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Concerning Tokuyo City Bank

(tentative translation)

November 26,1997
Bank of Japan

1. We have today been informed by Tokuyo City Bank and Sendai Bank of the following:

  1. (1) Tokuyo City Bank has continued independent efforts for reconstruction to deal with the deterioration in its asset quality and poor business performance so far. However, amidst falls in its stock price, its deposits began to be withdrawn and fund raising has been brought to a stalemate.
  2. (2) A basic agreement has been reached on a business transfer to Sendai Bank on the premise that a request will be made to the Deposit Insurance Corporation for financial assistance including the purchase of the bank's non-performing assets, and that a part of assets and deposits will be transferred to financial institutions, within and outside of Miyagi Prefecture, including 77 Bank.
  3. (3) In order to clarify the responsibility of the management which has brought about such a situation, Chairman Hayasaka and President Niida of Tokuyo City Bank will resign.
  4. (4) Sendai Bank, which will receive the business of Tokuyo City Bank, has raised its capital by subordinated borrowings and intends to further strengthen its financial base by increasing the amount of such borrowings.

2. It is truly regrettable that we have seen the failure of yet another financial institution. Nevertheless, from the viewpoint of protecting depositors and stabilizing the financial system, the Bank of Japan highly evaluates the fact that the above-mentioned agreement on the disposal plan has been reached under the cooperation of financial institutions including Sendai Bank and 77 Bank within and outside of Miyagi Prefecture aiming at minimizing the effect of the failure on the local economy.

The Bank of Japan will initiate discussions with relevant parties to swiftly finalize the disposal plan, and will provide support towards smooth implementation of the plan.

3. Deposits at Tokuyo City Bank will be transferred to the receiving financial institutions and will be fully protected. Thus, there is no need for depositors to be concerned and we strongly hope that they will act sensibly.

4. Until the business transfer, Tokuyo City Bank will continue its business as usual. The Bank of Japan will take all the necessary steps to secure sufficient funds, including, if necessary, extension of loans pursuant to Article 25 of the Bank of Japan Law in the meanwhile.