBJ-WEC)
Japan faces a number of issues, including economic slug- support on the planning front, such as by connecting them gishness, a decrease in the working population prompted with experienced entrepreneurs and experts in various by a lower birth rate and an increase in the average fields, providing startup expertise and advice and introduc- age, and reconstruction following the Great East Japan ing them to networks after the competition. Earthquake. Amid these conditions, expectations are rising for business startups by enterprising women. However, such startups require extensive support, including on the aspects Renewed growth, of information, networks and financing. led by women To this end, DBJ established the Women Entrepreneurs Center (DBJ-WEC) in November 2011 as a platform to pro- Fostering of Renewed vide comprehensive support, including funding, networks growth in disaster-affected business and startup expertise, for women seeking to start new busi- areas creation nesses or grow existing enterprises. DBJ To cultivate and foster new businesses, DBJ-WEC WEC will annually hold a business plan competition targeting women entrepreneurs. The winner of the competition will be awarded an incentive payment of up to ¥10 million. DBJ Women Entrepreneurs Center Additionally, DBJ-WEC offers all participants a variety of
Award ceremony of the first DBJ Women Entrepreneurs New First winner of the grand prize (¥10 million): Ms. Yuriko Kato Business Plan Competition
Annual Report & CSR Report 2012 57 DBJ’s Businesses
Public Asset Management
Public asset management describes the method of looking the average age rises, government bodies will face major at the public assets owned by government bodies from a changes in the amount and types of public assets that are management perspective for the purposes of overall plan- necessary. ning, control, use and disposal. However, long-term economic malaise and a decrease in The public assets owned by government bodies are large the percentage of the population in their productive years and varied. They include buildings, such as schools, public means that tax revenues are down and welfare budgets are offices and community centers, as well as waterworks, increasing. Owing to factors such as these, it is difficult to sewerage, roads and other infrastructure. Two major issues secure the budgets necessary to renovate or reallocate pub- have come to the fore in this category in recent years. lic assets that have deteriorated. The first is that facilities that were built in a concentrated For this reason, government bodies must quickly embark period during Japan’s era of high economic growth are now on the management of public assets and conduct sustain-
Consulting/Advisory Services deteriorating rapidly. Because many public assets were built able urban management. at around the same time, their deterioration is also simulta- DBJ is working with the Japan Economic Research neous. The second issue is a mismatch between the popula- Institute Inc. to determine the status of owned assets and tion—which is shrinking and changing in its makeup—and calculate their future cost, among other activities. Public the supply of facilities needed to serve the needs of resi- asset management advisory services are just one of the ini- dents. Going forward, as the overall population shrinks and tiatives we offer.
Issues Faced by Government Bodies Determine owned assets • Determine total volume and deterioration [Buildings] Calculate cost of upgrading • Elementary and junior high • What is the overall volume? • Make asset allocation fully visible schools...... Declining birthrate, elimination/consolidation • Determine extent of asset use and costs • How serious is the deterioration? • Welfare facilities...... Aging of society, rising demand • Disclose information such as “facility white papers” and • What is the actual cost of • Healthcare facilities...... Management issues, rising demand other documents to residents renovation? • Government office buildings, • What is the available financial community centers...... Decreasing population, excess facilities capacity? Determine population trends [Infrastructure] • What is the usage status of • Forecast populations of seniors and people in their • Water supply...... Profitable, but demand falling individual facilities? productive years • Sewerage ...... Massive regional bonds • Make fully visible populations of seniors and people in their productive years • Roads and bridges...... Massive volume Determine mismatches in regional allocations of facilities • Public housing ...... Massive volume • Gas...... Privatization becoming standard Public Asset Management Determine financial conditions (Also ports, waterways, parks, etc.) • Confirm pace of deterioration in tax revenue • Confirm estimated costs to sustain and for societal All deteriorating at same time protection Massive burden of funding to renovate • Confirm capital expenditures in repairs and renovations
1. Determine policy measures from a management perspective (equalize and prioritize the renovation investment) 2. Shift to specific management of individual assets (First, perform maintenance to extend life of aging assets. PFI and PPP are important to this process, as they encourage consolidation and disposal and deploy underutilized assets.)
58 Annual Report & CSR Report 2012 DBJ’s Businesses Crisis Response Operations
Crisis Response Operations
Crisis response operations, on the basis of the Japan markets, large-scale disasters, terrorism and epidemics of Finance Corporation Act (Act No. 57 of 2007, later updat- communicable diseases. Upon the receipt of such credit ed) consist of the provision of necessary funds during such (e.g., for two-step loans, financial indemnity or interest sub- crises as disruptions in domestic or overseas financial mar- sidies), institutions designated to provide such funds do so kets or large-scale disasters. The Japan Finance Corporation quickly and flexibly. (JFC) provides risk and other support from the Japanese At the time of its establishment, DBJ was designated government via designated financial institutions as funds for as such a financial institution, as was Shoko Chukin Bank responding to crisis-related damage. Limited. In accordance with this designation, DBJ com- These funds are earmarked for use in the event of such menced its crisis response operations in October 2008. crises as disruptions in the domestic or overseas financial Crisis Response Operations Crisis Response Operations Scheme
(Competent ministers: the Minister of Finance, the Minister of Economy, Trade and Government Industry and the Minister of Agriculture, Forestry and Fisheries)
• Capital contribution • Designated • Lending of funds • Interest subsidies Designated financial institutions
Japan Finance Corporation Private financial institution (Crisis Response Facilitation Private financial institution Account) • Prepares and announces “crisis • response facilitation guidelines” • 1. Two-step loans Shoko Chukin Bank Implements risk support and 2. Financial indeminities other measures on the basis of 3. Interest subsidies agreements with designated DBJ financial institutions Business conducted based on the approval of the competent ministers
Lending of specific funds, other services
Clients
The Great East Japan Earthquake
In response to the Great East Japan Earthquake, which crisis response operations for clients affected both directly occurred on March 11, 2011, as a designated financial and indirectly by the disaster. institution for crisis response operations DBJ set up a full- Please see pages 62–65 for “Initiatives Related to the fledged structure to facilitate the all-around operation of Great East Japan Earthquake.”
Annual Report & CSR Report 2012 59 DBJ’s Businesses
Results of Crisis Response Operations
On October 30, 2008, Shoko Chukin and DBJ established international financial order” concluded on March 31, 2011.) “lifestyle measures” in response to the worsening corporate cashflow conditions resulting from the global financial and As of March 31, 2012, DBJ’s loan performance and com- economic crisis that commenced in the autumn of 2008. mercial paper acquisitions of crisis countermeasure loans On December 11, these measures were granted crisis des- were as follows. ignation under the category of “incidents related to confu- • Cumulative loans: ¥4,297.0 billion (1,090 cases) sion in the international financial order.” On December 19, • Cumulative loans executed with loss guarantee agree- these measures were augmented by economic measures, or ments: ¥238.3 billion (46 cases, including those slated for “emergency lifestyle defense measures,” funded through application to JFC) an expanded budget and the commencement of the com- • Cumulative commercial paper acquisitions: ¥361.0 billion mercial paper acquisition business, and labeled Cashflow
Crisis Response Operations (68 cases) Countermeasures for Medium-Sized and Large Companies Employing the Crisis Response Operations of the Japan *1 Of the ¥67.0 billion in loans executed with loss guarantee agree- Finance Corporation. On January 27, 2009, government ments to Japan Airlines in relation to crisis response operations, regulations were amended, incorporating these items into ¥47.0 billion (amount confirmed in April 2011 owing to DBJ’s the second supplementary budget for fiscal 2008, aug- completion of corporate rehabilitation procedures) in compensa- mented with funds generated by DBJ’s commercial paper tion was ultimately provided by the Japan Finance Corporation on acquisition business on January 30. the basis of this agreement. *2 The commencement of corporate rehabilitation procedures for Additional economic crisis countermeasures were DBJ business partner Elpida Memory, Inc., was set for March 23, announced on April 10, 2009, outlining specific measures 2012. A portion of loans provided by DBJ were covered by an for large-scale crisis response operations and earmarking a agreement for the reimbursement of loss guarantee transactions total of ¥15 trillion for crisis response for medium-sized and with the Japan Finance Corporation. Going forward, if these large companies. In line with these measures, authorization loans become uncollectable or in the event of capital deteriora- of a supplementary budget for fiscal 2009 was announced tion, DBJ will request that the Japan Finance Corporation provide a compensation payment. The agreement between DBJ and the on May 29, 2009. This budget received Diet authorization Japan Finance Corporation for the reimbursement of loss guar- on June 26, and the Revision to the New DBJ Act went into antee transactions on loans provided by DBJ include ¥10.0 billion force and was promulgated on July 3, 2009. These mea- in loans executed with loss guarantee agreements for conduct- sures paved the way to reinforce DBJ’s financial structure ing crisis response operations, as well as an investment amount and facilitate crisis response operations. of ¥28.4 billion as a designated operator set forth in the Law For cases following the Great East Japan Earthquake, on Special Measures for Industrial Revitalization and Innovation. The above-stated amount does not include interest, damages or which occurred on March 11, 2011, the Japanese govern- other charges. Based on this agreement for the reimbursement of ment began conducting crisis certifications on March 12, loss guarantee transactions, the amount that DBJ may receive as 2011. Upon notification of such certifications, the implemen- compensation payment from the Japan Finance Corporation is a tation period for crisis response operations was re-extended. maximum of ¥27.7 billion. This includes an 80% compensation of (Meanwhile, the implementation period for certain projects, the investment amount (¥22.7 billion) and a 50% compensation such as those involving “incidents related to confusion in the for the loans provided by DBJ (¥5.0 billion).
Loans as Crisis Countermeasures Commercial Paper Acquisition as Crisis Countermeasures (Cumulative) (Cumulative) (Billions of yen) (Number of cases) (Billions of yen) (Number of cases) 6,000 1,200 400 80 1,090 361.0 361.0 361.0 944 68 68 68 4,500 817 4,297.0 900 300 60
3,338.5 3,111.0 215.0 3,000 600 200 40 36 301 1,500 300 100 20 1,060.3
0 0 0 0 Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, 2009 2010 2011 2012 2009 2010 2011 2012
60 Annual Report & CSR Report 2012 DBJ’s Businesses
Providing a Safety Net
DBJ acts as a social safety net by providing investments and and other illnesses, as well as terrorist attacks and other loans to support the rehabilitation and rebuilding of areas emergency situations that cause widespread anxiety about affected by earthquakes, typhoons or other large-scale the financial system. In this way, we act as an emergency natural disasters, the outbreak of severe acute respiratory response unit to fill the gap that emerges when peacetime syndrome (SARS), bovine spongiform encephalopathy (BSE) financial platforms fail to function.
Disaster Recovery
Societal Concerns DBJ Initiatives Required responses to a natural disaster are to (1) ensure DBJ has provided assistance in response to such disasters as that people who provide information to local communities the Great Hanshin-Awaji Earthquake in January 1995 and the
beset by a natural disaster have sufficient knowledge about Chuetsu Offshore Earthquake in October 2004. In addition Crisis Response Operations those communities and take that knowledge into consider- to the electricity, gas, rail, communications, broadcasting, ation and (2) provide rapid responses to help rebuild impor- urban development and other infrastructure industries, DBJ tant infrastructure that was destroyed. What is required is assisted providers of everyday necessities such as foodstuffs an entity that through its everyday business relationships and other retail items. These efforts played a major role in has accumulated know-how on the industries and business- revitalizing the employment and economic situations of local es that provide this core infrastructure. This entity also must communities, prompting a revival in many fields. have a wealth of expertise in supplying long-term funds. Note: DBJ’s cumulative financing for recovery from two earthquakes Great Hanshin-Awaji Earthquake: ¥184.8 billion (Year ended March 31, 1995, to year ended March 31, 2003) Chuetsu Offshore Earthquake: ¥20.3 billion (Year ended March 31, 2005, to year ended March 31, 2007)
Emergency Financing
Societal Concerns DBJ Initiatives Society requires institutions whose day-to-day operations In the year ended March 31, 2002, DBJ established an provide a solid foundation for financing in response to emergency response support system that provided financ- terrorist attacks, natural disasters and other emergency ing to the Japanese airline industry, which was immedi- situations. These institutions must also have the working ately affected by a downturn in business following the capital and funding expertise to respond quickly to these September 11, 2001, terrorist attacks on the United States situations. and the SARS outbreak. Note: DBJ’s cumulative emergency financing provided fol- lowing the terrorist attacks and the SARS outbreak: ¥437.0 billion (Year ended March 31, 2002, to year ended March 31, 2005)
Successful Safety Net Initiatives
1995 Reconstruction following the Great Hanshin- 2006 Asbestos countermeasures Awaji Earthquake Response to major rise in crude oil prices 1997 Financial climate response (credit crunch) 2007 Reconstruction following the Noto Peninsula 2000 Reconstruction following Mt. Usu eruption Earthquake Restoration support following torrential rains in Reconstruction following the Mid Niigata the Tokai Region Prefecture Earthquake 2001 Terrorist attacks on the United States 2008 Reconstruction following the Iwate-Miyagi SARS countermeasures, BSE countermeasures Nairiku Earthquake 2004 Reconstruction following the Chuetsu Offshore Financial crisis response Earthquake 2010 Yen appreciation and other countermeasures 2005 Reconstruction following the Fukuoka Prefecture 2011 Reconstruction following the Great East Japan Western Offshore Earthquakes Earthquake
Annual Report & CSR Report 2012 61 DBJ’s Businesses Initiatives Related to the Great East Japan Earthquake
Crisis Response Operations
In the fiscal 2011 supplementary budget (passed on May tions DBJ set up a full-fledged structure to facilitate imple- 2, 2011), ¥2.5 trillion was earmarked for the Japan Finance mentation of crisis response operations for clients affected Corporation (JFC) for Great East Japan Earthquake crisis response both directly and indirectly by the disaster. In addition, DBJ operations targeting medium-sized and large companies. is making a proactive effort to support increases in the pro- This supplementary budget having been passed, as a duction of materials needed for restoration and reconstruc- designated financial institution for the crisis response opera- tion in the aftermath of the recent disaster.
Responding to Electrical Power Supply Problems
Following the Great East Japan Earthquake, Japan’s electric private financial institutions to secure the funding needed to power utilities have been compelled to suspend operations at ensure a stable supply of electricity. their nuclear power plants. Accordingly, the stable supply of In the preceding fiscal year, DBJ worked to accurately deter-
Initiatives Related to the Great East Japan Earthquake electricity has become an important issue from the standpoint mine the funding needs of each power company. In particular, of maintaining or strengthening Japan’s economic and indus- we collaborated with The 77 Bank, Ltd., a local financial insti- trial competitiveness. The need to secure alternate forms of tution, to arrange a syndicated loan for Tohoku Electric Power fuel has caused electric utilities’ costs to increase and required Co., Inc., totaling ¥120.0 billion. Numerous financial institu- them to introduce new safety measures, both of which were tions participated, providing broad-ranging support from a expected to deteriorate their balance of revenues and expens- financial perspective for efforts to restore Tohoku Electric es. Because of the difficulty the utilities would have in issuing Power facilities that were directly affected by the disaster. corporate bonds, DBJ responded quickly in collaboration with
Response to TEPCO Needs
First, in April 2011 DBJ collaborated with leading banks to a backup commitment line to enable empathy and other com- provide Tokyo Electric Power Company, Incorporated (TEPCO), pensation payments according to an emergency special busi- with financing needed to provide long-term working capital, ness plan approved by the minister of finance. Thereafter, in including for fixed investment for restoration immediately after May 2012 the minister of finance approved a comprehensive the accident and for fuel costs. special business plan supporting the utility’s efforts to become Recognizing that the most important issue for TEPCO lies a “new TEPCO.” As a financial institution, we recognize the in balancing appropriate compensation payments to victims importance of responding to this need and cooperating with and providing a stable supply of electricity, in September 2011 related parties as we continue to support both a stable supply we launched the Nuclear Damage Liability Facilitation Fund. of electricity and the payment of appropriate compensation to This was followed in November 2011 by the establishment of victims.
Tohoku Revival Reinforcement Office
On April 21, 2011, DBJ established the Tohoku Revival departmental structure that spanning the Regional Planning Reinforcement Office within the Tohoku Branch to con- Department, Financial Institution Department, and other solidate and better provide companywide knowledge and departments and branches. The office provides beneficial financial expertise toward the restoration and reconstruc- information related to restoration and reconstruction and tion of the Tohoku region, which was affected by the Great communicates with government bodies, national institu- East Japan Earthquake that struck on March 11, 2011. tions, economic organizations and regional financial and The Tohoku Revival Reinforcement Office has a cross- other institutions to conduct surveys and introduce plans.
Communications between Tohoku Revival Reinforcement Office and Related Institutions • Communications with government bodies Government Bodies Support government body structuring and planning measures related to infrastructure creation and community development aimed at restoration and reconstruction Tohoku • Communications with regional Revival • Communications with national National financial institutions Regional Reinforcement institutions and economic Create frameworks to facilitate Of ce Institutions organizations Financial and Economic smooth provision of funds to Institutions Support information provision and other companies and other Organizations activities in response to various disaster-stricken entities government measures and industries
62 Annual Report & CSR Report 2012 DBJ’s Businesses
Restoration and Reconstruction Issues and Responses
The Great East Japan Earthquake was a complex major cal order. Also, given the broad expanse of the damaged disaster, an infrequent type even on a global scale. We region, restoration and reconstruction measures must take believe that restoration and reconstruction measures must into careful consideration the regions where they are being be implemented on a step-by-step basis, in chronologi- introduced and the type of damage they are targeting.
Restoration and Reconstruction Support through Investment and Loan Activities
Phase A Phase B Phase C (Emergency responses) (Early phase of (Full-scale reconstruction) restoration works)
March 11, February 10,
2011 March 12 July 29 December 26 2012 Present Initiatives Related to the Great East Japan Earthquake
Earthquake Given “disaster of Basic Guidelines for Law for Special Reconstruction extreme severity” Zone for Reconstruction in response to strikes and “crisis” Reconstruction Agency designations the Great East Japan Earthquake goes into effect inaugurated
• First supplementary budget (May 2011) • Second supplementary • Third supplementary • Budget compiled Crisis response Crisis response
operations ◆ operations Amount: Scale increase of ¥2.5 trillion budget (July 2011) budget (November 2011) for the fiscal year ◆ Interest rate subsidy programs established ◆ Amount: Scale increase of ¥1.5 ending March 31, • Government extends period for making additional capital trillion 2013 contributions to DBJ (to scal 2014 from scal 2011) ◆ Amount: ¥2.2 trillion measure
Performance Record June 30, 2011 Performance as of in Investment and Approximately March 31, 2012 Loans ¥57.1 billion Approximately ¥946.2 billion
Emergency Regional initiatives Regional Regional initiatives Regional April ● Establishment of Great East Japan December
measures owing Detailed billion) ¥500.0 (approximately Program Japan Smart DBJ for capital) risk (including support independent of Provision 21 Earthquake Reconstruction Fund 12 support for Reinforcement Office Tohoku of Revival Establishment to such factors Support and Counseling Center Reconstruction for Zone Special the of Opening as repayment • Joint funds with regional banks in Iwate, Miyagi, Fukushima corporate moratoriums and Ibaraki Prefectures revitalization • Provision of risk capital to support the revitalization of affected companies Support for ● Support for formulation of community and other plans restructuring of regional ● Surveys and advisory activities, other infrastructure, community ● Initiatives on regional projects development, etc. Industry initiatives Industry Industry initiatives Industry
● Establishment of Supply Chain ● Business continuity plan (BCP) Support Fund Support for proliferation and Support for increasing • Joint fund with Japan Auto Parts Industries increasing sophistication Association, aimed at providing long-term, global • Enhancement through renewal of stable funding for revitalization and competitiveness disaster preparedness system restructuring support
Participation in energy problems Initiatives addressing energy problems Initiatives addressing ● Support targeting primary damage, in response to bond renewable energy projects, market confusion etc. Loans to nine electric Responding to funding needs power companies since the disaster
Annual Report & CSR Report 2012 63 DBJ’s Businesses
Supply Chain Support Fund
In June 2011, DBJ joined the Japan Auto Parts Industries provide long-term stable funding through equity-type funds Association (JAPIA) to form the Supply Chain Support Limited for companies supporting the supply chains employed by Partnership. The partnership was formed to support the recon- Japan’s automotive industry. By assisting the industry in struction of automotive supply chains (parts procurement net- such aspects as reconstruction following the earthquake, works) that were affected by the Great East Japan Earthquake. and supporting business and industry restructuring, we aim The Great East Japan Earthquake disrupted the automo- to recover the confidence in the industry as a responsible tive industry’s supply chains. This fact, compounded by global supplier and toughen the supply chain. As a result, electric power supply problems created uncertainties about we aim to respond to the mandate of helping to rebuild when the automotive industry production would resume. one of Japan’s backbone industries and contribute to its Through the establishment of this fund, DBJ aimed to redevelopment and management stability.
Initiatives Related to the Great East Japan Earthquake Structure of the Supply Chain Support Fund
Completed product manufacturers Supply Chain Support
Limited Partnership Primary parts
DBJ financing Investment and manufacturers support Equity Secondary parts Japan Auto Parts manufacturers Industries Association (JAPIA) investment Equity support Equity Tertiary parts manufacturers
Great East Japan Earthquake Reconstruction Fund
DBJ and financial institutions in areas affected by the struction of prominent regional companies that were tem- earthquake formed the Great East Japan Earthquake porarily affected by the disaster. The fund provides such Reconstruction Fund to support the restoration and recon- companies with risk capital that makes uses of such instru- struction of companies that sustained damage in the earth- ments as subordinated loans and preferred shares, with the quake. aim of supporting the early reconstruction of the disaster- The fund is aimed at providing support for the recon- stricken region.
Miyagi Iwate Genki Ippai Fukushima Booster Ibaraki Kizuna Reconstruction Name Investment Limited Fund Investment Investment Limited Bridge Investment Partnership Limited Partnership Partnership Limited Partnership Scale of fund ¥5.0 billion (initially) Established August 2011 August 2011 August 2011 September 2011 General partnerships Tohoku Fukko Partners Co., Ltd. SFG Partners Inc. (GPs) DBJ and Limited partnerships DBJ and DBJ and DBJ and The Bank of Iwate, (LPs) The Toho Bank, Ltd. The 77 Bank, Ltd. The Joyo Bank, Ltd. Ltd. Investment period of three years, duration of 10 years Period (If necessary, however, it is possible to extend the investment period by up to two years and the duration by up to five years.)
64 Annual Report & CSR Report 2012 DBJ’s Businesses
Providing Information
Specific Measures and Issues for Great East Japan Specific Measures Targeting Reconstruction following Earthquake Reconstruction—Six Proposals for Creative the Great East Japan Earthquake—Seven Proposals Reconstruction Assuming Financial Limitations (July 2011) for Creating Industries that Leverage the Functions of Facing the question of how to recover from the Great East Tohoku University (December 2011) Japan Earthquake, creative reconstruction is necessary, tak- Restoring the lifestyles that were lost during the disaster ing into account the financial issues that existed prior to the requires that working locations and reconstruction activi- earthquake and looking toward the growth of Japanese ties be considered in tandem. From this starting point, we industry. Sharing a sense of urgency, DBJ and The Canon consider it extremely important to harness the functions Institute for Global Studies cooperated in formulating a spe- performed by Tohoku University, which is one of Japan’s cific policy and preparing a report on recommendations. leading centers of knowledge, to unleash the region’s This proposal covers six areas: (1) community develop- potential, creating new businesses and industries to gener- ment, (2) waterworks and sewerages, (3) medical care and ate employment and reconstructing the disaster-stricken Initiatives Related to the Great East Japan Earthquake welfare, (4) agriculture, (5) university research functions and region. Having a shared awareness of this issue, DBJ and (6) PFIs. Although the list of areas covered in the proposal Value Management Institute, Inc., cooperated in drafting a is not exhaustive, it provides grounds for consideration by specific policy proposal. related parties when formulating future reconstruction plans. Seven areas—(1) renewable energy, (2) distributed power sources, (3) electronic medical records, (4) remote Survey on Corporate Disaster Prevention and Business healthcare, (5) nursing and welfare robots, (6) urban mines Continuity Efforts following the Great East Japan and (7) micro-electromechanical systems (MEMS)—are Earthquake—The Accumulation of Sustainable BCPs covered by the current proposal, analyzing research themes and Competitive Reconstruction (September 2011) being pursued by Tohoku University and drawing up spe- Taking into account the Great East Japan Earthquake, the cific projects linking these themes to new industries. issue of how companies will introduce future disaster pre- vention and business continuity initiatives has taken on A Year after the Great East Japan Earthquake— increased importance. Verification, Area-Specific Data on Restoration and Taking these conditions into consideration, this survey Reconstruction and Future Issues (April 2012) elicits the cooperation of approximately 30 companies. Now that a year has passed since the Great East Japan Emergency hearings were held and questionnaires distribut- Earthquake, the characteristics of different areas have ed to corporate personnel in charge of disaster prevention grown more distinct. Therefore, in order to analyze the and their respective BCPs. As a result, based on the aware- data and produce future strategies, we have summarized ness and conditions of the companies involved, the state of area-specific data according to (1) the current status of the existing disaster prevention and business continuity initia- disaster-stricken region, (2) the status of formulation of tives was verified. We also considered how the companies reconstruction plans by government bodies, (3) key related would address these issues in the future and considered legislation and budget measures, and (4) economic, corpo- improvements, summarizing efforts to support corporate rate and regional financial trends. business continuity.
Study Group on Regional Reconstruction
To encourage the creative reconstruction of the Tohoku areas, including Tohoku, such as a strategic project aiming region and throughout the entire area afflicted by the Great for a “Calamity-Proof Nation (Strong in the Face of Major East Japan Earthquake, DBJ established the Study Group Disaster),” from three perspectives: (1) safety and security, on Regional Reconstruction (chaired by University of Tokyo (2) regional entities and (3) looking to the future. The study Professor, Takashi Onishi), comprising experts in such fields group met for the first time on May 18, 2011, and had as community development, disaster preparedness and convened six more times by March 2012, meeting in Tokyo regional public finance. and Sendai. In March 2012, the group produced a report The Great East Japan Earthquake, which combined an recommending that in addition to repairing physical dam- earthquake, tsunami and nuclear accidents, caused damage age, creative reconstruction was needed that combined on a massive scale. This unprecedented disaster will have sustained industry promotion and the lifestyle infrastructure serious repercussions for Japan’s economy, industry and by leveraging private-sector expertise and stronger ties with society. the public sector (the need for earthquake reconstruction The group is expected to consider specific measures to PPPs, reconstruction and community development compa- foster the necessary creative reconstruction in the stricken nies, and support functions).
Annual Report & CSR Report 2012 65 DBJ’s Businesses Making Use of Information Functions
Through its varied activities, DBJ comes into contact with many aspects of society. In addition to companies, DBJ’s information channels and human networks include domestic and overseas governments, international institutions, regional government bodies and universities. Through these contacts, DBJ extracts a variety of information on economic and societal issues, boosting its ability to supply quality information from a neutral standpoint.
Economic and Industrial Research
In a broad range of industrial circles, DBJ researches conditions “Impact of the Flooding in Thailand on the HDD in various sectors and among different types of businesses, Supply Chain” conducting surveys and performing research on such topics (DBJ Monthly Overview, No. 166, November 2011) as international competitiveness. DBJ also prepares reports Thailand plays a central role in the supply
Making Use of Information Functions on conditions in individual industries, technical development chain for hard disk drives (HDDs), which trends and new industries and innovation. We provide feed- are key components used in personal back on these reports to our clients, as well as other parties. computers, video players and other elec- Survey Examples tronics. Consequently, the impact of the DBJ Monthly Overview record-level deluge that affected Thailand This report provides a brief commentary on in 2011 rippled throughout the world, domestic and overseas economic and indus- affecting final product supplies. This report looks at the trial trends and monthly business indicators. extent to which the flooding in Thailand damaged manufac- The report explains domestic and over- turers of HDDs and components and the long-term impact seas economic trends through an analysis on Japanese companies of the HDD supply chain coming to of economic and financial indices published an operational standstill, and makes specific recommenda- each month. In recent years, the global tions for HDD-related manufacturers. economic and financial markets have grown more closely linked. With regard to these global markets, the report aims DBJ Long-Term Interest Rate Weekly Outlook to further that integration by introducing overseas fiscal and DBJ provides its clients with weekly long-term interest rate monetary policy and commenting on current topics. movement information on the first business day of each week. In addition, the report addresses topics that are timely Focused on Japan and the United States, we offer a brief sum- from the perspective of industrial trends. mary of market trends during the previous week and introduce key economic indicators, treasury auctions and other events “Forecasting Market Scale for Mass Retailers of Home scheduled in the current week. DBJ economists comment on Electronics Based on Units Owned by Households” the effects of important economic indicators and monetary (Preliminary Calculation) policy announced during the week, providing an outlook for (DBJ Monthly Overview, No. 165, October 2011) market trends based on the analysis of economic fundamentals. Although the size of the domestic retail market for home electronics is essentially unchanged, mass retailers of home “Determining Factors of Environmental Activities and electronics account for a larger portion of this market each Corporate Value—Analysis Based on Case Studies of year. In 2010, their share of the market exceeded 70%. Financing Employing Environmental Ratings” This report, assuming that “home electronics products (Economics Today, Vol. 31, No. 1, April 2010) are items owned by households,” seeks to answer “how Assuming that the market values corporate environmental many items households own overall” and “how many years consciousness activities, which thereby affects corporate value, elapse until they replace them.” Taking this approach, the we have conducted an empirical analysis of the relationship report forecasts the scale of the domestic home electronics between environmental activities and corporate value and retail market and makes individual estimates for key items individual corporate data based on newspaper reports related that account for more than 50% of total to DBJ Environmentally Rated Loan Program. The results of this sales: televisions, personal computers and analysis suggest that environmental consciousness activities white goods (lifestyle appliances). The and taking advantage of Financing Employing Environmental report then estimates the size of the home Ratings boost companies’ corporate value and profitability. The electronics retail industry and the market result also indicates that shareholder composition and fund-rais- scale of mass retailers of home electronics ing capabilities are determining factors in corporate decision- through 2015. making on whether to employ such financing.
66 Annual Report & CSR Report 2012 DBJ’s Businesses
“Beyond a Disparate Society” “The Great East Japan Earthquake—Recommenda- (Hirofumi Uzawa, Toshiaki Tachibanaki, Katsuhisa Uchiyama tions for Reconstruction for the Formulation of a [eds.], University of Tokyo Press, June 2012) Sustainable Society” This collection of essays shares the rec- (Shigeru Ito, Masahiro Okuno, Takashi Onishi and Masa- ognition among its authors that Japan haru Hanazaki [ed.], University of Tokyo Press, July 2011) exists within a disparate society, and The Great East Japan Earthquake highlighted that the Japa- develops the thesis that its incongruous- nese economy and society is built on an ness is not conducive to the stable and extremely fragile base. With the earth- sustained development of Japanese quake having shaken some very fun- society. Each chapter focuses on the damental values, this report examines theme of institutional capital (public initiatives suitable for reconstructing the finance, private finance, education, societal protection, etc.) disaster-stricken region and rebuilding as shared social capital, raises topics of the cities and the Making Use of Information Functions the Japanese economy and society. environment and discusses their relationship to a disparate This report summarizes disaster society. The collection looks toward the formation of a reconstruction recommendations by 50 academics who are less-disparate small society, describes the vision needed to at the forefront of such fields as economics, urban theory and achieve sustained development and discusses the role of industry theory. The report is divided into three sections, Part shared social capital. I: Regional Revitalization; Part II: Challenges for the Japanese Economy; and Part III: Reconstruction and Japanese Society.
Capital Investment Planning Survey
One of DBJ’s main businesses is the provision of funds for Survey Example long-term capital investment. With a history of more than “Report on June 2011 Survey of 50 years (from 1956), the questionnaire-based Capital Capital Investment Plans for Years Investment Planning Survey looks at community-specific to March 31, 2011, 2012 and 2013,” investing trends and provides analyses of raw corporate (Surveys, No. 103, September 2011) information. This information is tapped for many purposes, After completing our questionnaire- including investigation of, and policy formation for, the based survey on corporate capital Japanese economy, planning by corporate management investment activity, the Survey of and research and training activities at institutions and Capital Investment Plans, we publicized universities. the results, as well as our analysis.
Combining Surveys, Research and Investment and Loan Activities
In addition to publishing the results of its surveys, research Disaster Response and other activities, DBJ introduces its information at speak- Being prepared to respond to an earthquake or other natural ing engagements and seminars. In addition, after reflecting disaster and continue operations is an issue for every com- on the results of its investment and loan functions, DBJ pany. DBJ conducts surveys covering the corporate business provides new financial solutions for corporate CSR activities continuity plans companies have established. In fiscal 2006, and commercial technologies. we incorporated survey results to form the basis for Financing Employing DBJ Disaster Preparedness Ratings, which we use in Environmental our financing considerations. Financing Employing DBJ Disaster DBJ conducts survey reports on various environmental activi- Preparedness Ratings was substantially revised in August 2011. ties in Japan and overseas, under such themes as global warm- Thereafter, the name of this system was changed in 2012 to ing prevention measures, promotion of a recycling-oriented the DBJ Enterprise Disaster Resilience Rated Loan Program. society and sustainable corporate management. DBJ also con- ducts and contributes to specialty journals, newspapers and Technology magazines. In the year ended March 31, 2005, these activities DBJ’s activities in technology-related fields include conduct- culminated in the introduction of DBJ Environmentally Rated ing trend surveys (for example, on bioethanol). DBJ’s Practical Loan Program, which are used to determine preferential Application Support Center for Technology provides technical financing for environment-friendly projects and are used by evaluations and conducts other activities to help companies many companies. realize their potential for technological commercialization.
Annual Report & CSR Report 2012 67 DBJ’s Businesses
Providing Information to Local Communities
Supplying Information to Help Local Community “Fiscal 2012 Regional Handbook: Regional Data and Policy Development Information” Local communities are This handbook is a collection of data that include fundamental experiencing increasingly economic, industrial, lifestyle and policy indicators for regional blocks, administrative regions and principal cities, as well as a difficult environmental compilation of individual regional policies and projects to facili- circumstances, such as tate an overall understanding of regional a declining birthrate, policies, economies and societies and the an aging population, current status of regional projects. In the the amalgamation of Topics section, Takashi Onishi, University of Tokyo professor and president of the Science towns, cities and villages, and financial crises. Addressing Council of Japan, contributed a special sec- these issues requires a greater degree of expertise and more tion entitled “Issues Related to Restoration Making Use of Information Functions ingenuity than ever. DBJ assists by analyzing the information and Reconstruction Following the Great East it accumulates through its network of offices (19 domestic Japan Earthquake.” locations—head office, branches and representative offic- es—and three overseas locations—subsidiaries and a rep- “Issues and Outlook for Tohoku Tourism, Centering on Overnight Travel—Based on an Earthquake Impact Study” resentative office), economic agencies of regional govern- This report looks at the domestic overnight ments and local communities, and companies in Japan and tourism industry, which was significantly abroad. DBJ disseminates this information through reports, affected by the Great East Japan Earthquake, publications, lectures and other formats to encourage pub- summarizing the industry’s issues and pros- lic/private partnerships, promote tourism, build up local pects. Leveraging the expertise that DBJ has accumulated involving the ryokan (Japanese- communities, and contribute to local government financing. style inn) tourism and related industry busi- ness, this study involves interviews with vari- Building Local Communities ous experts and takes an approach combining One way DBJ puts its expertise to work in building up local a written survey with field research. communities is by conducting ”local community-building diagnostics.” In this process, a DBJ local-community diag- “Research Group on Development of the nosis team analyzes publicly available data to determine the Reconstruction Region Report” current state of a local community and then conducts inter- Earthquake reconstruction efforts are currently in full swing in each of the affected regions. views in that community before preparing an independent This report argues that in addition to physical diagnosis that interprets its results. We then discuss the diag- improvement, the areas could leverage and nosis results with people in the local community, which helps retain creative wisdom and methods, as well them to understand what issues they may be able to address as private-sector expertise. The report then on their own and provides them an opportunity to consider makes specific recommendations on initiatives for promoting industrial and lifestyle infrastructures. future directions. (See page 56.)
Branch Reports
Hokkaido Branch This report clarifies the cachet enjoyed by Hokkaido food “Establishing Hokkaido Food Products as a products that are exported overseas, and then speculates Recognized Brand Overseas—Brand Synergies that initiatives to promote exports of these products depend between Hokkaido Food Products and Hokkaido on (1) getting Japanese restaurants overseas to communicate Tourism” (Mini Report, May 2011) the attraction of Hokkaido food products by featuring them In the aftermath of the Great East on special menus and (2) breaking down the barriers to food Japan Earthquake and the nuclear product exports from Hokkaido by appealing to their brand power plant accidents, overseas strength and price competitiveness and by strengthening the consumers are exercising voluntary region’s ability to establish sales routes. As specific examples, restraint toward Japanese food and the report suggests that overseas promotions that emphasize food products originating in Japan, and authentic flavors of Hokkaido ramen (noodle) shops would some restrictions are in place. However, expand exports of Hokkaido food products and proposes initiatives to encourage food exports exporting Hokkaido ice cream by forging links among com- are essential to the future of Hokkaido. panies within the prefecture.
68 Annual Report & CSR Report 2012 DBJ’s Businesses
Tohoku Branch place. Specifically, the report looks at the results of a ques- “Growing Demand for Lumber and Tohoku’s Forest tionnaire sent out to companies to determine their status of Resources” (Survey Report, March 2012) BCP formulation and preparedness for interruptions in the This report studies future trends supply chain, and suggests ways for Hokuriku companies to in lumber demand, based on the enhance business continuity. assumption that we are entering an era that will take advantage of Tokai Branch Tohoku’s forest resources. Demand “Issues and Future Strategies for for lumber is expected to increase, the Aircraft-Related Industry— owing to the Act for Promotion of Focusing on Second-Tier Use of Wood in Public Buildings, Companies Involved in Airframe which went into effect in October Construction” (Region Report, 2010, as well as the promotion of September 2011) Making Use of Information Functions technologies for designing fire-resistant wooden structures. DBJ and The Juroku Bank, Ltd., As an example showing that making public buildings of cooperated in the publication of this wood is cost effective, this study imagines the case of all report as one aspect of their business school facilities in Tohoku’s six prefectures being construct- cooperation agreement. The report examines the current ed of wood. The report provides preliminary estimates of state of the aircraft industry, describing industry trends in the value of demand created and the resulting increase in countries of key overseas demand, new entries into emerg- employment. ing markets, and the maintenance, repair & overhaul (MRO) industry. At the same time, the report looks at the results of Niigata Branch a briefing (conducted in cooperation with The Juroku Bank, “Considerations on Rebuilding Food and Agriculture Ltd.) by suppliers involved in airframe structures in the Tokai Growth (Export) Strategies” (Recommendation Report, region, the area of highest concentration for the aircraft March 2012) industry. After describing the current state of the industry This report analyzes the gap between and looking into the issues it faces, the report offers six rec- the reputation that Japanese food ommendations for future development. It looks at Japan in enjoys overseas and actual exports. comparison with the Canadian province of Quebec, extract- The report identifies an insufficient ing the issues associated with Japan’s aircraft cluster policy Japanese response to international and considering three initiatives for the future. rules pertaining to food exports as one reason for the gap. It discusses Kansai Branch mainstay Japanese products—fish, “Impact of a Major Earthquake on the Regional rice and sake—and recommends Economy—Case Study of the Great Hanshin-Awaji response measures for each. Having implemented a Web- Earthquake” (Survey Report, December 2011) based questionnaire for overseas consumers, the report This report analyzes various indicators analyzes the perceived image of Japanese food and the in the region affected by the recent impact of the Great East Japan Earthquake. Great East Japan Earthquake in com- parison with trends before and after Hokuriku Branch the Great Hanshin-Awaji Earthquake. “Study on Hokuriku Companies’ Topping the list of comparisons are Awareness of Business Continuity the earthquakes’ economic-related Plans (BCPs)—Enhancing the effects on the respective regions— Business Continuity of Companies GDP, population trends, commerce, in Hokuriku” (Survey Report, March domestic finances and labor, tourism and reconstruction 2012) demand. The report then offers a multitude of multifaceted This report examines companies recommendations for the disaster-stricken region. whose headquarters are located within the three prefectures of the Chugoku Branch Hokuriku region, determining their level of awareness of “Study on the Shift to Urban Concentration in a many risks, including a large-scale disaster or major acci- Society Characterized by a Decreasing and Aging dent, and then studying what preparatory steps are in Population” (Region Report, May 2012)
Annual Report & CSR Report 2012 69 DBJ’s Businesses
This study, which DBJ conducted Kyushu Branch in cooperation with The Chugoku “Impact of the Opening of JR Electric Power Co., Ltd., is based on HAKATA CITY—Tenjin and Hakata: advance research into urban con- Changes in Behavior and Their centration. It looks at five cities in Appeal” (Survey Report, November the prefectures that comprise the 2011) Chugoku region, grouping them by March 2011 marked the start of busi- DID* population, population density ness for the JR HAKATA CITY station and patterns of changes in area, and building and the opening of the Kyushu analyzing the balance between the concentration of people Shinkansen route, accompanied by expectations of renewed in the areas of highest population (regions where popula- vigor for the Kyushu region. This report summaries and ana- tions and urban facilities are densest) and the buildup of lyzes environmental changes after the opening of JR HAKATA urban facilities. The report also introduces methods of cre- CITY in “Tenjin and Hakata: A 1,000-Person Questionnaire” Making Use of Information Functions ating urban facilities in line with the shift toward urban con- and “Changes Following the Opening of JR HAKATA CITY.” centration and looks at the model in place in the Chugoku Looking at answers to the Tenjin and Hakata questionnaire, region, looking at directional patterns in the urban shift and the report highlights the characteristics of both regions, suggesting points to keep in mind. concluding that, “The attractiveness of each has increased. The regions have overcome the difficulties they faced and the * An acronym for “densely inhabited district.” Wards, which are the overall increase in the attractiveness of Tenjin and Hakata has basic unit used in Japan’s national census, are used as the base led to further development in Fukuoka.” unit. DID describes areas with concentrated regional populations in areas of high population density within the borders of cities, wards, Minami-Kyushu Branch towns and villages. “The Chinese Business Shikoku Branch Environment, as Seen from Shanghai” (Lecture, “Evolving Shikoku Companies at September 2011) the Top of Their Niches” (Survey To invigorate the local Report, October 2011) economy, Kyushu, which has Many companies in Shikoku operate abundant tourist resources, needs to increase its number in niche fields, on either a national or of overseas tourists to supplement the benefits it receives an international level, and this factor from its domestic tourism. Above all, it is important for the is considered to be one of the distin- region to focus on tourists from China, which is geographi- guishing characteristics of Shikoku’s cally close and enjoying rapid economic growth. economy. This report introduces companies headquartered To attract tourists from China, first the region needs to in Shikoku that have top shares in their niche fields, listing understand current Chinese economic and political condi- the characteristics of their business developments to date, tions. To this end, the head of the Shanghai office of DBJ products they handle and their distinguishing characteristics Business Investment Co., Ltd., a DBJ subsidiary, spoke to from a management perspective. The report then discusses the Industrial Promotion Committee, sponsored by the the reasons behind these companies’ emergence at the top Kagoshima Association of Corporate Executives. of their fields and future aspects of community revitalization.
The Japan Economic Research Institute
The Japan Economic Research Institute (JERI) is a foundation department, universities, research institutions and other established for the purpose of contributing to the improve- experts, as well as national and regional government bodies ment of welfare and further development of the Japanese and the patronage of approximately 500 companies. DBJ economy through investigative research into important eco- works in conjunction nomic problems in Japan as well as overseas and funding with JERI to dissemi- the promotion of scholarship. JERI’s investigation into issues nate the results of that impact the Japanese economic structure in the areas its research. of urban and regional development, social capital infra- structure, energy, economy and industry are supported by a broad network that includes DBJ’s investigative research
70 Annual Report & CSR Report 2012 CSR Report
DBJ provides integrated investment and loan services to resolve the issues its clients face and Implementing CSR Management ...... 73 continues to support the ongoing growth of society from a financial perspective. CSR through Investment, Loan and Other Businesses . 78 At DBJ, corporate social responsibility Environmental Management ...... 101 involves not only contributing to society through investment, loan and other business, Business Continuity Plan (BCP) ...... 104 but also seriously taking into account societal needs and living up to responsibilities Fostering Human Resources and Creating a as a member of society. This requires all Comfortable Work Environment ...... 106 DBJ executives and regular employees to conduct their daily activities with constant consideration of society, the environment and the economy. We believe our efforts will build DBJ into a financial institution trusted, favored and chosen by the public.
CSRAnnual・ディスクロージャー誌 Report & CSR Report 20122012 71 Head office, 10 branch offices and eight representative offices Head office, 10 branch offices and eight representative All DBJ branches, including overseas representative offices and subsidiaries, except where noted. All DBJ branches, including overseas representative Japan: Overseas: One overseas representative office 31, 2012 The fiscal year from April 1, 2011, to March investment, As this report is designed to illustrate ongoing initiatives, some of the case studies for some of loan and other business contained herein are the same as in past issues. Furthermore, the information indicated herein will have been updated by the time this report is published. September 2012 September 2013 (previous publication: September 2011; frequency: annual) ith all manner of stakeholders and hopes to tool for communicating with all manner of stakeholders and hopes DBJ considers this report an important As in previous years, this report explains how DBJ came into being, as well as the services DBJ provides. The report aims As in previous years, this report explains how We explain DBJ’s stance on CSR as a way of addressing the problems society faces. We explain DBJ’s stance on CSR as a way of DBJ’s DBJ’s services relate to society, the report provides case studies To give the reader a clear sense of how loan and other businesses it conducts. ongoing emphasis on CSR through investment, welcome your comments and suggestions. continue improving it. Accordingly, we Scope of Report Organizations covered: n n Editorial Policy 2003 for a Sustainable issued Environmental Report with all stakeholders, in 2003, DBJ first To expand communication . Since 2005. In 2006, DBJ published the CSR Report annual sustainability reports in 2004 and Society. This was followed by of ”disclosure report and CSR report under the concept March 31, 2007, DBJ has combined its annual the fiscal year ended publishing CSR information introducing its initiatives to help realize a sustainable from a CSR perspective.” DBJ will continue society. responsibility through the careful attention it accords to each of its activities, to show that DBJ fulfills its corporate social its recent activities. Furthermore, we have employed the following guidelines in incorporating this discussion of the status of our effort to enhance the report’s readability. Period covered: Publishing Details Published: Next publication: Reference Guidelines Financial Services Sector Sustainability Reporting Guidelines 2006, issued by the Global Reporting Initiative (GRI), and the Supplement were used as reference guidelines.
Annual Report & CSR Report 2012 72
CSR Report Editorial Policy CSR Report Implementing CSR Management 73 Annual Report & CSR Report 2012 Community Environment the Community Revitalization Communication in International Cooperation Contribution Activities • Compliance • Fostering Human Resources the Environment, Society and Environmental and Social Contributions by Employees to Social Organization, Voluntary Management Environmental Regions contribution activities it undertakes. The combination of the The combination activities it undertakes.contribution Providing nancial DBJ’s Two Fields of CSR DBJ’s Two Fields of Personal Information support in growth elds • Risk Management • Client Protection, Protection Infrastructure Building Social Measures Essential for Forming Sustainable Corporate Foundations Reinforcing the functions of nancial and capital markets in Response to Client Issues addresses the problems society faces: (1) CSR through investment, loan and other busi- loan and other investment, through faces: (1) CSR society the problems addresses Investment, Loan and Other Services Corporate Governance and Other Activities (Sincere Pursuit) restructuring Providing a safety net for nancial markets Industry Supporting industrial Crisis Response Operations (Disaster Response, etc.) CSR through Investment, Loan and Other Businesses CSR through Investment, Loan and • Corporate Governance • Information Disclosure Fields of CSR Implementation at DBJ Fields of CSR Implementation two fields enhances corporate value. two fields enhances With corporate governance as its cornerstone, DBJ separates into two fields the scope of the CSR activities CSR activities the scope of the into two fields DBJ separates as its cornerstone, governance corporate With it which through nesses and (2) the environmental and social (2) the environmental nesses and Implementing CSR Management CSR Implementing Currently, Economy DBJ seeks to contribute to the realization of an increasingly prosperous and sustainable society. Government: 100% of DBJ’s shares are held
by the Japanese government. Government Society Local Communities: DBJ supports Creation of Creation of the autonomous development of local
Social Sustainability Local Local Social Sustainability Communities communities through its affiliations with DBJ maintains alliances with these organizations Clients regional government bodies and regional financial regional government bodies and regional financial through overseas networks.
