The Law for Partial Amendment of the Act on Development Bank of Japan Inc. and the Law for Partial Amendment of the Shoko Chukin Bank Act were passed during the current ordinary session of the Diet. On June 26, Zenginkyo released the following comments by Chairman Nagayasu.
During the current ordinary session of the Diet, the Law for Partial Amendment of the Act on Development Bank of Japan Inc. and the Law for Partial Amendment of the Shoko Chukin Bank Act to Smoothly Provide Funds for Small and Medium-Sized Enterprises were passed.
Under the present severe economic and financial environment, JBA is grateful for the wide range of economic measures that have been implemented, starting from measures taken by the government. The Development Bank of Japan and Shoko Chukin Bank have been designated as the financial institutions to carry out policy finance under the crisis-handling system during their transition to becoming completely privatized. As such, they are playing an important role during this crisis by providing financing services as a safety net to a wide range of industries. JBA understands that the aforementioned amendments were made to assist in the enhancement of the financial bases of both institutions to ensure they can fulfill this role.
As private financial institutions, banks are also striving to exert our financial intermediary function in an appropriate and proactive manner. Therefore, in order to increase the effects of these policies and to make an early exit from the current crisis, we believe that it is important for both sides, i.e. policy finance and private financial institutions, to cooperate while sufficiently fulfilling each of their functions and roles.
The amendments also include regulations for reviewing the government’s desirable degree or method of involvement based on the status of implementation of crisis handling taken by both institutions at around the end of fiscal 2011. Moreover, these amendments also include regulations stating that the government will not dispose of stocks of both institutions until necessary reviews have been completed. The Law for Partial Amendment of the Act on Development Bank of Japan Inc. specifically describes how the government shall become involved, in that “the government shall exert a degree of leverage over DBJ, such as by regularly owning more than one-third of the DBJ’s outstanding stocks, etc.”
As private financial institutions, we understand the importance of the role both these institutions play during a crisis. However, we are also aware of the mega trend or unchanging principles in the reform of policy-based finance, namely “from the public to the private sector” and “the public sector will only supplement the business of the private sector.” In view of these principles, we firmly request that, during future discussion on the final stages of privatization of both institutions, the debates give sufficient consideration to ensuring their equal footing with private financial institutions during normal times and their ideal function, as well as the desirable division of roles between the two sides.