Integrated Report Main Part

2019

Mission

Design the Futurewith Financial ExpertiseContinue to expand financial frontiers;
Provide the best solutions for customers and society;Pursue sustainable development for Japan and the world.

1Contents
The DBJ Group’s VisionCorporate GovernanceA presentation of the DBJ Group’s corporate
philosophy from a historical perspective,
along with an explanation of its management
policies rooted in this philosophy

A description of the corporate governancestructure that supports the DBJ Group’sbusiness model

2
4
8
10
18
20

The DBJ Group’s Corporate Philosophy
Our History

Message from the Chairman

68 embers of the Board of Directors,
M
Audit & Supervisory Board Members,
and Executive Officers

Sustainability Management
Message from the President
Financial and Non-Financial Highlights
Invigoration and Stabilization of
Financial Markets through Partnerships
and Collaboration under the Fourth
Medium-Term Management Plan
The DBJ Group’s Strategy

An explanation of the DBJ Group’s businessstrategy and management foundation­strategy based on the Fourth Medium-Term
Management Plan
Business Strategy

22
32
38

60
62
67

Function Strategy

 essages from Outside Members ofM
the Board of Directors

Risk Management
An account of the DBJ Group’s risk management for ensuring sound management

71

Risk Management
Corporate Data

76
77
		

Sector Strategy
Area Strategy

Corporate Governance78

Timeline
Shareholder Information /Summary of Changes to the DBJ Act
after Conversion to a Joint-Stock
Company
Organizational StructureManagement Foundation Strategy

46
50
52

Financial Capital

56

Knowledge and Collaboration

Human Resource Development
 PECIAL FEATURE:
S
Initiatives to Train “Generalists Who
Can Be Specialists in Many Fields”

Data Section80

 he Development Bank of Japan Inc.
T
Act

99

Financial Condition163

 orporate Information /CGroup Companies

Editorial Policy	The DBJ Group published its first report for increasing communication withstakeholders in fiscal 2003, Environmental Report for a Sustainable Society.
Integrated Report 2019 is intended to provide financial and non-financial information to explain the DBJ Group’s business activities and initiatives in sustainable value creation to its broad spectrum of stakeholders. The content isdecided by the Executive Committee.
Period Covered and Scope

Disclaimer

Period: Fiscal 2018 (April 1, 2018–March 31, 2019)(Some information from outside this period is also
included.)
Scope: In principle, the report covers DBJ and its 12 main
subsidiaries.

Integrated Report 2019 contains forward-looking statements.
Forward-looking statements are based on information available
at the time of writing and hypotheses or judgments regarding
uncertain factors. Accordingly, actual results may differ materially
if conditions change.

Guidelines and Entities Referenced
International Integrated Reporting Council (IIRC)
International Integrated Reporting Framework
Guidance for Integrated Corporate Disclosure
and Company–Investor Dialogues for
Collaborative Value Creation
Date of Publication: October 2019https://www.dbj.jp/en/
Latest news, financial services, case studies forinvestment, loans, various reports, information forinvestors, and details about CSR initiatives
Note: Detailed information in the main part can also
be found on the DBJ corporate website.

2

The DBJ Group’s Corporate Philosophy
Design the Future with Financial Expertise

With due consideration paid to progress it has made thus far, projected changes in the business environment, andoutstanding social issues, the DBJ Group has formulated a mission to relentlessly pursue, core values to share, andits long-term vision, Vision 2030, to follow as a guide into the future.
In connection with these elements of its corporate philosophy, the DBJ Group has identified four core corporate
values—long-term perspective, impartiality, public-mindedness, and reliability—that also embody its strengths andlong-term vision, areas of differentiation.

MissionVision 2030
Leveraging the DBJ Group’s
unique strengths to pursue its
mission and realize its vision

Business strategy
Sector strategy
Function strategy
Area strategy

Capital strategy
Sustainability
management

Financial capital
Human capitalIntellectual capital
Relationship andsocial capital

Values put into
practice define
our strengths

Execute strategy
based on values

Action Guideline

Values3

Further propagating and applying our corporate philosophy will improve awareness ofour social responsibility, enhance the sense of unity in the DBJ Group, lower communication
costs, and motivate our employees to grow with intention and a sense of mission.

Our unwavering
purpose andour incessantdetermination toshape the future

Our vision for 2030,
embodied in
our mission andstrategies

Design the Future with Financial ExpertiseContinue to expand financial frontiers;
Provide the best solutions for customers and society;Pursue sustainable development for Japan and the world.

As industry and infrastructure professionals skilled in handling all types of risk,
we will play a unique role in the economy and society of 2030—leading new
business and market creation while responding to crises and other social needs.

Our strategy to reach our vision for 2030
Fourth Medium-Term Management Plan
The DBJ Group’s unique strengths assist with strategy execution
Core corporate a long-term perspective, impartiality,
valuespublic-mindedness, and reliability

Our guidelines fortaking specificactions that
express our values

Responsibility to future generations.... • We fulfill our responsibility to the future by
pursuing both economic and social value.

The customer’s perspective................ • We devote unequalled thought to eachpossibility—from the customer’s point of view.

Outstanding service............................. • We review and enhance our services while
improving productivity.

Commitment and cooperation............ • We work tirelessly to broaden frontiers andachieve best results.

Our unwavering• We respect diversity and work together for
greater shared value.

values sharedby management
and employees(base component)

Initiative   Integrity

The DBJ Group’s Vision

Sharing Our Corporate Philosophy

4

Our History

Japan Development Bank (JDB) and Hokkaido-Tohoku Development Finance Public Corporation (HTDFP), the predecessors of DBJ, were established with the objective of reviving Japan’s economy and society after the end of World War II.
The DBJ Group has contributed to the sustainable development of society, always pursuing a balance between economic and social value, through the provision of solutions in tune with the needs of changing society, while considering
the perspectives of Dr. Osamu Shimomura and Professor Hirofumi Uzawa, who delved into the intricacies of a sustainableeconomy and society from an academic standpoint.

Inherited Perspectives
Dr. Shimomura, one of the leading economists in postwar Japan,
assisted Prime Minister Hayato Ikeda and contributed significantly toward the framing of the “Income-Doubling Plan,” which
successfully led to Japan’s advanced stage of economic growththat began in the 1960s. Later, following the first oil crisis, hedramatically changed his vision of the Japanese economy, andpromoted the “Zero-Growth Theory” as an approach to maintaining a sustainable economy under resource constraints, andemphasized that discipline on the part of the major economic
players was critically important. Dr. Shimomura’s unique vision
was ultimately a calling for s­ ustainability—a stable equilibrium inJapan’s economy over the long term—with a hands-on approachand nimble sensitivity to changes in the Japanese economy.
Professor Uzawa advocated for “Social Common Capital” asa theoretical framework for confronting environmental issues, asocial mechanism for sustainably and stably maintaining a society that is humanely attractive with a vibrant and abundant

Osamu Shimomura(1910–1989)

Dr. Osamu Shimomura was a well-known and an eminent economist in postwar Japan. He joined the Ministry of Finance (MOF) in
1934. He served as a member of the Policy Board of the Bank ofJapan. After retiring from the MOF, Dr. Shimomura was appointed
as a senior executive director of JDB and the first executive officerof the RICF, while constantly maintaining a high public profile as an
economist.
While in the MOF, Dr. Shimomura had advocated the theory
that Japan in the 1960s was poised to enter an advanced economic stage of growth and played a central role in structuring the
Hayato Ikeda Cabinet’s “Income-Doubling Plan.” Later, after the
first oil crisis, he dramatically changed his vision of the Japanese
economy and advocated the “Zero-Growth Theory” as an
approach to maintaining a sustainable economy under resource
constraints.

economy and an excellent culture. This concept encompasses
the natural environment, such as air and water; social infrastructure, such as roads and cultural facilities; and institutional capital,such as medical and educational institutions. “Social Common
Capital” can be thought of as having a relationship to the
Sustainable Development Goals (SDGs) within the context
of aiming to create a sustainable and inclusive society.
Dr. Shimomura, as a senior executive director of JDB andthe first executive officer of the Research Institute of Capital
Formation (RICF), and Professor Uzawa, as a research advisor of
the RICF, have both contributed significantly to furthering theactivities of the DBJ Group. Their visions live on in the DBJ
Group’s mission to, in accordance with guidelines to operatefrom the customer’s point of view, realize the sustainable development of Japan and the world, forming a cornerstone of sustainability management that aims to balance economic value
with social value.

Hirofumi Uzawa

(1928–2014)

Professor Hirofumi Uzawa was a world-famous theoretical economist.
In 1956, he went to the U.S. as a research assistant to Nobel laureate
Professor Kenneth J. Arrow, conducting research at Stanford University
and the University of California, Berkeley, and then became a professor
in the University of Chicago’s Department of Economics in 1964.
Professor Uzawa over the years held numerous key positions, suchas the president or honorary fellow of major professional associations inJapan and the U.S. In light of his accomplishments, in Japan, Professor
Uzawa was designated a Person of Cultural Merit in 1983 and conferred the Order of Cultural Merit in 1997. Beyond accomplishinginternationally outstanding research regarding theoretical economics,
he has greatly impacted Japanese society through his numerous
journal articles and economics-based proposals for environmental
issues. He devoted himself to theoretical research into the sustainability
and advocated the concept of Social Common Capital, encompassing
the natural environment, social infrastructure, and institutional capitalsuch as financial services, healthcare, and education etc.
After returning to Japan, he served as a research advisor of RICF
for nearly 50 years.

5

Roles played
by DBJThe DBJ Group has provided solutions in tune with the times and,while changing itself, has stayed true to its values—initiative andintegrity—amid dramatic changes in the economy, the fabric ofsociety, and social issues.

Economic recovery

Rapid growth

Stable growth

Developing
high-growth
infrastructure

Strengthening
international
competitivenessEconomic bubble

1951
The Japan Development Bank Law enacted

1951–1955

1966 –1971

1985 –1995

Reconstruction and self-reliance ofthe economy

Strengthening of international competitiveness and creation of social
development loans

Development of lifestyle and social
infrastructure and a smooth industrial
transformation

In 1951, Japan Development Bank (JDB) wasestablished and commenced accommodationloans to facilitate the development of the nation’s
power supply, which forms the basis of its
economy and industry, and the rationalization,
modernization, and cultivation of steel, marinetransportation, and other major industries.

Aiming to enhance international competitivenessin accordance with the transition to an open
economic system, JDB focused on support forindustrial system improvements and independent technological development. It also emphasized social development through regional
development, urban redevelopment, logistics
modernization, pollution prevention, and othermeasures in a bid to relieve problems accompanying high-level growth.

Pressing needs arose for increased domestic
demand and an industrial structural shift against
a background of aggravating trade friction withother countries. JDB focused on support forsocial capital improvement, creative technological development, and industrial transformationand other issues.
In the 1990s, it targeted environmental andenergy measures and regional economic stimulation with the aim of making Japan a lifestylesuperpower.

Kawasaki Steel Corporation (currently JFE SteelCorporation): Construction of Chiba Steelworks (Chiba)
Modernization of steelmaking through constructionof the first postwar blast furnace

Sony Corporation: Trinitron color television factory
Promotion of home-growth technologies throughcommercial application of new technologies

Kansai International Airport Company, Ltd.:
Kansai International Airport
Construction of a large international hub airport

1956 –1965

1972 –1984

1996 – 2000

Improvements to quality of life andstable energy supply

Creation of a vibrant and affluent
society and stable economy

High-growth infrastructuredevelopment
To expand and reinforce the energy and transportation activities that underpin industrial
infrastructure, JDB served to power new economic expansion. It also provided loans for local
development to correct regional disparities.
Established in 1956, Hokkaido Development
Finance Public Corporation was restructured in1957 to form Hokkaido-Tohoku Development
Finance Public Corporation (HTDFP) and beganproviding investments and loans to promoteindustry in these two regions.

JDB began antipollution measures, regional andurban development, other social initiatives, andindustrial development. During the first oil crisis,
it provided investment and loans for energy
alternatives to fossil fuels, as well as efforts toconserve energy in order to ensure stable energy
supplies. It also supported development oflarge-scale industrial sites.

JDB focused on such important areas as ongoing improvements to social capital, on environmental and other measures, and on support for
venture businesses. In addition, functioning as asafety net, it swiftly implemented reconstructionloans in the wake of the Great Hanshin-Awaji
Earthquake and loans to stabilize the financial
system.

Nippon Yusen Kabushiki Kaisha: Liner Sanuki Maru
Rebuilding Japan’s merchant shipping fleet withfinance under the government’s shipbuilding
program

New Town Center Development Co., Ltd.
(Now Sunshine City Corporation):
Sunshine City construction (Central Tokyo)
Ikebukuro redevelopment for new urban configuration

Hankyu Corporation: Earthquake reconstruction
work (Hyogo Prefecture)
Recovery work on traffic infrastructure destroyed byearthquakes

6

Smoothening
industrial
transformation

Creating
an affluent
society

Post-bubble
economyRegional
revitalization

Structural reform

Regenerating
business

Financialcrisis response,
post-earthquake
reconstruction

The 2008 global financial crisis

2007
Enactment of the Development Bank of Japan Inc. Act

2001–2007
Financial solutions that support
communities, the environment,
and technology
In 1999, JDB and HTDFP were dissolved andthe Development Bank of Japan was established. It focused its operations in three areas:
community development, environmental conservation and sustainable societies, and the creation of new technologies and industries.
In these ways, it contributed to the sustainable
development of Japan’s economy.

2008 onward
Development Bank of Japan Inc.
established

Global financial crisis precipitated by
the 2008 financial crisis

Development Bank of Japan Inc. was established on October 1, 2008, as a special stockcompany by means of conversion to a jointstock company. As an impartial provider ofindustrial finance, long-term funds, and risk
capital provided through integrated investment
and loan services, DBJ addresses the various
issues that clients face.

The financial crisis in the autumn of 2008 precipitated a global financial crisis. As this situation
impaired the functioning of the bond markets,
corporate cash flows worsened. DBJ responded
promptly with financial Crisis Response
Operations. Beginning in January 2009, these
operations started to include purchases ofcommercial paper in response to falling functionality in that market.

Great East Japan Earthquake disasterand crisis response

PASMO Co., Ltd.: Development of the PASMO IC
card that transformed public transport convenience
Note: PASMO is a registered trademark of
PASMO Co., Ltd.

Development of innovative financial
products focused on sources ofcorporate value
Drawing on the knowledge gained from extending more than ¥3 trillion of investments and loans
for environmental conservation projects overmore than 40 years, in 2004 DBJ launched theEnvironmentally Rated Loan Program, whichuses its proprietary screening system to evaluate
firms’ non-financial information and determine
loan terms and conditions for selected firms withhigh scores. Using the same method, DBJ
followed up with a disaster preparedness loan
program in 2006, which was renamed the BCM
Rated Loan Program in 2011, and with the
Employees’ Health Management Rated Loan
Program in 2012.

V-Lease Corporation:
DBJ entered the business of operating leases foraircraft engines, of which core parts are produced by
Japanese heavy industry companies. Through thisbusiness, we aim to promote the further development of the Japanese airline industry.

Dexerials Corporation:
DBJ supported the expansion of operations byproviding management resources, including humanresources, along with risk capital to Dexerials, which
has world-leading technologies in the functional
materials field.

Overseas business development
DBJ began to develop a foundation for providing
investment and loans overseas with the intentionof returning knowledge to Japan.

Responding to the March 11, 2011, Great East
Japan Earthquake disaster and crisis, DBJ
worked with other financial institutions to provide
appropriate financing, particularly to electric
power companies. Through the Great East
Japan Earthquake Reconstruction Fund, established jointly with financial institutions in thedisaster-stricken region, DBJ continues toprovide risk capital through such methods as
subordinated loans and preferred shares.

Joban Kosan Co., Ltd.: Spa Resort Hawaiians(Fukushima Prefecture)
Support for a theme park that became a symbolof reconstruction after the Great East Japan
Earthquake

7

Supplyingrisk capital

The Great East Japan Earthquake

Creation,
Conversion,and Growth
in Industry

Rebuilding andReinforcement ofInfrastructure

Self-Reliance andRevitalizationof LocalEconomies

Realizing a sustainable society

2015
Amendments to the Development
Bank of Japan Inc. Act

Vision 2030
Reinforcement of the function of
supplying growth capital
The Act for Partial Amendment of theDevelopment Bank of Japan Inc. Act, which wasenacted on May 20, 2015, created Special
Investment Operations. This new investment
scheme, a portion of the funding for which isprovided by the Japanese government, is atemporary measure to intensively provide thegrowth capital needed to promote the competitiveness of Japanese enterprises and regional
revitalization.

Stronger response to innovation
For new businesses, future pillars of Japan, toreach commercialization and become a part ofsociety, the DBJ Group engages in collaboration
with diverse players while shaping projects froma long-term perspective.

Japan H2 Mobility, LLC (JHyM): Financial support forrealization of a hydrogen-based society
Photo provided by JXTG Nippon Oil & Energy
Corporation

Space One Co., Ltd.: Support for development of thedomestic space industry by commercializing a newgeneration of small rockets

As industry and infrastructure professionals skilled in handling all
types of risk, we will play a unique role in the economy and societyof 2030—leading new business and market creation while responding
to crises and other social needs.

Future Changes in the External Environment
We have identified changes in the external environment that could have a major
impact on the DBJ Group stakeholders in the future. These sync with the United
Nations Sustainable Development Goals (SDGs) and we aim to contribute torealizing those goals.
Population
problems

Climate change,
naturalresources, andenergyGlobalizationAI, fintech,and othertechnologicalinnovations

Government
budgets,
finances, andregulations

Our Three Priority Areas
The DBJ Group has established infrastructure, industry, and the regions as its
three priority areas based on the roles it has played and the functions it has
undertaken to date, the social value it has realized, and future changes in theexternal environment. Leveraging its professional strengths, the Group is assessing long-term changes in the external environment to provide creative solutions
to issues confronting clients in infrastructure, industry, and the regions andthereby play a part in creating a sustainable society.

Rebuilding of energy systems, moreadvanced of transportation networks,
creation of attractive communities

Rebuild energy and transportation infrastructure, upgrade
public infrastructure
Promote urban growthCommercialization of newtechnologies, business restructuring to
improve productivity and honecompetitiveness, businessdevelopment in global markets

New technologies and businesses (promote innovation)

Industrial revitalization based onregional characteristics, overseas
business development, response toinbound tourism, businesssuccession

Solve issues specific toeach region

Reorganization
Overseas expansion

Play a role connecting regions
to Tokyo, regions to regions,and regions to the world

8

Sustainability Management
Value Creation Process

MissionVision 2030

Our Three Priority Areas
Rebuilding and Reinforcementof Infrastructure
Rebuilding of energy systems, moreadvanced transportation networks,
creation of attractive communities

Creation, Conversion, and
Growth in Industry

Self-Reliance and Revitalizationof Local Economies

Commercialization of new technologies,
business restructuring to improve productivity and hone competitiveness,business development in global markets

Industrial revitalization based on regional
characteristics, overseas businessdevelopment, response to inboundtourism, business succession

Sustainability Management
Integrated Investment and Loan
Services That Contribute to
Resolving Social and Client Issues

The DBJ Group’s Management
Capital Communication
Outcome of business activities

Financial Capital

Human Capital

Economic
Value
Creation

Creation of Diverse Financial
Deal Opportunities

Business
activities in tune
with risk
appetite

Increase andconversion ofcapital value

Provision of Our Knowledge

Crisis Response Operations

Sustainability
Management for Both
Economic andSocial Value

Intellectual Capital

Relationship andSocial Capital

Risk Capital FinanceSocialValue
Creation• Financing• Investment• Consulting and advisory• Asset management

Investment of management resources• Special Investment Operations• Crisis Response Operations

Corporate Governance and Risk Management
Long-running,
continuous collaboration and dialogue

Advisory Board
Monitoring Board

Communication with Stakeholders

Customers

Communities

Employees

Financial institutions

Investors

Shareholders

etc.

9

Solving Challenges in Priority Areas through Sustainability Management
For customers in priority areas—infrastructure, industry, and theregions, which were decided in view of DBJ’s functions to dateand opinions received from stakeholders—the DBJ Group provides integrated investment and loans commensurate with risk
appetite along with consulting and advisory services. For ourinvestor clients, we offer syndication and asset management

services. As financial professionals offering creative solutions forthe different issues faced by its customers, DBJ contributes to thecreation of a sustainable
society aligned with the SDGs.

Balancing Economic and Social Value
The DBJ Group works to promote industries and initiatives withthe potential to serve as pillars for Japan’s economy and society.
We offer up solutions for current issues affecting industries and ourcustomers, as well as examining hypothetical and envisioned
changes to both groups amid the rapid changes occurring in
our society.
As mandated under the DBJ Act, we also undertake Crisis
Response Operations as required by events such as major natural
disasters and financial market instability. We contribute to thesustained growth of society through Group measures to promote
new industries and initiatives while responding to crisis events,
always taking the needs of our customers and the community into
consideration. Implementing the DBJ Group’s business model
requires unique resources. While sound financial capital is a vital
support, we also strive for the integrated expansion of financial
and non-financial capital, using clear definitions for the humancapital, intellectual capital, and relationship and social capital that
impact on our financial value creation in the long term.

Building a Foundation for Sustainability Management through Communication with
Stakeholders
Communication with our stakeholders helps us continuously
improve our sustainability management, our unique value creation
process. As part of this process, the Advisory Board, an advisory
body to the Board of Directors, and the Special Investment
Operations Monitoring Board, receive third-party advice fromoutside experts and outside members of the Board of Directors.
Through communication in its daily operations with stakeholders,
including customers, regions, financial institutions, investors, andshareholders, the DBJ Group reaffirms its functions and examines
how those functions should evolve in the years to come.

The DBJ Group’s Vision

As a leader in sustainability management, the DBJ Group seeks to promote sustainable development in Japan and worldwide
by offering solutions to issues facing clients and society as a whole.
The sustainability management targeted by the DBJ Group consists of a business model that leverages Group capabilities
in fields including integrated investment and loans and consulting and advisory services. Our business model is designed toraise economic and social value simultaneously in pursuing a sustainable society. We work constantly to improve our value
creation process through collaboration and dialogue with stakeholders, seeking to refine our sustainability management andenhance the value we create.

10

Message from the President

Hajime Watanabe
President and CEO
Development Bank of Japan Inc.

11

customers, the DBJ Group helps realize a sustainable
society by promoting sustainability management whilebalancing economic and social value.

    the DBJ Group has worked to promote Japan’s sustainable
development. We have achieved this by responding flexibly toEnvironment Affecting the DBJ Groupthe issues of the day, through the periods of postwar reconstruction and high, stable growth, the bubble economy and its

The economic and social landscape is changing swiftly andcollapse, globalization, the declining birth rate and aging popu-

significantly. Political instability is increasing against a global

lation, and growing environmental and disaster awareness.

backdrop of emerging protectionism and growing geopolitical

The past decade alone has seen dramatic change in the wakerisk. The environment surrounding financial institutions is alsoof the global financial crisis and such major events as thechanging quickly amid tightened financial regulations acrossGreat East Japan Earthquake. Against this backdrop, the DBJ

the globe, a digital revolution involving rapid innovation inGroup has developed new initiatives to address social issues

fintech, and negative interest rates in Japan.

with an eye on the future.

In a world of rising uncertainty, a heightened awareness ofAmid ongoing change in the economy and society, the DBJ

the role of finance in building a sustainable society has led to a

Group strives to strike a balance between economic value andglobal call for action for sustainable finance, in areas including

social value by grasping the latest social issues and offering

environmental, social, and governance (ESG) investment.

ideas for solving them from a financial perspective, all while

Companies have quickly got on board with the final recom-

collaborating with other financial institutions. Our unwavering

mendations of the Task Force on Climate-related Financial

core values of “initiative” and “integrity” have supported thisDisclosures (TCFD), formed under the auspices of the Financial

flexible approach to solving problems. It would be a disservice

Stability Board (FSB) to facilitate the disclosure of information

to not mention two of our predecessors who had a major

related to risks and opportunities presented by climate

impact on shaping our core values: Dr. Osamu Shimomura, achange. In Japan, government initiatives aimed at achieving

former senior executive director of Japan Development Bank

the United Nations Sustainable Development Goals (SDGs)

and the first executive officer of the Research Institute of Capital

have been a powerful motivating force. Along with the ESG

Formation (RICF) of DBJ, and Professor Hirofumi Uzawa, ainvestment initiatives of the Government Pension Investment

former research advisor for the RICF. With a hands-on

Fund (GPIF), they have spurred considerable progress in theapproach to policymaking, Dr. Shimomura played an instru-

industrial and financial dialogue on sustainability. A movement

mental role in shaping “Income-Doubling Plan.” Professor

is gaining momentum for companies to develop solutions to

Uzawa developed the theory of “Social Common Capital” associal issues as an integral part of their business.

a sustainable foundation for a society that is attractive on ahuman level. These two predecessors, who had a major
impact on the direction of the DBJ Group, shared common    

characteristics—namely, warm hearts and cool heads—that
facilitated their keen perception of changes over time. Our core

The Role of the DBJ Group and Our Achievements

employee values today are the culmination of their intentions,to Datewhich live on as a cornerstone of sustainability management at
the DBJ Group.

Since the days of its predecessors, Japan Development Bankand Hokkaido-Tohoku Development Finance Public Corporation,

More than a decade has passed since October 2008, when
DBJ became as a joint-stock company. Society has changed

The DBJ Group’s Vision

In tune with the changing needs of society and our12

We will fulfill our unique role in the economy and society through 2030,
enhancing the added value we provide to our customers as financial
professionals, through contributions in priority domains while taking into
consideration dialogue with stakeholders.

significantly over these 10 years, with the collapse of Lehman    

Brothers and the ensuing financial crisis, the Great East Japan
Earthquake, large-scale monetary easing, and Industry 4.0

Vision 2030 and Priority Areas

brought on by digital transformation.
The DBJ Group has changed just as significantly as we

In 2015, with the aim of shaping our business vision around ahave responded to these changes in society. Specifically, there

longer-term outlook, we gave fresh thought to the role of DBJ

has been strong growth in the Group’s unique, integrated

in the years leading up to 2030. In the course of our debate, weinvestment and loan-based business model through the devel-

identified a number of changes in the external environment withopment of Crisis Response Operations to cope with unprec-

a significant impact on our stakeholders: Japan’s declining

edented events such as earthquakes and global financial

population and its climate and energy issues in the context ofcrises, and via measures to enhance the supply of risk capitalthe global effort to build a sustainable society; intensifying

for subsequent growth.

global competition; and innovations in digital technology such

The future is sure to present further changes and chal-as AI and fintech. Since our founding during the postwar recon-

lenges. In keeping with our unwavering mission, the DBJ

struction period, DBJ has dealt with issues ranging from urban-

Group will take a flexible approach to issues faced by regions

ization and pollution control through the period of highand our customers as a whole, staying true to our core values

economic growth, to the challenges of crisis management andand being mindful of our action guidelines.

competitiveness building we are working on today. Based on

Our Mission: Designing the future with financial expertisethe roles we have undertaken and the value we have realized

Our Action Guidelines:

over this time, we identified issues to be tackled in the future• Responsibility to future generations

and examined the best areas in which to use our strengths over

• The customer’s perspective

the longer term in the interests of a sustainable society. Vision• Outstanding service

2030 was the result. Drawn up in 2017, this long-term vision• Commitment and cooperation

sets infrastructure, industry, and regional economies as the

Our Values: Initiative and Integrity

three priority areas (materialities) for the DBJ Group initiatives.
Our contributions in these areas will be consistent with theGroup’s course so far, and we believe they will be in line withwhat society and stakeholders expect from us in the future.
To fulfill our mission, we will work as financial professionals
to enhance the added value provided to regional communities
and our customers in industry and infrastructure, steadily
implementing each initiative while respecting the views of
stakeholders. We will take the lead in business and market
creation by leveraging our ability to properly evaluate andaddress a broad range of risks. At the same time, as we lookforward to 2030, we will fulfill our unique role in the economy
and society by taking action during times of crisis and otherwise responding to social demand.