Society
NGOs NPOs/ DBJ’s in investment and loan services involve clients across a variety of industries. numerous regions and information and expertise Furthermore, we provide institutions that are deeply rooted in the local communities. institutions that are deeply rooted in the local NPOs/NGOs: as a part of its environmental preservation efforts, to realize a sustainable society. DBJ strives increase its to dialogue with stakeholders its in effort a sustainable society. realize to Environment - - - - Investors Employees As of March 31, 2012, DBJ’s employees numbered 1,147. DBJ employee training is designed to enable its employees to act autonomously and make full use of their abilities. DBJ secures financing through the issuance of Fiscal DBJ secures financing Program (FILP) agency bonds Investment and Loan bonds, through direct and government-guaranteed markets by issuing financing from the financial through loans corporate bonds and from private-sector banks. Economic issuesEconomic investments tied DBJ’s are to and Annual Report & CSR Report 2012 ment and the economy. It is not simply evaluating a compa It simply not is evaluating mentand the economy. performance, financial but assessing rather ny’s sustainable development social environmental, incorporating and by economic aspects. loans, and its include region-specific considerations and environmentally time-specific addition in concerns, the to the spanning economic thus faces, issues a company that three elements triple up bottom make evaluation. that line Investment, through Loan and Other “CSR in Accordingly, DBJ carries outBusinesses,” activities based on triple bot a sustainable help build to society. evaluations line tom Triple Bottom Line Triple activity corporate evaluating refers to bottom line” “Triple thefrom three vital perspectives the of society, environ Fields of CSR Implementation at DBJ CSR Implementation Fields of DBJ contact comes into with a wide variety organiza of tions, companies people and the in course its of operations. 74
CSR Report Implementing CSR Management CSR Report Implementing CSR Management 75 - - - See page 78. Annual Report & CSR Report 2012 Regions in growth fields Providing financial support Even afterEven contrib privatization, continue DBJ to aims Specifically, DBJSpecifically, apply will the distinctive and features
kets, supporting industrial restructuring, financial providing support growth in fields a safety and providing net for financial markets. societies and the creation employee-friendly of workplaces. DBJ considers the application its of Accordingly, intellectual assets and service platforms investments for and loans to be vital of importance. servicesfinancial the in past provide realized it to has that various solutions expected clients to cover that changes and other issues forecastare that the economic for and its DBJ fulfill will social four environments. In way, this the functions and capital financial of roles: reinforcing mar uting to building an affluent future by solving affluent an by building future to problemsuting activities. creative financial through determine our from We own perspective those businesses trulyare to useful that society the a sustain promote realization and work of to society. able Infrastructure Building Social - restructuring Supporting industrial and Other Businesses Corporate Philosophy CSR through Investment, Loan Providing a safety net for financial markets Crisis Response Operations (Disaster Response, etc.) Industry Reinforcing the functions of financial and capital markets We believe DBJ that We can the gain trust society of with Financial institutions can specific a Financial play a role building in viding quality financing and other financial solutions.viding quality and other financial financing investment, through loan and otherCSR businesses, such as the provision services of satisfaction, lead client that to coexistenceincreases with value, corporate in regional Due consideration of compliance issues is a prerequisite for for issuesDue a prerequisite compliance is consideration of the sustainable development enterprises. of Accordingly, importantit is business activity a corporation’s that brings problem-solving to contributes new to, value and gains in, the trust society. of harmonious society the over long identifying term by truly projectsmeaningful the economy for and society and pro CSR through Investment, Loan and Other Businesses Investment, Loan and Other CSR through Social Effectiveness itsDuring time as policy-based a comprehensive financial operations annual raised DBJ’s of institution, evaluations businessDBJ’s effectiveness and results, thereby improving its responses socioeconomic to These Japan. changes facing Investment, through CSR responses evaluate to a way were Loan and Other Businesses. - - - Messe Nagoya 2011 DBJ’s initiatives were introduced at this exposition, this at initiatives introduced were DBJ’s In our Regional Health Checks,discuss we objective Communication in International Cooperation DBJ holds seminars developing for governmental countries’ and developmental institutions, primarily those financial in Asia, describing experience the Bank’s applying in policy- supportbased to financing the reconstruction and growth theof industrial economy postwar of Participants Japan. also expertise benefit our accumulated from policy in issues and measures energy as conservation, environmental such The infrastructure. private Development Course, Finance attracted has example, a seminar that is for 346 people by it more was inaugurated 30from than countries since Furthermore, collaboration through with such DBJ 1967. in Communication on Community Revitalization on Community Communication DBJ considers working with communi local build to citizens DBJtial. employees interview community stakeholders in on day, the resources and, final studyadvance, the region’s hold a participatory workshop with residents. (See page 56.) Tokai Branch Messe Nagoya carry was held to forth the philosophiesMesse Nagoya 2011 theof 2005 Exposition, World Japan the Aichi, of (in areas and international sciencethe environment, and technology, cooperation). including the environmentally related DBJ Environmentally Rated Loan Program and disaster preparedness DBJ related DisasterEnterprise Rated Resilience Loan Program. ties their unique environments suit that important an part supportingof independent community development. To DBJ end, this sponsors events such as seminars and sym collaborationposiums in with local authorities and regional and Industry the Commerce branches of of Japan Chambers and other economic organizations. indicators analytical and original methods with residents and help them identify their issues community’s and poten - - (Eco-Products 2011) ”Eco Presentation”Eco Stage” - - - DBJ promotes understanding the of relationship DBJ a booth had has the at Eco-Products Exhibition every fiscalSince 2009, The ”eco japan is sponsoredThe cup” ”eco by public and private entities, including Ministry Japan’s of the Environment, Ministry of Land, Infrastructure, Transport Ministry and Tourism, of Internal Affairs Corporation, Banking Mitsui Sumitomo Communications, and Environmental Business Women and DBJ. The contest describes itself as a ”contest for unearthing and growing seeds of green This business.” program is a continuation of the 2005 ”Environmental Renamed event. Dynamite!” japan in 2006, cup” the ”eco this event is held on an annual basis. Annual Report & CSR Report 2012 * ing committees.ing Communication Focused on the Environment Communication Focused problems as globalEnvironmental such must warming be resolved, starting with individual awareness the of severity theof issues. between and business and financial activi the environment ties participating by the in Eco-Products Exhibition, Japan’s largest and holding environmental seminars event, and symposiums conjunction in with organizations. relevant panels, Through display we introduce fiscal since year 2001. various DBJ activities, as the such DBJ Rated Environmentally Loan Program and the DBJ Disaster Enterprise Resilience we also year this lectured Rated Loan In Program. fiscal 2011, Financing,” Environmental in on the theme “New of Trends booth. our attracting to visitors numerous DBJ been has a participating spon est environment- related contest. active are We on the organization’s executive and judg DBJ recognizes that today’s social and environmental DBJ today’s that recognizes problems can best be resolved communication by and the DBJ strives commu to opinions. of exchange Accordingly, sor the of eco japan larg Japan’s cup*, Environmental and Social Contribution Activities and Social Contribution Environmental nicate with people as many as possible seminars, through symposiums, lectures and the Internet. 76
CSR Report Implementing CSR Management CSR Report Implementing CSR Management 77 - - - - - . Annual Report & CSR Report 2012 Campaign Marunouchi shuttle bus Marunouchi . This was followed by similar reports. This similar by was followed 2004 in and DBJ combined has its report annual report and CSR TABLE FOR TWO is a program run by the non-profit organization TABLE FOR TWO International. Under this program, each time a specif ic food item is purchased, a ¥20 donation (enough money purchase to one school lunch in a developing country) is donated purchase to a school lunch for one child. A healthy menu sored the operation environmentally friendly of buses carry passengersing the in Otemachi, on charge free a route of business dis Tokyo’s of area Marunouchi and Yurakucho trict. These buses help awareness raise about environmental issues. Not only do the buses environmental impact reduce and noise with but a low-floor also they barrier-free are easydesign, ensuring disabled access for users. Participating in Local Community Activities Support for the Operation of the Environmentally Bus Shuttle Marunouchi Friendly 2004, DBJ co-spon has the ended year Since 31, March Participating in Activities That Contribute to Participating in Activities Society FORTABLE TWO DBJ began participating FOR the in TABLE TWO* on program Under one the of meals program, our in this 2010. 29, March menu” designated is as each a ”healthy day cafeteria company option. Through proactive employee participation pro this in totaled contributions DBJ’s the as May 2012, of end of gram, ¥733,320—enough provideto 36,666 meals. * Issuing CSR Reports Issuing CSR expand communication with stakeholders, all To 2003, in DBJ Report issued Environmental for a Sustainable 2003 Society 2005. In 2006, DBJ published the Report CSR perspective.” a CSR from under the ”disclosure of concept DBJ will continue publishinginformation CSR introducing a sustainable society. help realize initiatives to DBJ’s - - Presentation of the ADFIAP Award DBJa member is the of Association Development of Video Introduction to CSR Initiatives Video Introduction activities CSR DBJ’s make more easily understandable,To on included video entitledour website we have ”DBJ’s content Society Strengthening We CSR: Expertise.” Financial through exhibition.also showed video this the at Eco-Products 2011 http://www.dbj.jp/co/csr/index.html (Japanese only) Other Communication Efforts Providing Information institutionsthe and as Bank the Japan World International we provide Agency, Cooperation techno comprehensive logical Development cooperation banks such to as China the and Bank Infrastructure Development Malaysia. of Bank projects such were as support one to Notable 2011 in credit risk management Vietnam at Development Bank 2008) since detailed and a design(annually project the for Development Mongolia of 2009) Bank response in (since to requests respective their from governments. InstitutionsFinancing Asia in based the and Pacific (ADFIAP, been we have 1976 and since the Philippines), Manila, in networking with financial institutions South from China, ASEANKorea, countries, India and other areas. In 2012, received an We the meeting was held Istanbul, in Turkey. ADFIAP our activities to related Award on the East Great Japan Earthquake Reconstruction with us providing Fund, opportunityan recovery describe to the from disas Japan’s growth and future ter overseas an in plans forum. 100 95 99 90 92 93 94 . .
Regions ...... in growth fields Providing financial support DBJ Enterprise Disaster Resilience Rated Community Revitalization ...... Overseas Great East Japan Earthquake Response Operations Restructuring and Revitalization...... M&A and Business Alliances Private Finance Initiatives n n n n n n n Loan Program DBJ provides nancial support to help achieve Japan’s long-term strategies. Infrastructure Building Social 81 84 86 89 79 82 83 87 Case Studies
Reinforcing the functions of financial and capital markets ...... Providing a safety net for financial markets We respondWe swiftly in times of market dysfunction and other crises. restructuring ...... Supporting industrial CSR through Investment, Loan and Other Businesses Investment, Loan and Other CSR through (Disaster Response, etc.) Crisis Response Operations DBJ bolsters its partnership with other financial institutions and helps to reinforce the functions of Japan’s financial and capital markets and through the appropriate provision of risk capital to the market by leveraging the uniqueness of our financing—long terms, large scale, an approach that integrates investment and loans, and neutrality. We provideWe financial support for the reconstruction of the Japanese industrial structure that supports social and activities. economic ...... Industry Environmental Technology ...... Healthcare and Welfare DBJ Employee’s Health Management Rated Transportation...... Urban Development DBJ Green Building Certification DBJ Environmentally Rated Loan Program. . . . Energy n n n n n n n n Loan Program Specifically, DBJ will apply the distinctive features and financial services that it has realized in the past financial services and realized that it has features the distinctive DBJ will apply Specifically, Annual Report & CSR Report 2012 to provide various solutions to clients that cover expected changes and other issues that are forecast for the forecast that are and other issues expected changes cover to clients that solutions various to provide the functions of reinforcing four roles: DBJ will fulfill its this way, In environments. economic and social support financial in growth providing supporting markets, financial and capital industrial restructuring, for financial markets. a safety net fields and providing DBJ promotes CSR through investment, loan and other businesses to solve social problems. social to solve other businesses loan and investment, CSR through DBJ promotes CSR through Investment, Loan and Other Businesses Other and Loan Investment, through CSR 78
CSR Report CSR through Investment, Loan and Other Businesses CSR Report CSR through Investment, Loan and Other Businesses 79 Coal unloaderCoal after the earthquake Annual Report & CSR Report 2012 Coal unloaderCoal repaired after the earthquake Power plant before the earthquake Solar Frontier’s Kunitomi Plant Given certification, this DBJ Sekiyu Showa Shell financed Thin-film photovoltaic cell made primarily from indium copper, and selenium (CIS) Economy, Trade and Industry Trade (METI). Economy, institutionas a designated financial defined Article in 8 of the same legislation. * - Energy ------Showa Shell Sekiyu Soma Kyodo Power Varied energy usage is essential to ensure the long-term, stable supply of energy. Also, international Also, international supply of energy. stable the long-term, ensure to essential is usage energy Varied is mounting amid energy and other renewable biomass wind power, in using solar power, interest curbing energy is essential for of renewable Utilization about global warming. ongoing concerns society. a low-carbon gas emissions and realizing greenhouse The satisfies new plant the requirements a desig of Although the company’s power plant and other facilities power and otherAlthough facilities plant the company’s DBJ arranged recovery a syn the of in form financing tion under the Specified Business the Plan of Ministry of nated businessnated 4, Article under Paragraph on the of Bill 2, the Promotion Businesses of Develop to and Manufacture FriendlyEnergy and Environmentally Products. Accordingly, received the plant the first certifica 2011, 22, on March taining a strong the in oil business, foundation the company developing enterprisingly is a next-generation photovol CIS the company’s a low-carbon ize society. In February 2011, Plant)—one (Kunitomi No. plant 3 photovoltaic cell of largest—commencedthe world’s operations Miyazaki in with plants which are No.Prefecture. Together 1 and No. 2, already expand operation, production in to it aims annual the of one 10% approximately gigawattto acquire and to global market. Showa Shell SekiyuShowa Shell headquartered K.K., Minato-ku, in While main a Japanese is oil refiner and distributor. Tokyo, taic cell* projecttaic cell* via wholly owned subsidiary Solar Frontier energy an business help it into real turn to to aiming K.K., Case Study: Case Study: headquartered the in Ltd., Power Company, Soma Kyodo operates Prefecture, city a thermal Soma, of Fukushima power generation a wholesale and is plant elec supplier of tricity. heavilywere damaged the East in Great Japan Earthquake, recoveryquick efforts secure on damaged to the facilities stable supply electric of power enabled the resumption of electric December in power generation 2011. dicated loan to the Soma Kyodo Power Company for its for dicated Power Company loan the Soma to Kyodo Shinchi power plant, locatedin Shinchi-machi, Fukushima whichPrefecture, was damaged the East in Great Japan Earthquake. - Seajacks Leviathan Naoetsu LNG acceptance base under construction ness specialized vessels using particular (with consideration the performanceof high and operating capabilities SJ’s of with how shares the of exchange specialized and (3) vessels) Marubeni would add Corporation experience expertise and power in SJ’s generation to operations and maintenance base. operating growth the of offshore potential wind power generation the growth the of installation (2) potential busi market, - Energy ------Seajacks International INPEX INPEX constructing is gas (LNG) a liquefied natural DBJ INPEX provided to financing sufficient ensure to The offshore wind power business been has growing DBJ, along with Mizuho Corporate Bank, Ltd., Sumitomo Sumitomo Bank,DBJ, Ltd., along with Corporate Mizuho Annual Report & CSR Report 2012 ment company overseas, and Teikoku Oil Co., Ltd., a pio Ltd., Oil Co., overseas,ment company Teikoku and gas developmentneer Japan. oil natural and in in baseacceptance Naoetsu in Port the (in city Joetsu, of Niigata scheduled Prefecture) begin to operations 2014. in INPEX receive LNG to planning is produced Ichthys by LNG Project and Abadi (Australia) LNG Project (Indonesia) this at existingLNG natu the company’s using base, acceptance INPEX is headquartered Corporation, Minato-ku, in Tokyo, It largest gas development oil and natural company. Japan’s was founded October in 2008 a merger through between the previous INPEX, gas develop leading a oil and natural headquartered “SJ,” Seajacks (hereinafter, International Ltd. Norfolk, established England), 2006, Yarmouth, in Great in owns and operates offshore wind power generator instal ral gaspipeline ral network distribute to LNG vapor areas to the in Kanto-Koshinetsumainly region. INPEX on pro plans businessmoting aggressively a global create gas supply to chain. gas provision capabilitiesnatural the long over medium to term and support stable gas provision. lations. its SJ, in a leading company engaged is industry, thein installation wind of power generator turbines and specialized wind power instal equipment (using related as as well vessels,”) lation vessels, jack-up “self-propelled services maintenance in offshore for oil and gas platform facilities. rapidly under govern measures European promoted by ments countries near in the mainly North Sea. The demand specialized vessels installations SJ’s for using particular in beenhas extremely high. Bank, Mitsui Sumitomo Mitsui Trust Corporation, Banking AB and Swedbank pro (publ), Limited, ING N.V. Bank vided the SJ LBO acquisition of for Marubeni by financing Japan. of Network Corporation Innovation and Corporation the project, this In financing of terms DBJ assessed (1) Case Study: Case Study: 80
CSR Report CSR through Investment, Loan and Other Businesses CSR Report CSR through Investment, Loan and Other Businesses 81 - Annual Report & CSR Report 2012 Plant exterior (conceptual rendering) The Suzuran DBJ a syndicated the of in form arranged financing pulsion systems. The electric POD system combines propulsion via that propeller electric outboard and an motor of combination the can be turned 360 degrees, providing superior handling in harbors or when maneuvering around docks. A combination of electric POD and conventional diesel engine pro assembled billion with The Chugoku ¥16 loan totaling and local banks Okayama in Bank, Ltd., Tomato Bank, Ltd., wherePrefecture, located. is the plant Japan Aeroforge *
------Transportation Japan Aeroforge Shin Nihonkai Ferry Shin Nihonkai Transportation infrastructure supportsand abun- of a rich and is the foundation economic activity infrastructure Transportation of is necessary for the maintenance and renovation of investment The promotion dant lifestyle. aging and the requirements with degradation due to in accordance transportation infrastructure and to an aging population response as in as well transport and efficiency, capacity of increased long amounts and large investment involves issues. As transportation environmental infrastructure important. is increasingly funding of long-term periods, the procurement investment (17,300 tons total), which provide service total), tons on (17,300 The aircraft industry a growth is where area demand is Shin Nihonkai FerryShin replace two will vessels, the Suzuran DBJ the construction for arranged financing new of ves tioned needs that as area an strengthening the of terms in Japanese manufacturing industry’s growth. overall Japan first 50,000 install will Aeroforge Japan’s metric forging ton press. a stable This facilitate will domestic supply large of be now to had procured overseas from up to that forgings a domestic attempt an in create the val to in high market Japan Aeroforge, Ltd., headquartered in Chuo-ku, Tokyo, headquartered Tokyo, Chuo-ku, in Ltd., Japan Aeroforge, use aircraft and in for large forgings a manufacturer of is power between plantsventure as a joint created Kobe leading raw Japan’s and Hitachi Metals, Ltd., Ltd., Steel, manufacturers,materials and IHI and Kawasaki Corporation leading aircraft engine manu Heavy Japan’s Industries, Ltd., facturers. forecast expand to across the globe, been and has posi ue-added and strengthen area materials technological raw capabilities. Shin Nihonkai Ferry Co., Ltd., headquartered Osaka, in Ltd., Nihonkai FerryShin Co., leading one Japan’s and is was established of June in 1969 long-distance ferry operators engaged the in cruise and businesshotel with service regular between routes on four Honshu and Hokkaido. Case Study: Case Study: and Suisen The new and Tomakomai. between route the main Tsuruga be will ships equipped with the hybrid CRP-POD system* and exhaust fume power generators energy reduce to con sumption. This thesumption. design reduction to contributes envi of ronmental the burdens older compared to vessels. sels assembling by a syndicated Nihonkai Ferry. loan Shin to , which began operations in May 2012 ® Conceptual renderingConceptual Tokyo Skytree Tokyo ------Urban Development , the world’s tall , the world’s ® is the key property the is key in ® . DBJ has also invested in the tower’s opera. DBJ also has the invested in tower’s ® Tokyo Prime Stage Tobu Railway Efforts to develop and upgrade urban infrastructure and functions and the creation of urban culture urban culture of and the creation and functions infrastructure and upgrade urban to develop Efforts urban development people through and a comfortable of working for the lifestyles environment and at the regional of economies and communities behind the revitalization driving forces the are national levels. DBJ, together with Mizuho Corporate Bank, Ltd., DBJ, together Bank, Ltd., with Corporate Mizuho The current plan is for a standardThe for is plan floor current approxi of area With DBJ as the lead arranger, 26 financial institutions financial 26 With DBJ as the lead arranger, Annual Report & CSR Report 2012 est free-standing a large-scale is this broadcasting tower, urban redevelopment project Skytree the in Tokyo Station/ Oshiage area. Located in the area connecting Narihirabashi and Oshiage Skytree stations, Tokyo ium, a domedium, and other theater structures, expected and is the revitalize area. to arranged project, this and provided for financing including Skytree Tokyo a development aquar an facilities, includes that commercial Tobu Railway Co., Ltd., headquartered in Sumida-ku, Tokyo, headquartered Sumida-ku, in Tokyo, Ltd., Railway Co., Tobu operator operates that a majoris railway two lines, trunk Isesakithe Line Tobu (between Asakusa and Isesaki sta Line (between and Tojo Ikebukuro and the Tobu tions) Skytree Including Tokyo stations). Yorii Tokyo Prime Stage Co., Ltd., is an SPC an is established jointly Ltd., Prime Stage Co., Tokyo for Corporation and Taisei Ltd., Co., Tatemono Tokyo by the purpose developing of a prime located site Chiyoda- in occupied currently is Bank’s Mizuho that by Tokyo, ku, Otemachi head office and the Otemachi building Financial a large-scale into building multipurposeCenter building, tentatively named the Otemachi 1-6 Plan. tor, Tobu Tower Sky Tree Co., Ltd., and has provided and has fund Ltd., Co., Sky Tree Tower Tobu tor, This company, Ltd. Energy Management Co., Tobu to ing introduce will a wholly Railway, owned subsidiary Tobu of and operate a heat supply system Skytree’s vicinity. Tokyo in meters. square The high-rise will building 2,970 mately house state-of-the-art office space and a luxury with hotel, the premises 3,600 around providing meters square of Construction completiongreen for space. spring slated is in 2014. syndicated billion participatingare loan—one the in ¥270 theof largest arranged ever Japan. in Case Study: Case Study: 82
CSR Report CSR through Investment, Loan and Other Businesses CSR Report CSR through Investment, Loan and Other Businesses 83 Annual Report & CSR Report 2012 Iino Building Sendai First Tower Building CertificationBuilding and the DBJ Rated Environmentally Loan The Program. Shiodome Shibarikyu received Building Gold certification. - - - - DBJ Green Building Certification Building DBJ Green Iino Kaiun Hulic & Nippon Tochi-Tatemono Hulic & Nippon Demand is increasing for urban development and revitalization that take environmental conserva that take environmental - and revitalization for urban development is increasing Demand years Recent a sustainable society. into account in an attempt to realize tion and disaster prevention - to offer their stakeholders proper providers estate among real initiatives seen forward-looking have and society. for the environment but also incorporates consideration ty that not only is economical Sendai First Tower, completed June in 2009, a state- is Sendai First Tower, DBJ conferred DBJDBJ Certification Green conferred Building Iino to DBJ conferred DBJDBJ Certification Green conferred Building Sendai to located the in city Miyagi Sendai, of Prefecture, First Tower, headquartered Chuo-ku, in Ltd., and co-built Co., Hulic by headquar Ltd., Co., and Nippon Tochi-Tatemono Tokyo, Gold The was granted building Tokyo. Chiyoda-ku, in tered certification property a as environ high exemplifies that mental and social awareness. of-the-art combination office building. and commercial The assessment high certification this of was based on the energy-saving use eco-friendly, of technologiesbuilding’s and seismic isolation devices; its superior disaster perfor Iino Kaiun Kaisha, Ltd., headquartered Chiyoda-ku, in Iino Ltd., Kaisha, Kaiun engaged is businesses, various shipping in including Tokyo, crude gas and petrochemical of shipping oil, tanker prod mance, such as emergency such mance, reserve power sources enabling the support operations of extended for periods and time; of its capacity house to community-based operations and host various events and public indoor atrium in spaces. ucts and dry fertilizers, coal, of and wood shipping bulk paper develops for thechips production. company In Tokyo, estatereal and owns several rental office Having buildings. positioned these endeavors as the drivers the of company’s business, Iino undertaking is Kaiun lessen initiatives to their environmental impacts. and its located Iino Tokyo, Building, Chiyoda-ku, in Kaiun’s Shiodome Shibarikyu located Building, Minato-ku, in Tokyo. features The which opened Iino Building, October in 2011, a Center, the addition the of Iino Hall and Conference artistic cultural, for venue and intellectual activities as such concerts and lectures as as plans well the in heart Tokyo, of a greenbelt—thefor Iino Forest—aiming with harmony for Hibiya DBJ of green Park. the environment gave the natural and provided theIino highest Platinum, of Building rank via the DBJfunding Rated Loan Environmentally Program. This was the first time DBJ applied both the DBJ Green Case Study: Case Study: - Introduction of Introduction of energy renewable productionin DBJ environmental logo Collection and recycling of housing renovation waste at the Center Eco promotion the of proactive introduction mega of solar and other reusable development energysources and (5) and deployment a variety of eco-friendly of products as a leader industry. the materials in housing ing and resultsing as as with well environmental policy. trends in incorporate will The revised DBJ sheet fiscal rating for 2012 elements ISO to 26000 related and enhancements to related last to fiscal socialcorporate similar responsibility year. (CSR) Scopeincreasing the 3 disclosure of trend towards In light with years, consideration and overseas recent requirements in the importancefor reordering we are the of supply chain, chain. questions the supply to (value) related to receive outsideto expert adjustments advice and make to the DBJ Ratings system Environmental with line in past scor - - s - s 2012 129.9 March 31, Year ended 2011 78.2 March 31, Year ended 2010 65.5 March 31, Year ended DBJ Environmentally Rated Loan Program Rated Loan DBJ Environmentally 2009 60.3 March 31, Year ended 2008 35.8 March 31, Year ended 2007 36.5 March 31, Year ended emissions reductions domestic at bases 2 Reference 44.7 2006 LIXIL Group March 31, Year ended - for conducting busi responsible corporations are and concern, is a matter of global The environment being tasked no exception, institutions are Financial manner. responsible ness in an environmentally to a sustainable society. with the mission of contributing 40.3 2005 March 31, Year ended 0 Track Record of DBJ Environmentally Rated Loan Program Track Record of DBJ Environmentally Rated 80 40 The DBJ Ratings Advisory Environmental meets Committee DBJ assigned LIXIL the entire environmental rat Group The was based evaluation high on assessment the of 160 120 predecessor. 2. Figure for the year ended March 31, 2009, include those for DBJ’ Notes: 1. Figures for years ended March 31, 2005 to 2008, are for DBJ’ Notes: 1. Figures for years ended March 31, 2005 to 2008, predecessor (from April 1 to September 30, 2008). (Billions of yen) Annual Report & CSR Report 2012 of operation of efficiency, and promotion enhanced of (4) The below graph shows DBJ the of amount Environmentally Rated Loan the past Program for the years. in eight Financing an billion, ¥129.9 to amounted 2012, endedyear 31, March The the for total on year year. 66% increase approximately of billion. stands ¥491.2 at 2012, 31, years March eight to nies’ products—from housing renovation, (3) ambitious ambitious products—fromnies’ (3) renovation, housing targets set CO for Case Study: LIXIL headquartered Corporation, Group Chiyoda-ku, in and living environment housing a comprehensive is Tokyo, management environmental promoting provider solutions based on lifestyles principles human aimed harmonizing at with the earth LIXIL on. we live applies Group its envi ronmental efforts conscientiously and comprehensively, improving living arrangements that consideration take into only donot what but to also whom how do and for it. to a the of and used in form ings arrange them financing to institutions.syndicated other financial loan with 15 impact on the ecosystem and promotion of (1) company’s specific developments promotion biodiversity, regarding (2) the wasteof reuse of materials—including other compa 84
CSR Report CSR through Investment, Loan and Other Businesses CSR Report CSR through Investment, Loan and Other Businesses 85 - - Annual Report & CSR Report 2012 ISHIN-I Hybrid car carrier utilizing energy renewable ISHIN-II Ferry that uses LNG as fuel ISHIN-III Large ore carrier with high- efficiency energy heat waste recovery system Optimize operation and maintenance of main engines, auxiliary equipment and other machinery Take advantageTake of weather and sea condition forecasts optimum the trimand (1) Properly(1) reduce navigation speeds (2) (3) Select optimum routes Reduce(4) vessels’ wetted surfaces (5) energy-efficient Develop designs (6) ship (7) Equip vessels with Propeller Boss Cap Fins (PBCFs) We Traditional Culture Amenity No Yunokuni Mori Next-generation vessel concept Senpaku ISHIN project Efficient shipping through ECO SAILING ECO through shipping Efficient employeeof proposals environmental improvement and promotion energy of conservation activities daily through energy creation a building manage of improvements, (2) mentand monitoring equipment and thorough visualization communication of and (3) and fuel consumption water of the and natural importance traditional culture Kaga’s of tourists Traditional to facilities environment related through No Amenity Mori. Culture Yunokuni ment systemment energy-saving introduction the via of measure - - - - - DBJ Environmentally Rated Loan Program Rated Loan DBJ Environmentally emissions, (3) initiatives emissions, (3) 2 Yunokuni Hotel Mitsui O.S.K. Lines Thorough visualization water of and fuel consumption DBJ provided based financing on assessment a high DBJ MOL provided to financing based evalua on high Case Study: headquartered the in city Ltd., Kaga, of Hotel Co., Yunokuni a Japanese- Tensyo, operates Prefecture, Ishikawa Yunokuni style officially inn registered under the Act on Development Hot Springs. As Yamashiro Inbound at Hotels for of Tourists Yunokuni leading inn, spring area’ hot historic Yamashiro Hotel engaged is environmental activities in harmony in customer combining satisfactionwith the community, and reduction environmental burdens with of eco-friendly ser vice providing an opportunityvice an providing experience to the importance and the environment. regionalof culture proactive horizontal deployment (1) theof company’s Case Study: headquarteredMitsui Minato-ku, Lines, O.S.K. in Ltd., provides exemplary an Tokyo, environmental management model the industry shipping for based on the MOL Group GEARMidterm MOL, Management UP! Plan’s of one pillar its environmental strategy under environmental an manage ment system supports that its performance as a world top- strengthening through class line shipping its operational safety measures and the traditionally environmental high efficiency of its maritime shipping. tions of their (1) promotion tangible of efforts reduce to tions their (1) of the and execuenvironmental burdens through formulation tion the a road introduction of map for eco-ship of raw technologiesmaterial focused realization of on enabling the next-generation vessel Senpaku ISHIN concept project, intangible SAILING, efforts(2) ECO as consistent such the expertise of culmination instrumental efficient to shipping and the reduced realization CO of contributing to safe shipping, such as the such establishment safe shipping, to contributing of the Safety moni Operation to (SOSC) Supporting Center tor the movement of all ships under ships the operation all tor movement of and provide and other and terrorism pirates on weather, information hours threats a day. potential 24 - - (left) and traditional ingot (right) ® DC Slab Excavation site DBJ Land in investing is Solution, which to contributes “Comprehensive Special refers Zone” a systemto based on new growth strategies formulated by the government. Regions are multiple of implementation the for selected government the by supportmeasures, includingspecial exemptions primarily focused competitiveness international strengthen to financing taxeson and and revitalize regional communities. * Plant Yahata the reduction optimal environmental burdens through of solutions soil contamination for and underground water issues. Going forward, DBJ proactively will support com panies engaged new environ developing for in the market mentally conscious businesses. - - - - - ) at Toho Toho ) at ® Environmental Technology Environmental Land Solution Toho Titanium - pro issues, and to whole range of environmental and a energy problems warming, global solve To it is important to support financially so businesses society, of a recycling-oriented mote the creation these objectives, achieve To technologies. of the required can undertakethat they the development of technical expertise, advanced and a steady stream and accumulate more companies must obtain scales at varyingfunding is necessary stages of development. of different to accommodate projects Soil and underground water contamination occur Soil occur contamination and underground water rectify LandTo situation, this Solution developed a soil DBJ the provided construction for financing a large of Financing was provided to Fukuoka Prefecture, the Prefecture, city was provided Fukuoka Financing to Annual Report & CSR Report 2012 tion hedging. and risk It also develops independent soil and busi countermeasure contamination water underground Case Study: Land Solution headquartered Inc., Minato-ku, in Tokyo, provides risk solutions total soil for and underground water as partcontamination a major water the Group, of Kurita processing and soil com cleanup and underground water pany. it extremely making underground sight, out of difficult to ascertain the extent leaving yet it the of contamination, poses theuntreated ecosystem. to a threat risk quantification contamination and underground water system. Land Solution system this utilizes inspect to and propertyevaluate and perform as cleanups, as provide well supportintegrated the effective for fluidiza use land, of nesses. Case Study: headquartered the in city Ltd., of Titanium Co., Toho lead one is Prefecture, the Kanagawa of world’s Chigasaki, titanium metalsing manufacturers, for materials providing aircraft and general They industrial also use. are in involved electronic catalysts materials, propylene for polymerization and other functional chemical businesses. electron first the world’s for melting suc furnace beam (EB) cessfully mass-produced direct cast (DC slab Slab Titanium’s Yahata Plant in the in city Plant Kitakyushu. of Yahata Titanium’s Kitakyushuof and the city co-applicants Fukuoka, of the in SpecialGreen Asia Comprehensive Internationally Strategic Zone project. This was the first Subsidy Rate ”Interest Special Comprehensive Internationally Strategic System for capital the creation a to of investment contributing Zone*“ manufacturing base leading green Japan. in innovation 86
CSR Report CSR through Investment, Loan and Other Businesses CSR Report CSR through Investment, Loan and Other Businesses 87 - Annual Report & CSR Report 2012 Nijiiro nursery school Operating theater Operating lent disasterlent and business prevention continuity efforts. advanced environmental consideration initiatives and excel nursery schoolsand the provision child-rearing of support services. ------Healthcare and Welfare and Healthcare Kawakita Medical Foundation Success Academy Society faces a wide range of issues on the healthcare front, including an increasingly elderly popula- an increasingly including front, on the healthcare wide range of issues faces a Society need medical corporations and a acquisitions by mergers and procedures, in medical tion, advances - solving fiscal and admin uninterrupted aging facilities. Offering medical services involves to rebuild related and other personnel and the quality of the skills of medical and improving problems istrative equipment. facilities and medical Success AcademySuccess opened nursery six new Nijiiro schools DBJ Academy Success provided to the through funding With Quality for the cooperation the of Japan Council DBJ certified the Kawakita Medical Foundation a DBJ Case Study: Kawakita Medical Kawakita General Hospital, Foundation’s provides 24-hourlocated emergen Tokyo, Suginami-ku, in ates over 50 over directly-managed,ates licensed and certified Nijiiro nursery centers, schools, schoolchildren and children’s clubs a varietyproviding support of services. aggressively is and moving ahead with prepa Aprilin 2012 2013. from other new facilities for rations DBJ Smart lists waiting help Japan alleviate Program to for cy medical serving care, as emergency the main and acute medical care facility Inthe years, in area. recent the compa Case Study: Limited, headquartered AcadentSuccess the Company in city childcare a private is Prefecture, Kanagawa Fujisawa, of business under that, the theme child-rearing of support, operates workplace The and public childcare facilities. years experience of 20 over has company the in workplace childcare business, operating childcare over 140 facilities, hospitals in mainly but also schools in and companies. In the public childcare facility business, oper the company been has ny aggressively its upgrading medical support ser vices with the establishment the of Kawakita Rehabilitation Hospital, medicine health screening centers and and family geriatrichealth care facilities. the we created DBJ Visionary (JCQHC), Health Care Hospital supports menu that a new financing program, hospitals effortsfocusing on higher medical functions, environmental and disasterconsiderations and business prevention conti nuity countermeasures. Visionary Hospital and provided based financing on their Kawasaki Saiwai Hospital - Healthcare and Welfare and Healthcare Medical Management Database 2012 Medical Management Database Sekishinkai Topics related to hospital management (such as examples of hospital management related Topics and the state of emergency medical care) improvements Analysis of the current status of the environment surrounding the healthcare sector the healthcare surrounding status of the environment Analysis of the current involving hospital facilities and management) (trends status of hospital management (running costs, facility invest- Analysis of the current involving fund procurement) ment and trends Cover Story: Medical Management in Transition (Examination and Treatment, Nursing and Treatment, (Examination Cover Story: Medical Management in Transition Remuneration Reform, Topics) l l l Edited by DBJ and Japan Economic Research Institute, Inc., and published in July 2012,Edited by DBJ and Japan Economic Research - The handbook pro this handbook focuses on supporting hospital management reform. overview of essential information, including updatesvides a compact and comprehensive to basic information such as that indicated below. l DBJ provided financing to Sekishinkai for the transfer of of theDBJ transfer for Sekishinkai provided to financing Kawasaki Saiwai Hospital, medical the main facility in Annual Report & CSR Report 2012 ics and 11 nursing-related offices the in cities of centered ics and 11 SaitamaKawasaki, and Sayama, Prefecture, Kanagawa theKawasaki facilities, main OnePrefecture. Sekishinkai’s of Saiwai Hospital, located the in city Kawasaki, of Kanagawa been has Prefecture, engaged regional in medicine for Designated as a almost 40 years its since opening 1973. in IIGroup diagnosis combination (DPC) procedure hospital, university a main to facilitythis similar is hospital, based on its diagnostic doctors, requisite for measures, training high medical technology severely patients. treatment of and ill run-down and cramped Kawasaki Saiwai Hospital a new to strengthen to aiming the functionbuilding, the of hospital’s emergency medical and acute services. southern Kawasaki, now is expected further contribute to addressingin emergencies medical and acute illnesses. Case Study: FoundationSekishinkai operates two hospitals, six clin 88
CSR Report CSR through Investment, Loan and Other Businesses CSR Report CSR through Investment, Loan and Other Businesses 89 Annual Report & CSR Report 2012 s health Five support measures of the “Kao Group Health Declaration” Implementation of training to deal with mental health Implementation of training to deal with mental No Smoking Implementation of the “Kao Group in In scal 2010, a total of 293 employees participated annual Addition of cancer detection categories to the to medicine of knowledge of gender-speci c Spread Provision of healthcare advice focused on preventing advice focused on preventing of healthcare Provision for employees’ attempts to improve of support Provision with Establishment of a system to deal with employees issue for managers Marathon” 136 employees succeeded in quitting and the program, smoking. Safety and physical check-up designated by the Industrial Health Act gynecological the rate of females receiving increase exams lifestyle-related diseases lifestyle-related their lifestyles the introduction early on through mental health problems of a mental health check system ● smoking Measures to support employees wanting to quit ● ● by cancer Measures to support employees affected ● Measures to support women’ ● Measures to address lifestyle-related diseases ● ● Measures to address mental-health issues ● 3 4 5 1 2 Kao Group Health Declaration - - - s Health Management Rated Loan Program Management s Health ’ DBJ Employee Kao The promotion of employee’s health management is linked to improved employee satisfaction and satisfaction employee to improved management is linked health of employee’s The promotion of the financial betterment and talented human resources of the retention corporate productivity, imple- the strategic workers, of future Amid a declining population health insurance organizations. is an important issue for a managerial perspective from health management mentation of employee’s of a sustainable society. the realization DBJ provided based financing on the clear message of ment and (1) efforts precisely to ascertainment and (1) and analyze employee health levels based on qualitative information as quantitativesuch health and prescription data figures and in-house employee surveys, clarification internal of (2) priority measures based on the above analysis, formulation a medium-termof and creation a system plan of coop for eration with businesses, organizations, health insurance and outsideindustrial physicians specialists the and (3) companywide positioning health of creation as executive an establishingmanagement issue, a management-level health creation committee reporting for and improvements and assigning on-site health creation supervisors and managers a virtual create to health management PDCA cycle the for organization. entire ty products value. brand corporate and enhance the Kao Health Group Declaration issued manage top by Case Study: headquartered Kao Corporation, its 1887, in Since founding become has number one the in toiletry Tokyo, Chuo-ku, in category laundry as a manufacturer of soaps and kitchen and healthcare products. made early the From company on, effortan balances work that and life, a climate create to establishing a safe and clean workplace maximize the to each and every of potential employee provide to high-quali - DBJ Provided corporate revitalization expertise Preferred stock investment Temporary staff ● ● ● Business partners Kirayaka Turn Around Partners Provided management and other support BookLive! website BookLive! DBJ agreed to provide Kirayaka Turn Around PartnersDBJ agreed Turn provide to Kirayaka approximately ¥12.5 billion in disclosedapproximately debt ¥12.5 from Kirayaka engaged is and Bank management in and restructuring sup port partners. trading for via the purchase financing in billion with ¥1 approximately non-votingof temporary and dispatched shares, preferred staff. - - - - - Kirayaka Bank corporate split Transferred disclosed debt Temporary staff (common stock 100% voting rights) via ● ● Restructuring and Revitalization Restructuring establishment Joint holding company Kirayaka Turn Around Partners Kirayaka Turn BookLive Since the emergence of non-performing loans as a major problem in Japan in the late 1990s, cor- in the late 1990s, in Japan problem loans as a major of non-performing the emergence Since international years, recent an important has become issue. In revitalization porate and business fomented swift change in the corpo- have and the tide of economic globalization financial disorder is an important the distressed issue for not only revitalization Smooth rate business environment. financial institutions and other entities but also the viable businesses themselves companies that are supporting their revitalization. The Sendai Bank With the addition strategic of partners DBJ, Mitsui DBJ, along with Mitsui & Co., Ltd., Toshiba Corporation Corporation Toshiba Ltd., DBJ, along with Mitsui & Co., Schemes Annual Report & CSR Report 2012 and NEC Corporation, has invested in BookLive. invested in has and NEC Corporation, BookLive and NEC, attempt will to Toshiba Ltd., & Co., develop business electronic pursuing theof new potential publications and strengthen electronic the main bookstore BookLive! as industry an standard among ser a jumble of vices the in domestic electronic the book through market expertise culti have companies concentrated these four vatedyears. over many BookLive Co., Ltd., headquartered in Taito-ku, Tokyo, is an an is Tokyo, headquartered Taito-ku, in Ltd., BookLive Co., electronic publication business established the by Toppan operates that Group electronic bookstore BookLive! and a platform distribute to electronic publications. lished to provide centralized support providelished to centralized the restructuring for activities customers. the of bank’s DBJ agree an entered provide to capital and busi Bank,ment with Ltd., Kirayaka Case Study: headquartered Ltd., Around Partners Turn Co., Kirayaka wholly- a is Prefecture, Yamagata thein city Yamagata, of and was estabowned subsidiary Bank, Ltd., Kirayaka of Around Partnersness Turn inherited Kirayaka collaboration. Case Study: 90
CSR Report CSR through Investment, Loan and Other Businesses CSR Report CSR through Investment, Loan and Other Businesses 91 - - - DBJ Annual Report & CSR Report 2012 LP financing Company Monolith Tower, whichMonolith opened Tower, in February 2012 Earthquake, forcing an extended an Recovery forcing Earthquake, closure. con facil the entire struction February and in commenced, 2012 ity reopened. it began SRH Since has operations 1966, in demonstrated ability an attract to customers the utilizing well-known its of abundance springs and a unique hula hot attraction.dance The recovery SRHof provide will momen recovery for tum the in region. GP financing Wholly capitalized Wholly - Company Limited Partnership (Operating company) Fukushima Support Fund Tohoku Reconstruction Partners Restructuring and Revitalization Restructuring Subordinated loans / Preferred stock financing, etc. Company LP financing Great East Japan Earthquake Reconstruction Funds Earthquake Reconstruction Great East Japan The Toho Bank Great East Japan Earthquake Reconstruction Fund Scheme Great East Japan Earthquake Reconstruction Although the disaster causeda temporary downturn DBJ and The Toho Bank, Ltd., launched the Fukushima the launched Fukushima Bank, Ltd., DBJ and The Toho business core Spa is ResortJoban Kosan’s Hawaiians SRH was extensively damaged the East in Great Japan Case Study: support the restorationTo and reconstruction companies of damaged the East in Great DBJ Japan Earthquake, joined Great launch with institutions regions stricken to in financial ReconstructionEast Earthquake Japan funds. loans and pre subordinated utilizes each fund industry, in ferred shares to provide to capital shares ferred local to leading companies indispensible recovery to the in region, supporting the quick reconstruction of affected areas. Support Limited Fund Partnership, which post-Great funds East Japan Earthquake reconstruction Support (Fukushima preferred in billion decided and ¥1 Fund), purchase to headquartered the in Ltd., Joban from shares Co., Kosan city of Iwaki, Fukushima Prefecture. springs theme a hot park featuring “SRH”), (hereinafter, indoor pools,hotel. and a facilities leisure - TFK Japan Airlines Transfer 53.8% Acquisition DBJ acted advisor indica as financial the SATS regarding With the TFK, acquisition of the in the leading company
tion of interest in the tender, providing total support total providing from tion the in tender, interest of tender strategynegotiations. acquisition to formulation The deal was concluded December in 2011. entered formally has mealin-flight business SATS Japan, in and TFKthe Japan market, expects expand to its customer base. SATS SIPL* 100% - *SATS Investments Pte. Ltd. SATS Investment Vehicle M&A and Business Alliances M&A and Financial Advisor Each Stage of the Corporate Life Cycle DBJ SATS Group Mergers and acquisitions (M&A) have entered the spotlight with their increasing prevalence, owing owing prevalence, their increasing the spotlight with entered (M&A) have and acquisitions Mergers expansion, and overseas Asia-centered of business development, forms diverse to such factors as more essen- and effective considered industry activities in business and M&As are restructuring. growing businesses. underperforming and revitalize and to overhaul restructuring business tial for aggressive TFK Acquisition Scheme Consulting Practice Systemization: Different Approaches for Consulting Practice Systemization: Different Approaches The DBJ-edited Consulting Practice Systemitization, published by Kinzai in May 2012, at each particular stage of the business explains financial service business practices required (Chapter 2), of new business (Chapter 1), Growth lifecycle, including Creation/development in business activities (Chapter 3), Business reconstruction/change Management improvement 6). This(Chapter 4), Liquidation/bankruptcy (Chapter 5) and Business succession (Chapter businesses for which financial servic- case studies on numerous practical publication provides in demand, including detailed explanation of essential expertise and Financial Serviceses are Agency guidelines on consulting. In July 2010, SATS indicated an intention to acquire acquire to indicated intention an SATS In July 2010, Annual Report & CSR Report 2012 dling business listed is Asia.dling on in the Singapore SATS Exchange. shares “TFK”) a tender TFK of (hereinafter, Corporation Ltd. held Japan rights) by Airlines voting Co., all of (53.8% Case Study: headquartered in “SATS”), (hereinafter, Ltd. SATS, International Singapore and based Singapore at Changi Airport, engaged is the meal in in-flight han and ground 92
CSR Report CSR through Investment, Loan and Other Businesses CSR Report CSR through Investment, Loan and Other Businesses 93 - Annual Report & CSR Report 2012 ©Tokyo International Air Terminal Corporation Terminal Air International ©Tokyo Tokyo InternationalTokyo which Air Terminal, began operations in October 2010 DBJ, along with institutions, Western provid is financial Similar a Private to Finance Initiative (PFI) purchase of services via a Build-Operate-Transfer (BOT) contract in Japan, cost, schedules, quality and other performance indicators must be clearly defined when the contract is executed. This kind of scheme aims to high-quality competition and flexibleencourage approving bids, proposals from bidders by focusing on results rather than process details. LBJP to financing ing via project methods. finance * Rendering of Long Beach Courthouse ------Private Finance Initiatives Private Long Beach Judicial Partners Tokyo International Air Terminal Private finance initiatives (PFIs) draw on private-sector capital and management expertise, and management capital on private-sector draw as well (PFIs) initiatives finance Private that has traditionally been the infrastructure to build, operate and maintain social as technology, operat- PFI method include reduced of the Advantages of national and local governments. province of private-sector advantage while taking ing costs on the part of national and local governments, public services, high-quality for private- opportunities and business created to receive knowledge as allocating such practical operating concerns include PFIs confronting sector enterprises. Problems can arise as financing problems Numerous vendors. multiple and accountability across responsibility important, participants as to negotiate with, and manage, the various making the ability very well, as operating the business. well This the is first case transportation core national of infra The Long Beach Courthouse Project the is first social Ninety project this from revenue of percent come will DBJ, Mizuho Corporate Bank, Ltd., and The of Bank Bank, Ltd., DBJ, Corporate Mizuho Tokyo International Air Terminal Corporation, headquar Corporation, International Air Terminal Tokyo tered in Ota-ku, Tokyo, was established Ota-ku, in tered of charge take to Tokyo, terminal SPCan and manage the maintain international to International Airport, Tokyo of buildings whose largest Ltd. shareholder Japan is Co., Airport Terminal Case Study: Case Study: ment in the United States and Europe through public-pri through and Europe thementin United States partnerships statevate enable gov the to California (PPPs), carry to ernment Project. Long Beach Courthouse the out infrastructure project procured under the in United States Performance-Based of principles the Infrastructure (PBI) reconstruct, to a PPP scheme* contracting utilize to oper most socially and politically California’s and maintain ate, important courthouse with the largest capacity and highest number cases of the in state financing. private through state stable government the of the in form from California performance-basedpayments annual, of service fees. Using advanced adequately management risk to risk, reduce an expected. is risk comparedappropriate to return Long Beach Judicial Partners “LBJP”), (hereinafter, LLC headquartered the in city Long of Beach, CA, U.S.A., a is special purpose established (SPC) company Meridiam by Infrastructure, focused a fund on infrastructure develop structure being handled as a PFI. co-arrangedTokyo-Mitsubishi and provided Ltd., UFJ, project the of in By form constructingfinancing finance. a scheme flexiblefinance is that changes aviation in and to demand and other trends, DBJ market sup is commercial porting the implementation the of project a period up to of 30 years its from operational start-up. - - - - - Touch panels Touch - Electronic com Electronic (Magnetic pass sensors) - The leading manufacturer of sani tary ceramic ware and residential fixtures and among the global elite in technology and quality Bluetooth™ modBluetooth™ ule for automotive equipment ® After the Great Hanshin-Awaji Earthquake, TOTO imple After TOTO the Hanshin-Awaji Great Earthquake, Alps Electric region seven has factories the in Tohoku TACT SwitchTACT
