THE INDUSTRIAL BANK OF JAPAN, LIMITED

Annual Report 2000
Year ended March 31, 2000

The Industrial Bank of Japan, Limited

The Industrial Bank of Japan, Limited

ANNUAL REPORT 2000

Printed in Japan

Profile
The Industrial Bank of Japan, Limited (“IBJ”) was founded in1902 as a public sector bank and became a private sector longterm credit bank under the Long-Term Credit Bank Law in1952. IBJ pursues the development of its industrial financeactivities by integrating the functions of commercial andinvestment banking, and offers its customers a diverse range ofhigh value-added financial services through its global networkthat meet their needs promptly and appropriately. IBJ
contributes to develop the nation’s economy and industry as aJapan’s leading bank with unique independence from any
keiretsu grouping. IBJ shall be consolidated with The Dai-Ichi
Kangyo Bank, Limited, and The Fuji Bank, Limited to form theMizuho Financial Group (“MHFG”) on September 29, 2000.
MHFG will be the world’s largest bank in terms of assets andwill endeavor to become the world’s premier financial
institution in terms of the quality of services offered.

Contents
1

Financial Highlights

2

To Our Shareholders and Customers

6

Foundation of the Mizuho Financial Group ("MHFG") throughthe Consolidation of DKB, Fuji Bank, and IBJ

25

Review of Operations

59

Corporate Information

71

Financial Section

125

Investor Information on The Industrial Bank of Japan, Limited

126

Investor Information on Mizuho Holdings, Inc.

Financial Highlights
The Industrial Bank of Japan, Limited and Consolidated Subsidiaries
Fiscal years ended March 31, 2000 and 1999
For the Fiscal Year
Total Income
Total Expense
Income (Loss) before Income Taxes and Others
Net Income (Loss)
Cash Dividends*

At March 31
Total Assets
Securities
Loans and Bills Discounted
Debentures
Deposits
Total Shareholders’ Equity(in millions of yen)(in thousands of
U.S.dollars)

1999

1998

1999

¥ 2,999,663
2,832,600
167,063
70,75420,088¥ 3,386,760
3,642,993(256,232)(181,276)
19,681$ 28,258,726
26,684,883
1,573,843
666,549
189,246(in millions of yen)(in thousands of
U.S.dollars)

2000

1999

2000

¥42,466,450
7,580,782
22,779,689
20,471,200
6,636,501
1,627,417¥46,166,409
8,942,151
23,327,907
20,461,865
8,116,321
1,561,350$400,060,770
71,415,760
214,599,053
192,851,630
62,520,032
15,331,296(in yen)(in U.S.dollars)

1998

1999

1999

For the Fiscal YearPer Share
Net Income (Loss)
Cash Dividends*
Common Stock
Preferred Stock
Preferre Stock First Series Class w
Preferre Stock Second Series Class w¥

Total Shareholders’ Equity

At March 31
Capital Adequacy
Risk-Based Capital Ratio (BIS Capital Ratio)

25.59
7.00
498,605
7.00
175,000
17.50
5.38
1,627,417
483.94¥(70.64)$

498,605
7.00
175,000
0.05
0.02
1,561,350
458.91

2000

1999

12.19%

11.34%

0.241
0.066
0.066
4,697,176
1,648,610
0.165
0.051
4.559
15,331,296

(%)

2,000

50

16

0

11.34

9.04

10.26

12

8.59

1,320

0

1,325

12

1,500

BIS Capital Ratio

12.19

(¥)

25.59

Net Income (Loss) per Share(¥ billion)

1,543

50

Total Shareholders’ Equity

5.24(¥ billion)

1,627

Net Income (Loss)

1,561

70

Note: U.S.dollar amounts are converted for convenience only, at the rate of ¥106.15 to US$1.00, the rate of exchange on March 31, 2000.
*Cash Dividends are declared on both common stock and preferred stock together with interim cash dividends paid.

8(27.02)

1,000

(50)

(50)
4

(250)

0

(70.64)(79.80)

(202)

(200)

(181)

(63)

500

0

(100)

1995 1996 1997 1998 1999

1996 1997 1998 1999 2000

(Fiscal)(March 31)

1995 1996 1997 1998 1999
(Fiscal)1996 1997 1998 1999 2000
(March 31)

1

To Our Shareholders and Customers

Masao Nishimura
President and Chief Executive Officer

The financial year under review, ended March 31, 2000,
was a year of great significance for IBJ in a fast-changing
world.
Last August, IBJ announced an epoch-making
consolidation with The Dai-Ichi Kangyo Bank, Limited and
The Fuji Bank, Limited. Significant progress has been
made in preparation for this consolidation to found theMizuho Financial Group (“MHFG”). In particular, theShareholders’ Meetings held in June 2000 approved theincorporation of the group holding company, Mizuho
Holdings, Inc. (“MHHD”) through the stock-for-stock
exchange method. In Phase 1, the period after theestablishment of MHHD, the business of the three banks
will be conducted on an integrated basis through2

business unit structures. In Phase 2, from Spring 2002,

On a fully diluted basis, Net Income per Share of

the business unit operations of the three banks will be

Common Stock was ¥23.15. The Return on Equity, ROE,

reorganized according to business lines and customer

rose from a negative 14.3% for the prior year to asegments subject to the expected legislative and tax code

positive 5.4% for the year under review. The Risk-Basedchanges for corporate split in Japan, and will be

Capital Ratio (BIS Capital Ratio) rose from 11.34% as ofconsolidated into legally separate subsidiaries under

March 31, 1999 to 12.19% as of March 31, 2000.

MHHD.

Each of the Bank’s business units, set up in June 1999,
made significant progress. The Corporate Banking Unit

Operating Environment

enhanced its RAROA. The Treasury Unit achieved new

We saw many indications of the likely future global

business by providing non-interest-related derivatives tofinancial services industry landscape during the year

customers. Investment Banking Unit achieved strong

under review.

earnings growth. The Securities & Asset Management

In the U.S., the Glass-Steagall Act was amended toremove certain regulatory boundaries between banking,

Unit also enjoyed growth in gains from securities andcustodian services.

securities, and insurance services. This move wasdesigned to permit the future reinforcement of theStrategic Progressinternational competitiveness of the U.S. financial

At the start of the year under review, IBJ’s Fourthindustry. With the advent of the euro and a single market

Medium-Term Management Plan was launched, a fourin financial services, the European financial institutions

year initiative in accordance with the Restructuring Plan,

continue to face major consolidation challenges. It is asubmitted to the Government when the Bank received

global landscape of heightened integration andpublic funds along with the other major Japanese banks.

competitiveness. Japan is no exception.

The three priorities under the Fourth Medium-Term
Management Plan are to enhance profitability and

Performance Overview

financial strength, clarify management strategy, and shift

Despite this increasingly competitive operating

to a new management framework.

environment, the performance of the bank was generally

The balance sheet position as of March 31, 2000 was

sound in the year under review. Total Income decreased

greatly improved by writing-off non-performing loansby ¥387.0 billion to ¥2,999.6 billion but Total Expense

and reserving for problem loans.

decreased by ¥810.3 billion to ¥2,832.6 billion. Income

Consolidated Expenses Relating to Portfolio Problems

before Income Taxes and Others was ¥167.0 billion

totaled ¥227.3 billion (¥271.9 billion, excluding the net

against the prior Loss before Income Taxes and Others ofreversal of the Provision of General Reserve for Possible¥256.2 billion. As a results Net Income was ¥70.7 billion

Loan Losses). The Bank also shed low quality assets andagainst the prior Net Loss of ¥181.2 billion.

reduced the capital locked up in its large portfolio of

Net Income per Share of Common Stock was ¥25.59,

equities.

as compared to the prior year Net Loss per Share ofCommon Stock of ¥70.64.

3The Bank reformed its system of corporateof the business operations on an independent basis.

governance by the introduction of executive directors

Significant progress in strategic alliances was madesystem separating the process of policy formulation

during the year. The Bank entered into three joint

from its business implementation. The Board ofventures with The Nomura Securities Co., Ltd., in the

Directors has been redefined as the body responsible forpromising area of derivatives and asset management. In

policy formulation and the oversight of its

regard to the comprehensive strategic alliance with The

implementation. The Executive Committee was

Dai-ichi Mutual Life Insurance Company, two joint

established which is clearly responsible for theventures have been formed: IBJ-DL Financial Technology

implementations of Board policy under its oversight.

Co., Ltd. and DLIBJ Asset Management Co., Ltd.

A new functional management system by businessWith regard to the Y2K Problem, no serious

units has been set up that identifies four sectors as core

information technology failure occurred over the year

business units: the Corporate Banking Unit, the2000 event. Nevertheless, the system of IT risk

Investment Banking Unit, the Treasury Unit, and the

management planning remains in place and the Bank will

Securities & Asset Management Unit. The business units

remain vigilant for IT related problems over the remainder

are headed by unit heads, each of managing directorof the year 2000.

level, and full advantage has been taken of the budget
independence of each unit to achieve clear profit and loss

Tackling New Challenges

accountability for the capital allocated to each unit from

Earlier, I mentioned that the business units are managed

April 2000.

with clearly defined profit and loss accountability. From

Also during the year under review, corporate

April 2000, capital has been allocated to each businessgovernance was further strengthened by appointing

unit, and the business unit performance and control ofprominent opinion leaders to a new Advisory Board andrisk is being evaluated by using the Risk Adjusted Returnby establishing the Corporate Auditors Office toon Capital, RAROC, as the yardstick. Using this yardstick,strengthen the internal audit function.

IBJ is optimizing its business portfolio by the mostThe risk management capability and consolidated risk

efficient allocation of management resources. This

management system were enhanced by reorganizing

process of profit and loss accountability by business unit

the Market Risk Management Department into the Risk

and detailed monitoring by using RAROC is to be

Management Department which oversees market andadopted by MHFG as it strives for business supremacy

credit risks more comprehensively. Another important

through offering an extraordinarily diverse range of top

move was to raise the compliance function toquality financial services.

departmental status and have the new ComplianceTo permit MHFG to become an innovative financial

Department report directly to the Executive Committee.

group that will lead the new era through cutting-edge

The Legal, Credit Examination, Auditing andcomprehensive financial services, the following

Compliance Departments have been integrated as the

management goals have been established:internal auditing group to provide day-to-day oversight4•One of the top five global banks and the leading
financial institution in Japan.
•A top financial group in terms of customer
satisfaction.
•A front-runner in IT (information technology)
and FT (financial technology).
•No.1 in domestic commercial banking.
•A market leader in securities business andinvestment banking.
•A top-class in trust, asset management, andsettlement businesses.
•A management structure with “best practices”.
MHFG will provide comprehensive financial services
supported by its core competences arising from the
combined primary strengths of the three banks: anoverwhelming customer base in the domestic market, thehigh quality and comprehensive financial service
capabilities, and expanded IT investment capability forhigh-growth areas.
Finally, I recognize that realizing this concept of the
future MHFG will depend in part on whether it can meetthe needs for customer-initiated business models. The
information technology revolution is replacing supplierdominance with customer empowerment as the corefocus of business models. The senior management of thethree banks will ensure that MHFG responds decisively tothat paradigm shift to establish its rightful position in
global finance.
August 2000

Masao Nishimura
President and Chief Executive Officer

5Foundation of the Mizuho Financial Group(“MHFG”) through the Consolidation of
DKB, Fuji Bank, and IBJ
Overview of the Consolidation
On August 20, 1999, The Dai-Ichi Kangyo Bank, Limited(“DKB”), The Fuji Bank, Limited (“Fuji Bank”) and The Industrial
Bank of Japan, Limited (“IBJ”) announced their agreement on
the comprehensive consolidation of the three banks. A formal
consolidation agreement was subsequently signed on December
22, 1999.
The consolidation was subject to the approval of the general
meetings of shareholders and the regulatory authorities. At theordinary general meetings of shareholders and other shareholder meetings held in June 2000, the three banks obtained
their shareholders’ approval of proposals for the incorporationof the parent company using the stock-for-stock exchange(kabushiki-iten) method.

From left to right: Yoshiro Yamamoto, President and CEO of Fuji Bank;
Katsuyuki Sugita, President and CEO of DKB; and Masao Nishimura,President and CEO of IBJ, at a joint press conference held in
December 1999.

The name of the financial services group that will be formed
as a result of this consolidation will be Mizuho Financial Group(“MHFG”).

Group Name:

Background to the Consolidation

Mizuho Financial Group(MHFG)

Japanese financial institutions will put themselves in a new business environment with the expansion of the global economy,
the progress of Japan’s Big Bang financial reforms and thedevelopment of financial and information technology.
The three banks recognize the need for a quick and accurate

Holding Company Name:

Mizuho Holdings, Inc.
(MHHD)
Meaning:

response to the financial needs of their customers as well as the

In Japanese, mizuho (瑞穂) means “fresh harvest of rice,” and theneed for plentiful credit supported by the financial strength of aphrase “mizuho country”—meaning “fruitful country”—is used toleading international financial institution.

refer poetically to Japan.

A powerful leader of the Japanese financial services industry

Reason for Selection:is needed that will serve as an anchor for the stabilized financial

The name “Mizuho” expresses the commitment of MHFG, assystem, contributing to the development of the economy andJapan’s leading financial institution, to offer highly “fruitful” prod-

the enhancement of the international competitiveness ofucts and services to all of its customers, both domestic and overseas.

Japanese industry.

We feel that the youthful and energetic image of freshness pro-In order to maintain a strong position in the market and tojected by this name is perfectly suited for the new corporate culture

continue to lead the financial services industry, the three banksof MHFG, and that it is a name with which everyone can easily

have reached an agreement on the consolidation. MHFG

become familiar.

intends to achieve substantial improvement in efficiency and

The Mizuho Logo:enhance competitiveness by combining the strengths of each

The logo is the combination of the initial letter “M” of “Mizuho”

bank in different business areas and product lines.

and a deep blue arc. The “M” appears to be in dynamic motion,
expressing liveliness and action, while the deep-blue arc depicts theearth. The colors used in the logo also have a special meaning—thebright red highlighting passion, action and dynamism and the deep
blue highlighting reliability and stability.

6Basic Principles of the Consolidation

The wholesale securities subsidiaries of the three banks—

As we enter the 21st century, DKB, Fuji Bank and IBJ will create

DKB Securities Co., Ltd., Fuji Securities Co., Ltd. and IBJ

a strong and dynamic financial services group based on the fol-

Securities Co., Ltd.—will be merged into Mizuho Securities Co.,

lowing five principles:

Ltd. on October 1, 2000. Their trust and banking subsidiaries—

1. Offer a wide range of the highest-quality financial services to

The Dai-Ichi Kangyo Fuji Trust & Banking Co., Ltd. and IBJ Trustand Banking Co., Ltd.—will be merged into Mizuho Trust &our customers.
2. Maximize shareholder value and, as the leader of Japan’s

Banking Co., Ltd., also on October 1, 2000.

financial services industry, earn the trust of society at large.
3. Offer attractive and rewarding job opportunities for employ-

Phase 2In Phase 2, MHFG will take advantage of expected legislativeees.
4. Fully utilize the advantages and strengths of each bank andand tax code changes for corporate splits in Japan to consoli-

maximize the benefit of the consolidation through cost

date and reorganize the existing bank operations into legally

reductions.

separate subsidiaries under MHHD according to customer seg-

5. Create a new corporate climate and culture.

ments and business lines. The core subsidiaries that will beplaced under MHHD are as follows:

The Consolidation Process

Mizuho Bank, Ltd.

The consolidation process will take place in two stages, Phase 1

Mizuho Corporate Bank, Ltd.

from September 29, 2000, and Phase 2 from spring 2002.

Mizuho Securities Co., Ltd.
Mizuho Trust & Banking Co., Ltd.