13

Business Strategy

Management Foundation
Strategy
P22–45

P46–59Financial capital

Fields (Sectors)
Three infrastructure fields
Transportation

Industrial fields
Urban
development

Functions

EnergyFinancing(including Crisis
Response
Operations)

Provide higher-value-added services,such as structured financing andmezzanine financing

Investments(includingSpecialInvestment
Operations)

Promote long-term investments ininfrastructure and growth investments
in companies

Fees andcommissions

Expand the asset management business in
the infrastructure and private-equity fields,
in addition to arrangement and advisory
services

New functions

New fields

Invest management
resources
Integrated
management

Develop fields
where innovation
is progressing

Non-financial
capital

Aerospace
Communications
Healthcare
Global logistics

Human capitalIntellectual
capitalOther businessdevelopment

Develop new functions to complement
financing, advisory, and asset management
services

Results of businessactivities

Relationshipand social
capitalAreas
Support regional globalization, provide financing
opportunities overseas, provide solutions

Regions andoverseas

Role connecting regions to the world

Corporate Governance and Risk Management
P60–75

Financial Targets of the Fourth Medium-Term Management Plan
Fourth Medium-Term Management Plan
Actual(Fiscal 2018)

Actual(Average for fiscal
2017–fiscal 2018)

Gross ordinary income*1¥187.7 billion¥181.0 billion

Net income attributable to owners of the parent¥91.9 billion¥91.9 billion¥80 billion

35%

34%

About 35%

(Consolidated)

Profitability

Soundness

Expense ratio*

2

Target(Fiscal 2019)¥190 billion¥17.0 trillion—¥16 trillion

ROA*2

1.1%

1.1%

About 1%

ROE*2

2.9%

3.0%

About 3%

Capital adequacy ratio*3

16.6%

—

At least 14%

Total assets*1 Before credit cost deductions*2 Expense ratio and ROA versus gross ordinary income, ROE versus net income*3 Common equity Tier 1 risk-weighted capital ratio

The DBJ Group’s Vision

Fourth Medium-Term Management Plan

14

    

    

Sustainability Management at the DBJ Group

Initiatives under the Fourth Medium-Term Management
Plan (Fiscal 2017–Fiscal 2019)

The DBJ Group practices sustainability management as ameans of creating value with a focus on the three priority

The Fourth Medium-Term Management Plan: Initiate Change,

areas. By sustainability management, we mean working toCreate the Future was drawn up in 2017 by backcasting

create economic and social value by providing the solutions

from the Group’s long-term vision—Vision 2030. The Fourthneeded to create new industries and initiatives, by responding

Medium-Term Management Plan features a business strategy,

during times of crisis, and by making other contributions

consisting of sector, function, and area strategies, for realizing

towards the building of a sustainable society, all while being

the long-term vision as well as a management foundation

guided by the needs of our customers and society as a whole.

strategy encompassing financial capital and non-financial capital.

To this end, we must accurately understand the current

Under the current plan, our business strategy is to expand

issues affecting industries and our customers, in addition to

integrated investment and loan services for customers in threelonger-term trends and issues in society and the impact they

infrastructure fields (energy, transportation, and urban develop-

may have on our customers and specific sectors. Leveragingment) and industrial fields, including new fields. In our loan

our knowledge to produce future visions through trial and error,

business, we will provide high-value-added services in struc-and sharing these visions with customers and regional com-

tured and mezzanine finance, and in investments we will pro-munities while offering financial solutions such as risk capital to

mote long-term investments in the three infrastructure fields

deal with related issues, the DBJ Group will take the lead inand growth investments in industrial fields. Advisory business,creating industries and initiatives that can serve as pillars of

meanwhile, will benefit from expanded asset management inJapan’s economy and society in the years to come. Crisis

infrastructure and private equity. The DBJ Group will also play

Response Operations will be an important function, undertakena role in connecting Japan’s regions to overseas markets bywith flexibility and precision as required by events such as

developing these activities both regionally and overseas.

major disasters and instability in the financial markets.
As we move ahead with these services, we are also honing

Under our management foundation strategy, DBJ categorizes our management resources into financial capital, humanour strengths in relationship capital, as exemplified by robust

capital, intellectual capital, and relationship and social capital.

networks in industry, government, and academia, sound finan-

We will promote the growth and transformation of these forms

cial capital, and human capital sharing a common set of coreof capital by investing in our management resources

values. We believe in the importance of constantly improving

and improving our business activities to realize better results.

our sustainability management processes through dialogue with

Specifically, we aim to diversify funding methods, including

external stakeholders, centering on the Advisory Board and the

SRI bonds, and develop our risk management. In the area ofSpecial Investment Operations Monitoring Board of DBJ.

non-financial capital, we will develop human resources in linewith our business strategy, speed up decision-making, andcollaborate with other companies, including private-sector
financial institutions.

15

strengthen our management capital while expanding integrated investment
and loan services for clients in industry and three fields of infrastructure.

Business Profit and Loss (Consolidated)(¥ billion)

Fiscal 2017

Fiscal 2018

YoY change

174.3

187.7

13.3

Loans

84.8

80.9

(3.8)

Investment

65.8

81.5

15.6

Fee and commission income

23.6

25.2

1.5

Operating expenses(59.1)(64.8)(5.7)

Net ordinary income

115.1

122.8

7.6

Other extraordinary items

2.2

(1.3)

(3.6)

Gains on reversal of reserves and collectionof written-off claims

11.9

5.3

(6.6)

Loans

12.4

6.8

(5.5)

Investment

(0.4)

(1.5)

(1.1)

Income before income taxes and minority interests

129.4

126.7

(2.6)

Total income taxes(35.0)(33.5)

1.5

Current net income

94.3

93.2

(1.1)

Net income attributable to non-controlling interests

2.4

1.2

(1.1)

Net income attributable to owners of the parent

91.9

91.9

(0)

Gross ordinary income

Note: Business categories are those used in business management.

Fiscal 2018, the second year of the Fourth Medium-Term

On the finance side, efforts focused on the supply of risk

Management Plan, saw progress in our initiatives to supply risk

capital have resulted in a higher ratio of investments in businesscapital. This included the development of a stable investment

profit and loss, bringing it to a level on a par with loans. Profits

portfolio in the infrastructure field and the creation of distinctive

on loans decreased, owing in part to a decline in the average

special investment projects, including assistance for Japaneseloan balance. The lending yield has come under downward

companies participating in advanced overseas cases, in thepressure amid the ultra-low interest rates prevailing recently, as

renewable energy field. We established the Regional

DBJ gradually reshuffles our assets in light of our relatively highReconstruction Headquarters and launched the Regionalratio of long-term loans. We intend to strengthen our profits on

Emergency Response Program to provide rapid reconstructionloans, however, by focusing on relatively high-value-added

support after heavy rainfall damaged Western Japan in July

projects such as structured financing and mezzanine financing.

2018 and the Eastern Iburi Earthquake struck Hokkaido two

Profits on investments amounted to ¥81.5 billion, reflecting themonths later. The program facilitated reconstruction efforts

booking of gains on the divesture of investment projects thanks

while strengthening regional vitality.

to favorable macroeconomic conditions, in addition to earnings

The DBJ Group’s Vision

Under the Fourth Medium-Term Management Plan, we will make every effort to16

As a front runner in sustainability management, we will engage in dialogue withstakeholders and take initiatives to realize a sustainable society.

from investment portfolios producing relatively stable returns,    

such as investments in infrastructure-related energy and urban
development projects. Fee and commission income totaled

Future Business Operations¥25.2 billion, including commissions for arranging investments
and loans, and fees for assets under management by Group

Fiscal 2019 is the final year of the Fourth Medium-Termcompany DBJ Asset Management Co., Ltd. As a result, grossManagement Plan and the year that we begin formulating theordinary income came to ¥187.7 billion and net income attribut-

Fifth Medium-Term Management Plan. We will carry on withable to owners of the parent was ¥91.9 billion.

initiatives underway in new fields, in order to reflect social shifts
including changes in the aerospace, telecommunications,healthcare, and logistics fields. We will also strengthen our    base for supplying risk capital to include more sophisticatedinvestment risk management in tandem with growth in ourSpecial Investment Operations

investment business. Work on developing the Fifth MediumTerm Management Plan, which is slated to begin in fiscal

The DBJ Group’s Special Investment Operations are con-2020, should involve some lively debate. We will endeavor toducted as mandated in revisions made in 2015 to themeet our stakeholders’ expectations, backcasting from ourDevelopment Bank of Japan Inc. Act. Utilizing our experience

vision of how society will evolve over the next 10 years andin supplying risk capital, we decided to provide investments

debating our response to those changes. In executing mea-

and loans totaling ¥104.8 billion in fiscal 2018 for 19 projects

sures in the future, the DBJ Group will deepen cooperationthat contribute to regional revitalization and the strengthening

with private financial institutions, including regional banks, asof Japanese corporate competitiveness. Since launching these

we seek out the best measures to resolve the issues faced byoperations, DBJ has used them to extend ¥363.9 billion in

our customers and society at large.

investments and loans to a total of 81 projects. A total of¥1,390.9 billion in private-sector investments and loans havebeen triggered by DBJ’s investments and loans worth ¥324.6    

billion. The DBJ Group will continue to supply growth capital incollaboration with private financial institutions. The Group also

Development of Human Resources for Better

has an extensive track record in regional revitalization projects,

Sustainability Management

and is keen to engage in future initiatives with local financial
institutions willing to help create distinctive regional communi-

Sustainability management, a key to the DBJ Group’s value

ties. These initiatives are objectively evaluated by the Special

creation process, relies above all on workers who share the core

Investment Operations Monitoring Board, which meets twice avalues of initiative and integrity and who display the four elements

year to see that stakeholder opinions are reflected in theof our core corporate values in pursuing balancing economic andGroup’s businesses.

social value. Officers and employees of the DBJ Group haveinherited the core corporate values of long-term perspective,
impartiality, public mindedness, and reliability, which have evolved
over the years in the course of our business. Bolstered by these

17

The DBJ Group’s Vision

corporate values, the Group has consistently risen to meet the    challenges of the times. We always strive to enhance our skills in
corporate and project assessment. Our expertise in long-term

Collaboration on a Broader Scalescreening and assessment, based on a comprehensive view ofregional and current issues, is equal to knowledge, capability,

The environment surrounding Japan is one of great and con-and network building as a DBJ Group asset.

stant change. Over the next decade, Japan is likely to see a

The employees embodying the Group’s values should be able

number of megatrends gain momentum. These include an

to pursue their activities creatively and in good health, and we areaging and declining population, digital transformation affecting

promoting workstyle reform for this purpose. To bring more

all aspects of industry, and intensifying global competition. In

flexibility to working patterns, we have introduced telecommuting

the industrial field, we anticipate new forms of cross-sector

and a flex-time work system, and we aim to enhance work andcollaboration, an evolution in business models, and the emer-

paid leave programs for child-rearing and caregiving.

gence of new ecosystems. The DBJ Group will continue to

We also believe that improving the skills of our officers andsupply risk capital through integrated investment and loan

employees is a vital issue as our business becomes more

services for new initiatives being undertaken by our customers,

complex and sophisticated to deal with the increasingly diversein an effort to lead the development of a more sustainableissues faced by society and our customers. In fiscal 2018, DBJ

society.

initiated a program to develop global human resources with

Building a sustainable society is a global agenda, and it is

the cooperation of the University of Oxford—the Global

important that we work to make that happen. The public andStrategic Alignment Leadership Program. I actually paid a visit

private sectors have joined forces in a growing movement toto the university and spoke with young employees participating

contribute toward the SDG global agenda for 2030. In financial

in the program. The program gave them an opportunity tomarkets, interest in sustainable finance has increased. The

think about future global changes and the roles the DBJ GroupDBJ Group has made strides toward the realization of a sus-

should fulfill. Through this learning experience, we hope thattainable society by evaluating intangible assets through dia-

our young employees will absorb the varied expertise andlogue with customers in the course of our business, andinsight of the outstanding instructors at the University ofespecially through the DBJ Certification Programs. Engaging in

Oxford and develop into leaders capable of guiding the DBJ

dialogue with stakeholders will remain a crucial endeavor asGroup forward into the future. In addition to the University of

we continue to fulfill our mission as a front runner in sustain-

Oxford, DBJ has partnered with the International Instituteability management. It is our sincere hope that this integrated

for Management Development (IMD) business school inreport will lead to greater dialogue with all of our stakeholders.

Switzerland to launch a new program in fiscal 2019, and we
also plan to augment training for managers in the future. DBJ

August 2019will continue to develop our multi-faceted training and humanresource development system in a bid to nurture personnel
who can create new value by connecting customers andindustries through the wide-ranging networks and knowledgeof the DBJ Group.

President and CEO

18

Financial and Non-Financial Highlights

Financial Highlights
Balance of Investments and Loans(Non-Consolidated)

Capital Adequacy Ratio* (Consolidated)(¥ billion)

(%)
20

1,800

17.54
751.8

809.0

854.6

952.1

1,129.3

14,083.6

13,724.3

13,772.3

13,467.7

13,584.6

1,200

16.22

17.22

16.81

16.65

2016

2017

2018 (Fiscal year)

15

Target of 4th MTMP: about 14%

10

600
5

0

2014

2015

Loan balance

2016

2017

2018 (Fiscal year)

0

2014

2015

* Common equity Tier 1 risk-weighted capital ratio

Investment balance

The balance of investments and loans (non-consolidated) wasapproximately ¥14.7 trillion as of the end of fiscal 2018 and has
continued to hold steady at this level. The loan balance has
decreased since the end of fiscal 2014 from ¥14.1 trillion toaround ¥13.6 trillion as of the end of fiscal 2018, mainlyreflecting the scheduled repayment of loans for Crisis Response
Operations. As a result of focusing on investments, however,
the investment balance has increased by about ¥400.0 billion
over these five fiscal years, reaching ¥1.1 trillion as of the endof fiscal 2018.

Capital increased with profit accumulation and also as a resultof receiving industrial investment for Special Investment
Operations. The capital adequacy ratio (consolidated) was
16.65% as of the end of fiscal 2018. The DBJ Group assumes
this ratio will decrease by a certain degree as we supply risk
capital for purposes including strengthening our investment
operations. Nonetheless, we will maintain a sound capital
adequacy ratio of a minimum of 14.0% based on the target set
down in the Fourth Medium-Term Management Plan.

Gross Ordinary Income (Consolidated)(¥ billion)
250

200

10.9

20.3
86.6
28.3

45.8

150

111.6

100

57.3
101.2

23.6
65.8

25.2
81.5

85.4

84.8

80.9

2016

2017

2018

50

0

–50

Loans

2009

2010
Investment

2011

2012

2013

2014

2015

(Fiscal year)

Fee and commission income

In fiscal 2018, lending yields in loan operations came under downward pressure in the ultra-low interest rate environment. Thanks toa focus on high-value-added loans, however, the yield was basically unchanged. Loan profits did decrease, reflecting a decline in
the average loan balance. In investment operations, DBJ worked to build an investment portfolio that generates stable earnings on
investments in infrastructure and other areas. Increased profits in investment operations were a result of capital gains upon exiting
investments. For the first time in a fiscal year, profits from investments exceeded those from loans. Accordingly, gross ordinary
income increased to ¥187.7 billion.

19

Balance of Investments and Loans
in Renewable Energy

Collaboration and Cooperation with Regional Financial Institutions(No. of Collaborative Funds with Regional Financial Institutions)(¥ billion)(No. of funds)

200

40

186.9

3,000

36

150

30

25

124.2
110.2

100

50

20

1,100

0

30

10

2016

2017

2018

(Fiscal year)

0

2016

2017

2018

(Fiscal year)

The balance of investments and loans in renewable energy
stood at ¥186.9 billion as of the end of fiscal 2018. With renewable energy drawing more attention as the world moves awayfrom carbon-based energy sources, the DBJ Group will provide
financial support to ventures in solar power, onshore and offshore wind power, biomass, and hydropower based on theadvantages of each type of energy source, with a view towardachieving the Japanese government’s goal of a 22%–24% ratioof renewable energy by 2030.

As of the end of fiscal 2018, the DBJ Group had created 36
collaborative funds with regional financial institutions. The DBJ
Group and regional financial institutions, each with its local
customer base, supply risk capital to local companies. We
draw on the respective strengths of each financial institutions
with the aim of spurring initiatives to address regional issues.

Human Resource Development(No. of In-House Training Sessions)No. of Engagements with Customers for
DBJ Certification Programs(No. of sessions)(No. of engagements)

50

150

48
43

40

39
100

113

116

2016

2017

121

30

20
50
10

0

2016

2017

2018

(Fiscal year)

The DBJ Group provides abundant opportunities for training
through combinations of rank-based and business-related
training programs. We have recently augmented training for
management and established a curriculum for developing staff
who can perform skillfully on the global stage. Increasing the valueof human capital is something we see as an issue of the highest importance in implementing the unique business model ofthe DBJ Group. We will continue to train our staff through inhouse training sessions and assistance programs for self-study.

0

2018

(Fiscal year)

At the request of our customers, the DBJ Group helps customers participating in DBJ Certification Programs (see page 59)
identify the issues they need to address and develop moresophisticated management by providing objective, face-to-facefeedback regarding their assessment results. Through dialogue
with customers on more than 100 occasions in a typical year,
we help our customers make further strides in the practice ofsustainability management.

The DBJ Group’s Vision

Non-Financial Highlights

20

Invigoration and Stabilization of Financial Markets through Partnerships
and Collaboration under the Fourth Medium-Term Management Plan

Under the Fourth Medium-Term Management Plan, the DBJ Group provides unique solutions through optimal partnerships,
emphasizing cooperation and collaboration with other financial institutions and non-financial companies.

Infrastructure

Government
investments
and loans

DBJ

EnergyTransportation
Urban
development

Special Investment Operations

Government

Crisis Response Operations
SRI bonds
Financing

Industry
New technologies
and businesses
Restructuring
Overseas expansion

Risk capital andknowledge

Investments

Consulting andAdvisory Services
Bonds andloans

Regional financial
institutions

Asset Management
Asset
management

Group Companies
Regions
Industry promotion
Overseasdevelopment
Business succession

Creation offinancing
opportunities

Domestic andoverseas
institutional
investors

Collaboration

Leading financial
institutions

Cooperation

Collaborative
funds

Financial institutions andnon-financial companies

Procurement and Management of Funds	DBJ receives funding in various formats, including the procurement and management of funds from institutional investors and financial institutions in Japan and abroad. We use
these funds to supply risk capital to domestic and overseas
customers in the industrial and infrastructure fields.

	Crisis Response Operations and Special Investment
Operations
	These operations are mandated by the DBJ Act and areproperly undertaken as operations backed by the uniquestrengths of the DBJ Group.

Provision of Knowledge	Backed by its experience in industrial and infrastructure
fields as well as in risk analysis and structuring, the DBJ
Group creates added value through the provision of knowledge in forms including surveys and analyses.

Supply of Risk Capital by the DBJ Group
DBJ’s financing operations address diverse risks. These operations include investments (balance of ¥1.1 trillion) and loans(balance of approximately ¥13.6 trillion), ranging from crisis
response loans for emergencies and risk-tailored project
financing to hybrid and mezzanine financing. DBJ AssetManagement Co., Ltd. (DBJAM) has ¥1.1 trillion in capital

entrusted by investors, regional financial institutions, and othercustomers desiring expert fund management. In its work inasset management, DBJAM focuses on assets that allow the
DBJ Group to best apply its strengths. We will continue toenhance the supply of risk capital in order to better meet thediverse needs of our customers.

Hybrid / mezzanine financing¥0.6 trillion*2
Loans¥13.0 trillion(including Crisis Response Operations,structured financing andasset financing projects)

Investments¥1.1 trillion

DBJAM (AUM)¥1.1 trillion*1(As of March 31, 2019)*1 Portions entrusted by DBJ are eliminated from DBJAM’s assets under management (AUM).
*2 Overlapping portions for structured financing and asset financing are eliminated from hybrid and mezzanine financing.

21

The DBJ Group’s Strategy
The DBJ Group’s Strategy

Contents
Business Strategy
Sector Strategy

22

Energy Sector

24

Transportation Sector

26

Urban Development Sector

28

Industrial Sectors

Area Strategy

32

Regions

36

Overseas

Function Strategy

38

 pecial Investment Operations andS
Crisis Response Operations

42

Syndication, Advisory, and Consulting Services

44

Asset Management

Management Foundation Strategy

46

Financial Capital

50

Human Resource Development

52

56

 PECIAL FEATURE:
S
Initiatives to Train “Generalists Who Can Be Specialists
in Many Fields”
Knowledge and Collaboration

The DBJ Group
Working in unison, the DBJ Group provides diverse,
high-value-added solutions for solving various issues faced
by its customers and for solving issues throughout society.

Overseas locations• DBJ Singapore Limited• DBJ Europe Limited•	DBJ Investment Consulting(Beijing) Co., Ltd.
• DBJ Americas Inc.

Research, Consulting• Japan Economic ResearchInstitute, Inc.
• Value Management Institute, Inc.

Investments and loans,
Asset management• DBJ Capital Co., Ltd.
•	DBJ Investment Advisory Co., Ltd.
• DBJ Securities Co., Ltd.
• DBJ Asset Management Co., Ltd.

Real estate management /IT services• DBJ Real Estate Co., Ltd.
• Consist, Inc.

22

Sector Strategy
Priority Areas

Rebuilding and Reinforcement of Infrastructure

Rebuilding of energy systems, more advanced transportation networks,
creation of attractive communities

Energy Sector
The DBJ Group will contribute to the realization of alow-carbon society worldwide and the globalization ofJapanese energy companies by taking a leadershiprole in the financing of change in Japan’s energy
markets.

Main Business Fields
Financing and advisory services are provided to companies and projects in thefollowing sectors• Electricity• Gas• OilBalance of loans in the electricity, gas, oil refinery, heat, andwater sectors
As of March 31, 2019

¥

3.6 trillion

Longer-Term External Environment and Social Issues

Strategy

Japan’s energy industry is at a major crossroads. With changes in
the macroeconomic structure, including the population decline,
and advances in energy conservation, DBJ must promote thereduction of CO2 emissions while dealing with deregulation in theelectric power and gas markets.
Under these conditions, issues related to financial support for
the energy industry entail the supply of capital funding to spur the
spread of renewable energy and other new technologies and toaddress growing risks. Moreover, risks in project financing need to
be clarified more clearly, and efforts should be undertaken to allow
market participation by a broader range of companies.

While maintaining strong relationships with customers, DBJ will
focus on providing capital funding (risk money) and advisory
services to facilitate industry restructuring. Furthermore, DBJ will
focus on the smooth supply of capital by collaborating with abroad range of financial institutions to meet demand for investments in the deregulated electric power market in Japan, in addition to strengthening initiatives in project financing with clarified risk
allocation.
The DBJ Group will reinforce its asset management operationsin the energy field with the aim of nurturing markets able to recycle
capital, thereby allowing more financial institutions to participate in
the domestic energy infrastructure market.
Overseas, DBJ aims to become more involved in markets thathave taken the lead in fostering deregulation, and then return any
knowledge gained to the domestic market to advance its development, while proactively supporting Japanese companies in theirefforts to develop business overseas. Through these and otherefforts, we aim to contribute to the realization of a low-carbon
society on a global basis.

Accomplishments and Initiatives to Date
Aoyama-Kogen Wind Farm
Corporation

Green Energy Tsu Corporation–Third Medium-Term Management Plan (through Fiscal 2016)

https://www.dbj.jp/case/energy/

SDT Solar Power Co., Ltd.

Fukushima Gas Power Co., Ltd.

Fourth Medium-Term Management Plan (Fiscal 2017–Fiscal 2019)

To see examples and case studies (Japanese only) in the energy sector, please go to DBJ’s website.

23

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

Preferred Equity Financing for Participating in
J-POWER’s Triton Knoll Offshore Wind Power Project
DBJ made a preferred equity investment in an acquisition
vehicle established by Electric Power Development Co., Ltd.
(J-POWER) to acquire a 25% stake in a U.K.-based offshore
wind power project from the Innogy Group, a German
company engaged in the renewable energy business.
Through this acquisition, J-POWER, along with the Innogy
Group and Kansai Electric Power Co., Inc. (which also acquired
a 16% stake in the same U.K.-based offshore wind power
project at the same time as J-POWER), will construct, maintain,
and operate Triton Knoll, an offshore wind power farm locatedin the North Sea region in the east of England. Plans call for thewind power farm to have 90 wind turbines with a rated output

MESSAGE FROMEMPLOYEES

Provided by MHI Vestas Offshore Wind A/Sof 9,500 kW each, for a total project power generation capacityof 860,000 kW. Construction started in summer 2018, andoperations are slated to commence in October 2021.
Leveraging its experience investing in offshore wind power
projects in the U.K., DBJ will supply risk capital and contributeto the development of new renewable energy businessoverseas for J-POWER and other Japanese energy companies.

Support for New Renewable Energy Business Development Overseas at Domestic
Energy Companies

Offshore wind power generation projects have rapidly grown witha tailwind from government measures to promote wind power inEurope, especially in England. In Japan as well, wind power is
expected to expand as a core source of power in the future.
J-POWER engages in the development, construction,
operation, and maintenance of onshore wind power farms
in Japan, and is examining the feasibility of entering into theoffshore wind power business with other partners in the
Hibiki-nada Sea area of Kitakyushu City in Fukuoka Prefecture.
As one of a few Japanese companies with experience in wind
power generation, J-POWER will acquire know-how in theoffshore wind power business by participating in this project,
thereby contributing significantly to the development of therenewable energy market in Japan. DBJ will provide financial
support for Japanese companies willing to take on the challengeof creating new technologies and markets.

Efforts to Combat Climate Change in the Energy Field
Sustainability management means balancing economic value withsocial value. Based on this fundamental principle, the DBJ Grouphas worked for many years to ensure a reliable supply of energy
while reducing environmental impact.
In the renewable energy field, in particular, DBJ supplies diverse
risk capital, including project financing, mezzanine loans, andequity financing, to wind and solar power generation projects inJapan from their initial stages. DBJ also finances offshore wind
power projects in Europe, with the aim of learning from cuttingedge initiatives overseas and applying those lessons in Japan.
In view of the global debate about climate change and theOECD’s Arrangement on Officially Supported Export Credits, aswell as Japan’s energy policy based on the 3E+S* strategic plan,

DBJ works to ensure reliable energy supply while combating climate change. In renewable and alternative energy, we plan toincrease the supply of risk capital for wind and solar power, newpower grid, and hydrogen projects in order to encourage theirintroduction. For new projects involving coal-fired power plants,
which emit large amounts of greenhouse gases, DBJ takes a morecautious approach. In the process for finance decisions, we evaluate each project from environmental perspectives, such aswhether generation efficiency is at or above the ultra-super-criticallevel, in order to reduce environmental burdens as much as
possible.
* Energy security, Economic efficiency, the Environment, and Safety, as stated inJapan’s Basic Energy Plan.