damaged were that the East in Great but Japan Earthquake, disaster and business prevention continuity measures imple mented in daily operations successfully minimized damage, damage, daily operationsmented in successfully minimized shortening resume normal the time to production required line operations fulfill to its supply responsibilities in Japan overseas.and One of the world’s leadingmanufacturers of electronic components measures at all facilities by 2013. Financing provided DBJ Financing by 2013. by facilities measures all at thesewas used fund to plans. mented and strengthened seismic evaluations resistance to Japan, its in of and facilities buildings earthquakes 70% at but the East Great Japan Earthquake caused accel them to complete disaster to plans initial counter prevention erate ------DBJ Enterprise Disaster Resilience Rated Loan Program Loan Program Resilience Rated Disaster DBJ Enterprise Alps Electric TOTO Such recent disasters as the Great Hanshin-Awaji Earthquake, the Chuetsu Offshore Earthquake, Earthquake, Offshore the Chuetsu Hanshin-Awaji the Great disasters as recent Such Earthquake tremendous caused East Japan Great Earthquake and last year’s Inland the Iwate-Miyagi suspend operations for extended periods. to with many organizations forced damage to the economy, face the need to draft companies property, personnel and for protecting addition to measures In their clients in and retain lost revenue against themselves to hedge plans (BCPs) business continuity of disaster. the event DBJ provided financing to TOTO based on evalu a high DBJ TOTO provided to financing DBJ Alps provided to Electric financing based on a high Annual Report & CSR Report 2012 ation of core business operations and (4) the application businessation core of operations of and (4) daily business process improvements with mea concrete ficult to replace basic componentsficult to theuse and increasing of general purpose parts, the ongoing implementation (3) of practical focused primarily on risk simulations the continu sures formulated from the aforementioned simulations. tion in real time and centralization of leadership of tion time real and centralization in and com facilitating times as environment as an in well mand crisis of the execution decision-making quick of and emergency response. the earthquake resistance and seismic isolation ation (1) of measures implemented their at headquarters and main offices Japan in and overseas, as as their well attempt to disperse production efforts bases (2) geographically, to bottleneckseliminate business a to continuity and create strong multiplexing by supply the chain production dif of TOTO Ltd., headquartered the in city Ltd., Kitakyushu, of TOTO established has Prefecture, Fukuoka leader itself as Japan’s the and salesin manufacture residential fixtures, of from sanitary seats toilet to ware ceramic with a warm-water lifestyles adds to value its TOTO in three shower feature. mission universal areas: and bonds. design, environment ors disperse to production the bases (2) geographically, existing structures, whether damaged or of terms not, in exposure various social to ongoing) crises and (3) (review thethe companywide mechanism for informa of sharing evaluation of (1) the earthquake resistance and seismic (1) of evaluation isolation measures implemented their at headquarters and officesmain Japan in and overseas, as as their well endeav Case Study: headquartered Ota-ku, in Ltd., Alps Tokyo, Electric Co., leading manufacturers oneis the electronic of world’s of components everyday for electronic devices, including compact switches and sensors, devices control multi and in- vehicleunits and communication modules. Case Study: 94
CSR Report CSR through Investment, Loan and Other Businesses CSR Report CSR through Investment, Loan and Other Businesses 95 Program (Green Program (Green Annual Report & CSR Report 2012 Program (tourism). Large 125-person capacity gondola Inside Gonohe Food Processing Plant DBJ Prifoods, provided to certifying financing it under DBJ provided financing to Mt. Hakodate Ropeway DBJ on the Mt. Hakodate provided to financing Regional Areas Genki Branch’s the Tohoku NetworkProgram). Tohoku certification thebasis of Hokkaido the of company Branch’s under the Regional Areas Genki - - - - (bullet Community Revitalization Community For local economies to sustainably exist, development having a broad view (involving other view (involving a broad having development local economies to sustainably exist, For Prifoods Mt. Hakodate Ropeway Mt. Hakodate In recent years, the economic disparity between major urban areas and regional areas in Japan has in Japan areas and regional major urban areas disparity between the economic years, recent In disparities even cities. Moreover, and businesses continue to concentrate in expanded as people hub cities between gaps with increasing stratified and complex, more becoming are among regions and other areas. is important. markets) and overseas in Japan regions In 2003, Daiichi Broiler, which engaged is the in manu Broiler, Daiichi In 2003, Ahead of the fiscal 2015 start shinkansen of Ahead the of fiscal 2015 nal companies their traditionalnal in engaging businesses, the engaged industry, in the in livestock-rearing is company poultrycomprehensive and pig breeding, meat processing, processed food production, sales and engineering poul of Case Study: headquartered the in city Ltd., Hachinohe, of Prifoods Co., Aomori was reborn Prefecture, 2008 in after a merger Gordex Ltd., Ichirei Co., Ltd., between Broiler Co., Daiichi With inter the each of four Ltd. and Nihon HyporCo. Co., try processing facilities and machinery. gral part of the Hakodate tourism industry. partgral tourism the of Hakodate processing and salesfacture, broilers, of implemented the industry’s first traceability system its in a plant, packaging thenew in industry initiative further to food product ensure safety and peace mind. of Mt. Hakodate Ropeway Corporation, headquartered Ropeway Corporation, Mt. Hakodate in Hokkaido, operates a ropeway business onHakodate, Mt. its view for night inte and an famous dramatic Hakodate, Case Study: train) servicetrain) between Shin-Aomori and Shin-Hakodate, pulleysthe driving giant the ropeway and replaced, were replace gondolas to plans the company and remodel the observation the ropeway’s deck and improve maintain to appeal the through large-scale The facilities. renovation of environmental also reduce promotesinitiatives to company introducing & Green,” burdens under the motto “Clean fixtureslight powered solar by and switching and wind, electricto the reduce and cooking heating appliances to oil and gas used. of amount - - Program (stra NihonGenki Program (manufacturing industry: Program (manufacturing Headquarters and factory exteriorHeadquarters and DBJ Snow Peak, provided certifying to financing it under DBJ Asahi provided to financing certifying Intecc, it DBJ provided financing to Charmant, certifyingDBJ Charmant, provided to financing it under HORITECH Wire drawing and wire-forming technology thoroughly incorporates the user’s input in everythingthoroughly in input incorporates the user’s it these of manufactures. initiatives, called Passionate fans the around world. increasing are “SnowPeakers,” the DBJ Development Support Program ( Program). Regional Branch Areas Genki under the Tokai next-generationtegic industry). instruments compatible highly are with living organisms, possess superior corrosion resistance lightweight, and are strong and non-magnetic, with interference any eliminating Exemplifying room. instruments operating the other in the quality Japanese-made that these products known are for, instruments equipped are with special characteristics neces sary surgery. invasive minimally for the Regional Areas Genki electronics, textiles, plastics). pharmaceuticals, - - - - - Community Revitalization Community Charmant Snow Peak Asahi Intecc Making use technology of and expertise gathered from In accordance withIn its accordance mission statement adopting of the Annual Report & CSR Report 2012 Charmant, Inc., headquartered Inc., the in city Sabae,Charmant, Fukui of developsPrefecture, business globally engaged and is the in design,comprehensive development, production and sales brand. eyeglassof the frames, primarily through Charmant The possesses company illustrious intellectual property yearsrights product of many through cultivated devel opment, Excellence Titan including (developed through industry-university which a new is nickel-free research), joint flexible is that material retains shape yet memory, as well as the successful development laser of bonding technology enabling microfabrication. Charmant eyeglass April in manufacturing, frame 2012 productionlaunched and sales medical of equipment such as scissors use cataract in for and forceps and glaucoma surgery under the HORITECH Titanium brand. medical Snow Peak Inc., headquarteredSnow Peak Inc., the in city Niigata Sanjo, of region, long located is Prefecture, the in Tsubame-Sanjo known locally The manufacturing town. as a hardware engaged is thecompany and sales in manufacture natu of ral lifestyleral products nature-oriented for lifestyles. As the Snow Peak designs, developsindustry’s leading company, and manufactures tents, sleeping bags, compact stoves, apparel with various and kinds of created advancedlanterns metalworking technologies local by companies sold in theJapan countries around world. and 23 view point of user’s as their own and delivering products and services Snow Peak inspiration, enable that mutual Asahi Intecc Co., Ltd., headquartered the in city Ltd., Nagoya, of Asahi Co., Intecc Aichi a research and development is Prefecture, company on the development,focusing and sales manufacturing of medical devices based stainless on ultrafine steel wire man ufacturing technologies. Particularly inva the in minimally Case Study: sive surgery provides the company area, PTCA guide wires patients use treatment of in for with heart mini disease, to physical burdenmize on patients the improve and to patients’ Asahi quality (QOL). life of considered is a Intecc world leader industry. this in Case Study: Case Study: 96
CSR Report CSR through Investment, Loan and Other Businesses CSR Report CSR through Investment, Loan and Other Businesses 97 - Annual Report & CSR Report 2012 - - Plant exterior Plant
Abeno Harukas, scheduled to open in spring 2014 DBJ provided financing to Kyowa Chemical Industry Chemical DBJ Kyowa to provided to financing DBJ along arranged with financing, local banks TheSan- For properties construction, under a mechanism for confirming devel opment plans using the DBJ Green model Certification for Building scoring plans between other own ers and property-related individuals in terms of environmental features and convenience tenants to based on development plans. tifying the financing under the Shikoku RegionalBranch Areas Genki Program (Materials Island Shikoku Support Program). Rendering of sewage sludge carbonization facility sewage sludge of Rendering expand its medicinal preparation facility so it could that respond increased to demand prescription for laxatives, cer tiple office support a department facilities, store and a hotel amenities. extremely of provision the and convenient * for the manufacture of steel the of manufacture for or as biomass fuel. the in form Bank, Ltd., and The Tottori Godoin Bank, Ltd., syndicated billion loan. a ¥1.9 of - - - - - Community Revitalization Community Kyowa Chemical Industry Waste Biomass Kintetsu Corporation Kyowa Chemical Industry’s Chemical productsKyowa indispensable are in This project, which sludge involves carbonation facilities DBJ granted DBJDBJ Certification Green granted Building Abeno to Since its founding, Kyowa Chemical Industry Co., Ltd., Ltd., Industry Chemical its Kyowa Co., Since founding, headquartered the in city Kagawa Sakaide, Prefecture, of developedhas products under the motto Products “Unique the in field fine inorganic of Uniquethrough Technologies” chemicals, products creating developed with consideration peoplefor and the environment. modern society and widely used medical in and industrial applications. Their development and production medi of additivescal resin materials, and flame-retardant materials effectivemake resources while maintaining use natural of an awareness of environmental conservation. Waste Biomass Co., Ltd., headquartered the in city Ltd., of BiomassWaste Co., a project is Prefecture, involved company Tottori Sakaiminato, thein operation sewage of sludge carbonization facilities the largest industrial waste disposal Ltd., Co., led Sanko by Tsusho the in Sanin region, alongwith company the Toyota Ltd. and NipponCorporation Zoki Pharmaceutical Co., private-sector by built companies, extremely is important development promoting for regional in economies and greenhousereducing gas emissions drying by and carbon necting seven lines, the different to introduction rail mul of sewer ating sludge and Shimane collected Tottori from Prefectures and recycling it either material as heat insulation Kintetsu Corporation, headquarteredKintetsu Corporation, the in city Osaka, of engages estate real in development, distribution, and hotel and a varietyleisure other businesses, Group of addition in operating theto largest network, railway private spanning regions.five prefectures, the in Kinki Chubu and Harukas, located the in city Osaka, of set become to the tallest skyscraper complex under currently Japan, con in struction This the by Kintetsu was the first Corporation. a building for Japan certification* in plan granted Platinum still under construction. The project highly was evaluated the incorporationfor advanced of technology creating extremely superior environmental functionality, access con Case Study: Case Study: Case Study: Yuzuriha rearing ranch Yuzuriha Canal City Hakata East Building - - Community Revitalization Community Program (food, health and Program (food, Program (enhancing the Program (enhancing KAMICHIKU & Kinkou Farm Fukuoka Jisho DBJ the KAMICHIKU provided to financing which Group, Opening the city of Fukuoka to all Kyushu Shinkansen Shinkansen Opening Kyushu the all city to Fukuoka of DBJ, together with The Nishi-Nippon and City Bank, Ltd., Annual Report & CSR Report 2012 KAMICHIKU Co., Ltd., and Kinkou Farm Co., headquar Co., Farm and Kinkou KAMICHIKU Ltd., Co., environment industry). tered in the city of Kagoshima, Kagoshima Prefecture, is a engaged group corporate the in breeding of fattening and beef the cows meat for processingblack-haired and food service Not industry. relying on existing ideas, the company engages free-range new in initiatives including breeding business and production produce and farm feed of using leftover provide food to high-quality beef a low at cost with safety and peace mind. of the enhanced to its for evaluated highly initiatives linked is competitiveness Japanese the livestock of international certifyingindustry, under the the financing Minami-Kyushu RegionalBranch Areas Genki Case Study: Fukuoka Jisho Co., Ltd., headquartered the in city Ltd., of Jisho Co., Fukuoka a local is Prefecture, Fukuoka developerFukuoka, that develops and manages office facilities, and commercial metropolitan the the in Fukuoka mainly including area, shopping complex City HAKATA popular withCanal tour regional region competitiveness as the door the of Kyushu to Asia). ists. expectedlines is increase customers the of to amount from movement improve To area. within and without the Kyushu the in center between areas the Hakata and Tenjin Station Jisho added Fukuoka the East Building City, Fukuoka of Hakata Dori Ekimae nextfacing the extant to City Canal HAKATA. unique fast fashion The East featuring Building, tenants, acts as a bridge the existing to resulting building, smootherin flowing traffic foot between Hakata Station City HAKATA. and Canal City institutions, Canal other provided financial to financing the expansion, for certifyingHAKATA it under the Kyushu RegionalBranch Areas Genki Case Study: 98
CSR Report CSR through Investment, Loan and Other Businesses CSR Report CSR through Investment, Loan and Other Businesses 99 - Annual Report & CSR Report 2012 THAI Airbus A330-300 Rendering of power plant power of Rendering Given outlook, this the DBJ aircraft entered formally has Ultra-supercritical power generation uses steam to increase power power increase to steam uses generation power Ultra-supercritical traditional than efficiency pressure generation and heat more with generators. power house gases. and support project this high-efficiency build to power a low-carbon moving of toward as a way plants China in extension,society, and by the emission prevent green of * business, a syndicatedequipment finance arranging loan institutions the Airbus for with financial other international A330-300 aircraft THAI expects use of integral make to going forward. - - - - Overseas - - emissions. provision Stable of 2 The rapid economic development of Asia in particular, with its notable growth in middle income with its notable growth Asia of in particular, development The rapid economic the country must underpin gains for Japan, to translate into definite growth Asia’s for order In China Resources Power Thai Airways International Efforts at expansion overseas have become an important factor in Japan’s continued growth. continued an important become in Japan’s factor have overseas at expansion Efforts is running up against the region because opportunity a major business for Japan, represents groups, constraints and and other developmental difficulties issues, urbanization-related environmental faced and overcome. has already challenges that Japan growth process sharing with each country own its rise by of experience it has gleaned from the wealth Asia’s in the fields of the of strengths its unique profile must also mobilize Japan of economic development. of Asia in a comprehensive business operations in the rest to deploy and infrastructure environment and strategic fashion. This project, installation a new of independent power All the as the around world, travelers increasing are DBJ, along with Electric Power Development and Mitsui, Case Study: eration plants, the facility USC provides higher thermal effi DBJ, along with Electric Power Development Co., Ltd., and DBJ, along with Ltd., Electric Power Development Co., participated the in Hezhou Power Station Ltd., Mitsui & Co., project Resources Power Holdings conducted China by Resources Power”), “China Limited (hereinafter, Company headquartered investment through company Hong in Kong, JM Energy. Hezhou, located the in Guangxi Zhuang China’s producer in Autonomous Region, the is first ultra-supercritical (USC)* coal-fired electric power generation (two kW plant 1 million traditional power to the gen in regions.bases) Compared Case Study: Thai Airways Limited (here International Public Company inafter, “THAI”), headquartered “THAI”), is Thailand, Bangkok, in inafter, the carrier flagship the of Kingdom Boasting Thailand. of developeda highly network, route THAI the in a pillar is overseas million visi sightseeing 1.5 over bringing industry, present, THAI At tors the Kingdom to 2010. in Thailand of fuel-efficient highly introduce to intends airplanes, with the goal its replacing of existing fleet. This enables plan provi sion service of number passengers of a greater to without increasing burdens on the environment. economy and with improves, the attendant growth in demand airplanes, for the number airplanes of use in is expected double to the in next years. 20 ciency and suppression CO of opment in southern China, and this project and this opment southern to in contribute will China, improvements. energy conservation environmental and solutions provide the to optimal financial for continue will development new of power generation overseas facilities electric significantly economic power to contribute will devel - - DBJ disaster the provided of in form financing recovery Refining furnace and casting machine Plant remove to salt from disaster-related waste (Ofunato, Iwate Prefecture) toration and reconstruction efforts. reconstruction and toration Corporation, a major cement producer. As initiative this a major producer. cement Corporation, enables be waste disaster-related to used as fuel or raw pro this promoting Ofunato, in cement make to material the speedycess to should contribute reduction waste of in the region recovery and a quick the from disaster. support in Smelting Onahama and Refining to funds res of - - - - - Great East Japan Earthquake Response Operations Earthquake Response East Japan Great Onahama Smelting and Refining REMATEC Earthquake, tsunami, nuclear power plant crisis—the Great East Japan Earthquake unleashed Japan East Great plant crisis—the Earthquake,tsunami, nuclear power seen, seri- never disaster the likes of which the world has damage, a major compound unprecedented be imple- measures that the disaster recovery is essential It economy of Japan. ously impacting the to meet specific and tailored recovery stage towards to each basis according mented on a step-by-step disaster categories. and different needs of varying regions The Onahama Smelting and company’s Refining facil The tsunamigenerated the East by Great Japan DBJ draw arranged a syndicated loan REMATEC, for Annual Report & CSR Report 2012 Onahama Smelting and Refining Co., Ltd., headquartered Ltd., Onahama Smelting and Refining Co., first copper smelt was Japan’s Tokyo, Chiyoda-ku, in ing company, created through joint investment joint from through created company, ing Mitsubishi Materials (currently Mitsubishi Company Mining Dowa (currently Dowa Company Mining Corporation), and the Furukawa Group/Dowa Ltd.) Metals Co., & Mining Furukawa (currently Mining Company/Furukawa Company rapid Japan’s during 1963 in Ltd.) Metals & Resources Co., economic growth phase response domestic in increasing to present, develops the company At busi demand copper. for ness recycling involving and the detoxification scrap auto of mobile shredder dust and other industrial waste materials. located was Prefecture, ity, the in city Iwaki, Fukushima of significantly damaged the East in Great Japan Earthquake; reconstruction intensive work enabled the facilityhowever, resume operationsto on June 30, 2011. Case Study: ing participation by The Senshu Ikeda Bank, Ltd., Shoko Shoko participationing The by Bank, Ltd., Ikeda Senshu regional (a Limited Bank Ltd. and The Iwate, of Bank Chukin institution ¥1.5 and providing Iwatefinancial of Prefecture) the construction for financing in remove billion to a plant of salt waste. disaster-related from leaving waste, Earthquake of a large amount created behind with refuse REMATEC degree a high salinity. of established the Iwate in city Prefecture, a plant Ofunato, of and undertook the task waste desalinizing this of under Cement contracts Iwate from Prefecture and Taiheiyo REMATEC Corporation, headquartered Corporation, the in cityREMATEC of Kishiwada, Osaka, technologies unique and innovative has thein field industrial of waste recycling, the reuse enabling as reclaimed items such wasteof oil make and sludge to fuel and concrete. Case Study: 100
CSR Report CSR through Investment, Loan and Other Businesses CSR Report Environmental Management 101 - - - - - Annual Report & CSR Report 2012 Promulgated and Put into Effect October 1, 2008 October Promulgated and Put into Effect Promotion of resource and energy conservation and recycling and energy conservation and recycling of resource Promotion activities of supplies friendly sourcing of environmentally Promotion pollution of environmental Prevention In with line Policy the Basic Environmental formulated Promotion of recycling and resource and energy conservation Communication FocusedCommunication (See page on the 76.) Environment Revitalization on Community Communication (See page 76.) Cooperation (See International in pagesCommunication 76–77.) environmental issues, DBJ seeks to help resolve environmental environmental issues, DBJ seeks to help resolve environmental contributing to the thereby enhanced awareness, issues through of a sustainable society. realization international distribution of information cooperation, including the initiatives by Japan. about environmental communication with society. activities and through its environmental impact of its the environmental activities to reduce and promotes these ends, DBJ seeks to contribute to the creation operations. To the through environments friendly office of environmentally activities indicated below. (1) (2) (3) Communities heat islands, to prevent initiatives, such as measures improvement friendly of environmentally DBJ works to contribute to the creation societies. regional tal preservation and the a sustainable realization of society. mental conservation cooperate resolving in and to environ mental problems. In addition, November we acquired in 2002, we signed the certification,ISO 14001 November and in 2011, ActionPrinciples Financial a Sustainable for towards Society Such Century). Action(Principles Financial for the 21st for efforts environmen indicate to our organizational commitment Promotion of Environmental Awareness Activities in Offices DBJ works the reduce environmental impact to its of opera n n n tions beyond environmental regulations. by what required is As the we promote measures described such, below an in effort our offices environment-friendly. make to • Octoberin 2008, DBJ efforts promoting is the in regions where its branches and offices located. are help to enhance environmental awareness, enhance supporthelp to involve the environmental realiza issuesmentin to and contribute tion a sustainable of society. 2. DBJ seeks to promote environmental awareness through through awareness environmental 2. DBJ seeks to promote on its initiatives by sharing information 3. DBJ endeavors to improve Activities in Offices Promotion of Environmental Awareness laws and regulations, Article 4. DBJ complies with environmental Activities in Promotion of Environmental Awareness Article 5. By cooperating with community environmental - - - DBJ’s Basic Environmental Policy Environmental Basic DBJ’s by achieving harmony through the triple bottom line of society, the triple bottom line of society, by achieving harmony through the resolution recognize We and the economy. the environment as an issue that is common to all problems of environmental DBJ has established a policy that humankind. For this reason, friendly aims to contribute to the formation of an environmentally economic society. of a recycling- and the promotion measures warming prevention supporting environmentally In addition, by oriented society. DBJ contributes sustainable corporate management by its clients, and to the realization measures of environmental to their creation of a sustainable society. an from the risk evaluations of investment and loan activities perspective. environmental In June 2001, DBJ became the firstIn June 2001, Japanese to bank Promotion of Environmental Measures through Loan and Promotion of Environmental Measures through Investment Activities Article 2. global its investment and loan activities, DBJ supports 1. Through through measures 2. DBJ contributes to clients’ environmental through Environmental Promotion of Environmental Awareness Communication Article 3. to and advisory activities relating continuing research 1. Through Purpose sustainable society prosperous a more Article 1. DBJ aims to realize DBJ Green Building Certification (See pages 51 and 83.) DBJ Certification Green Building (See pages 51 DBJ Rated Loan Environmentally Program (See pages 50, 84–85.) DBJ addresses environmental problems conducting by ongoing environmental studies and proposals. These efforts Promotion of Environmental Awareness through Environmental Communication n n Promotion of Environmental Measures through Our Investment and Loan Services investment and loanDBJ’s activities support projects designed global a recycling- prevent and create warming to based society. Furthermore, clients’ we promote efforts environmentally conscious management. Bytoward con clients’tributing environmental to measures, we help to achieve a sustainable society. Putting into Practice DBJ’s Basic Environmental Policy Basic Environmental Putting into Practice DBJ’s sign the Institutionssign UNEP Financial by on the Statement Sustainable and Development, Environment strive to promising between harmony for economic development and environ
DBJ aims to realize a more prosperous sustainable realize DBJ to society aims by theachieving triple through harmony bottom society, of line the resolu recognize We and the economy. the environment Environmental Management Environmental tion environmental problems of as issue an common is that For the reason, DBJ this to humankind. contributed all has to environmentally an friendlyformation of economic society. - - - Cleanup/beautification activity—Tenjin Clean Day Volunteers planting seedlings and flower bulbs planting seedlings Volunteers Kansai Eco Office Declaration Forest-thinning activities Earth-Friendly Office Other Branches Kyushu Branch Kansai Branch Shikoku Branch We implement initiatives such as collecting as used postage such initiatives implement We stamps and PET bottle caps also donation. have for We employees their bring own chopsticks work to and cups to reduce waste. ucts, raise employee awareness resourcesand waste (3) of office regulate save energyreduction, and (5) and water (4) appropriate an at temperature. air • activity Day Clean participated sponsoredWe the in Tenjin and helped clean up to conference Love Tenjin theby We flowerthe and plant bulbs. area • Organizations gov and ernment bodies located Otemachi and Tokyo’s in Nihonbashi part areas take planting the in volunteer seedlingsof and flower Park, bulbs Tokiwabashi in sponsored the by Chiyoda- Adopt Promotionku a Park System (CAPPS). DBJ to continues parttake these in activities. • Registered 2008,Office since calls the ”Eco Declaration” energy saving, enforcing (2) style,” ”eco a summer (1) for automobile curbing use (4) green promoting purchasing, (3) and engaging (5) in waste recycling. • participate to continue in We forest-thinning activities conducted collaborationin with the town of Inomachi, Kochi Prefecture, and Ltd. Mitsui & Co., In fiscal 2009, we registered with the “Earth-Friendly Office” program the city by created Takamatsu’s of environmental department. con We tinued these activities fiscal in 2011, curb efforts making and are (1) to the promote use recycled of (2) paper prod consumption, -
million 2012 March 31, 3.53 Year Ended 24,105 100,494 63,530 million 95.3% 94.6% 98.2% 95.9% 2011 100.0% 100.0% 4.50 March 31, Year Ended Year Ended March 31, 2012 million 76,030 61,610 95,992 95,992 93,189 24,856 24,856 25,411 2010 4.82 March 31, Year Ended
）
） kg
（ ） kWh kg （
） （ 3 m （ on the market that do not comply with the prescriptions of the Law Concerning on the market that do not comply with the prescriptions Services by the State of Eco-Friendly Goods and of Procurement the Promotion nevertheless on the basis of certain purchased and Other Entities but that were characteristics or functional requirements. Achievements of the Green Procurement Program Achievements of the Green Procurement Resource- and Energy-Saving Efforts Resource- Paper Stationery Equipment Office equipment Lighting Interior items Waste emissions Copy and printing paper usage Energy consumption Water usage Promotion of environment-friendly sourcing of supplies Head Office Uchimizu Project 2011 Note: Head of ce building only for Typical Items Excludes printing paper, media cases, labels, and other items that were purchased purchased media cases, labels, and other items that were Note: Excludes printing paper, Annual Report & CSR Report 2012 • Prevention of environmental pollution DBJ complies with environmental laws and regulations. • In with line the Act on Promotion Procurement Eco- of of Friendly Goods and Services and Other the by State Entities effect Act), which into went Purchasing April(Green in 2001, productsDBJ purchase to implemented initiaves and services with lower environmental impacts. to continued have We practice our privatization. following green purchasing tinuing with itstinuing participation Project the in Uchimizu 2011. DBJ participates in theDBJ in participates Uchimizu Project 2009, a campaign hosted the by Otemachi, Marunouchi (OMY)and Yurakucho ProjectUchimizu District Executive (Otemachi- Committee District Redevelopment Project Marunouchi-Yurakucho the Promotion for theCouncil/Cooperative of OMY Area Ministry Association), Management Environment, the of MetropolitanTokyo Government DBJ and Chiyoda-ku. con is By cooperating community in environmental improvement DBJ heat islands, prevent as measuresinitiatives, such to works the creation environment-friendly to of contribute to regional societies. • Promotion of Environmental Awareness Activities in Communities 102
CSR Report Environmental Management CSR Report Environmental Management 103 - - - -
Of ce, Corporate (Secretariat) Planning & Conference Department Coordination Responsibility Management Environmental Corporate Social Public Relations & Annual Report & CSR Report 2012 division and of ce Manager) Employees Environmental Environmental Implementation Group Promoter Promotion Of cer Responsibility Ofce, Corporate Planning & (Corporate Planning & Vice-Environmental Environmental Group Management Of cer Management Of cer Coordination Department Coordination Department) (Director in charge of Public Heads of each department Relations & Corporate Social Selected as a designated financial institution under the Bill on the Promotion of Businesses Develop to and Manufacture Energy and Environmentally Friendly Products Carbon (“Low Act”) Promotion Investment Certification Building Established DBJ Green the Signed the Principles for Financial Action towards a Sustainable Society (Principles for Financial Action Century) for the 21st Business cooperation agreement to promote environmental environmental promote to agreement cooperation Business measures with a non-life insurance company Start of cooperation with regional financial institutions prepareto a system implement to Financing Employing Environmental Ratings ing the world’s largest international investment and loan activities countries) developing for Commendation for DBJ Environmentally Rated Loan Program: Award Development Environmental Finance International the with agreement cooperative Basic conduct institution financial Group Bank (World Corporation First Environmental Syndicated Club Loan ECONOWA First Board of Directors and Management Committee meet ings of Development Bank of Japan Inc.; formulation of Management Policy Environmental and Environmental Basic Regulations Annual Report & CSR Report (integrated annual report and CSR report)
Group Nov. Dec. Apr. Apr. Sep. Jan. Apr. Mar. Oct. Jul. members
Environmental Management Structure Environmental Management Environmental 2011
2010
2009 2008 agement activities action. into 2007 Environmental Group Promotion Group Environmental Officer and Environmental PromoterGroup a member designate and each branch in department environmental be promotion of charge to in environ and manage the annual achievement level of of mental targets. Employees Employees responsible are putting for environmental man - - - - ) Environmental Report 2003 for a Sustainable (first annual edition) Press conference announce to DBJ status as a signatory institu tion the to Principles for Responsible Investment CSR Report 2006 (fourth annual Sustainability Report UNEP FI 2003 Global Roundtable Renewal of ISO 14001 certification 14001 ISO of Renewal Third annual Sustainability Report Assumption of chair of the UNEP FI Asia Force Pacific Task Japan Greenhouse Gas Reduction Fund (JGRF) Reduction Gas Fund Greenhouse Japan established Japan Carbon Finance, (JCF) Ltd. established Second annual Sustainability Report Start of DBJ Environmentally Rated Loan Program Joint sponsorship of UNEP FI 2003 Global Roundtable inTokyo, an international conference on finance and the environment Society UNEP FI 2002 Global Roundtable in Rio de Janeiro, Brazil Launch of the Development Bank of Japan Environmental Policy ISO 14001 certification 14001 ISO Establishment of Social Environment Committee and Social Environment Group; hosting of discussions between UNEP no Financialand Kuni Wa Institutions on Environmental Considerations for Financial Institutions First Japanese bank sign to the UNEP Statement by Financial Development Sustainable and Environment the on Institutions Start of green procurement and environmental training Designation of sustainable development as an objective by the Development Bank of Japan Act (Act No. of 1999) 73
Nov. May Oct. Sep. Jan. Dec. Nov. Sep. Apr. Oct. Jul. Nov. Oct. Publishing of Mar. Oct. Jun. Apr. Oct. Aug.
2006
2005
2004
2003 2002
2001 1999 DBJ’s Primary Achievements in the Environmental Sector since Its Establishment Sector Primary Achievements in the Environmental DBJ’s To promote environmental management activities, management the environmental promote To Environmental Group Promotion Officer Environmental Group Promotion In charge of DBJ’s environmental managementIn DBJ’s activities of charge Social theis Public Responsibility Relations & Corporate Department. & Coordination Planning Office, Corporate In addition setting to environmental targets each fiscal for the degree and confirming whichyear established to tar Public Relations & Corporate Social Public Relations & Corporate Social & Responsibility Office, Corporate Planning Coordination Department The Environmental Management Conference deliberates deliberates Conference Management The Environmental environmental targetsannual and environmental manage gets been have office this achieved, manages compliance with laws regulations. and relevant Environmental Management Conference Environmental Management Officer Environmental Management The Management Environmental Officer assigned is the to SocialPublic Responsibility Relations & Corporate Office in Department. & Coordination Planning The Corporate DBJ’s officer environmental education and confirms and training environmental targets.authorizes annual mental management activities attended executives all by and employees. ment reviews. Environmental Management Conference Management Environmental DBJ Social set has up the Public Relations & Corporate Responsibility Office& Planning within the Corporate Department.Coordination This office spearheads environ - - Directions Backup of ce (Kansai Branch) Directions Head of ce departments, branches President Committee (Head Of ce) Disaster Response When formulating policies to ensure theWhen policies continuity ensure formulating to prioritizes that continuity of a BCP DBJ formulated has An overview provided is below. BCP DBJ’s of Confirmation and assurance of the of safety and assurance executives of Confirmation and regular employees BCP Operational Structure Outline and recovery operations, core of we took the approach of considering responses cases to in which important man agement resources damaged were a large-scale due to (2) and facilities, buildings affectingdisaster, head office (1) executives systems, employees, and regular and (3) instead responses considering of individual events to as earth such they must give first priority the lives and safety to our of clients and our executives employees, and regular paying attention television to and radio broadcasts, evacuating calmly (without the panic) and determining safety others. of 1) 2) Uninterrupted continuation of settlement-related business Reliable the formation of Disaster3) Response Committee IT of Restoration systems4) and maintenance the of status clients of afflicted in Confirmation 5) areas 6) Rapid response crisis commencement of operations operationsthe core described above. quakes and fires. quakes spells out necessary disaster responses easy-to- an in understand manner. - - - In addition addressing to opera the continuity core of Annual Report & CSR Report 2012 DBJ is preparing a business continuity plan (BCP) to protect to DBJ preparing is a business continuity (BCP) plan the interests its of stakeholders, its including clients, its and its executives employees, regular and shareholder, as its fulfill ensure as to socialwell to aims mission. The BCP the continuity recovery and rapid operations core the of in emergencies, disasters of event as natural such particu (in lar, large-scale pandemics, influenza systemlar, earthquakes), and power outages.failures 3. BCP Operational Structure tions head at office problematic, proves the Kansai Branch serveshall as the alternative location. When responding emergency an to as in such situation, a large-scale of thethe Disaster event principle, in disaster, Response be will Committee established head at office & Planning the by head the of Corporate and chaired Department,Coordination who reports the president. to This committee gives directions branches regarding DBJ’s to operations. core of opera Ifthe continuation maintaining tions and maintaining a plan to recover from disaster, disaster, from recover to a plan tions maintaining and specifiesthe BCP actions the initial executives that and employeesregular emergencies. in should take The plan DBJ Operations 2. Core In a large-scale of the event DBJ identified has disaster, the as six essential following items the continuity its to of are that items operationscore the from standpoint (1) of business to continuityfundamental (such and prerequisite social personnel DBJ’s as facilities, mission (2) and systems), as investment its of (such and the public nature financing and loan activity) responsibility markets financial and (3) to settlements). market of (continuity 1. Principles of Action for Executives and Regular Employees 1. Principles of Action for Executives goals defines the fundamentalThe regarding three key BCP stance executives that in employees and regular take to are a large-scale of the event disaster or other emergency. They the grasp situation personal ensure (2) safety, (1) to are calm and collected. remain and (3) Specifically, accurately
Business Continuity Plan (BCP) Plan Continuity Business 104
CSR Report Business Continuity Plan (BCP) CSR Report Business Continuity Plan (BCP) 105 - - - Annual Report & CSR Report 2012 Clarification of Initial of ResponseClarification and Procedures for orContinuing Restoring Operations Core To assure that decision-makingassure that the continu concerning To ity operations core and certain, of prompt is the in event thethat Disaster Response established, is Committee put alternative hierarchy and an command of a chain place in whichby authority can be delegated. For individual business units, establish advance the in response theprocedures initial for and the continuation or operations restoration core divi of so relevant that sions can respond quickly and with certainty on core operations. (3) Chain of Command and Delegation Authority of Command of Chain (3) essary, employing a PDCA cycle. (4) (4) the considered and is by results information, and recent Management regularly Committee and additionally as nec - Ensure advanced security levels at the main center, and advanced securityEnsure center, levels theat main the that operate the in event to center a backup create ceases operate. to center main Introduce a safety-confirmation system quickly deterto Furthermore, the BCP is revisedFurthermore, is reflect to the BCP training mine themine whereaboutsstatus and executives of and employees and onregular holidays. night at even In addition, locations distribute telephones satellite key to and personnel ensure to multilayered communication procedures. 5. Initiatives to Maintain or Improve BCP Viability 5. Initiatives to Maintain or Improve (2) Multilayered(2) Communication Procedures (1) Enhanced System Robustness Enhanced (1) 4. Measures to Ensure Business Continuity Business to Ensure 4. Measures prepared a variety business have We ensure measures to of The primary continuity. below. introduced measures are DBJ conducts various types instruction of of and training executives employees and regular or improve maintain to the viability its of BCP. - - - certifica DBJ has received next-generation Kurumin tion for its efforts counter to the falling birthrate, including recognition as a company that provides active support child-rearing. for environment to bring out bring the best to environment every in The employee. superior employee performance efforts such from resulting what is drives DBJ ahead it on an basis a daily and keeps Japan that needs the follow. trails blazing to innovator, edge and the ability see to the big picture, as as gaining well specialist knowledge. a human DBJ created therefore has developmentresource system incorporates job that rotation, performance education formal evaluation, and training. Plan-Do-Check-Act (PDCA) cycle. Particularly its through goal-setting, of enhancing encouragement DBJ emphasizes medium- and long-term and exter both value internally nally. DBJ also motivates employees offering by bonuses benefits other and performance. based on operating Supportto Next-Generation Raising as a company Children providesthat child-rearing support. Specific this for grounds the promotion spousal of support for includedapproval (1) (2) specialchildbearing through and childcare leave, leave measures ensure to time for child-rearing measures and (3) paid vacation. the promote taking annual to of specialists fields. many Responding in society’s to constantly demands broad requires experience,changing deep knowl ------DBJ has also instituted childbirth, childcare and nursing Labour the recog Tokyo Bureau On October 2010, 18, To maintain an environment in which employees in all environment an maintain To To develop its resources, DBJ human promotes autono To Annual Report & CSR Report 2012 bilities. DBJ actively works a systematic build to human developmentresource system and a comfortable work DBJ considers its be resources to its human most valuable assets endeavors and thus develop to its employees’ capa can DBJ feel secure, notified has employees its of policy sexual prevent and power setand has to harassment up a deal to withhotline issues. such Furthermore, support to mental and physical DBJ health, provides its employees and with medical regular their families examinations and care options. These systems external include treatment by spe cialists counselors. and access to give motivated employees to care programs leave better opportunities long-term for employment, as as a sys well employment continued for optionstem after from retiring full-time work. Creating a Comfortable Work Environment Work a Comfortable Creating DBJ actively strives a comfortable cultivate to work environment. tively to develop their abilities and accurately evaluate such such tively develop to evaluate their abilities and accurately initiatives. DBJ system enrich this working is to having by meetsubordinates individually with superiors set to goals and receive feedback, the through autonomously running Deploying the Target Management System Management Deploying the Target Management System to DBJ a Target introduced has employeesencourage work autonomously to and proac Human Resource Development Vision Human Resource Fostering Human Resources and Creating a Comfortable Work Environment Work a Comfortable Creating and Resources Human Fostering nized DBJ achievednized the as having objectives its of general March 2005, to business operator action April 1, (from plan based on the Act on Measures Advancement of 2010), 31, DBJ evolved has significantly and developed its indepen dence and creativity with line in the needs the of times in itsorder maintain to leadership position. mous and pioneering behavior its in employees as financial the vision through professionals generalists of who can be 106
CSR Report Fostering Human Resources and Creating a Comfortable Work Environment CSR Report Fostering Human Resources and Creating a Comfortable Work Environment 107
Domestic and overseas exchange
- students, trainees, etc. - External mastery of External seminars, lectures, etc. specialized knowledge, work-related development Cultivation of knowledge, HR Assignments, etc.
Distance learning, night courses, acquiring public quali cations, etc. related Acquisition knowledge of business- (Self-Training) Annual Report & CSR Report 2012 Business-Related business skills needed for work comportment solving and communi- cation thinking conversation execution skills •Etc. Common skill areas •Problem •Logical •English •Business Mastery of basic Mastery of knowledge and e such as nancial skills Strategic and focus areas, In step with globalization, DBJ employees cultivates able Interest Rate Basics Basic Derivatives Basic nance training Financial Instruments and Exchange Act DBJ Financial Academy—Core courses (I) DBJ Financial Academy—Core courses (II) • • • Basic Corporate Financ • • Basic M&A • Etc. in multiple departments,in employees additionally are trained and their skills specialized highly to positionsfor according This systembackgrounds. strategic of job rotation only not enables employees broad-based gain to practical experience givesthat clarity their medium- to long-term to career goals but also quickly provides and firmly for environment an acquiring and improving their highly specialized skills. performto as as domestic well international in settings. To DBJachieve this, actively assigns employees a wide to vari ety external of overseas organizations, including graduate schools (program being currently expanded), international com domestic institutes, institutions, overseas and research panies government agencies, and related thereby supporting developmentskill and network extension. •Etc. Addressing strategic and focus areas • Valuation • Financial Modeling • M&A • Real Estate Finance • Relationship Management • Business Revitalization • Environmental Rating Seminars • Disaster Preparedness Rating Seminars • Basic IFRS Accounting • International Finance • Financial Policy • Etc. - - - - Bookkeeping and Accounting Company Analysis Case Studies Financial analysis training nancial • • • Accounting Tax accounting knowledge • •Basics of •Etc. Acquisition of Business-Related Training
law Basic Legal Compliance nancial act training Mastery of • •Training in •Etc. Documentation nance and skills needed for work Mastery of knowledge and training assessment middle- and back-of ce operations involving investments and loans in debt management •Training in •Training •Etc. Systems related to investments and loans Mastery of DBJ Rating and asset basic processes procedures and Top training training training Manager management Management Cultivation of leadership skills management and HR development Training by Level Planned and continuous s Human Resource Development System Career training for new training Life plan In fiscal 2008, we established the Academy, DBJ Financial Regardless employees age, of undergo on-the-job train Secondary employees joining DBJ career track Introductory plan training development training after Autonomous oped education system. and training Mandatory by training combined withlevel, and elective skills to according training needs, enables each or employee her his plan career to and support finance. innovative initiatives in DBJ’s which designed is help employees to and maintain acquire basic competencies and deepen theirunderstanding of they assuming become will advanced in involved finance, operations. focus expanding are financial the We academy, M&A Finance, on coursesing as and the Corporate such InstrumentsFinancial and Exchange Act. A Solid Human Resource Development System Development Human Resource A Solid supported are professionals financial DBJ’s devel well a by ing that provides that ing hands-on exposure work vari involving to After experiencing employment responsibility. of levels ous DBJ’ Position - expected to run from May 2012 through May 2012 through expected to run from 2013) March May 2011 through February 2012) May 2011 through DBJ long has desired its that address employee training DBJ Financial Academy Curriculum
International Finance Financial Expertise Follow-up Training Financial Policy Real Estate Finance Behavioral Finance for Regional Financial Institutions Special Program M&A Business Statistics Financial Instruments and Exchange Act Real Estate Finance IFRS Accounting: Foundations and Practice Insolvency and Corporate Reorganization Corporate Finance Practice Nippon! Go forward to Modern Introduction Finance Financial Instruments and Exchange Act Business Statistics Basic Corporate Finance M&A Corporate Finance Practice IFRS Accounting: Foundations and Practice Insolvency and Corporate Reorganization Financial System Theory Introduction to Modern Introduction Finance International Finance “Financial Policy” Special Lecture: Basic Corporate Finance Basic Investment Elective courses Special Program Elective courses Special course 2012 Courses ( Core courses (I) Core courses (II) 2011 Courses ( Core courses n n n n n n ance and maintaining information security information and maintaining ance training through leaks. access and information fraudulent DBJ prevent to henceforthwill such more even devote resources toward efforts. n n n n n n n n n n n n n n n n rightsissues legal human addition in of compli ensuring to n n n n n n n - - - - Through the DBJ Financial Academy, each employee canThrough the Academy, DBJ Financial Annual Report & CSR Report 2012 Since May 2008,Since the DBJ Academy Financial typically has held twice-weekly courses with the objective the raising of expertise financial level of second-year primarily young of strengthening by organization the employees throughout their knowledge and understanding advanced of corpo DBJ Financial Academy business financial essential business DBJ’s rate model. to courses Introduction covered Modern to fiscalDuring 2011, Instruments the Financial Finance, Corporate Finance, and Exchange Act Insolvency and and Corporate Reorganization. whetherseek or aim her his abilities elevate finance, in to basic knowledge acquire to ing or striving deepen to under standing. outside from Students DBJ, as employees such of institutions, alsoregional look participate. may financial We forward expanding to the fields financial which in DBJ’s expertise is shared. Seeking Higher Ethical Standards Higher Ethical Seeking eral policy-basederal institution. As financial DBJ transforms a private-sectorinto institution stillfinancial that values the long-term perspective, and public-mindedness neutrality, reliability each employee cultivated, it has being is a held to higher ethical standard. For half a century, DBJ has led Japan’s economy as a gen DBJ led has For Japan’s a century, half 108
CSR Report Fostering Human Resources and Creating a Comfortable Work Environment セクション Intellectual Asset Report
DBJ’s executives and regular employees continually take on new challenges, while Intellectual Asset Management ...... 110 remaining firmly committed to DBJ’s four core values: a long-term perspective, neutrality, Financial Platform That Enables DBJ to Meet the public-mindedness and reliability. The Needs of the Times ...... 114 intellectual assets DBJ has built up over the years help form the financial platform and enable DBJ to provide services that extend beyond merely providing funds. Employing these assets, we endeavor to address the needs of the times and fulfill our role in enhancing socially responsible activities among companies.