Phase 1On September 29, 2000, the three banks will carry out a stock-Mizuho Holdings, Inc.

for-stock exchange to establish Mizuho Holdings, Inc. (“MHHD”).

MHHD will be responsible for the management and administra-

MHHD will manage the entire group by means of a Businesstion of MHFG and other business incidental thereto. It is due to

Unit (BU) structure based on customer segments and businessbe established as shown below.

lines, and operating across the three banks.

Head Office Location:
Date of Establishment:
Paid-in Capital:
Allocation of Holding
Company Stock:

Chairman & Co-CEO:
Chairman & Co-CEO:
President & Co-CEO:
Number of Executives
and Staff:

Marunouchi Center Building, 6-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo
September 29, 2000
¥2,572 billion
Under the stock-for-stock exchange, one common share (par value ¥50,000) in MHHD will be allocated for each 1,000 commonshares (par value ¥50) of each of the three banks. Additionally, one preferred share in MHHD will be allocated for each 1,000 preferred shares of each of the three banks.
Masao Nishimura
Yoshiro Yamamoto
Katsuyuki Sugita
Total number of executive and managerial staff: Approximately 350(of which nine are directors)

Glossary

2000, all the shareholders of the three banks will transfer their shares toThis method of establishing a holding

MHHD and receive shares in MHHD in return. As a result, the threecompany was allowed following the amendment of the Japanesebanks will become wholly owned subsidiaries of MHHD, their shares will

Commercial Code in 1999. When MHHD is established in autumn

be delisted and the shares of MHHD will be listed.

Stock-for-Stock Exchange

7

Foundation of the Mizuho Financial Group(“MHFG”) through the Consolidation of
DKB, Fuji Bank, and IBJ
Overview of the Consolidation
The management structure in Phase 1 will be as follows:

Councils
MHHD will set up Councils to serve as forums where its

Board of Directors

Executive Officers and officers of the Five Core Subsidiaries—

The Board of Directors of MHHD will consist of the two

DKB, Fuji Bank, IBJ, Mizuho Securities and Mizuho Trust &Chairmen & Co-CEOs, the President & Co-CEO, and six Deputy

Banking—can hold discussions regarding matters that require

Presidents (three full-time and three serving concurrently inadjustment among the Five Core Subsidiaries.

positions at subsidiary banks). There will be six Representative
Directors: the two Chairmen & Co-CEOs, the President & Co-

Advisory Board

CEO and the three full-time Deputy Presidents.

MHHD plans to establish an Advisory Board consisting of six
eminent persons from financial and business circles by April

Executive Officers

2001.

To separate managerial decision making and execution, andclarify levels of authority and responsibility, MHHD will intro-

Internal Audit & Compliance Committee

duce an Executive Officer System.

MHHD will establish an Internal Audit & Compliance Committee
under the Co-CEOs. This independent committee will utilize its

Executive Management Committee

extensive checking and verification functions to ensure that

MHHD will establish an Executive Management Committee tobusiness operations are carried out in an appropriate mannerserve as an advisory body for the Co-CEOs.

from the viewpoint of compliance and auditing.

The Executive Management Committee will consist of thethree Co-CEOs, six Deputy Presidents, and the Executive

Organizational Structure

Officers in charge of the six groups making up the Planning and

The organizational structure of MHHD will be as follows:

Administration Headquarters. Where necessary, Executive
Officers in charge of the Business Unit Headquarters will also
participate in the Committee’s meetings.

(Planning and Administration Headquarters)
Strategic Planning Group, Financial Control and Accounting
Group, Risk Management Group, Human Resources Group,

Board of Corporate Auditors

IT, Systems & Operations Group and Audit and Compliance

MHHD will have six corporate auditors, including three outside

Group.

auditors.
(Business Unit Headquarters)
Business Policy Committees

Consumer and Private Banking BU, Small Business & Middle

MHHD will set up Business Policy Committees to serve as

Market Banking BU, Corporate and Financial Institutions

forums for overall discussion and coordination of company-wide

Banking BU, Public Sector Banking BU, International Banking

issues of mutual concern to groups and BUs.

BU, ALM and Trading BU, e-Business and Global Transaction
Services BU, Securities and Investment Banking BU and Trustand Asset Management BU.
Glossary
BU: Business Unit

The Business Unit structure is a business manage-

ment structure whereby group or bank profit centers are classified into
separate units according to the nature of their operations and the risks
involved. This allows profits to be managed on an individual unit basis
and facilitates the efficient and flexible allocation of resources.

8

● Holding Company Management Structure (Phase 1)

General Meeting of Shareholders
Mizuho Holdings, Inc.
Board of Directors: 9

Advisory Board

Co-CEOs: 3
Full-time Deputy Presidents: 3
Deputy Presidents serving concurrently
in positions at subsidiary banks: 3(from April 2001)

Executive Management
Committee: 15
Co-CEOs: 3
Full-time Deputy Presidents: 3
Deputy Presidents serving concurrently
in positions at subsidiary banks: 3
Executive Officers from
Planning and Administration Headquarters (Group
Heads): 6

Corporate Auditors: 6
Full-time: 3 Outside: 3

Board of Corporate Auditors
Business Policy
Committees

Co-CEOs: 3
Internal Audit& Compliance Committee

Planning and Administration Headquarters
Strategic
Planning
Group

Financial
Risk
Control and Management
Accounting
Group
Group

Human
Resources
Group

IT,
Systems &Operations
Group

Audit andComplianceGroup

Planning & Financial Control
Committee
Portfolio Management Committee
ALM & Market Risk Committee
IT Strategy Committee
New Product Committee
Global Strategy Committee
Customer Satisfaction Promotion
Committee

Councils
Council for Branch Network
Council for Subsidiaries andAffiliates
Council for Business Cordination

Business Unit (BU) Headquarters

Trust and AssetManagement BU

Securities andInvestment Banking BU

e-Business and Global
Transaction Services BU

ALM and Trading
BU

International
Banking BU

Public Sector
Banking BU

Corporate and Financial
Institutions Banking BU

IBJ

Small Business & Middle
Market Banking BU

Fuji Bank

Consumer andPrivate Banking BU

DKB

MizuhoSecurities
Co., Ltd.
Mizuho Trust &BankingCo., Ltd.

Notes: 1. Further detailed consideration will be given to the formation of the Business Policy Committees and Councils.
2. The merger of DKB Securities, Fuji Securities and IBJ Securities into Mizuho Securities and the merger of Dai-Ichi Kangyo Fuji Trust & Banking and IBJ Trustand Banking into Mizuho Trust & Banking will both take place on October 1, 2000.

9

Foundation of the Mizuho Financial Group(“MHFG”) through the Consolidation of
DKB, Fuji Bank, and IBJ
Overview of the Consolidation
Management Infrastructure

IT investment will be concentrated in strategically important

Information Technology (IT) Systems

areas, and the key investment targets and amounts are as fol-

MHFG will swiftly integrate existing systems and make forward-lows:

looking strategic IT investments amounting to approximately● Build customer databases to support market strategies.

¥150 billion annually.

● Build global risk measurement systems.

Designed to make maximum effective use of the threebanks’ current systems, systems integration commenced in
January 2000 and is due to be completed by March 2002.
The core banking system (account management system) will
be centralized under a “One-Bank System” whereby the most

● Build advanced systems to support domestic and overseas
trading activities.
● Build an e-business model that uses the Internet.
● Expand CMS and other settlement systems.
● Promote the use of IC cards.

efficient system of the three banks will be comprehensively
adopted. A “Suite Structure” will be adopted for market sys-

● IT-related Investment(¥ billion)

tems (dealing and trading) and for business information systems.
Studies will be conducted into the feasibility of consolidating
and reorganizing IT affiliates of the three banks with a view tocreating entities that will provide comprehensive IT solutions

Cumulative for
FY2000-2002
PlannedCumulative for
FY2000-2005
Planned¥630¥1,100IT-related investment

Note: IT-related investment = IT investment + IT personnel expenses + IT general
expenses

covering the planning, development, management and operation of systems for MHFG. In addition to maximizing economies

Risk Managementof scale, every effort will be made to enhance the specialization

MHFG designates risk management as one of the most crucial

and sophistication of management resources.

issues facing management. It is therefore committed to building
a sophisticated management system that will keep the various
kinds of risk that arise in business to within appropriate and tolerable limits. MHHD’s efforts to manage consolidated risk will
center on its risk management division, which will constantly
monitor total consolidated credit risk, market risk and otherforms of quantifiable risk, and provide reports, analyses andadvice.
Human Resources
In Phase 1, every effort will be made to standardize a platform
for a personnel system for the three banks. In Phase 2, MHHD
will exploit its distinctive organizational features to introduce
new personnel systems that will reflect the unique businessstructures and cultures of the individual companies under it. It
will also create an attractive and fulfilling working environment

Glossary
One-Bank System

The most efficient system of the three banks will

be comprehensively adopted.

and accountability, providing fair opportunities and developing

Suite Structure

expertise in line with market standards.

The systems of the three banks are reviewed and themost efficient system for each operation and product is selected.
CMS (Cash Management Service)

A service provided by banks tocorporate customers to efficiently manage corporate fund operations.

10

by faithfully observing the principles of independent judgment

New personnel systems will standardize certain aspects of● All BUs and the Five Core Subsidiaries will enhance their com-human resources management across the entire group, while

pliance systems with a view to creating a unified compliancepromoting harmony with variations between individual compa-

regime throughout MHFG.

nies and maximizing the human synergies arising from the con-

● MHFG will enhance and strengthen its internal auditing andsolidation. At the same time, MHFG will introduce acompliance functions and its expertise in cutting-edge areas

merit-based personnel evaluation system that focuses on expertise and performance. Examples of the areas where standardiza-such as IT, dealing and trading, and others.
● MHHD will establish the Internal Audit & Compliancetion will be encouraged include the following:

Committee to check that operations are managed in an● The basic framework of the personnel system, including rank

appropriate manner.

classifications based on duties and career paths.
● Basic elements of welfare benefit programs, such as healthinsurance.
● Design of retirement benefits and pension schemes thatallow personnel transfers between group companies.

Stock Option Program
In order to increase performance on a group-wide basis andcreate a management structure which places emphasis on value
creation for shareholders, the introduction of a new compensation structure that is linked to MHFG’s performance, such as aCompliancestock option program, is being considered.

Since MHFG views compliance as one of the fundamental principles of sound business management, it will work assiduously

Self-Assessment, Reserves and Write-off Standards

to ensure that all applicable laws and regulations are observed

Strict and adequate self-assessment, reserves and write-off stan-and that all corporate activities are pursued in a fair and honest

dards, in conformity with the Financial Inspection Manuals

manner that conforms to societal norms. In the global financial

issued by the Japanese FSA, will be used uniformly by the threemarket, MHFG will establish world-class compliance proceduresbanks from fiscal 1999 (ended March 2000). The final disposi-with a view to winning the confidence of stakeholders, such astion of non-performing assets will be accelerated, aiming forcustomers, shareholders and the local communities in which it

improvement in asset quality.

operates.
It will also set up independent audit and inspection systems
with extensive check and verification functions. Specifically,
MHHD will take the following steps to ensure that its compliance system is second to none:● An Audit and Compliance Group will be set up under the
Planning and Administration Headquarters but will function
independently of other groups in the Planning and
Administration Headquarters and the Business Unit
Headquarters.
● A Chief Compliance Officer (CCO) will be appointed to taketotal responsibility for compliance within MHFG.

11

Foundation of the Mizuho Financial Group(“MHFG”) through the Consolidation of
DKB, Fuji Bank, and IBJ
The Mizuho Financial Group’s Management Strategy
Vision and Management Goals
MHFG has established the following management goals as a

Aiming to Be a Top Financial Services Group in Terms of
Customer Satisfactionmeans of realizing its future concept of becoming an innovative

MHFG will draw on its roots as a service business to establish afinancial group that will lead the new era through cutting-edge

corporate culture that places the customer first, and to ensurecomprehensive financial services:that its employees will at all times provide customers with the● One of the top five global banks and the leading financial

best available services. MHHD will establish the Customer
Satisfaction Office whose primary goal will be to promptly chan-institution in Japan.
● A top financial group in terms of customer satisfaction.

nel feedback from customers into improving the services● A front-runner in IT and FT (financial technology).

offered by MHFG.

● No. 1 in domestic commercial banking.
Using IT and FT to Transform the Structure of the Business● A market leader in securities business and investment bank-

As a front-runner in IT and FT, MHFG will work to establish theing.

“Mizuho e-Business Model,” use IT to improve the effectiveness● A top-class institution in the trust, asset management andand efficiency of its business strategy and provide solutions that

settlement businesses.

utilize FT. In so doing, it will alter the processes whereby intra-● A management structure with best practices.

group business is executed, while endeavoring to offer highquality services that anticipate the needs of the changing times
and proactively developing new business models.

● Aiming to Be a Top Financial Services Group in Customer Satisfaction (CS)
Improvement of Customer Satisfaction and Loyalty through Offering the Best Solutions
Mizuho Holdings, Inc.
Customer Satisfaction Office
Establishment of an organization topromote CS across all business sections

Mizuho Trust& BankingMizuhoSecurities

IBJ

12

Fuji Bank

Tools to Collect Customer Opinions• Unified Customer Voice Card
• CS Survey• Service Recovery Questionnaire

5 Core Subsidiaries

DKB● Customer Satisfaction Officewill plan and promote
CS for the entire group.
● Each bank will establish
its own CS Planning &Promoting Section for its
head office and branches.

Common concepts and measures● Common tools to improve
CS among three banks● Incentive measures

Bilateral communication with customers
RetailCustomers

Corporate
Customers

Message to Customers• Eye-catching CS message• Active PR and advertisements

Creating the “Mizuho e-Business Model”(B2B, B2C and G2C)

Providing FT-based Solutions

The creation of a new business model covers several areas. In

ing and supporting the new businesses, venture companies andthe B2C sector, it covers Internet businesses, such as financial

technologically advanced firms that will play a leading role inportal companies, EC (electronic commerce) community andthe 21st century, setting up a venture fund to nurture them andInternet-based brokerage houses as well as the debit and IC

sustain their development. MHFG will also arrange M&A deals

card businesses. In the B2B sector, the model covers tradeas part of the realignment and restructuring of domestic andfinance EDI (electronic data interchange) and settlement andoverseas operations and the implementation of new businesscertification business for companies, while in the G2C sector it

strategies, and will be involved in the securitization of assets, ascovers infrastructures such as the Utilities & Tax Bills Net.

well as in such structured finance activities as the creation of a

MHFG will offer various financial services, focusing on discover-

MHFG will actively participate in the above-mentioned B2B,

comprehensive real estate investment trust.

B2C and G2C sectors.

● Creating the “Mizuho e-Business
Model”
B2B+B2C+G2C

New Business Creation

B2B Settlement/Certification
Trade Finance EDI
Electronic
Certification

EC Community
Internet Business

Financial
Portals

Card Business
Debit /IC Cards
Wholesale
Global CMS
Settlement Infrastructure Processing

Multi-payment
Infrastructure
Utilities & Tax
Bills Net (G2C)

RetailInternet
Banking

Business Process Reengineering (Rationalization)

Glossary
B2C

Business to Consumer: Consumer-oriented business

B2B

Business to Business: Business between companies

G2C

Government to Consumer: Business between governments and consumers

13Foundation of the Mizuho Financial Group(“MHFG”) through the Consolidation of
DKB, Fuji Bank, and IBJ
The Mizuho Financial Group’s Management Strategy
Business Strategies

Focused allocation of resources in strategic markets will

MHFG’s business strategies will utilize the “three primaryenable MHFG to provide customers with highly professional pri-strengths” gained through consolidation to create an optimal

vate banking services that make maximum use of overall group

group business portfolio that is both balanced and leads in eachstrengths and take advantage of its incomparable corporate

business sector. The “three primary strengths” are as follows:customer base to concentrate on the corporate retail market.