24

Sector Strategy
Priority Areas

Rebuilding and Reinforcement of Infrastructure

Rebuilding of energy systems, more advanced transportation networks,
creation of attractive communities

Transportation Sector
The DBJ Group aims to lead in a financial aspect thegrowth of the transportation sector and advancementof transportation networks in Japan. DBJ will also act
as a bridge between Japan’s financial market and theglobal transportation financing market.

Main Business Fields
Provision of financing tocompanies and for projects inthe transportation sector• Land transportation• Marine transportation• Air transportation

Balance of loans in the transportation infrastructure(transportation industry) sector
As of March 31, 2019

¥

2.3 trillion

Longer-Term External Environment and Social Issues

Strategy

Around the world, growing populations will lead to the greater
movement of people and goods and spur growth in the transportation sector. In Japan, a country reliant on trade, it is imperative tomaintain the reliable transportation of goods, address issues suchas the declining and aging population, and facilitate the influx ofoverseas visitors. Various issues await solutions for sustaining
growth in the transportation sector and increasing the sophistication of transportation networks. Keen to help its customers solvethese issues, the DBJ Group will provide financial solutions tailoredto diverse needs while acting as a bridge between financial markets in Japan and the global transportation financing market.

While maintaining relations with customers in the transportation
sector, we will refine our ability to respond flexibly to changes in theexternal environment and society. More specifically, DBJ will further
strengthen its optimal financial solutions for quality projects andassets in the land, marine, and air transportation fields, as well as
supply risk capital to Japanese companies for sharpening theirinternational competitiveness. Additionally, DBJ will provide financing
opportunities to Japanese regional banks and other financial institutions and investors in the global transportation financing market
through improved syndicated loans and various investment andloan products that utilize investment and securities functions.

Accomplishments and Initiatives to Date
Solaseed Air Inc.

Kawasaki Kisen Kaisha, Ltd.

–Third Medium-Term Management Plan (through Fiscal 2016)

https://www.dbj.jp/case/transport/

Kanto Railway Co., Ltd.

Tokyo International Air Terminal
Corporation

Fourth Medium-Term Management Plan (Fiscal 2017–Fiscal 2019)

To see examples and case studies (Japanese only) in the transportation sector, please go to
DBJ’s website.

25

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

Contribution to Fukuoka Airport Concession
Operation
In October 2018, DBJ arranged a total of ¥170.0 billion in project
financing for Fukuoka International Airport Co., Ltd. (FIAC), themain entity involved in the concession in Fukuoka Airport, one of
the largest airport concessions in Japan. DBJ and Mizuho Bank,
Ltd. are the mandated lead arrangers, and 12 other financial
institutions, including such regional financial institutions as The
Nishi-Nippon City Bank, Ltd. and The Bank of Fukuoka, Ltd.,are lead arrangers of the project financing.
Regarding the Fukuoka Airport concession, following a
bidding process with a number of corporate groups participating,a consortium comprising Fukuoka Airport Holdings Co., Ltd.,(financed by local firms, etc.) as the representative, as well as
Nishi-Nippon Railroad Co., Ltd., Mitsubishi Corporation, Changi
Airports International Pte. Ltd., and Kyushu Electric Power
Co., Inc., obtained preferential negotiation rights in May 2018.
Established as the operator in this consortium, FIAC began
operating the airport in April 2019.
DBJ, Mizuho Bank, The Nishi-Nippon City Bank, and The
Bank of Fukuoka provided support to the consortium during thebidding process and played an instrumental role in obtaining
preferential negotiating rights. The four banks also madeconcerted efforts to arrange financing for the project. The project
financing for this concession to take over management ofgovernment-operated airports was very complicated due to its

MESSAGE FROMEMPLOYEES

Provided by Fukuoka International Airport Co., Ltd.

scale, one of the largest in Japan. DBJ took advantage of its
accumulated know-how to create a flexible and sophisticatedfinancing scheme that matched the feasibility of the project,
helping raise a large sum of capital.
Fukuoka Airport will be operated using the combined
knowledge and networks of the companies (leading firms inKyushu and Asia) participating in the concession, raising
expectations that Fukuoka Airport will grow into a top-classinternational airport serving East Asia. DBJ contributes to thehealthy development of Japan’s economy by strengthening andmaintaining core transportation infrastructure such as airports,
which creates more sophisticated transportation networks andincreases population movement.

Support for Growth into Top-Class International Airport in East Asia

Fukuoka Airport serves as a gateway to Western Japan, andhas extremely strong potential given the size of the populationand economy in a 5,000 km radius. The consortium that
acquired the rights to operate Fukuoka Airport will maximize thispotential by fully leveraging the knowledge and networks of its
non-local sponsors in airport operations inside and outside
Japan, in addition to the strong passion of local firms.

By coalescing the combined capabilities of local, domestic,
and overseas partners, the consortium aims to turn Fukuoka
Airport into a top-class international airport serving East Asia. In
order to arrange a financing scheme for the local, domestic, andoverseas sponsors, we at DBJ focused our efforts on an
arrangement that can support the stable operations of the
airport after they commence, designing a scheme that financial
institutions can easily participate in while helping the consortium
secure preferential negotiating rights as a financial institution thatagrees with the ambitions of the consortium. A cross-functionalteam was created within DBJ to focus the accumulated expertise of DBJ on fine-tuning this scheme to win the approval ofsponsors inside and outside Japan. With the cooperation ofregional financial institutions, DBJ was able to smoothly workout issues with local firms as well. There has been an outpouring of support from the region for growing Fukuoka Airport into
a top-class international airport in East Asia, and being a part ofthis endeavor has been quite rewarding.

26

Sector Strategy
Priority Areas

Rebuilding and Reinforcement of Infrastructure

Rebuilding of energy systems, more advanced transportation networks,
creation of attractive communities

Urban Development Sector
The DBJ Group’s vision is to grow alongside cities byhelping with the maintenance, renewal, and expansion ofurban functions. The DBJ Group also aims to grow withthe real estate financing market as a market-stabilizing
mechanism.
Main Business Fields
Loans and investments in urban development projects undertaken by developers;
special-purpose companies for owning realestate; loans and investments for real estate
investment trusts (REITs); and managementof DBJ Green Building Certification with theJapan Real Estate Institute•U rban development business•R eal estate
financing•D BJ Green
Building
Certification

Balance of loans in the real estate sector
As of March 31, 2019

¥

1.9 trillion

Longer-Term External Environment and Social Issues

Strategy

Increasing the international competitiveness of cities in Japan is
key to enhancing the country’s overall competitiveness. Urban
infrastructure, built up since 1945, is coming due for an upgrade.
Seamlessly upgrading urban infrastructure without interruption isimportant from the standpoint of creating communities that take
into account the environment and society.
The real estate financing market, an essential part of creating
communities, is prone to instability due to international exposure.
The securitization market in particular was greatly affected by the
global financial crisis, while the real estate financing market was
thrown into disarray. In the face of such conditions, it is necessary
to ensure a reliable supply of capital, spur growth in the real estate
financing market, and promote urban development.

DBJ will facilitate urban development through the supply of risk
capital, including financing for developers and individual development projects. We also support the growth of REITs, which havebecome increasingly important entities for the stable managementof properties.
DBJ will provide opportunities to invest in quality assets for
institutional investors around the world as well as for regional
financial institutions. By engaging in collaborative financing throughproper risk-sharing agreements, we will create stable cash flows in
the real estate finance market.
DBJ Green Building Certification was created in fiscal 2011 asa system for evaluating and certifying real estate from an environmental and social perspective. DBJ continues to operate thissystem along with the Japan Real
Estate Institute, while endeavoring to
improve the evaluation of environmental and social aspects of realestate.

Accomplishments and Initiatives to Date
TOKYO SKYTREE®

Shin-Daibiru Building

Kyobashi EdograndAkasaka Intercity AIR©TOKYO-SKYTREE–Third Medium-Term Management Plan (through Fiscal 2016)

https://www.dbj.jp/case/development/

Fourth Medium-Term Management Plan (Fiscal 2017–Fiscal 2019)

To see examples and case studies (Japanese only) in the urban development sector, please go
to DBJ’s website.

27

Acquisition of Hybrid Corporate Bonds (Green Bonds) Issued by Tokyo Tatemono Co., Ltd.
DBJ acquired hybrid corporate bonds issued by Tokyo Tatemono
Co., Ltd. in March 2019.
Tokyo Tatemono is involved in several large-scale redevelopment projects, including Hareza Ikebukuro and the Type-1 Urban
Redevelopment Project for Yaesu 1-Chome East Area in Front ofTokyo Station. As a designated project that is part of the government’s National Strategic Special Zone, Hareza Ikebukuro entails
plans to develop a high-rise, multipurpose building on the formersite of the Toshima Ward Office in the Ikebukuro area to create avenue for disseminating international culture with eight theaters,in addition to functions as one of the largest business exchange
centers in the area. Tokyo Tatemono issued hybrid corporate
bonds to raise funds in order to maintain its financial soundness
and increase capital efficiency for its various initiatives to enhanceurban functions, like these projects.
These bonds were issued as green bonds. The procured
funds will be allocated for acquiring and constructing Hareza
Ikebukuro, as well as for acquiring and constructing Nakano
Central Park South. These two buildings have received or plan
to obtain five-star ratings as certified DBJ Green Building
Certification with exceptional considerations made for the environment and society, among the best in their class in Japan.

MESSAGE FROMEMPLOYEES

External view of Hareza IkebukuroThis public issuance of hybrid corporate bonds as green bonds isa first in Japan, and also the largest amount issued for a green
bond in Japan. DBJ participates as an anchor investor in thesebonds and is supporting Tokyo Tatemono by inviting other investors, including private financing institutions, to buy the bonds.
By supporting these initiatives by Tokyo Tatemono, DBJ aims tofacilitate the growth of the green financing market while strengthening the international competitiveness of Japanese cities.

Ongoing Support for Urban Redevelopment

Tokyo and other major cities in Japan are among the first in
the world to have reached a mature stage. Reinforcing andrenewing urban functions has become an issue within thecontext of strengthening international competitiveness,
invigorating regional economies, and creating tourist destinations
that spur tourism, in addition to rebuilding aging office buildings

to address inadequate earthquake resistance. Moreover, wehave entered an era in which cities need to accommodate
diverse workstyles as companies increasingly promote
workstyle reforms.
Hareza Ikebukuro and other redevelopment projects are
initiatives to help solve the abovementioned issues faced bycities. Real estate development requires large sums of funds,
and it takes a long time to recover investments. For thesereasons, it is often the case that deep risk-taking is necessary
with stable, long-term financing and mezzanine loans.
We aim to back such efforts to create attractive
communities through the ongoing provision of business funds
and assistance with financial technologies, such as asset
financing.

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

28

Sector Strategy
Priority Areas

Creation, Conversion, and Growth In Industry

Commercialization of new technologies, business restructuring to improve productivity and hone competitiveness, and business development in global markets

Industrial Sectors
In industrial fields seeing changes brought about bytechnological innovation, the creation of new businesses, and restructuring, the DBJ Group will take adirect approach to solving issues faced by customers
and society while searching for growth opportunities
for itself. As an incubator that creates new businesses
and markets, the DBJ Group aims to play an essential
role in strengthening the competitiveness of industries
in Japan.

Main Business Fields
Provision of financing
and advisory services
for companies andprojects in industrial
sectors• Manufacturing• Communications, broadcasting, media• Retail and foods• Healthcare• Hotels, Japanese-style inns, tourism, Etc.

Longer-Term External Environment and Social Issues

Strategy

Amid changes in the external environment, including population
problems, globalization, and such technological innovations as AI,
customers are dealing with a variety of issues that include thecommercialization of new technologies and other innovations,business restructuring to enhance productivity and competitiveness, and overseas business development with an eye on new
growth opportunities. Meanwhile, the financial environment is likely
to include diversification in capital providers, considering the ongoing surplus capital conditions and advances in fintech and othertechnologies. As it becomes easier to access capital, providing
unique added value will become essential to helping customers
solve their problems on the financial front.

DBJ will offer solutions to the issues faced by customers—
centered on the fields of business portfolio optimization, newbusiness creation, overseas business development, financial
strategy, and capital policy—by mobilizing its financing functions,knowledge, and unique network while leveraging its insight andexpert knowledge of each industry. DBJ has created teams ofspecialists for establishing a solid business foundation in theaerospace, communications, and healthcare fields since 2017,and in the logistics field since May 2018. While being deeply
involved in each industry, DBJ keeps an eye on socioeconomic
megatrends and changes in the landscape to facilitate innovation
on various fronts of business development across industries(such as moving toward a hydrogen-based society) without being
beholden to traditional frameworks.

Accomplishments and Initiatives to Date
Dexerials Corporation

Mitsubishi Heavy Industries AeroEngines Ltd.

Nippon Charge Service LLC

DMG MORI CO., LTD.

–Third Medium-Term Management Plan (through Fiscal 2016)

https://www.dbj.jp/case/industry/

To see examples and case studies (Japanese only) in industrial sectors, please go to DBJ’s website.

29

Telecommunications
With 5G mobile communications systems poised to take off,
communications networks are responsible for handling everincreasing volumes of data and communications traffic, and theirimportance is only growing. Along with the arrival of a digital society where everything is connected together over networks, as
key social infrastructure, communications networks will have to
become more resilient and sophisticated. In fiscal 2018, DBJ
advanced financing for core communications assets, such ascommunications towers and data centers. Looking ahead, DBJ
will use the knowledge it acquired via financing activities to collaborate with Japanese firms and aggressively advance initiatives
for the benefit of Japan.
Healthcare
In the healthcare field, the DBJ Group has focused on medicine
and nursing care, launching new initiatives in the life sciences field.
In fiscal 2018, DBJ invested in Newton Biocapital I Pricaf Privee
SA, a Japanese–European venture capital fund focusing on earlystage pharmaceutical companies. Through this fund and past

Yanmar Co., Ltd.

Cellnex Telecom, S.A.

investments in other venture capital funds, DBJ provides companies with growth opportunities by helping Japanese companies
build networks with companies in Europe and the U.S.
Logistics
In May 2018, DBJ newly established the Global Logistics Office inorder to sharpen its focus on the logistics field in light of sweepingchanges in the logistics industry being ushered in by technologicalinnovations including AI and the IoT. In terms of financial support,
the Global Logistics Office facilitates improvements in competitiveness and productivity in the logistics field through assistance forcreating new industries with the latest technologies, in the supply ofrisk capital to companies innovating on the technological front, andin investments and loans for the latest, high-function logistics
facilities. With regard to information support, DBJ holds Logistics
Innovation Workshops. In May 2019, these workshops produced
reports about measures for spurring innovation, the state ofcollaboration and cooperation among companies and industries,
and the roles that financial institutions should play.
Responding to Innovation
Over the past few years, there has been a sudden rise in technologies and innovations, such as in IT, new materials, new energy,
bioscience, and robotics, with the potential to substantially change
the existing fabric of industry and society. For these new technologies to help society and lead to the creation of new businesses,
it is important to spread new value systems and lay down rules
for collaboration across industries and between the public andprivate sectors.
The DBJ Group created the Innovation Promotion Office underthe Business Planning & Coordination Department in April 2017 tofacilitate collaboration among these diverse players and take thelong view for moving projects forward.
As for initiatives since fiscal 2017, DBJ, along with 10 othercompanies including automakers and infrastructure developers, hasestablished Japan H2 Mobility, LLC (JHyM), for the purpose of building out a network of hydrogen refueling stations for fuel-cell vehicles.

Space One Co., Ltd.

Japan H2 Mobility, LLC

Photo provided by JXTG Nippon Oil & Energy Corporation

Fourth Medium-Term Management Plan (Fiscal 2017–Fiscal 2019)

The DBJ Group’s Strategy

Aerospace
DBJ has been assisting the aviation field for about three decades,
ever since the Japan Development Bank era. In April 2017, DBJ
established the Aerospace Office with the aim of developing theouter space field, which is expected to grow as a new industry, in
addition to the aircraft field, leveraging the abundant knowledge andnetworks it has accumulated. In fiscal 2018, initiatives in the aviation
field included support for new technologies and ideas that would
enhance Japan’s competitiveness in the aircraft industry, having
signed a collaborative agreement with Japan Aerospace Exploration
Agency (JAXA) to help with the JAXA Aircraft Technology Innovation
Challenge 2018 Powered by DBJ. In the outer space field, DBJ has
endeavored to strengthen the competitiveness of Japan’s
aerospace industry, raising funds for New Generation Small Rocket
Development Planning Co., Ltd., which was renamed Space One
Co., Ltd. when it became an operating company.

30

Priority Areas

Creation, Conversion, and Growth In Industry

PROJECT SPOTLIGHT

Underwriting of Third-Party Capital Increase by CMIC CMO Co., Ltd.
DBJ has signed a capital and business tie-up agreement withCMIC HOLDINGS Co., Ltd. in the contract development andmanufacturing organization (CDMO) business. In July 2018,
CMIC CMO Co., Ltd. (CCJ), its wholly owned subsidiary
integrating group CDMO operations, issued shares to DBJ
through a third-party allotment to raise funds and create a joint
management framework with CCJ as the joint venture.
In recent years, the healthcare industry has witnessed an
unprecedented increase in expectations for solutions to unmet
medical needs, as therapies have yet to be established formany kinds of diseases, while government finances around theworld are coming under pressure from the rising costs ofhealthcare. Meanwhile, the operating environment for thedomestic pharmaceutical industry has become increasingly
challenging with more frequent revisions to official drug prices,making it imperative that the entire industry improve productivity
and efficiency.
The CMIC Group initially launched a contract researchorganization (CRO) business in Japan, and now has operations
that comprehensively support the value chains of pharmaceuticalcompanies, ranging from development to production, marketing,and sales. As a cornerstone of its operations, the CDMO
business addresses needs for not only commercial production
but also more advanced drug development technologies andchanges in formulations, thus the company has beenstrengthening pharmaceutical development. By expanding the
CDMO business, the company aims to more aggressively meetgrowing needs around the world and help improve productivity inthe pharmaceutical industry as a platform for drug manufacturing.
DBJ supports not only the CMIC Group’s growth strategy
for its CDMO business with financing for growth investments
but also the growth of its existing core businesses throughinitiatives that fully leverage the networks and information
possessed by DBJ, to enable a broader push on its strategy,
including inorganic growth through M&A and alliances.

New production line for injectable drugs

MESSAGE FROMEMPLOYEESSupport for Strengthening Global Competitiveness of Domestic Healthcare Industry

DBJ has assisted the CMIC Group by contributing to themedium- and long-term improvement in its corporate value
through support on multiple fronts, including personnel, networks, and know-how, in addition to financing, with the aim ofhelping the CMIC Group achieve its growth strategy for the
CDMO business.
For this project, DBJ established a joint management framework with CMIC HOLDINGS, had countless discussions foraligning management’s sights on the realization of its growthstrategy, and advised on revisions to its business plan for the
CMIC Group’s CDMO business. After the investment, in light ofchanges to the business plan, we set in motion several key
measures to address issues that came to light and needed tobe solved in the CMIC Group’s CDMO business, and helped
management carry out these measures.
By helping the CMIC Group’s CDMO business grow andbecome a globally competitive business entity, DBJ amplifies
the company’s business functions as a manufacturing anddevelopment platform that hones the competitiveness of global
pharmaceutical makers and Japanese pharmaceutical companies, encouraging a shift in resources toward a bolder horizontal division across the pharmaceutical industry. In this way, weare proud to be actively involved in helping Japanese pharmaceutical companies improve their global competitiveness.

31

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

Support for Growth Strategies throughJoint Investment
In a joint investment with Maxell Holdings, Ltd., DBJ acquired
shares in Izumi Products Company (now Maxell Izumi Co., Ltd.)in October 2018.
In its Maxell Growth (MG) 20 medium-term management
plan, Maxell Holdings has a growth strategy centered on creating new businesses and expanding business domains in thethree growth fields of automobiles, housing infrastructure, andwellness & beauty care devices, with the Maxell Business
Platform (MBP) designed to facilitate group growth through“co-creation and co-prosperity.” Maxell Izumi has extensive
business experience in the manufacture and sale of electricalconstruction equipment, in which it has a top share of thedomestic market for electrical engineering work, and of electrical devices for home beauty care. Maxell Holdings’ acquisitionof shares in Maxell Izumi has drawn attention as a move to use
MBP to expand the scope of business with both companies’
management resources and to create high-margin businesses
with high market shares.
DBJ initiated a joint investment with Maxell Holdings by
underwriting the shares issued by an intermediary holding
company when Maxell Holdings acquired all of the shares inthen Izumi Products Company. After performing this transaction, DBJ supported initiatives from a neutral standpoint asboth companies coordinated on initiatives to generate group

MESSAGE FROMEMPLOYEESElectric shavers made by Maxell Izumi Co., Ltd.

synergies by expanding their lineup of electrical products forbeauty care while enhancing the efficiency of their production
systems, increasing the voltage of batteries used in electricalconstruction equipment with the battery technologies of Maxell
Holdings, and improving IoT features. DBJ played a significant
equity investment role in this transaction, supporting efforts that
improved the industrial competitiveness of Japanese companies through collaboration.

DBJ’s Financial Capabilities Support Vision for “Co-Creation & Co-Prosperity” of Both
Companies

DBJ has made joint investments in operating companies overthe past few years. When examining an investment, DBJ
focuses on the visions of the joint investment partner and thecompany to receive the investment. For this transaction,
DBJ visited several production sites and engaged in multifaceted discussions with management at both companies todetermine whether their respective visions for “co-creation &co-prosperity” aligned. During these examinations, DBJ considered both companies’ pride in their respective technologies, thepotential for new developments from the combination of theirtechnologies, and the passion of their employees in various
situations. After taking all this into account, DBJ decided tocarry out the transaction. The two companies are now working
to generate group synergies and realize the vision they drew upprior to the transaction. We are looking forward to helping withthis process in anticipation of a positive impact on society.
From a longer-term perspective, DBJ aims to help industry
improve competitiveness with its financial capabilities froman impartial standpoint.

32

Area Strategy
Priority Areas

Self-Reliance and Revitalization of Local Economies

Industrial revitalization based on regional characteristics, overseas businessdevelopment, response to inbound tourism, business succession

Regions
The DBJ Group provides solutions for regional issues,connecting regions throughout Japan to Tokyo,
domestic regions to those overseas, and regions theworld over to each other.

OutlineThe DBJ Group provides services
tailored to the characteristics ofthe respective regions in Japan
from 10 branches and eight
representative offices across thecountry.

• Investments and loans• Consulting services•P lanning and researchservices

Total number of business alliances with financial institutions

106

As of March 31, 2019Longer-Term External Environment and Social Issues
The regional economic outlook is severe with declining householdspending and weaker demand for loans alongside a long-term
downtrend in regional populations. As regional economies contract, regional enterprises need growth strategies that include
overseas business development, measures to improve corporate
value through business restructuring and succession, and ascertainment of good opportunities in asset management.

Strategy
DBJ will provide services with two objectives in mind—namely, tocreate value by connecting regions throughout Japan to Tokyo,
domestic regions to those overseas, and regions the world over toeach other, and to solve problems through risk capital and consulting services.

More specifically, while taking into account regional characteristics, the themes of key objectives entail improving the productivity
and growth strategies of regional companies through businessrestructuring and overseas business development, respectively, andcooperating with regional financial institutions to create opportunities
in asset management. As a part of these initiatives, DBJ created theRegional Investment Promotion Office in the Strategic Finance
Department under the chief investment officer on April 1, 2017, forthe purpose of facilitating the supply of risk capital to regional midtier companies and small- to medium-sized enterprises.
By providing detailed solutions to regional problems, the DBJ
Group strives to increase the value of its human capital (e.g., theskills and experience of its executives and employees), and relationship capital (e.g., networks).

Accomplishments and Initiatives to Date

Special Investment
Operations

Supply of risk
capital throughcollaboration andcooperation with
regional financial
institutions

OthersFiscal 2017

Fiscal 2018

• Assisted domestic hotel operators through a joint fundwith Hoshino Resorts Inc.
• Contributed to the development of regional public
infrastructure through the supply of growth capital forrehabilitating Miyazaki Car Ferry Co., Ltd.

• Invigorated tourism resources in the Akan region through financing for
Akan Adventure Tourism Corp. (Hokkaido)•C ontributed to measures to stimulate regional industry through financing
for Niigata Aerospace Corporation• Invigorated agriculture and rejuvenated deserted arable land throughjoint investment with ISHIDA Corporation (Tottori)• Formed funds with The Hokuriku Bank, Ltd.,The Shizuoka Bank, Ltd., and The 77 Bank, Ltd.
• With The Hiroshima Bank, Ltd., created loans withspecial provisions to waive the original principal in theevent of an earthquake•F ormed funds with North Pacific Bank, Ltd., and The Hokkaido Bank,
Ltd., in response to the Hokkaido Eastern Iburi Earthquake•C reated funds with The Bank of Iwate, Ltd., and The Toho Bank, Ltd.,to help with reconstruction in regions affected by disasters in the
Tohoku region•A rranged a syndicated loan with The Hyakujushi Bank, Ltd. andreinforced the financial positions of local infrastructure companies
through Special Investment Operations• Issued reports about solving regional issues• Promoted PPP/PFI projects and made proposals for rebuilding public infrastructure• Offered advisory services to local public organizations related to comprehensive government policies• Provided knowledge to local governments, including assistance for managing public assets

33

Kushiro Representative Office

Hokkaido Branch

Hakodate Representative OfficeNiigata Branch

Aomori Representative OfficeToyama Representative Office
Hokuriku Branch

Tohoku Branch

Okayama Representative Office
Matsue Representative Office

Head Office

Chugoku Branch
Kyushu Branch
Oita Representative Office
Minami-Kyushu Branch

Tokai Branch
Kansai Branch
Shikoku Branch
Matsuyama Representative Office

Collaboration and Cooperation with Regional Financial
Institutions

Collaboration for M&A of Local Companies andOverseas Information Dissemination

Assisting Regional Financial Institutions with BusinessFeasibility Studies
Working with regional financial institutions, DBJ provides to the clientsof regional financial institutions support for assessing the feasibility ofbusinesses that propose solutions to management issues. Based on
an analysis of macroeconomic conditions and individual companies,
DBJ engages in fact-finding to identify management issues at clients,
and then presents its findings in an easy-to-understand format.
DBJ subsequently comes up with various financial solutions to
the identified issues to help its clients formulate their own growthstrategies and drum up business. Employees dispatched to DBJ
from regional financial institutions are given opportunities to gain
knowledge through on-the-job training while performing businessfeasibility studies of the clients of their own bank. DBJ holds study
groups to help regional financial institutions gain a better
understanding of business feasibility assessments.