CSRAnnual・ディスクロージャー誌 Report & CSR Report 20122012 109 - - - - ability ordinary DBJ asset: our Assets Structural Organizational Human Resources corporate value. corporate Since privatization, we have aimed to maintain our eco maintain aimed privatization, to we have Since Listed aggressively that companies finding are disclos Intellectual Assets ing intellectualing asset helps them markets value information For reason, thethis introductionmore appropriately. of regulatory frameworks listed com or encourage require to panies disclose to grown has into non-financial information a global Europe. in beginning trend, when combined represent extra an expertise resolving in issues the through application of methods,new financial the widespread use our financial of platform and our economic and social contributions. This asset led our development has to methods the of financial described It enables respond to us below. chang quickly to policying requirements and plays a major role our in adding economic continue and socialto value. nomic social and believe our ability contributions. that We clearlyto identify use intellectual of assets and make be will important increasingly an factor achievinggoal. in this Intellectual Asset Management Essential to Essential to Asset Management Intellectual Value Enhancing Corporate Although intellectual assets intangible the in are sense that statements, financial recordedthey not are on a company’s Managing component value. corporate they a core of are intellectual assets effectively promotes claritythe of terms in competencies opportunities and creates key corporation’s to increase Assets - - Structural Relational - - Business Model Corporate Value maintaining the maintaining Tangible Fixed Assets underpin a company’s future future underpin a company’s related to intellectual to assetsrelated are Assets Financial Relationships among Intellectual Assets, Business Models and Corporate Value activities (Created by DBJ from Ministry of Economy, Trade and Industry materials) Based values, our executives on core our and regular Annual Report & CSR Report 2012 DBJ’s View Assets on Intellectual DBJ’s panies must identify must panies important their resources management competitiveness.and sources of Specific technologies, expertise, resources and business human models some are factors the lead differentiation that to to invisible but are entity’s an Determining casual true observer. corporate these the of requires evaluation value company-specific strengths. DBJ’s Intellectual Assets Intellectual ongoing prosperity ensure Companies by and profit competitors. themselves from differentiating consistently Differentiating the products and services they offer a is their operations,large part enhance com the of process.To Intellectual Asset Management Asset Intellectual Asset Management and Intellectual Value Corporate lated a wealth of expertise a wealth of lated the in screening and evaluation long-termof projects ability and a keen identify to and address the of times terms issues unique in are or that the local them. In the face process, communities that we becomehave a repository intellectual of assets, which ity companies and projects. evaluate to accumu have We Dating back to the time of our predecessor, the back time our predecessor, to of Dating es of corporate value that that es value corporate of performance. economic trust our clients of and societybeen large at has our most important objective. standpoint, this From created we have a wide variety networks of both the spanning public and private sectors. their abil enhance workingemployees to continued have designed foster the application to these of intangible sourc 110
CSRIntellectual Report Asset Report Intellectual Asset Management CSRIntellectual Report Asset Report Intellectual Asset Management 111 ------Annual Report & CSR Report 2012 methods, as as strengthen well To impart various financial skills, DBJ maintains training impart DBJ training skills, maintains various financial To DBJ also has established the Research Institute Capital of Organizational Structural Assets companies, manufacturing DBJ no has explicitUnlike intel lectual assets, our intro rights. as patent such However, duction methods new our work of financial Japan, with to platforms financial and institutions create to other financial Japanese the economy to contributions other many our and society rely on our organizational adeptness, is, that our ability quickly ascertain to emerging issues and deploy appropriate personnel. combined with This the ability, long- 50 over years of accumulated data we have term financial investment and loan operations culture and a corporate alwaysof projects considering economically an in rational their broader of terms as as in well economic and manner, organizational struc DBJ’s social constitute significance, assets,tural as does the smooth communication and rapid process the from common knowledge resulting has that and other training evolved financing corporate through channels. various fields—as issues. they consider such All DBJ execu tives employees and regular a long-term maintain work to and neutral perspective, approaching new business with and challenge. a spirit innovation of include a 2.5-monthmenus that train finance corporate new all employees, for This program. program, helpsing develop screening expertise. Our menus, combined with on-the-job raise thespecialist level of training, expertise among DBJ executives employees. regular and maintain We a number personnel of programs and dispatch exchange with domestic and overseas universities and research insti that institutions, international with as other well as tutions, help our networks. form These help DBJ programs develop new financial and introduce network ties. Formation, which carries as as well research, out financial research on global and other countermeasures warming efforts a sustainable create society. to The the research that produces a neutral and long-term from center perspective is regardedhighly the by community and other experts. ------employees (human resources) and intellectual and employees resources) (human decisions a neutral standpoint. from In era an ute to business to structure.ute formation and the financial Our ability provide to solutions compa appropriate for are that nies, the economy as as for well and society a broader in dependssense, on the ability resources— our human of executives employees and regular who in professionals are characterized by increasingly complexcharacterized increasingly by economic and social issues and more sophisticated business long-term this skills, perspective a major has impact ability on DBJ’s contrib to Appropriately medium- judging long-term to investments executives DBJ’s of and loans all and regular requires employees to a long-term maintain perspective and make financial Human Resources tion government agencies with central and regional govern and private-sector institu withlaborate financial public- As our mission prior privatizationto support was to projects policy had that our system significance, and planning of investmentsmaking and extending loans coopera involved DBJ’s Utilization of Intellectual Assets DBJ’s Utilization ment bodies. Now advantage we take these of networks the promotion subsidy for programs rate our interest to inter other as well as management, environmental of est subsidy systems and regional national by place put in government bodies. assist to with Also, continue we crisis response operations. DBJ also works and develop create to construct platforms. thesefinancial To platforms, we col tions Japan in and overseas and maximize our networks of university including professionals professors, attorneys, and certified combination public accountants. This multifaceted networksof host a in professionals of consisting fields of in academiaindustry, and the government constitutes DBJ’s structuralrelational capital. DBJ’s Utilization of Intellectual Assets of Intellectual Utilization DBJ’s One school defines thought of intellectual assets as the understanding and reporting of on entity’s an networks structural basesand client management assets), (related and team assets and business processes structural (organizational intellectual DBJ’s assets we introduce assets). Below, and activities segmentation. this to according - - In years, become recent we have actively in involved rate bond issues and funds provided by financial institutions are senior financing. Senior financing involves relatively low risk. In Japan, most corpo * during the periodduring when the viability being is their plans of meet need, this DBJ providesreviewed. To debtor-in- possession (DIP) as temporary financing workingcapital to operating and maintain continue enable companies such to the in bestvalue portions their businesses. of In addition, DBJ business creates revitalization help companies to funds their operations,normalize a process through operation of al selection their and reduce debt and focus, levels. mezzanine financing. literally (”Mezzanine” refersthe to partial story between In two the stories main a building.) of mezzanine lower the is than financing repayment hierarchy, typicallysenior institutions, provided financing* financial by so a higher investment it is In risk. and the United States other markets with a broad investors, range of mezzanine plays important an financing role diversifying in the types of funding that are provided. Mezzanine financing can be as used business such a number situations, in or of capital a long-term perspective,restructuring. Taking DBJ provides mezzanineas one its of financing tailor-made financing solutions. ------generally benefits private-sector from The United Kingdom ini the finance introduced private DBJ provides a full range of financing optionsDBJ the in area financing provides range of a full Annual Report & CSR Report 2012 tion in-house of resources and expertise. human Operating within complex markets, DBJ these financial maintain will activities distribute and control risk as to while continuing possible. as effectively priately allocating risks among the and public private sec tors, PFI efficient an is effective and provide to public way services. With PFI, project the is method financing asused project raise funds, to roles allocated are appropri We are a leader are our intellectual leveraging We in assets to methods new Our financial Japan. pioneeringintroduce to efforts maximization come from our intellectual of assets, cooperation with local communities and extensive cultiva Advanced Initiatives Involving New Financial Methods That Utilize Intellectual Assets Assets That Utilize Intellectual Methods New Financial Initiatives Involving Advanced companies private encourage to tiative (PFI) scheme 1992 in or manage projects fund to typically are that operated by Asthe public sector. a leader absorbing in and accumu expertise, such lating DBJ participated has numerous in PFI projects By Japan. in shifting the sector private to the responsibility for constructing, maintaining and operating the countrypublic facilities, expertisemanagement capabilities. By appro technical and ately and long-term business assured. is of business revitalization. After filing applications accord Rehabilitation Act Reorganization Civil to ing or Corporate Act procedures, companies typically working capital require 112
CSRIntellectual Report Asset Report Intellectual Asset Management CSRIntellectual Report Asset Report Intellectual Asset Management 113 - - Annual Report & CSR Report 2012 Maintaining Conformance Human Rights Service Quality CSR Elements Labor Standards Corporate Ethics Fair Competition Client Satisfaction Legal and Regulatory Working Environment Human Resource Education As can be seen 58, on pages to “Integrated 42 By employing our intellectual assets these in ways, we agement. Investment on 100, and and Loan pages to Services,” 78 Investment, through DBJ Loan and Other Businesses,” “CSR takingis advantage its intellectual of various accumulated assets. ing social responsibilities. we alsogo a role play beyond merely financing: providing sophisticated increasingly promoting in man CSR corporate laws and regulations, ensure safe and securelaws workplace ensure and regulations, and environmentssurrounding and provide quality products and services competition. These fair through activities reinforce base fulfill by client value corporate and raise a company’s (Created by DBJ from Ministry of Economy, Trade and Industry materials) Human Resources Relational Elements Client Base Networks and and Employees Organizational Structural Assets Structural Assets Business Processes Management Team Intellectual Asset Intellectual Assets and Relationship between Intellectual Assets and CSR Relationship between Intellectual Assets For example, the DBJ Rated Loan Environmentally Relationship between Intellectual Assets and CSR at DBJ Assets between Intellectual Relationship The contrasts nearby figure intellectual assets as viewed DBJby role this as and DBJ’s seen in society. by Evaluated intellectualsense, assets two are and CSR sides the of same coin. theProgram, DBJ Disaster Enterprise Rated Resilience Loan Program DBJ and Certification—fully Green Building intellectual through mobilized asset networks with central government bodies, regional government bodies, experts and clients—as resources comprising as our human well executives and regular employees and our accumulation of experience and expertise serve all the At a vital role. CSR same these time, same loan strongly programs support the activitiesCSR our business of partners: these companies with cause various reconsider their to conformance have - - - On Investment 58, pages to “Integrated and Loan 42 pants, a catalyst needed is participation encourage to from a broad players. range of Owing our neutral position to and advanced-player status, perfectly we are serve to suited as the catalyst plat developing financial for and maintaining institutions. financial cooperation with other in forms thesystems framework of and laws support that corporate economic activity the involves application experienced of and real-world expertise institutions and busi financial of nesses, body as as accumulated results an well of can that (transactionbe reference cases, used future for precedents Furthermore, platforms as financial function and thelike). inadequatelyif used they are only by a minority partici of first This the creates foundation institute executive director. intellectual creating assetsfor collaboration through with outside experts, on university instructors. centered Taking academican perspective, and liberal the promotes institute research activities targeting a sustainable socioeconomic structure. (For details, the please Research to Institute refer Capital Formationof http://www.dbj.jp/ricf/en/.) at website, Investment, through “CSR 100, and pages to Services,” 78 DBJLoan its introduces and Other activities Businesses,” involving financial platforms. - - - - - practices, transparency and the market degree of participation. The platforms, more complete the financial which are Annual Report & CSR Report 2012 DBJ fulfills a broad range of information functions. a broad information DBJ range of fulfills In addi tion to corporate monitoring, DBJ exchanges information information DBJ exchanges monitoring, corporate to tion with government agencies, local government bodies and private financial institutions and coordinates their interests. In the investment and loan department, DBJ promotes and helps develop platforms structured financial for financing, business restructuring support, envi to related financing ronmental and disaster policies, M&A advisory services, safety nets and other functions. In the research depart ment, DBJ established the Research Institute Capital of Osamu as its Shimomura Formation Julywith in 1964, Dr. Activities Involving Financial Platforms ing theing revitalization businesses of and urban and local communities and the creation new of industries. However, platforms,financial general- which institutional, an are access capital good, Creating formed not are overnight. In DBJ’s definition, ”financial platform” refers to the refers to platform” In definition, ”financial DBJ’s and quality whichamount and other corporate to funds of clients access, the systematic have bases of formulation that affect the diversity fund-raising of methods, exper financial Financial Platform That Enables DBJ to Meet the Needs of the Times the of the Needs Meet to DBJ Enables That Platform Financial “Financial Platform” Defining tise and market indispensable system financial to soundness and macro their is effectiveness the greater economic vigor, promot at 114
CSRIntellectual Report Asset Report Financial Platform That Enables DBJ to Meet the Needs of the Times CSRIntellectualセクション Report Asset Report 115115 116 121 122 126 128 Annual Report & CSR Report 2012Annual Report & CSR Report 2012 ......
Compliance ...... Risk Management System/Declaration Client Protection Management Protection/Policy for on Personal Information of Interest ...... Managing Conflicts . Disclosure ...... Corporate Governance Corporate Governance
DBJ’s most important public social public social DBJ’s most important to instill public confidence responsibility is and achieve the as a financial institution management transparency. highest levels of management cycle We employ an operations voice of society, particularly that reflects the the issues society in terms of addressing perspective, at the faces from a long-term and in the appropriate appropriate time that are manner. We undertake projects and social meaningful from both economic perspectives and work to offer superior investment and loan solutions. Management Structure Management - University of Tokyo. Accountancy, Aoyama Gakuin University. Accountancy, Professor, Graduate School of Waseda University; Graduate School of Waseda Professor, Panasonic Financial Services Co., Ltd. (Full-Time Corporate Auditor [Outside]); Kazuo Ueda, Professor, Faculty of Economics, the Kazuo Ueda, Professor, We conductWe with our business the action accordance in Shinji Hatta, Professor of Graduate School of Professional of Graduate School of Professional Shinji Hatta, Professor Makoto Ito, Attorney and Visiting Legal Research As prescribed by the Companies Act, a majority of the five follows: as outside corporate auditors are The three Sumishin Kazuyoshi Arakawa, former Managing Director,
porate philosophy. First Customers DBJ operate our clients’ will from viewpoints, addressing theirtheir success. in challenges pleasure and sharing Professional With DBJ be will discernment and creative skill, a unique investment and platformfinancial integrated providing loans both Japan in and abroad. Global & Local DBJ a long-term maintain will viewpoint, the considering needs the of times, the world and the region. Speed & Teamwork Relying on skilled teamwork, DBJ act will rapidly and in clients’ strong for trust.good building foundations faith, financial technology basedfinancial gathered and R&D, over on skills years experience. of many Networks Networks with created clients, local governments and other financial institutions. guidelines described below our cor as we strive realize to Corporate Auditors, Auditing Committee The Auditing Committee comprises five auditors. This committee convened 16 times during the fiscal year ended 31, 2012. March Auditing Committee members are outside corporate auditors. DBJ has three full-time corporate auditors, one of whom is an outside corporate auditor. The Office of Corporate Auditors has been created to assist corporate auditors (including outside auditors) in performing their duties. Specialized staff members are assigned to the Office of Corporate Auditors, which is directed by the Auditing Committee. -
Corporate Philosophy Corporate to design the future the design to the trust of our clients and trust the clients our of achieve their future prosperity. future their achieve client issues, earn client to as work we Applying financial expertiseApplying financial We apply creative financing to resolve to financing apply creative We Akio Mimura, Chairman, Nippon Steel Corporation and The Compensation Committee, which includes outside outside directors: The following two members are The Advisory Board has been established as a
Annual Report & CSR Report 2012 Management Committee advisory body. This board provides advice on overall management issues, including DBJ’s management strategies, from a neutral standpoint. directors, has been created to deliberate on director compensation and advise the Board of Directors in this regard. At the same time, DBJ has established a Personnel Evaluation Committee comprising outside experts to evaluate personnel proposals on the selection and resignation of directors and corporate auditors. Board of Directors ensure To comprises 10 members. of Directors The Board outside members are two Board management transparency, 31, 2012, the During the fiscal year ended March directors. met 13 times. of Directors Board Corporate Governance Measures and Their Implementation Status Corporate Governance Measures Internal Organizations of DBJ elects outside directors from the standpoint ensuring management transparency and enhancing corporate governance. Core Competencies The competencies core described below support DBJ’s efforts its realize philosophy. corporate to Intention The fundamental stance values: our corporate of the at core long-term perspective, and public-mindedness neutrality, reliability. Intellectual Assets Expertise industryfields in including credit analysis, research, DBJ has formulated a corporate philosophy to encapsulate philosophy encapsulate a corporate DBJ to formulated has invest position management’s integrated DBJ’s regarding Corporate Governance Corporate Governance on Corporate Basic Position ment and loan services. philosophy consider this the We activities. our corporate of core 116
CSRIntellectualManagement Report Asset Structure Report Corporate Governance CSRIntellectualManagement Report Asset Structure Report Corporate Governance 117 Annual Report & CSR Report 2012 University of Tokyo The Shizuoka Bank, Ltd. Global Advisors Inc., Senior Advisor of Korn/Ferry Asia Pacific International’s Advisor, Tokyu Corporation Tokyu Advisor, Financial Group, Inc. Financial Group, Akio Mimura, Chairman, Nippon Steel Corporation Faculty of Economics, the Kazuo Ueda, Professor, Fujio Cho, Chairman of Toyota Motor Corporation Fujio Cho, Chairman of Toyota & Chief Executive Officer, Katsunori Nakanishi, President Sakie Fukushima-Tachibana, President of G&S President Sakie Fukushima-Tachibana, Kiyofumi Kamijo, Director and Executive Corporate Kiyofumi Kamijo, Director Masayuki Oku, Chairman of the Board, Sumitomo Mitsui Masayuki Oku, Chairman of the Board, The Advisory Board is composed of the following outside is The Advisory Board
Outside Directors General Risk Management Committee General Risk makes decisions on deliberates and This committee compliance, client to legal items related important and risk management operational management, protection management. system risk and Loan Decisions Committee on Investment deliberates and makes decisions This committee handles, the investment to investments and loans, as well as related and loan management. Committee New Operation Screening and makes decisions on the This committee deliberates involving new businesses. commencement of initiatives Investments and Loans Advisory Panel on advance deliberation on and This panel handles the and loans. monitoring of investments Committee on International Operations to the overseas This committee deliberates items related conditions. business strategies, operations and management Advisory Board as a body to advise been created has The Advisory Board advice on DBJ’s the Management Committee, providing overall management. experts and outside directors. Outside Experts Accordingly, the Management Committee makes Accordingly, Committees under the Management Committee have been established under the committees Various Management Committee assigned specific decision-making or of Directors tasks, excluding decisions made by the Board the Management Committee within each field of specialization. ALM & Risk Management Committee This committee deliberates and makes decisions pertaining to portfolio risk management and asset/liability management. Management Committee has vested in the Management of Directors The Board the Committee decision-making authority regarding execution of business. important management decisions. The committee met 40 31, 2012. times during the fiscal year ended March Personnel Evaluation Committee Committee, DBJ has established the Personnel Evaluation and other outside experts, as composed of outside directors The committee’s of Directors. an advisory body to the Board on the selection and proposals is to evaluate personnel role and corporate auditors. of directors resignation Compensation Committee include The Compensation Committee, whose members been established as an advisory body has outside directors, the standpoint of ensuring from of Directors to the Board The committee considers the and objectivity. transparency that befits DBJ. type of executive compensation structure Operations Audit Committee has established the Operations of Directors The Board to this body the authority to Audit Committee, delegating to internal matters related audits. This deliberate important during the fiscal year ended March committee met once 31, 2012. Content of Standards and Policies Related to Standards and Policies Content of of Outside Directors in the Selection Independence Corporate Auditors and Outside Not applicable. Audits Audits auditor Reporting Cooperation Accounting bodies Department Internal Audit Deliberative Operations International Committee on Reporting Loans Committee Committee Advisory Board Committee Investments and Advisory Panel on Compensation Operations Audit Corporate Auditors, Auditing Committee Personnel Evaluation Specifically, this system is designed to determine the The organization outlined below has been put in place The organization outlined Disposition of surplus funds Disposition and dissolution Merger, corporate split plans, redemption plans and fund Basic policy on business procurement Screening Committee Status of Internal Control System To ensure operational soundness and in accordance with the Companies Act, the Board of Directors has established an internal control system under the Internal Control System Basic Policy. status of legal compliance, risk management and internal audits, as well as other items of management importance. The internal control system is designed to confirm the formulation of various regulations and the status of their implementation in various departments. • • • the abovementioned activities. to execute and supervise New Operation Committee Shareholders Management Board of Directors General Meeting of Loan Decisions Committee on Investment and Committee General Risk Management bodies Committee ALM & Risk Management Subsidiaries Decision-making representative directors and auditors redemption plans and fund procurement Operating and Supervisory Structure Operating and Supervisory Appointment and dismissal of Concurrent positions as directors Amendments to Articles of Incorporation Disposition of surplus funds Merger, corporate split and dissolution Basic policy on business plans, Concurrent positions as directors Concurrent positions of Incorporation Amendments to Articles Appointment and dismissal of representative directors and Appointment and dismissal auditors Departments • • • • • Matters requiring authorization of Matters requiring authorization competent minister • Annual Report & CSR Report 2012 Executive Officer System DBJ has an executive officer system to clarify responsibility for the execution of duties and accelerate decision-making. The Board of Directors has designated eight managing executive officers, excluding officers who are concurrently directors, and eight executive officers. • • The New DBJ Act prescribes matters for which DBJ requires for which DBJ requires Act prescribes matters The New DBJ Finance. Major items of the Minister of the permission are as follows: requiring such permission • Matters Requiring Approval of Competent Minister Approval Matters Requiring 118
CSRIntellectualManagement Report Asset Structure Report Corporate Governance CSRIntellectualManagement Report Asset Structure Report Corporate Governance 119 Annual Report & CSR Report 2012 The Representative Director shall exchange opinions with the auditors Director The Representative shall also Director The Representative or at the auditors’ request. regularly, environment. of a reporting cooperate in the preparation The Internal Audit Department works with the auditor to establish internal of internal and the results audits audit plans. The department reports to do so. exchanges opinions and liaises with the auditors when requested audit and employees shall cooperate with the auditors in their Directors audit the Audit Committee Regulations, auditors’ activities and shall respect and other regulations. standards and of accounting audits, directors the adequacy and reliability ensure To the independence a system to ensure employees shall cooperate in creating of the accounting auditors. If directors or employees become aware of any major potential damage to or employees become aware If directors such or operating performance, they shall immediately report credibility DBJ’s information to the auditors. certain information to perform their duties, If auditors find that they require and employees as needed, and the directors from reports they may request appropriately. shall report is addressed party to whom the request The Board of Directors shall manage operations appropriately, in accordance in accordance appropriately, shall manage operations of Directors The Board andwith the scope and characteristics of operations of its subsidiaries appropriate shall introduce the Board companies. Furthermore, affiliated and risk the perspective of legal compliance, client protection from measures management. guidance, management process reporting, shall create of Directors The Board to operations management between DBJ and its and other systems related companies. subsidiaries and affiliated the Internal with the necessary scope of legal regulations, In accordance Audit Department shall conduct internal audits of subsidiaries and affiliated and appropriately of these audits promptly the results companies and report of Directors. to the Board decisions on the items with which it has been entrusted, to contribute to entrusted, to contribute items with which it has been decisions on the in Committee shall deliberate the Management expeditious decision-making the Furthermore, of Directors. by the Board for resolution advance matters insti- committees as advisory Committee shall establish various Management on specific items. to which to delegate decision-making tutions or as bodies execution of business based on decisions made efficient the ensure To the regarding shall be established regulations of Directors, by the Board of tasks shall be allocated and the execution organizational structure appropriately. be system shall enable swift decision-making, an executive officer To shall be formulated to define Regulations established. Executive Officer and responsibilities. roles executive officers’ Other Systems to Ensure Effective Audits by the Auditors Effective Other Systems to Ensure auditors of Directors, Article 10. In addition to attending meetings of the Board may attend meetings of the Management Committee and other important their opinions as necessary. meetings and offer System Related to Employees Assisting the Auditors in Their Duties System Related to Employees Assisting the Auditors with their duties, if soArticle 7. As a specialized organization to assist auditors of Corporate Auditors shall be established by the auditors, an Office requested of the Auditing Committee. under the direction Matters Concerning Employees Supporting the Auditors in Their Duties Directors and the Independence of Such Personnel from to the employees supporting the duties of Article 8. Personnel issues related to the independence of such personnel shall be auditors and matters related of the Auditing Committee. left in the control and Employees to Auditors and System for Reporting by Directors Other Systems for Reporting to Auditors to auditors on the status of and employees shall report Article 9. Directors other necessary information. business and execution of DBJ’s System to Ensure the Adequacy of Operations of the Corporate Group, Operations of the Corporate Group, the Adequacy of System to Ensure Companies and Affiliated Comprising DBJ and Its Subsidiaries of operations of the the adequacy shall ensure of Directors Article 6. The Board with the corporate philosophy. in accordance DBJ Group 2. 3. 4. 5. 2. 3. 2. 3. 4. 3. 4. Internal Control System Basic Policy System Basic Internal Control The Board of Directors shall establish a Management Committee and del- of Directors The Board egate decision-making on specific items to this council. In addition to making A comprehensive risk management process shall be created. Also, a shall be created. risk management process A comprehensive and a and an executive committee for risk management shall be created, department shall be assigned to take charge of risk management. Risks shall be segmented into the following categories, and risk management policies shall be established for each: risk, 5) risk, 2) investment risk, 3) country risk, 4) market credit 1) credit market risk, 6) market liquidity risk, 7) financial liquidity risk, 8) settlement risk, 9) operational risk. using a the extent possible, the abovementioned risks shall be measured To consistent system, risk guidelines shall be established and the risks shall be managed. of The necessary systems shall be put in place to minimize the effects business to ensure collapse in the event of disaster, economic loss and credit return to normal a prompt continuity in crisis situations and to ensure functioning. shall establish an Internal to of Directors Audit Basic Policy The Board determine the status of internal including risk management. The control, of internal of the results reports and appropriate prompt shall receive board internalaudits from audit departments. A Compliance Manual, compliance program and internal shall regulations A Compliance Manual, compliance program compliance by executives with laws and to ensure in preparation be created regulations. and manage legal compliance, A committee shall be formed to promote division shall be placed in charge of legal and an executive and a control compliance. to acts a response A compliance hotline system shall be established to enable and acts of potential concern the from that contravene laws and regulations perspective of legal compliance. that DBJ has absolutely no connection shall be made to ensure Preparations or safety. social order that threaten with antisocial forces shall formulate an Internal of Directors Audit Basic Policy The Board compliance. Thispertaining to the status of internal including legal control, independent ofpolicy shall establish internal audit departments that are audit for the execution of business and that report departments responsible and appropriately. promptly results Systems to Ensure the Efficient Execution of Duties by Directors the Efficient Systems to Ensure shall formulate management plans and of Directors Article 5. The Board management control. perform appropriate Regulations and Other Systems Related to Managing the Risk of Loss Regulations and Other Systems Related to Managing the soundness of management and manage risk properly, ensure Article 4. To risks that defines, evaluates, monitors and controls a risk management process in the course of business shall be put with various characteristics encountered in place. System for the Storage and Management of Information Related to theSystem for the Storage and Management of Information Execution of Duties by Directors shall be by directors Article 3. Information pertaining to the execution of duties and this information shall be accessible, as managed appropriately, and stored necessary. System to Ensure Compliance with Laws and the Articles of Compliance with System to Ensure and Employees of Duties by Directors Incorporation in the Execution compliance legal recognize of Directors and the Board Article 2. The directors DBJ has most important management issues. Accordingly, as one of DBJ’s the execution of duties by executives that ensure formulated a basic policy to of Incorporation and establishes thecomplies with laws and the Articles basic policy on legal compliance.corporate philosophy and a Purpose with Item in accordance basic policy has been established Article 1. This the 362, of the Companies Act (hereinafter, 6, Paragraphs 4 and 5, Article Regulations Enforcement 100, of the Act’s ”Act”), and Item 1 and 3, Article a system (internal control Regulations”) to create ”Enforcement (hereinafter, ”DBJ”) of Japan Inc. (hereinafter, Development Bank system) to ensure manner. conducts operations in an appropriate 2. 2. 3. 4. 5. 6. 2. 3. 4. 5. 6. DBJ has no special-interest relationship with any other of DBJ has no special-interest limitation agreements with its DBJ has signed liability Number of Directors of directors DBJ’s Articles of Incorporation limit the number to 13 or fewer. Requirements for Determination of Director Appointments DBJ’s Articles of Incorporation stipulate that shareholders possessing at least one-third of the shareholder voting rights exercisable at the General Meeting of Shareholders shall attend the meeting and determine the appointment of directors based on a majority vote. The Articles of Incorporation further specify that the appointment of directors shall not be resolved by cumulative voting. Overview of Personal, Equity, Transactional Transactional of Personal, Equity, Overview Relationships with Special-Interest or Other and Outside Corporate Outside Directors Auditors of Nippon Steel Corporation, Akio Mimura, Chairman of DBJ. DBJ has no special-interest is an outside director Mimura, and its business with Nippon relationship with Mr. normally. Steel Corporation is conducted outside corporate auditors. its outside directors or based on outside directors and outside corporate auditors, Act. Paragraph 1, Article 427, of the Companies Overview of Agreements with Outside under Directors and Outside Corporate Auditors Act Paragraph 1, Article 427, of the Companies (Liability Limitation Agreements) establish liability DBJ’s Articles of Incorporation allow it to and outside limitation agreements with its outside directors for damages corporate auditors, limiting their responsibility Act, under Paragraph 1, Article 425, of the Companies intent and provided their duties are executed with good specified in without gross negligence, to the total amounts the Companies each item in Paragraph 1, Article 425, of Act. DBJ’s auditors, Audit Department and accounting As of June 28, 2012, 21 people belonged to the Audit As of June 28, 2012, 21 people belonged audit the The Auditing Committee and the auditors other The auditors attend Board of Directors and The Operations Audit Committee deliberates and decides The Operations Audit In accordance with the Companies Act, as designated limited In accordance liability partners, the number of years of continuous audit must be stated. As designated limited liability partners, the number of continuing years of performing audits conducted in accordance with the Financial Instruments and Exchange Act was four years for for Atsuyuki and one year Ono, four years for Hayato Yoshida Yukio Shimada. The number of business periods during which an audit used to indicate the number of was performed is the standard 49 people, including a systems years. Assisting in this audit were specialist, a licensed tax accountant, a specialist in determining fair value and a specialist in pension mathematics. Annual Report & CSR Report 2012 auditor periodically and as necessary exchange opinions and information, and communicate in an effort to ensure effective and appropriate audits. * DBJ has in place an agreement with Deloitte Touche with Deloitte Touche DBJ has in place an agreement LLC to conduct accounting audits as its Tohmatsu During the fiscal year ended March accounting auditor. conducted by designated 31, 2012, these operations were liability certified public accountants (designated limited period* of four Ono (continuous audit partners) Yukio (same, four years) and Atsuyuki years), Hayato Yoshida Shimada (same, one year). Status of Accounting Audits audit plans, audit reports and other important matters audit plans, audit reports and this information is reported to related to internal audits, the Board of Directors. Department. their audit policy execution of duties by directors, based on and audit plans. query the important meetings. When necessary, they documents and execution of business by directors, peruse conduct branch audits. DBJ has established the Audit Department under the direct under the the Audit Department DBJ has established and independent from of the DBJ president supervision The department conducts other operating departments. the appropriateness and effectiveness inspections to ensure DBJ’s overall operational of internal controls, including and performs compliance and risk management, improvements. evaluations and recommends Status of Internal Audits and Audits by Auditors Internal Audits Status of 120
CSRIntellectualManagement Report Asset Structure Report Corporate Governance CSRIntellectualManagement Report Asset Structure Report Corporate Governance 121 Annual Report & CSR Report 2012 DBJ also has established a Compliance Hotline. The to managing conflicts of DBJ, in matters relating conduct activities appropriately and in compliance with conduct activities appropriately and in compliance the law. that DBJ DBJ’s executives and employees are well aware and must conduct its businesses legally and appropriately the general be responsible for explaining its actions to public. Compliance System Department DBJ has established the Legal and Compliance for planning, preparing to take overall responsibility DBJ has and adjusting compliance activities. In addition, Committee to established the General Risk Management matters, determine the extent on legal compliance reflect to DBJ’s of compliance, and deliberate on improvements internal system. objective of this internal system is to swiftly reporting any legal violations. identify and resolve formulated as a basic policy “Conflicts of Interest interest, Management Regulations” against undue infringement a system to of its clients, and is preparing of the interests manage conflicts of interest. Requirements for Special Resolutions at the Resolutions at the for Special Requirements Meeting of Shareholders General of Shareholders, a smooth General Meeting To ensure stipulate that shareholders DBJ’s Articles of Incorporation of the voting rights exercisable possessing at least one-third and determine by a two-thirds shall attend the meeting for special resolutions at majority vote the ”requirements shareholders” provided in Paragraph 2, general meetings of Act. Article 309, of the Companies 2) DBJ recognizes compliance as one of its most important DBJ recognizes compliance as one of its most on In addition to its fundamental regulations DBJ’s executives and employees are keenly aware of DBJ’s social mission and responsibilities as a public-sector bank and recognize that illegal acts or improper business operations harm the reputation of DBJ and interfere significantly with DBJ’s ability to fulfill its objectives under the New DBJ Act. We also realize DBJ’s need to always that the management issues. As basic policies to ensure with laws and execution of duties by directors complies we have regulations and the Articles of Incorporation, Compliance formulated a corporate philosophy, a Basic Policy and other compliance-related regulations. Manual and a compliance, DBJ has created a Compliance around DBJ, we compliance program. Via activities in and activities seek to thoroughly implement the compliance outlined below. Specific compliance initiatives are as follows. DBJ has formulated the compliance principles indicated below as part of its creation of compliance regulations. 1) Compliance Principles Compliance To enable them to perform their duties and fulfill the roles To enable them to perform them, in accordance with Paragraph that are expected of Companies Act, DBJ has established 1, Article 426, of the that the liability for damages in its Articles of Incorporation (and former directors) and auditors incurred by directors may be reduced to the legal limit by (and former auditors) of Directors. resolution of the Board Limiting the Responsibility of Directors and of Directors and the Responsibility Limiting Auditors - - Treasury Department President Risk Management Department ALM and Risk Management Committee Investment and Loan Departments/Ofces Credit Analysis Department Committee From the standpointFrom manage risk comprehensive of hold separate The sales and credit analysis departments Management Asset/Liability and Risk Management System Overview Asset/Liability and Risk ment, DBJ established has a Risk Management Department, which overseen is a director by official an in DBJ capacity. seeks its control to risk within total a specified target range. In set addition, risk guidelines each cat we have risk for egory help manage risk. total to credit for roles in the screening and administering of the operations individual loans and each department keeps Investment and of the other in check. The Committee on important Loan Decisions meets as needed to deliberate of issues concerning the management and governance serve to individual loans. These mutual checking functions ensure the appropriateness of the lending operation and management environment. Borrower Rating System DBJ’s borrower rating system measures creditworthiness by combining an evaluation point rating and a borrower category rating, with the result quantifying a potential client’s credit circumstances. The evaluation point rating selects indicator/evaluation categories that are common across all industries, scoring the creditworthiness of the potential borrower quantitatively and qualitatively. On the other hand, the borrower category rating measures specific items related to the borrower, looking at the borrower’s realistic financial condition, cash flows and debt repayment history. By putting the ratings together, the system generates a comprehensive assessment of a borrower’s repayment capacity. ------Annual Report & CSR Report 2012 ment requires creditment management requires individual of loans as well bankwideas portfolio management. Credit risk refers to the risk of sustaining the losses risk refers risk of to Credit resulting a declinefrom assets the of in value deterioration due to in risk manage Credit condition thethe of borrower. financial sisting of DBJ’s executives,sisting DBJ’s of deliberates on important matters risksconcerning and conducts line in monitoring, regular with the basic policy risk manage comprehensive to related ment the approved by Board Directors. of Credit Administration of Individual Loans When making an investment or loan, DBJ examines the a from profitability viability and the project’s project entity’s also fair and neutral standpoint, as well as its benefits. We have an internal rating system. DBJ is not subject borrower for to the Banking Act or the Act on Emergency Measures the Revitalization of the Financial Functions (Act No. 132 of 1998) but carries out independent asset assessments in line with internal quality for self-assessment of credit policies Financial Inspection based on the Financial Services Agency’s subject to an self-assessments are of The results Manual. to the reported audit by an auditing corporation and are to monitored risk and amounts are management. Credit within the limits established for individual confirm they are borrowers. tional efficiency, ongoing to which the prerequisites are appropriate management of ensure To operational viability. individual risk categories, DBJ developed has a risk manage ment system clarifies that which department responsible is each typefor The risk. of Risk Management Department asset/liabilityoversees comprehensive management risk and activities. The ALM con & Risk Management Committee, Risk Management Credit fore we have established we have fore risk management processes and methods. System Risk Management DBJ conducts risk management the from perspectives of soundness financial operamaintaining and improving Risk Management Risk management soundness ensure as as well and safety, To DBJ works value, raise corporate manageappropri risk to with line ately in specific businesscharacteristics. and risk issue an risk is utmost of importance,Controlling and there 122
CSRIntellectualManagement Report Asset Structure Report Risk Management CSRIntellectualManagement Report Asset Structure Report Risk Management 123 claims Normal Doubtful claims Claims Classified Claims Classified Revitalization Act Revitalization under the Financial under the Financial Substandard claims Claims in bankruptcy, reorganization claims and similar claims
Annual Report & CSR Report 2012 Monitoring the situation and considering DBJ calculates and analyzes risk exposure with cash flow DBJ calculates and analyzes risk exposure Portfolio Management data based on DBJ performs a comprehensive analysis of portfolio’s overall borrower ratings, and calculates the loan can be classified exposure to credit risk. Credit risk exposure expected during as (1) expected loss (EL), the average loss loss (UL), the a specific loan period; and (2) unexpected at a certain rate of maximum loss that could be incurred reported to the probability. The EL and UL calculations are ALM & Risk Management Committee. countermeasures allow DBJ to control risk and devise effective measures to improve risk return. creating the risk of reduced profits or the risk of losses. profits the risk of reduced creating of DBJ’s the economic value rate risk can reduce Interest income. assets or interest interest ladder analyses (gap analysis), value at risk (VaR), rate sensitivity analyses (basis point value), and other rate risk associated with methods. A portion of the interest rate swaps, interest through lending operations is covered used solely for hedging purposes. DBJ does not which are risk because it does not engage in have any trading-related trading (specified transactions). Denition Borrowers with favorable business conditions and who have been conrmed business conditions and who have been conrmed Borrowers with favorable nancial circumstances to have no particular problematic Although not legally or formally in bankruptcy, these borrowers are Although not legally or formally in bankruptcy, these falling into experiencing severe nancial difculties and are realistically has been conrmed. bankruptcy, as their lack of potential for restructuring Borrowers in this category are having nancial difculties but are not Borrowers in this category are having nancial the like are progressing bankrupt. Management improvement loans and fall into bankruptcy. poorly, and these borrowers are highly likely to with their nances. These borrowers are likely to require management with their nances. These intervention in the future. Specically, these These borrowers are in bankruptcy, legally and formally. corporate reorganization, borrowers are in bankruptcy or liquidation, under have had transactions bankruptcy proceedings or civil rehabilitation, or suspended by a bill clearinghouse. Borrowers experiencing weak business conditions, are unstable or have issues Borrowers experiencing weak debts of these borrowers requiring caution are Either some or all of the under management. 12 13 14 15 1-8 9-11 Rating Borrower caution Normal bankrupt Bankrupt requiring borrowers borrowers borrowers borrowers danger of Borrowers Effectively bankruptcy Substandard Borrowers in Borrower Rating Classifications Borrower Rating Borrower Category Market Risk rate risk, classified into interest Market risk can be broadly exchange risk and stock market risk. Market risk describes fluctuations in the value of assets or the risk of loss from sheet items), owing to liabilities (including off-balance rates, exchange rates, stock markets and changes in interest into various other markets. DBJ divides these risks broadly rate risk and exchange risk. interest Rate Risk Interest on rates mismatches rate fluctuations can create Interest periods, on assets and liabilities or on interest of interest Market and Liquidity Risk Management Asset Self-Assessment System asset Asset self-assessments are used to define risk or the classifications that will offset recoverability borrower rating, degree of risk of value loss, based on the the collateral the corresponding borrower category and DBJ establish or guarantee status. Such assessments help and reserve timely and appropriate amortization schedules levels. As its main methods of acquiring funds, in addition to As its main methods maintains daytime liquidity by DBJ Additionally, the ALM & Risk Management risk, In addition to credit System Risk Management a computer System risk refers to the risk of loss due to defects, or system breakdown or malfunction, system systems improper computer usage. To properly manage processes risk, DBJ has implemented the following internal to optimize system risk management. The Information Resources Department is responsible for managing DBJ’s system risk centrally, based on its system risk management regulations. By determining security standards from a variety of viewpoints, from information system planning and development to operation and use, the department extends the risk management system bankwide, and addresses appropriate system risk management operations. times, because of market complexities, entities in these entities in these of market complexities, times, because to participate in market may become unable circumstances conduct transactions compelling them to transactions, favorable terms than otherwise under substantially less is risk of losses for these reasons would be the case. The risk. known as market liquidity and taking out long-term loans, issuing corporate bonds funds of long-term on the stable procurement DBJ relies Program Fiscal Investment and Loan the government’s from (FILP) and government-guaranteed rather than on bonds meet unexpected as deposits. To short-term funds such used, funds on hand are short-term funding requirements, Overdraft taking security and liquidity into consideration. established with multiple other have been lines of credit financial institutions. Real Time Settlement Gross using the Bank of Japan’s instantly for each made settlements are (RTGS), whereby that settlement is made to ensure transaction. Every effort appropriately. managed conditions are market risk and liquidity risk. Committee deliberates DBJ’s Within operational risk management, DBJ conducts The General Risk Management Committee has been DBJ manages counterparty risk in swap transactions, the DBJ manages counterparty Annual Report & CSR Report 2012 Operational Risk Management Operational risk refers to the risk of sustaining losses resulting from employees neglecting to perform their duties correctly or from accidents, fraud, and the like. To reduce or prevent operational risk, DBJ prepares manuals, performs checks on administrative procedures, provides education and training and uses systems to reduce the burden of administrative duties. established to deliberate topics concerning operational risk management. operational risk management and systems risk management as described below. Operational Risk Management loss arising from DBJ defines operational risk as the risk of are inappropriate internal processes, people or systems that DBJ works to or non-functioning, or from external events. risk and establish a risk management system to minimize prevent potential risks from materializing. Liquidity Risk in Liquidity risk is the risk of a mismatch occurring used and raised, causing the periods when funds are in the flow of funds (cash liquidity unexpected differences and difficult risk). This situation makes securing funds rates on borrowed interest situations in which creates higher than usual rates. At such substantially funds are Exchange Risk Exchange due to unexpected shifts is the risk of loss Exchange risk a entities holding affects prices, and this risk in exchange liabilities denominated in foreign net excess of assets or of a decline Exchange risk entails the possibility currencies. of assets due to the impact of DBJ’s in the economic value exchange risk exchange rates. DBJ’s changes in currency financing and investment and currency foreign derives from swaps bonds. DBJ uses currency currency issuing foreign to hedge this risk. and other instruments in the swap transaction will be risk that the counterpart by continually monitoring unable to fulfill its obligations, all parties, and by diversifying of the creditworthiness transactions among several institutions. 124
CSRIntellectualManagement Report Asset Structure Report Risk Management CSRIntellectualManagement Report Asset Structure Report Risk Management 125 Annual Report & CSR Report 2012 Do loans Other activities Fund-raising Execution of investments and We alsostrive We manage effectively to the wide of range Appointment and dismissal of representative directors and Appointment and dismissal of representative directors Concurrent positions as directors Amendments to Articles of Incorporation Disposition of surplus funds Merger, corporate split and dissolution fund Basic policy on business plans, redemption plans and auditors procurement Matters requiring authorization of competent Matters requiring authorization minister earn the institution, and to risks trust as a financial we face our clientsof and society as a whole. Competent minister - outside directors) Advisory Board (Outside experts and report Plan business Check performance Evaluation of Formulation of Budgetary plan Status & results management plan Board of Directors Advice Committee Management Act budget allocation re ected in Conclusions DBJ’s Cycle PDCA planning and Review of resource tions their and results. This cycle encourages ongoing improvement. Building a PDCA Cycle Building ActDBJ Check, follows Do, management the cycle Plan, to boost accountability the appropriateness for its of opera We have incorporated a declaration on our policies We have incorporated the DBJ is a registered financial institution under We acquire information about clients through legal We acquire information and manage such information and appropriate means with clients, in the event that DBJ safely. In transactions it ensures appropriate information outsources operations, response. management and client Provisions for Safe Management of Personal Provisions Information in Handling Personal Continuous Improvements Information 3) on related to personal information into our Declaration Personal Information Protection. has drawn Financial Instruments and Exchange Act. DBJ of conflicts up policies introduced for the management overview of the of interest under this act and provides an publicly announced policy. their level of convenience. DBJ recognizes the extreme recognizes the extreme of convenience. DBJ their level the standpoint of of such a system from importance soundness and appropriateness. operational which the information was obtained or provide such information such information which the information was obtained or provide in the event of a corporate merger. 5. manage clients’ updated personal DBJ seeks to appropriately and the leakage of such information, information and prevent maintains rationally sound management measures. accordingly and supervises its directors DBJ appropriately Furthermore, employees and subcontractors who handle clients’ regular personal information. 6. in its handling of ongoing improvements DBJ strives to ensure clients’ personal information and to update the Declaration as with developments in information in accordance appropriate technology or changes in social requirements. for Requesting Personal Information 7. Procedures by notifying clients appropriately DBJ endeavors to respond of the purpose of use of the personal information it retains; to disclose such information; and in to requests responding the event that the content of such information is incorrect, additions for revisions, to clients’ requests responding or deletions, discontinuing use, deleting information, or parties. of such information to third discontinuing the provision 8. Inquiries in good faith to all opinions or DBJ endeavors to respond the use of personal information. regarding requests tions Declaration on Personal Information Protection Declaration on Personal Information Our Client Protection Management Policy is outlined Our Client Protection 1. Policy of personal information protection DBJ considers the appropriate endeavors to use personal DBJ an important social responsibility. in all its activities by conforming information appropriately of Personal of the Act on the Protection with the requirements as laws and regulations, Information, as well as other related well as its own Declaration. Obtainment of Personal Information 2. Appropriate clients’ personal information only within the DBJ acquires to perform its operations, and employs scope that is required for obtaining such information. procedures appropriate 3. Purpose of Using Personal Information DBJ obtains clients’ personal information only for specific purposes and uses such information only within the scope necessary to satisfy such purpose of use. In the event that other concerning limited by legal regulations purposes of use are specified purposes of use, such information is not used for purposes other than so specified. DBJ discloses on its website the purposes of use of clients’ personal information. If information is obtained for other purposes of use, such purposes clearly indicated at the time such information is obtained. are Parties Personal Information to Third 4. Providing clients’ personal information In principle, DBJ does not provide the client permission from parties unless it has received to third to such information or unless it is legally required to provide without obtaining DBJ may, such information. However, provide clients’ personal information to parties provide client approval, it has commissioned to conduct activities within the scope for When transacting with clients, we endeavor to provide When transacting with clients, we endeavor appropriate and explain information that is accurate and in line with laws and regulations. other When we receive requests for consultation, issue from requests or complaints, we strive to see the respond in the client’s point of view, listen sincerely and an operationally appropriate manner. Annual Report & CSR Report 2012 based on this policy, which we employ in briefings to raise based on this policy, in-house awareness. below: 1) 2) Client Protection Management Policy and Declaration on Personal Information Protection Declaration on Personal Information Management Policy and Client Protection Client Protection Management Policy DBJ has formulated a with laws and regulations, to ensure strict compliance of its clients and raise the level of client protect the interests also created internal regula convenience. We have Client Protection Management System/Declaration on Personal on Personal System/Declaration Management Protection Client Interest of Conflicts Managing for Protection/Policy Information of a client protection and maintenance The establishment people it protects the system is vital because management systems and raises financial institution’s who use the 126
CSRIntellectualManagement Report Asset Structure Report Client Protection Management System/Declaration on Personal Information Protection/Policy for Managing Conflicts of Interest CSRIntellectualManagement Report Asset Structure Report Client Protection Management System/Declaration on Personal Information Protection/Policy for Managing Conflicts of Interest 127 Annual Report & CSR Report 2012 Scope of Companies Subject to Management of Conflicts of Scope of Companies Subject Interest Likely to Involve That Are Policy for Managing Transactions Conflicts of Interest Records shall be prepared of measures undertaken by the Conflicts undertaken by the of measures shall be prepared Records Furthermore, Subject Transactions do not include acts that are not include acts that are do Subject Transactions Furthermore, as follows. etc., were subsidiary institutions, As of July 2, 2012, DBJ’s of methods. Subject only specific examples (The following are Separation of the department conducting Subject Transactions from from Separation of the department conducting Subject Transactions the department conducting transactions for said client or Amernding the conditions or instruments of Subject Transactions said client transactions or said client transactions Cessation of Subject Transactions unduly Disclosing to said client the risk of Subject Transactions of said client infringing on the interests 5. Management of Conflicts of Interest—Organization the management of conflicts of interest, the appropriate ensure To Department Management Control duties of a Conflicts of Interest & Compliance Department. handled within its Legal Affairs are Management the Conflicts of Interest with the Policy, In accordance Subject manages prescribed Department appropriately Control as the DBJ Group Furthermore, and conflicts of interest. Transactions its status with in accordance to manage conflicts of interest is required financial institution under the Financial Instruments and as a registered does not violate its legal that the DBJ Group Exchange Act, provided to its duty of confidentiality or its duty of confidentiality in relation including those clients, information pertaining to Subject Transactions, subsidiary financial institutions, etc., of transactions handled by DBJ’s may be managed in a centralized manner. to prescribed Department with regard Management Control of Interest shall be and their management, and such records Subject Transactions date. for a period of five years following the creation retained Management management, the Conflicts of Interest appropriate ensure To Department shall periodically verify the content of activities byControl employees and the content of business executives and regular DBJ Group being conducted in the operations are activities at each branch to ensure for the policy, with the Policy and the operational procedures accordance and shall periodically verify the management of conflicts of interest. n n n n the Financial Instruments and Exchange Act or other under prohibited laws and regulations. 3. transactions are Transactions As stated in 2 (1) above, Subject institutions, etc. subsidiary financial conducted by DBJ or by DBJ’s those DBJ subsidiaries etc.” are ”Subsidiary financial institutions, Financial in Article 36-5 of the prescribed companies or affiliated Act. Instruments and Exchange Co., Ltd. DBJ Asset Management Co., Ltd. Investment Sun Arrows Management Partners, Inc. Healthcare Management Co., Ltd. Milestone Turnaround Limited DBJ Europe DBJ Investment Advisory Co., Ltd. Asuka DBJ Investment LPS DBJ Securities Co., Ltd. Capital L.L.C South East Asia Growth 4. to the Subject Transactions, as In the case of transactions prescribed of its legal or contractual is not in violation extent that the DBJ Group the DBJ duties (including but not limited to the duty of confidentiality), of its clients through in the interest is determined to act properly Group the following or other measures. ) not limited to those indicated below. are Transactions Overview of Policy for Managing Conflicts of Interest Managing Conflicts of Policy for Overview Types of Transaction That Are Likely to Involve Conflicts of Likely That Are of Transaction Types Interest ”Conflicts of interest” are (a) situations of opposing interests situations of opposing interests (a) are ”Conflicts of interest” to financial related in the case of ”business operations ”Clients” are, those instruments” are to financial ”Business operations related Under these conditions, DBJ manages transactions that are likely to likely manages transactions that are Under these conditions, DBJ financial institution under the Financial DBJ is a registered Cases in addition to the above in which the danger exists of unduly of clients owing to Situations of Opposing infringing on the interests Interests. Based on a deep trust-based relationship formed between the DBJ Based on a deep trust-based relationship expectation that and its clients, notwithstanding the client’s Group is in the DBJ Group interests, would act in the client’s the Group to such expectation owing to danger of being unable to act according Situations of Opposing Interests. has By utilizing undisclosed client information that the DBJ Group could rationally act in its own self the DBJ Group the duty to protect, of other clients in transactions that exceed the or the interest interest scope of that duty. Based on a contract of mandate that exists between the DBJ Group Based on a contract of mandate that exists between the DBJ Group has a duty of and its clients, notwithstanding that the DBJ Group of prudent manager or duty of loyalty to said client, the DBJ due care is in danger of being unable to fulfill such duties owing to Group Situations of Opposing Interests. n n n n between the DBJ Group and its clients, or (b) situations of opposing and its clients, between the DBJ Group clients and other clients (hereinafter, between the DBJ Group’s interests that unduly infringe on ”Situations of Opposing Interests”) together, of clients. the interests (a) counterparties in existing instruments” conducted by the DBJ Group, negotiation with the DBJ Group (b) parties in transactional relationships, otherwise having the potential to become to transactions or with regard or (c) parties that have been counterparties in transactional relationships, also legally are transactional counterparties in the past and that currently relationships. to past transactional competent with respect for in Article 70 (2) of the Cabinet Office businesses provided pertaining to financial instruments business, etc., that are Ordinance subsidiary financial institutions, etc. performed by DBJ or DBJ’s of Subject Transaction (2) Types determine whether transactions are Specific individual circumstances examples of transactions but below are judged as Subject Transactions, said Subject Transactions. likely to be considered that are (1) Subject Transaction likely to involve conflicts or ”transactions that are of this Policy, Targets subsidiary conducted by DBJ or DBJ’s those transactions are of interest,” ”the hereinafter, financial institutions or others (defined in 3 below; infringing on the interests that have a likelihood of unduly DBJ Group”) ”Subject (hereinafter, of conflicts of interest of clients as a result Transactions”). involve conflicts of interest to ensure against undue infringement of the against undue infringement to ensure involve conflicts of interest clients. of its interests Act. DBJ has drawn up these ”Rules for Instruments and Exchange ”the Policy”) in (hereinafter, of Interest” Management of Conflicts of conflicts of for the management policies introduced with accordance Ordinances by Cabinet Office this act and as prescribed under interest document pertaining to the financial instruments business. This an overview of the Policy. provides 2. 1. Purpose increasingly by financial institutions grow As the services provided multiple competing or opposing interests diverse, the potential for and the increases, or financial groups within financial institutions will arise. that conflicts of interest likelihood increases DBJ maintains personal and client information, DBJ maintains personal information in a manner that without disclosing such the rights of individuals or related would encroach upon information that would parties. We do not disclose of good faith. counter the doctrine the Internet, DBJ. Through printed materials and over tools to the department uses numerous communication disclose information. status and operating policies, which are an essential part are an essential operating policies, which status and of markets and societies. in a wide range of being trusted our information through we seek to disclose Accordingly, activities. investor relations public relations and (Japanese) http://www.dbj.jp/en DBJ Quarterly Journal is also available in iPhone and iPad http://itunes.apple.com/jp/app/id389307222 DBJ Quarterly Journal (newsletter) DBJ News Digest (mail magazine; Japanese) End-of-Period Financial Reports Annual Report & CSR Report Securities Report (Japanese) Stock Exchange Report (Japanese) Business Report (Japanese) formats. Annual Report & CSR Report 2012 Website: (3) Others The (2) Voluntarily disclosed information Information Disclosure Materials Information Disclosure using such DBJ offers a wide range of information, media as newsletters and its website: (1) Materials legally required for disclosure PR/IR Structure Department The Corporate Planning & Coordination and plays a takes overall charge of PR and IR activities and outside central role in the flow of information within In its PR and IR activities, DBJ aims to comply with In its PR and IR activities, operate in good faith and relevant laws and regulations, with its stakeholders, and disclose in a dignified manner accurately in a timely and information clearly and appropriate manner. Basic PR/IR Philosophy Disclosure and investor relations that public relations DBJ believes and bringing management function of have the important help these activities together. In addition, stakeholders accurate understanding of DBJ’sstakeholders gain an 128
CSRIntellectualManagement Report Asset Structure Report Disclosure Corporate Data 129129 130 131 132 133 134 135 136 139 141
...... Annual Report & CSR Report 2012Annual Report & CSR Report 2012 ...... Corporate Data Corporate ...... for Extraordinary Expenditure and Assistance to for Extraordinary Expenditure and Assistance
Cope with the Great East Japan Earthquake Development Bank of Japan Inc . Act Act Timeline Board of Directors, Corporate Auditors and Directors, Corporate Board of ...... Executive Officers Organization Chart ...... Locations and Directory ...... Subsidiaries ...... Stock Information Excerpt from the Development Bank of Excerpt from the Development Bank . Japan Inc . Act ...... Act for Partial Amendment of the Addition of investment function (pertaining to business in such areas as research and development, urban as research to business in such areas Addition of investment function (pertaining governmentdevelopment and energy use stipulated by ordinance) he Development Bank of Japan Law revised (introduction of additional spot inspections by the Financial of additional (introduction he Development Bank of Japan Law revised Development Bank of Japan Inc. established (Capital: ¥1 trillion) Limited launched DBJ Singapore (Act No. 67 of 2009) Act for Partial Amendment of the Development Bank of Japan Inc. Act (New DBJ Act) of capital to ¥1,103,232 million Increase Limited launched DBJ Europe of capital to ¥1,181,194 million Increase of Act for Partial amendment of the Development Bank of Japan Inc. Act (based on establishment Japan Earthquake (Act No. 40 of 2011)) East and Assistance to Cope with the Great Expenditure Extraordinary of capital to ¥1,187,364 million Increase of capital to ¥1,187,788 million Increase of capital to ¥1,198,316 million Increase Japan Development Bank (JDB) established Japan Development Branch), Nagoya (now (now the Hokkaido Sapporo the Kansai Branch), opened in Osaka (now JDB branches and Fukuoka (now the Kyushu Branch) Branch) the Tokai Finance Public Corporation established Hokkaido Development Development as the Hokkaido-Tohoku Finance Public Corporation reorganized Hokkaido Development Hokkaido Branch) and Sendai (now the (HTDFP) branches opened in Sapporo Finance Public Corporation Branch) (now the Tohoku (now the Shikoku Branch) Takamatsu JDB branch opened in (now the Hokuriku Branch) (now the Chugoku Branch) and Kanazawa in Hiroshima JDB branches opened opened in New York office JDB representative Minami-Kyushu Branch in October 1999) and opened in Kagoshima (renamed offices JDB representative Matsue in London opened office JDB representative Niigata Branch in July 1989) opened in Niigata (renamed office HTDFP representative Japan Development Bank Law revised 1) 2) Addition of R&D fund investment function partially by sale of NTT shares rate loan system funded of low interest JDB and HTDFP creation in Oita, Matsuyama, Okayama and Toyama opened offices JDB representative opened in Hakodate and Aomori offices HTDFP representative JDB commenced loans to assist disaster recovery of bill entitled ”Pertaining to Consolidation and Rationalization of Special-Purpose Cabinet approval and HTDFP and consolidate them as a new bank) Companies, etc.” (decision to dissolve JDB 31, 2001, of March (introduction to the financial environment JDB and HTDFP commenced loans in response sunset clause) No. 73 of 1999) approved The Development Bank of Japan Law (Law of JDB and HTDFP to the Development Bank of Japan (DBJ) of all rights and responsibilities of approval Transfer Corporation and Japan Environment Japan Regional Development of financing operations from Transfer Corporation and Singapore in Kushiro opened offices DBJ representative T Services Agency) of the Important Policy of Administrative Reform Cabinet approval Government of Administrative Reform for Realization of Small and Efficient (Act No. The Act on Promotion 47 of 2006) approved of Policy Finance Policy-Based Financing Reform Plan decided upon by the Headquarters for the Implementation Reform The Development Bank of Japan Inc. Act (Act No. 85 of 2007) approved October June September November March December March June April June April April July January June September February September December June December June Annual Report & CSR Report 2012 2008 2008 December 2009 2009 2009 2010 2011 May 2011 2012 2012 Development Bank of Japan Inc . 1951 Timeline Bank of Japan and the Development Public Corporation Development Finance Hokkaido-Tohoku Bank, the The Japan Development 1952 1956 1957 1960 1961 1962 1963 1964 1972 1985 1987 1989 1995 1997 1997 1999 1999 October 2002 May 2005 2006 May 2006 June 2007 130
Corporate Data Timeline Corporate Data Board of Directors, Corporate Auditors and Executive Officers 131 Annual Report & CSR Report 2012 (As 2012) of 1, September
Managing Executive Officer Officer Managing Executive Officer Managing Executive Head of Kansai Branch Managing Executive Officer, Hideo Oishi Head of Business Planning & Executive Officer, Coordination Department Haruhisa Kawashita Head of International Strategy & Executive Officer, Coordination Department Satoshi Tomii Strategic Finance Group, In charge of Portfolio Investment Group, Finance Group, Structured Investment Group, Border & Cross Growth Syndication Group Osamu Koyanagi Branch In charge of Kansai Branch, Chugoku Branch, Shikoku Satoshi Tomizuka (In charge of Internal Audit) Executive Officer Seiji Jige (In charge of Special Missions) Executive Officer Masafumi Aizawa (In charge of Financial Institution) Executive Officer Kenkichi Fukuda Head of Human Resources Executive Officer, Management Department Shin Kikuchi Head of Corporate Planning & Executive Officer, Coordination Department Kazuyo Hachisuka Head of Risk Management Executive Officer, Department In charge of Risk Management Department, Legal Affairs & Legal Affairs Risk Management Department, In charge of Compliance Department Ido Toshiaki Department In charge of Treasury Susumu Kusano Department, Corporate Finance In charge of Urban Development Asset Finance Group Department [Division 3], Masahiko Ichie Department [Division 1 and 2] In charge of Corporate Finance Hideyuki Kadono 4] In charge of Corporate Finance Department [Division Hisato Nagao 5] In charge of Corporate Finance Department [Division Hashimoto Tetsumi Regional Mid-Size & Growth, In charge of Corporate Finance Group, Branch, Niigata Planning Department, Hokkaido Branch, Tohoku Branch Branch, Hokuriku Branch, Tokai Takahiro Suzuki Takahiro Managing Executive Officer Managing Executive Officer Executive Officer Managing Managing Executive Officer Officer Managing Executive Kazuyoshi Arakawa, Makoto Ito and Shinji Hatta are outside corporate auditors under Article 16 of Section 2 of the Companies Act. Akio Mimura and Kazuo Ueda are outside directors under Article 15 of Section 2 of the Companies Act. 2. 1.