● An overwhelming customer base in the domestic market.

MHFG will also use its ability to respond to customers’ require-● High-quality and comprehensive financial service capabilities.

ments as well as its powerful network of cooperating corpora-● Expanded IT investment capability for high-growth areas.

tions and traders to strengthen its consumer loan services.

Consumer and Private Banking

Small Business & Middle Market Banking

Vision: MHFG will become the consumers’ bank of choice

Vision: MHFG will become “the best partner for small andby providing customers with the highest level of satisfac-

medium-sized companies” by speedily offering high-qual-tion throughout their lives.

ity finance and sophisticated products and services thatare carefully tailored to their requirements.

Basic Strategy
MHFG will become the leader in the consumer and private

Basic Strategy

banking sector by:

MHFG will:● Developing relationship marketing further by making maxi-● Provide small and medium-sized businesses which underpin

mum use of MHFG’s enormous customer base and overall

the Japanese economy with a smooth and stable supply ofstrengths.
● Selecting strategic markets and focusing allocation of
resources.

funds.
● Expand its solutions business in line with business strategies.
● Use IT to provide a speedier, more accurate response to customers’ requirements.

In the consumer and private banking sector, the first step will

● Endeavor to identify new businesses in high growth sectors

be to create a solid platform by aggressively investing in IT. In

and provide them with the support they need to develop.

practical terms, this means developing and expanding conve-● Work to build an efficient, high-quality operating structure.

nient multichannel networks such as Internet and mobile banking services and in-store branches through cutting-edge IT

In the small business and middle market banking sector, MHFG

investments and tie-up strategies. MHFG will also build up its

will aggressively support a wide range of corporate activities by

databases to fuel more sophisticated marketing techniquesdeveloping new products and building up its staff of specialists

focusing on multifaceted relationships.

in opening up new markets. To do so, it will make maximum

By applying its overall strengths in this way, MHFG will estab-use of the consolidated strengths of the three banks, including

lish a lineup of advanced products and services that betterthe information and know-how they glean through their trans-

match customers’ needs, including state-of-the-art settlement

actions with a wide range of companies, and their extensive

services such as multifunctional IC cards and easy-to-use credit

domestic and overseas networks.

card services. A new loyalty program will also be inaugurated toraise customer satisfaction to the highest possible level.

14

MHFG will offer solutions to match customers’ business

new businesses and management structures by taking an active

strategies, assisting with IPOs, equity investments, M&A androle in assisting customers with their strategic management andMBOs and providing management support and information.

business needs.

Likewise, it will devote considerable effort to identifying and

Additionally, MHFG will create e-business models that

nurturing new businesses and venture companies. In doing so,emphasize customer convenience. Using strategic IT investment,

it will provide the small and medium-sized companies that con-

it will strengthen its firm banking (FB) and CMS functions. It willstitute the backbone of the Japanese economy with a smoothalso establish virtual corporate retail services by means of BPR

and stable supply of funds.

portal sites, establishing exclusive home pages that can beaccessed by personal computers installed on the customer’s

Corporate and Financial Institutions Banking

premises.

Large Corporates
Vision: MHFG will aim to become “the No. 1 Japanese

Financial Institutions

wholesale bank in the global market” fully equipped with

Vision: To become the leading “Money Center Bank.”

information and financial know-how.
Basic Strategy
Basic Strategy

Financial Institutions as Customers

MHFG will:● MHFG will provide the best solutions for all the investment● Create a strategic portfolio based on its high level of man-and management needs of domestic financial institutions.

agerial competence.
● Deliver business coordination services on a global scale.

Financial Institutions as Business Partners● Offer innovative financial services that utilize cutting-edge● MHFG will support financial institutions in solving manage-

financial know-how and a strong information infrastructure.
● Serve as a partner in building new businesses and management structures by taking an active role in assisting customers

ment problems.
● MHFG will support financial institutions in their customer-oriented sales activities.

with their strategic management and business needs.
MHFG will act as a leading “Money Center Bank” that canIn the wholesale banking sector, MHFG will offer optimal solu-

respond to the constantly diversifying fund management needs

tions to satisfy the increasingly complex and varied require-of financial institutions through bank debenture issues, invest-

ments of customers by establishing a highly sophisticatedment trusts (mutual funds), trusts and securitization products. It

full-line service menu that blends the financial expertise and uti-

will also provide advisory services in connection with portfolio

lizes the global network of the three banks.

management, IT, securitization and domestic custody.

In particular, it will use this network to provide advisory services covering cross-border M&A, business strategies and financial risk management. It will also serve as a partner in building

Glossary
MBO: Management Buyout

The process whereby the current man-agement of a company enlists the financial support of external investors
to buy the company, or one or more of its operational divisions or subsidiaries, from current shareholders.
BPR: Business Process Reengineering

15

Foundation of the Mizuho Financial Group(“MHFG”) through the Consolidation of
DKB, Fuji Bank, and IBJ
The Mizuho Financial Group’s Management Strategy
MHFG plans to become a solid business partner for financial

Specifically, MHFG will take an aggressive approach to solv-

institutions in various areas. It will utilize its sophisticated IT foring the increasingly diverse and complex issues affecting central

insourcing business, such as settlement and defined contribu-

government related transactions following reforms of the Fiscaltion pension plans (the Japanese equivalent of 401(k)), provide

Investment and Loan Program (FILP) and the social security sys-

assistance with overseas operations and offer investment bank-tem. Based on more effective use of its nationwide network anding services relating to M&A, MBOs, PFIs and others. In addi-

its speedy, accurate operations services, MHFG will also increasetion, through its wholesale business, MHFG will exploit its

its designated financial institution transactions with regional

strengths in product and service development to offer over-the-municipalities, and provide support for PFIs.

counter sales of investment trusts and develop products jointlywith insurance companies.

International Banking
Vision: MHFG will become “the best partner” for cus-

Public Sector Banking

tomers who are in the process of globalizing.

Vision: To be the leading bank in public sector banking.
Basic Strategy
Basic Strategy

MHFG will:● MHFG will provide comprehensive solutions to meet the● Build a powerful global network.

needs of public sector entities in such areas as diversified● Offer leading-edge financial products on a global basis.

funding and investment, downsizing and raising organiza-● Expand its global customer base and portfolio in a balanced

tional efficiency.

manner.

MHFG is reinforcing its comprehensive financial services in

MHFG will secure the position of most trusted banking partner

response to the public sector’s growing need for funding fromfor global corporations by utilizing its extensive overseas network

the private sector, the diversification of fund procurement andand its industrial sector-based relationship management (RM)

investment operations, downsizing and rising demand for more

specialists.

efficient administrative services.

MHFG will work to establish itself as “Asia’s No. 1 financial
services group” as part of its plan to become the best partner
for Japanese customers going abroad and companies from theAmericas and Europe coming to Asia. It will offer services ranging from local currency-based transactions and trade settlements to project finance, M&A and other investment banking
services.

Glossary
PFI: Private Finance Initiative

A financial structure whereby the pri-vate sector takes the place of the national and/or local governments insupplying the funds, technologies and know-how necessary to buildand operate assets that provide services to and for the public sector.
PFIs are used to reduce the public sector’s capital spending requirements and to increase efficiency.

16

In the Americas and Europe, it will aim to become a top-tiercapabilities by strengthening ties with MHFG retail securities

foreign bank by establishing a powerful team of industrial sec-companies and setting up an Internet-based brokerage house.

tor-based RM specialists, securing for itself the position of a top

Kankaku Securities Co., Ltd. will change its name to The

bank in arranger and syndication services. It will also be actively

Mizuho Investors Securities Co., Ltd. on October 1, 2000, andengaged in financial product businesses such as project finance,develop its business as a retail securities company assuming a

M&A, MBOs and LBOs.

role of developing the middle retail business of MHFG.

Securities and Investment Banking

Trust and Asset Management

Vision: Create Japan’s first full-scale investment bank.

Vision: To become a top player in the areas of asset management and administration, and the defined contribu-

Basic Strategy

tion pension plan business.

MHFG will participate actively in the securities and investmentbanking business, with Mizuho Securities playing a core role.

Basic Strategy● MHFG will strengthen its underwriting and sales activities

MHFG will:through alliances with group securities companies.
● MHFG will build a full-scale investment bank that is capableof competing with the big houses of the Americas andEurope.

● Focus its management resources on key areas such as mastertrust business and other aspects of asset administration.
● Secure a position as a front-runner in the defined contribution pension plan market.
● Work to become a first-class asset management group, cov-

MHFG will strengthen its existing operations and take up newering trusts, investment trusts and the investment advisory

challenges in the securities-related business. Its activities in thebusiness.

securities and investment banking sector will aim to combine its
securities functions and investment banking functions in order to

MHFG will make the best possible use of its extremely strong

provide a full range of products and services covering domestic

customer base in the trust and asset management sector, as

and foreign stocks and bonds, derivatives, M&A, structured

well as the wide range of financial products offered by groupfinance, MBOs and real estate funds.

asset management companies. It will also strengthen its alliance

MHFG will establish a system centered on Mizuho Securities

with four life insurance companies to develop joint asset man-to provide integrated management and administration of its

agement and defined contribution pension plans, with special

domestic and overseas securities businesses and thus provide

emphasis on combining their expertise and avoiding overlap-

satisfactory solutions for its customers’ global requirements. At

ping investment.

the same time, it will strengthen its underwriting and sales
Glossary
Defined Contribution Pension Plans

A pension scheme whereby

participants make predetermined contributions and invest them at theirown discretion. Similar to the 401(k) plans common in the UnitedStates.
Master Trust

Trust structure whereby a single trust bank manages

pension fund assets entrusted to several investment management institutions. It covers a wide range of services, including custody and settlement of securities, the preparation of accounting reports, securities
lending, performance evaluations and risk management.

17

Foundation of the Mizuho Financial Group(“MHFG”) through the Consolidation of
DKB, Fuji Bank, and IBJ
The Mizuho Financial Group’s Management Strategy
In the investment trust and investment advisory sector,

More specifically, it will establish the “em-town” e-business

MHFG will work to become one of the world’s leading asset

model (please refer to page 22), promote the standardization ofmanagement groups in terms of both the quality and the value

IC cards and the greater use of debit cards and advance intoof assets under management. To this end, it will maximize cus-such areas as global CMS, trade finance EDI and dealing andtomer satisfaction by taking advantage of the distinctive prod-

trading settlement.

uct mixes and sales functions offered by group asset

The group is also centralizing its external settlement opera-

management companies, and create a first-rate operating struc-tions and upgrading its IT to improve the efficiency of its opera-ture for investment trusts.

tional divisions and strengthen control of settlement risk.

e-Business and Global Transaction Services

ALM and Trading

Vision: To establish advanced settlement and e-business

Vision: To build a stable earnings structure by strengthen-models.

ing its risk management functions and establishing itself
as a major global player.

Basic Strategy
MHFG will:

Basic Strategy● Build and put into practice the next generation of settlement

MHFG will:

systems, leading possibly to potential strategic alliances.
● Build up its clearing business by centralizing settlement opera-● Respond accurately to a wide range of customer needs.
● Enhance its risk management functions.

tions and using IT more extensively.
Trading
MHFG will provide customers with advanced financial services

Building on the robust customer base formed by the consolida-by establishing and actualizing a new generation of businessestion and the group’s market-making strengths, MHFG will strive

while keeping a watchful eye open for potential strategic

to enhance its trading techniques as a means of responding

alliances.

more accurately to customers’ diversifying needs.
ALM
To create a stable earnings structure, MHFG will introduce
sophisticated ALM techniques to provide accurate control ofassets and liabilities and manage risk with precision.

18

Financial Targets

income in the banking sector. MHFG will also work to increase

Current Status and Forecast for Earnings

its commission income by strengthening its non-asset and com-

MHFG is committed to maximizing its earning power by creating

missions businesses, including Mizuho Securities and Mizuho

an optimal group business portfolio that is balanced and leads inTrust & Banking.
By closing and consolidating branches and streamlining its

each business sector.
Setting appropriate pricing levels while boosting high-earning assets such as housing loans will increase net interest

workforce, MHFG aims to reduce its expense ratio to 40% or
below by fiscal 2005.

● Financial Targets(¥ billion unless otherwise indicated)

Consolidated Net Business Profits*
Consolidated Net Income
Gross Profits**
General and Administrative Expenses**
Net Business Profits (Before Provision ofGeneral Reserve for Possible Loan Losses)**
Ratio of General and Administrative
Expenses to Gross Profits**
Consolidated ROE
Consolidated Risk-Based Capital Ratio(BIS Capital Ratio)
Tier I Ratio

FY1999PlannedFY1999Actual

FY2002
Projected

FY2005
Projected¥ 810.0
210.0
1,640.0920.0¥ 876.8
194.4
1,662.3
850.2¥1,250.0580.0
1,938.4
866.4¥1,600.0
800.0
2,150.0
800.0

720.0

806.6

1,066.0

1,350.0

55% (approx.)
4% (approx.)

51.1%
4.2%

45% (approx.)
8% (approx.)

40% or lower
12% (approx.)

11% (approx.)
6% (approx.)

11.7%
6.0%

11.5% (approx.)
7% (approx.)

11.5% (approx.)
7.5% (approx.)*Consolidated Net Business Profits: Three banks’ Net Business Profits + (Subsidiaries’ Ordinary Profits u Equity Ratio) – Earned Dividends, etc.
**Figures for three banks only (non-consolidated).

●Increase in Consolidated
Business Profits[Assumptions]
Real GDP
3M TIBOR
Yield on JGBs

FY1999
0.5%
0.2%
1.7%

FY2002
2.0%
1.3%
3.5%

(¥ billion)
3,000

FY2005
2.0%
1.5%
3.5%
12%

1,500

5.8%
4.3%

1,000
500
0

(Subsidiaries’ Ordinary Profits x
Equity Ratio)-Earned Dividends, etc.
Net Business Profits
of the Banks

7.5%

8

Mizuho Securities
Mizuho Trust & Banking

1,600
250

6

+¥100 billion comparedwith FY1999

1,250
180

4

810
90

1,350
1,070

2

720

FY
1999

Consolidated ROE
Tier I Ratio

10

2,500
2,000

(%)
12

FY
2002

FY
2005

0

19

Foundation of the Mizuho Financial Group(“MHFG”) through the Consolidation of
DKB, Fuji Bank, and IBJ
The Mizuho Financial Group’s Management Strategy
Consolidation Effect● Consolidation Effect

The consolidation of the three banks into MHFG will yield con-(¥ billion)

siderable benefits as synergies strengthen the business base andfurther restructuring reduces costs.
● The non-recurring expenses directly related to the consolidation (“consolidation cost”) will be covered by the increase ingross profits generated by synergies and expenses reductions
arising from further restructuring.

Cumulative for
FY2000–2002
Projected

Cumulative for
FY2003–2005
Projected¥ 94.6(157.6)76.8(80.8)
13.8¥371.7(77.5)
204.7
127.2
498.9

April 1999–
March 2003

April 2003–
March 2006

(83)
(47)
(4,500)(approx.)(70)(7)(2,500)(approx.)

Synergy Effect on Gross Profits
Consolidation Cost
Restructuring Effect
Net Cost Reduction
Net Consolidation Effect● From fiscal 2003, the stronger business base and renewed
efforts to restructure will enable MHFG to make further cost
cuts and enhance the consolidation effect.
On a cumulative basis, it is forecast that by fiscal 2005, the synergy effect on gross profits will amount to ¥460 billion, therestructuring effect to ¥280 billion and the consolidation cost to

Domestic Branches*
Overseas Offices/Subsidiaries
Workforce* Represents the net reduction after taking into account approximately 17
branches of the Mizuho Corporate Bank.