DBJ helps local companies address various management issues,
such as business restructuring and succession as well as expansion of business domains, including overseas expansion. As partof efforts to revitalize regions through collaboration with regional
financial institutions, DBJ creates M&A opportunities for local
companies through its network of regional banks (74 banks as ofMarch 31, 2019). DBJ also provides information to regional financial institutions helping local companies get a toehold in Asianmarkets through its Asia Financial Support Center (67 regionalbanks as of March 31, 2019).

Initiatives in PPP/PFI and Public Asset Management via
Collaboration with Local Governments and Regional
Financial Institutions
Public asset management refers comprehensively to the reassessmentof assets held by local governments from a management perspective.
DBJ assists numerous local governments in this regard, helping themcreate plans and draw up individual projects with group think tanks.
DBJ set up PPP/PFI Promotion Centers in June 2013. Whileplanning and holding its PPP/PFI Academy seminars, DBJ offers
regional platforms for cooperating at the national level. In these andother ways, DBJ has made a concerted effort to expand the use of
PPP/ PFI, putting into place a structure for promoting their use. In
particular, the PPP/PFI Academy encourages roundtable discussions and the sharing of advanced case studies through a teleconference system that connects all of DBJ’s bases. In its ninth year, the
PPP/PFI Academy has welcomed a cumulative total of about 7,000
people as participants.

Regional Areas Genki Program
Facing the challenges of population constraints, severe financial
conditions, environmental restrictions, and global competition,
Japan’s regions must coordinate with one another and implement
diverse regional development schemes that capitalize on theirrespective strengths, competitive advantages, and latent potential.
In fiscal 2010, DBJ arranged a unique initiative, the Regional Areas
Genki Program, to support regional growth that capitalizes oneach region’s respective strengths and potential in terms of
information and funding aspects. In addition, each DBJ branch
focuses on its region’s distinctive fields and businesses, based on
its industrial structure, and partners with regional financial institutions to offer financial support.
Please click on the link to DBJ’s website for information about
support coverage in the areas of each branch (Japanese only).
https://www.dbj.jp/service/finance/area/index.html

The DBJ Group’s Strategy

Head office
10 branches	Eight representative offices

34

Priority Areas

Self-Reliance and Revitalization of Local Economies

Provision of Knowledge about Local Issues
Green Infrastructure
As a noteworthy event in fiscal 2018, DBJ published a research
report entitled “DBJ Workshop on Green Infrastructure for
Rebuilding Urban Frameworks: Proposal for Sustainable Urban
Redevelopment with Green Infrastructure.”
Green infrastructure is designed to increase greenery in urban
areas and replace certain functional aspects of conventional infrastructure in terms of disaster preparedness and the environment.
Attracting attention in recent years, green infrastructure enhances
the appeal of cities and increases sustainability. It is expected tohelp alleviate financial burdens while updating infrastructure.
DBJ created the DBJ Workshop on Green Infrastructure for
Rebuilding Urban Frameworks, chaired by Associate Professor
Takanori Fukuoka from the Tokyo University of Agriculture, andinvited President Takashi Onishi of the Toyohashi University ofTechnology as an advisor as well as Distinguished Professor
Shiro Wakui from Tokyo City University and others as leading
experts to the workshop. Discussions covered several topics
related to facilitating green infrastructure in society. The workgroup’s report outlines the discussions undertaken by the experts
and suggests ways to implement green infrastructure in society
based on their discussions.
Smart Venues and Estimations of Economic Scale ofSports Industry
In conjunction with the Smart Venue Workgroup (Chair: Professor
Yoshiyuki Mano from Waseda University Faculty of Sport
Sciences), DBJ published a research report titled “Creation ofSports-Oriented Communities with Smart Venues® —Multi-function
Facilities as Venues for Community Exchange.” With this publication, DBJ began to focus on responding to requests for advice
from local governments and business entities considering
upgrades to stadiums and sports arenas across the country. In
October 2018, DBJ began working with Cerezo Osaka Sports
Club on its business model, the first time DBJ has collaborated
with a local professional sports company.
In the joint research paper “Estimations of Economic Scale ofJapan’s Sports Industry” published by Doshisha University in
March 2018, DBJ estimates the economic scale of the sports
industry was ¥6.6 trillion in 2011. In light of this estimate, in “theFuture Investment Strategy 2018,” it is written that, with the cooperation of DBJ, the government will examine methods to estimate
the size of the sports market on an ongoing basis in a format thatfacilitates international comparisons.

Regional Revitalization with Traditional Japanese-Style Homes
DBJ provides information and advice about creating economic
value with traditional Japanese-style homes with the aim of using
such homes to stimulate regions. In recent years, DBJ has published research reports, including one titled “Regional Revitalization
Using Traditional Japanese-style Homes to Create Economic
Value,” which discusses the potential market for repairing andremodeling traditional Japanese-style homes and the economic
boost from overseas tourists staying at these homes, as well as“Key Points for Businesses Using Traditional Japanese-style
Homes,” which introduces example business models for using
such homes and reference benchmarks for business revenue.

Exterior of Sasayama Castle Town Hotel NIPPONIA

Research into Reviving Traditional Manufacturing Industries
DBJ has published a research report titled “Research into Reviving
Traditional Local Manufacturing Industries.”
As everything becomes more rationally and efficiently homogenous, alongside the ultimate development of an industrial society
with artificial intelligence and the maturation of globalism, theunique characteristics of countries and regions, rooted in theirrespective cultures, histories, nature, and geographies, are likely to
become more important factors behind differentiation. Among theregional revitalization initiatives it has taken since 2014, DBJ also
aims to revitalize industry that uses local resources. In this report,
published in 2018, DBJ describes issues and the development
potential of traditional regional manufacturing, using the “traditional
manufacturing industry” as a case study.

Please click on the link below to see the Regional, Industry andEconomic Report on DBJ’s website (Japanese only).
https://www.dbj.jp/investigate/etc/index.html

People practicing traditional manufacturing methods

35

Signing of Financial Agreement to Strengthen
Vitality of Hokkaido
In response to the Hokkaido Eastern Iburi Earthquake thatstruck in September 2018, DBJ signed a financial agreement tostrengthen the vitality of Hokkaido with North Pacific Bank, Ltd.
and The Hokkaido Bank, Ltd. in October of the same year. Thisagreement brings together the know-how and networks of thethree banks to support initiatives to strengthen the vitality of
Hokkaido through recovery and restoration work after theearthquake.
Soon after signing this agreement, as the first round of cooperation, the three banks established the Hokkaido Vitalization
Fund to provide risk capital in the form of loans (repayment in fullon maturity) and other means. This fund has already provided
investments and loans for multiple projects. In April 2019, as thesecond round of cooperation, North Pacific Bank and The
Hokkaido Bank, with DBJ as a facilitator, set up loans with a
special provision that all or a portion of the principal amountborrowed would be
waived in the event of amajor earthquake.
Through these efforts,
we are helping
Hokkaido become
more resilient whilerevitalizing the region.

Financing for Akan Adventure Tourism Corp.
Akan Adventure Tourism Corp. is a destination managementcompany established for the purpose of creating new businesses and promoting tourism for Akanko Onsen and neighboring areas.
Akanko Onsen is in an area of Japan blessed with an
exceptional abundance of natural hot springs. The number ofguests staying here has been on the decline for a while, owing
in part to a series of natural disasters. Akan Adventure Tourism
Corp. is keen to expand into attractions that draw visitors forlonger periods of stay and tap into rising demand from overseas tourists.
From the planning stage, DBJ is participating in an initiative
to solve these issues, providing advice on creating businessplans based on its accumulated knowledge of tourism. Withassistance from Special Investment Operations at DBJ, Akan
Adventure Tourism Corp. was established with financing provided by local tourism businesses, North Pacific Bank, The
Hokkaido Bank, and other financial institutions, in addition to
JTB Corporation and Japan Airlines Co., Ltd. We are helping
with the development of specific businesses, such as adventure tours and Kamuy Lumina, a night walk event that launched
in July 2019.

MESSAGE FROMEMPLOYEES

Multifaceted Response in Hokkaido Region
In addition to directly damaging buildings and facilities, therecent earthquake indirectly damaged Hokkaido’s important
tourism industry, as shown by hotel reservation cancellations,for example. Assistance was urgently needed from financial
institutions. Within two months of the earthquake, DBJ moved
quickly to sign agreements and set up a fund with the tworegional banks, relying on relationships of trust that have been
built up in various collaborative efforts.
This was the first time we created a fund with two regionalbanks in the same area as the central framework of an agreement. Using the deeper relationships forged from this endeavor,
we aim to help strengthen the vitality of Hokkaido.

Akan Adventure Tourism Corp.’s operations aim to create new
tourism assets and have helped improve the appeal of tourist
attractions in Hokkaido while revitalizing the area around
Akanko Onsen.

DBJ has not only provided this company with financing but
also made a strong commitment to help it formulate businessplans, to support its establishment, and to adjust terms andconditions with other financial institutions. While working out
these details, we were able to build a relationship based ontrust with the participants.
We look forward to supporting the company’s futureendeavors, as well as to contributing to additional regional
revitalization by duplicating this initiative in other regions.

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

36

Area Strategy
Priority Areas

Industrial revitalization based on regional characteristics, overseas businessdevelopment, response to inbound tourism, business succession

Self-Reliance and Revitalization of Local Economies

Overseas
Positioning overseas operations within its sector
strategy and function strategy, the DBJ Group
engages in global operations in sectors providing
high added value.

Outline
DBJ has subsidiaries in London, Singapore, Beijing (including abranch office in Shanghai), and New York to coordinate operations overseas.

Longer-Term External Environment and Social Issues

Strategy

Based on projections for continued growth in the world economy,
the DBJ Group is likely to see continued demand for global business development from its core customers in domestic industries.
At the same time, demand for capital should increase strongly
from the infrastructure and transportation sectors against a backdrop of population growth and the increasing volumes of movement in people and physical goods. It is imperative that Japan’s
economy and industry sustain growth by effectively tapping into
these overseas growth opportunities.

DBJ will continue to engage in overseas operations in line with its
sector strategy and function strategy.
1) In infrastructure fields such as energy and transportation, DBJ
will provide investments and loans for the overseas development of Japanese industry and for projects that bring overseas
knowledge to domestic markets.
2) DBJ will provide investment and advisory services to support
the overseas industrial expansion needs of its customers,
including customers headquartered regionally in Japan.
3) Group companies will manage investments in infrastructure
assets and corporate assets for the purpose of providing
Japanese investors with investment opportunities overseas.

Accomplishments and Initiatives to Date
Fiscal 2017

Collaboration withother financial
institutions

Fiscal 2018

• Participated in syndicated loans for U.K. airports• Participated in syndicated loans for a leading firm in the
LPG carrier industry in Singapore•L aunched a joint investment program withThe Bank of Kyoto, Ltd. for overseas private equity funds• Invested in a PPP project for a toll freeway in the U.S.
• Acquired bonds issued by a Chinese airline company on the
TOKYO PRO-BOND Market•M ade a preferred equity investment related to J-POWER’s participation in the Triton Knoll offshore wind power project in the U.K.
•S igned a financing contract for a venture capital fund that invests
in early-stage pharmaceutical companies in Japan and Europe•E stablished a fund with Sumitomo Corporation that invests inoverseas offshore wind power projects

Project financing• Participated in a project with Japanese companies for oil andgas floating production, storage, and offloading (FPSO) in
gas fields offshore Ghana•P articipated in a natural gas power plant project in the U.S.

Other

• Responded to customer needs for M&A and overseas business expansion in Asia

Investment
operations

37

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

Investment in the Largest European Rail Wagon
Leasing Company
Through a partnership with Morgan Stanley InfrastructurePartners (“MSIP”), a leading global infrastructure investment
platform, DBJ has made a co-investment, through an intermediary investment vehicle, in VTG Aktiengesellschaft (“VTG”).
Operating globally with a focus on Europe, VTG is a market
leader in private rail freight wagon leasingin Europe. By providing leasing and maintenance services to a diversified customer
base of over 1,000 customers from a variety of industries,
VTG provides essential transport infrastructure to the European
industrial base. As it promotes a shift to rail transportation, thecompany also plays a key role in reducing CO2 emissions in
freight traffic, therefore creating positive environmental impacts.
With the manufacturing and maintenance capability to meeteach customer’s specific needs, as well as its long-standing
relationships with such customers – VTG possesses significant
differentiating factors that position it as a leader in the industry.
Investment in infrastructure is used as effective asset management measure for overseas pension funds and other institutional investors, and Japanese investors are also showing
growing interest in this asset class. Taking advantage ofProvided by VTG

DBJ’s expertise in investment, lending and risk assessment in
the infrastructure field, DBJ will continue investing and financing
in advanced infrastructure companies and projects overseas,
while addressing asset management needs of pension funds,
institutional investors and other investment partners in Japanby sharing such prime investment opportunities with them.

New Base for Addressing Needs of Customers in North and South America—DBJ Americas Inc. Open for Business—
DBJ incorporated its representative office in New York as
a wholly owned subsidiary called DBJ Americas Inc., with theobjective of strengthening its operating base for investments
and loans in the Americas. On October 1, 2018, DBJ Americas
Inc. started business.
The DBJ Group has responded to the various needs of its
customers through initiatives in overseas operations involving
DBJ Singapore Limited, DBJ Europe Limited, and DBJ
Investment Consulting (Beijing) Co., Ltd., with the aim of supporting the overseas development of Japanese companies andinvigorating Japanese financial and capital markets. Throughthese three overseas subsidiaries in Asia and Europe, alongwith its new presence in New York, the economic and financial
center of the world, the DBJ Group supports investment andloan operations across the Americas, from North America toSouth America.
At DBJ Americas, we aim to enhance the corporate value of
our customers by addressing their needs for businessdevelopment in the Americas, by meeting a wide range ofneeds for sophisticated and diverse asset management forinvestors with close ties to the DBJ Group, through the provision of such financial services as due diligence support andjoint proposals for products, and by building relationships withrecipients of investments and loans in the Americas.

38

Function Strategy

Special Investment Operations andCrisis Response Operations
The DBJ Group will provide optimal financing solutions tailored to customer needs, from loans to mezzanine financing and investments, while reinforcing its
ability to adequately evaluate various risks.

Outline
DBJ provides loans and investments after analyzing businessprospects, evaluating risks, and creating financing schemes.
Taking into consideration the traits of each project and the intentions of participants, DBJ specializes in integrated investment andloan services that flexibly deploy loans, mezzanine financing, andinvestments.

DBJ’s Initiatives to Supply Risk CapitalSpecial Investment Operations
Special Investment Operations, established as an intensive but
temporary scheme to supply growth capital* from the perspectiveof promoting the competitiveness of Japanese enterprises alongwith regional revitalization, draw only a portion of the investment(industrial investment) from the Japanese government, enough toencourage the private sector to supply growth capital. Since
launching the aforementioned operations in June 2015, DBJ has(as of March 31, 2019) made ¥363.9 billion in investments andloans (81 total projects), the first ¥324.6 billion of which has
spurred ¥1,390.9 billion in private-sector investments and loans.
Special Investment Operations follow policy objectives, in accordance with the law, complementing and encouraging(Budget for fiscal
2019: ¥130 billion)

Japanesegovernment(industrial
investment)*	According to the Japanese government’s Study Panel Concerning the Promotionof Expanding Growth Funding, certain financial institutions, including DBJ, areexpected to serve in a pump-priming capacity for the foreseeable future to
attract private-sector investment by cultivating new capital providers, markets,and investors, thereby fostering the development of an investment cycle led by
the private sector.

DBJ

Other financial
institutions

Capital account(megabanks, regionalbanks, private funds, etc.)

Addition(Budget for fiscal
2019: ¥130 billion)

Special Investment
Operations(Managing investments andloans in special account)
Fiscal 2019: ¥260 billion

Evaluation /verification

Special Investment
Operations
Monitoring Board

Complement andencourage privatesector enterprises(including
pump-priming)
Capital funds(including preferred sharesand subordinated loans)

Target company initiatives
Loans,
etc.

• Initiatives for effective use ofmanagement resources• Initiatives to promotemanagement innovation– Cultivate new business– Form alliances among
various sectors and groups

Political targets• Encouragement of self-reliant
development of regional
economies• Increase in competitiveness ofJapan and domestic
enterprises• Development of markets for
growth capital

Enhance risk capital supporting growth

Capital increaseprivate-sector enterprises and ensuring appropriate competitive
relationships. To improve the structure of Special Investment
Operations and thereby maintain objective evaluation and supervision of activities, an advisory body to the Board of Directors
was established—the Special Investment Operations Monitoring
Board—with participation from outside experts in financial and capital markets, industry, and other professional groups (see page 63).

39

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

Establishment of Joint Fund with Nihon M&A Center
Inc. to Create Star Companies LocallyJapan Investment Fund Inc. (J-FUN), which was jointly established by DBJ and Nihon M&A Center Inc., created its firstJapan investment fund, a limited partnership for investment(hereinafter, the “Fund”), in February 2018. The Fund will play arole in social infrastructure that builds a foundation fostering
mid-tier firms and small- to medium-sized enterprises (SMEs)
across the nation. The Fund will also support the growth ofcompanies in which it has invested so they can become star
performers in their respective regions. In this way, Special
Investment Operations are being utilized to invigorate regional
economies and strengthen the competitiveness of local
companies.
The Fund has invested in Fujibambi Co., Ltd., a confectionery maker founded 71 years ago in Kumamoto Prefecture.
Fujibambi is a venerable company cherished by local residents,
and its main product, “Raw Cane Sugar Donut Sticks,” isfamous within Kumamoto Prefecture. However, the management team has reached an advanced age while facing thechallenge of expanding sales nationwide. Starting with an“Raw Cane Sugar Donut Sticks,” the main product madeby Fujibambi Co., Ltd.

introduction to Fujibambi by its main bank, the Fund advised
the company about business succession and a future growthstrategy, which led to the signing of a capital and a businessarrangement. After the Fund invested in Fujibambi, a newpresident was appointed, and DBJ, the Fund, and its mainbank have worked together to develop new sales channels,
create new products, and strengthen the management
structure.
DBJ, leveraging its extensive experience in fund operations andregional revitalization, as well as its influence in regional networks, is cooperating with experts from Nihon M&A Center tohelp Japanese mid-tier firms and SMEs expand their business.

PROJECT SPOTLIGHT

Setting-Up of Overseas Renewable Energy Fund with
Sumitomo Corporation and Sumitomo Mitsui Banking
Corporation

51%

24.5%

DBJ

24.5%

Limitedpartners (LPs)Fund managementcompany (GP)Three companies(Sumitomo Corporation,
SMBC, DBJ)

Offshore wind power
generation assets

SMBC

The Fund (first fund)

DBJ, Sumitomo Corporation, and Sumitomo Mitsui Banking
Corporation (SMBC) jointly established fund management company Spring Infrastructure Capital Co., Ltd. to administer the
Spring Infrastructure I Investment Limited Partnership (hereinafter, “the Fund” ).
The Fund raises money from Japanese investors and finances
and invests in offshore wind power projects overseas. The Fundhas already acquired and begun managing wind power facilities
in the U.K. as seed assets from Sumitomo Corporation. In Europe,
offshore wind power has rapidly proliferated, helping with themove toward a low-carbon society, while also providing excellent investment opportunities to investors. In Japan, a numberof new offshore wind power projects are in the planning stages,
underscoring the potential for growth in this market. Against
this backdrop, DBJ provided financing through Special
Investment Operations for the Fund, in recognition of its highly
significant role in providing opportunities for domestic investors
to invest in the renewable energy field, and helping acceleratebusiness development therein at Sumitomo Corporation.

Sumitomo
Corporation

Other domestic investors

Overview of the FundDBJ is using the knowledge it has gained from investing exten­
sively in renewable energy to provide the fund managementcompany with know-how and personnel, thereby facilitatingsmooth fund operations. DBJ contributes to the global lowcarbon movement by financially encouraging the spread ofrenewable energy across the world.

More information about Special Investment Operations, including our initiatives, is on the DBJ website (Japanese only).
https://www.dbj.jp/service/invest/special/index.html

40Function Strategy

as disruptions in domestic or overseas financial markets or largescale disasters. In response to crisis-related damage, Japan
Finance Corporation provides two-step loans as a complementaryrisk measure, among other measures, to government-designatedfinancial institutions that supply necessary funds to address
crisis-related damage.

Crisis Response Operations
DBJ’s Crisis Response Operations function as a stabilizing force
during periods of instability in the economy, society, and markets.
Crisis Response Operations, on the basis of the Japan FinanceCorporation Act (Act No. 57 of 2007, including later revisions),
consist of the provision of necessary funds during such crises

Crisis Response Operations Scheme
Japanese Government•C apital contribution• Lending of funds• Interest subsidies

DesignatedJapan Finance Corporation(Crisis Response Facilitation Account)Two-step loans,
etc.

•	
Prepares and announces “crisis response facilitation guidelines” (approved by
the competent minister)•	Implements complementary risk and other measures on the basis of agreements (approved by the competent minister) with designated financial
institutions

Designated financial
institutions
Private financial institution
Private financial institution
Private financial institution

Defines a new scope for DBJ’s responsibilities,
making Crisis Response Operations obligatory for
an indefinite period• Extends the scope of Japanese government recapitalization securing DBJ’s
financial structure, etc.
• Establishes a new crisis response reserve account, reflecting this obligation in
the Articles of Incorporation, and indicates mandatory Japanese government
ownership of more than one-third of shares and other measures

DBJ• Designated financial institutions conductbusiness in accordance with the Crisis
Response Operations Rules (based on
approval of the competent minister).
• Designated financial institutions conductbusiness with complete double checks ofrequired compliance at their financing
departments and their departments responsible for crisis response operations.

Note: Capital increases related to Crisis Response Operations before the 2015
revisions to the DBJ Act were transferred from capital to a crisis response reserve(¥206.5 billion). Capital increases for Crisis Response Operations after therevisions are to be added directly to the crisis response reserve.

Provision of funds,
etc.

Clients

41

2008/10

2008/12

Commenced Crisis
Response Operations
as a designatedfinancial institution

2011/3

2019/3Financial Crisis Response
Operations and Earthquake
Disaster Crisis Response
Operations

Earthquake Disaster Crisis Response Operations(through March 31, 2011)

Main events that were
designated a crisis:•	Turmoil in international
financial markets(Global financial crisis)• Great East Japan Earthquake•	Damage from heavy rainfall during
typhoon #18 in 2015
• Kumamoto earthquakes in 2016

Total funds raised by the government in Crisis Response Operations (as of March 31, 2019)¥206,529 million

Total loans for Crisis Response Operations, loans with loss guarantee agreements,
and commercial paper purchases as of March 31, 2019:• Loans: ¥6,216.1 billion (1,149 projects)•	Loans executed withloss guarantee agreements: ¥268.3 billion (47 projects, including those slated for application to Japan
Finance Corporation)• Commercial paper acquisitions: ¥361.0 billion (68 projects)

PROJECT SPOTLIGHT

Great East Japan Earthquake of 2011

Kumamoto Earthquakes in 2016

In the fiscal 2011 supplementary budget passed in the wake of
the Great East Japan Earthquake, ¥2.5 trillion was earmarked
for Japan Finance Corporation for Crisis Response Operations
targeting medium- and large-sized enterprises. DBJ proactively
provided assistance for clients affected both directly and indirectly by the disaster.
Along with designated financial institutions in the disasterarea, DBJ arranged the Great East Japan Earthquake
Reconstruction Fund, which has financed 67 reconstruction
projects to date.
In December 2014, in response to the shift of the stage ofearthquake reconstruction from the restoration of production
facilities (the “restoration stage”) to efforts to open up a newenterprise-based market that resumes production, collaborates
among multiple enterprises to boost industry competitiveness,builds infrastructure and reinforces functions (the “reconstruction and growth stage”), we established a reconstruction andgrowth support fund in collaboration with the Regional
Economy Vitalization Corporation of Japan.
In 2019, with demand for reconstruction seeming to settle,
we established a new fund for medium- to long-term capitalfunds and other forms of money with shared risk, aimed at
supporting the economic development of the affected areas.
Going forward, we will continue to work with local financial
institutions while promoting efforts to help stricken areas
according to their particular stage of recovery.

In 2016, DBJ established the Kumamoto Recovery Office within
its Kyushu Branch to better provide useful knowledge andfinancial expertise for the restoration and reconstruction ofregions affected by the Kumamoto earthquakes.
In July 2016, DBJ formed the Kumamoto Reconstruction
Support Fund jointly with The Higo Bank, Ltd. and The
Kagoshima Bank, Ltd., financial institutions in the disasterstricken area. The fund supplies risk capital, through such
schemes as senior loans (repayment in full on maturity, uncollateralized, non-guaranteed loans) and subordinated loans, tobusinesses affected by the disaster.
Additionally, DBJ has provided beneficial information about
restoration and reconstruction through a cross-departmental
system, and has offered survey and planning services in conjunction with related local governments, national institutions,and economic groups, as well as local financial institutions.

Kumamoto Castle, damaged by the earthquakes(photo from the Ninomaru Parking Lot)

The DBJ Group’s Strategy

Accomplishments and Initiatives to Date

42

Function Strategy

Syndication, Advisory, and Consulting Services
The DBJ Group mobilizes tie-ups and collaboration
to provide syndicated loans and support for M&A
designed to promote Japanese companies’ growthstrategies and strengthen their international competitiveness, and offers impartial consulting services witha long-term perspective. Along with related services,
this helps clients solve the problems they face andstimulates activity in financial markets.

OutlineSyndication
DBJ utilizes its impartial standpoint to call on a wide range offinancial institutions in providing high-value-added syndicatedloans that draw on such original DBJ financing products as
DBJ Green Building Certification and the Regional Areas Genki
Program.
Advisory Services
DBJ offers expert advice related to corporate M&A—ranging fromthe formulation of strategies, screening of acquisition candidates,
and assessment of corporate value to negotiations, structure
policy, and post-merger integration assistance—for a variety ofsituations, including industry restructuring, overseas businessdevelopment, business domain expansion, business succession,and fund investments and exits.
Research & Consulting
Utilizing its extensive network of connections to universities,
research institutions, experts, national governments, and local
governments, DBJ provides support through surveys and problemsolving ideas related to business strategies and policy formation
for urban development, regional development, social capital maintenance, energy, the economy, and industry.

Strategy and Initiatives to Date
Syndication
Activities have included leveraging DBJ’s strengths in syndicatedloans in the energy sector and reinforcing ties and partnerships
with regional financial institutions through such means as businesscooperation agreements for syndicated loans. In this way, DBJ iscontributing to corporate fund-raising while also providing financing opportunities for financial institutions.

In fiscal 2018, DBJ provided information to other regional financial institutions about a measure it jointly developed with The
Hiroshima Bank, Ltd. in fiscal 2017 to provide loans with special
provisions that waive the original principal in the event of an earthquake. Moreover, DBJ put together special deals, including a large
syndicated loan for the Fukuoka Airport concession project.
Advisory Services
As a result of its impartiality, DBJ has a wide network it can mobilize
in providing its advisory services, including not only Japanese firms
but also overseas companies and private equity funds.
In fiscal 2017, DBJ entered into an overseas M&A advisory business cooperation agreement with BDA Partners (headquartered in
New York), which needed to develop business in Asia and otherparts of the world. The synergies generated between BDA’s overseas network and the DBJ Group’s M&A advisory organization anddomestic and overseas networks produced a more effective andefficient overseas M&A advisory service for the client.
Research & Consulting
Japan Economic Research Institute, Inc. is a comprehensive thinktank that conducts research in the public, solutions, and international fields. In the public–private partnership and project financing
initiative fields, it has a top-class track record in Japan backed byunparalleled experience and know-how.
Value Management Institute, Inc. is also a comprehensive thinktank that excels in analysis using proprietary economic models
and insight into cutting-edge technologies. Its highly specialized
knowledge encompasses a broad range of policy fields, including
the formulation of integrated strategies for local governments
across Japan.