Notes: Shinji Hatta Corporate Auditor (Outside) Full-Time Corporate Auditor (Outside) Full-Time Makoto Ito Corporate Auditor (Outside) Full-Time Corporate Auditor Full-Time Kazuyoshi Arakawa Takeshi Kobayashi Takeshi Corporate Auditor Full-Time Mitani Yasuhito Kazuo Ueda Director (Outside) Akio Mimura Director (Outside) In charge of Environmental Initiative & Corporate Social Responsibility- Initiative In charge of Environmental Regional Support Department, Business Development Department, Institute of Capital Planning Department (Administration), Research Formation, Kyushu Branch, Minami-Kyushu Branch Masanao Maeda Director and Managing Executive Officer Masaaki Komiya Director and Managing Executive Officer Department, Economic In charge of Business Planning & Coordination Department & Industrial Research In charge of Corporate Planning & Coordination Department (Public In charge of Corporate Planning & Coordination Financial Institution Relations & Corporate Social Responsibility Office), Department Department, International Strategy & Coordination In charge of Accounting Department, Credit Analysis Department In charge of Accounting Department, Credit Takeuchi Yo Director and Managing Executive Officer Shindo Tetsuhiko Director and Managing Executive Officer Executive Officer Director and Managing Department & Coordination In charge of Corporate Planning & Corporate Social Responsibility (excluding the Public Relations General Affairs Department, Resources Information Office), Department Deputy President Hajime Watanabe Hideto Fujii Deputy President i Masanori Yanag Hashimoto Toru & CEO President Board of Directors, Corporate Auditors and Executive Officers Officers Executive and Auditors Corporate of Directors, Board Otemachi Redevelopment Project Of ce Settlement & Accounting Operation Of ce Economic Research Of ce Corporate Management & Accounting Research Of ce Public Relations & Corporate Social Responsibility Of ce Healthcare & Hospitality Industry Of ce Tohoku Revival Reinforcement Of ce Risk Management Department Information Resources Department General Affairs Department Accounting Department Treasury Department Financial Institution Department Internal Audit Department Business Development Department Economic & Industrial Research Department Regional Planning Department Research Institute of Capital Formation Credit Analysis Department Legal Affairs & Compliance Department Secretariat Of ce Human Resources Management Department Corporate Planning & Coordination Department Asset Finance Group Portfolio Investment Group Strategic Finance Group Growth & Cross Border Investment Group Structured Finance Group Syndication Group Department Environmental Initiative & Corporate Social Responsibility-Support Corporate Finance Department, Division 2 Corporate Finance Department, Division 3 Corporate Finance Department, Division 4 Corporate Finance Department, Division 5 Corporate Finance Department, Mid-Size & Growth Corporate Finance Group, Hokkaido Branch Business Planning & Coordination Department Business Planning Department Urban Development Strategy & Coordination Department International Division 1 Corporate Finance Department, Chugoku Branch Shikoku Branch Kyushu Branch Minami-Kyushu Branch Tohoku Branch Niigata Branch Hokuriku Branch Tokai Branch Kansai Branch (As of July 2012) 1, Executive Committee Committee Operations Audit Of ce of Representative Of ces: Hakodate, Kushiro, Aomori, Toyama, Matsue, Okayama, Matsuyama, Oita Representative Of ces: Hakodate, Kushiro, Aomori, Toyama, Matsue, Okayama, Matsuyama, DBJ Europe Limited Overseas Representative Of ce: New York Overseas Subsidiaries: DBJ Singapore Limited, Corporate Auditor Corporate Auditors/ Directors Board of Board of Corporate Auditors General Meeting of Shareholders Annual Report & CSR Report 2012 Organization Chart Chart Organization 132
Corporate Data Organization Chart Corporate Data Locations and Directory
133 Old Broad St. Broad Old 125 Street Level 20, Old Broad Throgmorton St. Cornhill
Threadneedle Walk Threadneedle St. Threadneedle DBJ Europe Limited Sixty Thread Needle Street Royal Exchange Bartholomew Lane Representative Of ces: Hakodate Kushiro Aomori Toyama Matsue Okayama Matsuyama Oita Annual Report & CSR Report 2012 Bank Bank of England
Lothbury Prince’s St. New York Representative Of ce DBJ Europe Limited Level 20, 125 Old Broad Street, London EC2N 1AR, U.K. Tel: +44-20-7507-6070 Domestic Branch Of ces, Branch Of ces, Domestic Of ces Representative Branch Of ces: Hokkaido Tohoku Niigata Hokuriku Tokai Kansai Chugoku Shikoku Kyushu Minami-Kyushu
To Kanda JR Line To Tokyo Cecil St. Raf es Place Ocean Bldg. DBJ Singapore Limited NTT Tei-Park UOB Plaza Marunouchi Line Otemachi Sta. (Direct from Exit A1) Bharat Bldg. Market St. 55 Market Street DBJ Singapore Limited (Exit C1) Equity Plaza
Koko Bldg. Tokyo Sankei Building Church St. Shuto Expressway Golden Shoe Park DBJ Singapore Limited 9 Raf es Place, #30-03 Republic Plaza, Singapore 048619 Tel: +65-6221-1779 Development Bank of Japan Inc. New Head Of ce Hanzomon Line Otemachi Sta. KDDI (As of July 2012) 1, Hibiya Dori (St.) Chiyoda Line Japan Business Otemachi Sta.
Federation (Exit C1) 52nd St. 51st St. 50th St. 49th St. (Keidanren)
5th Ave. Rockefeller Center Radio City Music Hall
(Relocating November 26, 2012) (Relocating 6th Ave. Hilton New York Sheraton New York Hotel and Towers
Development Bank of Japan Inc. 7th Ave.
DBJ Europe Limited 49th St. 49th
Broadway St. 50th Overseas Representative Of ce and Subsidiaries Overseas Representative Of ce Head Of ce Head Of ce (Since November 2012) City Otemachi Financial South Tower, 9-6, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8178, Japan New Head Of ce New Head Of ce 9-1, Otemachi 1-chome, 9-1, Otemachi Chiyoda-ku, Tokyo 100-0004, Japan Tel: +81-3-3270-3211 http://www.dbj.jp/en Locations and Directory and Directory Locations New York Representative Of ce 1251 Avenue of the Americas, Suite 830, New York, NY 10020, U.S.A. Tel: +1-212-221-0708 99 .99 66 .65 50 .58 50 .00 50 .00 49 .40 (0 .01) (0 .00) (0 .00) (0 .01) 100 .00 100 .00 100 .00 100 .00 100 .00 100 .00 100 .00 100 .00 100 .00 100 .00 100 .00 Rights (%) Total Voting Total Voting Percentage of Percentage of
3 99 50 40 80 68 99 500 479 986 1,786 1,300 6,680 29,600 34,687 Yen) Capital €7 million (Millions of S$1 million Established 2003 2010 2010 1998 1989 2009 2006 2008 2005 2008 2005 March 10, February 1, October 1, October 22, June 1, 1990 April 3, 2006 December 13, June 5, 2009 December 1, January 18, February 15, October 28, July 9, 2010 December 16, June 6, 2003 October 14, July 9, 2010 Principal Businesses business startups rights, consigned trusts operation and guidance advisory services support and advisory services agency services support and advisory support and advisory services investment associations investment associations Investment consulting Investment in new Acquisition of beneficiary and Research, consulting Investment and loan Real estate leasing Investment advisory and Investment associations Securities business Investment and loan Management of Investment associations Investment associations Investment associations Management of Investment associations Investment associations Address Chiyoda-ku, Tokyo Chiyoda-ku, Tokyo Chiyoda-ku, Tokyo Chiyoda-ku, Tokyo London, United Kingdom Chiyoda-ku, Tokyo Chiyoda-ku, Tokyo Chiyoda-ku, Tokyo Minato-ku, Tokyo Republic of Singapore Chiyoda-ku, Tokyo Chiyoda-ku, Tokyo Chiyoda-ku, Tokyo Chiyoda-ku, Tokyo Chiyoda-ku, Tokyo Chuo-ku, Tokyo Chiyoda-ku, Tokyo (As of March 2012) 31, Company Figures indicated within parentheses ( ) in the column showing DBJ’s percentage of total voting rights in subsidiaries indicate indirect holdings. Further, for Figures indicated within parentheses ( ) in the column showing DBJ’s percentage of total voting rights in DBJ Investment LPS, the percentage of financing UDS Corporate Mezzanine Limited Partnership, UDS III Corporate Mezzanine Limited Partnership and Asuka is stated. company, it is treated as a subsidiary. DBJ’s equity ownership in Asuka DBJ Investment LPS is less than 50%, but as DBJ effectively controls the becoming a consolidated subsidiary. On October 1, In August 2011, DBJ Securities acquired common stock of the former Hitachi Capital Securities Co., Ltd., 2011, the company’s name was changed to DBJ Securities Co., Ltd. DBJ Business Investment Co ., Ltd . DBJ Business Investment Co ., Ltd . New Business Investment DBJ Credit Line, Ltd . Institute Inc . Japan Economic Research DBJ Europe Limited DBJ Real Estate Co ., Ltd . DBJ Investment Advisory Co ., Ltd . DBJ Capital Investment Fund No . 2 DBJ Securities Co ., Ltd . DBJ Singapore Limited DBJ Corporate Mezzanine Partners Co ., Ltd . UDS Corporate Mezzanine Limited Partnership UDS III Corporate Mezzanine Limited Partnership Asuka DBJ Investment LPS DBL Capital Co ., Ltd . DBJ New Business Investment Fund DBJ Capital Investment Fund No . 1 Annual Report & CSR Report 2012 7. There are 17 consolidated subsidiaries and 15 affiliated companies. Notes: 1. Amounts of less than ¥1 million have been omitted in the figures stated above. than that amount have been omitted. 2. DBJ’s percentage of total voting rights in subsidiaries is shown to three decimal places. Percentages less 3. 4. The date of establishment shown for DBJ Singapore Limited indicates the date the company was incorporated. 5. 6. Subsidiaries Subsidiaries Subsidiaries Consolidated 134
Corporate Data Subsidiaries Corporate Data Stock Information 135
Note 3 100 .00 100 .00 1,060,466 1,060,466 1,060,466 1,060,466 1,060,466 Note 2 Capital surplus (Millions of yen) (Millions of — — — — Percentage of total equity (%) Note 3 (97,248) Note 2 Annual Report & CSR Report 2012
Changes in capital surplus capital surplus (Millions of yen) (Millions of 43,632 43,632 1,000,000 1,000,000 1,103,232 1,181,194 1,187,364 1,187,788 Paid-in capital Paid-in capital (Millions of yen) (Millions of (Thousands of shares) Number of shares held — 424 6,170 77,962 103,232 1,000,000 Changes in paid-in capital paid-in capital (Millions of yen) (Millions of — 40,000 40,000 42,064 43,623 43,632 — issued Address Number of shares Number of shares (Thousands of shares) (Thousands 8 — — 2,064 1,559 40,000 (As of March 2012) 31, 1-1, Kasumigaseki 3-chome, Chiyoda-ku, Tokyo shares issued shares issued (Thousands of shares) (Thousands Changes in number of Changes in number Note 4 Note 5 Note 4 Note 4 Total Finance Minister Based on this requirement, these delivery bonds were redeemed effective December 7, 2011. The face value of delivery bonds decreased by this amount, Based on this requirement, these delivery bonds were At the third meeting of the Development Bank of Japan, Inc., Asset Evaluation Committee on January 28, 2009, the committee determined the value of At the third meeting of the Development Bank of Japan, In accordance with Article 9 of the Supplementary Provisions to the New DBJ Act, on October 1, 2008, all assets of the predecessor were transferred to In accordance with Article 9 of the Supplementary Provisions bonds were redeemed on June 6, 2012. The face value of delivery bonds decreased by this amount, and at the same time DBJ’s common stock increased by bonds were redeemed on June 6, 2012. The face value for this increase in common stock. the equivalent of the required redemption amount. The number of shares was not affected by procedures and at the same time DBJ’s common stock increased by the equivalent of the required redemption amount. The number of shares was not affected by and at the same time DBJ’s common stock increased procedures for this increase in common stock. By resolution of the General Meeting of Shareholders on June 26, 2009, and provisions of the Companies Act (Article No. 448, Paragraph 1, and Article By resolution of the General Meeting of Shareholders reserve to other capital surplus and transfer from other capital surplus to retained earnings. 452), the deficit was covered by transfer from capital per share; paid-in capital is ¥50,000 per share. budget for fiscal 2009, in accordance with the provisions of Article 2-4, Paragraph 1, of the Development Bank of Japan Inc. Act and the supplementary to ¥6,170 million was required for redemption on November 24, 2011. Appendix to the New DBJ Act, an amount equivalent assets (as of October 1, 2008) for transfer authorization. The value of these assets less the value of liabilities less ¥1 trillion in capital amounted to assets (as of October 1, 2008) for transfer authorization. ¥1,157,715 million. As of October 1, 2008, according to the provisions of Article 2 of the Supplementary Provisions to DBJ’s Articles of Incorporation, the value of the capital As of October 1, 2008, according to the provisions of in Paragraph 1, Article 16, of the Supplementary Provisions to the New DBJ Act to be the value of reserve was calculated by evaluation officers as stipulated capital. assets less the value of liabilities less the ¥1 trillion in the new DBJ as an in-kind contribution (except those prescribed for ongoing use by the Japanese government under Paragraph 2, Article 15, of the the new DBJ as an in-kind contribution (except those were transferred to the Japanese government, the capital investor in the predecessor, through a Supplementary Provisions to the Act), and these shares gratuitous conveyance. All shares issued on October 1, 2008, were to raise capital corresponding to incorporation. All shares issued on October 1, 2008, were to raise capital By way of a rights offering, all shares of common stock were assigned to the Minister of Finance (for consideration). The issue price (amount paid) is ¥50,000 By way of a rights offering, all shares of common stock October 1, 2008 June 26, 2009 December 7, 2011 March 23, 2012 September 24, 2009 March 23, 2010 Shareholder 6. As is stated above, delivery bonds in the amount of ¥10,528 million were required for redemption on May 18, 2012. Based on this requirement, the delivery 6. As is stated above, delivery bonds in the amount of 3. 4. of the ¥1,350 billion in delivery bonds issued under the Act for the Partial Amendment of the 5. To secure a financial base for crisis response operations, 2.
Notes: 1. Number of Shares Issued and Paid-in Capital Shares Issued and Number of Stock Information Information Stock (Unofficial translation) (Unofficial (Act No. 85 of 2007) No. 85 of (Act business operations fall within those operations referred to operations referred fall within those business operations in Item (7); 2, Paragraph 8, to in Article do the activities referred To and Exchange Act; Financial Instruments Item (7) of the 8, to in Article 2, Paragraph do the activities referred To Instruments and Exchange Act Item (9) of the Financial or the handling of primary offering (limited, in the case of to those to be conducted upon secondary distribution, instruments business operators entrustment by financial instruments trading business engaged in the type I financial 1 of the Financial set forth in Article 28, Paragraph Act (the financial instruments Instruments and Exchange 2, Paragraph 9 of the Financial dealers set forth in Article the same), and Act; hereinafter Instruments and Exchange business operators); for such financial instruments 8, to in Article 2, Paragraph do the activities referred To Act; Item (11) of the Financial Instruments and Exchange to in Article 2, Paragraph 8, activities referred do the To Act; Item (13) of the Financial Instruments and Exchange to in Article 2, Paragraph 8, activities referred do the To Act; Item (15) of the Financial Instruments and Exchange With securities are to securities (including, if such respect by such securities) or not issued, rights to be represented to in each Item of Paragraph 2 of transactions referred Act, Article 33 of the Financial Instruments and Exchange Paragraph to do the activities set forth in each Item of said 9, 11 to in Items 3, 5, 7 through (other than those referred and 13); entities with consulting services regarding other provide To corporate split, share-for-share merger, business transfer, transfer (kabushiki exchange (kabushiki kokan) or share for these transactions; iten), or to act as a broker entities with consulting services regarding other provide To provide management, and to conduct investigations or for the business operations of other information as required entities; or training regarding investigations, research conduct To financial and other economic issues; and Items. incidental to each of the foregoing do activities To (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) The Corporation may issue the Development Bank of Japan Bonds. If the Corporation intends to start acceptance of deposits set forth in Article 3, Paragraph 1, Item (1) or issue of the Development Bank of Japan Bonds, the Corporation shall of the Minister of Finance. obtain the prior approval referred If the Minister of Finance intends to give the approval paragraph, the Minister of Finance shall, in to in the preceding advance, have a discussion with the Prime Minister and obtain his/her consent. If the Corporation intends to solicit those who will subscribe for for sale set forth in Article 199, Paragraph 1 of offered shares the Companies Act (Act No. 86 of 2005, as amended) to as the ”Shares in Article 34, Item (4) referred (hereinafter set forth in for Sale”) or stock acquisition rights offered Offered in Article 238, Paragraph 1 of the Companies Act (hereinafter to the ”Stock Acquisition Rights Article 34, Item (4) referred or stock acquisition rights in or to deliver shares Offered”), exchange, the Corporation connection with a share-for-share shall obtain authorization of the Minister of Finance.
Article 5 Issue of the Development Bank of Japan Bonds 1. Article 9 Special Rules When Starting Acceptance of Deposits, Etc. 1. 2. Article 12 Shares 1. To enter into derivatives transactions set forth in Article 2, To Paragraph 20 of the Financial Instruments and Exchange Act (other than those that fall within the securities-related these derivatives transactions), except in cases where To act as an agent or intermediary for execution of To for lending money on behalf of which provides agreements banks (the banks set forth in Article 2, Paragraph 1 of the Banking Act (Act No. 59 of 1981, as amended); hereinafter the same) and other entities engaged in the financial business stipulated in the Cabinet Order; To acquire or transfer Short-term Notes, Etc.; acquire To To subscribe for Specified Debentures or Preferred or Preferred subscribe for Specified Debentures To Investment Securities issued by a Specified Purpose the Specified Purpose Company (limited to the cases where only designated monetary claims or Company acquires in trusts with which designated beneficial interests derived entrusted with cash proceeds monetary claims are or Preferred issue of those Specified Debentures from Investment Securities as set forth in the Asset Liquidation in case of Specified Debentures, Plans, and except for, Specified Short-term Notes), and other similar securities (hereinafter stipulated in the Ministry of Finance Ordinance to as the ”Specified Debentures”) in this Item referred it is intended for secondary (except in cases where distribution (uridashi)), or to handle primary offering so subscribed; (boshu) of the Specified Debentures To acquire or transfer monetary claims (including claims or transfer acquire To by certificates stipulated in the Ministry of represented such as negotiable bank deposit Finance Ordinance certificates); To lend Securities; To To guarantee the due performance of debts and guarantee To obligations; To make capital contributions; make To To lend money; To To accept deposits (limited to certificates of deposit (CDs) accept To and other deposits stipulated in the Cabinet Order); To sell and purchase Securities (other than those that fall purchase sell and To by certificates set forth within monetary claims represented Item (8)) in Item (7), Short-term Notes, Etc.; the same in (other than those that fall within securities-related derivatives transactions (which mean the securities-related Paragraph 8, derivatives transactions set forth in Article 28, Act (Act Item (6) of the Financial Instruments and Exchange in this Item and No. 25 of 1948, as amended); hereinafter derivatives Item 11 the same), or enter into securities-related transactions (limited to those made for investment these business operations purposes), except in cases where to in Item (3); fall within those operations referred (11) (10) (9) (8) (7) (6) (4) (3) (2) The Corporation shall engage in the following business The Corporation shall engage in the following operations to attain its objectives: (1) Annual Report & CSR Report 2012
(5)
Excerpt from the Development Bank of Japan Inc. Act Inc. of Japan Bank the Development from Excerpt Article 1 Purpose as to referred (hereinafter Bank of Japan Inc. The Development stock company shall be a joint the ”Corporation”) object is to maintain the foundations of (kabushikikaisha) whose functions of long-term business funds as investment and financing of Japan by conducting business activities the Development Bank combining investments and financing and utilizing the methods of methodologies, while maintaining other sophisticated financial full-scale with the goal of realizing the autonomy of management to smooth supply of funds to contributing privatization, thereby business funds, as well as to the those who need long-term functions. sophistication of financial Article 3 Scope of Business Operations 1. 136
Corporate Data Excerpt from the Development Bank of Japan Inc. Act (Act No. 85 of 2007) Corporate Data Excerpt from the Development Bank of Japan Inc. Act (Act No. 85 of 2007) 137 Annual Report & CSR Report 2012 in Article 2 of the Long-Term Credit Bank Act (Act No. 187 Bank Act (Act No. Credit of the Long-Term in Article 2 amended)); of 1952, as trading business set forth in in type I financial instruments of the Financial Instruments and Article 28, Paragraph 1 Exchange Act); Lending Business Act (Act No. Paragraph 2 of the Money and exclude those who 32 of 1983, as amended), to in the referred conduct the business concurrently stipulated requirements Items or fall within other preceding Ordinance); in the Ministry of Finance Business Act (Act No. 154 of Paragraph 2 of the Trust 2004, as amended)); Act (Act in Article 2, Paragraph 2 of the Insurance Business No. 105 of 1995, as amended)); and similar to each of the foregoing. those who are (1) Banks; Subject to Authorization”) its subsidiary (the subsidiary set forth set forth (the subsidiary subsidiary its to Authorization”) Subject Act), the Corporation Item (3) of the Companies in Article 2, of Finance in advance: authorization of the Minister shall obtain set forth banks banks (the long-term credit credit (2) Long-term Dealers (limited to those who engage (3) Financial Instruments money lenders set forth in Article 2, (4) Money lenders (the Article 2, companies (the trust companies set forth in (5) Trust set forth (6) Insurance companies (the insurance companies as Ordinance (7) Those stipulated by the Ministry of Finance Incorporation of Resolutions for amendment to the Articles of than the Corporation, disposition of surplus funds (other corporate disposition of losses) such as distribution, merger, without split, and dissolution shall not become effective authorization of the Minister of Finance. of Article 10, Paragraph 1 of the Notwithstanding the provision Fiscal Loan Funds Act, the fiscal loan funds may be and the for the Corporate Debentures appropriated in the following Development Bank of Japan Bonds (hereinafter Paragraph, immediately following Article and Article 25, Etc.”) to be issued to as the ”Debentures, Paragraph 1 referred for proceeds the resulting by the Corporation to appropriate for its operations set forth in Article 3, expenses required Paragraphs 1 and 2. of Article 3 of the Act on Notwithstanding the provision Restrictions on Financial Assistance by the Government to Corporations (Act No. 24 of 1946, as amended), the Government for the may enter into a guarantee agreement Etc., to the extent of the to the Debentures, obligations relating of the Diet. by the resolutions amount approved The competent minister under this Act shall be the Minister of that in the case that the however, Finance provided, to in Article 9, referred Corporation obtains the approval Article 20 Etc. Amendment to the Articles of Incorporation, 1. Article 22 Fiscal Loan Funds Special Exemptions from Management of 1 of the of Article 10, Paragraph Notwithstanding the provisions the fiscal Fiscal Loan Funds Act (Act 100 of 1951, as amended), set forth in Article 2 loan funds (which means the fiscal loan funds be the same) may of the Fiscal Loan Funds Act; hereinafter to simply in Article 24 referred for loans (hereinafter appropriated Corporation as the ”Loans”) to the Corporation when the for its for expenses required money for appropriation borrows operations set forth in Article 3, Paragraphs 1 and 2. Article 23 1. Article 25 Guarantee of Obligations 1. Article 29 Competent Ministers 1. If the Corporation intends to make any of the following entities to in Items (other than individuals in the cases of those referred to as the ”Subsidiaries referred (3), (4) and (7); hereinafter Except in cases where the provision of Article 4, Paragraph 2 the provision Except in cases where is a company if the Corporation (or, applies, any director maintaining committees (iinkai secchi kaisha), any executive who performs the day-to-day business of the officer) business of any Corporation shall not perform the day-to-day Minister of other corporation without authorization of the Finance. for of an application The Minister of Finance shall, upon receipt Paragraph, grant to in the preceding the authorization referred it is determined his/her authorization, except in cases where with sound and proper that any matter so applied may interfere management of the Corporation. Prior to the beginning of each fiscal year, the Corporation shall year, beginning of each fiscal Prior to the the issue of corporate its basic policy regarding prepare of Japan the Development Bank (shasai) (other than debentures and the the same) hereinafter Debentures;” Bonds, ”Corporate Bonds (excluding the short-term Development Bank of Japan 66, Item (1) of the Act Concerningnotes set forth in Article the (Act No. 75 of Corporate Debentures Central Depositary System the Corporate Debentures both from of 2001, as amended) of Japan Bonds, respectively; and the Development Bank 18 the same), as well as in this Article and Article hereinafter one than (limited to those with more the borrowings regarding Article and Article 18 the in this year to maturity; hereinafter to the issue of the relating for matters same), which provides Bank of Japan and the Development Corporate Debentures such as the amounts of of money, Bonds, and the borrowing of the Corporate currency denominated issue and borrowings, the the Development Bank of Japan Bonds and Debentures, as stipulated in the Ministry of Finance Ordinance, borrowings, If the and obtain authorization of the Minister of Finance. it, the same shall apply. Corporation intends to revise Article 19 Subsidiaries Subject to Authorization 1. Article 18 Redemption Plan the Corporation shall Prior to the beginning of each fiscal year, draw the plans for the Corporate Debentures, out redemption and obtain Bank of Japan Bonds and the borrowings Development authorization of the Minister of Finance, as stipulated in the If the Corporation intends to revise Ministry of Finance Ordinance. it, the same shall apply. Article 16 Authorization of Concurrent Positions of Directors 1. 2. Article 17 Business Plan the Corporation shall Prior to the beginning of each fiscal year, draw out a business plan for the new fiscal year and obtain authorization of the Minister of Finance, as stipulated in the If the Corporation intends to revise Ministry of Finance Ordinance. it, the same shall apply. Resolution for Election of Representative Directors and Other Resolution for Election of Representative Directors Officers the representative Resolutions for appointment and dismissal of of the Corporation, executive officers or representative directors or appointment appointment and dismissal of statutory auditors, ) shall not and dismissal of audit committee members (kansaiin of Finance. without authorization of the Minister become effective 1. Article 15 Article 13 Article Bank of Japan Bonds and Development Corporate Debentures, Borrowings For management of the Assumed Assets set forth in the For management of the Region (which or the Tohoku in the Hokkaido Cabinet Order Miyagi, Akita, Yamagata, of Aomori, Iwate, means the areas of Finance and Minister prefectures): Fukushima and Niigata and and Transport; Minister of Land, Infrastructure than the For management of the Assumed Assets other of Item: Minister Assumed Assets set forth in the preceding Finance. The values of assets and liabilities assumed by the Corporation by the Corporation assets and liabilities assumed The values of as to referred following Paragraph DBJ (in the immediately from by evaluation shall be as evaluated Properties”) the ”Assumed (hyoka iin). officers This is an unofficial English translation. Only the original This is an unofficial over this and prevail Japanese texts of the act have legal effect solely for translation. This translation has been prepared of this translation should purposes. The reader reference consult the original Japanese text for the purposes of and applying the act to any legal issues or interpreting disputes. Article 16 Article Assumed of Properties Values 1. Article 18 Competent Ministers under Article 26, Paragraph 2 and Article The competent ministers of assets to be assumed by the 27, Paragraph 1 for management Article 15, Paragraph 1 of the Corporation pursuant to to as this Article referred in (hereinafter Supplementary Provisions of shall, notwithstanding the provisions the ”Assumed Assets”) be as follows: Article 29, Paragraph 1, (1) (2) Article 66 Review (3) of the On or prior to the date set forth in Article 1, Item measures the Government review Supplementary Provisions, shall the equal competitive conditions with other business to secure and to the systems for which the investment entities, with respect of provisions utilized pursuant to the financing functions of DBJ are under those acts), such as the acts (including ordinances relevant of Japan to the Development Bank Act on Security for Loans from as amended), Electric Utility Corporations (Act No. 145 of 1950, amended), the Act the Oil Stockpiling Act (Act No. 96 of 1975, as of Alternative of Development and Introduction on the Promotion Act on Special Energy (Act No. 71 of 1980, as amended), the by Concerning of Urban Development Measures the Promotion the Act on Private Sectors (Act No. 62 of 1987, as amended), Business Activities for the Rational to Promote Measures Temporary (Act No. 18 use of Energy and the Utilization of Recycled Resources Finance of Private of 1993, as amended) and the Act on Promotion considering the Initiative (Act No. 117 of 1999, as amended), while convenience of users of those systems, and take the required of such review. based on the results measures Article 67 Investment and Financing Utilization of the Corporation’s Functions for Long-term Business Funds investment and If the Government utilizes the Corporation’s financing functions for long-term business funds on or after the date set forth in Article 1, Item (3) of the Supplementary the Government necessary to Provisions, shall take measures the equal competition conditions, as well as other secure necessary for utilization of such investment and measures financing functions, paying attention to the Corporation’s with other business entities. competitive relationships appropriate DBJ shall be dissolved at the time of establishment of the any and all rights and obligations of Corporation, whereupon DBJ shall be taken over by the Corporation, except for those assets to be assumed by the Government as set forth in the following Paragraph. Of the rights actually held by DBJ at the time of establishment no of the Corporation, the assets which will be considered longer necessary for the Corporation to smoothly perform its business operation shall be assumed by Japan at the time future of establishment of the Corporation. In order for the Corporation to smoothly start the business for the Corporation to smoothly start the business In order Development operations as soon as it is duly organized, The to as ”DBJ”) may borrow referred Bank of Japan (hereinafter in Article 42, Long-term Loans, in addition to those set forth Paragraphs 1 and 2 of the Development Bank of Japan Act (Act except for Article 26 No. 73 of 1999, as amended; hereinafter, to as the ”DBJ Act”), referred of the Supplementary Provisions, the date on Period (the period from during the Preparatory up to September 30, 2008; the which this act comes into force same in Paragraph 5). For a period from the effectuation of this act until the of this the effectuation For a period from Government of all of the Government-Owned disposes Shares, such as matters, the Government time to time review shall from the method in which the Government- matters regarding should be disposed of and take the required Owned Shares so that the of such review, based on the result measures investment and financing foundation of the Corporation’s maintained. functions for long-term business funds will be Pursuant to Article 6, Paragraph 2 of the Act on Promotion of 2 of the Act on Promotion Pursuant to Article 6, Paragraph for Realization of Small and Efficient Administrative Reform Government No. 47 of 2006), the Government (Act shall intend by it of the held the number of the shares to reduce Paragraph and the in the following Corporation (hereinafter as ”Government- to Article referred immediately following the market situation, and taking into account Owned Shares”), five to seven years in approximately shall dispose all of them Article. of the preceding the date set forth in Item (3) from Paragraph 1, the competent ministers for the following matters matters the following ministers for competent 1, the Paragraph the Prime Minister. Minister of Finance and shall be the Annual Report & CSR Report 2012 Article 9 Capital Contribution Upon the incorporation of the Corporation, DBJ shall contribute except assets to be assumed by Japan all of its properties, pursuant to Article 15, Paragraph 2 of the Supplementary to the Corporation. Provisions, Article 15 Dissolution of DBJ, Etc. 1. 2. Special Rules for Business Operations during the Preparatory Special Rules for Business Operations during the Period 1. Article 3 Abolition of this Act and Other Measures If the Government Government-Owned disposes of all of the to the Government measures Shares, shall immediately take assign necessary to smoothly abolish this act, as well as measures and obligations of the business operations, functions, and rights of as a bearer the Corporation to any organization to be formed and financing the functions commensurate with the investment functions held by the Corporation. Article 4 2. Article 2 Shares Disposition of the Government-Owned 1. Supplementary Provisions Supplementary 138
Corporate Data Excerpt from the Development Bank of Japan Inc. Act (Act No. 85 of 2007) Corporate Data Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 67 of 2009) 139 (Unofficial translation) (Unofficial Annual Report & CSR Report 2012 into account the status of the capital contributions by the Government of Article to the Corporation under the provisions 2-2 of the Development Bank of Japan Inc. Act as amended by of the Governmentthis Act; the redemption bonds under the of the Article 2-4, Paragraph 2 of the supplementary provisions Development Bank of Japan Inc. Act as amended by this Act; the implementation of the Crisis Response Operations by the Corporation; and the changes in socioeconomic and other a point of view of maintaining the from circumstances involvements with the Corporation by the State such as letting the Government exceeding one- consistently hold its shares in the aim of ensuring issued shares of the Corporation’s third implementation of the Crisis Response the appropriate Operations by the Corporation. of Administrative Reform for Realization of Act on Promotion conducted by March 31, 2012). March conducted by under of the government all or a part bonds delivered redeem must Article, 2 of the preceding of Paragraph the provisions comply without delay. capital of the Corporation’s paragraph, the amount preceding immediately prior to the shall be the sum of its capital the money redeemed. and the amount of redemption paragraph, the term of the preceding applying the provisions with ”case, or in cases to be replaced ”case” shall be deemed of the Supplementary Provisions Article 2-4, Paragraph 3 where of Japan Inc. Act (Act No. 85 of to the Development Bank 2007) is applied.” of paragraphs, necessary matters concerning the redemption government by the Government under the bonds delivered Article shall be of Paragraph 2 of the preceding provisions determined by Finance Ministry ordinance. In the event that as of July 1, 2012, any government bonds of Article 2-3, Paragraph 2 of the under the provisions delivered the Corporation unredeemed, remain Supplementary Provisions bonds to the Government.must return such unredeemed of the preceding bonds returned to it under the provisions paragraph. paragraphs, necessary matters concerning the return and of government by the Government bonds delivered retirement of Article 2-3, Paragraph 2 shall be under the provisions determined by Ministry of Finance Ordinance. 2 Notwithstanding the provisions of Article 6, Paragraph 2 of the 2 Notwithstanding the provisions 2 The Government, when requested by the Corporation to by the Corporation to 2 The Government, requested when of the under the provisions has been made 3 When redemption applied in 445, Paragraph 1 are of Article 4 When the provisions stipulated in each of the preceding 5 Other than the matters Return of the Government Bonds Article 2-5 1 any government 2 The Government retire must immediately two 3 Other than the matters stipulated in the preceding License Tax Exception to Imposition of Registration and Article 2-6 of made under the provisions When capital contributions are made or redemptions Article 2-2 of the Supplementary Provisions of Article 2-4, Paragraph 2 of the under the provisions shall not a Registration and License Tax Supplementary Provisions, by the Corporation, in capital received be imposed on the increase is obtained as specified by Ministry of that registration provided Finance Ordinance. In Article 2, Paragraph 1 of the Supplementary Provisions, Provisions, Paragraph 1 of the Supplementary In Article 2, By the end of fiscal year 2011, the Government shall review implementation of the Crisis Response what the appropriate to the Crisis Response Operations Operations (referring of Article 2, Item 5 of the Japan under the provisions prescribed Finance Corporation Act (Act No. 57 of 2007); same implemented by the Development Bank of Japan hereinafter) the Corporation”) and the appropriate Inc. (hereinafter” organization of the Corporation based on that including the by the Governmentway of holding its shares should be, and taking based on these reviews, shall take necessary measures paragraph, to the extent of the amount approved by the by the paragraph, to the extent of the amount approved budget, shall issue the government and deliver them to bonds the Corporation. shall be noninterest-bearing. otherwise attached as security rights, or may not be transferred, disposed of. in of Paragraph 1, other than that provided the provisions Finance Paragraph 3, shall be determined by Ministry of Ordinance. of the the redemption The Corporation, may request of government as set forth in the provisions bonds delivered Article, only within the amount of Paragraph 2 of the preceding as the capital calculated by the Ministry of Finance Ordinance of to the increase necessary amount of capital in response to its Crisis Response Operations (limited to those assets related The Government, in implementing the crisis response The Government, crisis response in implementing the Corporation operations in Article 2, Item 5 of the Japan Finance to as ”Crisis referred Act (Act No. 57 of 2007; hereinafter Response Operations”) may issue the government bonds in to ensure of the capital required to use for securement order 31, 2012. of the Corporation, until March the financial strength Review, Etc. Review, Article 2 1 Supplementary Provisions Enforcement Date Article 1 on the date of its promulgation. This act shall take effect 3 Government bonds issued under the provisions of Paragraph 1 3 Government provisions bonds issued under the of Paragraph 1 4 Government provisions bonds issued under the 5 Necessary matters concerning government bonds issued under Redemption of the Government Bonds Article 2-4 1 Delivery of the Government Bonds Delivery of the Government Article 2-3 1 of the preceding 2 The Government, pursuant to the provisions The Development Bank of Japan Inc. Act (Act No. 85 of 2007) Act (Act No. 85 of 2007) Bank of Japan Inc. The Development below. amended as described shall be partially by the Government Capital Contribution Article 2-2 The Government may make capital contributions to the by the of the amount approved Corporation, to the extent until March Governmentbudget, whenever the deems necessary, 31, 2012. (Act No. 67 of 2009) No. 67 of (Act ”Article 3 of the to read Article” shall be amended ”the following ”the day stipulated in Item 3 of and Supplementary Provisions” The following five ”April 1, 2012”. Article” to read the preceding Article 2. articles shall be added after Act Inc. of Japan Bank Development the of Amendment for Partial Act June 25, 2009 (Unofficial translation) (Unofficial House of Councilors Committee on Financial Affairs House of Councilors Committee on Financial based on its findings. Any such reviews should take into based on its findings. Any such reviews that the Corporation acts for the account the need to ensure of the funds that it has a stable source good of the community, of long-term to fulfill its functions as a provider required investment and loans, and that it has systems in place to secure and employees. The Governmentcompetitive officers should any damage to the to prevent measures take appropriate long-term value. Corporation’s policy-based finance by Development Bank of Japan Inc. and the importance of the Japan Finance Corporation, reaffirming and functions and paying attention to their their roles not only with private financial institutions but also relationships with the Japanese financial sector as a whole, including organizations and the Japan Post Bank. affiliated Amendment Act”), in regard to the application of the provisions provisions to the application of the Act”), in regard Amendment of on Promotion Paragraph 2 of the Act of Article 6, of Small and Efficient Reform for Realization Administrative of the preceding Government under the provisions as amended said date, ”and” shall be the Article up to the day before into account the market with ”taking deemed to be replaced of all such capital contributions in situation, and shall dispose after implementation of the five to seven years approximately and the paragraph, mentioned in the preceding measures Government make capital contributions in.” shall of the preceding Act, the provisions Shoko Chukin Amendment in In this case, ”the following Article” Article shall not apply. shall be the Supplementary Provisions Article 2, Paragraph 2 of 4 of the Supplementary with ”Article deemed to be replaced Amendment of the Shoko to the Act for Partial Provisions the Supply Chukin Bank Limited Act and Other Act to Facilitate (Act No. 54 of of Funds to Small and Medium-sized Enterprises 2009).” • of provision The Government the future should reassess Resolutions passed. 2 If this Act come into effect after the date of enforcement of the the date of enforcement after effect 2 If this Act come into Delegation to Government Ordinance Article 5 of this Act for the enforcement required measures Transitional shall be determined by government ordinance. If this Act come into effect prior to the date of enforcement of prior to the date of enforcement If this Act come into effect Bank the Act for Partial Amendment of the Shoko Chukin of Funds to Limited Act and Other Act to Facilitate the Supply 54 of 2009; Small and Medium-sized Enterprises (Act No. ”Shoko Chukin mentioned in the following paragraph as the Small and Efficient Government No. 47 of 2006) as (Act Small and Efficient following Article of the to the provisions amended pursuant of the Article 2, Paragraph 1 of and the provisions Bank of Japan of the Development Provisions Supplementary to this Act, the GovernmentInc. Act as amended pursuant shall of the Corporation prior to the shares not dispose of its holding shall be taken. paragraph described in the preceding measures Development Bank of Japan Inc. and take necessary measures Development Bank of Japan Inc. and take necessary measures financial impacts, and the balance of loans to small and medium must be made to further efforts enterprises falling steadily, facilitate loans by the Japan Finance Corporation to small and medium-sized businesses. In implementing Crisis Response Operations for large and midscale enterprises, Development Bank of Japan Inc. must be certain to expedite loans to associated small and medium enterprises as well. measures for additional capital contribution, Development Bank measures in a smooth result the measures of Japan Inc. shall ensure analysis by drawing supply of funds on the basis of appropriate upon its accumulated knowledge and skills. Annual Report & CSR Report 2012 Partial Amendment of the Act on Promotion of Partial Amendment of for Realization of Small and Efficient Administrative Reform Government Article 3 Reform for Realization of of Administrative The Act on Promotion Government shall be partially amended as Small and Efficient follows. paragraph” in Article preceding described in the ”In the measures April 1, 2012.” to ”from 6, Paragraph 2 shall be revised Adjusted Provisions Article 4 1 Supplementary Resolutions on the Bill for Partial Amendment of the Development Bank of Japan Inc. Act Supplementary Resolutions on the Bill • in The Government its holding of shares should review • With the global monetary crisis having serious economic and The following matters should receive the Government’s careful careful the Government’s The following matters should receive consideration. • In implementing Crisis Response Operations based on the recent 140
Corporate Data Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 67 of 2009) Corporate Data Amendment of the Development Bank of Japan Inc. Act (based on establishment of the Act for Extraordinary Expenditure and Assistance to Cope with the Great East Japan Earthquake (Act No. 40 of 2011)) 141 (Unofficial translation) (Unofficial Annual Report & CSR Report 2012 (based on establishment of the on establishment (based The Government, in implementing the crisis response The Government, crisis response in implementing the to as the “Crisis Response referred operations (hereinafter in Article 2, Item 5 of the Japan Operations”) prescribed may issue the Finance Corporation Act (Act No. 57 of 2007) capital of the government to use for securement bonds in order of the Corporation, the financial strength to ensure required 31, 2015. until March by the paragraph, to the extent of the amount approved budget, shall issue the government bonds and deliver them to the Corporation. (Reference 1) The Supplementary Provisions of the 1) The Supplementary (Reference Act (After the amendment Bank of Japan Inc. Development of the the Act for Partial Amendment pursuant to Act and the Amendment Bank of Japan Inc. Development pursuant to the Act for and Replacement reading and Assistance to Cope with the Extraordinary Expenditure to as the referred (hereinafter, Great East Japan Earthquake Expenditure”.)) ”Act for Extraordinary Shares Disposition of the Government-Owned Article 2 of 2 of the Act on Promotion Pursuant to Article 6, Paragraph for Realization of Small and Efficient Administrative Reform Government No. 47 of 2006), the Government (Act shall intend by it of the Corporation held the number of the shares to reduce and Article 3 of the in the following Paragraph (hereinafter to as “Government-Owned referred Supplementary Provisions, shall taking into account the market situation, and Shares”), from five to seven years dispose all of them in approximately April 1, 2015. Capital Contribution by the Government Article 2-2 The Government to the may make capital contributions the by Corporation, to the extent of the amount approved budget, whenever the Government necessary to facilitate deems 31, March operations, until implementation of the crisis response 2015. Delivery of the Government Bonds Article 2-3 1 of the preceding 2 The Government, pursuant to the provisions Redemption of the Government Bonds Article 2-4 of the government the redemption The Corporation may request of Paragraph 2 of as set forth in the provisions bonds delivered Article, only within the amount of capital calculated the preceding as the necessary amount of by the Ministry of Finance Ordinance to its Crisis of assets related to the increase capital in response 31, Response Operations (limited to those conducted by March 2015). Partial Amendment of the Act for Partial Amendment of the Development Bank of Japan Inc. Act Article 11 The Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 67 of 2009) shall be partially amended as follows. Within of Article 2, Paragraph 1 of the Supplementary Provisions the Development Bank of Japan Inc. Act, “the end of fiscal year to “the end of fiscal year 2014,” and 2011” shall be revised the it shall be applied by replacing ”(including the cases where of Article 36 of the term and phrase pursuant to the provisions and Assistance to Cope with the Expenditure Act for Extraordinary East Japan Earthquake (Act No. 40 of 2011))” shall be Great added next to “Article 2, Paragraph 2 of the Supplementary of the Development Bank of Japan Inc. Act”, and Provisions of the ”Article 2-4, Paragraph 2 of the Supplementary Provisions to “Article Development Bank of Japan Inc. Act” shall be revised of the 2-4, Paragraph 2 of the Supplementary Provisions Development Bank of Japan Inc. Act after the amendment pursuant to this Act.” Partial Amendment of the Development Bank of Japan Inc. Partial Amendment of the Development Bank Act Article 9 be partially The Development Bank of Japan Inc. Act shall amended as follows. Supplementary ”April 1, 2012” in Article 2, Paragraph 1 of the be of the Development Bank of Japan Inc. Act shall Provisions to “April 1, 2015”. revised Partial Amendment of the Act on Promotion of Partial Amendment of the Act on Promotion and Efficient Administrative Reform for Realization of Small Government Article 7 of of Administrative Reform for Realization The Act on Promotion Government 2006) shall be Small and Efficient (Act No. 47 of partially amended as follows. to revised April 1, 2012.” in Article 6, Paragraph 2 shall be ”from April 1, 2015.” ”from Supplementary Provisions Special Rules for the Development Bank of Japan Inc. Act Bank of Japan Inc. for the Development Special Rules Article 36 the issuance or capital contribution and to the With regard of Government of to facilitate implementation bonds redemption specified in Article 2, operations (operations the crisis response Corporation Act (Act No. 57 of Item (5) of the Japan Finance 133) by the Development Bank of 2007), as well as in Article East Japan Earthquake, within the Great Japan Inc. to cope with to the Development Provisions Article 2-2 of the Supplementary 31, 2012” (Act No. 85 of 2007), “March Bank of Japan Inc. Act 31, 2015,” and “as with “March replaced shall be deemed to be with “as it be deemed to be replaced it deems necessary” shall implementation of the crisis response deems necessary to facilitate Article 2-3, Paragraph 1 and Article 2-4, operations,” and within 31, “March supplementary provisions, Paragraph 1 of the same 31, 2015,” with “March to be replaced 2012,” shall be deemed supplementary and within Article 2-5, Paragraph 1 of the same with “July 1, 2012” shall be deemed to be replaced provisions, ”July 1, 2015.” Amendment of the Development Bank of Japan Inc. Act Inc. Act Japan of Bank Development of the Amendment Act for Extraordinary Expenditure and Assistance to Cope with the Great East Japan Earthquake (Act No. 40 of 2011)) No. 40 (Act Earthquake East Japan the Great Cope with to and Assistance Expenditure Extraordinary Act for 40 of 2011) Article 36) of the Development Bank of Japan Inc. Bank of Japan Article 36) of the Development 40 of 2011) of the Government by this Act; the redemption Act as amended 2 of the supplementary the Article 2-4, Paragraph bonds under Inc. Act as Bank of Japan of the Development provisions implementation of the Crisis amended by this Act; the the Corporation; and the changes in Response Operations by a point of view from circumstances, socioeconomic and other with the Corporation by the of maintaining the involvements GovernmentState such as letting the consistently hold its in shares issued of the Corporation’s exceeding one-third shares implementation of the appropriate the aim of ensuring the by the Corporation. Crisis Response Operations Reform for Realization of of Administrative Act on Promotion Government (Act No. 47 of 2006) as Small and Efficient of the following Article provisions amended pursuant to the of Article 2, Paragraph 1 of the and the provisions Japan of the Development Bank of Supplementary Provisions GovernmentInc. Act as amended pursuant to this Act, the shall to the of the Corporation prior not dispose of its holding shares paragraph shall be taken. described in the preceding measures 2 Notwithstanding the provisions of Article 6, Paragraph 2 of the provisions 2 Notwithstanding the By the end of fiscal year 2014, the Government By the end of fiscal year shall review of the Crisis Response implementation what the appropriate Response Operations to the Crisis Operations (referring 2, Item 5 of the Japan of Article under the provisions prescribed (Act No. 57 of 2007); same Finance Corporation Act Development Bank of Japan implemented by the hereinafter) and the appropriate “the Corporation”) Inc. (hereinafter based on that including the organization of the Corporation Government by the should be, and way of holding its shares taking based on these reviews, shall take necessary measures by the into account the status of the capital contributions of Article Government the provisions to the Corporation under (including the replacement 2-2 of the Supplementary Provisions and Expenditure pursuant to the Act for Extraordinary readings No. East Japan Earthquake (Act Assistance to Cope with Great Annual Report & CSR Report 2012 (Reference 2) The Supplementary Provisions of the Act for Provisions of the Act 2) The Supplementary (Reference Inc. Bank of Japan of the Development Partial Amendment to the Act for the amendment pursuant Act (After Expenditure) Extraordinary Etc. Review, Article 2 1
Amendment of the Development Bank of Japan Inc. Act (based on establishment of the Act for Extraordinary Expenditure and Assistance to Cope 142 Corporate Data with the Great East Japan Earthquake (Act No. 40 of 2011)) Financial Condition 143 144 186 189 ...... Annual Report & CSR Report 2012 . . . Consolidated Financial Statements ...... Non-Consolidated Financial Statements Capital Adequacy Status Financial Condition Financial — 677 525 158 (1,817) 77,006 57,121 85,864 (13,049) 337,160 234,981 164,062 229,397 620,503 956,702 297,154 2012 1,563,674 1,941,926 1,563,674 6,586,298 1,860,200 1,611,971 2,201,754 1,088,940 (1,842,667) Thousands of 29,866,604 29,943,610 14,451,734 12,902,620 14,315,887 159,615,727 111,577,487 166,023,471 U.S. Dollars (Note 1) U.S. Dollars (Note $189,559,337 $189,559,337 $ 38,088,519 $ 2,136,741 — — 52 48 17 711 (101) 5,530 4,581 5,960 (1,158) 17,406 13,169 25,885 36,137 52,981 61,852 24,819 2011 145,068 132,329 145,068 316,675 122,296 181,486 (161,607) 2,404,464 2,409,995 1,181,194 1,060,466 8,576,482 1,165,580 12,435,218 13,031,480 ¥14,845,213 ¥14,845,213 ¥ 3,312,713 ¥ 233,297 — 55 43 12 Millions of Yen (149) 6,329 4,694 7,057 (1,072) 27,711 19,313 50,999 13,484 78,631 18,854 89,500 24,423 2012 128,518 159,606 128,518 541,327 132,487 180,962 152,889 (151,448) 2,454,736 2,461,065 1,187,788 1,060,466 9,170,553 1,176,622 13,118,816 13,645,469 ¥15,579,881 ¥15,579,881 ¥ 3,130,495 ¥ 175,618 Total liabilities and equity Total Foreign currency translation adjustments translation currency Foreign Deferred gain on derivatives under hedge accounting Deferred Unrealized gain on available-for-sale securities (Note 30) gain on available-for-sale Unrealized Annual Report & CSR Report 2012 Total Minority interests equity Total
See notes to consolidated financial statements. Reserve for contingent losses Acceptances and guarantees (Note 13) Equity: in 2012 and Common stock authorized, 160,000 thousand shares in 2012 and 43,623 2011; issued, 43,632 thousand shares in 2011 (Note 15) thousand shares Capital surplus (Note 15) Retained earnings (Note 15) Reserve for directors’ and corporate auditors’ retirement benefits and corporate auditors’ retirement Reserve for directors’ tax liabilities (Note 24) Deferred liabilities Total income: Accumulated other comprehensive Short-term corporate bonds (Notes 9 and 28) Short-term corporate bonds (Notes 9 and and corporate auditors Accrued bonuses to directors benefits (Note 23) Reserve for employees’ retirement Customers’ liabilities for acceptances and guarantees (Note 13) Customers’ liabilities for acceptances and Allowance for loan losses (Notes 8 and 28) Allowance for investment losses assets Total Liabilities and equity Liabilities: (Notes 9, 14 and 28) Debentures money (Notes 10 and 28) Borrowed Corporate bonds (Notes 9 and 28) Other liabilities (Notes 11 and 12) Accrued bonuses to employees Loans (Notes 4, 5, 14 and 28) Loans (Notes 4, 5, 14 and 14) Other assets (Notes 6 tax assets (Note 24) Deferred Call loans and bills bought (Note 28) Call loans and bills bought (Notes 28 and 30) Money held in trust 28 and 30) Securities (Notes 3, 14, assets (Note 7) fixed Tangible Intangible fixed assets Reverse repurchase agreements (Notes 3 and 28) agreements Reverse repurchase As of March 31, As of March Assets 28) banks (Note Cash and due from Consolidated Balance Sheet Balance Consolidated Subsidiaries Bank of Japan Inc. and Consolidated Development 144
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 145 38 693 505 6,714 1,506 1,287 3,493 1,408 10.41 11,655 31,906 38,722 67,197 88,671 $21.56 261,446 127,076 388,522 952,326 460,765 285,287 579,975 115,118 460,747 189,694 2012 1,340,848 2,676,841 1,272,235 4,017,689 1,892,168 3,088,567 Thousands of $ 940,671 $3,374,627 U.S. Dollars (Note 1) U.S. Dollars (Note U.S. Dollars (Note 1) 3 10 75 371 944 607 149 171 149 165 Annual Report & CSR Report 2012 1,481 1,315 2,500 9,998 7,238 1,147 12,012 36,708 37,903 52,920 12,642 42,275 19,268 2011 104,381 103,065 259,464 116,646 363,846 172,231 271,860 ¥101,583 ¥298,929 ¥2,328.63 Yen 3 56 41 Millions of Yen 957 551 123 105 287 115 856 2,622 3,182 5,522 9,461 7,287 21,488 10,444 31,932 78,271 37,870 23,447 47,668 37,868 15,590 2012 110,204 220,009 104,564 330,213 155,517 253,849 ¥ 77,313 ¥277,360 ¥1,772.27 Income before income taxes and minority interests Income before income taxes and minority Other interest expense Other interest Interest on corporate bonds on Interest Interest on short-term corporate bonds on Interest Interest on borrowed money borrowed on Interest Interest on call money and bills sold on Interest Interest on debentures on Interest Other interest income Other interest Interest on swaps Interest Interest on due from banks on due from Interest Interest on reverse repurchase agreements repurchase on reverse Interest Interest on call loans and bills bought on call loans and bills Interest Cash dividend applicable to the year Interest and dividends on securities Interest Basic net income Interest on loans Interest Income taxes (Note 24): Current Deferred income taxes Total Net income before minority interests Minority interests in net income Net income Fees and commissions (Note 20) Other operating expenses (Note 21) General and administrative expenses Other expenses (Note 22) expenses Total
Other operating income (Note 18) Other income (Note 19) income Total Expenses expense: Interest Fees and commissions (Note 17)
See notes to consolidated financial statements. Per share of common stock (Note 16) Income income: Interest For the year ended March 31, March For the year ended Consolidated Statement of Income Statement Consolidated Subsidiaries Bank of Japan Inc. and Consolidated Development
209 (601) 44,628 232,514 125,178 107,728 2012 Thousands of $1,140,212 $1,184,840 $ 952,326 U.S. Dollars (Note 1) U.S. Dollars (Note (22) (46) 1,475 8,277 6,273 2,073 2011 ¥109,867 ¥111,343 ¥103,065 17 Millions of Yen (49) 3,668 8,854 19,110 10,288 2012 ¥93,714 ¥97,382 ¥78,271 Total other comprehensive income other comprehensive Total Minority interests Owners of the parent Share of other comprehensive income in affiliates accounted in affiliates income of other comprehensive Share for by the equity method Foreign currency translation adjustments currency Foreign Deferred gain on derivatives under hedge accounting gain on derivatives under Deferred Unrealized gain on available-for-sale securities gain on available-for-sale Unrealized Annual Report & CSR Report 2012
Comprehensive income income attributable to: comprehensive Total
See notes to consolidated financial statements. Other comprehensive income (Note 26): Other comprehensive For the year ended March 31, March For the year ended minority interests Net income before Consolidated Statement of Comprehensive Income of Comprehensive Statement Consolidated Subsidiaries Bank of Japan Inc. and Consolidated Development 146
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 147 (579) 9,718 5,159 5,159 (1,817) (1,238) 77,006 67,288 74,748 75,070 75,070 337,160 125,371 211,789 234,981 160,232 940,671 209,259 940,671 2012 (608,792) (608,792) 1,941,926 1,610,047 29,322,243 12,902,620 12,902,620 14,451,734 Dollars (Note 1) Thousands of U.S. Thousands of U.S. $29,943,610 $14,371,505
— — — — (46) (54) (101) Annual Report & CSR Report 2012 5,530 6,252 2,078 (9,094) 22,908 17,406 11,154 13,169 11,091 40,779 (17,378) (10,033) (10,033) 2011 132,329 101,583 101,583 2,327,538 1,060,466 1,060,466 1,181,194 ¥2,409,995 ¥1,181,194
Millions of Yen (47) 798 424 424 (149) (101) 6,170 6,329 5,530 6,143 6,170 27,711 10,304 17,406 19,313 13,169 77,313 17,198 77,313 (50,036) (50,036) 2012 159,606 132,329 2,409,995 1,060,466 1,060,466 1,187,788 ¥2,461,065 ¥1,181,194 Capital increase due to redemption of government due to redemption Capital increase compensation bonds Balance at beginning of year Balance at end of year Net change during the year Balance at beginning of year Balance at end of year Net change during the year Balance at beginning of year Balance at end of year Net change during the year Balance at beginning of year Balance at end of year Net change during the year Balance at beginning of year Balance at end of year Net income Balance at end of year Cash dividends Net change during the year Capital increase due to redemption of government of due to redemption Capital increase compensation bonds Balance at beginning of year Balance at end of year Net income Balance at beginning of year Balance at beginning Balance at beginning of year Balance at beginning Cash dividends Balance at end of year Issuance of new shares of common stock Issuance of new shares Issuance of new shares of common stock Issuance of new shares
Total equity: Total
Minority interests:
Foreign currency translation adjustments: Foreign currency translation adjustments:
Deferred gain on derivatives under hedge accounting: Deferred gain on derivatives under hedge
Accumulated other comprehensive income: securities: Unrealized gain on available-for-sale
Retained earnings:
Capital surplus: Common stock: For the year ended March 31, March For the year ended
See notes to consolidated financial statements.