¥230 billion, resulting in a cumulative net consolidation effectof ¥510 billion.

● Realization of Consolidation
Effect (Banking Segment)

Aggregate Total(¥ billion)
250

Net Consolidation Effect+510.0

200

157.0

150

100

Synergy Effect on
Gross Profits+460.048.5
Restructuring Effect+280.050

55.0
0(20.0)(54.0)

-50

-100

FY
2000

20

FY
2001

FY
2002

FY
2003

FY
2004

FY
2005

Consolidation Cost
(230.0)Profit Trends by Business Segment● Retained Earnings

Each BU will engage in active cross-marketing of various financial
services offered by other BUs, thereby delivering the products
and services that best meet the increasingly varied and sophisticated needs of customers through the most appropriate delivery(¥ billion)
4,000
3,000

channels. They will also make the maximum possible use of thestrengths of MHFG’s comprehensive financial services, including
sophisticated FT and specialist know-how, in boldly tackling the

2,000

Retained earningsof 5 Core Subsidiaries

1,000

Equivalent to¥1,950 billionof public funds(preferredstocks)creation and development of new business fields.
The table below shows MHFG’s profit targets by segment.

0

FY
2002

FY
1999

FY
2005

Retained Earnings
By fiscal 2005, MHFG is expected to accumulate sufficientretained earnings to cover the ¥1,950 billion in public funds
injected into the three banks.

● Profit Targets by Segment(¥ billion)

Consumer and Private, and Small Business & Middle
Market Banking

FY1999Actual

FY2000
Projected

FY2002
Projected

FY2005
Projected

Three banks¥208.3¥221.2¥ 504.7¥ 653.7

Wholesale Banking
Securities and Investment Banking,Trust and Asset Management, ande-Business and Global Transaction Services

Three banks

417.6

406.9

439.9

509.1

Three banks

17.4

16.7

24.4

72.5

ALM and Trading

Three banks

231.1

247.9

166.8

200.7

Total

Three banks
Mizuho Securities
Mizuho Trust & Banking

806.6
13.8
(19.6)

829.2
22.8
(8.3)

1,066.0
41.2
3.5

1,350.0
56.0
46.2

(5.8)

14.5

44.7

102.2

800.8

843.7

1,110.7

1,439.1

Total for Mizuho Securities andMizuho Trust & Banking

Total(Three banks + Mizuho
Securities + Mizuho Trust& Banking)Note: The figures represent Net Business Profits for the three banks and Ordinary Profits for Mizuho Securities and Mizuho Trust & Banking.

21

Foundation of the Mizuho Financial Group(“MHFG”) through the Consolidation of
DKB, Fuji Bank, and IBJ
The Mizuho Financial Group’s Management Strategy
Major Joint Projects

MHFG Strategic Projects

Joint Services Offered by the Three Banks

Inauguration of “em-town” e-Business Model

Reciprocal Access to ATMs

MHFG will generate new value added by offering services in● The three banks started offering reciprocal access for ATM

three key sectors: Banking, Financial Portals and EC Community.
Using various settlement methods, such as debit cards, credit

with drawals from April 3, 2000.

cards and bank transfers, these services will deliver one-stop● DKB and Fuji Bank started offering reciprocal access for ATM

shopping in everything from financial services to merchandising.

deposit transactions from August 21, 2000.

In the area of “Banking,” an “em-town branch” will be set
Spark Cards

up, subject to regulatory approval, to offer deposit, loan, fund● Spark Cards are dual-function credit/debit cards, which DKB

and account transfer, shopping settlement and other services. A“Financial Portal” will be set up through consortia with externaland Fuji Bank have been issuing since March 2000.

partners to display and offer a wide range of finance-related
Mizuho Group Credit Cards

products. The “EC Community” will consist of a shopping mall

● The credit card subsidiaries of the three banks plan to issue

offering numerous attractive products and services in conjunc-

joint Mizuho Financial Group credit cards from Octobertion with external partners from many different businesses

2000.

under a single roof.

● The “em-town” Business Model
EC Community
TravelBooks

Tickets

Music

CDs

PCs/
Software

ISPs

Trading

Mail Order

Local
Specialities

Advertisements

New Portal Site Operating Company
Alliance withDistribution Industry

Financial Portal
Casualty
Insurance

Securities

Mizuho Online
Securities

TrustsCredit Cards

401(k)[Advantages] ●Information Service: Simulation Service, Search Engines●Realization of One-to-One Marketing●Joint Advertisement, Joint Marketing

Settlement Tie-ups

Convenience
StoresAlliances

Life
Insurance

DeliveryService

SET Debit, Bank Transfers, etc.

Banking Services

22

em-town (virtual branch)

Mizuho Financial GroupInternet Banking: Deposits, Loans, etc.

Internet Banking

Operation by
Mizuho Financial GroupJoint Asset Administration Services, including Master
Trust Business● Tie-ups with Four Insurance Companies’ AssetManagement Business

Using the high credit ratings supported by its sound financial
position and strong customer bases of the three banks, MHFG

Asahi
Mutual Life
Insurance

MizuhoFinancialGroupwill develop its master trust and other asset administration busi-

Dai-ichiMutual Life
Insurance

FukokuMutual Life
Insurance

YasudaMutual Life
Insurancenesses while promoting its ties with four life insurance companies.
Joint Development of Defined Contribution Pension Plan
Business
Master Trust Business

Securities Administration●Custody and settlement services
for securities, financial reporting●Efficient asset allocation(securities lending, investment)●High value-added information(investment evaluations,risk management)●Securities administration regarding
pension trusts, specified money
trusts, mutual funds, etc.
●Administration of life insurancecompanies’ securities●Custody business

MHFG will conduct studies into joining four life insurance companies and group firms in establishing a joint venture company
that will undertake managerial and administrative tasks associated with the defined contribution pension plan business. Thesetasks include the development of educational tools for potential
and current policyholders, operation of support centers and thedevelopment and management of Internet-based delivery channels.

● Joint Operating Company for Defined Contribution Pension Plan Business
Customers’ Needs

Outsourcing of operations

Customer

Joint-operating company
Contract

Life Insurance Cos.:
Asahi Mutual
Dai-ichi Mutual
Fukoku Mutual
Yasuda Mutual●Education of members●Operation of support centers●Development and operationof web channels

Joint-operation Project

MizuhoFinancial
Group

Asset Management

JIS&T (Record-keeping company)

Contract

Administration

Product Offering

MizuhoFinancial Group
Contract(banks, trustbanks, investment
advisory companies)

Four life
insurancecompanies
Etc.

Asset management contract23

● Mizuho Venture Fund

Establishment of the Mizuho Venture Fund
The three banks will jointly establish the “Mizuho VentureFund” to identify and support new businesses, venture companies and firms with technological capabilities that will play acentral role as leaders in the 21st century.

Establishment of Multiple Funds under Mizuho
Venture Fund (Joint Venture of the Three Banks),
Each Fund Managed under Different Investment
Aims and Concepts (e.g. Target Industry, Growth Stage)

Establishment of a Real Estate Investment Trust

Fuji

DKB

IBJ

MHFG and Mitsui Fudosan Co., Ltd. will jointly establish the“Real Estate Fund”—an investment trust (mutual fund) aimed

Investment

Investment

Investment

at investing in real estate such as office buildings, condominiums, commercial facilities and other real estate—with a view toMizuho Venture Fund

eventually listing it on the Tokyo Stock Exchange.
Investment

Fund A

Investment

Fund B

Investment

Fund C

Investment

Fund D

New businesses regarding IT, biotechnology, environment, etc.

● Real Estate Investment Trusts●A Joint Fund with Mitsui Fudosan Co., Ltd.
●Full Operation within FY2000, Aiming for Future TSE Listing

Fund Management Company
Mitsui FudosanCo., Ltd.
(real estatecompany)

Financial functions
Mutual Fund

Trust Bank

life insurancecompanies,
real estate companies,
industrial corporations,etc.

Capital/Personnel

Real estate functions

Real Estate Trusts

Real estate owners:

Capital/Personnel

TSE Listing

Target properties:
office buildings,
real estate for other purposes

Life
Insurance
Companies

24

Real Estate
Companies

PensionFunds

Institutional
Investors

Individuals,
etc.

MizuhoFinancialGroupReview of Operations

Contents
26

Strategy in Action

30

Risk Control and Compliance lssues

38

Operational Review
38

Corporate Banking Unit

43

Investment Banking Unit

47

Treasury Unit

51

Securities & Asset Management Unit

55

Technological Innovation

56

Solid Research Capabilities

57

Corporate Citizenship

58

Environmental Initiatives

25Review of Operations
Strategy in Action
Increasing Profitability and
Improving Financial Strength

aggressively writes-off or reserves for non-performing and

IBJ is strengthening its fundamentals in line with the objectives

problem loans. Total Expenses Relating to Portfolio Problems forof the Fourth Medium-Term Management Plan. The immediate

the year under review amounted to ¥227.3 billion. On a parent

objective is to rebuild customer and market confidence bybasis, the Total Expenses Relating to Portfolio Problems was theenhancing profitability.

lowest for the past five years and it may be said that the Bank’s

To strengthen the balance sheet position, the Bank

In order to improve the Bank’s profitability and financial

credit problems are on a declining trend after their peak in fiscal

strength, three measures are being taken: enhancement of

1998. In addition, the Bank continues to reduce the capitalbusiness profitability, strengthening of the balance sheet, andlocked up in its large portfolio of equities and to shed low

achievement of maximum efficiency.

quality assets.

To enhance business profitability, the Bank is endeavoring to

To achieve maximum efficiency, the Bank is pursueing a

retain its quality customer base and further expands this byrestructuring and consolidation of the domestic and overseas

providing state-of-the-art financial products and by

office network and a reduction in the number of directors andstrengthening the capability to make value-added businessemployees.

proposals. The Bank is also endeavoring to secure pricings thatIn the year under review, the Bank largely achieved thereflect the risks and costs of each potential transaction totargets of the Restructuring Plan made on non-consolidated

ensure an acceptable level of profitability transaction bybasis and submitted to the Financial Reconstruction Commission

transaction.

in connection with the injection of public funds as shown
below.

● Achievement under the Restructuring Plan(¥ billion)

Fiscal 1999
ActualFiscal 1999
Projected% Change¥174.1
138.8
60.2
240.0

¥162.8
122.8
71.2
239.5

6.9%
13.0
(15.4)
0.2

Fiscal 1999
ActualFiscal 1999
Projected% Change

Corporate Banking Unit
Investment Banking Unit
Treasury Unit
Securities & Asset Management Unit

¥158.3
4.2
33.7
3.3

¥114.5
4.9
85.2
(4.7)

38.2%
(14.2)(60.4)–

Total Business Units Net Business Profits¥199.5¥199.9(25.4)(37.1)¥174.1¥162.8Net Business Profits (Before Provision of General Reserve for Possible Loan Losses)
Ordinary Profits
Net Income
Retained Earnings(¥ billion)

Headquarters
Total Net Business Profits (Before Provision of General Reserve for Possible Loan Losses)(0.2)%
31.5
6.9%(¥ billion)

IBJ Group Companies Profits
Corporate Banking
Investment Banking
Securities & Asset Management

Fiscal 1999
ActualFiscal 1999
Projected% Change

¥22.3

¥19.9

12.0%

10.0
0.1
12.2

10.4
0.1
9.4

(3.8)
0.0
29.7

Fiscal 1999
ActualFiscal 1999
Projected% Change¥139.3¥157.0(17.7)(¥ billion)

Fiscal 1999
Actual (a)Head Office and Domestic Branches
Overseas Branches

26

24
15

Fiscal 1999
Projected (b) (a)-(b)
24
14

0
1

General and
Administrative Expenses

In June 1999, the Bank established a business unit structure

Tackling B2B

that identifies four sectors as core business units: the Corporate

The information technology revolution is proving to be one of

Banking Unit, the Investment Banking Unit, the Treasury Unit,

the most significant economic developments since the Industrial

and the Securities & Asset Management Unit, as a preliminary

Revolution. How quickly and skillfully IBJ introduces e-

to recreating these as independent profit centers.

commerce now and how this is then developed within the

From April 2000, capital has been allocated to each business

Mizuho Financial Group (“MHFG”) have immense importance.

unit on an independent budget basis and senior management

Becoming a front-runner in IT (information technology) and FT

evaluates the performance of each business unit employing the(financial technology) is one of MHFG’s management goals.

RAROC yardstick. Utilizing this management framework, theOne of the prime advantages in tackling e-commerce is that

Bank is optimizing its business portfolio by the most efficient

the Bank has established relations across the entire Japanese

allocation of management resources.

industrial landscape beyond the bounds of the large corporategroupings characteristic of Japan, the keiretsu, on account of its
keiretsu-independent origins as a public sector bank in 1902.

● Auto Trans Project – Demonstration (Phase 1)

Jointly Owned Cargo
Information Data Base
Shipping Companies

Ph

Inp

utti

ng

/ In

e3

putting

In

Planning,
Development

re

ing

Automobile
Companiesas

Trade Information, Load Details
Shipping/Transport Information
Customs Clearance Information,
Inpu
etc.
tt

qui

e
/ Inquir

Production

uire

Parts
Manufacturers
TradingCompanies

Procurement

Financing/ Inq

Distribution
Sales

e2

as

Ph

TradingCompanies

re

ui

nq

g

in

tt

u
np

/I

I
Forwarders

27

Review of Operations
Strategy in Action
Taking advantage of these strong relationships with

System will eventually prove to have broad applications in many

companies in Japan, the Bank is concentrating its energy onother industries. The above systems, which are all Internet-

business-to-business, B2B, transactions which have far larger

based, have a uniform command structure and are available on

business volumes than business-to-customer, B2C, transactions.

an open platform basis.

Immediate opportunities in e-commerce are in the operating

The Bank has established the e-Business Promotion Planningenvironment of foreign exchange transactions and accounts

Department as an organization under the direct control of thesettlement. In April 1998, The Foreign Exchange Law was

CIO in its corporate structure, in order to get action in areas

amended to largely liberalize cross-border transactions.

where increasingly rapid take-up growth is expected. Such areas

Japanese companies are now emphasizing the consolidated

as Internet banking, e-commerce, and the establishment of an

results rather than the parent company results under the new

integrated financial services mall are being considered. The

accounting standards applicable to the financial results for fiscal

Bank plans to promote business by grouping technical1999 ended March 31, 2000. These changes in the operatingknowledge in the Department, and by making it solely

environment are encouraging companies to conduct foreign

responsible for electronic business.

exchange and settlement on a more rational and efficient groupbasis.

The Bank has applied for patents on SPARCS, ITss and
AutoTrans System as part of a new policy towards creating

The Bank has developed the following e-business systems

proprietary intellectual property. The Committee for Financial-that serve such corporate needs: ITss, the Integrated Treasury

related Patents has been formed to ensure that patentable

Support Services, which allows groups to integrate and control

products are in fact patented.

the cash flows of their subsidiaries and affiliates, the IBJ Global
CMS, which is the world’s first Internet-based global cash
management system, and SPARCS, Suppliers’ Account
Receivables Control System, which helps customers securitize
their receivables and raise working capital.