43

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

Formation of Syndicated Loan Worth ¥6.2 Billion for
Takamatsu-Kotohira Electric Railroad Co., Ltd.
Takamatsu-Kotohira Electric Railroad Co., Ltd., a regional
railway operator affectionately known as “Kotoden” by locals,
operates three railway lines around Takamatsu City, Kagawa
Prefecture. The railroad company provides critical public transportation services around Takamatsu City. Based on the city’surban plan, Takamatsu-Kotohira Electric Railroad aims to build
two new train stations in areas of the city where the population
is growing, and construct double train tracks over the course of
its next medium-term business plan. Takamatsu City intends forthe new stations to be transportation hubs for trains and buses
and is rebuilding the public transportation network inside thecity in a bid to improve convenience in areas connected by thetrain lines, increase the flow of people from outside the region,and enhance the sustainability of public transportation services.
The railroad company needs to make capital investments in the
new train stations and other facilities and also urgently needs toinvest in modernizing its existing train station buildings(Kawaracho Building, situated by Takamatsu City’s largest
transportation node) and aging fleet of rolling stock. Even
though the railroad company has generated a certain level ofprofitability, it needs to raise fresh financing due to its filing forcivil rehabilitation proceedings in the past.

MESSAGE FROMEMPLOYEES

Provided by Takamatsu-Kotohira Electric Railroad Co., Ltd.

In light of Takamatsu City’s urban plans and the railroad
company’s new medium-term business plan, DBJ worked withits main bank, The Hyakujushi Bank, Ltd., coordinated withparties involved in the project (participating financial institutions,for example), and offered advice to the railroad company about
its fund-raising and business plans, in order to arrange a syndicated loan for supplying growth capital that included subordinated capital loans.
DBJ’s supply of growth capital to Takamatsu-KotohiraElectric Railroad not only benefits the railroad company but also
improves the sustainability of critical local transportation services for the public.

Collaboration with Regional Financial Institutions to Support Essential Regional Public
Transportation Infrastructure

Due to its past filing for civil rehabilitation proceedings, efforts
regarding the framework for this syndicated loan, including
adjustments for conflicts of interest, for Takamatsu-KotohiraElectric Railroad required long hours and much labor to find an

agreeable solution within DBJ and among the participating
financial institutions, attorneys and other experts, and the manyother interested parties in the project, such as the Ministry ofLand, Infrastructure, Transport and Tourism. The Hyakujushi
Bank, the railroad company’s main local bank, and DBJ worked
closely together in their respective fields of expertise, with The
Hyakujushi Bank providing local information and insight aboutpast circumstances and DBJ providing knowledge about thescreening process, industry conditions, and financial structuring. Following arduous discussions and engagements, theinvolved parties were able to reach an agreement on arranging
the syndicated loan for the railroad company.
DBJ continues to work closely with regional financial institutions, drawing out each other’s strengths and deploying DBJ’s
advantages in networks, screening, and analysis to provide
comprehensive solutions for the railroad company’s problems,with the aim of helping both the company and the region to grow.

44

Function Strategy

Asset Management
Backed by the DBJ Group philosophy and comprehensive financial expertise, DBJ Asset Management
Co., Ltd. (DBJAM) provides investment and asset
management services that meet clients’ bestinterests.
By stimulating the flow of funds and appropriately
addressing diverse investment needs, DBJAM aims tospur the development of capital markets in Japan.

Outline
DBJAM is an investment managementcompany that primarily handles investments(alternative investments) in the fields of realestate, private equity, and infrastructure.

• Real estate• Private equity• Infrastructure

Longer-Term External Environment and Social Issues

Accomplishments and Initiatives to Date

Japan is a nation with considerable assets, including over ¥1,700
trillion in household financial assets and ¥200 trillion in pension
assets. With the Japanese economy confronted by a declining
population and an aging society, it is imperative that this wealth(financial assets) is steadily expanded.
In realizing sustainable asset formation for the nation, it is anextremely important policy issue for Japan to have a healthy andefficient capital market. Financial institutions, pension funds, andother institutional investors must also advance their investment
capabilities in order to maintain a vibrant capital market.
DBJAM acknowledges the importance of such policy objectives
and believes that its services are well aligned with the public interest.

DBJAM was established in November 2006 for the purpose ofenergizing the real estate financing market in Japan. Since then,
DBJAM has provided domestic real estate fund management andasset management services. In 2016, it formed and began asset
management in DBJ Private REIT Inc., an unlisted private realestate investment trust. In addition, since 2013, DBJAM has been
providing discretionary investment services and investment advisory services related to alternative investments in overseas anddomestic private equity and infrastructure and overseas real estate.
In its efforts to seek out and provide investment opportunities,
DBJAM has set up seven co-investment programs targeted atregional financial institutions and foreign private equity funds as ofJuly 2019. In 2018, Japan’s Government Pension Investment Fundappointed DBJAM as an investment manager focusing mainly on
Japanese infrastructure.
As a result of these activities, DBJAM had ¥1,470 billion in
assets under management as of March 31, 2019.

Strategy
DBJAM, as a fiduciary investment manager, works in the bestinterests of its institutional investor clients with the aim of achieving
longer-term growth in returns on each investment, being aware of
the profits flowing to the ultimate beneficiaries. DBJAM also works
to help its clients increase their asset management capabilities.
To achieve these aims, DBJAM develops a deep understandingof the financial standings, investment policies, and risk and returnpreferences of its clients through active, thorough, and faithfulengagement.
DBJAM believes that such an attitude allows it to provide investment and asset management services that are truly optimized forthe client. Through these services and operations, DBJAM contributes to the development of financial markets in Japan by energizing new money flows, as well as the conversion of fund flows into
the reliable formation of assets for the nation’s citizens.

45

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

New Stimulation for the Real Estate Financing
Market with Private REIT
DBJAM established DBJ Private REIT Inc. in August 2016 tocater to diverse investment needs by providing high-quality
investment opportunities to entities such as financial institutions
and pension funds from an impartial and long-term standpoint.
One objective of the establishment of DBJ Private REIT was toenergize the real estate financing market.
DBJ Private REIT takes full advantage of the DBJ Group’s
extensive experience in urban and regional development and its
wealth of expertise in real estate securitization, including REITs,
in aiming for stable medium- to long-term earnings and steady
growth in assets under management.
The company is distinguished by a basic policy of investmentin properties with DBJ Green Building Certification or otherenvironmental certifications to promote sustainable real estate.
In 2017, DBJ Private REIT led the way in the private REIT
sector thanks to its being awarded a Green Star (highest designation) in the Global Real Estate Sustainability Benchmark(GRESB) assessment.* In 2019, the company published its
environmental, social, and governance report summarizing all

MESSAGE FROMEMPLOYEES

of its ESG-related initiatives. It invests in sustainable real estateand practices management guided by sustainability alignedwith current investor interest in ESG issues while also maintaining and enhancing asset value in the medium to long term.
* GRESB, established in 2009 by leading European pension fund groups,
undertakes annual assessments that take into account real estate sector
ESG performance.

Harnessing the Overall Power of the DBJ Group in Private REIT Management

DBJ Private REIT currently has the funds of more than 80
investors, including financial institutions and pension funds,
under management. We believe private REITs are suited tolong-term investors due to their ability to potentially generate

longer-term, stable income gains commensurate with fundamental real estate value by virtue of their non-listed, indefinite
period, open-ended structure. Private REITs are entrusted withthe funds of professional investors (institutional investors) andare required to perform to a high standard in real estate acquisition and management and in fund-raising. Furthermore, asprivate REITs are predicated on being going concerns for indefinite periods, it is particularly important that they earn theunwavering trust of investors over the long term.
Our employees, with distinct responsibilities in property
acquisition, fund-raising, and property management, and
DBJ Private REIT management will continue working together
to build a track record of stable management and stable­dividends. And equipped with investment opportunities andservices that draw on the DBJ Group’s long-term perspective
and impartiality, they will engage in close communication withinvestors and participate in DBJ initiatives regarding ESG andsustainability to maintain a customer-first approach in stable
investment.

46

Management Foundation Strategy

Financial Capital
We target sustainable growth by constructing an
optimal risk–return portfolio while maintaining andstrengthening a robust financial base that supports
our unique business activities, including integrated
investment and loan services.

Basic Policy
Financial capital is a vital element of our business foundation
implementing advanced business strategies centered on our
sector strategy (see page 22) and function strategy (see page 38)
under the Fourth Medium-Term Management Plan. A robust financial foundation of funds and capital is necessary for the DBJ Groupto execute its sector strategy, supply risk capital, and engage inExternal
environment
Scenarioplanning

Crisis Response Operations. We aim to maintain and strengthen
our financial capital by managing it within the context of a risk
appetite framework based on sophisticated analysis of risks andreturns, with due consideration paid to regulatory capital (management focused on shareholders’ equity ratios) and economic capital(management of capital using stress tests).

BusinessstrategyStress test

Business plan

Execution

Monitoring

Strategy for
financial capital

Financial Soundness Indicators
Issuer ratings
Common equity Tier 1 risk-weighted capital ratio

A1 (Moody’s), A (S&P), AA (R&I), AAA (JCR)
16.65%

Specific Initiatives to Improve the Value of
Financial Capital
A pillar of the DBJ Group’s business strategy is to provide longterm financing for infrastructure projects. To do so, the DBJ Groupprocures long-term funds through corporate bonds and the Fiscal
Investment and Loan Program (FILP). In recent years, DBJ has
stably procured funds through FILP as well as by issuing corporate(As of March 31, 2019)(As of March 31, 2019)bonds, thereby augmenting its fund procurement activities withdiversified maturities and methods. DBJ has been issuing green
bonds and sustainability bonds since fiscal 2014. The issuance of
these bonds has not only diversified our fund procurement base
but also invigorated the socially responsible investment (SRI)bond market.

47

The DBJ Group’s Strategy

market by continuing to issue
SRI bonds and proactively
engaging in international anddomestic initiatives.

DBJ Socially Responsible Investment Bonds
In 2014, DBJ became the first bond issuer in Japan to issue agreen bond. Furthermore, DBJ has issued a DBJ Sustainability
Bond each year since 2015. DBJ’s €700 million issuance in fiscal
2018 was the largest sustainability bond denominated in the euro
ever issued by a Japanese issuer. The raised funds are allocatedtoward the creation of a sustainable society through DBJ Green
Building Certification and the Environmentally Rated Loan Program.
Information on the management and allocation of funds is evaluated by third parties to increase transparency.
DBJ, in January 2017, became an issuer member of the Green
Bond Principles,* the first Japanese firm to attain such a status,
and in March 2017 participated on a committee created by the
Ministry of the Environment to draw up the Green Bond Guidelines,
2017. DBJ will continue to support the sustainable growth of this* The Green Bond Principles are compiled by the International Capital Market
Association (ICMA), investors, issuers,
and securities companies. These partiesare responsible for updating annually
the Green Bond Principles, which arevoluntary process guidelines thatrecommend transparency and disclosure and promote integrity in thedevelopment of the green bond market
by clarifying the approach for issuanceof a green bond. These parties also
create a platform to share the latest
information about green bonds anddisclose relevant information to society.

Issuance of SRI bonds(As of March 31, 2019)€700 million in 2018
$1 billion in 2017$500 million in 2016€300 million in 2015€250 million in 2014

Capital Procurement (Non-Consolidated)

Funds raised (flow)
Fiscal Investment and Loan Program
Of which, borrowings from FILP*Of which, government-guaranteed bonds(domestic)
Of which, government-guaranteed bonds(overseas)
Government-guaranteed bonds with maturity ofless than five years (domestic)
Corporate bonds (FILP bonds)
Long-term debt
Of which, recovered, etc.

(¥ billion)

Fiscal 2015

Fiscal 2016

Fiscal 2017

Fiscal 2018

3,027.7
634.4
300.0

4,012.6
1,127.7
800.0

3,153.4
922.7
580.0

3,790.8
643.3
300.0

200.0

150.4

150.2

150.2

134.3

177.3

192.5

193.0

—

—

100.2

100.3

395.3
358.2
1,639.7

497.1
861.5
1,526.1

535.8
589.5
1,005.0

549.4
446.3
2,051.4* Borrowings from FILP in fiscal 2016 included ¥500 billion in the supplementary budget for “economic stimulus measures for investments in the future.”

MESSAGE FROMEMPLOYEES

Spreading Understanding of DBJ’s Principles and Work through IR Activities

In addition to procuring government credit through the Fiscal
Investment and Loan Program (FILP) and the issuance ofgovernment-guaranteed bonds, DBJ conducts its own creditraising activities, such as issuing corporate bonds (FILP bonds)
to domestic and overseas investors and borrowing moneyfrom insurance companies and financial institutions, primarily
regional banks. When conducting its own credit-raising activities, DBJ places emphasis on having investors understand andsupport its principles and work and, to that end, dispatches
representatives to conduct proactive investor relations throughface-to-face meetings in all regions of Japan and overseas.
Particularly when raising funds through loans, DBJ takes
care to further a deeper understanding of its work by giving
examples of investments and loans it has extended inside andoutside Japan as well as within domestic regions. DBJ also
takes care to gain a deeper appreciation of the issues facedby the borrowing customer, viewing the interaction as anopportunity for further collaboration on investments and loans,in addition to borrowings.

48

Reference (Long-Term Profits / Losses, Financial Condition)
2008

2008–2010

Became a jointstock company

First Medium-Term Management Plan:
CHALLENGE 2010

Fiscal 2008

Consolidated(October 1, 2008 to
March 31, 2009)(Six-month fiscal period)

Fiscal 2009

Fiscal 2010

Fiscal 2011

(April 1, 2009 to
March 31, 2010)(April 1, 2010 toMarch 31, 2011)(April 1, 2011 toMarch 31, 2012)

Total income

151.2

347.9

345.1

318.7

Income before income taxes(121.6)

51.9

95.0

99.2

N/A

(26.7)

(2.9)

(1.3)

3.5

(0.8)

9.3

10.9

Income before income taxes and minority interests(118.1)

51.1

104.3

110.2

Total income taxes(13.5)(10.8)(1.3)(31.9)Net income attributable to owners of the parent(128.3)

39.8

101.5

77.3

—

10.0

50.0

37.3

Total assets

14,028.0

15,595.7

14,845.2

15,579.8

Loans

12,008.8

13,514.6

13,031.4

13,645.4

Securities

1,246.5

1,289.4

1,165.5

1,176.6

Total liabilities

11,941.6

13,268.2

12,435.2

13,118.8

Borrowed money

8,067.8

9,082.4

8,576.4

9,170.5

Debentures and corporate bonds

3,513.0

3,746.3

3,629.3

3,671.8

Total equity

2,086.4

2,327.5

2,409.9

2,461.0

Common stock

1,000.0

1,181.1

1,181.1

1,187.7

Total capital ratio (Basel II, BIS standard)

18.87%

19.13%

20.50%

18.56%

Total capital ratio (Basel III, BIS standard)

—

—

—

—

Ratio of risk-monitored loans (Banking Act basis)

1.60%

5.07%

1.28%

1.47%

Return on assets (ROA)(0.92)%

0.27%

0.67%

0.51%

Return on equity (ROE)(6.06)%

1.82%

4.31%

3.18%

Number of employees

1,096

1,181

1,203

1,270

1,733.4

3,793.1

2,116.6

2,927.0

1,670.3

3,682.0

2,034.4

2,849.0

63.1

111.1

82.2

78.0

1,733.4

3,793.1

2,116.6

2,927.0

184.3

840.9

1,212.8

691.7

Of which, equity and fund-related gains / losses
Extraordinary profit / loss

Total dividend amount

Investment and fund-raising flow (non-consolidated)
Loans and investments (flow)
Loans
Investments
Funds raised (flow)
Of which, recovered, etc.

49

2014–20162017–2019

Second Medium-Term Management Plan:
Endeavor 2013

Third Medium-Term Management Plan:
Supporting Japan’s Sustained Growth as a Global Innovator

Fourth Medium-Term
Management Plan

Fiscal 2012

Fiscal 2013

Fiscal 2014

Fiscal 2015

Fiscal 2016

Fiscal 2017

Fiscal 2018

(April 1, 2012 toMarch 31, 2013)(April 1, 2013 toMarch 31, 2014)(April 1, 2014 toMarch 31, 2015)(April 1, 2015 toMarch 31, 2016)(April 1, 2016 to
March 31, 2017)(April 1, 2017 toMarch 31, 2018)(April 1, 2018 toMarch 31, 2019)

340.0

361.6

339.0

358.6

285.4

291.7

301.2

115.6

165.7

153.0

185.1

122.5

127.1

128.1

30.0

30.3

32.1

70.8

41.1

39.7

40.5

0.6

0.2

0.6

1.5

(0.0)

2.2

(1.3)

116.2

166.0

153.6

186.7

122.4

129.4

126.7

(44.5)(40.8)(58.9)(57.6)(34.6)(35.0)(33.5)

71.3

124.3

92.7

128.9

87.6

91.9

91.9

35.2

30.8

22.5

29.2

19.7

22.1

21.0

16,248.7

16,310.7

16,360.6

15,907.1

16,570.4

16,952.2

17,079.5

13,918.2

13,838.4

13,261.3

12,952.5

13,039.5

12,725.2

12,923.9

1,357.0

1,637.5

1,887.9

1,803.0

1,750.3

1,866.4

1,961.0

13,710.1

13,682.9

13,613.3

13,022.9

13,584.2

13,842.1

13,783.2

9,448.3

9,182.6

8,598.2

7,892.1

8,472.3

8,574.1

7,987.8

3,924.5

4,237.4

4,569.3

4,727.9

4,711.8

4,932.9

5,296.9

2,538.5

2,627.7

2,747.2

2,884.2

2,986.2

3,110.1

3,296.3

1,206.9

1,206.9

1,206.9

1,000.4

1,000.4

1,000.4

1,000.4

—

—

—

—

—

—

—

15.52%

15.83%

16.80%

17.87%

17.47%

16.94%

16.74%

1.23%

0.99%

0.77%

0.64%

0.54%

0.47%

0.40%

0.45%

0.76%

0.57%

0.80%

0.54%

0.55%

0.54%

2.86%

4.83%

3.47%

4.60%

2.99%

3.03%

2.88%

1,315

1,391

1,407

1,435

1,546

1,631

1,650

2,652.4

2,943.3

2,544.2

3,027.7

4,012.6

3,153.4

3,790.8

2,524.5

2,805.1

2,262.7

2,861.3

3,805.8

2,973.6

3,490.4

127.8

138.2

281.4

166.3

206.7

179.7

300.4

2,652.4

2,943.3

2,544.2

3,027.7

4,012.6

3,153.4

3,790.8

502.2

1,307.5

1,129.9

1,639.7

1,526.1

1,005.0

2,051.4

The DBJ Group’s Strategy(¥ billion)

2011–2013

50

Management Foundation Strategy

Human Resource Development
We aim to be an organization with diverse humanresources who helps employees develop skills whileraising their motivation.

Number of employees(consolidated)

As of March 31, 2019



1,650

Number of employees(non-consolidated)

As of March 31, 2019

1,186


Average length of service(non-consolidated)

As of March 31, 201913.9 years
Basic Policy

Human Resource Development Vision

To steadily implement the DBJ Group’s value creation process,which aims to create both economic and social value, and to realize
Vision 2030, our long-term vision for our future, it is imperative for
us to nurture excellent employees who can implement the distinctive business models of the DBJ Group, including its integrated
investment and loan services.
To this end, we think it is important to create structures in which
employees will be highly motivated. Improving the value of humancapital is one of our most important priorities, and DBJ is taking
concrete steps to achieve this goal.

DBJ’s role has evolved and developed substantially to meet theneeds of the times. DBJ considers such innovation crucial tomaintaining its leadership position in the constantly advancing fieldof finance.
To develop its all-important human resource assets, DBJ
encourages autonomous and pioneering behavior in its employees
as financial professionals in keeping with the vision of “generalists
who can be specialists in many fields.” While it is important toacquire specialist knowledge, responding to society’s constantly
changing needs also requires broad experience, deep knowledge,
and the ability to see the big picture. We continue to build a wide
variety of systems based on this philosophy.

Career Development
Training for new employees
Rank-based

Career development / management /leadershipManagement / leadership
Career development program

Strategic human resource development through job rotationand on-the-job training

Proposal ability

Front officeFinance

In-house
training

Work skills

Screening ability

Functional department
Management department

Financialaccounting

Legal

Corporate finance, etc.

Middle / Back office
Shared skills

Domestic
Dispatchoutside DBJ

Strategic global human resource development
Overseas

Self-study

Knowledge
and skills

Logical thinking / facilitation / presentation, etc.

Seconding to Group companies and outside institutions
Overseas university strategic partnership programs /Short-term study in top business schools / Overseas study /Trainee programs / Seconding to overseas institutions, etc.
Language study / Finance / Law / Accounting

51

Intensification of the Hiring and Exchange of
Human Resources across the DBJ Group
DBJ will strengthen its hiring processes and practices and secure
the personnel necessary across the entire Group to implement its
sector strategy, function strategy, and area strategy.
The DBJ Group will also work to further disseminate its longterm vision, Vision 2030, and its value creation process bystrengthening the exchange of human resources across the
DBJ Group.
Skills Development
The DBJ Group develops human resources through practicalon-the-job training and extensive training opportunities.
• Employees are strategically rotated so that they steadily develop
highly specialized skills by gaining practical and diverse experience and broad perspectives in multiple departments and outside institutions.** Dispatch employees to national government agencies, Group companies aroundthe world, and companies that have received investments• New college hires receive thorough growth assistance withapproximately three months of DBJ’s own accounting and financial analysis courses, and a full year of new employee training
programs.
• An extensive skills development program, in terms of both quality
and quantity, is available for employees that provides rank-based
training for required subjects whenever necessary, along with
supplementary programs for self-improvement in addition to
work-related training.
• Opportunities to study abroad at overseas universities and training systems are made available for developing global humanresources. DBJ also operates its own leadership training program (entirely in English) in collaboration with top overseas­universities for young employees and management-level
employees.
• DBJ supports human resource development with physical facilities:
for example, the newly constructed Minami Aoyama Training Center.

Diversity Management and Productivity Improvements
To promote workplaces where diverse human resources can work
together, DBJ encourages mutual understanding and takes steps
to improve the productivity of each employee.
• DBJ aims to enhance its work and leave systems for childrearing and elderly care, such as telecommuting, reduced work
hours, and flex time, in addition to holding seminars guided byexperts for finding and enrolling in facilities for childcare andelderly care.
• D BJ creates and distributes a guide to balancing work withchild-rearing and elderly care, and holds “iku-boss” seminars formembers of management to enable them to support employees
using these systems while improving team productivity. DBJ also
holds seminars for furthering understanding of people with disabilities and promotes the building of cooperative relationships
among staff, including employees who use these systems.
• DBJ set up the Work Shift Promotion Headquarters with theintention of increasing work efficiency from a work shift standpoint and promoted awareness reforms and related initiatives
across the Group.
• DBJ supports the physical and mental well-being of its officers
and employees with courses about coping with stress and managing sleep, as well as by offering a counseling system staffed byoutside professionals, in addition to periodic health checkups.
Motivation and Engagement
We constantly ask ourselves if we have laid the proper foundation
for genuinely motivating officers and employees to take the initiativein accordance with the DBJ Group’s corporate philosophy.
• DBJ conducts engagement surveys for employees, evaluates theresults of these surveys, and creates action plans that enableeach department to increase motivation through improvement
activities.
• In training about career formation, DBJ creates opportunities forfurthering understanding of its corporate philosophy and constructive dialogue about improvements and practical approaches.

Employees’ Use of Childbirth and Child-Rearing Support
Systems, Number of Employees in Training Courses
Ratio of employees returning to work after
taking childcare leave (number of employees
having completed childcare leave in fiscal 2018)

Internal training

22/24 (92%)

Rehiring system (number of registrants as ofMarch 31, 2019)32

Reduced work hours and flex time for
employees raising children

120“Iku-boss” training participants(cumulative total)

About 200

Seminars for finding childcare facilities(cumulative total)

About 150

The DBJ Group’s Strategy

Specific Initiatives to Increase the Value of
Human Capital

52

SPECIAL FEATURE

Initiatives to Train “Generalists Who
Can Be Specialists in Many Fields”
DBJ– Oxford Global Strategic Alignment Leadership Programme
DBJ trains employees in line with its vision of “generalists who can be specialists in many fields” in the development of humanresources, its greatest resource. Below, we introduce the Global Strategic Alignment Leadership Programme (GSALP),a unique leadership program that DBJ has developed in a strategic alliance with the University of Oxford in the United
Kingdom for the development of global human resources.

Katsushi Kitajo
Executive Officer
Head of Human Resources Management
Department

Development of Unique DBJ Program for Training
Human Resources, Our Greatest Management
Resource
People are our greatest resource. DBJ has developed human resources throughvarious training venues and practical on-the-job training. In recent years, anincrease in overseas investment and loan projects has raised the importance of
training human resources able to work from a broader, more global perspective.
In fiscal 2018, DBJ partnered with the Saïd Business School at the University of
Oxford in the United Kingdom to launch the Global Strategic Alignment Leadership
Programme (GSALP), a unique curriculum for young DBJ employees.
Of note, GSALP accepted about 20 young employees, mainly in their late 20s,
instead of mid-career employees and managers who already have considerable
work experience. The participants spent a total of four months, including one
week at the University of Oxford, pondering topics such as “the future vision for
DBJ” and “how the organization should change to achieve its goals” in two-way
discussions and group projects involving instructors and students. As the culmination of the program, the participants gave a final presentation to DBJ President
Hajime Watanabe. Through this process, the participants broadened their perspectives by tapping into the advanced and wide-ranging knowledge available
at the University of Oxford, and the DBJ Group as a whole had an opportunity toview from a higher vantage point its raison d’être and business aims.
To ensure that human resource development remains one of the highest priorities at DBJ, management and relevant departments are committed to creating
multiple venues for young employees to engage in mutual dialogue. Following
their presentation to President Watanabe, GSALP participants engaged in frankand spirited exchanges of opinion, generating fresh and bold ideas. Some of theseideas ended up in reference materials for debates about future management policy.
Starting in fiscal 2019, in addition to GSALP, DBJ is expanding educational
programs for young employees through a new partnership with the International
Institute for Management Development (IMD) business school in Switzerland.
Furthermore, DBJ has created an innovative program for managers in collaboration with Columbia University in the U.S. Through various initiatives such as these
programs and study-abroad opportunities, we aim to develop a greater number ofhuman resources globally for the benefit of our customers and stakeholders.