Consolidated Statement of Change in Equity in of Change Statement Consolidated Subsidiaries Bank of Japan Inc. and Consolidated Development — — — (54) 754 6,582 5,159 1,350 1,300 2,563 1,614 (1,338) (8,654) (1,045) 75,070 15,016 19,213 18,032 24,587 31,428 (42,794) (32,004) (20,787) (13,780) (38,522) 135,791 143,768 620,503 2012 (608,792) (209,084) (634,753) (336,391) (217,443) (150,891) (123,597) (564,775) (919,215) (490,985) 2,429,639 6,458,680 1,261,792 3,410,445 2,733,326 7,228,025 1,892,168 (7,566,130) (1,917,911) (1,860,200) (7,470,359) (2,217,033) (3,374,627) $1,340,848 $1,510,425 Dollars (Note 1) Thousands of U.S. Thousands of U.S. 0 (4) (3) — — — — 17 21 106 (623) (553) 2,848 8,111 1,790 2,342 7,923 1,984 (2,020) (1,215) (2,107) (9,665) (2,104) (6,727) (1,845) (1,837) 54,828 83,217 16,948 63,148 74,494 15,330 (22,439) (10,033) (26,021) (15,157) (41,815) (29,624) 2011 144,756 362,248 303,109 179,991 483,181 172,231 (175,029) (153,000) (191,498) (505,997) (298,929) ¥104,381 ¥199,692 1,469,407 (1,727,311) (4) — — — 61 Millions of Yen (85) 540 424 110 106 210 132 (110) (711) 6,170 1,234 1,579 1,482 2,020 2,583 (3,517) (2,630) (1,708) (1,132) (3,166) 11,160 11,816 50,999 (50,036) (17,184) (52,170) (27,648) (17,871) (12,401) (10,158) (46,418) (75,550) (40,354) 2012 199,692 530,838 103,706 280,304 224,652 594,071 155,517 (621,860) (157,633) (152,889) (182,217) (613,988) (277,360) ¥110,204 ¥124,141 Returns on (payments for) income taxes Call money and bills sold Reverse repurchase agreements Reverse repurchase Call loans and bills bought Due from banks Due from Short-term corporate bonds Reserve for contingent losses Reserve for employees’ retirement benefits Reserve for employees’ retirement Accrued bonuses to directors and corporate auditors Accrued bonuses to directors Accrued bonuses to employees Allowance for investment losses Allowance for loan losses Dividends paid to minority shareholders of subsidiaries Dividends paid to minority shareholders Proceeds from issuance of securities to minority shareholders of of securities to minority shareholders issuance from Proceeds subsidiaries Payments for cash dividends Proceeds from issuance of stock issuance from Proceeds Capital increase due to redemption of government due to redemption compensation Capital increase bonds Proceeds from purchases of stocks of subsidiaries resulting in of stocks of subsidiaries resulting purchases from Proceeds change in scope of consolidation Proceeds from sales of intangible fixed assets sales from Proceeds Payments for purchases of intangible fixed assets Payments for purchases Proceeds from sales of tangible fixed assets sales from Proceeds Payments for purchases of tangible fixed assets Payments for purchases Proceeds from decrease of money held in trust decrease from Proceeds Payments for increase of money held in trust Payments for increase Proceeds from redemption of securities redemption from Proceeds Proceeds from sales of securities sales from Proceeds Payments for purchases of securities Payments for purchases Interest paid Interest Interest received Interest Changes in operating assets and liabilities: Loss (gain) on sales of fixed assets—net Loss (gain) on sales of Foreign exchanges losses Foreign Gain on money held in trust—net Gain on money held (Gain) loss on securities—net Interest expense Interest Interest income Interest Equity in gains of affiliates Losses on impairment of long-lived assets Losses on impairment Annual Report & CSR Report 2012 Foreign currency translation adjustments on cash and cash equivalents Net cash used in financing activities Net change in cash and cash equivalents Cash and cash equivalents of newly consolidated subsidiaries Cash and cash equivalents at beginning of year
Net cash provided by investing activities Cash flows from financing activities:
Net cash (used in) provided by operating activities Net cash (used in) provided by operating Cash flows from investing activities: Other—net Sub-total
Corporate bonds Corporate Debentures money Borrowed Loans
See notes to consolidated financial statements. Cash and cash equivalents at end of year Adjustments for: Depreciation For the year ended March 31, March For the year ended activities: Cash flows from operating minority interests income taxes and Income before Consolidated Statement of Cash Flows of Cash Statement Consolidated Subsidiaries Bank of Japan Inc. and Consolidated Development 148
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 149 Annual Report & CSR Report 2012 DBJ Business Investment Co., Ltd. DBJ Corporate Mezzanine Partners Co., Ltd. UDS Corporate Mezzanine Limited Partnership UDS Corporate Mezzanine No. 3 Limited Partnership DBJ Credit Line, Ltd. New Business Investment Co., Ltd. DBJ Singapore Limited Japan Economic Research Institute Inc. Asuka DBJ Investment LPS DBJ Europe Limited DBJ Real Estate Co., Ltd. DBJ Investment Advisory Co., Ltd. DBJ Capital Co., Ltd. DBJ Capital Investment Fund No. 1 DBJ New Business Investment Fund DBJ Capital Investment Fund No. 2 DBJ Securities Co., Ltd. Scope of Consolidation in which DBJ Inc., directly or indirectly, is able to exercise control over Under the control concept, those companies 8, 2006, the Accounting Standards Board of Japan (“ASBJ”) issued operations are fully consolidated. On September Solution on Application of Control Criteria and Influence Criteria to Practical Issues Task Force No. 20, “Practical for the period and the fiscal years ending on or after September 8, Investment Associations” which was effective the control and influence concept should be practically applied to the 2006. The practical solution clarifies how vehicles, such as limited partnerships, Tokumei Kumiai and other entities consolidation scope of collective investment with similar characteristics. Consolidated Subsidiaries as of March 31, 2012 is 17. The consolidated subsidiaries as of March 31,The number of consolidated subsidiaries 2012 are as follows: due to acquisition of its shares. In the year ended March 31, 2012, DBJ Securities Co., Ltd. was newly consolidated Principles of Consolidation (1) (i) In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made reclassifications and rearrangements have financial statements, certain In preparing these consolidated yen. omitting the figures less than one million in millions of yen are rounded down by The amounts indicated
Summary of Significant Accounting Policies 2 . Summary of Significant Accounting (a) to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to order to present them in a form which statements issued domestically in to the consolidated financial financial statements to been made in the 2011 consolidated In addition, certain reclassifications have readers outside Japan. used in 2012. conform to the classifications thereto may not financial statements and the notes of each amount appearing in the accompanying Accordingly, the sum the convenience in U.S. dollars are presented solely for of the individual account balances. Amounts be equal to the sum the effective exchange rate prevailing as of March 31, 2012, has been of readers outside Japan. The rate of ¥82.19=$1.00, or of such amounts is not intended to imply that Japanese yen amounts have been used in the conversion. The presentation or settled in U.S. dollars at that rate or any other rate. could have been readily translated, realized 1 . Basis of Presentation forth in the provisions set in accordance with have been prepared financial statements consolidated The accompanying for and Ministerial Ordinance regulations and its related accounting and Exchange Act Financial Instruments the Japanese generally and in conformity with accounting principles Bank of Japan Inc. (“DBJ Inc.”) Accounting of the Development requirements certain respects as to application and disclosure GAAP”), which are different in accepted in Japan (“Japanese Reporting Standards. of International Financial Notes to Consolidated Financial Statements Financial to Consolidated Notes Subsidiaries Bank of Japan Inc. and Consolidated Development Makuhari Messe, Inc. Hokkaido International Airlines Co., Ltd. Urban Redevelopment Private Fund New Perspective One LLC Narumi Corporation Shinwa Seiko Corporation Mediclude Co., Ltd. Advangen, Inc. Asahi Fiber Glass Company, Limited Nihon Shoryoku Kikai Co., Ltd. PRISM BioLab Corporation Izumi Products Company OPAL Co., Ltd. Springsoft, Inc. SKYROCKIT, Inc. Teibow Co., Ltd. Unconsolidated Subsidiaries Unconsolidated of subsidiary as The major unconsolidated 31, 2012 is 23. subsidiaries as of March of unconsolidated The number Partnership. Mezzanine Limited 2012 was UDS II Corporate March 31, no material because such exclusion has are excluded from the scope of consolidation Unconsolidated subsidiaries earnings and assets, income, net income, retained financial statements in terms of total impact on the consolidated and losses. deferred hedge gains Equity Method Application of the to exercise affiliates over which DBJ Inc. has the ability concept, unconsolidated subsidiaries and Under the influence are accounted for by the equity method. significant influence not accounted for by the equity method Unconsolidated subsidiaries was 23. by the equity method as of March 31, 2012 subsidiaries not accounted for The number of unconsolidated accounted for by the equity method was UDS II Corporate Mezzanine The major unconsolidated subsidiary not Limited Partnership. Affiliates accounted for by the equity method the equity method as of March 31, 2012 was 15. The major affiliates The number of affiliates accounted for by March 31, 2012 were as follows: accounted for by the equity method as of for by the equity method: Changes in scope of affiliates accounted Co., Ltd. was newly incorporated and the materiality of Asahikawa Since DBJ-JAIC Investment Consulting (Beijing) during the year ended March 31, 2012, these two companies were Airport Terminal Building Co., Ltd. increased as of March 31, 2012. newly accounted for by the equity method method Affiliates not accounted for by the equity by the equity method as of March 31, 2012 was 93. One of the major The number of affiliates not accounted for affiliates as of March 31, 2012 was: that are not accounted for by the equity method have been excluded Unconsolidated subsidiaries and affiliates income, retained earnings and from the scope of the equity method because their aggregate effect in terms of net of DBJ Inc. deferred gains and losses has no material impact on the consolidated financial statements 20% and 50% Entities not recognized as affiliates where DBJ Inc. owns the voting rights between and 50% were not recognized as The following companies of which DBJ Inc. owns the voting rights between 20% the venture business and not to affiliates accounted for by the equity method, since DBJ Inc.’s intent is to nurture exercise significant influence on their operating and financing policies: As of March 31, 2012 (ii) (2) (i) (ii) (iii) (iv) Annual Report & CSR Report 2012
150
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 151 2012 (626,317) U.S. Dollars 7 10 Thousands of 2012 $2,136,741 $1,510,425 Number of subsidiaries Annual Report & CSR Report 2012 (33,605) 2011 ¥233,297 ¥199,692 Millions of Yen (51,476) 2012 ¥124,141 ¥175,618 The necessary adjustments are made in the consolidated financial statements to reflect material transactions that statements to reflect material transactions are made in the consolidated financial The necessary adjustments Investments in limited partnerships and other similar partnerships are accounted for at their original cost plus Investments in limited partnerships and other similar partnerships are accounted for net of income taxes. Unrealized gains and losses on available-for-sale securities are included in equity, in the same way as other Securities which are held as trust assets in money held in trust accounts are valued Hedge Accounting (*1). The portfolio hedge is DBJ Inc. applies the deferral method of hedge accounting or the accrual method on the Application of Accounting accounted for by the method stipulated in “Accounting and Auditing Treatments Institute of Certified Public Standards for Financial Instruments in the Banking Industry,” issued by the Japanese Balance Sheet Dates of Consolidated Subsidiaries Dates of Consolidated Balance Sheet as follows: subsidiaries are dates of consolidated Balance sheet December 31 March 31 year-end statements that are prepared as of their are consolidated based on the financial Consolidated subsidiaries balance sheet date. date. and the consolidated balance sheet balance sheet date of the subsidiary occur between the year-end Balances and Transactions Elimination of Intercompany unrealized eliminated in consolidation. All material balances and transactions have been All significant intercompany DBJ Inc. and its consolidated subsidiaries is eliminated. profit resulting from transactions between Amortization of Goodwill net assets and the cost of the acquired subsidiary is being amortized on The difference between the fair value of period not exceeding 20 years. Minor differences are charged a straight-line basis over the estimated beneficial excess of the fair value over the cost of acquired subsidiaries (negative to income in the year of acquisition. The as incurred. goodwill) is recognized as income immediately Held-to-maturity debt securities are stated at amortized cost with amortization computed on a straight-line basis, using Held-to-maturity debt securities are stated at amortized cost with amortization computed market quotations are stated at market the weighted average method. Available-for-sale securities with readily available instruments whose fair value cannot value (cost is calculated principally using the weighted average method). Financial be reliably determined are stated at cost using the weighted average method. interest in earnings since acquisition and less any dividends received, based on their most recent financial DBJ Inc.’s statements. securities. Valuation Method for Derivative Financial Instruments derivatives that are designated as All derivative financial instruments are carried at market value. Except for certain are recognized in the statement of hedging instruments as discussed below, gains or losses on derivative transactions income. Hedge Accounting (1) (3) Time deposits with banks Cash and cash equivalents Cash and due from banks Cash and due from (4) (5) Cash and Cash Equivalents statement of cash flows consist of cash on hand and due from banks. “Cash and Cash Equivalents” in the consolidated equivalents” and “Cash and due from banks” in the consolidated balance The reconciliation between “Cash and cash sheet is as follows: (c) Securities (d) (e)
(b) ) and foreign currency swap contracts which meet the hedging requirements ) and foreign currency swap contracts which *1 ), under the Accounting Standards for Financial Instruments at the inception date, DBJ ), under the Accounting Standards for Financial *2 : Debentures, Borrowed money, Corporate bonds, Securities and Loans money, Corporate bonds, Securities : Debentures, Borrowed loans and Debentures : Foreign currency denominated : 4 years to 20 years : 3 years to 50 years Others Buildings If a foreign currency swap is executed to hedge existing foreign currency assets or liabilities, a) the difference, if any, between if any, liabilities, a) the difference, assets or currency swap is executed to hedge existing foreign currency If a foreign or liability translated using the spot rate at the inception date asset currency the Japanese yen amount of the hedged foreign in the statement of income in the period which or liability is recognized of the contract and the book value of the asset between the Japanese on the contract (that is, the difference includes the inception date, and b) the discount or premium spot rate at the rate and that translated using the yen amount of the contract translated using the contracted forward over the term of the contract. inception date of the contract) is recognized If a foreign currency swap is executed to hedge a future transaction denominated in a foreign currency, the future the future currency, transaction denominated in a foreign swap is executed to hedge a future currency If a foreign exchange forward rate, and no gains or losses on the foreign using the contracted forward transaction will be recorded recognized. contract are The estimated useful lives are principally as follows: In addition, as for portfolio hedging activities to fix the cash flows, the effectiveness is assessed based on the In addition, as for portfolio hedging activities to both interest rate swap contracts which meet the hedging With respect to an individual hedge, in regards In cases where foreign currency swaps are used as hedges and meet certain hedging criteria, foreign exchange forward exchange forward criteria, foreign used as hedges and meet certain hedging swaps are currency foreign In cases where manner; accounted for in the following contracts and hedged items are If interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or received hedging criteria, the net amount to be paid or received used as hedges and meet certain rate swap contracts are If interest on the assets or liabilities for which the swap the interest from rate swap contract is added to or deducted under the interest contract was executed. (i) (ii) Hedged Items Hedged Items Amortization of Intangible Fixed Assets software for internal use is Intangible Fixed Assets are amortized using the straight-line method. Capitalized from 3 to 5 years). amortized using the straight-line method based on the estimated useful lives (mainly
Depreciation of Tangible Fixed Assets Assets of DBJ Inc. are Tangible Fixed Assets are stated at cost less accumulated depreciation. Tangible Fixed installed facilities) that are depreciated using the declining-balance method, except for buildings (excluding is computed principally using the depreciated on a straight-line basis, and depreciation of consolidated subsidiaries straight-line method based on the estimated durability of assets. *2. *1. Accountants (the “JICPA Industry Audit Committee Report No. 24”). In addition, foreign currency swaps which swaps which addition, foreign currency Report No. 24”). In Audit Committee (the “JICPA Industry Accountants the rates, as values but at contractual not translated at market fluctuations are hedge foreign currency are used to for Financial Instruments. Standards criteria under the Accounting meet the hedging swap contracts foreign currency and Hedged Items Hedging Instruments • Hedging Instruments swaps : Interest rate • Hedging Instruments swaps : Foreign currency Hedging Policy and foreign currency fluctuations on its assets instruments to hedge interest rates and DBJ Inc. utilizes hedging for each hedged item. or every constant group are drawn liabilities. Individual contracts Evaluation of Hedge Effectiveness DBJ Inc. evaluates the effectiveness of the hedges by testing whether the According to the risk management policy, associated with the hedged items. derivatives are effective in reducing the risks index of the hedged cash flow and the hedging instrument. correlation between the base interest rate requirements of the accrual method ( Inc. is not required to periodically evaluate hedge effectiveness. Inc. is not required to periodically evaluate of the assignment method ( (2) Fixed Assets (1) (2) (3) (4) Annual Report & CSR Report 2012
(f)
152
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 153 Annual Report & CSR Report 2012 Lease Assets over the lease term. zero residual value method with computed by the straight-line for lease assets is Depreciation collateral or guarantees, the With respect to the claims on debtors who are legally or substantially bankrupt with (3) Long-lived Assets the carrying events or changes in circumstance indicate assets for impairment whenever DBJ Inc. reviews its long-lived amount of losses are recognized if the carrying asset group may not be recoverable. Impairment amount of an asset or the continued future cash flows expected to result from exceeds the sum of the undiscounted an asset or asset group the amount by impairment losses would be measured as of the asset or asset group. The use and eventual disposition cash amount, which is the higher of the discounted of the asset exceeds its recoverable which the carrying amount asset or the net selling price at disposition. use and eventual disposition of the flows from the continued Bonds Issuance Costs Debentures and Corporate to income as incurred. Bonds Issuance Costs” are charged “Debentures and Corporate Method Foreign Currency Translation and Revaluation currencies held by DBJ Inc. have been translated at the exchange rates Assets and liabilities denominated in foreign currency accounts held by consolidated foreign subsidiaries are prevailing as of the balance sheet date. Foreign at the respective year-end exchange rates. The foreign exchange gains translated into the currency of the subsidiaries in the statement of income to the extent that they are not hedged by and losses from transactions are recognized sheet accounts of the consolidated foreign subsidiaries are translated into forward exchange contracts. The balance as of the balance sheet date except for equity, which is translated at the Japanese yen at the current exchange rate translation were shown as “Foreign Currency Transaction Adjustments” in historical rate. Differences arising from such and expense accounts of consolidated foreign subsidiaries are translated into a separate component of equity. Revenue the balance sheet date. yen at the exchange rate prevailing as of Allowance for Loan Losses Losses” as detailed below pursuant to the internal policies for self-assessment DBJ Inc. provides for “Allowance for Loan for claims on debtors who are legally bankrupt, in special liquidation or of credit quality and loan losses. The allowance on the amount of claims, after the write-off described below, net of amounts effectively bankrupt is provided for based of collateral or execution of guarantees. The allowance for claims on debtors expected to be recovered through disposal but are likely to become bankrupt, and for which future cash flows cannot who are not legally bankrupt at the moment, is provided for at the amount considered to be necessary based on an reasonably be estimated (possibly bankrupt), the claims, net of amounts expected to be recovered through disposal of overall solvency assessment performed on are likely to become bankrupt or to be collateral or execution of guarantees. With respect to the claims on debtors who the allowance is provided for as the closely monitored, and for which future cash flows can reasonably be estimated, the contracted interest rate and the difference between the present value of expected future cash flows discounted at described above is provided based carrying value of the claims. The allowance for claims on debtors other than those a certain historical period. All claims on the historical default rate, which is calculated based on the actual defaults over Credit Analysis Department, which is are assessed initially by the investment and lending departments and then by the for self-assessment of credit quality. independent of the investment and lending departments based on internal policies The allowance is provided for based on the results of the self-assessment. which are deemed uncollectible amount of claims exceeding the estimated market values of collateral or guarantees million for the years ended March 31, were written-off, and totaled ¥59,113 million ($719,235 thousand) and ¥45,551 for “normal” categories based 2012 and 2011, respectively. The consolidated subsidiaries calculate the general reserve bankrupt,” “effectively bankrupt” on the specific actual historical loss ratio, and the specific reserve for the “possibly value. and “legally bankrupt” categories based on estimated losses, considering the recoverable Allowance for Investment Losses on certain investments based on an “Allowance for Investment Losses” is provided for based on the estimated losses assessment of the issuers’ financial condition. (g) (h) (i) (j) (k)
DBJ Inc. has two types of pension plans for employees: a non-contributory and a contributory funded defined and a contributory funded of pension plans for employees: a non-contributory DBJ Inc. has two types pension plan, established under the Japanese Welfare Pension Insurance The contributory funded defined benefit of the substitutional portion of past pension obligations to the In the current year, DBJ Inc. applied for transfer 2011, DBJ Inc. recognized a gain on transfer of the substitutional Based upon the above approval in November required for the future asset The asset retirement obligation is recognized as the sum of the discounted cash flows over the remaining useful life of The asset retirement cost is subsequently allocated to expense through depreciation Accrued Bonuses to Employees, Directors and Corporate Auditors Directors and Corporate to Employees, Accrued Bonuses amount of the estimated provided for in the Auditors” are Directors and Corporate Bonuses to Employees, “Accrued 2011. March 31, 2012 and to the years ended are attributable bonuses which Reserve for Employees’ Retirement Benefits Reserve for Employees’ and a lump- defined-benefit corporate pension plan benefit pension plans, which consist of a DBJ Inc. has defined for pension Benefits” represents future payments plan. “Reserve for Employees’ Retirement sum severance indemnity pension the projected benefit obligations and estimated to employees. It is accrued based on and retirement benefits period of ten using the straight-line method over the year end. Prior service cost is amortized plan assets at each fiscal is amortized at incurrence. Net actuarial gains and losses average remaining service period years within the employees’ service period the employees’ average remaining method over the period of ten years within using the straight-line next fiscal year after incurrence. commencing from the benefit pension plan. governmental pension program managed by DBJ Inc. on behalf of the Law, covers a substitutional portion of the at the discretion of DBJ Inc. In accordance with the Defined Benefit government and a corporate portion established DBJ Inc. applied for an exemption from obligation to pay benefits for future Pension Plan Law enacted in April 2002, portion which would result in the transfer of the pension obligations employee services related to the substitutional approval. DBJ Inc. obtained an approval for exemption from the future and related assets to the government upon and Welfare on July 1, 2010. obligation by the Ministry of Health, Labor Ministry of Health, Labor and Welfare on November 1, 2011. The actual government and obtained approval by the assets to the government is to take place subsequently after the transfer of the pension obligations and related government’s approval. in the amount of ¥ 11,036 million ($134,281 thousand) for the year portion of the governmental pension program ended March 31, 2012. Auditors’ Retirement Benefits Reserve for Directors’ and Corporate Retirement Benefits” is accrued based on the amount that would be “Reserve for Directors’ and Corporate Auditors’ retired at the balance sheet date. required if all directors and corporate auditors Asset Retirement Obligations obligations, ASBJ Statement No. 18 In March 2008, the ASBJ published the accounting standard for asset retirement 21 “Guidance on Accounting “Accounting Standard for Asset Retirement Obligations” and ASBJ Guidance No. retirement obligation is defined as Standard for Asset Retirement Obligations”. Under this accounting standard, an asset construction, development and the a legal obligation imposed either by law or contract that results from the acquisition, such tangible fixed asset. normal operation of a tangible fixed asset and is associated with the retirement of estimate can be made. If a retirement and is recorded in the period in which the obligation is incurred if a reasonable the asset retirement obligation reasonable estimate of the asset retirement obligation cannot be made in the period retirement obligation can be made. is incurred, the liability should be recognized when a reasonable estimate of asset cost is capitalized by Upon initial recognition of a liability for an asset retirement obligation, an asset retirement increasing the carrying amount of the related fixed asset by the amount of the liability. subsequent revisions to the timing or the asset. Over time, the liability is accreted to its present value each period. Any increase or a decrease in the carrying the amount of the original estimate of undiscounted cash flows are reflected as an cost. amount of the liability and the capitalized amount of the related asset retirement Lease Transactions Lease Transactions,” which revised In March 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for revised accounting standard for lease the previous accounting standard for lease transactions issued in June 1993. The transactions was effective for fiscal years beginning on or after April 1, 2008. ) m Annual Report & CSR Report 2012 (l) ( (n) (o) (p) 154
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 155 Annual Report & CSR Report 2012 Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased to transfer ownership that were deemed standard, finance leases previous accounting Under the to account for 1, 2008. In addition, DBJ Inc. continues revised accounting standard on October DBJ Inc. applied the accompanying consolidated statement of income are dividends applicable Cash dividends per share presented in the new accounting policy is applied with revision of accounting standards, Changes in Accounting Policies—When a specific transitional the new policy is applied retrospectively unless the revised accounting standards include an entity shall comply with provisions. When the revised accounting standards include specific transitional provisions, the specific transitional provisions. prior-period financial Changes in Presentations—When the presentation of financial statements is changed, statements are reclassified in accordance with the new presentation. for in the period of the change Changes in Accounting Estimates—A change in an accounting estimate is accounted affects both the period of the if the change affects that period only, and is accounted for prospectively if the change change and future periods. is discovered, those Corrections of Prior-Period Errors—When an error in prior-period financial statements statements are restated. and corrections of prior-period This accounting standard and the guidance are applicable to accounting changes April 1, 2011. errors which are made from the beginning of the fiscal year that begins on or after accounted for as operating permitted to be finance leases were However, other the lessee were capitalized. property to lessee’s financial statements. in the note to the was disclosed if capitalized” information if certain “as lease transactions lease assets and transactions be capitalized to recognize standard requires that all finance lease The revised accounting existed at the accounting standard permits leases which balance sheet. In addition, the revised lease obligations in the for as to the lessee to continue to be accounted not transfer ownership of the leased property transition date and do operating lease transactions. not transfer to DBJ Inc. on October 1, 2008, and does at March 31, 2008 and were transferred leases which existed transactions. property to the lessee as operating lease ownership of the leased Consumption Taxes consumption taxes paid or received. subject to consumption taxes exclude related Income and expenses Income Taxes based on the pretax income included in the consolidated statement of The provision for income taxes is computed is used to recognize deferred tax assets and liabilities for the expected future income. The asset and liability approach between the carrying amounts and the tax bases of assets and liabilities. tax consequences of temporary differences currently enacted tax laws to the temporary differences. Deferred taxes are measured by applying Per Share Information dividing net income available to common stockholders by the weighted- Basic net income per share is computed by outstanding for the period, retroactively adjusted for stock splits. Diluted average number of shares of common stock March 31, 2012 and 2011 is not disclosed because there are no dilutive net income per share for the years ended securities. after the end of the year. to the year including dividends to be paid Accounting Changes and Error Corrections Statement No. 24, “Accounting Standard for Accounting Changes and In December 2009, the ASBJ issued ASBJ 24, “Guidance on Accounting Standard for Accounting Changes and Error Error Corrections” and ASBJ Guidance No. this standard and guidance are as follows: Corrections.” Accounting treatments under (1) (2) (3) (4) (q) (r) (s) (t) 3 — 377 $1,165 $ 784 642,199 2012 2012 2012 4,776,608 2,066,028 4,467,871 1,660,513 U.S. Dollars U.S. Dollars U.S. Dollars Thousands of Thousands of Thousands of $ 130,020 $2,432,731 $14,315,887 $ 3,005,380 6 259 4,104 49,210 ¥4,119 ¥ 8 2011 2011 2011 282,139 164,136 300,594 111,000 ¥ 6,811 ¥167,281 ¥1,165,580 ¥ 418,710 0 — Millions of Yen Millions of Yen Millions of Yen 31 ¥95 ¥64 52,782 2012 2012 2012 392,589 169,806 367,214 136,477 ¥ 10,686 ¥199,946 ¥1,176,622 ¥ 247,012 Investments in unconsolidated subsidiaries and affiliates included in “Equities” as of March 31, 2012 and 2011, are ¥24,066 million 31, 2012 and 2011, are as of March included in “Equities” subsidiaries and affiliates Investments in unconsolidated as of included in “Other securities” subsidiaries and affiliates ¥24,293 million. Investments in unconsolidated ($292,818 thousand) and million ($538,857 thousand) and ¥42,919 million. ¥44,288 31, 2012 and 2011, are March issued by private placement (Article of corporate bonds among securities which were DBJ Inc. has contingent liabilities for guarantees 31, 2011. Act) and amount to ¥697 million as of March 2, Paragraph 3 of Financial Instruments and Exchange can be sold or agreements under repurchase 31, 2012 and 2011. Securities accepted as of March no securities repledged are There 31, 2012. thousand) as of March ¥152,889 million ($1,860,200 are Securities neither sold nor repledged repledged. decline in the market value below the is a considerable if there impaired considered are Marketable securities available-for-sale between the acquisition cost and the market value is The difference to be recoverable. acquisition cost and such decline is not believed the impairment loss for the fiscal year. in market value” is as follows: The criterion for determining “Considerable decline cost. of the acquisition Market value declined by 50% or more as recoverable. cost, and such decline is not considered of the acquisition Market value declined by 30% or more The amounts of loans indicated above are stated at gross amounts, before reduction of the allowance for loan losses. reduction amounts, before stated at gross The amounts of loans indicated above are and 4 of the legally bankrupt as defined in Article 96-1-3 non-accrual loans to debtors who are “Loans to bankrupt debtors” represent Regulation. Law Enforcement Japanese Tax payments are interest non-accrual loans other than (i) Loans to bankrupt debtors and (ii) Loans whose “Delinquent loans” represent in financial difficulty. of borrowers efforts to assist or facilitate the restructuring in order deferred past due and do not months or more payment is three loans whose principal or interest are months or more” “Loans past due three fall under the category of “Loans to bankrupt debtors” or “Delinquent loans.” as a means such terms have been modified to the advantage of debtors through loans whose repayment loans” are “Restructured support or payments, and forgiveness of loans to rates, postponement of principal and interest or exemption of interest reduction loans,” or “Loans the debtors’ businesses, and do not fall under the category of “Loans to bankrupt debtors,” “Delinquent restructure months or more.” past due three Total Total Annual Report & CSR Report 2012 Corporate bonds Equities Other securities Other Equities Impairment losses on marketable securities available-for-sale for the years ended March 31, 2012 and 2011 are as follows: Impairment losses on marketable securities *1. *2. *3. *4. Bonds Japanese government bonds Japanese government 3 . Securities and 2011 are as follows: of March 31, 2012 Securities as *1. *2. *3. *4. *5. 4 . Non-Performing Loans and 2011 are as follows: The amounts of non-performing loans included in “Loans” as of March 31, 2012 Loans to bankrupt debtors Delinquent loans Loans past due three months or more Loans past due three Restructured loans Restructured Total 156
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 157 720 22,587 539,995 760,784 206,583 554,353 2012 2012 2012 1,129,815 1,518,460 U.S. Dollars U.S. Dollars U.S. Dollars Thousands of Thousands of Thousands of $ 104,609 $1,611,971 $ 712,853 $1,842,667 $ 105,634 $2,201,754 74 822 Annual Report & CSR Report 2012 40,250 49,509 20,640 73,420 47,808 2011 2011 2011 123,589 ¥ 11,895 ¥122,296 ¥ 88,187 ¥161,607 ¥ 9,191 ¥181,486 59 Millions of Yen Millions of Yen Millions of Yen 1,856 62,528 16,979 44,382 92,859 45,562 2012 2012 2012 124,802 ¥132,487 ¥ 58,589 ¥ 8,597 ¥151,448 ¥180,962 ¥ 8,682 Accumulated depreciation of tangible fixed assets as of March 31, 2012 and 2011, is ¥2,538 million ($30,886 thousand) and ¥1,837 31, 2012 and 2011, is ¥2,538 million ($30,886 of tangible fixed assets as of March Accumulated depreciation million. Since many of these commitments expire without being drawn down, the unused amount does not necessarily down, the unused amount does not necessarily commitments expire without being drawn Since many of these Derivatives Other Total General allowance for loan losses An allowance for loan losses as of March 31, 2012 and 2011 is as follows: 8 . Allowance for Loan Losses Note: Accrued income Fixed Assets 7 . Tangible and 2011 are as follows: Tangible fixed assets as of March 31, 2012 Specific allowance for loan losses Total Prepaid expenses Prepaid 6 . Other Assets are as follows: Other assets as of March 31, 2012 and 2011 represent a future cash requirement. Most of these contracts have conditions whereby DBJ Inc. and its subsidiaries can have conditions whereby DBJ Inc. and its requirement. Most of these contracts represent a future cash in financial limits for proper reason (e.g., changes for loans or decrease the contract refuse customers’ applications subsidiaries obtain inception of contracts, DBJ Inc. and its in customers’ credit worthiness). At the situation, deterioration subsidiaries perform necessary. Subsequently, DBJ Inc. and its or other assets as collateral if considered real estate, securities to reconsider internal rules, and take necessary measures customers’ business results based on periodic reviews of the guarantees. and/or require additional collateral and conditions in contracts Commitments 5 . Commitments to limits in response up to the prescribed DBJ Inc. lends to customers under which limits are contracts Loan commitment 31, 2012 As of March condition in the contracts. no violation of any as long as there is applications for loans customers’ million. As of million ($7,057,341 thousand) and ¥245,482 of unused commitments are ¥580,042 and 2011, the amounts within one year are whose remaining contract term are 2011, the amounts of unused commitments March 31, 2012 and thousand) and ¥132,978 million. ¥455,229 million ($5,538,740 Construction in progress Leased assets Other Total Land Buildings 24,334 2012 304,987 243,339 608,316 620,503 575,835 [608,316] [620,503] [912,476] [730,016] [608,347] [110,000] 6,426,313 9,464,904 3,465,974 5,767,125 U.S. Dollars [2,676,615] Thousands of 10,096,808 $45,295,320 $ 7,696,883
3,605,707 5,329,053 4,164,877 7,538,189 — $6,266,272 thousand 2,000 10,000 39,675 25,070 49,982 2011 267,000 348,923 936,344 163,092 682,486 1,104,812 ¥3,629,389 ¥ Millions of Yen 2,000 [9,040] 20,000 47,327 25,066 49,997 50,999 [60,000] 2012 [74,996] [50,000] [49,997] [50,999] 474,000 528,178 777,920 284,868 829,856 [219,990] ¥3,722,822 ¥ 632,606 296,353 437,994 342,311 619,563 ¥515,024 million 2012 Maturity date Sep. 2028 Jun. 2015 Feb. 2024 Nov. 2027 Mar. 2047 Sep. 2014– Jul. 2016– Aug. 2011– Dec. 2014– Jun. 2011– Jun. 2012 Dec. 2011– Mar. 2017 Sep. 2023 May 2011– Mar. 2019 Mar. 2012– Jun. 2023 Jul. 2018 Aug. 2011– May (%) 1.81 0.847 2.1 6.875 2.74 0.48– 0.4– 1.05– 0.7175– 0.78– 1.65 0.241– 2.875 2.032 0.104– 1.745 0.61586– 2.2 1.47355 0.8– 0.12499 Interest rate 2012 Issue date Sep. 1998 May 2011 2012 Mar. Nov. 2007 Jul. 2008 Aug. 2009– Nov. 2008– Mar. Oct. 2002– Jun. 2007 Nov. 1999– Dec. 2009– Dec. 2008– Feb. 2012 Mar. 2009– Mar. 2012 Sep. 2008 2011– Apr. Aug. 2008 Jul. 2011 Aug. 2001– 2
7 1, 7 7 4, 5 4, 7 6, 7 1, 7 3 4, 7 These bonds are government-guaranteedThese bonds are bonds issued by the Development Bank of Japan. This bond is a government-guaranteed bond issued by the Japan Development Bank. non-guaranteed bonds issued based on MTN program. These bonds are issued by the not government-guaranteed. bonds are (FILP) agency bonds issued are These Fiscal Investment and Loan Program Development Bank of Japan. FILP bonds issued based on MTN program. These bonds are corporate bonds issued based on MTN program. unsecured These bonds are within one year. indicated in brackets [ ] indicate the amounts to be redeemed Figures Corporate bonds Euro MTN Japanese government- 1, 3-14* private placement 1-2 guaranteed bonds 1-14 guaranteed foreign bonds 5, 7, 9, 11, 13, 16, 17, 19, 20, 22, 24-51* 1* public placement 1-23* Corporate bonds through Japanese government- 6-15, 17-30* guaranteed bonds 5-23* FILP agency domestic bonds FILP agency foreign bond Japanese government- Japanese government- guaranteed Euro MTN bonds 1-5* guaranteed foreign bond 67* guaranteed foreign bond Corporate bonds through Euro MTN bonds 2* Japanese government- Annual Report & CSR Report 2012 Short-term corporate bonds* Total Corporate bonds Debentures Debentures and Corporate Bonds and Corporate 9 . Debentures follows: and 2011 are as as of March 31, 2012 and corporate bonds Debentures Scheduled redemptions of debentures and corporate bonds which have been assumed and repaid by DBJ Inc. for Scheduled redemptions of debentures and corporate bonds which have been assumed subsequent years as of March 31, 2012 are as follows: 31, 2013 The fiscal year ending March *1. *2. *3. *4. *5. *6. *7. 2014 2015 2016 2017 158
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 159 2 12 6,839 1,060 12,742 180,146 $12,728 $12,742 252,518 155,158 2012 2012 2012 $956,702 $348,240 U.S. Dollars U.S. Dollars U.S. Dollars Thousands of Thousands of Thousands of Thousands of $111,577,487 1 1 14,651,310 14,533,405 13,420,068 11,743,934 76 $16,326,443 thousand 739 132 Annual Report & CSR Report 2012 1,046 8,805 11,272 ¥1,043 ¥1,046 2011 2011 2011 ¥52,981 ¥30,908 ¥8,576,482 0 0 87 Millions of Yen Millions of Yen Millions of Yen 562 1,047 14,806 ¥1,046 ¥1,047 20,754 12,752 2012 2012 2012 ¥78,631 ¥28,621 965,233 ¥9,170,553 1,204,191 1,194,500 1,102,995 ¥1,341,870 million Due date of repayment May 2012–Jan. 2032 1.13 Average interest rate (%) The asset retirement obligation is calculated based on the sum of the discounted cash flows using discount rates from The asset retirement obligation is calculated based on the sum of the discounted The changes in asset retirement obligations for the years ended March 31, 2012 and 2011 are as follows: The changes in asset retirement obligations for the years ended March 31, 2012 12 . Asset Retirement Obligations provided by the real estate DBJ Inc. recognizes asset retirement obligations associated with the recovery obligations of pulling down the previous head rental agreements. In addition, asset retirement obligations related to the obligations with the head office relocation due to office buildings and removing the toxic substances were recognized in connection Otemachi redevelopment project. 0.4% to 1.1% with the estimated useful lives of 4 to 8 years. Other liabilities as of March 31, 2012 and 2011 are as follows: Other liabilities as of March 31, 2012 and 11 . Other Liabilities The fiscal year ending March 31, 2013 The fiscal year ending Borrowings of March 31, 2012 are as follows: of borrowings for subsequent years as Scheduled redemptions 2014 2015 2016 2017 Borrowed Money 10 . Borrowed is as follows: 31, 2012 and 2011 money as of March Borrowed Total Reconciliation associated with passage of time Other Balance at beginning of year Unearned income Other Balance at end of year Asset retirement obligations (Note 12) Asset retirement Lease obligations Accrued expenses Accrued income taxes Derivatives 2012 U.S. Dollars Thousands of $1,563,674 2011 ¥145,068 Millions of Yen 2012 ¥128,518 Under the Companies Act, companies can distribute dividends at any time during the fiscal year in addition to the year- Under the Companies Act, companies can distribute dividends at any time during certain criteria such as; (1) having end dividend upon resolution at the shareholders meeting. For companies that meet Auditors, and (4) the term the Board of Directors, (2) having independent auditors, (3) having the Board of Corporate term in its articles of incorporation, of service of the directors is prescribed as one year rather than two years of normal time during the fiscal year, prescribed the Board of Directors may declare dividends (except for dividends in kind) at any Inc., however, shall not distribute that the Board of Directors can declare dividends in its articles of incorporation. DBJ not prescribed that are such dividends based on resolution of the Board of Directors, since its articles of incorporation limitations on the amounts available the Board of Directors can do such an action. The Companies Act provides certain that the timing and amounts for for dividends or the purchase of treasury stock. Article 20 of the DBJ Inc. Act provides dividends shall be authorized by the Finance Minister. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus set aside as a legal reserve (a The Companies Act requires that an amount equal to 10% of dividends must be capital surplus) depending on the component of retained earnings) or as additional paid-in capital (a component of reserve and additional paid-in equity account charged upon the dividends until the total aggregate amount of legal of additional paid-in capital and capital equal 25% of Common stock. Under the Companies Act, the total amount that common stock, legal reserve, legal reserve may be reversed without limitation. The Companies Act also provides among the accounts under additional paid-in capital, other capital surplus and retained earnings can be reclassified certain conditions upon resolution by the shareholders. Loans and securities pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are Loans and securities pledged as collateral Annual Report & CSR Report 2012 15 . Equity regulated by the Companies Act. In addition, DBJ Inc. is regulated by the DBJ Inc. Japanese companies including DBJ Inc. are Act and the DBJ Inc. Act that affect financial and accounting matters are Act. The significant provisions in the Companies summarized as follows: (a) Dividends (b) Assets Pledged as Collateral 14 . Assets Pledged as of Japan are Settlement for bank deposits at the Bank pledged as collateral in Real Time Gross Loans and securities In addition, ($179,026 thousand) as of March 31, 2012. thousand) and ¥14,714 million ¥697,263 million ($8,483,557 including exchange trading and collateral for transactions, replacement of margin money for future they are deposited as for futures million ($11,407 thousand) of margin deposits 31, 2012. Also, in other assets, ¥937 settlements as of March thousand) of guarantee deposits are included as of March 31, 2012. Under transactions is included and ¥42 million ($514 DBJ Act (Act No. 43), obligations created by the bonds issued by DBJ Inc. are the DBJ Inc. Act (Act No. 17 and 26), the the property of DBJ Inc. The denomination value of these debentures amounts secured by a statutory preferential right over as of March 31, 2012. to ¥2,318,822 million ($28,212,946 thousand) of March 31, 2011. In addition, they are deposited as replacement of margin ¥700,942 million and ¥235,556 million as transactions, including exchange settlements as of March 31, 2011. ¥1,575 money for future trading and collateral for for loans of companies which are investees of DBJ Inc. as of March 31, 2011. million of securities are pledged as collateral deposits for futures transactions is included and ¥41 million of guarantee Also, in other assets, ¥937 million of margin Under the DBJ Inc. Act (Act No. 17 and 26), the DBJ Act (Act No. 43), deposits are included as of March 31, 2011. DBJ Inc. are secured by a statutory preferential right over the property of DBJ Inc. obligations created by the bonds issued by amounts to ¥2,802,443 million as of March 31, 2011. The denomination value of these debentures Guarantees Acceptances and Guarantees 13 . Acceptances and 2011 are as follows: of March 31, 2012 and guarantees as Acceptances 160