● Operational System for Patent Applications

Moreover, the Bank is currently testing the AutoTrans Systemdeveloped to support trade finance by processing electronic
data interchange for the automobile parts and components

Financial Engineering
Department

industry. When launched, this Internet-based system willsupersede paper-based trade documentation such as ordering

Information Offering
Advisors

and confirmation forms and shipping and delivery notices. All

The Committee forFinancial-related Patents(Corporate Planning
Department)

users will be able to track information through a Web browser.
Through system support of net transactions from the order<Each Offices in Charge>

stage, in the flow “order-distribution-claim-payment-•Excavation, development, and application

settlement”, the Bank is able to provide financial services that

•Response to patents of other banks

of application mattersare based on changes in the economic activities and transaction
format of corporations brought about by the IT revolution. The
Bank believes that, once the system is launched, the AutoTrans

FilingLegal Check
Application Procedures(Lawyers, Consultants)

Legal Department

28

Patent Office
Applications

Progress in Strategic Alliances

In regard to the comprehensive alliance with Dai-ichi, IBJ

During the year under review IBJ made further progress in

Financial Technology Co., Ltd. became a joint venture with Dai-

alliances with other members of the financial service industry,ichi, and the name was changed to IBJ-DL Financial Technology

particularly, The Nomura Securities Co., Ltd. (“Nomura”) andCo., Ltd. (IBJ-DL FT) in April 1999. In October last year, IBJ and

The Dai-ichi Mutual Life Insurance Company ( “Dai-ichi”).

Dai-ichi amalgamated their three companies, IBJ NW AssetIn December 1998, IBJ and Nomura jointly establishedManagement Co., Ltd., IBJ Investment Trust Management Co.,

Nomura-IBJ Investment Services Co.,Ltd. (NIIS). This company

Ltd., and Dai-ichi Life Asset Management, Co., Ltd. into DLIBJ

will play an important role in Japanese-style 401(k) defined

Asset Management Co., Ltd.(DIAM).

contribution pension plans by offering consulting advice for

DIAM, which brings together investment skills and expertise

corporations. In August 1999, with other leading domestic andof the two financial institutions, serves a wide range of

foreign financial institutions, Japan Investor Solutions &customers with investment products and financial services in a

Technologies Co., Ltd. (JIS&T) was formed, which will spearhead

sophisticated way as a leading asset management company.

the record-keeping services associated with defined
contribution pension plans. In March 2000, JIS&T increased its
capital by ¥20.7 billion.
Another partnership with Nomura is through IBJ Nomura
Financial Products (UK) plc (INFP) which started business in April
1999. This company offers derivatives and structured products.
In June 1999, Nomura IBJ Global Investment Advisors, Inc. (NIGIA) started its joint operation.

Japanese-style 401(k) pension plan and asset management seminar was held by
Nomura IBJ Global Investment Advisors (December 6, 1999)

Tape cutting ceremony for the establishment of DLIBJ Asset Management(October 1, 1999)

29

Review of Operations
Risk Control and Compliance Issues
Integrated Risk Managementwith annual profit which each business unit earns by utilizing its

The deregulation and globalization of the financial services

allocated risk capital to its business activities.

industry and the advent of advanced financial technology areforcing financial institutions to control the expanding spectrum

Credit Riskof risk more effectively and to ensure continued profitability at

Credit risk is the possibility that credit extended will not be

the same time. Diversified and complex risks, such as credit risk,

recovered, causing the Bank to sustain a loss. It is necessary tomarket risk, operational risk, systems risk, legal risk and othercontrol the scope of exposure to such risk; otherwise, it will berisks in the business of financial institutions have made the needunable to maintain a secure asset portfolio, achieve anfor effective and sophisticated risk management systems. The

adequate return on assets, or fulfill its fiduciary duty tointegrated risk management structure of IBJ enables the Bank toshareholders.

manage risk and profit appropriately, and to allocate
management resources effectively through the allocation of risk
capital to business units.
Allocation of Risk Capital
IBJ allocates risk capital to its four business units considering● Allocation of Risk CapitalManagement reserved
capitaltheir capabilities, strategy, competitiveness and growth, while
retaining a management reserve for minimum capital adequacy,
and future strategic business development. Risk capital is used

Capital account, etc.

as the tool for the evaluation of each business unit’s proficiency

Risk capital to beallocated to businessunits

For business units,
allocated by eachrisk category

and effective allocation of management resources compared● Integrated Risk Management Structure
Board of Directors

Executive Committee

Risk management policies
Risk-taking capability
Establishment of risk limits

Preparation of business plans
Evaluation of risk and return

Financial Control Committee

Risk Management Department
Credit Committee

ALM Committee
Credit risk

Market risk

Credit Portfolio Committee

Business Units

30

Credit Risk Management Systemeach credit extension, whether originated in Japan or overseas.

In order to maintain the profitability and soundness of its assets,

The Risk Management Department also handles the “macro”

IBJ must control its credit risk exposure. The Bank instituted arisk of the total loan portfolio, employing financial engineering

comprehensive risk management system in June 1999 totechniques to quantify, monitor, and control overall risk.

coincide with the establishment of the four business units.

Working in close consultation, the two departments keep

Allocation of risk capital to the business units was made in April

senior management constantly informed of the Bank’s overall

2000, along with the introduction of new guidelines for thecredit risk profile via regular reports to the Board of Directors,

extension of credit.

the Executive Committee, the Credit Committee, and the Credit

To assure reliable credit risk management, the Credit Risk

Portfolio Committee.

Management Department acts in close consultation with the
Risk Management Department. Both departments are

Credit Risk Management Method

independent of the Bank’s business divisions.

In evaluating creditworthiness, IBJ analyzes the borrower’s

The Bank’s credit risk management system focuses on two

financial status and business performance to fully comprehend

simultaneous activities: (1) monitoring of each borrower and its

the borrower’s underlying business and future prospects.

affiliated companies on a “micro” basis; and (2) monitoring ofThrough this impartial evaluation process, the Bank gains a clear

the Bank’s total loan asset portfolio on a “macro” basis. Close

indication of creditworthiness on a quantitative and qualitative

attention to both the “micro”“and “macro” aspects is essential

basis, and accordingly assigns a credit rating based on a 10-

to the overall risk management process.

point scale. This is used not only in reviewing each application

The Credit Risk Management Department is responsible forof credit extension but also in monitoring each borrower’s risk

the “micro” risk of each borrower on a fully integrated basis. It

profile on a group basis, particularly during the self-assessment

monitors the creditworthiness of borrowers, establishes policies,

process. The Bank can therefore make more informed credit

guidelines and procedures for extension of credit and internal

decisions and provide more appropriate advice to eachcredit rating system. It is also responsible for the approval ofborrower.

● Credit Risk Management Structure
Allocation of risk capital

Board of Directors

Executive Committee

Credit Portfolio Committee

Credit Committee

Risk Management Department

Credit Risk Management Department

Credit Examination Department

Quantification of credit risk
Portfolio risk management

Credit management planning
Assigning of internal credit ratings
Analysis of companies
Analysis of loan applications
Self-assessment of asset quality (secondary)Internal auditing of self-assessment of asset quality
Internal auditing of assigning of internal credit ratings

Corporate Banking Unit

<Head Office and Branches>
Self-assessment of asset quality (primary)

31

Review of Operations
Risk Control and Compliance Issues
In addition to individual borrower risk management based on

Market Risk

internal ratings, the Bank undertakes more comprehensive risk

Market risk arises when fluctuations in interest rates, stock

management of its entire portfolio using credit risk

prices, foreign exchange rates, and other market variables result

measurement techniques. These enable the Bank to maintain ain changes in the value of financial assets and liabilities,

quantitative understanding of its overall portfolio risk profile.

including derivatives.

The Bank employs quantitative techniques to control risk
profile. The objective is to assure a balanced and appropriate

Market Risk Management System

portfolio that is not excessively weighted towards any particular

All of IBJ’s offices that are engaged in market transactions have

corporate or corporate group, industrial sector, or geographicalfront offices and middle offices. Front offices handle actual

region. In order to control exposure to corporate groups, thetransactions, while middle offices work independently to

Bank assigns credit limits for each credit rating level andmeasure earnings and market risk. In addition, the Risk

establishes internal credit guidelines for each corporate group.

Management Department at the Bank’s head office is

Also the Bank maintains a set of sector and region-specificresponsible for measuring the maximum loss, or Value at Risk

portfolio guidelines to avoid excessive concentration of credit(VaR), for the Bank as a whole. VaR is defined as the maximum

risk in any industrial sector or geographical region.

potential loss of a portfolio with a given probability over a given

By adopting such advanced credit risk management, theperiod of time. It is calculated based on parameters of volatility

Bank is able to reduce the credit costs associated with theand correlation coefficients that estimate future movements inextension of credit. This also enables the Bank to undertakeinterest rates, foreign currency rates, and other risk factors,

strategic purchases and sales of assets while minimizing risk anddrawing from analysis of past data on market fluctuations. The

maximizing return, thus establishing more proactive portfolio

Department also analyzes market risk from multiple perspectives

management. Through these efforts, the Bank seeks toand reports the results to management at meetings such as the

maximize capital efficiency, profitability and shareholder value.

Board of Directors, the Executive Committee and the ALM● Credit Risk Control System
Maximum Loss

Unexpected Loss: UL
Expected Loss: EL

Standard Terms

Credit Concentration
Risk

Credit Limits by Rating

Absorbed by interest rate margin→Recognized as cost

Default Rate
Variable Risk

Three
Methods forManaging
Credit Risk

Portfolio Guidelines by Region
and Industry

Absorbed by distributed risk capital→Recognized as VaR in 99% confidence

Expected Loss = Exposure x Default Rate x (1– Recovery Rate)
Unexpected Loss = Statistically measured loss which is caused by the deviation of
expected loss at the expiry of the expected term.

32● Standard Terms
Standard transaction terms are established in order for
projected loss associated with every credit transaction to
be always covered with profit margin.
● Credit Limit by Rating
In order to avoid concentration of credit in specificcompanies, the limit of credit amount is established foreach company by internal rating. It controls unexpected
loss effectively by the portfolio guidelines by region andindustry.
● Portfolio Guidelines by Region and Industry
Transaction limits by region and by industry are
established in order for credit not to concentrate on
certain regions or industries.

necessary. The Department also monitors risk limits linked with● Methods Currently Used to Monitor Market Risk andSpecific Content

risk capital allocated to each business unit from April 2000.

VaR

Committee held monthly and also at times when deemed

Calculation of maximum losses within a specified probability limit (IBJ
uses 99%) due to future fluctuations in interest rates, currency rates,and other indicators is made based on statistical analysis of past data.

Market Risk Management Method
IBJ uses VaR as the unified measure of risk for all its operations.
In addition to computing VaR, the Bank establishes limits on theextent of the impact of market fluctuations outlined on theright, and performs ongoing tests to monitor and control risk
levels.
The Bank’s risk management activities are based on anunderstanding of the most advanced financial theories. Staff

Stress Tests
To prepare for times when market rates diverge substantially fromstatistical fluctuations assumed by VaR analysis, computations of losses
are made assuming extreme market fluctuations (stress scenarios).
Interest Rate Sensitivity (Delta)
Delta shows the amount that the Bank's portfolio would change invalue if interest rates should move by a certain percentage (usually one
basis point, or 0.01 percentage point).
Upper position limits for each interest-related position are usually set for
detailed management.
Gamma
Gamma is the change in delta for only a one basis point change ininterest rates. Upper limits are set when managing option positions.

well versed in this area have been assigned to risk management
and are engaged in R&D related to risk management

Vega
Vega indicates the change in value of assets and liabilities when
volatility brings a one percentage point change. Upper limits are set
when managing option positions. (Note: Volatility is the expected rateof change in market rates during a specified future period.)

techniques.
The principal methods for monitoring and controlling market
risk are shown on the right. Other methods are also employed
to suit the nature of individual types of risk.

Position Limits by Financial Instrument
As there are differences in the volume of financial instruments ofspecified types that can be purchased in the market at one time, whennecessary, limits are placed on positions in individual financial
instruments.
Loss Limits
For each position limits, the Bank sets upper limits on accumulated
losses that can be sustained over a specified interval.

● Market Risk Management Structure
Allocation of risk capital

Board of Directors

Executive Committee

ALM Committee

Treasury Unit
Treasury Department

Derivatives and
Fixed Income Department

ALM for yen assets
and liabilities

Sales and trading of derivatives
and trading account securities

Risk Management Department
International Treasury
Department
Tokyo
London
New York
Singapore
Sales and trading in foreign
currencies

Measuring market risk of all the
Bank’s offices with an integrated
standards

Other Units
Overseas Branches,
Subsidiaries andAffiliates

Analysis of risk as well as making
suggestions to management
R&D related to risk
management techniques

Supervision and control through monitoring of income and risk conditions
Risk Management Department
Middle office for Treasury Department, Derivatives and Fixed Income Department and International Treasury Department

Middle office for the above offices

Supervision and control through checks on individual transactions
Market Business Operations Department, International Treasury Operations Department
Back office for IBJ head office

Back office for the above offices

33

Review of Operations
Risk Control and Compliance Issues
Market Risk Management Method for
Banking Operations

period at the end of fiscal year of 1999 is shown in Table B. The

With respect to IBJ’s banking business such as ALM and treasury

the profit.

Bank recognizes the influence of fluctuation in interest rate on

operations, the departments responsible – the Treasury
Department for yen-denominated business; the International
Treasury Department for other currencies – are engaged inMarket Risk Management Method for
Trading Operations

fund-raising and fund-management for the whole Bank. In thisWith respect to IBJ’s trading business, the offices responsible –way, interest rate risk is controlled centralily on a unified basis

the Derivatives and Fixed Income Department, the International

throughout the Bank. On the other hand, the Risk Management

Treasury Department and consolidated subsidiaries – work in

Department calculates fair value of assets and liabilities,

cooperation globally. The Bank calculates VaR of all the offices

including those with on-balance and off-balance sheet

on an integrated unified basis. VaR calculated by the Risk

components, as well as VaR, interest rate sensitivity (Delta),

Management Department is utilized as an index of risk

profit-loss, and other indices and monitors compliance of uppermeasurement, as well as other upper limits and “alarm point”

limits and “alarm points” for the various indices set by the ALM

for Delta, profit-loss, and other indices set by theCommittee.

ALM Committee.

Trends in VaR for all banking business for fiscal 1999 are

The Bank’s model employs simultaneously the Variance-

shown in Table A. These estimates assume a holding period of

Covariance Method and the Monte Carlo Simulation Method. It

one month and a confidence level of 99 percent. Delta of eachalso incorporates around 200 market data scenarios, such as
yen interest rates and yen-dollar exchange rates, representing
various risk factors.
Trends in VaR for all trading offices for fiscal 1999 are shownin Table C. These estimates assume a holding period of one day● Table A VaR Results in Banking Business( ¥ billion)

VaR
Fiscal 1998

Fiscal 1999

162.4

Year-end value

38.2

Average value

69.6

Back Testing: The Bank tests the accuracy of its internal

Maximum value

235.5

model through back testing, which involves comparing the daily

Minimum value

15.7

profit/loss statements of all trading offices with the estimated● Table B Year-end Interest-rate Sensitivity (delta)
Yen
At March 31, U.S. dollars
2000

Less than 1 year 1-5 years More than 5 years

out.

VaR to determine whether actual profit or loss exceeds VaR.

( ¥ billion)

Total

0.09

(0.09)(0.08)(0.07)(0.02)(0.06)(0.45)(0.53)

Euro(0.02)(0.04)(0.09)(0.16)

Other(0.00)(0.00)(0.00)(0.01)

Notes:
1. Interest-rate sensitivity (delta): Change in fair value when interest rate changes
by one basis point (0.01%).
Minus figures: Fair value increases when interest rate declines by one basis
point.
Plus figures: Fair value increases when interest rate increases by one basis point.
2. Yen figures are based on transactions of Treasury Department.
3. U.S. dollar, euro, and other figures are based on transactions of International
Treasury Department (including New York, London, and Singapore Divisions).

34

offices is computed, positions held by various offices are netted

Year-end value

Holding period: One month; One-side confidence interval: 99%
Simple VaR totals for Treasury Department and International Treasury Department.