53

The DBJ Group’s Strategy

Description of GSALP
GSALP is a fully customized educational program conductedentirely in English for young employees of DBJ created inpartnership with the University of Oxford, with the aim of developing
global human resources.
The curriculum is divided into three sessions (Tokyo, online, andOxford sessions) over a span of four months, based on the objectiveof deepening organizational understanding and rethinking one’s own
career path while obtaining a broader and more global perspective.
The participants work on group projects and learn about theconcept of strategic alignment from Professor Jonathan Trevor, an
expert in business administration and organizational theory.
In fiscal 2018, the participants spent two days at the Tokyosession held at the Minami Aoyama Training Center to deepen
their understanding of DBJ and the fundamentals of organizational
theory. They then received instruction from Professor Trevor in the
online session and began to draft their group presentations. During
the five-day session at the University of Oxford, the participants
met with Professor Trevor and received lectures from Oxford
instructors on various subjects, including the latest trends in the
global economy and leadership. The participants then gave apresentation about the outcomes of their projects based on this
instruction. After returning to Japan, the program wrapped up witha presentation in front of DBJ President Watanabe, followed by anexchange of opinions.

Group photo at the Oxford session (top)Training during the Tokyo session (bottom)

Comment from the Professor
Last year saw the successful launch of the Global Strategic
Alignment Leadership Programme (GSALP), a brand-new executive education programme, with the Development Bank of Japan(DBJ). The aim of our joint programme was to provide 20 of thebank’s future leaders with a key understanding of “Strategic
Alignment” and business critical leadership skills, and create global
leaders who could transform the organisation in line with the longterm vision, Vision 2030, which promotes sustainability management in pursuit of both economic and social value.
My recent research highlights that the best companies arethose that are the best aligned. Indeed, strategic alignment meansthat all the elements of a business, including its market strategy
and the way the company is organised, are arranged in such a
way that best supports the fulfilment of its long-term purpose. With
this in mind, the programme helped DBJ develop future leaders to
be able to systematically choose best-fit organisational strategies,
capabilities, resources, and systems to fulfil its purpose, anddeliver the best chance of success in the 21st century global
business environment.
On the programme, I was joined by several of my colleagues
from within the Oxford Saïd faculty, and we worked alongside
guest speakers and DBJ’s senior executives to deliver the programme over two modules of class-based tuition in Tokyo andOxford. Participants learnt through a variety of methods including

Jonathan Trevor
Associate Professor of Management PracticeSaïd Business School University of Oxford

lectures and workshops, whilst working on business impact projects and group assignments through the school’s virtual classroom, the HIVE.
Such was the success of evaluation scores of the first cohort ofthe programme, I am delighted to confirm the launch of the 2019
GSALP, starting in August, with preparations now well under way.

54

Long-Term Perspective and Deep
Insight Gained from GSALP Translate
into Better Proposals for Customers

Engaging in Daily Work with DBJ’s
Long-Term Vision Always in Mind

Financial Institutions
Department(at time of enrollment)
Joined DBJ in 2011

Kansai Branch(at time of enrollment)
Joined DBJ in 2011

Current Job

Current Job

I work at the Kansai Branch in investment and loan services
for customers in the energy and non-manufacturing fields inthe Kansai region. The Kansai economy has been robust
lately with planning for many major events, such as theWorld Expo. On the other hand, structural problems havebecome entrenched, with an increasing elderly population
and a declining working-age population. As environmental,social, and governance and other trends become embedded in global markets, management teams at local companies are expected to solve increasingly complex problems
and devise long-term visions. At DBJ as well, management
teams must rise to meet expectations for helping local
industry survive and grow further. We work diligently every
day to come up with optimal solutions to these problems.

I belong to the department responsible for financial institutions, including regional ones. Every day, we talk about
how to create initiatives for collaborating with them. We
introduce the DBJ Group’s know-how and functions not
only to these financial institutions but also to their customers, with the aim of helping solve their management issues.
Specifically, we hold study sessions about mezzanine
financing and other topics; conduct joint surveys of industries, such as traditional local industry; offer consulting
services; and propose ideas for improving work efficiency.
Through these efforts, we advance the creation of projects
for collaborative financing and risk sharing.

Impressions and Benefits of GSALP Participation

Impressions and Benefits of GSALP Participation

It is not easy to view issues from a long-term time frame ofseveral decades. Discussions with my peers at GSALP
gave us an opportunity to think more deeply about whatmust be done in the future to address these structuralissues in Japanese society within the context of population
projections for Japan. We also examined organizational
strategies for domains where DBJ should take the initiativein the future, and how to realize progress. In our discussions, I realized that unprecedented issues can be analyzed
based on a long-term vision and that various initiatives
around the world today can provide hints. The long-term
perspective and deep insight gained from GSALP has led
to better proposals and debates for addressing issues
faced by our customers.

Before participating in GSALP, I had long thought that DBJ
and regional financial institutions could pool together theirindividual strengths and knowledge to help not just ourcustomers (regional financial institutions) but also their local
communities and operating companies grow. My participation in GSALP was very meaningful from the standpoint of
the genuine discussions I had with other participants about
the strengths, issues, and future direction of DBJ. I come towork every day thinking about what DBJ can and should do
in light of customer opinions, changes in the external environment, and the needs of society.

55

Helping Expand DBJ’s Fund Procurement
Base through Discussions with Peers
about DBJ’s “Now” and “Future”

Corporate Finance Department,
Division 2(at time of enrollment)
Joined DBJ in 2014

Treasury Department(at time of enrollment)
Joined DBJ in 2015

Current Job

Current Job

I belong to the automobile team, which is in charge ofcoming up with ideas for investment and loan services intune with the fund procurement needs of a broad range ofcustomers in the automobile industry around the world,
including domestic automobile manufacturers and parts
suppliers as well as overseas firms and leasing companies.
The automobile sector is approaching a major industrial
transition: the connected, autonomous, shared, and electric (CASE) trend. For this reason, our team’s discussions
have recently centered on sharing the latest CASE-related
information and its potential impact on our customers.

I am involved in fund procurement operations, such as
borrowing from private financial institutions, and in thecreation of disclosure documents such as securities filingsin the Treasury Department. In fund procurement operations, I work diligently to ensure DBJ is able to optimallyand reliably procure funds. I accomplish this by studying
the needs of investors and paying attention to changes inthe external environment, such as changes in interest rates.
Through investor relations activities that include holding
results briefings and events for directly engaging withstakeholders in areas across the country, I explain DBJ’s
principles and work to investors.

Impressions and Benefits of GSALP Participation

Impressions and Benefits of GSALP Participation

At GSALP, I was able to learn case studies about a variety ofsuccessful companies that changed their strategies to adapt
to changes in market conditions. It was a rather stimulating
experience for me, because I previously had focused solely
on the automobile industry. Since participating in the
program, I have been able to present case studies in otherindustries during conversations with our customers and toengage in dialogue with a better appreciation of not only ourcustomers’ visions and management strategies but also theexternal environment. Moreover, I now think more about how
I can change things for the better through my own work at
DBJ, and rethink the importance of my own work here.

Leveraging the knowledge about organizational theory
I gained through GSALP lectures, I met with instructors
and fellow participants to frankly discuss the changes I
think are needed at DBJ to realize its “future,” while better
understanding DBJ as it stands “now.” In addition to myregular work experience, I now have a broader, fresh
perspective with which to view DBJ’s principles, work, andculture, and this has given me more confidence wheninteracting with investors at investor relations venues. I aim
to contribute to the expansion of DBJ’s fund procurementbase through proactive investor relations activities, whilefurthering the understanding of investors about DBJ’s“now” and “future.”

The DBJ Group’s Strategy

A Call for Action for DBJ as an
Organization, and Idea Proposals for
Customers

56

Management Foundation Strategy

Knowledge and Collaboration
To improve intellectual capital and relationship andsocial capital, the management resources of the
DBJ Group, we are accumulating knowledge whileadvancing collaboration with various stakeholders.

Basic Policy
Intellectual Capital
Knowledge
We strive to improve skills as a core element of operations
necessary to differentiate our business model through surveys,
research, analyses, and risk management centered on industry.
Processes
We will improve operations, including via investments in information and communication technology (ICT), by clarifying and simplifying business processes from the customer’s standpoint in order
to rapidly and properly address customer needs.
Relationship CapitalSocial Capital
The DBJ Group defines social capital as a resource shared acrosssociety that underpins the foundations of market economics.
Increasing the value of social capital is a basic tenet for realizing asustainable society. DBJ specifically engages in unique initiatives
within the context of (1) the natural environment, (2) social infrastructure, and (3) system capital.
Details

Example of initiatives(1) Naturalenvironment

Forests, mountains,rivers, lakes, soil, airEnvironmentally Rated
Loan Program
DBJ Green Building
Certification(2) Social
infrastructure

Energy,transportation,
urban infrastructure,industrial value
chainsLoans and investments
for infrastructure andindustrial projects
BCM Rated Loan
Program(3) System capital

Stabilization andstimulation of thefinancial system,
development andinvigoration offinancial markets

Crisis Response
Operations
Supply of risk capitalSocially responsible
investing bondissuance

Social capital

Collaboration
The DBJ Group has built diverse networks with customers, financial institutions, investors, and national and local government
agencies for the purpose of exchanging information and avoiding
conflicts of interest. The DBJ Group utilizes its unique networks to
identify issues affecting the economy and society and to conduct
investment and loan operations. We aim to maintain our reputationand improve our brand value through the services we provide tocustomers.

57

Knowledge
Industry Analysis
The role of the Economic & Industrial Research Department is toanalyze and disseminate information on economic and industrial
trends in Japan and overseas, including macroeconomic trends
and trends in key industries, and to support investment activity.
DBJ proactively works to accumulate and use intellectual capital,
including information on recent trends in such areas as big data,AI, computer-assisted software engineering (CASE), virtual andaugmented reality, and fintech.
In April 2017, DBJ established the post of chief research­officer and placed under it the Economic & Industrial Research
Department and the Sustainability Planning & Intellectual Capital
Support Department. We provide knowledge-based solutions tocustomers in various industries, including solutions from the perspectives of environmental, social, and governance (ESG) issues
and the Sustainable Development Goals (SDGs), based on our
wide-ranging knowledge of industry.
For details, please follow the link below to the
DBJ website.
https://www.dbj.jp/en/investigate/

Capital Investment Planning Survey
With a history of more than 60 years (since 1956), DBJ’s Capital
Investment Planning Survey looks at trends in corporate capital
investment in Japan as well as corporate activities based on the“broad definition of investment,” including capital investment overseas, and spending on R&D, M&A, and human resources. The
results of the survey are used for many purposes, such as furthering education at universities and research at R&D organizations, inaddition to serving as a reference for national economic policy andcorporate planning.

principles behind Japan’s post-1940s, high economic growth,
as its first executive officer. The institute serves as a venue forcreating intellectual capital through cooperation and collaboration
between DBJ and external experts at universities and other orga­
nizations. Its research includes a focus on the formation of a­sustainable economy and society from an academic and liberalstandpoint. In recent years, the institute has expanded the meansfor creating intellectual capital by establishing new committees forresearching sustainability, publishing research papers throughSpringer, an international academic publishing company, andholding international academic conferences in conjunction withforeign academic journals and think tanks.
Processes
Work Reform Project
DBJ established the Work Reform Project in fiscal 2016 under theleadership of a deputy president and with members from a range of
departments to devise measures to raise added value for customers, including streamlining investment and loan processes, increasing productivity, vitalizing organizations, streamlining how meetings
are conducted, reviewing decision-making processes, setting up amobile work environment, introducing a video-conference system,and streamlining settlement procedures.

Concrete Measures to Increase the Value ofRelationship and Social Capital
Collaboration and Dialogue with Stakeholders
Customers

Financial
institutions
Government

Cross-Sector Conference
Cross-sector innovation is accelerating and the number of themesthat must be analyzed by industrial surveys is increasing. Against
this background, to pursue deep industry knowledge while maintaining a cross-sector perspective, the DBJ Group set up the
Cross-Sector Conference in fiscal 2017 as a platform for sharing
information among the Economic & Industrial Research
Department, business offices, and Group companies. To discoverand share cross-sector knowledge, we convened the CrossSector Conference nine times in fiscal 2018 with such themes as
CASE, logistics, and healthcare.
Research Institute of Capital Formation
The Research Institute of Capital Formation (RICF) was establishedin 1964 with Dr. Osamu Shimomura, who advocated for the

Research
institutions• Provided certification programs• Held a business plan competition for women• Provided platforms via DBJ Connect• Supported innovation with iHub
• Collaborated with LTIC
• Participated in high-level panel about ESG
finance• Participated in TCFD scenario analysis support
project•H eld DBJ Academy at RICF

Participation
and assessmentof outside initiatives

DISCLOSURE INSIGHT ACTIONADFIAPfinancing sustainable development

The DBJ Group’s Strategy

Specific Initiatives to Improve the Valueof Intellectual Capital

58

DBJ Women Entrepreneurs Center (DBJ-WEC)
DBJ provides comprehensive support, including entrepreneurial
know-how and networking opportunities, to nurture growth businesses led by women from new vantage points that could change
society and the economy for the better. As a part of these efforts,
DBJ holds a business plan competition every year for women
entrepreneurs. New business ideas that evince excellent businesspotential and innovativeness are awarded business grants of up to¥10 million. After the competition finishes, the winners are connected with outside experts and venture capitalists who help themturn their business plans into reality by supporting the growth anddevelopment of their business ideas.
In addition to the DBJ Women Entrepreneurs Prize, the DBJ
Women Entrepreneurs Prize for Excellence, and the DBJ Women
Entrepreneurs Prize for Business Promotion, in 2017 DBJ createdthe DBJ Women Entrepreneurs Prize for Social Design. DBJ presents these awards for high-utility sustainable plans that makestrong contributions to society and contribute to the solution ofregional issues while taking into consideration the Sustainable
Development Goals.
More than 2,300 business plans have been submitted over the
past seven competitions, expanding the scope of opportunity for
women entrepreneurs, and some of the winners’ and finalists’competition plans have goneon to play a role in expanding
operations.

For more information, please follow the link below(Japanese only).
https://www.jeri.or.jp/wec/

DBJ iHub 4.0 (DBJ innovation Hub 4.0)
Along with Japan Economic Research Institute, Inc., DBJ seeks tospur innovation through iHub 4.0 and“value training” activities. By using its
impartial position and broad network,
DBJ aims to resolve social issues
through logical and innovative businesssolutions.
For more information, please follow the link below(Japanese only).
https://www.jeri.or.jp/sctm/about/ihub.php

DBJ Connect
Beginning in June 2017, at the suggestion of our young employees, we launched DBJ Connect, a service promoting new business development among start-ups and established companies,
in collaboration with Creww, a company that operates the largest
start-up community in Japan. The programs that DBJ Connect
operates allow start-ups to leverage the management resourcesof established companies to accelerate the growth of their businesses and offer established businesses a foothold in emerging
new businesses.
In fiscal 2018, our Tokai Open Accelerator program helped fourestablished companies based in the Tokai region collaborate with
six start-ups.

For more information, please follow the link below to the
DBJ website (Japanese only).
https://dbj-i.net/ja

Participation in and Evaluation of Outside Initiatives
In December 2016, DBJ and DBJ Asset Management Co., Ltd.
became signatories of the United Nations-supported Principles for
Responsible Investment (PRI) and, since February 2018, have
served as members of the PRI Infrastructure Advisory Committee.
DBJ is also a member of Long-Term Investors Club (LTIC), aninternational group of investors that emphasizes investment activities with long-term time horizons. In May 2019, with the Japan
Bank for International Co-operation, DBJ held an annual meetingand sponsored events to exchange opinions with financial institutions from G20 countries. Furthermore, DBJ proactively participates in and contributes to outside initiatives that promotesustainability management, as an investor member of the Global
Real Estate Sustainability Benchmark, a participant in high-level
panels on ESG finance at the Ministry of the Environment, as well
as a signatory to the Principles for Financial Action for the 21stCentury and chair of its Working Group on Savings, Lending, andLeasing Operations.
In recognition of its participation in outside initiatives, inFebruary 2019 DBJ received an award from the Association of
Development Financing Institutions in Asia and the Pacific for its
efforts in health management in February 2018 and its initiatives toaddress natural disasters and climate change.

59

examples of outstanding efforts at other companies, with the viewof supporting more sophisticated initiatives in the future.
For customers using the BCM Rated Loan Program, we hold anannual event called the BCM Rated Loan Club as a venue for crisis
managers to exchange opinions and information. Through its certification programs, DBJ broadly supports the initiatives of its customers while contributing to the formation of a sustainable society.

Using its independently developed screening system, DBJ certification programs set the terms and conditions of loans based on
corporations’ non-financial information.
DBJ launched the Environmentally Rated Loan Program in
2004, the first such program in the world. In 2006, DBJ launched
the BCM Rated Loan Program to evaluate disaster preparedness
and measures to ensure business continuation. Furthermore, in2012 DBJ began to offer the Employees’ Health Management
Rated Loan Program, which evaluates measures in health management. A major defining characteristic of DBJ certification programsis the assessment process that emphasizes face-to-face
discussions, during which we directly inquire about clients’initiatives that are not evident in their publicly disclosed information.
Our screening sheet is reviewed every year in deliberations by theAdvisory Committee composed of outside experts, who also take
into consideration the latest issues and trends around the world.
As follow-up services, we create venues in the form of
post-assessment award ceremonies at which companies’ top
management can exchange their opinions with each other. In
addition to feedback and details about the assessment results,
we directly convey information about anticipated matters andBCM Rating

Environmental Rating(Business continuation risk)(Environmental risk)

Health Management
Rating(Human productivity risk)

For details on DBJ certification programs, please follow thelink below to the DBJ website (Japanese only).
https://www.dbj-sustainability-rating.jp/

Assessment Flow of DBJ Certification Programs

1

2

3

4

5

6

Preliminary
screening

Interviews

Judgment meeting

Evaluation decision

Financing
implementation

Feedback

DBJ Rated Loans(Number)

(¥ billion)

1,250

2,500

(Left axis)

Environmental rating(Right axis)

Cumulative amount

BCM rating

Health management rating

183
137

1,000

346

107
315

Total number of
rated loans:

750

75
45

1,184
¥2,057.7billion

17
4(As of March 31, 2019)

500

1
28
250

33
0

2004

67

2005

11

13

100

126

2006

2007

2,000

19

162

2008

23

198

2009

55

190

1,500

621

655

574

145

103

278

234

1,000

523
470

415
369
500

308
244

2010

2011

2012

2013

2014

2015

2016

2017

2018

0
(Fiscal year)

The DBJ Group’s Strategy

DBJ Certification Programs

60

Corporate Governance

Message from the Chairman

With ongoing efforts to strengthen governance,
DBJ contributes to sustainable growth throughan innovative process of value creation.

Creation of a Unique Business Model

Governance Suited to Our Business Model and
Dialogue with Stakeholders

In accordance with the Development Bank of Japan Inc. Act,
the DBJ Group practices sustainability management that bal-

In order to continue playing this unique role, DBJ must haveances economic and social value with the aim of building arobust corporate governance, ensure transparency in manage-

sustainable society. Under the current Fourth Medium-Term

ment, and consider the opinions of outside experts. To promote

Management Plan, we supply risk capital to forward-looking

this aim, we have created the Operations Audit Committee, theinitiatives through our Special Investment Operations program.

Compensation Committee, and the Personnel Evaluation

Collaboration and cooperation with private financial institutions

Committee as advisory bodies to the Board of Directors.

stimulate new flows of risk capital in Japan. DBJ’s investments

Listening to the views of our stakeholders is imperative toand loans in new fields help to strengthen Japan’s economic

strengthening this framework.

competitiveness. We also address local issues through risk

In an environment of fair competition, it is essential that DBJ

capital supplied through joint funds created with regional finan-collaborate and cooperate with private financial institutions.

cial institutions.

We hold regular events for this purpose, usually twice a year, for

Furthermore, DBJ functions as an emergency supplier ofdiscussions with representatives of such institutions. And incapital for responses to natural disasters and other crises. In

regard to Special Investment Operations, DBJ has created thetimes of international financial turmoil, and following the GreatSpecial Investment Operations Monitoring Board (see page 63)

East Japan Earthquake, the Kumamoto earthquakes, andas an advisory body to the Board of Directors. It meets twice aother events calling for rapid influxes of capital, DBJ has beenyear in order to discuss and evaluate projects as well as

there to provide relief.

encourage private-sector enterprises and complement their

In the wake of heavy rains in Western Japan in July 2018

operations while maintaining appropriate competitive relations.

and the Hokkaido Eastern Iburi Earthquake in September of

The opinions we obtain through social events with private

the same year, we established our own Regional Reconstruction

financial institutions and the outcomes of deliberations by the

Headquarters and Regional Emergency Response Program.

Special Investment Operations Monitoring Board are debated

We are working to strengthen our system for responding flexibly

by the Advisory Board. As an advisory body to the Board ofand quickly to demand for recovery and reconstruction funds.

Directors, the Advisory Board (see page 63) is made up of

61

Corporate Governanceoutside experts and directors in fields including manufacturing,

directors engaged in lively debate on initiatives related toinfrastructure, regional communities, and finance. The Advisoryenergy, climate change, and the SDGs.

Board provides valuable ideas on matters concerning the safe-

To realize a sustainable society while balancing economic

guarding of proper competition with private financial institutions

and social value, the DBJ Group offers solutions to issues

and the DBJ Group’s management plans. In my view, a distinct

faced by society and the Group’s customers. The Group will

aspect of corporate governance at the DBJ Group is its con-continue to create innovative business models, centered on

tinuous reassessment of its unique value creation process while

the supply of risk capital, in an effort to advance sustainability

engaging in dialogue with stakeholders.

management and maintain a balanced value creation process.

We want to keep our initiatives one step ahead of the times,

Moreover, we will continue making every effort to ensure

especially in regard to the supply of risk capital, and this means

robust and effective corporate governance, based on theensuring that we operate in conformity with the Companies

notion that nothing is more important than embodying best

Act. For this purpose, the Board of Directors formulated thepractices that will continue to earn us the trust of our custom-

Basic Policy for Internal Control, which positions legal compli-

ers and society.

ance, risk management, and internal audits as important issues
for management.

August 2019

Realization of a Value Creation Process That Balances
Economic and Social Value
The DBJ Group established the Sustainability Committee as ameans of dealing with the growing need to review corporate
management from the standpoint of sustainability given the
adoption of the Sustainability Development Goals (SDGs),
the Paris Agreement, and other recent developments. The
Sustainability Committee discusses changing social issues andother matters important for management. In fiscal 2018,

Yasushi Kinoshita
Chairman

62

Corporate Governance

Basic Position on Corporate Governance
DBJ is governed by the Development Bank of Japan Inc. Act (the DBJ Act) in accordance with the following objective.

Article 1
Development Bank of Japan Inc. (hereinafter referred to as the “Corporation”) shall be a joint-stock company (kabushiki-kaisha) whose
objective is to contribute to the smooth supply of funds to those needing long-term business funds, as well as to the sophistication offinancial functions.

DBJ is working to enhance its unique governance system in addition to usual management supervision as a company with a boardof directors and company auditors (Audit & Supervisory Board),
through a business model built upon features such as integrated
investments and loans and proper execution of the preceding
objective, in order to raise the value of tangible and intangible
management resources to be invested and to realize sustainable
management that aims for both economic and social value.
Specifically, the 2015 revisions to the DBJ Act establishedSpecial Investment Operations and obligatory measures to beconsidered, requiring that DBJ conduct its operations in a mannerthat does not obstruct appropriate competitive relations with otherentities, in particular, applying these requirements to the Advisory
Board, made up of outside experts and outside members of theBoard of Directors, and the Special Investment Operations
Monitoring Board, composed of outside experts, which function asadvisory bodies to the Board of Directors. These bodies provide
advice on DBJ’s overall management and deliberate and evaluatebusiness results, including consistency with the policy objectives ofSpecial Investment Operations, ensuring that appropriate competitive relations are maintained with private financial institutions.

DBJ’s Corporate Governance System
A company with a board of
directors and company auditors(Audit & Supervisory Board)

Institutional design configuration
Number of members of the Boardof Directors
Of whom are outside members of theBoard of Directors
Number of Board of Directors’
meetings in fiscal 2018
Number of Audit & Supervisory Board
members
Of whom are outside Audit &Supervisory Board members
Number of Audit & Supervisory Board
meetings in fiscal 2018

10
2
13
5
3
16

Adoption of executive officer system

Yes
Deloitte Touche Tohmatsu
LLC

Accounting auditor

Overview of DBJ’s Corporate Governance System
Matters requiring authorization ofcompetent minister

General Meeting of
Shareholders• Appointment and dismissal of representative
members of the Board of Directors andAudit & Supervisory Board members• Concurrent positions as members of theBoard of Directors

Audit & Supervisory
Board members,
Audit & Supervisory Board
Operations Audit
Committee

Board of Directors• Amendments to Articles of Incorporation

ReportingAccounting auditor

Compensation
Committee

Cooperation
Reporting

Personnel Evaluation
Committee• Disposition of surplus funds

Internal Audit
Department• Mergers, corporate splits, and dissolutions
Advisory Board• Basic policy on business plans, redemption
plans, and fund procurement
Executive Committee

AuditsSpecial Investment Operations
Monitoring Board

Decision-making bodies
Deliberative bodies

ALM & Risk
Management
Committee

Departments
Subsidiaries

General Risk
Management
Committee

Committee on
Investment and Loan
Decisions

New Operation
Screening
Committee

Advisory Panelon Investments
and Loans

Sustainability
Committee

Audits63

The Audit & Supervisory Board comprises five members. The
Companies Act prescribes that a majority of Audit & Supervisory
Board members be outside members (in DBJ’s case, three of thefive). DBJ offices contribute three members (two members proper
to DBJ and one an outside member).
Also, DBJ has created the Audit & Supervisory Board Office,which under the board’s direction, assists board members, including outside members, in performing their duties. The Audit &Supervisory Board and Audit & Supervisory Board members audit
the execution of duties by members of the Board of Directors,
based on their audit policy and audit plans.
Audit & Supervisory Board members attend Board of Directors’
and other important meetings and may query the execution of business by members of the Board of Directors, peruse documents, andconduct branch audits.

Advisory Bodies to the Board of Directors
In pursuit of sustainability management and DBJ’s corporate
objectives, the following committees have been established asadvisory bodies to the Board of Directors for the purpose of maintaining transparency in management and to reflect the knowledgeof outside experts.
Operations Audit Committee
The Board of Directors has established the Operations Audit
Committee, delegating to this body the authority to deliberate
important matters related to internal audits. This committee met
four times during the fiscal year ended March 31, 2019.
Compensation Committee
The Compensation Committee, the majority of which consists ofoutside executives, considers the type of executive compensation
structure that befits DBJ from the standpoint of ensuring transparency and objectivity regarding compensation.
Personnel Evaluation Committee
The Personnel Evaluation Committee, composed of outside
members of the Board of Directors and other outside experts,
evaluates personnel proposals on the selection of members of theBoard of Directors and Audit & Supervisory Board members.
Advisory Board
Since DBJ’s establishment as a joint-stock company in October
2008, the Advisory Board has been in place as an advisory bodyto advise the Executive Committee, providing advice on overallmanagement. Revisions in 2015 to the DBJ Act stipulate for anindefinite period obligatory measures to be considered, in particular, requiring that DBJ conduct its operations in a manner thatwould not obstruct appropriate competitive relations with otherentities. Accordingly, this board is positioned anew as an advisory
body to the Board of Directors. As one of its roles, even more than
before, the Advisory Board is tasked with deliberating and evaluating important affairs related to ensuring that appropriate competitive relations are maintained with private financial institutions.