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 161 $21.56 2012 EPS $115,118 U.S. Dollars Thousands of U.S. Dollars Annual Report & CSR Report 2012 ¥9,998 2011 EPS Yen ¥1,772.27 ¥2,328.63 Millions of Yen ¥9,461 2012 43,624 43,623 Thousands of Shares Weighted average shares Net income ¥101,583 ¥ 77,313 Millions of Yen Under the Companies Act, stock acquisition rights are presented as a separate component of equity. Act, stock acquisition rights are presented Under the Companies and treasury both treasury stock acquisition rights also provides that companies can purchase The Companies Act Diluted net income per share for the years ended March 31, 2012 and 2011 is not disclosed because there are no dilutive securities. are 31, 2012 and 2011 is not disclosed because there for the years ended March Diluted net income per share Net income available to common shareholders Net income available to common shareholders Treasury Stock and Treasury Stock Acquisition Rights Stock Acquisition and Treasury Treasury Stock on treasury stock based and dispose of the purchase treasury stock for companies to Act also provides The Companies to the distributable amount cannot exceed treasury stock purchased The amount of of the Board of Directors. resolution is determined by specific formula. the shareholders which of stock separate component of equity or deduction acquisition rights are presented as a stock. The treasury stock acquisition rights. of Shares or Stock Acquisition Rights Solicitation and Delivery or stock to solicit those who will subscribe for shares Inc. Act regulates that, if DBJ Inc. intends Article 12 of the DBJ exchange, rights in connection with a share-for-share or to deliver shares or stock acquisition acquisition rights offered, an authorization from the Finance Minister. DBJ Inc. shall obtain ended March 31, 2012 Common Stock Issued during the year a request for redemption of government compensation bonds equivalent On November 24, 2011, DBJ Inc. executed the Finance Minister and accordingly, capital stock of DBJ Inc. increased by to ¥6,170 million ($75,070 thousand) to Inc. issued 8,480 new shares of common stock by way of allocation of new that amount. And on March 24, 2012, DBJ per share for ¥424 million ($5,159 thousand). As a result, ¥6,594 million stocks to the Finance Minister at ¥50,000 stock. ($80,229 thousand) was included in Capital Year ended March 31, 2012 Commissions 17 . Fees and Commissions (Income) as follows: Fees and commissions (income) for the years ended March 31, 2012 and 2011 are Note: Basic EPS Year ended March 31, 2011 Basic EPS 16 . Per Share Information for the years ended March 31, 2012 and 2011 is as follows: Basic net income per common share (“EPS”) (d) (e) (c) — — — 367 380 8,654 1,267 8,356 6,308 6,002 60,836 13,903 94,294 40,993 44,215 $6,714 $ 5,994 $67,197 123,140 134,281 $10,859 $31,906 2012 2012 2012 2012 $ — $460,747 U.S. Dollars U.S. Dollars U.S. Dollars U.S. Dollars Thousands of Thousands of Thousands of Thousands of 7 — 77 141 434 184 350 ¥607 1,194 5,777 2,339 8,095 2,104 1,837 8,002 4,104 12,471 12,301 2011 2011 2011 2011 ¥ 445 ¥ 121 ¥12,642 ¥42,275 ¥ 6,939 ¥12,012 — — — 30 31 Millions of Yen Millions of Yen Millions of Yen Millions of Yen 711 104 686 518 493 ¥551 5,000 3,369 3,634 1,142 7,750 ¥ 492 ¥5,522 10,120 11,036 ¥ 892 ¥2,622 2012 2012 2012 2012 ¥ — ¥37,868 Annual Report & CSR Report 2012 Other income for the years ended March 31, 2012 and 2011 is as follows: Other income for the years ended March Reversal of allowance for investment losses Gains on redemption of bonds Gains on redemption Gains on derivative instruments Total 19 . Other Income Reversal of allowance for loan losses Equity in net income of affiliates Other Total Gains on sales of bonds Other Operating Income 18 . Other Operating is as follows: 31, 2012 and 2011 years ended March income for the Other operating Other for contingent losses Reversal of reserve Gains on sales of equities and other securities Gains on money held in trust Gains on sales of fixed assets claims Collection of written-off of the governmentalGain on transfer of the substitutional portion pension program and other similar Gains on investments in limited partnerships partnerships 21 . Other Operating Expenses Other operating expenses for the years ended March 31, 2012 and 2011 are as follows: Commissions 20 . Fees and Commissions (Expenses) are as follows: Fees and commissions (expenses) for the years ended March 31, 2012 and 2011 Foreign exchange losses Foreign issuance costs Debentures Corporate bonds issuance costs of bonds Write-off Other Total 162
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 163 — 20 123 (286) 3,830 1,614 1,311 2,683 (1,178) 63,205 83,557 60,843 32,960 12,699 10,251 21,959 261,176 2012 2012 2012 (178,071) $285,287 $ 17,197 $(164,062) $(439,247) $ 14,234 $(134,281) U.S. Dollars U.S. Dollars U.S. Dollars $ 25,724 Thousands of Thousands of Thousands of 3 1 21 (63) (35) 571 923 171 (462) Annual Report & CSR Report 2012 3,104 8,881 5,754 3,065 2,370 1,311 ¥ — 15,188 ¥1,167 19,316 ¥2,166 (27,793) 2011 2011 2011 ¥ — ¥37,903 ¥(25,885) ¥(47,110) 1 — 10 Millions of Yen Millions of Yen Millions of Yen (96) (23) 314 132 107 842 220 5,194 6,867 2,708 5,000 1,043 1,804 21,466 (14,635) 2012 2012 2012 ¥ 1,413 ¥23,447 ¥(13,484) ¥(11,036) ¥(36,101) ¥ 1,169 ¥ 2,114 All retirement benefit costs are classified as service cost for the subsidiaries applying the simplified method. benefit costs are All retirement overseas subsidiaries is included in to the defined contribution pension plans of certain consolidated Contribution of pension premiums “Other”. The above projected benefit obligation as of March 31, 2011 includes a portion which the pension fund manages on behalf of the 31, 2011 includes a portion which the pension fund manages benefit obligation as of March The above projected Japanese government program. welfare benefits. retirement Certain subsidiaries apply the simplified method for the calculation of liability for employees’ (a) The Funded Status of the Pension Plans (a) The Funded Status of the Pension Reserve for employees’ retirement benefits as of March 31, 2012 and 2011 consisted of the following: Reserve for employees’ retirement benefits 23 . Employees’ Retirement Benefits terminated are, under most circumstances, entitled to retirement and pension Employees whose service with DBJ Inc. is rates of pay at the time of termination, length of service and conditions under benefits determined by reference to basic is involuntary, caused by retirement at the mandatory retirement age or which the termination occurs. If the termination to greater payment than in the case of voluntary termination. caused by death, the employee is entitled Losses on sales of equities and other securities Losses on sales of equities of equities Write-off Provision for allowance for loan losses for allowance for loan Provision of loans Write-off in trust Losses on money held assets Losses on sales of fixed Impairment losses charges Early redemption 22 . Other Expenses and 2011 are as follows: March 31, 2012 for the years ended Other expenses Other Total Losses on investments in limited partnerships and other similar Losses on investments in limited partnerships partnerships Reserve for employees’ retirement benefits Reserve for employees’ retirement Unrecognized prior service cost Unrecognized Fair value of plan assets Unfunded pension obligation net actuarial losses Unrecognized cost Interest Expected return on plan assets Amortization of prior service cost Amortization of net actuarial losses *1. Gain on transfer of the substitutional portion of the governmental pension program *2. Other Service cost (b) Components of Pension Cost Net pension cost *1. *2. Projected benefit obligation Projected (2,049) 81,530 59,823 98,761 (85,803) 508,904 333,310 2012 (762,504) (280,032) (192,180) 1,271,409 U.S. Dollars — Thousands of 2.0% 0.5% $ 228,872 $ 697,984 2011 2011 1.26% (1.13) (0.71) 40.69% 10 Years 10 Years (37.59) (782) 5,374 (4,136) 52,880 10,499 12,789 37,916 (85,281) (16,792) (11,873) 2011 138,162 ¥ 36,088 ¥ 71,580 2.0% 0.5% Millions of Yen 2012 2012 0.75 3.16 (2.77) (168) 28.98% 40.69% 10 Years 10 Years (12.85) 4,916 6,700 8,117 (7,052) 41,826 27,394 (62,670) (23,015) (15,795) 2012 104,497 ¥ 18,810 ¥ 57,367 Actual effective tax rate Actual effective Less—valuation allowance Reserve for retirement benefits Reserve for retirement Minority interests in net income of subsidiaries Minority interests Tax loss carryforwards Tax Reduction of deferred tax assets due to changes of tax rate Reduction of deferred Losses from revaluation of securities revaluation Losses from Change in valuation allowance Unrealized gain on available-for-sale securities gain on available-for-sale Unrealized Allowance for loan losses Deferred gain on derivatives under hedge accounting Deferred Annual Report & CSR Report 2012 The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and The tax effects of significant temporary differences are as follows: liabilities as of March 31, 2012 and 2011 Total Total tax liabilities: Deferred
Sub-total Other Other
Other tax assets Net deferred Total Total for the purpose of Creating a Taxation On December 2, 2011, the “Act for Partial Amendment to the Income Tax Act, etc. of 2011) and the “Act on Special System Responding to Changes in Economic and Social Structures” (Act No. 114 Reconstruction following the Great East Measures for Securing Financial Resources Necessary to Implement Measures for corporate tax rate will be reduced and Japan Earthquake” (Act No. 117 of 2011) were promulgated. Consequently, the statutory tax rate, which is used a special recovery tax will be imposed. In accordance with this tax reform, the effective
Increase (decrease) in taxes resulting from: in taxes resulting (decrease) Increase
Deferred tax assets: Deferred Normal effective statutory tax rate Normal effective 24 . Income Taxes taxes which, in the to Japanese national and local income consolidated subsidiaries are subject DBJ Inc. and its domestic March 31, 2012 approximately 40.69% for the years ended a normal effective statutory tax rate of aggregate, resulted in and 2011. tax rate with the actual effective tax rate for the years ended March 31, A reconciliation of the normal effective statutory 2012 and 2011 is as follows: Discount rate (c) Principal Assumptions Used (c) Principal Expected rate of return on plan assets Expected rate of return Amortization period of prior service cost Amortization period of actuarial gains/losses Amortization period 164
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 165 (3) — — 133 Total Total $523 $657 (234) (473) Total ¥195 ¥ 51 ¥673 ¥286 2012 (2,855) $3,481 $ 625 U.S. Dollars Thousands of 53
¥149 ¥203 Annual Report & CSR Report 2012 2011 — — — (178) (144) ¥ 80 ¥ 25 ¥224 ¥204 (2,170) $2,483 $ 313 2011 2012 2012 10 Millions of Yen ¥42 ¥53 Millions of Yen Millions of Yen Intangible fixed assets Intangible fixed assets Intangible fixed assets Thousands of U.S. Dollars 2012
— — (3) (56) ¥25 ¥81 (328) (686) ¥115 ¥448 $997 $312 Tangible fixed assets Tangible fixed assets Tangible fixed assets
Pro forma information of leased property such as acquisition cost, accumulated depreciation, obligations under finance cost, accumulated depreciation, obligations of leased property such as acquisition Pro forma information Due within 1 year Acquisition cost Net leased property Acquisition cost Accumulated depreciation Accumulated depreciation Accumulated impairment losses Net leased property 2011 are as follows: Pro forma amounts of obligations under finance leases as of March 31, 2012 and Acquisition cost 25 . Lease Transactions under finance leases equipment and others. Lease payments consolidated subsidiaries lease certain DBJ Inc. and its domestic million, respectively. ¥150 million ($1,833 thousand) and ¥208 31, 2012 and 2011 amounted to for the years ended March expense for finance leases that do not transfer ownership of the leased property leases, depreciation expense and interest for the years ended March 31, 2012 and 2011 is as follows: to the lessee on an “as if capitalized” basis Accumulated depreciation Accumulated depreciation Accumulated impairment losses Accumulated impairment losses to measure deferred tax assets and deferred tax liabilities, has been reduced from 40.69% to 38.01% for temporary to 38.01% for temporary from 40.69% has been reduced and deferred tax liabilities, deferred tax assets to measure 35.64% March 31, 2015 and 1, 2012 through the period from April be eliminated during that are expected to differences tax assets and deferred a result, deferred tax April 1, 2015. As eliminated on or after differences to be for temporary deferred gain million ($69 thousand), respectively and ¥698 million ($8,500 thousand) and ¥5 liabilities decreased by – deferred securities and income taxes hedge accounting, unrealized gain on available-for-sale on derivatives under ($42,387 thousand), ($11,325 thousand) and ¥3,483 million million ($22,656 thousand), ¥930 million increased by ¥1,862 respectively. Net leased property Due after 1 year Total 31 — — — $1,759 $1,790 1,217 209 209 855 (601) (646) (601) (601) $2,811 $4,028 2012 2012 U.S. Dollars U.S. Dollars Thousands of Thousands of (47,721) (35,472) (50,848) 125,178 172,899 107,728 273,032 143,200 2012 (100,133) $232,514 $194,047 Thousands of U.S. Dollars 5 148 ¥200 ¥206 ¥218 ¥366 2011 2011 — — — 17 17 70 (49) (53) (49) (49) 8,854 2 (3,922) (2,915) (8,229) (4,179) 10,288 14,210 22,440 11,769 Millions of Yen Millions of Yen ¥19,110 ¥15,948 2012 100 ¥144 ¥230 ¥147 ¥331 Millions of Yen 2012 2012 Income tax effect Amount before income tax effect Income tax effect Amount before income tax effect Income tax effect Amount before income tax effect Income tax effect Amount before income tax effect Gains arising during the year Reclassification adjustments to profit or loss Losses arising during the year Reclassification adjustments to profit or loss Gains arising during the year Reclassification adjustments to profit or loss Depreciation expense is calculated using the straight-line method, assuming that useful life is equal to the lease term and that the useful life is equal to the lease term and that using the straight-line method, assuming that expense is calculated Depreciation lease term is zero. value at the end of the residual expense assets is charged to assumed interest and the assumed acquisition cost of leased between total lease payments The difference method. fiscal year using the interest and is allocated to each Reclassification adjustments to profit or loss Gains arising during the year Annual Report & CSR Report 2012 Total Total other comprehensive income
Share of other comprehensive income in affiliates: Total
Total Foreign currency translation adjustments:
Total Deferred gain on derivatives under hedge accounting:
Unrealized gain on available-for-sale securities: 26 . Other Comprehensive Income income for the year ended March 31, 2012 are as follows: The components of other comprehensive Due within 1 year *1. *2. non-cancelable operating leases as of March 31, 2012 and 2011 are as follows: The minimum rental commitments under Depreciation expense Depreciation Pro forma amounts of depreciation expense and interest expense under finance leases for the years ended March 31, 2012 years ended March finance leases for the expense under expense and interest amounts of depreciation Pro forma are as follows: and 2011 Total Interest expense Interest Due after 1 year Total 166
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 167 Total Total Total ¥318,775 ¥345,189 $3,878,517 Annual Report & CSR Report 2012 Other Other Other ¥35,612 ¥22,337 $271,777 Millions of Yen Millions of Yen Thousands of U.S. Dollars ¥37,716 ¥32,467 $395,032 Securities investment Securities investment Securities investment ¥271,860 ¥263,970 Loan business Loan business Loan business $3,211,707 From both funding and investment aspects, DBJ Inc. implements comprehensive asset/liability management in From both funding and investment aspects, interest rate risk, these risks are Although corporate bonds and borrowings are exposed to cash liquidity risk and to exchange rate risk. DBJ Foreign currency denominated loans, debentures and corporate bonds are exposed and currency swap DBJ Inc. utilizes derivative financial transactions such as interest-rate swap agreements Policy for Financial Instruments that are aimed to provide long-term stable funding. As main methods DBJ Inc. provides investment and loan services corporate bonds and long-term borrowings, DBJ Inc. relies on the stable of acquiring funds, in addition to issuing government’s Fiscal Investment and Loan Program (FILP). Since long-term, procurement of long-term funds from the DBJ Inc. raises its funds mainly with long-term, fixed rate liabilities. fixed-rate makes up the majority of its assets, and losses from fluctuations of interest rate and exchange rate. DBJ Inc. order to mitigate the risk of capital shortfall to interest and currency. utilizes derivative financial instruments in order to hedge or control the risks related Nature and Extent of Risks Arising from Financial Instruments which are exposed to credit risk The financial assets in DBJ Inc. are mainly investments and loans in domestic clients, Main categories of industries that stems from customers’ default of contracts and decline of their creditworthiness. 31, 2012. The changes of of debtors are transport and postal activities, manufacturing and others as of March of their obligations. DBJ economic circumstances surrounding these industries may cause influence on fulfillment and other similar partnerships, Inc. holds securities such as bonds, equities and investments in limited partnerships other risks. DBJ Inc. does not have which are exposed to issuer’s credit risk, interest rate risk, price volatility risk and any trading-related risk because it does not engage in trading (specified transactions). and other transactions. hedged or controlled by matching of financing and investing, interest-rate swap agreements currency corporate bonds Inc. mitigates this risk by matching foreign currency investments and loans with foreign and currency-related transactions. As for hedge accounting, DBJ agreements in order to hedge or control the risks related to interest and currency. and the assignment method Inc. applies the deferral hedge method or the accrual method to interest-rate swaps, borrowings, debentures and to foreign currency swaps. Hedged items of interest-rate swaps are loans, securities, loans, debentures and corporate bonds. Hedged items of foreign currency swaps are foreign-currency denominated effectiveness of the hedges by corporate bonds. According to the risk management policy, DBJ Inc. evaluates the the hedged items. testing whether the derivatives are effective in reducing the risks associated with The Situation of Financial Instruments (1) (2) Year ended March 31, 2012
Financial Instruments and Related Disclosures 28 . Financial Instruments and Related (a) Ordinary income from externalincome from customers Ordinary Ordinary income from external customers Ordinary income from externalincome from customers Ordinary Related information: 2012 and 2011 is following: by service for the years ended March 31, Segment information DBJ Inc. consists of only one business segment of long-term financing and accordingly, the disclosure of the reportable and accordingly, the disclosure one business segment of long-term financing DBJ Inc. consists of only is omitted. segment information 27 . Segment Information The corresponding information for the year ended March 31, 2011 was not required under the accounting standard for the accounting standard not required under March 31, 2011 was for the year ended information The corresponding and not disclosed of adopting that standard for the first year income as an exemption of comprehensive presentation herein. Year ended March 31, 2012 Year ended March 31, 2011 Market risk volume (estimated loss) is based on VaR using the historical simulation method (holding period Market risk volume (estimated loss) is based on VaR using the historical simulation of 1 year, observation period of 5 years, and confidence interval of 99.9%). The amount of market risk (risks of 1 year, observation period of 5 years, and confidence interval of 99.9%). The amount as of March 31, 2012 and pertaining to the changes in interest rates, foreign exchanges and market prices) Such measurements are 2011 was ¥41,484 million ($504,744 thousand) and ¥73,672 million, respectively. Quantitative Information about Market Risk are financial instruments DBJ Inc. has not been engaged in trading activities, and all the assets and liabilities other than for trading purposes. About derivative transactions, the front office, the back office and the risk management department are About derivative transactions, the front office, the back office and the risk management in check based on separated from each other, and each department keeps the operations of the other in-house regulations. When DBJ Inc. acquires financial assets entailing price volatility risk such as securities with market value, it When DBJ Inc. acquires financial assets entailing price volatility risk such as securities account market fluctuation follows in-house regulations and policies which have been developed taking into Through regular risks, and the risk management department is involved in the decisions as necessary. & Risk Management monitoring, price volatility risks are reviewed on a timely basis and reported to ALM Committee periodically. Foreign Exchange Risk Management exposed to the exchange rate risk, therefore those risks are Foreign currency receivable and bonds are off some foreign currency denominated investments and loans hedged or controlled not only by setting bonds and debentures but also by making currency-related as foreign currency denominated corporate transactions. Interest Rate Risk Management management. Details of risk management methods DBJ Inc. manages interest rate risk by asset/liability regulations, and Management Committee and ALM & Risk and procedures are determined on internal about determination of policies on asset/liability management, Management Committee have discussion plans. In addition, the risk management department monitors the monitoring of implementation and future overall. ALM & Risk Management Committee conducts regular interest rate and term of financial assets/debts (gap analysis), value at risk (VaR), interest rate sensitivity analyses monitoring with cash flow ladder analyses a part of asset/liability management, interest-rate swaps are (basis point value), and other methods. As conducted hedging interest rate risk. The credit risk of securities is managed in the same way as that of loans. In addition, DBJ Inc. regularly of loans. In addition, DBJ Inc. regularly is managed in the same way as that The credit risk of securities 5) 4) Derivative Transactions 3) Price Volatility Risk Management 2) 1) Market Risk Management In accordance with the internal guidelines, DBJ Inc. utilizes credit exposure management and portfolio exposure management and portfolio internal guidelines, DBJ Inc. utilizes credit In accordance with the entity’s or loan, DBJ Inc. examines the and loans. When making an investment management for investments Inc. sets ratings along with the internal borrower project’s profitability. After that, DBJ project viability and the The sales and credit analysis departments credit amount, sets collateral and guarantee. rating system, grants keeps for individual loans and each department the screening and administering of credit hold separate roles in to and Loan Decisions meets as needed other in check. The Committee on Investment the operations of the performs a governance of individual loans. DBJ Inc. issues concerning the management and deliberate important exposure to calculates the loan portfolio’s overall of data based on borrower ratings, and comprehensive analysis remains within specified range of capital. regularly to ensure that such risk credit risk, which is measured the market value of the securities. As for counterparty risk arising examines total risk which takes into account derivative transactions by continually monitoring the cost of from derivative transactions, DBJ Inc. manages of each counterparty. Additionally, DBJ Inc. diversifies restructuring its transactions and the creditworthiness to manage counterparty risk. transactions among several counterparties (ii) Risk Management for Financial Instruments for Financial Risk Management Management (i) Credit Risk (3) Annual Report & CSR Report 2012
168
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 169 — — — — — — 3,157 23,357 618,330 130,158 119,571 ¥ — ¥ — ¥641,687 ¥252,887 Difference Annual Report & CSR Report 2012 36,871 12,904 50,999 89,500 213,894 695,762 544,484 152,889 2012 3,260,653 9,290,125 Fair value 14,113,871 Millions of Yen ¥ 49,776 ¥15,441,536 ¥13,146,263 ¥ 175,618 36,871 12,904 50,999 89,500 213,894 672,405 541,327 152,889 (149,928) 3,130,495 9,170,553 13,645,469 13,495,540 ¥ 49,776 ¥14,799,848 ¥12,893,376 ¥ 175,618 Carrying amount 1 2 DBJ Inc. conducts backtesting to compare the VaR calculated by the model with hypothetical performances with hypothetical calculated by the model compare the VaR backtesting to DBJ Inc. conducts conducted by the risk management department on a regular basis and reported to ALM & Risk Management reported to ALM & Risk a regular basis and department on by the risk management conducted policies. ALM operating to utilize for establishing Committee that the measurement models in use the actual market movements and confirms calculated based on the market risk volume under a definite with sufficient accuracy. VaR measures capture the market risk market movements and accordingly, calculated statistically based on the historical probability of incidence captured in such situations as when market may be cases where market risk cannot be and therefore there historically. dramatically beyond what was experienced conditions are changing Liquidity Risk Management on Financing Liquidity Risk Management ALM & Risk of cash liquidity and reports it to the department monitors the possession level The risk management financing. of liquidity risk management on periodically in line with in-house regulations Management Committee and risk by appropriate operations of financing Committee manages the liquidity The ALM & Risk Management risks. investing depending on the situations of ) iii Supplementary Explanation on Fair Value of Financial Instruments Supplementary Explanation on Fair Value at the quoted market price. If the quoted price is not available, The fair value of financial instruments is measured Because assessed price is computed under certain conditions, it could DBJ Inc. measures reasonably assessed price. differ in price according to the different conditions. ( Allowance for loan losses* Available-for-sale securities Available-for-sale Derivative transactions qualifying for hedge accounting Held-to-maturity debt securities Derivative transactions not qualifying for hedge accounting (4) Fair Values Information of Financial Instruments value and differences between them as of March 31, 2012 and 2011.The following are the carrying amount, fair cannot be reliably determined, are excluded from the table below (see (2)). Unlisted equities and others, whose fair value
Loans Total derivative transactions Total
Debentures Corporate bonds Derivative transactions* Total assets Total money Borrowed Short-term bonds liabilities Total Reverse repurchase agreements Reverse repurchase Securities
Call loans and bills bought Cash and due from banks Cash and due from (b)
— — — — — — — — — — 2,190 22,301 97,924 38,412 116,264 284,183 578,687 ¥ ¥ ¥216,379 ¥600,989 1,583,631 1,454,821 7,523,187 Difference Difference $ — $ — $7,807,371 $3,076,864 — —
40,703 27,441 61,852 13,262 360,318 548,939 448,612 318,865 157,014 620,503 2012 2011 2,602,440 3,410,637 8,692,747 8,465,289 1,088,940 6,624,710 1,860,200 Fair value Fair value 39,672,150 13,449,875 Millions of Yen ¥ ¥12,422,250 ¥14,654,282 ¥ 233,297 113,032,308 171,722,491 $ 605,626 $187,876,101 $159,949,671 $ 2,136,741 Thousands of U.S. Dollars
40,703 27,441 61,852 13,262 360,318 526,637 448,612 316,675 157,014 620,503 (160,292) 2,602,440 3,312,713 8,576,482 8,181,106 1,088,940 6,586,298 1,860,200 (1,824,167) 13,031,480 38,088,519 12,871,187 ¥ ¥12,205,871 166,023,471 ¥14,053,292 ¥ 233,297 111,577,487 164,199,304 Carrying amount Carrying amount $ 605,626 $180,068,730 $156,872,807 $ 2,136,741
1 1 2 2 Allowance for loan losses* Available-for-sale securities Allowance for loan losses* Held-to-maturity debt securities Held-to-maturity debt Derivative transactions qualifying for hedge accounting Derivative transactions qualifying for hedge accounting Available-for-sale securities Available-for-sale General and specific allowances for loan losses are deducted. Allowance for loan losses is set off against the carrying amount directly carrying amount directly against the deducted. Allowance for loan losses is set off General and specific allowances for loan losses are due to immateriality. on a net basis. presented derivative transactions are Assets and liabilities arising from Derivative transactions not qualifying for hedge accounting Derivative transactions not qualifying for Derivative transactions not qualifying for hedge accounting Held-to-maturity debt securities Annual Report & CSR Report 2012
Loans Derivative transactions*
Total derivative transactions Total Total derivative transactions Loans Debentures Borrowed money Corporate bonds Total liabilities Securities Call loans and bills bought
Borrowed money Borrowed Short-term bonds Debentures Total assets Total Total assets Reverse repurchase agreements Reverse repurchase Derivative transactions* *1. *2. Corporate bonds Call loans and bills bought liabilities Total Cash and due from banks Cash and due from
Cash and due from banks Securities 170
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 171 Annual Report & CSR Report 2012 Cash and due from banks Cash and due as the fair value, as the fair value approximates maturity, the carrying amount is presented For deposits without as the amount is presented as the fair value, For deposits with maturity, the carrying such carrying amount. of such maturity period of the majority such carrying amount because the remaining fair value approximates within 1 year). deposits is short (maturity and Reverse repurchase agreements Call loans and bills bought carrying contract terms (1 year or less). Thus, the the majority of transactions are short For each of these items, such carrying amount. as the fair value, as the fair value approximates amount is presented is measured at the market price. The fair value of bonds is The fair value of marketable equity securities price from third party. For bonds without such price, the fair value is measured at the market price or the quoted flows at the rates that consist of the risk free rate and the credit risk determined by discounting contractual cash internal ratings and maturity length. premium that is based on types of securities, contractual cash flows at the rates that consist of the risk The fair value of loans is determined by discounting is based on types of loans, internal ratings and maturity length. free rate and the credit risk premium that the hedging requirements of the assignment method is qualified Foreign currency swap contracts which meet on the interest rate swap and foreign currency swap. For loans to loans, the contractual cash flows are based less), the carrying amount is presented as the fair value, as the fair which are short contract terms (1 year or With respect to the claims on debtors who are likely to become value approximates such carrying amount. for which future cash flows can reasonably be estimated, the fair bankrupt or to be closely monitored, and cash flows that reflect expected loss at the risk free rate. For values are determined by discounting expected bankrupt” and “possibly bankrupt,” the reserve is provided loans to obligors “legally bankrupt,” “effectively or based on amounts expected to be collected through the disposal based on the discounted cash flow method, carrying value net of the reserve as of the consolidated balance sheet of collateral or execution of guarantees, values of those loans. date is the reasonable estimate of the fair as the fair value, as the fair For floating rate debentures issued by DBJ Inc., the carrying amount is presented rate is reflected in the fair value approximates such carrying amount. This is on the basis that the market interest period and that there has been value of such debentures because the terms of these were set within a short time For fixed rate debentures no significant change in the creditworthiness of DBJ Inc. before and after the issuance. rate debentures without with market prices, the fair value is determined based on their market price. For fixed based on types of maturity market prices, the fair value is determined by discounting contractual cash flows of the accrual method is lengths (when interest rate swap contracts which meet the hedging requirements swap) at the rates that consist qualified to debentures, the contractual cash flows are based on the interest rate swap contracts which of the risk free rate and the rate of certain costs applicable to DBJ Inc. Foreign currency the contractual cash flows meet the hedging requirements of the assignment method is qualified to debentures, are based on the interest rate and foreign currency swap. Borrowed money as the fair value For floating rate borrowed money, the carrying amount is presented as the fair value, rate is reflected in the fair value approximates such carrying amount. This is on the basis that the market interest period for such variable rate of such borrowed money because the terms of these were set within a short time of DBJ Inc. nor consolidated borrowings and that there has been no significant change in the creditworthiness money, the fair values subsidiaries before and after such borrowings were made. For fixed rate borrowed lengths (when interest rate are determined by discounting contractual cash flows based on types of maturity to borrowings, the swap contracts which meet the hedging requirements of the accrual method is qualified Following are the methods used to calculate the fair values of financial instruments: fair values of financial to calculate the are the methods used Following Assets (i) (ii) (iii) Securities (iv) Loans Liabilities (i) Debentures (ii) (1)
430,053 2012 1,557,367 1,544,922 U.S. Dollars Thousands of $ 297,154 $3,829,496 27,723 2011 133,860 117,040 ¥ 24,819 ¥303,444 Carrying amount Millions of Yen 35,346 2012 127,999 126,977 ¥ 24,423 ¥314,746 2, 3 1 2, 3 1, 3 Assets in trust and partnership assets which consist of financial instruments, whose fair value cannot be reliably determined, cannot be reliably Assets in trust and partnership assets which consist of financial instruments, whose fair value not subject to disclosing of fair values. such as unlisted equities and other securities, are not subject are determined, Financial instruments for which the quoted price is not available and fair value cannot be reliably to disclosing of fair values. 31, 2012 ended March determined for the year Impairment loss on financial instruments whose fair value cannot be reliably is; unlisted equities The breakdown and 2011 was ¥6,803 million ($82,772 thousand) and ¥15,173 million, respectively. ($1,433 thousand) and ¥1,592 ¥6,685 million ($81,340 thousand) and ¥13,548 million, unlisted other securities ¥117 million partnerships ¥32 million for the and investments in limited 31, 2012 and 2011, respectively, million for the years ended March 31, 2011. year ended March contractual cash flows are based on the interest rate swap) at the rates that consist of the risk free rate and the free rate and the that consist of the risk swap) at the rates on the interest rate cash flows are based contractual subsidiaries. to DBJ Inc. or consolidated costs applicable rate of certain bonds Short-term corporate because value approximates such carrying amount is presented as the fair value, as the fair The carrying amount terms (1 year or less). of the short contract Corporate bonds as the amount is presented as the fair value, bonds issued by DBJ Inc., the carrying For floating rate corporate in the basis that the market interest rate is reflected such carrying amount. This is on the fair value approximates been no significant change in the creditworthiness a short time period and that there has interest rate set within with market prices, the fair value is the issuance. For fixed rate corporate bonds of us before and after value is bonds without market prices, the fair their market price. For fixed rate corporate determined based on flows based on types of maturity lengths (when interest rate swap determined by discounting contractual cash of the accrual method is qualified to corporate bonds, the contracts which meet the hedging requirements interest rate swap) at the rates that consist of the risk free rate and the contractual cash flows are based on the rate of certain costs applicable to DBJ Inc. *1. *2. *3. Money held in trust* Unlisted equities* similar Investments in limited partnerships and other partnerships* Unlisted other securities* Total (iii) (iv) Derivatives is included in Note 29. The information of the fair values for derivatives whose fair value cannot be reliably determined as of March 31, Following are the financial instruments 2012 and 2011: amount in the table summarizing fair values of financial These securities are not included in the Instruments . (2) Annual Report & CSR Report 2012
172
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 173 — — — — — — — — — — — — — — — — 2,833 2,833
34,479 34,479 11,500 51,888 40,388 491,400 631,320 139,920 775,873 10 years 10 years Due after Due after ¥ — ¥830,595 9,440,004 $ — $10,105,802 — — — — — — — — — — — — 2,600 31,634 27,018 43,226 10,000 30,626 48,542 21,523 372,634 525,938 590,609 261,876 121,669 328,733 10 years 10 years Due after 7 Due after 7 1,967,851 23,942,706 years through years through ¥ — ¥2,059,620 $ — $25,059,253 Annual Report & CSR Report 2012 — — — — — — — — — — — — 2,151 3,200 1,048 38,937 12,758 26,179 28,700 52,605 67,074 816,088 349,191 640,047 148,379 7 years 7 years 1,805,326 Due after 5 Due after 5 1,835,293 22,329,892 years through years through ¥ — ¥1,986,873 $ — $24,174,155 2012 2012 6 — — — — — — — — — — — — 73 Millions of Yen 34,940 36,372 34,946 425,193 425,120 Thousands of U.S. Dollars 442,544 162,498 299,014 100,143 5 years 5 years 3,638,094 1,977,110 1,218,440 Due after 3 Due after 3 3,247,912 39,517,127 years through years through ¥ — ¥3,581,874 $ — $43,580,414
— — — — — — — — — — — — — — 3,480 42,347 21,815 60,172 85,551 25,378 25,296 307,775 732,115 308,782 265,428 3 years 3 years 1,040,896 Due after 1 Due after 1 3,884,502 year through year through 47,262,476 ¥ — ¥3,995,350 $ — $48,611,148 — — — — — — — — — — — — 2,613 6,143
31,801 74,749 89,500 38,200 44,344 52,591 49,978 639,879 608,079 539,532 464,782 Due in 1 Due in 1 1,088,940 year or less year or less 1,786,870 21,740,733 ¥ 175,614 ¥2,148,921 $26,145,777 $ 2,136,692 Short-term corporate bonds Japanese government bonds Japanese government bonds Japanese local government bonds Japanese local government bonds Japanese local government bonds Japanese local government bonds Short-term corporate bonds Short-term corporate bonds Short-term corporate bonds Japanese government bonds Japanese government bonds contractual maturities* with market values securities with Available-for-sale Held-to-maturity debt securities
with market values Held-to-maturity debt securities Held-to-maturity debt contractual maturities* Available-for-sale securities with Available-for-sale Obligations to “Legally Bankrupt,” “Effectively Bankrupt” and “Possibly Bankrupt” amount to ¥147,541 million ($1,795,128 Bankrupt” and “Possibly Bankrupt” amount to ¥147,541 Obligations to “Legally Bankrupt,” “Effectively securities with contractual maturities ¥377 is; available-for-sale 31, 2012. The breakdown not included as of March thousand) are million ($4,596 thousand) and loans ¥147,163 million ($1,790,533 thousand). Following are the maturity analysis for financial assets and securities with contractual maturities as of maturities as of with contractual assets and securities for financial are the maturity analysis Following 2012: March 31, Total bonds Corporate Other Loans* Other Call loans and bills bought Securities Due from banks Due from
Due from banks Due from
Call loans and bills bought Corporate bonds Corporate Corporate bonds Corporate bonds Corporate
Securities Other Other
Loans*
Total * (3)
— —
651,029 10 years 10 years Due after Due after 7,921,025 3,892 ¥1,069,681 ¥1,720,710 (11,479) (13,908) $13,014,737 $20,935,762 (losses) (losses) ¥ 3,358 ¥ ¥15,372 ¥17,267 Unrealized gains Unrealized gains — — 408,507 10 years 10 years 4,970,282 Due after 7 Due after 7 years through years through ¥1,129,073 ¥1,537,581 $13,737,359 $18,707,641 3,892 (11,479) (13,908) — ¥ 3,358 ¥ ¥15,372 ¥17,267 — Fair value Fair value 452,038 7 years 7 years 5,499,915 Due after 5 Due after 5 2011 2012 years through years through ¥1,163,007 ¥1,615,045 $14,150,232 $19,650,148 Millions of Yen Millions of Yen 2012 2012 — — — — Millions of Yen 532,028 506,242 Thousands of U.S. Dollars 961,875 5 years 5 years ¥532,868 ¥507,934 Due after 3 Due after 3 Due after 1 year Due after 1 year 11,703,067 years through years through ¥2,068,229 ¥3,030,104 $25,164,002 $36,867,068 — — Contract amount Contract amount — — 734,347 3 years 3 years 8,934,759 Due after 1 Due after 1 Total Total year through year through ¥2,398,691 ¥3,133,039 602,607 588,298 $29,184,714 $38,119,474 ¥603,529 ¥590,096
50,999 620,503 464,025 Due in 1 Due in 1 5,645,769 year or less year or less ¥1,341,870 ¥1,856,895 $16,326,443 $22,592,715 Receive float/ Pay fixed Receive float/ Pay fixed Receive fixed/ Pay float Receive fixed/ Pay float Interest Rate-related Transactions Maturity analysis for Debentures, Borrowed money and Other Liability with Interest as of March 31, 2012 as of March 31, 2012 with Interest and Other Liability Borrowed money analysis for Debentures, Maturity are as follows: Total
Over-the-counter Swaps Total Over-the-counter Swaps Borrowed money Borrowed Borrowed money Borrowed Short-term corporate bonds Short-term corporate bonds Debentures and corporate bonds Debentures Debentures and corporate bonds Debentures Total Total Derivative Transactions to which Hedge Accounting is not applied Derivative Transactions to which Hedge (1) (4) Annual Report & CSR Report 2012 29 . Derivative Transactions (a)
174
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 175 (0) (1) (76) (1,620) (3,437) (41,829) (losses) (losses) (losses) (losses) ¥10,592 ¥11,082 ¥12,779 ¥14,030 (169,225) $ 40,864 $170,709 $210,089 $128,880 Unrealized gains Unrealized gains Unrealized gains Unrealized gains Unrealized gains (0) (1) (76) Annual Report & CSR Report 2012 (1,620) (3,437) (41,829) ¥10,592 ¥11,082 ¥12,779 ¥14,030 (169,225) Fair value Fair value Fair value Fair value $ 40,864 $170,709 $210,089 $128,880 2012 2011 2012 2012 Millions of Yen Millions of Yen — — — — — — — — — Thousands of U.S. Dollars Thousands of Thousands of U.S. Dollars — ¥97,497 ¥97,497 6,159,422 $1,186,245 $6,180,008 Due after 1 year Due after 1 year Due after 1 year Due after 1 year 8 Contract amount Contract amount Contract amount Contract amount 102 — — — — 38,139 Total Total Total Total 158,859 107,290 ¥ 97,497 ¥ 97,497 7,157,781 1,305,391 $1,186,245 $7,179,663 Receive float/ Pay fixed Receive fixed/ Pay float The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated included in the consolidated gains (losses) are marked to market and changes in unrealized The above transactions are statement of income. values. based primarily on discounted present Fair values are The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated included are gains (losses) to market and changes in unrealized marked are The above transactions statement of income. values. present based primarily on discounted transactions are Fair values for the over-the-counter Currency-related Transactions Total *1. *2. Over-the-counter Swaps Total Forwards Sold Over-the-counter Swaps Total Over-the-counter Swaps Total *1. *2. Forwards Sold Bought Bought Over-the-counter Swaps Forwards Sold Bought (2)
(439) (150) (1,836) ¥ (895) ¥(1,272) ¥(1,712) ¥(1,046) (losses) (losses) (losses) $(12,730) $(10,894) Unrealized gains Unrealized gains Unrealized gains (439) (150) (1,836) ¥ (895) ¥(1,272) ¥(1,712) ¥(1,046) $(12,730) $(10,894) Fair value Fair value Fair value 2012 2012 2011 Millions of Yen Millions of Yen — — — — Thousands of U.S. Dollars — 11,000 ¥74,219 ¥95,110 $903,029 Due after 1 year Due after 1 year Due after 1 year Contract amount Contract amount Contract amount — — — 11,000 36,000 Total Total Total ¥85,219 133,856 ¥178,660 $1,036,865 The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated included in the consolidated gains (losses) are marked to market and changes in unrealized The above transactions are statement of income. price. values or the counterparties’ tendered based on discounted present Fair values are risk. risk and ‘Bought’ means the transferring of credit ‘Sold’ means the underwriting of credit Credit default options Credit default options Credit default options Equity-related Transactions Equity-related Bond-related Transactions Transactions Commodity-related Credit Derivatives Transactions *1. *2. *3. Total Over-the-counter Sold Total Over-the-counter Sold Over-the-counter Sold Total Bought Bought Bought (3) (4) (5) (6) Annual Report & CSR Report 2012 applicable. Not applicable. Not applicable. Not 176
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 177 3 3 3 * * * (2,484) (2,784) (33,884) Fair value Fair value Fair value ¥29,925 ¥39,656 ¥27,441 ¥36,871 $482,496 $448,612 444 325 — — — 3,966 2012 2011 2012 Annual Report & CSR Report 2012 45,129 61,028 742,526 394,040 547,724 6,664,124 Millions of Yen Millions of Yen ¥577,498 ¥479,741 Due after 1 year Due after 1 year Due after 1 year $5,836,975 Thousands of U.S. Dollars Contract amount Contract amount Contract amount 563 444 — — — 5,408 Total Total Total 50,231 66,529 809,465 405,804 566,400 6,891,361 ¥585,389 ¥485,498 $5,907,024
Hedged item Hedged item Hedged item Debentures, Debentures, money, Borrowed Corporate bonds and Loans Debentures, Debentures, money, Borrowed Corporate bonds, Securities and Loans Debentures, Borrowed money, Corporate bonds and Loans Debentures, Borrowed money, Corporate bonds and Loans Debentures, Debentures, money, Borrowed Corporate bonds and Loans Debentures, Debentures, money, Borrowed Corporate bonds, Securities and Loans Receive fixed/ Pay float Receive fixed/ Pay float Receive float/ Pay fixed Receive float/ Pay fixed Receive float/ Pay fixed Receive fixed/ Pay float Receive float/ Pay fixed Receive fixed/ Pay float Receive float/ Pay fixed Receive fixed/ Pay float Receive float/ Pay fixed Receive fixed/ Pay float DBJ Inc. applies the deferral method of hedge accounting primarily stipulated in “Accounting and Auditing Treatments on the and Auditing Treatments DBJ Inc. applies the deferral method of hedge accounting primarily stipulated in “Accounting Industry Audit Committee Report for Financial Instruments in Banking Industry”(JICPA Application of Accounting Standards No. 24). values. based primarily on discounted present transactions are Fair values for the over-the-counter not remeasured of the accrual method are rate swap contracts which qualify for the hedging requirements The above interest expense or and included in interest recognized are under the swap agreements paid or received at fair value but the differential is Related Disclosures” rate swaps in Note 28 “Financial Instruments and income. In addition, the fair value of such interest loans. corporate bonds and money, borrowed included in that of hedged items such as debentures, Interest Rate-related Transactions Interest Rate-related Accrual method Swaps Total *1. *2. *3. Swaps Deferral method Total Deferral method Swaps Accrual method Swaps Accrual method Swaps Total Deferral method Swaps Derivative Transactions to which Hedge Accounting is applied to which Hedge Accounting Transactions Derivative (1)
(b) * * * — — — Fair value Fair value Fair value ¥— $— — — — 2011 2012 2012 ¥5,427 Millions of Yen Millions of Yen Due after 1 year Due after 1 year Due after 1 year Thousands of U.S. Dollars Contract amount Contract amount Contract amount — — — Total Total Total ¥5,427 $66,036 ¥164,228 debentures Hedged item Hedged item Hedged item Foreign-currency loans Foreign-currency and loans Foreign-currency loans The above foreign currency swap contracts which qualify for the hedging requirements of assignment method are not of assignment method are hedging requirements swap contracts which qualify for the currency The above foreign swaps in Note 28 currency the fair value of such foreign of fair value information. In addition, subject to the disclosure and debentures in that of hedged items such as foreign-currency is included “Financial Instruments and Related Disclosures” loans. Equity-related Transactions Bond-related Transactions Swaps Translated at contractual rates Total Note: Swaps Total Total Translated at contractual rates Translated at contractual rates Translated at contractual Swaps (3) (4) (2) Currency-related Transactions (2) Currency-related Annual Report & CSR Report 2012 Fair value of securities, money held in trust and negotiable certificate of deposit classified as “Cash and due from banks” as Fair value of securities, money held in trust and negotiable certificate of deposit classified of March 31, 2012 and 2011 is summarized below. Fair Value of Securities and Money Held in Trust 30 . Fair Value applicable. Not applicable. Not
178