Currency

and a confidence level of 99 percent. When VaR at all trading● Table C VaR Results in Trading Business( ¥ billion)

VaR
Fiscal 1998

Fiscal 1999

Year-end value

2.8

Year-end value

2.2

Average value

2.5

Maximum value

3.4

Minimum value

1.9

Holding period: One day; One-side confidence interval: 99%

Table D shows the results of back testing for the year undermaximum loss is derived by estimating the worst market

review. On the 262 business days in that year, there were no

scenario based on the characteristics of its trading portfolio.

instances when the actual loss exceeded VaR. These results

This takes into account the volatility and correlation ofverify the accuracy of the Bank’s internal model.

approximately 200 risk factors, such as yen interest rate andStress Testing: The VaR method indicates the maximum

dollar-yen exchange rate movements. Table E is a plot of the

expected loss that may occur in a normal market environment.

Bank’s stress testing in cases where there are only two risk

In addition to VaR, the Bank also employs stress testing tofactors.

estimate unusual market movements on its trading profit/loss

The results of stress testing for positions held by all tradingstatement that cannot be measured by VaR. Under the Bank’s

offices at March 31, 2000, show a maximum loss of ¥1.8

stress testing, which is called the “Steepest Descent Model,”billion, compared with VaR of ¥1.1 billion on the same date.

Liquidity Risk Management● Table D The Results of Back Testing for the Fiscal 1999(¥ million )4,000

Funding Liquidity Risk
Funding liquidity risk refers to the potential that changes in

3,000

market conditions in Japan or overseas may prevent access to

2,000

necessary funding, or that funding may only be available at

1,000
0

abnormally high interest rates, thus causing losses. It is crucial(1,000)to secure adequate and reliable funding source to meet the(2,000)varied requirements of Banks’ customers. Controlling funding(3,000)(4,000)4/1999 5liquidity risk and interest risk are both vital elements in ALM.
6

7

8

9

10

11

12 1/2000

2

3

The front office prepare their annual and monthly fund flow

Profit and loss
VaR
VaR after reversing the sign

projections, while the Risk Management Department estimates
the future funding requirement from net cash flow derived● Table E Image of the Results of a Stress Scenario with
Two Risk Factors

from current balance sheet. The funding requirement is thencompared with additional funding resources allowing analyses
and proposals to deal with such a requirement.
The Bank takes the above measures in normal market

Market Value

conditions and has a scale of exceptional market conditions
with countermeasures in place by scale number.
Market Liquidity Risk
Market liquidity risk refers to the possibility that volatile market
movements may prevent transactions occurring or that

Occurrenceof Stress

transactions may only be made at unfavorable prices, thus

Factor 1

incurring losses.
Factor 2

Notes:
1. The Bank’s method corresponds to the stress test cited in the Amendment
to the Capital Accord to Incorporate Market Risk, prepared by the Basle
Committee on Banking Supervision (January 1996) as the “Scenarios
developed by the Bank itself to capture the specific characteristics of its
portfolio.”
2. The Bank’s stress tests measure the maximum loss that may occur with aholding period of one day.

To control market liquidity risk, the ALM Committee sets
ceilings for day-to-day fund-raising amount and the operating
amount for market-driven products, taking into account market
size and other factors. The Risk Management Department
monitors compliance with such ceilings on an ongoing basis.

35

Review of Operations
Risk Control and Compliance Issues
Operational Risk

illegalities by banks, or the conclusion of inappropriate

Operational risk means the risk of loss caused by mistakes in thecontractual agreements in relation to operational transactions

conduct of businesses or by the occurrence of irregularities oror management decisions.

similar incidents. Such risk is becoming more and more diverse

It is the responsibility of the Legal Department to control

and sophisticated as the Bank enters new businesses amid thelegal risk. This involves close cooperation with leading law firms

deregulation of financial markets.

and legal specialists around the world to ensure that the legal

The Operations Supervisory Department is responsible forposition of the Bank is not prejudiced. Outside the Department,

ensuring that operating standards contained in the Bank's

staff in responsible positions are also required to attend courses

Procedures Manual are properly established and, consequently,

on legal affairs to assure awareness of legal compliancethat operational risk is minimized. The Auditing Department

throughout all of the Bank’s operations, and to provide theconducts an independent check approximately once a year toBank’s employees with legal seminars on banking transactions.

ensure that the Procedures Manual is being correctly followed
in all operational areas.

The Legal Department controls legal risk by considering all
possible legal issues that may develop in the course of the

In line with the increasing diversity and complexity ofBank’s business. It maintains very close working relationshipsbanking transactions, the Operations Supervisory Department

with the business divisions to ensure that they understand thecontinually revises and improves the Procedures Manual andlegal implications of their activities.

other related documents. It also ensures proper observance ofthe Manual, and trains staff accordingly.

Internal Audits
IBJ’s Auditing Department conducts audits of the Bank’s head

Systems Risk

office, as well as all branches and subsidiaries in Japan and

Systems risk refers to the possibility of losses being incurred due

abroad, and consolidated affiliates in Japan. This is designed to

to a suspension of business or a loss of important data arising

ensure compliance with internal accounting and proceduralfrom system failures and malfunctions or from improper

requirements and thereby prevent irregularities, given thecomputer operations.

increasing scope and sophistication of the Bank’s operations.

To prevent accidents from happening in the first place and to

All operating units are subject to unscheduled audits

minimize losses when an accident should actually take place, IBJ

approximately once a year. A special IT team also conducts

established “Basic Policies for System Risk Management”. The

audits in the Bank’s IT-related operations and systems.

Information Technology Department mainly spearheads system

Recent revisions to the Banking Law saw the introduction ofrisk management and takes comprehensive safety measures for

the Prompt Corrective Action system aimed at those banks

the Bank’s computer systems; for instance, duplicating of

judged to have insufficient capital adequacy. The Bank’s Credit

servers, establishing the backup site of the host computers in

Examination Department is responsible for auditing andOsaka, round-the-clock monitoring of the access made tomonitoring the loan portfolio to ensure the results of self-machine rooms and taking special measures to counter illegal

assessment of assets.

access into the network and computer viruses.

In the United States, Americas Division works independently
to ensure that internal auditing standards are maintained, theLegal Risk

loan portfolio is adequately monitored, and local legal

Legal risk refers to the risk of direct or indirect financial losses

requirements are fully observed.

arising from disputed transactions with customers, outright36

Compliance

In line with the Bank’s reorganization in June 1999, theCompliance issues are of great importance to senior

Compliance Division was raised to departmental status. To

management. Compliance not only means adherence to theguarantee its integrity, it was further upgraded and made fully

applicable laws but also the observance of established standard.

independent. It supervises the compliance activities of the Legal

Management believes this broader view of compliance is vital

Department, the Credit Examination Department, and thegiven IBJ’s unique position as a leader in Japanese finance. From

Auditing Department.

this perspective, the Bank must accommodate to the rapidly

The Compliance Department is responsible for planning,changing regulatory framework surrounding the industry, as

promoting and supervising the compliance operation

well as shifting social attitudes. To prevent non-compliance withthroughout the Bank. To this end, it formulates programs forrules, all staff must understand the importance of thecompliance supervision.

compliance function and comprehend regulatory issues related

To ensure that a strong “compliance culture” permeatesto their activities. If a breach occurs, it must be detected andthroughout the Bank, each business unit has assumed

dealt with swiftly to prevent any further occurrence.

compliance responsibility for its particular jurisdiction. In each

The Compliance Department has prepared a compliancesection of the Bank and its branches, one staff member has

manual, which it uses extensively in internal education andbeen made responsible for enforcing compliance. In addition,

training programs. The first level monitoring of the status ofthere is a reporting and monitoring system in place to ensurecompliance with the rules is conducted by the departmental

that the Compliance Department can immediately give advice

offices, and at the second level by the Auditing Department.

and warnings as needed.

Japan’s Big Bang financial reforms are not only changing the

In June 1999, the Corporate Auditors Office was formed

Bank’s operating and regulatory environment, but alsowith the aim of supporting the functions of the Bank’s Board of

permitting the establishment of new subsidiaries to enter

Auditors. The Office works closely with the Board of Auditors

entirely new areas of financial activity.

without, however, impinging on its independence.

● Compliance Structure
General Meetingof Shareholders
Auditors

Board of Auditors

Corporate
Auditors Office

Board ofDirectors

Executive
Committee

Compliance Department

Legal Department

Credit Examination Department

Auditing Department

37

Review of Operations
Operational Review

Corporate Banking Unit

Tsutomu Abe
Managing Director
Head of Corporate
Banking Unit

Our mission is to discover ourcustomers’ true needs from theperspective of the 21st century.
“In a nutshell, the feature of our corporate banking unit is ourstrong network of domestic as well as foreign customers basedon the characteristics of IBJ’s neutrality. We offer a wide rangeof value-added financial services, not only to large corporations,but to small and medium-sized corporations, public entities,
financial institutions, institutional investors, major foreign
corporations and individual customers. Our operations include
not only traditional services such as loans, foreign exchange
services and the sale of bank debentures, but we have also
been providing other sophisticated products to meet ourcustomers’ needs in terms of business and financial
improvement. We are also expanding rapidly into the field of
B2B e-business.
Last fiscal year, ended March 31, 2000, was the first year inwhich we adopted the business unit form of organization. The
aim for this move was to provide greater transparency withregard to profit and loss accountability by delegating authority
and responsibility. This has enabled our unit to reorganize andtransfer personnel, while responding flexibly to our customers’
needs and achieve favorable results in both our domestic andforeign operations.
An improvement of the Corporate Banking Unit’s portfolioof assets was our first major domestic task. By shifting assets
toward more highly rated investments, dealing with problem
loans and also focusing on optimizing our return based on
different levels of risk, we have been able to improve theportfolio remarkably.
Also, by taking advantage of the revision of corporate
accounting standards and the trend of placing greater emphasison the market as well as shareholders, we were able to achieve
outstanding results in advisory business such as large M&A and38

real estate securitization deals. Our RM, relationshipmanagement, has been able to understand our customers’ trueneeds quickly and accurately. Using this information, the Unit
was able to participate in a number of major deals with theother units.
Moreover, we have been able to offer a diverse range ofservices such as bank debentures and investment trusts to our
individual, financial institutions and institutional investor
customers who have been attempting to cope with the
problems of the abnormally low level of interest rates at present
in Japan.
In this way, our unit has made full use of our strong RM ties
with various customers to offer solutions that meet their needs.
The rapid growth of operations such as those mentioned above
was one of the major characteristics of the year under review.
Meanwhile, when most Japanese banks were scaling down,
we positioned our overseas services as one of the strategic areasthat had to be reinforced. We strengthened our businesscapabilities by concentrating our value-added services in ourleading offices in the Americas, Europe and Asia and byreorganizing our network of branch offices. As can be seenfrom our achievements such as that we were the highest
ranking Japanese bank in the league table in the syndicatedloan category in the Americas, as well as our high profile
participation in large-scale European transactions during theyear under review, our efforts have paid off.
Currently, our most important business opportunities lie in
our capability to provide solutions to our customers’ problems.
For this purpose, we intend to strengthen our industry-specificstrategies by reinforcing our Industrial Research Department
and other Group functions making full use of our global
network. Also with regard to the rapidly unfolding IT revolution,
we intend to provide sophisticated financial products centeredon B2B e-business services to aid in creating customer-initiatedbusiness models.
We intend to provide more satisfaction to our customers andhence contribute to the success of the Mizuho Financial Groupby focusing our efforts on our strengths such as offering
realistic solutions and sophisticated product business.
To realize the merits of the consolidation as quickly as
possible, we are actively promoting the integration and mutual
reinforcement of functions. This includes giving the three banks
access to each other’s networks and the cross-marketing ofeach other’s products. The Unit’s most important role is tostrengthen RM, relationship management, IBJ’s most valuableasset, and pursue business initiatives in alliance with other units.
We will harness all our resources to fulfill this role.”

The Corporate Banking Unit provides wholesale and retail

The Unit extends long-term loans for capital investment

services for large corporations, financial institutions, institutional

purposes, as well as short-term finance to fund working capital.

investors, and public entities, as well as small and medium-sized

It also provides commitment lines, syndicated loans, and otherenterprises and individuals.

new forms of funding that meet the fund-raising needs of

IBJ benefits from its position of complete neutrality, and does

corporations and the fund-management needs of investors. The

not belong to any keiretsu, or industrial group. This has allowed

IBJ Group provides real estate securitization and non-recourse

the Bank to build an unusually wide customer and partner

loans, and helps corporations tap the capital markets by

network around the world.

underwriting bond and commercial paper issues.

The Unit has done well since its establishment in June 1999,

Amid the ongoing Japan's Big Bang financial reforms,

reporting strong earnings in the year under review. This

customer needs are becoming more and more diversified,

performance reflects the clear focus on risk and return and an

highlighting the need for high value-added, flexible products

emphasis on RM based on which the Unit offers commercial

and services. To meet those needs, the Unit draws on thebanking, investment banking and B2B e-business services that

Bank’s global network and state-of-the-art financial techniques.
The value of the Bank's products and services are further

meet its customers needs.

enhanced by its sophisticated advisory services. To help

Large Corporations

companies build corporate value for their shareholders, the

The Corporate Banking Unit offers a wide range of services toBank focuses on the following services; advisory services such aslarge corporations integrating the functions of both commercialbalance sheet control techniques to optimize asset

banking and investment banking. As a prominent participant insecuritization, M&A services to restructure operations and enter

corporate finance, it provides a diverse array of fund-raising

new businesses, and the provision of cash management

support and other high value-added financial services. All ofservices.

these services are underpinned by a commitment to impartiality
and professionalism, which in turn shapes IBJ's role as a bankthat acts “in partnership with industry”.

● Loans Outstanding for Plant and Equipment Investment by Industry (¥ billion)
3,320.5

Electric Power (45.0%)
1,495.2

8,146.0

Transportation and Telecommunications (15.7%)
1,276.6
Chemicals (17.1%)

1,343.4
229.9
Total for the manufacturing sector¥12,019.2 billion¥ 1,275.6 billion (10.6%)

1,011.6

Transportation machinery and Equipment (13.5%)
136.5
Electric Machinery(8.0%)

998.6
79.9

Petroleum Refining (23.7%)
Iron and Steel (22.0%)
Ceramics (10.2%)

All industries¥175,488.9 billion¥ 8,078.5 billion (4.6%)

775.9
183.8
689.8
151.8

Outstanding loans for capital investment fromdomestic banks (excluding loans from trust
accounts)
Outstanding loans for capital investment from IBJ

485.0
49.3

Paper and Pulp (16.4%)

484.8
79.3

Nonferrous Metals (32.9%)

349.0
114.9
0

1,000

2,000

3,000

4,000

8,000

Note: Figures in parentheses are IBJ’s share of the total.
(At March 31, 2000)

39

Review of Operations
Operational Review

Corporate Banking Unit
Financial Institutions

underwritten many government-guaranteed bonds and local

The Corporate Banking Unit provides tailored responses to thegovernment bonds, including those of the Tokyo metropolitan

fund management needs of institutional investors, serving as

government. As financial liberalization progresses, the Unit will

their business partner to address various management issues.

continue to complement its fund-raising support services with a

Key factors distinguishing IBJ from its competitors are its neutral

range of research and advisory services.

position and a broad customer base built up through the sale of

Small and Medium-Sized Customers

debentures.
The Bank’s five-year debentures are consistently popular

By providing fund-raising assistance and solutions-oriented

among regional banks, shinkin banks, financial institutions andadvisory services, IBJ serves as the ideal financial partner for

insurance companies. The IBJ Group’s diverse line-up includes

small and medium-sized customers.

commercial paper, asset-backed securities, and investment

The Corporate Banking Unit extends direct funding via loans,trusts. It also provides derivatives, securities investment trusts,

as well as indirect funding in the form of SPARCS, Suppliers’

and custodian and pension fund services.