This board convened twice during the fiscal year ended March
31, 2019. This board is composed of the following outside
members of the Board of Directors and outside experts in fields
including manufacturing, infrastructure, regional communities,
and finance.

Outside Experts
Reiko Akiike

Senior Partner and Managing Director,
The Boston Consulting Group

Masayuki Oku

Honorary Advisor of
Sumitomo Mitsui Financial Group, Inc.

Kazuaki Kama

Executive Corporate Advisor, IHI Corporation

Katsunori Nakanishi

Chairman and CEO, The Shizuoka Bank, Ltd.

Yoshizumi Nezu

President, Tobu Railway Co., Ltd.

Outside Members of the Board of Directors
Akio Mimura

Honorary Chairman of Nippon Steel Corporation

Kazuo Ueda

Professor, Faculty of Business Studies, Kyoritsu
Women’s University

Special Investment Operations Monitoring Board
One of the measures of the 2015 revisions to the DBJ Act was inregard to Special Investment Operations. The act stipulates theestablishment of a Special Investment Operations Monitoring
Board as an advisory body to the Board of Directors. This monitoring board is tasked with deliberating projects and evaluating theirperformance in terms of appropriateness against policy objectives
and with emboldening private-sector enterprises and complementing their operations while maintaining appropriate competitive
relations. This board, whose members include outside experts infields such as manufacturing, infrastructure, regional communities,
and finance, convened twice during the fiscal year ended
March 31, 2019.
Moreover, in order to examine whether appropriate competitive
relations with other entities are being maintained, roundtable discussions are held regularly with the Japanese Bankers Association,
the Regional Banks Association of Japan, and the Second
Association of Regional Banks, including these entities’ private
financial institution members. Each group met twice in fiscal 2019,
for a total of six meetings. Disputes and opinions raised in thesemeetings are reported to and deliberated by the Advisory Boardand the Special Investment Operations Monitoring Board.

Outside Experts
Hideharu Iwamoto

Vice Chairman & Senior Executive Director ofJapanese Bankers Association

Masayuki Oku

Honorary Advisor of
Sumitomo Mitsui Financial Group, Inc.

Katsunori Nakanishi

Chairman and CEO, The Shizuoka Bank, Ltd.

Takashi Yamanouchi

Advisor, Mazda Motor Corporation

Keisuke Yokoo

Director, IDI Infrastructures Inc.

Fumiaki Watari

Honorary Executive Consultant of
JXTG Holdings, Inc.

Corporate Governance

Audit & Supervisory Board Members,
Audit & Supervisory Board

64

Executive Committee
The Board of Directors has vested in the Executive Committee decision-making authority regarding the execution of business.
Accordingly, the Executive Committee makes important management decisions. The committee met 27 times during the fiscal year ended
March 31, 2019.

Committees under the Executive Committee
Name

Role

ALM & Risk Management Committee

This committee deliberates and makes decisions pertaining to portfolio risk management and asset–liability
management.

General Risk Management Committee

This committee deliberates and makes decisions on important items related to operational risk management,
system risk management, legal compliance, responses to antisocial forces, client protection management, andother important items.

Committee on Investment
and Loan Decisions

This committee handles, deliberates, and makes decisions related to investments and loans, overseas businessstrategy, and operations and management conditions.

New Operation Screening Committee

This committee deliberates and makes decisions on the commencement of initiatives involving new businesses.

Advisory Panel on Investments
and Loans

This panel handles the advance deliberation on and monitoring of investments and loans as well as deliberations
on overseas business strategy and operations and management conditions.

Sustainability Committee

This committee deliberates on items related to both economic and social value as well as dialogue withstakeholders.

DBJ established the Sustainability Committee, which has operated since fiscal 2017 onward, as part of efforts to contribute to asustainable society, in accordance with the DBJ Group’s Policy on
Sustainability (please refer to page 65). This committee
approaches important social issues from an ESG perspective andincorporates this attitude into business activities, including investments and loans as well as asset management.
The committee met three times during the fiscal year ended
March 31, 2019.

Matters Requiring Authorization of Competent Minister
The DBJ Act prescribes matters for which Minister of Financeauthorization is required. Major items requiring such authorization
are as follows:• Appointment and dismissal of representative members of theBoard of Directors and Audit & Supervisory Board members• Amendments to Articles of Incorporation• Disposition of surplus funds; Mergers, corporate splits, anddissolutions; Basic policy on business plans, redemption plans,
and fund procurement

Internal Control System Basic Policy

Internal Audits

DBJ has established the following internal controls to ensure
operational soundness, with the Board of Audit, Ministry of
Finance, Financial Services Agency, and other institutions also
conducting examinations of overall management.

DBJ has established the Internal Audit Department under the
direct supervision of the president of DBJ and independent ofother operating departments. The department conducts inspections to ensure the appropriateness and effectiveness of internal
controls, including overall operational compliance and risk management, and performs evaluations and recommends improvements. The Operations Audit Committee deliberates and decides
audit plans, audit reports, and other important matters related tointernal audits, and this information is reported to the Board of
Directors. As of June 27, 2019, 20 people belonged to the Internal
Audit Department.

Status of Internal Control System
In accordance with the Companies Act, the Board of Directors has
established an internal control system under the Internal Control
System Basic Policy. Specifically, this system is designed to determine the status of legal compliance, risk management, and internal
audits, as well as other items of importance to management. Theinternal control system is designed to confirm applicable regulations and the status of their implementation in various
departments.
The full text of the Internal Control System Basic Policy isavailable on the DBJ website (Japanese only).
https://www.dbj.jp/co/info/governance_policy.html

Accounting Audits
DBJ has in place an agreement whereby Deloitte Touche Tohmatsu
LLC conducts accounting audits as its accounting auditor.

65

DBJ’s Audit & Supervisory Board members, the Internal Audit
Department, and the accounting auditor periodically and as necessary exchange opinions and information, and communicate in aneffort to ensure effective and appropriate audits.

Compliance
DBJ recognizes compliance as one of its most important management issues. As basic policies to ensure that the execution ofduties by executives and regular employees complies with laws
and regulations and the Articles of Incorporation, we have formulated a corporate philosophy, a Basic Compliance Policy, and othercompliance-related regulations. In addition to its basic regulations
on compliance, DBJ has created and provided notice throughout
the organization of a Compliance Manual and a compliance program. We seek to thoroughly implement the compliance activities
outlined below.
Compliance Principles
DBJ has formulated the compliance principles indicated below aspart of its creation of compliance regulations.
1) DBJ’s executives and employees are keenly aware of DBJ’s
social mission and responsibilities as a public-sector bank andrecognize 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 conduct activities appropriately and incompliance with the law.

Client Protection Management Basic Policy /Declaration on Personal Information Protection /Policy for Managing Conflicts of Interest
The establishment and maintenance of systems for client protection management and the protection of personal information arevital because doing so protects the people who use the financial
institution’s systems and raises their level of convenience. DBJ
recognizes the extreme importance of such systems from thestandpoint of operational soundness and appropriateness. DBJ
has formulated a Client Protection Management Basic Policy toensure strict compliance with laws and regulations, protect theinterests of its clients, and raise the level of client convenience.
We have also created internal regulations based on this policy,
which we employ in briefings to raise in-house awareness.
We have incorporated a declaration on our policies into our
Declaration on Personal Information Protection.
DBJ is a registered financial institution under the Financial
Instruments and Exchange Act. In accordance with this act andthe Cabinet Office Ordinance on Financial Instruments Business,
etc., DBJ has drawn up a policy introduced for the managementof conflicts of interest and provides an overview of the publicly
announced policy.
The Client Protection Management Basic Policy, Declaration
on Personal Information Protection, and Policy for Managing
Conflicts of Interest can be found on the DBJ website(Japanese only).
https://www.dbj.jp/co/info/compliance.html

Policy on Sustainability2) DBJ’s executives and employees are well aware that DBJ must
conduct its businesses legally and appropriately and be responsible for explaining its actions to the general public.

The DBJ Group formulated the Policy on Sustainability in 2017 inorder to facilitate the creation of both economic value and social
value while engaging in dialogue with stakeholders and effecting
continuous improvement in the value creation process.

3) DBJ refuses all advances from antisocial forces and cooperates
with police and other related institutions to prevent any sort ofrelationship with such elements.

The full text of the Policy on Sustainability is available on the
DBJ website.
https://www.dbj.jp/en/co/csr/regular/index.html

Compliance System
DBJ has established the Legal Affairs & Compliance Department
to take overall responsibility for planning, preparing, and adjusting
compliance activities. In addition, DBJ has established the General
Risk Management Committee to reflect on legal compliance matters, determine the extent of compliance, and deliberate on
improvements to DBJ’s internal system. One specific initiative isthe establishment of a compliance hotline.
The objective of this internal reporting system is to swiftly identify
and resolve any legal violations. DBJ has also prepared Conflicts ofInterest Management Regulations as a basic policy in addition tosystems to manage conflicts of interest.

Responses to Japan’s Stewardship CodeIn August 2014, DBJ stated its acceptance of the Principles for
Responsible Institutional Investors (Japan’s Stewardship Code)(the “Code”). Under the Code, stewardship responsibilities refer tothe responsibilities to enhance the medium- to long-term investment returns for clients and beneficiaries by improving and fostering investee enterprises’ corporate value and sustainable growththrough constructive “purposeful dialogue” (engagement), basedon an in-depth understanding of the investee enterprises and theirbusiness environments.
DBJ recognizes that, in addition to operational selection andfocus and the realization of growth strategies, calls for corporate
governance are growing. Recognizing the importance of themeaning of equity, in our equity investments we support the longterm advancement of the investee enterprises that are our clients,

Corporate GovernanceThree-Pronged Auditing Approach

66

taking particular note of their social responsibilities. When making
investments, we endeavor to gain an in-depth understanding ofinvestee enterprises, their business environments, and their management teams’ intention and to share with investee enterprises in theirlong-term strategies. After investing, we leverage our networks andstrengths in information, industry research, and financing technologies to provide total financing solutions that address the issues
they face. Through dialogue with investee enterprises, we work torealize their long-term development and maximize their corporate
value over the long term.
DBJ believes that its investment operations have been conducted in close affinity with the spirit of the Code. In providing risk
capital and knowledge, we consider the appropriate fulfillment ofstewardship responsibilities by institutional investors to be of service from the perspective of working with diverse financial players
to ensure the smooth formulation of financial and capital markets.
Accordingly, we are in agreement with the meaning of the principles provided in the Code.
The full text, including the May 2017 revisions to the Code,is available on the DBJ website (Japanese only).
https://www.dbj.jp/co/info/stewardship.html

Executive Compensation
DBJ’s Compensation Committee is an advisory body to the Board of
Directors. It deliberates on the compensation structure for membersof the Board of Directors and evaluates the propriety of the compensation structure for the company. The majority of its members areoutside executives.
DBJ takes the following basic approach to executive
compensation.
• Compensation should reflect social trends in regard to
executive pay.
• Compensation should provide motivation for initiatives aimed atrealizing economic and social value during each fiscal year and in
the medium to long term.
In accordance with this approach, DBJ provides compensation
to its executives in four forms: basic compensation, allowances,
executive bonuses, and executive retirement benefits.
(1) Basic compensation is paid monthly in an amount based on theexecutive’s position.
(2) Allowances are paid monthly in an amount commensurate withthe executive’s position.
(3) Executive bonuses are distributed after taking into consideration
the performance of each member of the Board of Directors incarrying out their duties during the fiscal year. Bonuses comprisea standard amount based on the position of the member of theBoard of Directors plus an amount that reflects progress towardfiscal year targets set by DBJ.
(4) Executive retirement benefits are paid out upon retirement in an
amount reflecting successful service over the longer term.
Below is a description of the compensation structure formembers of the Board of Directors.
Compensation for full-time members of the Board of Directors
consists of basic compensation, allowances, executive bonuses,and executive retirement benefits. To maintain their independence,
part-time members of the Board of Directors receive basic compen-

sation alone.
Compensation for full-time Audit & Supervisory Board members
comprises basic compensation, allowances, and executive retirement benefits. Compensation for part-time Audit & Supervisory
Board members consists solely of basic compensation.
The amount of compensation paid to members of the Board of
Directors is determined after deliberation by the Board of Directors,
within the maximum amount approved at the General Meeting of
Shareholders following discussions by the Compensation
Committee. Compensation amounts are based on the position
and responsibilities of each member of the Board of Directors, withdue consideration given to social trends, DBJ’s financial performance, and other standards balanced against employee salaries.
The amount of compensation paid to Audit & Supervisory Board
members is also determined after deliberation by the Audit &Supervisory Board members within the scope of the maximum
amount approved at the General Meeting of Shareholders.
The Compensation Committee was established in 2008 to ensuretransparency and objectivity in the process for determining compensation, and a majority of members of the Compensation Committee
comprises outside executives. This composition allows independent
outside executives to be involved and give relevant advice.
Meetings of the Compensation Committee in fiscal 2018
Number of meetings
held in fiscal 2018
Compensation Committee

2

Members of the Compensation Committee
Chairman

Yasushi Kinoshita(head of the committee)

President

Hajime Watanabe

Outside member of the Board of Directors

Akio Mimura

Outside member of the Board of Directors

Kazuo Ueda

Outside Audit & Supervisory Board member

Toshio YamazakiCompensation paid to DBJ’s members of the Board of Directors andAudit & Supervisory Board members in fiscal 2018(¥ million)

Category

Number of people

Compensation, etc.
264
(of which, 24 tooutside members of theBoard of Directors)

Members of the Boardof Directors

12

Audit & Supervisory
Board members

6

78

Total

18

342

Notes:
1. Compensation amounts include executive bonuses paid to members of the Board of
Directors (¥25 million, including ¥— million for outside members of the Board of Directors).
2. Compensation amounts include provisions to reserves for executive retirement benefits
for members of the Board of Directors and Audit & Supervisory Board members, aswell as retirement benefits of the members of the Board of Directors (¥48 million formembers of the Board of Directors, including ¥— million for outside members of theBoard of Directors, and ¥4 million for Audit & Supervisory Board members).
3. Numbers of persons to be paid and compensation amounts include two members of
the Board of Directors and one Audit & Supervisory Board member who retired during
fiscal 2018.

67

Messages from Outside Members of the Board of Directors

Akio Mimura
Outside Member of the Board of Directors

April 1963:
Joined Fuji Iron & Steel Co., Ltd.
April 2000:	Representative Director andExecutive Vice President of
Nippon Steel Corporation
April 2003:	Representative Director and Presidentof Nippon Steel Corporation
April 2008:	Representative Director and Chairmanof Nippon Steel Corporation
October 2008:	Outside Member of the Board of
Directors at DBJ (current position)
October 2012:	Director, Member of the Board, andSenior Advisor of Nippon Steel &Sumitomo Metal Corporation
June 2013:	Senior Advisor of Nippon Steel &Sumitomo Metal Corporation
November 2013:	Chairman of the Tokyo Chamber ofCommerce & Industry (current position)
Chairman of the Japan Chamber ofCommerce & Industry (current position)
June 2018:	Honorary Chairman of Nippon Steel &Sumitomo Metal Corporation(now Nippon Steel Corporation)(current position)

I have served as an outside member of the Board of Director, since DBJ became a jointstock company in 2008.
I am currently a member of the Advisory Board, an independent body that facilitates corporate governance by incorporating the opinions of outside experts into the managementof DBJ. In accordance with the amendment of the DBJ Act in 2015, the Advisory Board ispositioned as an advisory body to the Board of Directors. The role of the Advisory Board is
not only to advise DBJ’s management on balancing economic and social value, but also todeliberate on the important matter of ensuring suitable competitive relations with private
financial institutions. The Board must also perform checks, from a third-party perspective,on the proper execution of legally mandated Special Investment Operations, Crisis
Response Operations, collaboration with private financial institutions, and sustainability
management by DBJ. I believe that the Board fulfills its responsibilities in this respect.
Dialogue and cooperation with stakeholders is essential for DBJ to be able to achieve
the targets in its Fourth Medium-Term Management Plan while helping solve the many
issues that arise in our rapidly changing society. I will continue to carry out my corporate
governance responsibilities by advising and facilitating such dialogue.

Strengthening Corporate Governance for the
Advancement of Sustainability Management
Kazuo Ueda
Outside Member of the Board of Directors

July 1980:	Assistant professor at the Universityof British Columbia, School of
Economics
April 1982:	Assistant professor at Osaka University,
School of Economics
April 1989:	Assistant professor at Tokyo University,
School of Economics
March 1993:	Professor at Tokyo University,
School of Economics
April 1998:	Member of the Bank of Japan’s Policy
Board
April 2005:	Professor at Tokyo University,
School of Economics
October 2008:	Outside Member of the Board of
Directors at DBJ (current position)
April 2017:	Professor, Faculty of Business Studies,
Kyoritsu Women’s University (current
position)
Director of Tokyo University’s Center for
Advanced Research in Finance(current position)

International interest in sustainability, as seen in measures such as ESG initiatives and theSustainable Development Goals, has grown rapidly since the adoption of the Paris
Agreement. DBJ’s solutions have been in step with the times and changing social issues.
These solutions have included developing evaluation-based lending programs and providing risk capital through joint investment with private companies and financial institutions.
I want to see DBJ expand yet further its initiatives to balance economic and social value
while keeping aware of the international mood.
DBJ’s medium- to-long term goals for facilitating social and economic development
and achieving a sustainable society require that it continues to implement these initiatives.
Proper governance is therefore essential. The DBJ Group’s Advisory and Monitoringboards support the attainment of these goals and underpin DBJ’s unique business model.
As a member of the Advisory Board—in addition to my duties as an outside member of theBoard of Directors—I work closely with outside experts to advise on overall management.
I will do my part in pursuing the sustainable social development and sustainability management that is the goal of all of us at DBJ.

Corporate Governance

Leveraging Corporate Governance to Help Solve
Social Issues

68Members of the Board of Directors, Audit & Supervisory Board
Members, and Executive Officers (as of the end of July 2019)

E

C

G

I

D

A

H

F

B

J

A

Yasushi Kinoshita

B

Hajime WatanabeC

Shin Kikuchi

D

Satoshi TomiiE

Kenkichi Fukuda

F

Makoto AnayamaG

Seiji Jige

H

Eiichiro Yamane

I

Akio MimuraJ

Kazuo Ueda

69

ChairmanMember of the Board of Directors, Managing Executive Officer

Yasushi Kinoshita

Makoto Anayama

1979: Joined the Ministry of Finance2013: Administrative vice minister
2015: Deputy President of DBJ
2018: Chairman of DBJ

In charge of Accounting Department, Credit Analysis Department,
Risk Management Department, Legal Affairs & Compliance Department,
Research Institute of Capital Formation

President and CEO

Hajime Watanabe
1981: Joined The Japan Development Bank
2008: General Manager, Head of Urban Development Department
2009: Executive Officer, Head of Corporate Planning & Coordination
Department
2011: Director and Managing Executive Officer of DBJ
2015: Deputy President of DBJ
2018: President and CEO of DBJ

Deputy President

Shin Kikuchi
1984: Joined The Japan Development Bank
2011: Executive Officer, Head of Growth & Cross Border
Investment Group
2011: Executive Officer, Head of Corporate Planning & Coordination
Department
2013: Managing Executive Officer of DBJ
2015: Director and Managing Executive Officer of DBJ
2018: Deputy President of DBJ

Member of the Board of Directors, Managing Executive Officer

Satoshi Tomii
In charge of Strategic Finance Department,
Growth & Cross Border Investment Department

1985: Joined The Japan Development Bank
2012: Executive Officer, Head of Growth & Cross Border
Investment Group
2014: Managing Executive Officer, Head of Growth & Cross Border
Investment Department
2015: Member of the Board of Directors, Managing Executive Officer
of DBJ

Member of the Board of Directors, Managing Executive Officer

1986: Joined The Japan Development Bank
2011: Head of Economic & Industrial Research Department
2013: Executive Officer, Head of Business Planning & Coordination
Department
2015: Managing Executive Officer of DBJ
2018: Member of the Board of Directors, Managing Executive Officer
of DBJ

Member of the Board of Directors, Managing Executive Officer

Seiji Jige
In charge of Business Planning & Coordination Department,International Strategy & Coordination Department,
Economic & Industrial Research Department

1986: Joined The Japan Development Bank
2012: Executive Officer in Charge of Special Missions
2013: Executive Officer, Head of Corporate Planning & Coordination
Department
2015: Managing Executive Officer of DBJ
2018: Member of the Board of Directors, Managing Executive Officer
of DBJ

Member of the Board of Directors, Managing Executive Officer

Eiichiro Yamane
In charge of Treasury Department, Syndication & Credit Trading
Department, Sustainability Planning & Support Department

1988: Joined Ministry of the Treasury
2017: Councillor, Secretariat of the Headquarters for Administrative
Reform, Cabinet Secretariat
2019: Member of the Board of Directors, Managing Executive Officer
of DBJ

Outside Member of the Board of Directors

Akio Mimura
Honorary Chairman of Nippon Steel & Sumitomo Metal Corporation;
Chairman of Tokyo Chamber of Commerce and Industry;
Chairman of Japan Chamber of Commerce and Industry

2008: Outside Member of the Board of Directors at DBJ

Kenkichi Fukuda
In charge of Corporate Planning & Coordination Department,
Information Resources Department, General Affairs Department

1983: Joined The Japan Development Bank
2009: General Manager, Head of Chugoku Branch
2012: Executive Officer, Head of Human Resources Management
Department
2014: Managing Executive Officer, Head of Kansai Branch
2016: Member of the Board of Directors, Managing Executive Officer
of DBJ

Outside Member of the Board of Directors

Kazuo Ueda
Professor and Head of Office for New Department Planning,
Kyoritsu Women’s University, Faculty of International Studies;
Director of Tokyo University’s Center for Advanced Research in Finance2008: Outside Member of the Board of Directors at DBJ

Notes: O f the 15 members of the Board of Directors and Audit & Supervisory Board members, 14 are male and one is female, leaving the female to male ratio at 6.7%.
Standards and policies related to independence in the selection of outside members of the Board of Directors and outside Audit & Supervisory Board members are not applicable.
Akio Mimura, Honorary Chairman of Nippon Steel Corporation, is an outside member of the Board of Directors of DBJ. DBJ has no special relationship with Mr. Mimura, and its
business with Nippon Steel Corporation is conducted normally.
DBJ has no special-interest relationship with any other of its outside members of the Board of Directors or outside Audit & Supervisory Board members.
DBJ has signed liability limitation agreements with its outside members of the Board of Directors and outside Audit & Supervisory Board members, based on Paragraph 1, Article
427, of the Companies Act.

Corporate GovernanceMembers of the Board of Directors

70

A

E

D

Audit & Supervisory Board Members

C

B

Executive Officers (excluding those who are concurrently members of the Board of Directors)

Audit & Supervisory Board Member

Managing Executive Officer

Managing Executive Officer

A Atsushi Kurashige

Takao Kaizu

Tsutomu Murakami

1986: Joined The Japan Development Bank
2010: General Manager, Credit Analysis Department
2011: General Manager, Secretariat Office
2013: General Manager, Head of Urban Development Department
2017: Audit & Supervisory Board Member at DBJ

In charge of Financial Institutions
Department, Corporate Finance
Department, Division 6

Managing Executive Officer

In charge of Structured Finance
Department, Urban Development
Department, Real Estate Finance
Department, Corporate Finance
Department, Division 3

Yoshinao Ikeda

Audit & Supervisory Board Member

In charge of Corporate Finance
Department, Division 1 and 2

Executive Officer

B Mitsue Kurihara

Keisuke Takegahara
Deputy Chief Research Officer,
Chief Manager of Sustainability
Management Office, Corporate
Planning & Coordination
Department

1987: Joined The Japan Development Bank
2011: S enior Vice President of Healthcare & Hospitality Industry Office,Corporate Finance Department, Division 4
2013: G eneral Manager, Head of Corporate Finance Department,
Division 6
2015: Audit & Supervisory Board Member at DBJ

Managing Executive Officer

Outside Audit & Supervisory Board Member

Managing Executive Officer(Head of Kansai Branch)

Head of Business Planning &Coordination Department

1982: Joined The Sumitomo Trust and Banking Co., Ltd.
2017: President of Sumitomo Mitsui Trust General Service Co., Ltd.
2018: Advisor of Sumitomo Mitsui Trust General Service Co., Ltd.
2018: Audit & Supervisory Board Member at DBJ

Hiroshi Shimizu

Executive Officer

Managing Executive Officer

Head of Corporate Planning &Coordination Department

Outside Audit & Supervisory Board Member

Yasushi Babasaki

D Makoto Ito

In charge of Corporate Finance
Department, Division 4

Executive Officer

C Toshio Yamasaki

Advisor at Nagashima Ohno & Tsunematsu; Visiting Professor,
Nihon University Law School

2008: Audit & Supervisory Board Member at DBJ
Outside Audit & Supervisory Board Member
E

Shinji Hatta

Norifumi Sugimoto
In charge of Regional Planning
Department, Tohoku Branch,
Hokuriku Branch, Kyushu Branch,
Minami-Kyushu Branch

In charge of Kansai Branch,
Chugoku Branch, Shikoku Branch

Executive Officer

Shigeru Tamagoshi

Toshiyasu Takazawa

Shoichiro Kubota

Managing Executive Officer

Head of Growth & Cross Border
Investment Department

Michihiro Kishimoto

Executive Officer

In charge of Corporate Finance
Department, Division 5

Professor, OHARA Graduate School of Accounting;
Professor Emeritus, Aoyama Gakuin University

Managing Executive Officer

2008: Audit & Supervisory Board Member at DBJ

In charge of Hokkaido Branch,
Niigata Branch, Tokai Branch

Ryusei Segawa

Kazufusa Matsushima
In charge of Internal Audit

Executive Officer

Katsushi Kitajo
Head of Human Resources
Management Department

71

Risk Management

DBJ conducts risk management from the perspective of ensuring
management soundness. To ensure appropriate management of
individual risk categories, DBJ has developed a vital risk management system that specifies and evaluates manageable risks andclarifies which department is responsible for each type of risk. The
Risk Management Department oversees comprehensive risk management activities.

The ALM & Risk Management Committee and the General Risk
Management Committee deliberate on important matters concerning risks and conduct regular monitoring, in line with the basic
policy related to comprehensive risk management approved by the
Board of Directors.

Asset–Liability and Risk Management System Overview

Credit Analysis
Department

President
Executive
Committee

Investment andLoan
Departments /Offices

Risk
Management
Department
ALM &Risk Management
Committee

Treasury
Department

Comprehensive Risk Management
The Risk Management Department assesses both comprehensive and individual risks. Based on risk guidelines that weigh
Executive Committee business plans and the results of stresstests, the Risk Management Department controls the amountof comprehensive risk and that of individual risk categories attheir respective levels. Furthermore, the Corporate Planning &Coordination Department has begun efforts to measure risk–
return by such means as risk-adjusted return on capital.