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 179 — — — — — — — — — — — — — — — (762) 6,626 6,248 80,624 (4,521) (2,968) (1,553) (1,979) (1,216) (18,897) (36,114) (55,011) 13,482 27,878 14,382 24,281 164,039 339,194 Difference Difference Difference ¥23,357 ¥ 7,769 ¥22,301 ¥ 3,650 $ 94,531 $284,183 — — — — — — — — — — — — — — — 2011 2012 2012 58,312 33,328 98,633 709,489 Fair value Fair value Fair value 224,595 166,282 141,047 147,887 471,166 131,961 114,241 123,851 416,977 Annual Report & CSR Report 2012 1,716,110 1,799,341 2,023,151 5,732,649 2,732,640 ¥695,762 ¥182,231 ¥548,939 ¥178,884 Millions of Yen Millions of Yen $2,217,198 $8,465,289 Thousands of U.S. Dollars — — — — — — — — — — — — — — — 59,866 34,545 99,396 728,385 229,116 169,250 443,288 134,420 134,405 133,941 392,696 107,993 109,469 1,635,302 1,635,487 2,059,265 5,393,455 2,787,651 ¥672,405 ¥174,461 ¥526,637 ¥175,234 Carrying amount Carrying amount Carrying amount $2,122,666 $8,181,106 Corporate bonds Other Short-term corporate bonds Japanese local government bonds Japanese local government Corporate bonds Other bonds Japanese government Short-term corporate bonds Short-term corporate Other Short-term corporate bonds Corporate bonds Japanese local government bonds Japanese local government Japanese local government bonds Japanese government bonds Japanese government bonds Other Corporate bonds Short-term corporate bonds Japanese local government bonds Corporate bonds Other Japanese government bonds Short-term corporate bonds Japanese government bonds Japanese local government bonds Other Japanese government bonds Japanese local government bonds Short-term corporate bonds Corporate bonds Fair value is based on the closing price at the consolidated balance sheet date. Held-to-maturity Debt Securities as of March 31, 2012 as of March 31, Debt Securities Held-to-maturity Total Sub-total Sub-total Fair value does not exceed carrying amount Sub-total Fair value exceeds carrying amount Fair value exceeds carrying amount Total Sub-total Sub-total Fair value does not exceed carrying amount Fair value exceeds carrying amount Sub-total Fair value does not exceed carrying amount Total Held-to-maturity Debt Securities as of March 31, 2011 Note: (1) (2) Securities (a) Securities
— — — — — (86) (33) (53) (7) (2) (4) — — — — — 330
4,020 75,153 71,134 68,863 5,659 5,846 6,176 (13,128) (1,078) (13,042) (1,071) 354,178 29,109 Difference Difference $341,050 ¥28,030 $210,161 ¥17,273 — — — — — — — —
2012 2012 26,291 57,390 78,010 2,160 6,411 4,716 270,615 984,485 634,403 608,112 611,303 52,141 49,980 50,242 80,914 22,241 108,796 127,067 103,156 1,323,715 1,546,021 1,255,100 Millions of Yen ¥235,863 ¥ 19,193 Acquisition cost Acquisition cost $2,869,736 $ 233,531 Thousands of U.S. Dollars — — — — — — — — 26,238 64,968 2,156 5,339 274,634 126,253 634,316 608,079 611,303 52,134 49,978 50,242 10,376 86,761 22,572 (Fair value) (Fair value) 107,717 156,177 109,333 1,310,587 1,900,199 1,330,253 1,055,619 ¥263,894 ¥ 36,467 $3,210,786 Carrying amount Carrying amount $ 443,693 Japanese government bonds Japanese local government bonds Short-term corporate bonds Corporate bonds Japanese government bonds Short-term corporate bonds Short-term corporate Corporate bonds Japanese local government bonds Short-term corporate bonds Corporate bonds Japanese government bonds Japanese local government bonds Short-term corporate bonds Corporate bonds Japanese government bonds Japanese local government bonds Bonds Other Equities Other Bonds Equities Other Other Equities Equities Bonds Bonds Sub-total Sub-total Sub-total Total Sub-total Total Carrying amount does not exceed cost Carrying amount exceeds cost Carrying amount exceeds cost Carrying amount does not exceed cost (3) Available-for-sale Securities as of March 31, 2012 as of March 31, Securities (3) Available-for-sale Annual Report & CSR Report 2012
180
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 181 — — — — — — (20) (20) 577
1 7 7 7,097 5,891 5,313 — — — — — — — — (2,866) 86 (2,846) 20,051 Difference ¥17,185 ¥ 7,062 ¥1,319 ¥1,804 ¥1,225 ¥1,803 losses on sales losses on sales Total amount of Total amount of — — — — — 859 859
2011 6,779 41,170 30,014 10,296 68,597 334,037 Annual Report & CSR Report 2012 311,496 242,898 Millions of Yen ¥375,207 ¥ 15,762 Acquisition cost — — — — — 15 995 121 477 121 492 2012 2011 1,205 — — — — — ¥3,346 ¥1,858 838 838 ¥12,571 ¥11,244 gains on sales gains on sales Millions of Yen Millions of Yen 7,450 Total amount of Total amount of 38,303 30,014 13,876 73,911 (Fair value) 354,089 243,476 317,387 ¥392,392 ¥ 22,824 Carrying amount — — — — — 514
1,789 36,547 91,070 91,584 265,768 265,768 ¥342,260 ¥123,307 ¥ 39,944 ¥ 29,932 Proceeds from sales Proceeds from sales
Japanese local government bonds Short-term corporate bonds Corporate bonds Japanese government bonds Japanese government bonds Japanese government Japanese local government bonds Japanese local government bonds Short-term corporate Corporate bonds Other
Equities Bonds Other Equities Bonds Carrying amount above represents the fair values determined based on the closing price at the fiscal year-end. the fair values determined based Carrying amount above represents Corporate bonds Corporate bonds Short-term corporate bonds Short-term corporate bonds Japanese local government bonds Japanese local government bonds Japanese government bonds Japanese government bonds
Sub-total Total Sub-total Total Total Other Other
Bonds Bonds Available-for-sale Securities sold during the year ended March 31, 2012 and 2011 Securities sold during Available-for-sale Available-for-sale Securities as of March 31, 2011 Securities as Available-for-sale Carrying amount does not exceed cost Equities Equities Carrying amount exceeds cost Note: (5) (4)
— — — — — cost) cost) ¥— 18 ¥4 ¥(21) ¥(1) $58 does not exceed does not exceed (Carrying amount (Carrying amount $21,941 $21,959 losses on sales of income of income of income Total amount of Total amount Net unrealized loss on Net unrealized Net unrealized gain on Net unrealized gain on Net unrealized
the consolidated statement the consolidated statement the consolidated statement ¥2,909 ¥2,968 exceeds cost exceeds cost 2011 2012 2012 Carrying amount Carrying amount — — Millions of Yen Millions of Yen Unrealized gains (losses) Unrealized gains (losses) 185 5,994 5,809 Thousands of U.S. Dollars 2012 12,108 $22,614 $40,717 ¥43 ¥38
Net Net $527 gains on sales 2011 2012 Total amount of Total amount ¥2,909 ¥2,946 Millions of Yen Millions of Yen Thousands of U.S. Dollars Thousands of Carrying amount Carrying amount Carrying amount
— — cost cost
6,254 ¥21,470 ¥21,834 Acquisition Acquisition 21,778 1,114,308 1,108,054 $ 364,191 $1,500,278 Proceeds from sales Proceeds from
amount amount Carrying Carrying ¥24,379 ¥24,781 Short-term corporate bonds Short-term corporate Corporate bonds Japanese government bonds Japanese local government bonds
Other (other than for the purpose of investment and held to maturity) Money Held in Trust for the Purpose of Investment Money Held in Trust for the Purpose of Change in Classification of Securities Other money held in trust Other money held in trust Money held in trust for the purpose of investment Money held in trust for the purpose of investment Money held in trust for the purpose of investment Reclassification from held-to-maturity debt securities to available-for-sale securities due to deterioration of issuers’ Reclassification from held-to-maturity debt for the year ended March 31, 2011. creditworthiness amounted to ¥2,460 million Equities Bonds Other
Total (2) (1) (6) Money Held in Trust Annual Report & CSR Report 2012
(b) 182
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 183 — (88) cost) $— 210,486 2012 35,394 32,798 (85,803) U.S. Dollars U.S. Dollars 267,867 Thousands of Thousands of 55,691,512 $318,276 $234,981 does not exceed (Carrying amount $ — —
(6) 14 $35,394 Annual Report & CSR Report 2012 exceeds cost 17,299 Balance at March 31, 2012 2,946 (4,136) Carrying amount 2011 13,161 4,577,285 ¥14,352 ¥13,169 ¥ — Unrealized gains (losses) Unrealized gains Millions of Yen
Net 2012 Millions of Yen (7) $35,394 2,909 2,695 (7,052) 838,489 Thousands of U.S. Dollars Thousands of 2012 22,015 ¥26,159 ¥19,313 U.S. Dollars 9,603,350 6,083,465 Thousands of 27,468,883 $ 80,229
cost Acquisition $261,233 68,915 Amounts of the transactions 789,299 500,000 2,257,667
Millions of Yen ¥ 6,594 amount Carrying $296,627
— — Accrued expenses Borrowed money Account item 3 2 1 Borrowings* Repayments Payment for interest Guarantees* Subscription of capital increase* Description Shareholder Category Other money held in trust Other money held in Unrealized gain includes foreign currency translation adjustments on non-marketable securities denominated in foreign currency. securities denominated in foreign translation adjustments on non-marketable currency gain includes foreign Unrealized It consists of subscription due to redemption of government of ¥6,170 million ($75,070 thousand) It consists of subscription due to redemption compensation bonds in an amount thousand). in an amount of ¥424 million ($5,159 (¥50,000 per share) party allotment of capital increase and subscription for third loan. The rates for fiscal investment and funds, and applied interest the fiscal investment and loan program from DBJ Inc. has borrowed period is January 20, 2032 without putting up collateral. last redemption of guarantee charge. issued by DBJ Inc. free for debentures The guarantees are ($45,155,871 ¥3,711,361 million to Article 2, item 5 of the Japan Finance Corporation Act, DBJ Inc. has borrowed According business. to the crisis response Japan Finance Corporation relating thousand) from available-for-sale securities Other money held in trust Unrealized Gain on Available-for-sale Securities Unrealized Gain on is as follows: gain on available-for-sale securities The breakdown of unrealized *1. *2. *3. *4. Finance Minister 31 . Related Party Transactions March 31, 2012 and 2011 are as follows: Related party transactions for the years ended Note: Unrealized gain on Unrealized Deferred tax liabilities Related party Unrealized gain on available-for-sale securities before interest Unrealized gain on available-for-sale securities adjustments (c) Amount corresponding to minority interests Amount corresponding DBJ Inc.’s interest in net unrealized gain on available-for-sale DBJ Inc.’s interest in net unrealized gain by the equity method securities held by affiliates accounted for Unrealized gain on available-for-sale securities, net of taxes gain on available-for-sale Unrealized — U.S. Dollars $454,426 Thousands of 18,434 ¥4,866,584 Millions of Yen Balance at March 31, 2011 Balance at March
¥37,349 Millions of Yen 78,916 836,315 2,164,887 Millions of Yen ¥ 300,000 ¥ 300,000 Amounts of the transactions Amounts of the
— Borrowed money Accrued expenses Account item 2 1 Borrowings* Description Description Repayments Payment for interest Guarantees* Shareholder Category DBJ Inc. has borrowed from the fiscal investment and loan program funds, and applied interest rates for fiscal investment and loan. The rates for funds, and applied interest and loan program the fiscal investment from DBJ Inc. has borrowed 20, 2030 without putting up collateral. period is November last redemption of guarantee charge. by DBJ Inc. free issued for debentures The guarantees are Japan Finance ¥3,035,757 million from has borrowed the Japan Finance Corporation Act, DBJ Inc. to Article 2, item 5 of According in an implemented early redemption 31, 2011, DBJ Inc. business. In the year ended March response to the crisis Corporation relating charges in an amount of ¥8,881 million in early redemption Corporation and recognized amount of ¥307,520 million to Japan Finance 31, 2011. year ended March the consolidated statements of income for the Appropriations of Retained earnings as of March 31, 2012 Appropriations of Retained earnings as of Annual Report & CSR Report 2012 Year-end cash dividends-Common stock (¥856-$10.41 per share) cash Year-end 32 . Subsequent event resolved the following appropriations of retained earnings. After that, the On June 28, 2012, the shareholders meeting by the Finance Minister on the same day: timing and amounts for dividends were authorized *1. *2. *3. Finance Minister Related party 184
Financial Condition Consolidated Financial Statements Financial Condition Consolidated Financial Statements 185 Annual Report & CSR Report 2012 Independent Auditor’s Report Auditor’s Independent — 158 645 55,968 85,726 (13,049) 951,814 250,768 162,338 228,620 180,286 334,826 620,503 2012 6,586,298 1,088,940 1,860,200 1,623,966 1,563,674 1,881,904 1,880,272 1,563,674 (1,829,307) Thousands of 13,866,036 14,451,734 12,902,620 29,749,738 166,747,778 159,607,404 111,577,487 U.S. Dollars (Note) $ 2,001,885 $189,357,142 $189,357,142 $ 38,088,519 — — 17 52 711 4,500 5,937 7,350 (1,158) 61,852 52,882 20,903 25,748 36,083 17,238 2011 316,675 123,178 148,068 156,032 129,855 148,068 (158,806) 1,150,145 1,181,194 1,060,466 2,396,104 8,573,482 13,067,978 12,434,852 ¥ 220,743 ¥14,830,957 ¥14,830,957 ¥ 3,312,713 — 12 52 Millions of Yen 4,600 7,045 (1,072) 89,500 78,229 20,610 13,342 18,790 14,817 27,519 50,999 2012 541,327 152,889 133,473 128,518 154,673 154,539 128,518 (150,350) 1,139,649 1,187,788 1,060,466 2,445,130 9,170,553 13,704,999 13,118,132 ¥ 164,534 ¥15,563,263 ¥15,563,263 ¥ 3,130,495 Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥82.19=$1.00, the effective the effective outside Japan. The rate of ¥82.19=$1.00, solely for the convenience of readers presented Amounts in U.S. dollars are 31, 2012, has been used in the conversion. as of March exchange rate prevailing Total liabilities Total Total assets Total equity Total liabilities and equity Total Annual Report & CSR Report 2012 Note: Corporate bonds Short-term corporate bonds As of March 31, As of March Assets banks Cash and due from Non-Consolidated Balance Sheet (Unaudited) Sheet Balance Non-Consolidated Bank of Japan Inc. Development Call loans Other liabilities Reverse repurchase agreements agreements Reverse repurchase Accrued bonuses to employees Money held in trust and corporate auditors Accrued bonuses to directors Reserve for employees’ retirement benefits Reserve for employees’ retirement Securities Reserve for directors’ and corporate auditors’ retirement benefits and corporate auditors’ retirement Reserve for directors’ Loans Reserve for contingent losses Other assets Acceptances and guarantees Tangible fixed assets fixed Tangible Equity: in 2012 and Common stock authorized, 160,000 thousand shares in 2012 and 2011; issued, 43,632 thousand shares in 2011 43,623 thousand shares Intangible fixed assets Capital surplus Deferred tax assets Deferred Retained earnings Customers’ liabilities for acceptances and guarantees Customers’ liabilities for acceptances and Unrealized gain on available-for-sale securities gain on available-for-sale Unrealized Allowance for loan losses Deferred gain on derivatives under hedge accounting Deferred Allowance for investment losses Liabilities and equity Liabilities: Debentures Borrowed money Borrowed 186
Financial Condition Non-Consolidated Financial Statements Financial Condition Non-Consolidated Financial Statements 187 38 693 505 1,408 3,493 1,164 1,506 6,150 $20.84 88,671 67,197 38,722 31,457 178,256 112,332 460,673 579,975 445,079 340,875 260,372 127,141 387,513 2012 3,097,303 4,012,003 1,891,814 1,271,881 2,715,375 1,296,628 Thousands of $3,371,802 $ 909,115 U.S. Dollars (Note) U.S. Dollars (Note) 3 75 10 56 165 149 164 149 611 941 998 Annual Report & CSR Report 2012 7,238 2,500 15,603 10,033 12,642 38,895 52,920 11,917 35,307 36,358 2011 272,466 357,434 172,186 116,601 256,381 101,052 ¥295,863 ¥100,054 ¥2,293.57 Yen 3 95 41 56 Millions of Yen 115 287 123 505 7,287 9,232 5,522 3,182 2,585 14,650 37,862 47,668 36,581 28,016 21,400 10,449 31,849 2012 254,567 329,746 155,488 104,535 223,176 106,569 ¥277,128 ¥ 74,720 ¥1,712.81 Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥82.19=$1.00, the effective the effective outside Japan. The rate of ¥82.19=$1.00, solely for the convenience of readers presented Amounts in U.S. dollars are 31, 2012, has been used in the conversion. as of March exchange rate prevailing Basic net income Interest and dividends on securities Interest on call loans Interest Interest on loans Interest agreements repurchase on reverse Interest banks on due from Interest income Other interest Interest on swaps Interest Total income Total Other interest expense Other interest Interest on corporate bonds on Interest Interest on debentures on Interest call money and bills sold on Interest money borrowed on Interest short-term corporate bonds on Interest Total expenses Total Income before income taxes Note: Per share of common stock Income income: Interest For the year ended March 31, March For the year ended Non-Consolidated Statement of Income (Unaudited) Income of Statement Non-Consolidated Bank of Japan Inc. Development
Fees and commissions Other operating income Other income Expenses expense: Interest
Fees and commissions
Other operating expenses General and administrative expenses Other expenses Income taxes: Current Deferred Total income taxes Total Net income 5,159 5,159 75,070 90,856 89,429 75,070 215,945 909,115 334,826 125,088 209,738 180,286 909,115 2012 (608,792) (608,792) 1,880,272 1,579,949 Thousands of 29,153,242 12,902,620 12,902,620 14,451,734 $29,749,738 U.S. Dollars (Note) $14,371,505 — — — — 257 6,512 6,255 7,350 7,092 17,238 10,982 39,834 (10,033) (10,033) 2011 100,054 129,855 100,054 2,299,571 1,060,466 1,060,466 1,181,194 ¥2,396,104 ¥1,181,194
Millions of Yen 424 424 6,170 7,467 7,350 6,170 17,748 74,720 27,519 10,281 17,238 14,817 74,720 (50,036) (50,036) 2012 154,539 129,855 2,396,104 1,060,466 1,060,466 1,187,788 ¥2,445,130 ¥1,181,194 Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥82.19=$1.00, the effective the effective outside Japan. The rate of ¥82.19=$1.00, solely for the convenience of readers presented Amounts in U.S. dollars are 31, 2012, has been used in the conversion. as of March exchange rate prevailing Balance at end of year Net change during the year Net income Cash dividends Issuance of new shares of common stock Issuance of new shares Capital increase due to redemption of government due to redemption Capital increase compensation bonds Balance at beginning of year Balance at end of year Net change during the year Balance at beginning of year Balance at end of year Net change during the year Balance at beginning of year Balance at end of year Net income Cash dividends Balance at beginning of year Balance at end of year Balance at beginning of year Balance at beginning Balance at end of year Issuance of new shares of common stock of common Issuance of new shares Capital increase due to redemption of government of due to redemption Capital increase compensation bonds Balance at beginning of year Balance at beginning Annual Report & CSR Report 2012
Total equity: Total
Deferred gain on derivatives under hedge accounting: Deferred gain on derivatives under hedge
Unrealized gain on available-for-sale securities: Unrealized gain on available-for-sale
Retained earnings:
Capital surplus:
For the year ended March 31, March For the year ended Common stock: Non-Consolidated Statement of Changes in Equity (Unaudited) in Equity Changes of Statement Non-Consolidated Bank of Japan Inc. Development Note: 188
Financial Condition Non-Consolidated Financial Statements Financial Condition Capital Adequacy Status 189 882 922 40,325 45,348 61,866 746,214 295,370 827,885 605,151 242,864 1,156,814 1,082,887 1,383,031 3,735,347 1,818,276 1,012,804 (Millions of yen) (Millions of yen) (Millions of yen) ¥3,494,246 ¥14,515,336 ¥14,516,218 ¥12,483,080 March 31, 2011 March March 31, 2011 March March 31, 2011 March 883 Annual Report & CSR Report 2012 1,401 68,098 54,714 994,334 505,898 293,406 769,702 242,390 497,046 272,894 1,196,031 1,387,525 1,334,769 3,429,722 2,475,942 ¥3,774,990 ¥15,222,544 ¥15,223,428 ¥13,147,987 March 31, 2012 March March 31, 2012 March March 31, 2012 March
”Overseas” refers to overseas consolidated subsidiaries. DBJ has no overseas branches. ”Overseas” refers Bonds (JGBs and corporate bonds, etc.) loan agreement/call Repurchase Other Total (1) By region Equities, funds Domestic total Commitments and customers’ liabilities for acceptances and guarantees Commitments and customers’ liabilities for acceptances Loans Overseas total Wholesale and retail Note: Manufacturing and fisheries Forestry Construction Finance and insurance Mining Real estate Transportation and communications Transportation Electrical, gas and water Services Other (2) Breakdown by industry and transaction counterparty (2) Breakdown As of this disclosure (July 2012), DBJ has not yet applied Article 14-2 of the Banking Act of Japan, but for reference the the Banking Act of Japan, but for reference DBJ has not yet applied Article 14-2 of (July 2012), As of this disclosure approach, using the standardized risk was calculated the capital adequacy ratio, credit to the measuring With regard (b) Fiscal year-end credit risk exposure, broken down as follows: broken risk exposure, credit (b) Fiscal year-end (a) Fiscal year-end credit risk exposure and breakdown by principal categories and breakdown risk exposure credit (a) Fiscal year-end
Items Related to Credit Risk (Excluding Securitization Exposure) 1 . Items Related to Credit Risk (Excluding [1] Capital Adequacy Ratio Status (Consolidated) [1] Capital Adequacy Quantitative Disclosure capital adequacy ratio has been disclosed in accordance with the Capital Adequacy Ratio Notification. with the Capital has been disclosed in accordance capital adequacy ratio (specific Also, as DBJ does not conduct trading approach. was calculated using the basic indicator and operational risk the market risk Capital Adequacy Ratio Notification apply, and as Article 4 and Article 16 of the transactions) operations, not calculated. equivalent amount was Capital adequacy ratios indicate eligibility of the institution’s capital under regulations on capital requirements in light of the in requirements on capital under regulations capital eligibility of the institution’s ratios indicate Capital adequacy Held, etc. Light of the Assets in Own Capital Is Sufficient Institution’s Whether A Financial “Criteria for Judging purposes of Services Agency Notification No. 19, 27, 2006, Financial 14-2 of the Banking Act” (March of Article under the Provision ratios have been calculated on both a Ratio Notification”). Capital adequacy the “Capital Adequacy hereinafter, basis, and to uniform internationalconsolidated and non-consolidated standards. Capital Adequacy Status Adequacy Capital
— — — 554 954 267 3,409 9,891 1,697 98,610 32,081 13,867 24,340 824,102 522,451 120,510 175,106 304,261 444,358 ¥690,796 ¥213,080 5,412,965 1,988,982 (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) 3,817,147 4,244,213 5,613,238 ¥5,767,717 ¥ 550,730 March 31, 2011 March 31, 2011 March March 31, 2011 March 31, 2011 March — 336 955 3,499 8,403 1,796 3,412 6,943 1,142 86,205 25,005 71,312 41,763 29,988 820,874 512,585 182,600 374,858 418,199 ¥715,430 ¥112,263 5,230,813 1,954,710
2,903,066 5,164,121 6,377,135
¥6,704,444 ¥ 485,398 March 31, 2012 March 31, 2012 March March 31, 2012 March 31, 2012 March
requirement requirement requirement requirement requirement requirement Balance Balance Balance Balance Balance Balance
20% 50% 100% 350% Capital deductions Other* Of which, resecuritization exposure Of which, resecuritization Of which, resecuritization exposure Of which, resecuritization Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis). approach (calculated on ”look-through” Assets held by funds including the commitment to funds Applying to exposure the transitional measures indicated in Article 15 of the Supplementary Provisions to the Capital Adequacy Ratio Notification. indicated in Article 15 of the Supplementary Provisions the transitional measures Applying to exposure Capital Risk weight * Risk weight 10% finance Structured Risk weight 0% Five years or less Five years or five years, up to 10 than More 10 years, up to 15 than More 15 years than More No maturity date Risk weight 20% Risk weight 50% Risk weight 100% Risk weight 150% Not applicable. by major underlying asset type amount and breakdown (1) Retained securitization exposure * (2) Balance of retained securitization exposure by risk weight and required capital amounts capital by risk weight and required securitization exposure (2) Balance of retained (3) Breakdown by period to maturity by period (3) Breakdown Credit derivatives Credit Risk weight Capital Funds* Risk weight Capital Risk weight Capital Risk weight Capital Capital Risk weight
Securitization exposure in which the Consolidated Group is the originator in which the Consolidated Group (a) Securitization exposure is an investor in which the Consolidated Group (b) Securitization exposure (c) Breakdown of exposure by risk weight (after accounting for credit risk mitigations) (after accounting for credit by risk weight of exposure (c) Breakdown Annual Report & CSR Report 2012 2 . Securitization Exposure
190
Financial Condition Capital Adequacy Status Financial Condition Capital Adequacy Status 191
— — — — — — — — — ¥— 175,106 ¥21,220 ¥56.4 billion ¥269,252 (Millions of yen) (Millions of yen) (Millions of yen) March 31, 2011 March March 31, 2011 March 31, 2011 March March 31, 2011 March Decrease in economic Decrease an from value resulting rate shock interest rate measuring interest fluctuations in the 1st and 99th percentile using a one- percentile, year holding period and a five-yearhorizon: time — 49 618 204 621 551
Annual Report & CSR Report 2012 1,336 1,133 1,195 182,600 ¥41,763 ¥14,286 ¥236,150 March 31, 2012 March March 31, 2012 March 31, 2012 March ¥19.5 billion March 31, 2012 March Decrease in economic Decrease an from value resulting rate shock interest rate measuring interest fluctuations in the 1st and 99th percentile using a one- percentile, year holding period and a five-yearhorizon: time
requirement requirement requirement requirement requirement Balance Balance Balance Balance Balance
40% 100% 225% 650% Capital deductions Breakdown of securitization exposure amounts and underlying asset categories deducted from capital in accordance with capital in accordance amounts and underlying asset categories deducted from of securitization exposure Breakdown Article 247 of the Capital Adequacy Ratio Notification Breakdown of retained resecuritization exposure by application of techniques to mitigate credit risks and guarantors, or by risks and guarantors, to mitigate credit by application of techniques exposure resecuritization of retained Breakdown risk weighting applied to guarantors. the Capital to Supplementary Provisions risk assets calculated with application of Article 15 of the Amount of credit Adequacy Ratio Notification Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis). approach (calculated on ”look-through” Assets held by funds including the commitment to funds Funds* Credit risk assets Credit Capital * (3) finance Structured Risk weight Risk weight Resecuritization exposure Resecuritization (4) (5) Risk weight Capital Risk weight Capital Risk weight Capital Risk weight Capital
Decrease in economic value resulting from interest rate shock interest from in economic value resulting Decrease
3 . Interest Rate Risk in the Banking Book Not applicable. Not
DBJ’s involvement in securitized and resecuritized transactions is typically that of an investor, that of an investor, transactions is typically involvement in securitized and resecuritized DBJ’s The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating Credit Rating and Investment Information, Inc. (R&I), Japan The rating agencies are In principal, collateral valuation is performed by the Credit Analysis Department, based on the Analysis Department, by the Credit In principal, collateral valuation is performed Overview of Risk Management Policies and Procedures falls into the category securitization exposure derivatives, the majority of DBJ’s Excluding credit of specialised lending (Item 47, Article 1, of the Capital Adequacy Ratio Notification) employing the internal applied to standard from ratings that are internal rating methods. Different is given a rating by using a grading system applied to match the this exposure corporate credit, in characteristics of specialised lending. DBJ conducts risk management in line with changes these when making new acquisitions, DBJ reviews rating level. In addition to rating its exposure ratings periodically. such transactions continues until the through acquired and in principle the exposure maturity. instrument’s Overview of status of implementation and operation of systems stipulated in Article 249, Paragraph 4, Items 3-6, of the Capital Adequacy Ratio Notification (including application with modifications in Capital Adequacy Ratio Notification Article 254, Paragraph 2, and Article 302-4, Item 1) risk management framework. the systems necessary for operating within its credit DBJ has created risk management, our sales department endeavors to as one aspect of our credit Specifically, risk characteristics and performance, to comprehensive collect information related appropriately creditworthiness. and DBJ monitors conditions to determine any changes in the borrower’s analysis department, which may revise to the credit Related information is also provided information as necessary. ratings or make other adjustments on the basis of this related borrower Methods Used to Calculate Credit Risk Asset Amount of Securitization Exposure for these calculations. approach DBJ employs the standardized Overview of Risk Management Policies and Procedures Overview of Risk Management the decline in or disappearance of the from resulting to the risk of loss to DBJ refers risk Credit debt standing of clients for loans or assets, owing to the worsening credit value of credit on average can be expected include expected losses (EL), or losses that guarantees. These risks unexpected losses (UL), which go extend period; and measurement to occur within a certain expected within a period of time. DBJ of losses that, on average, are beyond the boundaries the amount of capital in surplus. UL and capital to measure periodically compares Risks Rating Agencies Eligible to Weight the FSA has among the four that risk are The rating agencies that DBJ uses for weighting to selected according not Eligible rating agencies are named eligible to perform such weighting. type of exposure. (S&P). Corp. & Poor’s and Standard Investors Service, Inc. (Moody’s), Moody’s Ltd. (JCR), Agency, (a) (b) (c) All capital contributions are from the government of Japan. from are All capital contributions rate risk and risk, interest credit DBJ quantifies of capital adequacy, the degree Regarding capital surplus. the total capital and measures the total risk amount with operational risk, compares decide whether events, risks and unforeseen to unquantifiable to respond This surplus enables DBJ risks and establish the operating directions. to take new financing (a) (b) based on changes in the borrower’s DBJ obtains collateral or guarantees as necessary the perspective of of collateral is determined from the effectiveness If required, creditworthiness. liquidation or the the situation through expected to resolve the amount that could be reasonably respectively. of the guarantor, creditworthiness and Investment and loan departments/offices of investment and loan departments/offices. request In principle, the risk based on valuation results. Analysis Department manage credit the Credit of the DBJ is aware once or twice each year to ensure is reviewed valuation of all collateral property status of its collateral property. current of transaction counterparties to determine amounts to the ratings and credit refers DBJ regularly to understand the risks of existing transactions. the advisability of entering a transaction or Overview of Risk Management Policies and Procedures Related to Risk Involving Counter parties in Derivative Product Transactions with and Transactions Long Settlement Periods Exposure Overview of Risk Management Policies and Procedures for Reducing Credit Risk Overview of Fund- Overview Raising Methods Overview of Methods for Evaluating the Degree of Capital Adequacy of the Bank Credit Risk Annual Report & CSR Report 2012 5 . 6 . Securitization 4 . 1 . 2 . 3 . [2] Capital Adequacy Ratio Status (Non-Consolidated) Adequacy Ratio [2] Capital Disclosure Qualitative 192
Financial Condition Capital Adequacy Status Financial Condition Capital Adequacy Status 193 Annual Report & CSR Report 2012 DBJ regularly compares VaR and 200bpValue against capital to ensure that interest rate risk that interest against capital to ensure and 200bpValue VaR compares DBJ regularly The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating Inc. (R&I), Japan Credit Rating and Investment Information, The rating agencies are pertaining to and basic risk management policy DBJ establishes its management structure charged These personnel are at each of its offices. DBJ designates operational risk officers business, level of sophistication and complexity of the financial In line with the increasing VaR: Use a historical method of measurement with a one-year holding period, a five-year with a one-year holding period, Use a historical method of measurement VaR: time horizon and a 99.9% confidence level using a one-year and 99th percentile, rate fluctuations in the 1st percentile interest Measure holding period and a five-year time horizon the rate shock to measure interest Use a 2% parallel shift in a standardized 200bpValue: change in economic value * Measurement methods are described in (ii) and (iii) of (b). methods are * Measurement remains within a specified range of capital. remains Overview of Methods for Calculating Interest Rate Risk Used by the Bank for Internal Control of the Banking Book rate risk based on the following method. DBJ calculates interest (i) (ii) (iii) rate shock under Basel II.) interest methods for measuring the standardized ((ii) and (iii) are Method of Accounting for Securitized Transactions Accounting for Securitized Method of accounts for these DBJ an investor. transactions is that of in securitized involvement DBJ’s Instruments.” for Financial Standard with the ”Accounting in accordance transactions Securitization Exposure of Type Risks by Eligible to Weight Rating Agencies among the four that the FSA has DBJ uses for weighting risk are The rating agencies that to not selected according are such weighting. Eligible rating agencies named eligible to perform exposure. type of securitization Corp. (S&P). & Poor’s and Standard Service, Inc. (Moody’s), Investors Ltd. (JCR), Moody’s Agency, Policies and Procedures Overview of Risk Management internal the activities of processes, risk as the risk of loss arising from DBJ defines operational extrinsic or from or non-functioning, inappropriate employees or systems that are and officers events. wide range of operational risks that it potentially management methods after considering the legal risk, human risk, tangible asset risk and faces, such as operational risk, systems risk, risk. reputational risk of risks and creating aware remaining with establishing data collection procedures, databases. management methods and various operational risks by establishing or reinforcing DBJ addresses these risks. monitor and control evaluate, measure, identify, to appropriately preparations Risk Equivalent Amount Method Used to Calculate Operational to calculate these risks. DBJ uses the basic indicator approach and Procedures Overview of Risk Management Policies to reduce lending, and DBJ seeks of the DBJ’s Long-term, fixed-rate loans make up the majority rate risk by raising funds featuring similarly long-term, fixed rates. DBJ also employs its interest rate shock* method to compute interest and the Basel II standardized the value at risk (VaR) the standpoint of their economic value. various risks from (b) (d) (e) includes in its calculation the Capital Adequacy Ratio Notification, DBJ Based on Article 16 of equivalent amount. method no market risk (a) (b) a partial or total loss on the economic value of DBJ defines investment risk as its risk of sustaining of an investee’s assets), owing to such factors as the worsening assets (including off-balance-sheet DBJ exposure, acquired For newly market environment. financial conditions or to fluctuations in the risk and potential return in each field of investment. considers the balance between investment conducts performance evaluations on its exposure. DBJ regularly Thereafter, (a) Interest Rate Risk on the Banking Book Management Policies and Procedures Regarding Exposure to Shares and Other Equity Investments and Capital Injections into the Banking Book 9 . Overview of Risk 10 . 8 . Operational risk 7 . Market Risk — — — 7,527 61,866 19,194 18,295 30,141 18,711 267,120 564,120 295,370 827,885 20.39% 25.32% 733,382 639,510 684,046 ¥714,187 (Millions of yen) (Millions of yen) (Millions of yen) ¥14,499,758 ¥12,483,395 ¥14,499,758 March 31, 2011 March March 31, 2011 March 31, 2011 March — — — 8,867 20,803 15,672 36,124 21,306 296,948 456,927 293,406 769,702 242,390 18.30% 22.89% 826,447 723,673 769,519 ¥805,644 ¥15,252,211 ¥13,192,835 ¥15,252,211 March 31, 2012 March March 31, 2012 March 31, 2012 March
Capital ratio Tier I ratio
Other exposure Equity exposure Exposure to corporations Exposure Exposure to financial institutions Exposure Japanese government and regional municipal bodies Japanese government and regional DBJ has no overseas sales locations. Securitization risk exposure (v) (iv) (iii) (ii) Exposure by portfolio to which standardized method applied by portfolio to which standardized Exposure (i) (2) (1) Domestic total Note: Commitments and customers’ liabilities for acceptances and guarantees Commitments and customers’ liabilities for acceptances Overseas total Loans Equities, funds Other Total Bonds (JGBs and corporate bonds, etc.) loan agreement/call Repurchase (1) By region Fiscal year-end credit risk exposure and breakdown by principal categories and breakdown risk exposure credit Fiscal year-end Fiscal year-end credit risk exposure, broken down as follows: broken risk exposure, credit Fiscal year-end (d) Non-consolidated total capital requirement ((a) + (b) + (c)) (d) Non-consolidated total capital requirement Tier(e) Non-consolidated capital ratio and non-consolidated I ratio (c) Capital requirement to operational risk (c) Capital requirement to market risk (b) Capital requirement
Items Related to Capital Adequacy Level to Capital Adequacy Items Related (a) Capital requirement to total credit risk to total credit (a) Capital requirement
(a) (b) Annual Report & CSR Report 2012 Items Related to Credit Risk (Excluding Securitization Exposure) 2 . Items Related to Credit Risk (Excluding Quantitative Disclosure Quantitative
1 .
194
Financial Condition Capital Adequacy Status Financial Condition Capital Adequacy Status 195 922 98,610 45,348 40,325 32,081 824,102 505,991 683,817 (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) 5,412,965 3,808,137 1,988,982 4,244,213 5,608,858 1,156,814 1,099,731 1,411,058 3,735,347 1,818,276 1,013,870 1,426,488 ¥ — ¥ 550,730 ¥3,494,246 ¥5,767,717 March 31, 2011 March 31, 2011 March March 31, 2011 March 31, 2011 March Annual Report & CSR Report 2012 1,401 86,205 54,714 68,098 25,005 820,874 499,049 995,400 442,443 5,267,556 2,896,755 1,960,287 5,164,121 6,411,453 1,196,031 1,450,669 1,362,796 3,429,722 2,475,942 1,210,309 ¥ 485,398 ¥3,774,990 ¥3,774,990 ¥6,704,444 ¥ 152,830 March 31, 2012 March 31, 2012 March March 31, 2012 March 31, 2012 March Risk weight 10% Risk weight 0% Five years or less Forestry and fisheries and Forestry than five years, up to 10 More Risk weight 20% Manufacturing Mining than 10 years, up to 15 More Risk weight 50% Construction than 15 years More No maturity date Risk weight 100% Wholesale and retail Risk weight 150% Finance and insurance Real estate Transportation and communications Transportation Electrical, gas and water Services Other (3) Breakdown by period to maturity (3) Breakdown (2) Breakdown by industry and transaction counterparty and transaction by industry (2) Breakdown Breakdown of exposure by risk weight (after accounting for credit risk mitigations) by risk weight (after accounting for credit of exposure Breakdown Items Related to the Effect of Credit Risk Mitigations Items Related to the Effect Guarantees or credit derivatives Guarantees or credit Eligible financial collaterals (c) Exposure to Items to Which Effect of Credit Risk Mitigations Applied of Credit to Items to Which Effect Exposure
3 .
— — — — 554 569 159 1,800 3,409 9,891 1,697 59,554 36,745 89,258 39,180 36,000 98,100 13,867 24,320 120,510 178,660 142,371 210,271 304,009 446,402 ¥657,037 ¥213,080 ¥133,529 (Millions of yen) (Millions of yen) (Millions of yen) March 31, 2011 March 31, 2011 March March 31, 2011 March Current exposure exposure Current method — — 550 336 955 8,403 1,796 2,274 3,412 6,943 1,142 62,467 85,219 49,504 30,734 99,075 54,916 11,000 80,789 41,763 29,988 115,667 223,486 374,858 428,980 ¥692,945 ¥112,263 ¥133,953
March 31, 2012 March 31, 2012 March March 31, 2012 March Current exposure exposure Current method requirement requirement requirement requirement requirement requirement Interest rate transactions rate Interest transactions exchange Foreign transactions derivative Credit cost Net restructuring default swaps provision Credit default swaps purchase Credit Balance Balance Balance Balance Balance Balance
20% 50% 100% 350% Capital deductions Other* Credit derivatives used to compute the credit equivalent amount are included in securitization exposure; there is some data overlap with there included in securitization exposure; equivalent amount are used to compute the credit derivatives Credit of customers’ liabilities include the measurement known as single-name CDS offerings and what are indicated elsewhere securitization exposure of the company in question. legal and other exposure for acceptances and guarantees as consisting of the Collateral is not used to reduce credit risk on derivative product transactions. risk on derivative product credit Collateral is not used to reduce Of which, resecuritization exposure Of which, resecuritization Of which, resecuritization exposure Of which, resecuritization 2. 1. Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis). approach Assets held by funds including the commitment to funds (calculated on ”look-through” Applying to exposure the transitional measures indicated in Article 15 of the Supplementary Provision to the Capital Adequacy Ratio Notification. indicated in Article 15 of the Supplementary Provision the transitional measures Applying to exposure Credit derivatives Credit Capital Risk weight * capital amounts by risk weight and required securitization exposure (2) Balance of retained (1) Retained securitization exposure amount and breakdown by major underlying asset type amount and breakdown (1) Retained securitization exposure finance Structured * Securitization exposure in which DBJ is the originator Securitization exposure Not applicable. Securitization exposure in which DBJ is an investor Securitization exposure Funds* Risk weight Capital Risk weight Capital Risk weight Capital Risk weight Capital Capital Risk weight ) b Securitization Exposure derivatives for Notional amounts of credit equivalent amount by type of calculated credit derivatives taking Notional amounts of credit risk mitigations into account credit or provision purchase derivative, by protection credit Equivalent credit calculation method Equivalent credit cost restructuring Gross netting equivalent amounts through Reducing credit Net equivalent credit
Gross add-on, by transaction type add-on, Gross Notes: (a) Settlement Periods with Long and Transactions Product Transactions Risk on Derivative Counterparties’ Transaction
Annual Report & CSR Report 2012
5 . 4 .
( 196
Financial Condition Capital Adequacy Status Financial Condition Capital Adequacy Status 197 — — — — — — — — — ¥— 7,350 5,168 10,034 14,199 209,329 ¥21,220 221,289 ¥237,072 ¥ 34,209 (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) March 31, 2011 March 31, 2011 March March 31, 2011 March 31, 2011 March
— 32 402 736 132 777 404 358 Annual Report & CSR Report 2012 1,336 1,303 6,402 9,841 14,817 221,570 ¥41,763 ¥14,286 249,942 ¥207,768 ¥ 37,900 March 31, 2012 March 31, 2012 March March 31, 2012 March 31, 2012 March
requirement requirement requirement requirement requirement Balance Balance Balance Balance Balance
40% 100% 225% 650% Capital deductions Exposure to listed shares Exposure Exposure to other equity investments and capital injections Exposure The Group has no gains or losses from valuation recognized on the non-consolidated balance sheets or the non-consolidated statement of valuation recognized has no gains or losses from The Group income. to the Capital Adequacy Ratio Notification applies. to which Article 13 of the Supplementary Provisions to shares has no exposure The Group Amount of credit risk assets calculated with application of Article 15 of the Supplementary Measure (Interim Measure for Measure (Interim Supplementary Measure risk assets calculated with application of Article 15 of the Amount of credit Breakdown of securitization exposure amounts and underlying asset categories deducted from capital in accordance with capital in accordance amounts and underlying asset categories deducted from of securitization exposure Breakdown 1. 2. Breakdown of retained resecuritization exposure by application of techniques to mitigate credit risks and guarantors, or by risks and guarantors, to mitigate credit by application of techniques exposure resecuritization of retained Breakdown risk weighting applied to guarantors. Securitization Exposure) to the Capital Adequacy Ratio Notification Securitization Exposure) Article 247 of the Capital Adequacy Ratio Notification Market value of below-listed items as included within categories in the non-consolidated balance sheets Gains or losses on the sale of equity investments or shares Gain or loss on write-off of equity exposure of equity exposure Gain or loss on write-off Gains or losses from valuation recognized on the non-consolidated balance sheets valuation recognized Gains or losses from on the non-consolidated statement of income but not recognized Included amount stipulated in Article 18, Paragraph 1, Item 1 of the Capital Adequacy Ratio Notification Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis). approach (calculated on ”look-through” Assets held by funds including the commitment to funds
Funds* Credit risk assets Credit Capital (5) (3) finance Structured * Risk weight Risk weight Resecuritization exposure Resecuritization (4) Risk weight Capital Risk weight Capital Risk weight Capital Risk weight Capital Items Related to Market Risk calculation of the 16 of the Capital Adequacy Ratio Notification. Consequently, DBJ falls into the category indicated in Article market risk equivalent amount was not performed. Investments and Capital Injections into the Banking Book Items Related to Shares and Other Equity Exposure Applied for the Deemed Calculation of Credit Risk Assets Not applicable. (a)
(b) (c) (d)
Notes: 6 . 7 . Not applicable. Not
8 . ¥56.4 billion March 31, 2011 March Decrease in economic in economic Decrease an from value resulting shock rate interest rate measuring interest fluctuations in the 1st and 99th percentile using a percentile, one-year holding period and a five-year time horizon: ¥19.5 billion March 31, 2012 March Decrease in economic in economic Decrease an from value resulting shock rate interest rate measuring interest fluctuations in the 1st and 99th percentile using a percentile, one-year holding period and a five-year time horizon: Interest Rate Risk in the Banking Book Risk in the Banking Interest Rate Decrease in economic value resulting from interest rate shock interest from value resulting in economic Decrease Annual Report & CSR Report 2012 9 . 198
Financial Condition Capital Adequacy Status Profile (As of September 1, 2012)
Established: October 1, 2008 (The Japan Development Bank [1951] and the Hokkaido-Tohoku Development Finance Public Corporation [1956] were merged to form the Development Bank of Japan in 1999) Legal basis: The Development Bank of Japan Inc. Act (Act No. 85 of 2007) President: Toru Hashimoto Number of employees: 1,147 (As of March 31, 2012) Capital: ¥1,198,316 million (100% owned by the Japanese government) Address: 9-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-0004, Japan URL: http://www.dbj.jp/en Number of offices: Branch offices, 10; representative offices, 8; overseas representative office, 1; and overseas subsidiaries, 2 Subsidiaries and affiliated companies: Consolidated subsidiaries, 17; non-consolidated subsidiaries, 23; and affiliated companies, 15 (As of March 31, 2012) Main business: The provision of long-term funding (investment and loans) Purpose: To conduct business activities utilizing the methods of combining investments and financing and other sophisticated financial methodologies, thereby contributing to the smooth supply of funds to those who need long-term business funds, as well as to the sophistication of financial functions.
n Scope of business operations: As well as such basic businesses as investment, lending and guarantee of obligations, DBJ carries out businesses in which it develops new financial techniques.
n DBJ raises funds in a stable manner by borrowing from the government’s Fiscal Investment and Loan Program (FILP) and by issuing government-guaranteed bonds, as well as corporate bonds (without government guarantees), and by taking out long-term loans from the private sector. Total assets: ¥15,563.2 billion (As of March 31, 2012) Loans: ¥13,704.9 billion (As of March 31, 2012) Capital adequacy ratio: 18.30% (As of March 31, 2012) Issuer ratings: Aa3 (Moody’s Investors Service, Inc.), A+ (Standard & Poor’s Corp.), AA (Rating and Investment Information, Inc.), AAA (Japan Credit Rating Agency, Ltd.)
Note: Information above is on a non-consolidated basis.
Development Bank of Japan Inc. Published in September 2012 by the Public Relations & Corporate Social Responsibility Office, Corporate Planning & Coodination Department
Forward-Looking Statements URL: http://www.dbj.jp/en This Annual Report & CSR Report contains statements concerning management policies and future operating results. Such statements are not guarantees. Please be aware that future performance is subject to various changes in conditions in the operating environment. 12 0 2 Annual Report & CSR Report to Design the Future Applying Financial Expertise Applying Financial
Annual Report & CSR Report 2012 Development Bank of Japan Inc. Development Bank of Japan Inc. 100-0004, Japan 9-1, Otemachi 1-chome, Chiyoda-ku, Tokyo http://www.dbj.jp/en This report is printed on paper certified by the Forest Stewardship Council (FSC) as being made from sustainably Council (FSC) as being made from Stewardship by the Forest is printed on paper certified This report is printed with vegetable ink. All the electricity used in printing and binding this The report managed forests. resources. (600 kWh) was supplied by green report