Account Receivables Control System, which helps customers
securitize their receivables and raise working capital.

The Bank has formed tie-ups with other financial institutions
in such fields as investment trust sales, capital market finance,

In December 1999, the Unit formed an investment support

and the development of credit risk management systems. Suchdivision for small and medium-sized companies and venture

tie-ups will become increasingly important in the years ahead.

capital businesses. The aim of the new division is to help suchcustomers with their general business development and with

Public Sector Entities

their IPO planning, through pro-active equity participation or

IBJ maintains close ties with national and local government andextension of loans.
The Unit also supports enterprises through Japan

with public sector corporations, providing them with time-

Management Systems Inc., a management consulting

proven fund-raising and other financial expertise.
In addition to extending loans, the Corporate Banking Unit

subsidiary, and IBJ Investment, Ltd., a joint venture between thehas a particularly good record in bond issues for public sector

Bank and 3i Group plc, the largest venture capital company incorporations. The Bank is a key member of the committee that

the U.K.

advises the Japanese government on bond issues. The Unit has● Commissioned Bank / Fiscal Agent Activities of IBJ (¥ billion)
Lead Commissioned Bank
Public-Sector Bonds[Reference]
Lead Commissioned Bank / Fiscal Agent
Electric Power Utility Bonds
Other Corporate Bonds(51.5%)

5,385.6
0(60.2%)(11.6%)

1,000

2,000

3,000

4,000

5,000

6,000

1,683.0
5,074.5
Amount for which IBJ acted as Lead Commissioned Bank
Note: Figures in parentheses are IBJ’s share of the total.
(Fiscal 1999)40

Individuals

B2B e-Business

IBJ has long served the needs of individual customers with a

The Corporate Banking Unit’s support for corporate customers

broad range of retail banking services. For individual investors,

extends to providing state-of-the-art financial services in the

the Corporate Banking Unit’s offerings include debentures, time

field of B2B e-business transactions.

deposits, foreign currency deposits, and investment trusts. The

The liberalization of foreign exchange transactions and theUnit also provides advisory services to help customers with theirintroduction of consolidated accounting requirements haveasset management through the assistance of about 340

heightened the need for efficient foreign exchange and cash

qualified financial planners at 24 domestic branches.

flow management between Japanese companies and their

In April 2000, the Unit greatly enhanced service convenienceoverseas counter-parties, as well as among companies in theby linking online with Japan’s post office network. Customers

same group. IBJ has responded decisively to these requirements

can now deposit and withdraw cash and receive deposit

by developing a wide range of support systems and cash

balance updates from around 25,000 ATMs and cash dispensers

management services.

at post offices nationwide. In the same month, the Unit

ITss, Integrated Treasury Support Services, helps corporations

extended its telephone banking services to the customers of all

integrate the cash flows of group companies. The system

the domestic branches.

incorporates sophisticated Internet technology, which has won

For the employees of customer companies, the Unit offers aacclaim for its reliability and expandability.

payroll savings plan incorporating bank debentures, as well as

In November 1998, IBJ launched IBJ Global CMS, the world’s

housing loans services. It is also preparing to offer products andfirst Internet-based global cash management system which

establish systems and other infrastructure to support Japanese-

streamlines financial administration for companies withstyle 401(k) defined contribution pension plans shortly to beworldwide operations.
The Bank will help customers exploit the potential of e-

introduced.

business through Identrus LLC, a U.S. electronic certification● Balance of Payroll Savings Plan Incorporating
Bank Debentures (at March 31)

service that the Bank supported the establishment of in 1999.
That firm will launch its services commercially in 2001. Anothercontribution to e-business is the AutoTrans System, which the(¥ billion)

Bank is currently testing. This system will support trade finance

1,000

5.0%

900

4.5%

800

4.0%

700

3.5%

600

3.0%

500

2.5%

400

2.0%

EDI, electronic data interchange, for the automobile parts andcomponents industry. AutoTrans System is based on an open
platform architecture and has potential applications in manyother industries.

300

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
IBJ market balance
IBJ market share

1.5%

41

Review of Operations
Operational Review

Corporate Banking Unit
International Operations

Cooperation Fund, to act as a syndicated loan agent forWith operations in 22 countries, the IBJ Group integrates a

countries throughout the region. The Bank also serves Japanese

broad range of highly specialized products and services tocompanies and their overseas subsidiaries and affiliates, offering

produce superior customer solutions.

foreign exchange, cash management, and other services. In

IBJ has reorganized its overseas network into three blocs, theinvestment banking, the Bank has a project finance team in

Americas, Europe, and Asia-Oceania, by concentrating its

Hong Kong and a treasury team in Singapore for treasury

services such as project finance, structured finance, and otherbusiness.

high value-added investment banking in the leading offices ofeach bloc.

The Bank's relationship with China extends back more than
two decades. During that time, it has built up strong

In the Americas, the Bank provides a wide range ofrelationships, forming co-operative agreements with around 60

customers with commercial banking services. The IBJ Group also

government-related entities and financial institutions in China.

offers securitization programs, lease finance, derivatives, andWith a branch in Shanghai, the Bank has received authorization

other products based on sophisticated financial technology. In

to handle Renminbi transactions. It will continue to strengthen

the year under review, the Bank headed the league table

its ties with China.

among Japanese banks in U.S. syndicated loans. The Bank also
helps Japanese companies establish operations in the Americas,

Industrial Finance Seminarand facilitates the efforts of companies in that region to access

For the past 38 years, the Bank has held regular Industrial

opportunities in Japan and the rest of Asia.

Finance Seminars, aimed at introducing Japan's economy,

Following the introduction of the euro in January 1999,

industry, finance, and culture to various types of institutions andEuropean markets have undergone dramatic structural changes,

corporations around the world. These seminars have been well

prompting many corporations to reorganize or expand theirattended, attracting more than 2,400 people who play

operations through M&A activity. The Bank sees business

important roles in around 80 countries. The Bank will continue

opportunities arising from such change, and has concentrated

to hold these seminars in further efforts to strengthen mutual

its European investment banking functions in London in orderunderstanding.

to provide high value-added services to customers.
The Bank played significant roles in major deals such as
Olivetti S.p.A.’s acquisition of Telecom Italia S.p.A., serving as
one of the arrangers and the sole Japanese bank. The Bank also
acts as a financial adviser to AES Corporation, a U.S. electric
power developer, and arranged a syndicated loan when thatcompany bought the Drax coal-fired power station from
National Power plc of the U.K. That deal won the Bank the“1999 European Project Finance Loan of the Year” and “1999Overall European Deal of the Year” awards of the International
Financial Review (IFR) magazine and Project Finance magazine,
respectively.
In Asia and Oceania, currencies and economies havestabilized, and the region has entered a new phase of economic
growth. The Bank maintains alliances with such institutions as
the Japan Bank for International Cooperation, a merger of theformer Export-Import Bank of Japan and Overseas Economic

42

Review of Operations
Operational Review

Investment Banking Unit

Masayuki Yasuoka
Managing Director
Member of theBoard of Directors
Head of Investment
Banking Unit

From “year of launch” to “year ofachievement”“The Investment Banking Unit provides tailored balance sheet
solutions covering management and financial strategies, tomeet the increasingly diversified and sophisticated needs ofcustomers. The Unit was launched in June 1999 to handle IBJ’s
global operations in structured finance, financial advisory
services, and project finance.
In the current global competition, executives of Japanese
corporations are acutely aware of the need to maximize
corporate value by forming business alliances and selectively
concentrating managerial resources. Accounting standards arealso changing, highlighting the need for financial strategies toenhance balance sheet control. In response, the Unit harnessed
its technology and achieved solid results in the year underreview. In fact, we dubbed the year under review as “the yearof launch”, because it was the first year of the Unit’s existence.
Let's look at the highlights in each business category. In
structured finance, we focused on meeting the needs ofcustomers associated with the introduction of new accounting
requirements. The IBJ Group generated significantly improved
results for new structured products, notably the securitization ofreal estate assets, housing loans, and other assets as well as
many types of leasing schemes such as a synthetic lease forsemiconductor manufacturing equipment, an operating leasefor ships and Japanese leveraged leases for aircraft andbuses.The pension fund trust product also performed extremely
well.
In financial advisory services, we saw a growing need for
M&A-related assistance as companies sought to restructure
their operations to enhance competitiveness. As a result, we led
a number of large, cross-border projects, including strategic

global alliance by Japan Telecom Co., Ltd. with British Telecom
plc and AT&T Corp. and the equity tie-up by Fuji Heavy
Industries Ltd. with General Motors Corporation.
In project finance, we were appointed as financial advisor
for a US$2 billion LNG project in Malaysia. It is the largest
project to date where a Japanese bank served as sole financial
advisor.
The strength of our investment banking business has
become particularly evident in these times of businessrestructuring and industrial transformation. To this end, we
meld our knowledge and experience as we move from 1999,
the “year of launch”, to 2000, the “year of achievement”.
Cross-border M&A projects will become even more
prominent in the future as companies maneuver to strengthen
their competitiveness. In response, we will augment our
information-provision capabilities by building up our global
network, which includes industry research analysts in key
locations. We will also monitor trends among European andNorth American banks to integrate their investment banking
and equity operations. To this end, we will reinforce ourrelationship with IBJ Securities Co., Ltd., which commenced fullscale equity operations after the final removal of businessrestrictions in October 1999.
The current financial year will be the first phase of the Bank’s
consolidation into the Mizuho Financial Group (“MHFG”). On
October 1, 2000, three companies–DKB Securities Co., Ltd., Fuji
Securities Co., Ltd., and IBJ Securities–will merge to form
Mizuho Securities Co.,Ltd. The new company will also take overthe investment banking operations of the parent banks of thethree securities companies. By forming MHFG, we will
significantly expand our customer base.
In fact, the key objective of MHFG is to become Japans firstfull-scale investment bank serving for its Japanese customers. To
maximize mutual benefits ahead of the consolidation, we arepromoting joint projects involving the three banks. In May
2000, we announced the creation of Japanese-style real estate
investment trust (REITs), an investment trust formed incollaboration with Mitsui Fudosan Co., Ltd. We hope to fully
mobilize this new business during the current year and be
prepared to take advantage of anticipated favorable changes inlegislation.
Utilizing the most sophisticated financial techniques, The
Unit will continue to provide balance sheet enhancement
solutions based on long-term perspectives.”

43

Review of Operations
Operational Review

Investment Banking Unit
The Investment Banking Unit provides comprehensive solutions-

Structured Financedriven services, including formulation of management andIBJ is a major player among Japanese banks in the area offinancial strategies, to help customers address various issues

structured finance. Here, the Investment Banking Unit devotes

arising from changes in markets and in legal and accounting

itself to structuring new financial schemes and products that are

requirements. This includes providing advice on ways totailor-made for particular customers. In recent years, theconcentrate resources in strategic businesses and divest

business environment in Japan has changed dramatically amid

peripheral and unprofitable operations.

the liberalization and introduction of international accounting

The Unit centers its global operations on structured finance,

standards, leading to greater diversity in customers’ financial

financial advisory services including M&A and management

requirements. The Unit is closely attuned to these changing

buyouts (MBOs) advice, and project finance. It draws heavily on

needs and responds quickly by developing and proposing new

the IBJ Group’s extensive capabilities in derivatives, research,financing schemes. Using the IBJ Group’s expertise in

and distribution. Employing such instruments as asset and real

securitization and lease financing, for example, the Unit

estate securitization and lease financing, the Unit provides anprovides customers with a greater variety of fund-raisingarray of fund-raising options to help customers enhance theiroptions while also helping them to streamline their balance

financial positions.

sheets and to improve their financial ratios and funding costs. In

Overseas, the Unit maintains several subsidiaries and joint

addition, the resulting products such as asset-backed securities

ventures that complement its domestic capabilities. In the U.S.,

and lease investments provide investors with new investment

The Bridgeford Group advises U.S. and multinational

opportunities. Recently the Unit has also started to develop

corporations on M&A, corporate strategy, financing and direct

Japanese-style real estate investment trusts (REITs), anticipating

investment. 3i-Kogin Buyouts Ltd., which IBJ jointly establishedthe considerable legal and accounting liberalization in this area.

with the 3i Group Plc, targets new MBO opportunities in Japan.

● Company Balance Sheets and Structured Finance Products

Cash Management Service

Asset-backed Securities
Asset-backed Loans<Assets><Liabilities>

Current Assets

Current Liabilities

Cash and Cash Equivalent

Trade Payable

Trade Receivables

Short-term Debts

Securities

CP

Inventories
Fixed Assets

Real Estate Securitization
Lease FinanceExchangeable Bonds

Group Finance Company

44

Amount in Arrears
Fixed Liabilities

Tangible Fixed Assets

Bonds

Intangible Fixed Assets

Convertible Bonds

Investment Securities

Long-term Debts

Affiliated Company Stocks

Retirement Payment Debts

Capital Subscriptions

Factoring

Defeasance

Employee Retirement
Benefit Trust<Shareholders’ Equity>

Long-term Loans

Capital

Other

Surplus Funds, etc.

Total Assets

Total Liabilities andShareholders’ Equity

Incentive PlanOne of the recent trends among Japanese companies is the

Financial Advisory Services

formulation of financial strategies for corporate groups as a

The Investment Banking Unit’s professionals advise companies

whole. Behind this development has been the shift from non-on strategic alliance opportunities with domestic and foreign

consolidated to consolidated financial statement accounting.

companies, assists in M&A transactions, and propose share

The Unit has kept abreast of these trends and has researchedswap and transfer schemes to restructure group operations.

the issues various corporate groups are facing. The Unit has

The Unit is particularly responsive to corporations seeking tomade proposals that raise the overall financial efficiency andbroaden their global reach. Its comprehensive capabilities

promoted rationalization of these groups. For example, theseinclude providing legal and accounting support and investment

proposals included the securitization of financial assets and realresearch, identifying potential joint venture partners, assisting inestate, leasing, debt defeasance, trust arrangements, and othernegotiations, and formulating structured finance and otherfinancial techniques.

funding schemes. The Unit also helps companies attempting to

The Unit has developed and marketed tailor-made structured

downsize and exit unprofitable business segments by carefully

finance schemes not only in Japan, the U.S., and Europe but

structuring liquidation or disposals, and other techniques toalso in various regions around the world. By marketing theseassure minimal impact on the surviving core businesses.

services and making full use of the know-how gained in Japan,

Japanese corporations are now facing a bewildering range ofit researches the special features of the legal, accounting, andrestructuring options. The Unit helps senior management

tax frameworks in various countries and structures the optimalcomprehend and exploit such concepts as enterprise value,schemes for each region.

holding company structures, share swaps and transfers,
alliances, divestments, and acquisitions. It provides carefully
tailored M&A advisory services based on long-term perspectives.
These services draw on IBJ’s decades-long relationships with

● M&A Advisory Mandates
Newly Won
584.6

numerous Japanese corporations, and benefit from the Bank’s(Index)
600

376.9

500
Indices basedon 1993=100

400● M&A Advisors Rankings by Valuefor Japanese-related Deals fromJanuary 1, 1999 to December 31, 1999

93

95

96 97 98 99(fiscal/Calender Year)

M&A advisory mandates won by IBJ(fiscal year from April 1 to March 31 next year)
Japanese M&A deals disclosed(calendar year ended December 31)
Source: IBJ survey

Announced Deals Not Withdrawn
Credit to Target & Acquisition Advisors

Announced Deals Not Withdrawn
Credit to Target & Acquisition Advisors

271.0

215.5

145.0

192.3
155.7

94

123.1

131.3
92.3

0

92.3

100

100

200

116.9

300

● M&A Advisors Rankings by Valuefor Japanese-related Deals fromJanuary 1, 2000 to June 30, 2000

AdvisorGoldman, Sachs & Co.
Merrill Lynch & Co. Inc.
Arthur Andersen
Salomon Smith Barney
Morgan Stanley Dean Witter
JP Morgan & Co. Inc.