Credit Risk
Credit risk refers to the risk of sustaining losses resulting from adecline in or loss of the value of assets due to deterioration in thefinancial condition of the borrower. DBJ provides corporate loans
and non-recourse loans, making credit risk acquisition a source ofprofits. As such, it represents a significant risk category, with DBJ
conducting credit management of individual projects as well asbank-wide portfolio management, accordingly.

Credit Administration of Individual Loans
When making an investment or loan, DBJ examines the entity’s
project viability and the project’s profitability from a fair and impartial standpoint. DBJ is not subject to the Banking Act or the Act on
Emergency Measures for the Revitalization of the Financial
Functions (Act No. 132 of 1998), but carries out independent
asset assessments in line with internal policies for self-assessmentof credit quality based on the Financial Services Agency’s Financial
Inspection Manual. The results of self-assessments are subject toan audit by an auditing corporation and are reported to management. Credit risk and amounts are monitored to confirm that they
are within the limits established for individual borrowers.
The sales and credit analysis departments hold separate rolesin the screening and administering of credit for individual projects,
and each department keeps the operations of the other in check.
The Committee on Investment and Loan Decisions meets asneeded to deliberate important issues concerning the management and operation of individual projects.
These mutual checking functions serve to ensure the appropriateness of the finance operation and management system.

Risk Management

Risk Management System

72

Borrower Rating System
DBJ’s borrower rating system measures creditworthiness by combining an evaluation point rating and a borrower category rating,with the results quantifying a potential client’s credit
circumstances.
The evaluation point rating selects indicator and evaluation
categories that are common across all industries, scoring thecreditworthiness 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, generating a comprehensive assessment of a borrower’s
repayment capacity.

Asset Self-Assessment System
Asset self-assessments are used to define asset classifications
that will offset recoverability risk or the degree of risk of value loss
based on the borrower rating, the corresponding borrower category, and the collateral or guarantee status. Such assessments
help DBJ establish timely and appropriate amortization schedules
and reserve levels.

Borrower Rating Classifications
Borrower
category

Borrower
ratingDefinition

Claims classified under the
Financial Revitalization Act

Normalborrowers

1–8

Borrowers with favorable business conditions who have been confirmed to have no particular
problematic financial circumstances.

Borrowers
requiring
caution

9–11

Borrowers experiencing weak business conditions, are unstable, or have issues with theirfinances. These borrowers need to be managed with caution.

Substandard
borrowers

12

Either some or all of the debt of these borrowers requiring caution is under management.

Substandard claims

Borrowers indanger ofbankruptcy

13

Borrowers in this category are having financial difficulties but are not bankrupt.
Management improvement plans and the like are progressing poorly, and these borrowers arehighly likely to fall into bankruptcy.

Doubtful claims

Effectively
bankrupt
borrowers

14

Bankrupt
borrowers

15

Normal claims

Although not legally or formally in bankruptcy, these borrowers are experiencing severe financial
difficulties and are realistically falling into bankruptcy as their lack of potential for restructuring
Claims in bankruptcy,
has been confirmed.
reorganization claims,
These borrowers are in bankruptcy, legally and formally. Specifically, these borrowers are inand similar claims
bankruptcy or liquidation, under corporate reorganization, bankruptcy proceedings or civil
rehabilitation, or have had transactions suspended by a bill clearinghouse.

Portfolio Management

Investment Risk

DBJ performs a comprehensive analysis of data based on borrower ratings and calculates the loan portfolio’s overall exposure tocredit risk. Credit risk exposure can be classified as (1) expected
loss (EL), the average loss expected during a specific loan period;and (2) unexpected loss (UL), the maximum loss that could beincurred at a certain rate of probability minus the EL. The EL andUL calculations are reported to the ALM & Risk Management
Committee.
Through such monitoring and the consideration of countermeasures, DBJ is committed to controlling risk and devising effective
measures to improve risk–return.

Investment risk refers to the risk of sustaining losses resulting froma decline in or loss of the economic value of assets due to worsening financial conditions for entities receiving funds and to changing
market environments. DBJ’s investments include the provision of
mezzanine and equity financing, particularly to unlisted entities,
such as corporations, funds, infrastructure, and real estate. As asource of profits, investments represent one of DBJ’s most significant risk categories. DBJ makes investment decisions and manages individual investments as well as its bank-wide portfolio
accordingly.
In addition to investment analysis and management in line withcredit risk management, investment decisions based on target
returns in accordance with investment category and regular monitoring are utilized to manage individual investments. In terms of
portfolio management, we conduct risk measurement that applies
credit and market risk assessment methods, with a focus on
differences between investment categories and recovery methods.

73

Liquidity Risk

The primary focuses in terms of market risk management areinterest rate risk and exchange risk. DBJ classifies market risk as
passive risk pertaining to investment and loan activities and implements management in the manner detailed below. DBJ does nothave any trading-related risk because it does not engage in trading(specified transactions).

Liquidity risk is the risk of a mismatch occurring in the periods
when funds are used and raised or of an unexpected outflow offunds, causing differences in the flow of funds (cash liquidity risk).
Such situations make securing funds difficult and create situations
in which interest rates on borrowed funds are substantially higher
than usual rates. At other times, because of market complexities,
entities in these circumstances may become unable to participate
in market transactions, compelling them to conduct transactions
under substantially less favorable terms than otherwise would be
the case. The risk of losses for these reasons is known as market
liquidity risk.
As its main methods of acquiring funds, in addition to issuing
corporate bonds and taking out long-term loans, DBJ relies on thestable procurement of long-term funds from the Japanese government’s Fiscal Investment and Loan Program and governmentguaranteed bonds rather than on short-term funds such as
deposits. Contingency plans are established as appropriate tomeet unexpected short-term funding requirements and cash flow
shortfalls.
Additionally, DBJ maintains daytime liquidity by using the Bankof Japan’s real-time gross settlement system, whereby settlement
is made instantly for each transaction. Every effort is made toensure that settlement conditions are managed appropriately.
In addition to credit, investment, and market risk, the ALM &Risk Management Committee deliberates DBJ’s liquidity risk.

Interest Rate Risk
Interest rate fluctuations can create mismatches on rates of interest on assets and liabilities or on interest periods, creating the riskof reduced profits or the risk of losses. Interest rate risk can reduce
the economic value of DBJ’s assets or interest income.
Based on monitoring through multifaceted indices, such as
value at risk (VaR) and interest rate sensitivity analyses (duration
and basis point value), as well as ALM policies established by the
Executive Committee, DBJ conducts comprehensive managementof current assets and liabilities to optimize net interest expenses
and economic value by adequately controlling interest rate risk andfinancial liquidity risk. In regard to controlling interest risk, a portionof the interest rate risk is covered through interest rate swaps.

Exchange Risk
Exchange risk is the risk of loss due to volatility in exchange rates,
and this risk affects entities holding a net excess of assets or
liabilities denominated in foreign currencies. DBJ’s exchange risk
derives from financing in foreign currencies and issuing foreign
currency bonds. However, DBJ uses exchange swaps and other
instruments to limit this risk in terms of assets and liabilities
denominated in foreign currencies at a net-base position.
DBJ uses swap transactions to manage counterparty risk bycontinuously monitoring the creditworthiness of all parties and by
setting a limit to financing for each counterparty. DBJ also conducts risk management through margin transfers by means of acentralized exchange and mutual credit support annex.

Risk Management

Market Risk

74

Operational Risk
DBJ defines operational risk as the risk of loss arising from internal
processes, people or systems that are inappropriate or nonfunctioning, or from external events. DBJ works to establish a risk
management system to minimize risk and prevent potential risks
from materializing. The General Risk Management Committee has
been established to deliberate topics concerning operational risk
management.
Within operational risk management, DBJ conducts administrativerisk management and system risk management as described below.

Administrative Risk Management
Administrative 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 administrativerisk, DBJ prepares manuals, performs checks on administrative
procedures, provides education and training, and uses systems to
reduce the burden of administrative duties.

System Risk Management
System risk refers to the risk of loss due to a computer system
breakdown or malfunction, system defects, or improper computeruse. DBJ has implemented the following internal processes tooptimize system risk management and properly manage risk withregard to system risk. The System Risk Management Division 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 bank-wide and addresses
appropriate system risk management operations.

Business Continuity Initiatives
DBJ has prepared a business continuity plan (BCP) to protect theinterests of its stakeholders, including its clients, its shareholder,
and its executives and employees, as well as to fulfill its social
mission. The BCP aims to ensure the continuity and rapid recoveryof core operations in the event of emergencies, such as natural
disasters (in particular, large-scale earthquakes), influenza andother pandemics, system failures, and power outages.
The BCP describes in an easy-to-understand format the roleof the Disaster Response Committee, work priorities, and specificactions and procedures to be taken in the event of a disaster.
When drawing up policies for business continuity and restoration,
the Company envisions specific incidents, such as an earthquake
underneath the Tokyo metropolis, and methodically decides how
to respond to anticipated damage in each disaster scenario.

Measures to Ensure Business Continuity
We have prepared a variety of measures to ensure business
continuity.

Enhanced System Robustness
We have ensured advanced security levels at the main centerand created a backup center to operate in the event that the main
center ceases to operate.

Multilayered Communication Procedures
We have introduced a safety confirmation system to quickly determine the whereabouts and status of executives and employees
even at night and on holidays. In addition, we have distributed
satellite telephones to key locations and personnel to ensure­multilayered communication procedures.

Chain of Command and Delegation of Authority
To assure that decision-making concerning the continuity of core
operations is prompt and certain, in the event it becomes necessary to execute the plans of the Disaster Response Committee, wehave put in place a chain of command and an alternative hierarchy
by which authority can be delegated.

Clarification of Initial Response and Procedures forContinuing or Recovering Core Operations
For individual business units, we have established in advance theprocedures for the initial response and the continuation or recoveryof core operations so that relevant divisions can respond quickly
and with certainty on core operations even when in a state of
confusion.

Initiatives to Maintain or Improve BCP Viability
DBJ conducts various types of instruction and training of executives and regular employees to maintain or improve the viability of
its BCP. Furthermore, employing a plan-do-check-act cycle, werevise the BCP to reflect training results and recent information,and the Executive Committee reviews it regularly and amends it
as necessary.

75

Since the adoption of the Paris Agreement in 2015, addressing
climate change has been a key priority for Japan and other countries around the world.
To a large extent, DBJ has done this through dialogue withcustomers made possible by the Environmentally Rated Loan
Program (see page 59) and DBJ Green Building Certification (seepage 26). In June 2018, we announced our agreement with theunderlying principles of the Task Force on Climate-related Financial
Disclosures (TCFD) created by the Financial Stability Board (FSB).
DBJ identifies the unique risks and opportunities presented byclimate change and discloses relevant information after proper
examination.
DBJ is also a participant in the TCFD Consortium, which wasestablished in May 2019 as a forum for discussion among thecompanies and financial institutions that agree with the TCFD
declaration. Through this consortium, DBJ joins other participatingcompanies in proactively discussing how to use and assess information disclosed under TCFD guidelines.

Corporate Governance
DBJ has based its business activities on the Policy on
Sustainability, which it drew up in May 2017 with the aim of contributing to a sustainable society.
At meetings of the Sustainability Committee (see page 64),
which reports to the Executive Committee, members of the Boardof Directors lead discussions on climate change and otherimportant social issues, their risks and opportunities, and DBJ’s
initiatives in this context. The outcomes of these discussions arereflected in business strategies and decision-making for investments and loans. In fiscal 2018, the Sustainability Committee
discussed future goals and the fine-tuning of initiatives taken todate for the disclosure of information based on TCFD guidelines, aswell as trends in energy around the world and the policies of DBJ.

Discussions at the Sustainability Committee

Strategy
When formulating Vision 2030 (see page 2), DBJ identified climatechange, natural resources, and energy as changes in the external
environment that can significantly impact the stakeholders of the
DBJ Group. DBJ is responding to climate change by providing
customers with solutions in the three critical fields of infrastructure,industry, and regional development.
DBJ holds seminars featuring outside experts in scenario analysis in order to gather information and build networks in the field.
With the aim of serving as a leading example for domestic financial
institutions, we plan to move ahead with the scenario analysis ofclimate risks and opportunities with the support programs of the
Ministry of the Environment.

Risk Management
DBJ identifies, evaluates, monitors, and controls various risks
associated with climate change.
In April 2019, in recognition of the need to consciously evaluate
and monitor environmental and social risks related to specificprojects targeted for financing, DBJ created the Environmental &Social Assessment Office within the Structured Finance
Department.
DBJ’s Environmentally Rated Loan Program and DBJ Green
Building Certification provide important ways of engaging customers in discussions on how to build sustainable businesses that
contribute to a sustainable society.

Measurement Standards and Targets
DBJ gauges the progress of its environmental initiatives related to
Scope 1 (direct) and Scope 2 (indirect), which concern the amountof greenhouse gas (GHG) emissions associated with corporate
activities. Specific targets are set for DBJ and for each department
in regard to the environmental aspects of investment and loan
operations and environmental protection initiatives such as educational programs that encourage dialogue on relevant issues. These
are all ways in which DBJ works systematically and consistently tohelp preserve the environment.

Risk Management

Climate Change Initiatives

76Timeline

The Japan Development Bank, the Hokkaido-Tohoku Development Finance Public Corporation,and the Development Bank of Japan
Year

Month

Event

1951

April

The Japan Development Bank (JDB) establishedJDB branches opened in Osaka (now the Kansai Branch), Sapporo (now the Hokkaido Branch),
Nagoya (now the Tokai Branch), and Fukuoka (now the Kyushu Branch)

1952
1956

June

The Hokkaido Development Finance Public Corporation established

1957

April

The Hokkaido Development Finance Public Corporation, reorganized as the Hokkaido-Tohoku Development
Finance Public Corporation (HTDFP) branches, opened in Sapporo (now the Hokkaido Branch) andSendai (now the Tohoku Branch)
JDB branch opened in Takamatsu (now the Shikoku Branch)

1960

JDB branches opened in Hiroshima (now the Chugoku Branch) and Kanazawa (now the Hokuriku Branch)

1961
1962

April

JDB representative office opened in New YorkJDB representative offices opened in Kagoshima (renamed Minami-Kyushu Branch in October 1999) and Matsue

1963
1964

July

1972

January

1985

June

1987

September

JDB representative office opened in London
HTDFP representative office opened in Niigata (renamed Niigata Branch in July 1989)
The Japan Development Bank Law revised1)	Investment function (pertaining to business in such areas as research and development,
urban development, and energy use stipulated by government ordinance) added
2) R&D fund investment function added
Low interest rate loan system funded partially by sale of NTT shares created by JDB and HTDFP
JDB representative offices opened in Oita, Matsuyama, Okayama, and Toyama
HTDFP representative offices opened in Hakodate and Aomori

1989

JDB loans to assist disaster recovery commenced

1995

February

1997

SeptemberBill entitled “Pertaining to Consolidation and Rationalization of Special-Purpose Companies, etc.” approvedby the Cabinet (decision dissolving JDB and HTDFP and consolidating them as a new bank approved)

1998

December

JDB and HTDFP loans in response to changes in the financial environment commenced(March 31, 2001, sunset clause introduced)

1999

June
October

The Development Bank of Japan Law (Law No. 73 of 1999) approved
All rights and responsibilities of JDB and HTDFP and all financing operations of Japan Regional Development Corporation andJapan Environment Corporation transferred to the Development Bank of Japan
DBJ representative offices opened in Kushiro and Singapore
The Development Bank of Japan Law revised (additional spot inspections by the Financial Services Agency introduced)

2002

May

2005

December

2006

May

The Act on Promotion of Administrative Reform for Realization of Small and Efficient Government(Act No. 47 of 2006) approved

June

Policy-Based Financing Reform Plan decided upon by DBJ head office for the Implementation of Policy Finance Reform

2007

June

The Development Bank of Japan Inc. Act (Act No. 85 of 2007) approved

Important Policy of Administrative Reform approved by the Cabinet

Development Bank of Japan Inc.
Year

Month

2008

October

Event

Development Bank of Japan Inc. (DBJ) established (Capital: ¥1 trillion)
Crisis Response Operations begun by DBJ as a designated financial institution

December
2009

June

Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 67 of 2009) approved

September

Capital increased to ¥1,103,232 million

November

DBJ Europe Limited launched

2010

March

2011

May

2012

DBJ Singapore Limited launched

Capital increased to ¥1,181,194 million
The Development Bank of Japan Inc. Act partially amended based on establishment of the Act for Extraordinary Expenditure
and Assistance to Cope with the Great East Japan Earthquake (Act No. 40 of 2011)

December

Capital increased to ¥1,187,364 million

March

Capital increased to ¥1,187,788 million

June

Capital increased to ¥1,198,316 million

December

Capital increased to ¥1,206,953 million

2014

June

DBJ Investment Consulting (Beijing) Co., Ltd. (formerly Japan Asia Investment Consulting (Beijing) Co., Ltd.) converted to wholly
owned subsidiary

2015

May

Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 23 of 2015) approved
Special Investment Operations started
Advisory Board positioned as an advisory body to the Board of Directors
Special Investment Operations Monitoring Board established

AugustCapital reduced by ¥206,529 million, and crisis response reserve increased by the same amount2018

October

DBJ Americas Inc. launched

77

Shareholder Information

Address

Number of shares held (thousands of shares)

Percentage of total equity (%)

Finance Minister

1-1, Kasumigaseki 3-chome, Chiyoda-ku, Tokyo

43,632100.00Total—

43,632100.00

Summary of Changes to the DBJ Act after Conversion toa Joint-Stock Company
On October 1, 2008, DBJ transitioned from a special public corporation to a joint-stock company. In preparation for full-scale privatization following the disposal of all Japanese government-owned
shares, DBJ has continued working to enhance its corporate value
through integrated investment and loan services. These activities
include providing long-term loans; equity, mezzanine financing,and other types of risk capital; and M&A advisory services.
On the other hand, shortly after DBJ’s conversion to a jointstock company, the global financial crisis and the Great East
Japan Earthquake occurred. The Japanese government calledon DBJ to steadily mount large-scale Crisis Response Operations.
Due to these crises, the Development Bank of Japan Inc. Act(Act No. 85 of 2007: “DBJ Act”) was amended twice, with DBJ
accepting an additional increase in Japanese government capital.
Also, by the end of fiscal 2014, the Japanese government was toreview DBJ’s organization, including its shareholdings, as stipulated by the revision.
Based on the deliberations by the Japanese government’s
Study Panel Concerning the Promotion of Expanding GrowthFunding, the Act for Partial Amendment of the Development Bankof Japan Inc. Act, which was enacted on May 20, 2015, maintains
the direction toward full-scale privatization. At the same time, inorder to fully ensure the provision of funding in response tolarge-scale disasters and economic crises, the amended act
makes DBJ’s Crisis Response Operations obligatory for an indefinite period. From the perspective of promoting the provision of
growth capital to revitalize regional economies and increase thecompetitiveness of enterprises, the amended act calls for DBJ toaccept a certain amount of capital from the Japanese government(industrial investment). This investment is to be used for a newscheme, Special Investment Operations, to strengthen anddevelop the Fund for Japanese Industrial Competitiveness. In
addition, with regard to the application of DBJ’s investment andloan functions toward crisis response and the provision of growth
capital, measures were introduced obliging the Japanese government to hold at least a certain percentage of DBJ’s shares.
As part of this structural revision, deliberations by the Japanese
government’s Study Panel Concerning the Promotion of
Expanding Growth Funding covered such topics as DBJ’s proper
implementation of Crisis Response Operations, the importance ofinitiatives for providing growth capital (equity and mezzanine
financing) to address shortages in Japanese financial and capital
markets, and an evaluation of DBJ’s initiatives following its conversion to a joint-stock company.
Note: For the full text of the DBJ Act, please refer to the Data section.

Highlights of 2015 Revisions to the DBJ Act
1. Measures maintaining direction toward full-scale privatization
BeforerevisionFull-scale privatization and disposal of all Japanese
government-held shares, targeting around five toseven years from April 1, 2015•	No changes in the main provisions, including Article 1, which stipulates DBJ’s objectives

After•	Disposal of shares as soon as practicable (considering its effect on achieving DBJ’s
revision objectives as well as on the market situation)

2. Measures ensuring appropriate implementation of Crisis Response Operations

Beforerevision•	Conducting Crisis Response Operations as adesignated financial institution•	Enabling Japanese government recapitalization incrisis response by March 31, 2015

•	Assuming responsibility for Crisis Response Operations for an indefinite period (at thesame time reflecting this obligation in the Articles of Incorporation)

After•	Extending for an indefinite period the scope of the Japanese government’s recapitalization
revision securing DBJ’s financial structure, with the Japanese government having such obligations
as holding more than one-third of DBJ’s shares

3. Measures establishing new Special Investment Operations scheme to temporarily provide growth capital in a concentrated manner

Beforerevision

Provision of risk capital through the Fund for JapaneseIndustrial Competitiveness•	Reinforcement of the Fund for Japanese Industrial Competitiveness (a portion of thefinancial resources for which are provided through measures for industrial investment);
implementation of Special Investment Operations as a measure for a limited period of time,Afterthrough fiscal 2025 (at the same time reflecting this obligation in the Articles ofrevision Incorporation, complementing and encouraging private-sector enterprises, etc.)•	Obligation that the Japanese government shall hold one-half or more of shares until theconclusion of Special Investment Operations

4. Provisions referencing consideration for private financial institutions through ongoing Japanese government involvement

As per the Third Medium-Term Management Plan,
Before sustainment of close communications, maintaining arevision focus on operations in collaboration with otherfinancial institutions•	The Corporation shall, for an indefinite period, pay special attention in conducting its
business so that it will not affect its appropriate competitive relationships with otherbusiness entities
After•	The Japanese government shall hear the opinions of representatives of ordinary financial
revision institutions and other relevant persons concerning Japanese government revisions on an
as-needed basis regarding Crisis Response Operations and Special Investment
Operations

Corporate Data

As of March 31, 2019
Name

78

Organizational Structure (as of August 1, 2019)

Business Planning & Coordination Department

General Meeting of
Shareholders

Innovation Promotion OfficeFinancial Institutions Department
Urban Development Department
Audit & Supervisory
Board Members /Audit & Supervisory
Board

International Strategy & Coordination Department
Corporate Finance Department,
Division 1

Audit & Supervisory
Board Office

Corporate Finance Department,
Division 2

Aerospace Office

Corporate Finance Department,
Division 3

Global Logistics Office

Corporate Finance Department,
Division 4
Corporate Finance Department,
Division 5
Board of Directors

Corporate Finance Department,
Division 6

Executive Committee

Healthcare Industry Office

Hokkaido Branch
Tohoku Branch
Advisory Board

Tohoku Recovery & Growth Support OfficeNiigata Branch
Hokuriku Branch
Tokai BranchSpecial Investment
Operations
Monitoring Board

Kansai Branch
Chugoku Branch
Shikoku Branch
Kyushu Branch

Kumamoto Recovery Office

Minami-Kyushu Branch
Real Estate Finance Department
Chief
Investment
Officer

Strategic Finance Department

Regional Investment Promotion Office

Growth & Cross Border Investment Department
Structured Finance Department

Environmental & Social Assessment OfficeSyndication & Credit Trading Department
Business Development Department
Chief
Research
Officer

Sustainability Planning & Support Department
Economic & Industrial Research Department
Regional Planning Department
Research Institute of Capital Formation

Economic Research Office
Industrial Research & Customer Solutions
Planning Office
Corporate Management & Accounting
Research OfficeSecretariat Office
Human Resources Management Department
Corporate Planning & Coordination Department

Representative Offices:
Hakodate, Kushiro, Aomori,Toyama, Matsue, Okayama,
Matsuyama, Oita

Risk Management Department

Overseas Subsidiaries:
DBJ Singapore Limited
DBJ Europe Limited
DBJ Investment Consulting (Beijing) Co., Ltd.
DBJ Americas Inc.

Accounting Department

Operations Audit
Committee

Public Relations OfficeSustainability Management OfficeInformation Resources Department
General Affairs Department

Credit Analysis Department
Legal Affairs & Compliance Department
Treasury Department
Internal Audit Department

Settlement & Accounting Operations Office

79

Corporate Information

Development Bank of Japan Inc.

Established

October 1, 2008

Head office

Otemachi Financial City South Tower, 9-6, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8178, Japan
Tel: +81-3-3270-3211

Capital¥1,000,424 million (All capital is funded by the government of Japan)

Number of employees

1,650 (non-consolidated 1,186)(As of March 31, 2019)

Group Companies
The DBJ Group provides diverse services that satisfy the needs of its customers.

Overseas
locations

Investments
and loans,Assetmanagement

Research,
Consulting

Real estate
management /IT services

DBJ Singapore Limited

DBJ Investment Consulting (Beijing) Co., Ltd.

DBJ Singapore Limited is a Singapore-based subsidiary established in December 2008. It mainly provides support for investments and loans as well as advisory services in the Asia-Pacificregion, and also collects and disseminates information locally.

DBJ Investment Consulting (Beijing) Co., Ltd. became a wholly
owned subsidiary in June 2014 and is based in Beijing andShanghai. It mainly offers support for investment and loan services
in China, and also collects and disseminates information locally.

DBJ Europe Limited

DBJ Americas Inc.

DBJ Europe Limited is a London-based subsidiary established in
November 2009. It mainly provides support for investment andloan services in Europe, and also collects and disseminates
information locally.

Launched in October 2018, DBJ Americas Inc. is a local subsidiary based in New York, U.S.A. It mainly provides support forinvestment and loan services in the Americas, and also collects
and disseminates information locally.

DBJ Capital Co., Ltd.
DBJ Capital Co., Ltd. is theventure capital arm of the DBJ
Group. It mainly makes earlystage equity investments in venture firms, and supports their
growth through hands-on management.

DBJ Investment Advisory Co., Ltd.
DBJ Investment Advisory Co., Ltd. provides advice related to
DBJ’s VG (Value for Growth) Investment Program*.
* Value-added equity investment that supports growth strategies

DBJ Securities Co., Ltd.

DBJ Asset Management Co., Ltd.

DBJ Securities Co., Ltd. is asecurities subsidiary that assists
the DBJ Group with investment
and loan services. It supports optimal capital procurement, centered on alternative product fields, provides asset management
opportunities, and flexibly fulfills diverse needs.

DBJ Asset Management Co., Ltd.
is an asset management company
focused on real estate, private
equity, and infrastructure investments. It provides quality investment
opportunities to investors with the comprehensive financial backingof the DBJ Group.

Japan Economic Research Institute, Inc.

Value Management Institute, Inc.

Japan Economic ResearchInstitute, Inc. is a comprehensive
think tank that primarily conducts
surveys and consulting. It meets customer needs from a comprehensive viewpoint, leveraging synergies in its three survey fields:
public, solutions, and international.

Value Management Institute, Inc.
is a comprehensive think tankwith strengths derived from its
insight into advanced technologies and analysis using proprietary
economic models. It provides tailor-made solutions to a broad
range of government policy issues.

DBJ Real Estate Co., Ltd.

Consist, Inc.

DBJ Real Estate Co., Ltd. handles administrative functions forthe DBJ Group for office building
leasing, rental conference rooms, and business libraries.

Consist, Inc. provides one-stop
consulting services for developing, maintaining, and operating
IT, using technology to help solve social issues.

Corporate Data

Name

https://www.dbj.jp/en

In consideration of the environment, this report is printed on
FSC-certified paper using non-VOC ink.

Printed in Japan