IBJ
Deutsche Bank AG
CIBC World Markets
Nomura Group

in millions of
U.S. dollars$111,167.3
105,068.0
71,066.5
16,883.8
14,593.8
9,318.4
5,720.2
4,297.4
3,853.0
3,445.0

Source: Thompson Corporation

AdvisorMerrill Lynch & Co. Inc.
Salomon Smith Barney
Deutsche Bank AG

IBJ
Goldman, Sachs & Co.
JP Morgan & Co. Inc.

Nikko Securities Co. Ltd.
KPMG
Nomura GroupMorgan Stanley Dean Witterin millions of
U.S. dollars$15,623.7
10,736.9
6,974.8
5,931.9
5,905.6
5,176.6
5,103.7
5,019.6
4,987.0
4,729.2

Source: Thompson Corporation

45

Review of Operations
Operational Review

Investment Banking Unit
global M&A network, especially the expertise of The Bridgeford

The Investment Banking Unit of IBJ, as Japan’s leader ofGroup in the U.S. In providing M&A advice, the Unit's approachproject finance, provides a variety of services ranging fromis to find the best solution for the customer taking full accountproject analysis to risk identification/control and documentation,of the cross-cultural dimension involved.

and is an active participant from the initial stages of eachIn the year under review, the Unit secured many M&A

project. The Unit has also earned an excellent reputation foradvisory mandates. It finished seventh in the league table fordevising innovative project schemes which are later adopted as

deals involving Japanese companies, in terms of value of deals,

de facto models by the marketplace.

and fourth in terms of number of deals. A highlight of the year

The Unit was recently mandated as the financial advisor for a

was the project for Japan Telecom Co., Ltd. in which AT&T

major LNG project in Malaysia, which is the largest international

Corp. and British Telecom plc jointly acquired significant equity

project to date for a Japanese bank to serve as sole advisor.

stakes. The Unit also advised Fuji Heavy Industries Ltd., which

Deals led by the Bank, such as the Shandong Zhonghua coal-

was the subject of a major injection of new capital by General

fired power plant project in 1998 and the AES Drax coal-fired

Motors Corporation.

power plant project in 1999, were awarded the “Deal of theManagement buyouts (MBOs) have tremendous potential in
Japan. In April 1999, IBJ formed 3i-Kogin Buyouts Ltd., in a joint

Year” from Project Finance magazine, evidencing the wellearned reputation of the Bank in the field.

venture with 3i Group plc, of the U.K. The new company acts

The Unit is exploring new opportunities for the application ofprincipally as an investment adviser in connection with

its highly-valued project financing skills in such businesses fields

investments to be made together by 3i Group and a selectas private finance initiatives (PFIs) and MBOs.

number of limited partnerships. The prime goal is to help major

Principally based in New York, London, Tokyo and HongJapanese groups successfully spin off divisions, subsidiaries, andKong, the Unit has around 60 experts working to cover theaffiliates. The Unit’s activities include advising customers on the

Bank’s project finance commitments worldwide and to establish

objectives and procedures of such buyouts, and are often madeit as a global leader in this emerging field.

with the equity participation of 3i Group and the select numberof partnerships.

Project FinanceAlthough project finance techniques have traditionally been
applied in the fields of natural resources, energy and basic
materials, the recent trend of global deregulation andprivatization in the public sector has encouraged the active
participation of private capital in such new fields as electric
power, telecommunications, and transportation. In Japan, thepotential for domestic project financing is also growing; mostnotably in the fields of electric power and environmental
systems.

● Project Finance:
Recent Projects with Major IBJ Involvement■ Power Generation
AES Drax Power Plant (U.K.):“1999 Overall European Deal of the Year” (Project Finance)“1999 European Project Finance Loan of the Year” (IFR)
Shandong Zhonghua Power Plant (China):“1998 Power Deal of the Year” (Project Finance)
AES Barry Power Plant (U.K.):“1997 Power Deal of the Year” (Project Finance)■ Petrochemicals & Manufactured Products
Saudi Petrochemical (“Sadaf”) (Saudi Arabia)
Q-Chem (Qatar):“1999 Industrial Deal of the Year” (Project Finance International)“1999 Middle East Petrochemical Deal of the Year” (Project Finance)
Eastern Petrochemical (“Sharq”) (Saudi Arabia)
Al-Jubail Petrochemical (“Kemya”) (Saudi Arabia)
Ibn Rushd Petrochemical (Saudi Arabia)
BST Elastomers (Thailand)■ Resources & Energy
Bontang LNG Reliability Enhancement (“BLRE”) (Indonesia)
Premier Transco Gas Pipeline (U.K.)
Minera Los Pelambres Copper Mining (Chile)46

Review of Operations
Operational Review

Treasury Unit

Norio Nakajima
Managing Director
Head of Treasury Unit

Effective Asset Liability
Management and quick response tocustomers’ needs“The Treasury Unit is responsible for IBJ’s ALM operations
including the investment portfolio management, and sales andtrading mainly related to our activities to provide derivative
products to our customers. Since the adoption of the business
unit structure, we have concentrated on the objectives below
and have made significant progress in each area.
1) Reinforce our risk management ability to effectively manageinterest rate risk inherent in our balance sheet.
2) Analyze market trends in a more global perspective in orderto adequately allocate risk and enhance our return3) Expand our product base to provide a wider spectrum of
hedging alternatives to our customers
During the year under review, long-term domestic interest
rates showed a gradual upward trend despite the initial
weakening while U.S. interest rates rose substantially as a resultof the Federal Reserve Bank’s discount rate hike totaling 125
basis points. Despite this generally severe business environment,
the Unit has been able to report steady earnings by appropriate
risk management.
In our ALM operations, five-year bank debentures, which areissued on a monthly basis, continues to be our stable source offunding. Despite the fact that the Japanese Government andvarious city banks started to issue five-year bonds, we have notseen any negative effect on our pricing or sales. Due to the highmarketability supported by the profound liquidity in the market
and credibility among our long standing investors, we areconfident that our debentures will maintain their preeminent
position in the market.

We will continue our efforts to enhance our earning base by
prudent attention to risk management and also adequate
allocation of risk where we can expect higher return.
In the area of sales and trading, we have focused on thedevelopment of non-interest-rate-related derivative products aswell as interest-rate-related derivative products in order to meetthe increasingly diverse and complex hedging needs of ourcustomers. For example, we have developed commodity
derivatives based on coffee, petroleum and others, weather
derivatives structured to hedge the risk associated with change
in weather, and credit derivatives aimed to hedge credit
exposure.
Among such products the weather derivatives are the first
products of its kind to be launched in Japan and we jointly
developed these with IBJ-DL Financial Technology Co., Ltd., thejoint venture specializing in financial technology.
Our unit is fully committed to reinforcing its derivativesrelated business and will continue its effort to create anddevelop new products which well satisfy our customers’ diverse
demands. Also in the area of trading activities we aim toenhance the profitability of our proprietary trading especially
focusing on a “relative value approach”, capturing arbitrage
opportunities between theoretical prices and actual market
prices.
In addition we are confident that consolidation of the threebanks will eventually render the Mizuho Financial Group thepremier position in the derivatives business. Our strategy is tocombine the innovative skills and technology possessed by thethree banks respectively, and become the leading Japanesehouse in yen-based derivative products.
With the revolution of Internet based e-commerce, it isexpected that forex, interest rate, bond and other productdealing and trading will migrate onto the web. We arepreparing to cope with this major change in the businessenvironment and to offer appropriate business models to ourcustomers.”

47

Review of Operations
Operational Review

Treasury Unit
The Treasury Unit’s operation encompasses yen and foreign

Banking Businesscurrency ALM, investment portfolio management and sales andIBJ’s banking operation’s strategy is to optimize its asset andtrading-related foreign exchange, derivatives and otherliability profile on a global perspective by closely monitoring themarketable securities.

trend in the international financial market. In this light the Unit

IBJ’s risk management policy, including risk limits, isdetermined by the Board of Directors, the Executive Committee

dynamically shifts its investment percentile in bonds of different
countries.

and its sub-committee ALM Committee. Risk limits are

The objective of ALM operations is to optimize the interest

established within the risk capital allocated to the Unit, utilizing

rate risk exposure inherent in the balance sheet and maximize

the VaR measurement methodology. In order to optimize its

earnings. The Unit dynamically hedges the risk associated withasset and liability structure and enhance the earning base, theits assets and liabilities, utilizing swaps and futures.

Unit effectively assigns such risk limits among the respective

In particular, the Bank’s yen-denominated ALM isfunctions within the Unit. VaR is a statistical vehicle for

distinguished by the fact that it focuses on controlling the risk

identifying the maximum potential losses from adverse market

associated with long-term interest rates. This is because themovements.

Bank issues five-year debentures on a monthly basis andextends loans based on the long-term prime rate which links tointerest return of five-year debentures.

Bank Debentures
Bank debentures are IBJ’s primary source of funding. By
issuing five-year debentures, the Bank is able to manage
its long-term interest rate risk arising from its assets andliabilities.
The Bank dominates Japan’s ¥60 trillion debenture
market, accounting for around one-third of issues. Its
five-year debentures consistently attract investors’
demand due to the liquidity in the market. The Bank’s
success in this market arises from its solid sales network
established over the many years’ covering both
institutional and individual investors nationwide.
In the year under review, the Bank increased its direct
placement of five-year debentures to institutional
investors by ¥360 billion, bringing the balance of total
IBJ debentures to around ¥20 trillion at March 31, 2000.

48

In October 1999, the city banks were permitted toissue corporate bonds. And since February 2000, theGovernment has started issuing five-year interestbearing Japanese Government Bonds. Despite this newcompetition for investor funds, the Bank is confident
that the effect on its fund-raising activities will beminimal on account of the established position in themarket with the outstanding distribution channels andthe large lot liquidity available.
The Bank expects that its long experience in the issueof bank debentures will make a contribution to thefunding of the Mizuho Financial Group.

For derivative transactions significant change in accounting

Trading Business

requirements took place this year. In principle derivatives must

The Treasury Unit takes advantage of IBJ’s network covering

be booked at fair value unless hedge accounting applies. If a

Tokyo, London, New York, and Singapore to offer a broad

derivative is utilized to hedge the exposure related to the on-range of products tailored to customers’ specific needs. Thebalance sheet instruments such as loans and debentures, theUnit develops customized products. These include not only

entitiy is allowed to apply hedge accounting which permits theinterest-rates-related derivatives such as swaps and options, butdeferral of income and loss on derivative transactions subject toalso non-interest-rates-related derivatives to hedge risks ofcertain conditions. In response to this accounting change thecommodity, weather and credit. The Unit also emphasizes

Bank established its hedge accounting policy which requires

proprietary trading, especially a relative value approach, yield

derivatives to be linked to the related assets or liabilities when

spread strategies and basis trading in the bond and swap

the derivative is designated as a hedge.

markets.

The Unit is also working on Bank of Japan’s RTGS, real-timegross settlement system, which will be introduced shortly.

The Bank is a major player in foreign exchange markets,making markets around the clock and winning a preeminent
position in dollar-yen trading. For customers, the Unit operates
a night desk to provide after-hours trading services, and offers ahost of other services via the Bank’s global network.
The Unit anticipates major business opportunities to arise
from deregulation and change in market infrastructure. To
exploit these opportunities, the Unit will continue to expand its
trading business.

● Trends in IBJ’s Five-Year
Debenture Issues(¥ trillion)
12

10

8

6

4

2

0

3/96 9/96 3/97 9/97 3/98 9/98 3/99 9/99 3/00
Direct placement49

Review of Operations
Operational Review

Treasury Unit
Derivatives

cash flow, and consolidated accounting structures. The Unit uses

The Treasury Unit has responded decisively to the growing

this information to tailor risk-hedging schemes that reflectneeds among corporations to better manage the various risks incustomers’ market approaches and risk tolerances drawing on atheir balance sheets. The main risks are the fluctuation ofbroad range of derivatives that best suit customers. These

interest rates, foreign exchange rates, equity prices, commodity

activities benefit from proprietary financial analysis software thatprices, credit of counterparties, and occurrence of loss caused

allows the Unit to provide timely, comprehensive advice andby unseasonable weather, natural disasters and other external

formulate hedge schemes. Specialized teams concentrate on

events.

advanced risk-hedging techniques for equity, commodity, credit

The Bank helps companies control these risks by closely

risks and event risks. IBJ was the first bank in Japan to enter the

analyzing the risks inherent in their balance sheets, earnings,

derivatives contract market to offset weather risks, for example.

● Corporate Balance Sheets and Derivative Transactions
Hedging Tools in Response to
Various Risks of Balance Sheet

Inclusion into Various Finance Schemes
Interest Rate / Foreign Exchange

EquityCreditDerivative Products

Securitization
Project Finance
M&A

Finance /Foreign Exchange Market
IssuerCommodity

External Factors (Events)

AssetsLiabilities

Financial Assets

Borrowing

Securities

Bonds

Raw Materials

CapitalBanks, etc.

Capital Market
Commodity Market

Natural Disasters / Weather, etc.

50

Review of Operations
Operational Review

Securities & Asset Management Unit

Hiroshi Suzuki
Managing Director
Member of theBoard of Directors
Head of Securities &Asset Management

Structuring the leading group
among Japanese banks in the
securities business“The Securities & Asset Management Unit covers a wide rangeof business activities including securities business, asset
management and administration business including custody,
venture capital business and financial technology products. Our
Unit comprises approximately 20 IBJ subsidiaries and three
specialized departments to provide sophisticated financial
products and services for our customers. Transactions
conducted by our Unit’s member subsidiaries cover two cases;
one where the Bank cannot conduct transactions due to legal
restrictions and the other where the Bank can conduct thebusiness but has subsidiaries perform the function for its
speciality, efficiency or risk reasons. The business of the Unit is
the mainstream of the Bank, whatever the pertinent transaction
may be.
During the year under review, the performance of our Unit
was extremely favorable being supported by much higher
profits in custody business and dividends from groupsubsidiaries including IBJ Securities Co., Ltd. Results of thesesubsidiaries were well ahead of prospects. In the current
financial year business will grow favorably. Another event
worthy mentioning is the start of the business cooperation with
The Nomura Securities Co., Ltd. and The Dai-ichi Mutual Life
Insurance Company, which will further strengthen the Unit's
market position.
In line with the impact of Japan’s Big Bang financial reforms,
the Japanese business environment for securities, asset
management and administration services is radically changing
and the Unit has three factors uppermost in its mind:

1) The pension fund market in particular is going through its
current restructuring process and equity commission rates havebeen deregulated. To respond to such historical changes in ourbusiness environment, we must establish independent
management systems in each Unit’s related subsidiary.
2) Emphasis on quality earnings throughout our Unit in order tomake the maximum contribution to the Mizuho Financial Group(“MHFG”).
3) Careful control of the risk profiles of all our Unit’s member
subsidiaries.The priority target of our Unit in the current
financial year is the consolidation of its member subsidiaries in
the areas of securities, asset management and administration
with those of its partners in MHFG. On October 1, 2000, DKBSecurities Co., Ltd., Fuji Securities Co., Ltd. and IBJ Securities
Co., Ltd. will merge to form the wholesale securities company
to be named Mizuho Securities Co., Ltd. At the same time, The
Dai-Ichi Kangyo Fuji Trust & Banking Co., Ltd. will merge withIBJ Trust and Banking Co., Ltd. to form Mizuho Trust & Banking
Co., Ltd., which will specialize in asset management andcustody business.
The securities company subsidiaries of the three parent
banks in London, Zurich and New York have also been
preparing to consolidate their operations. Similarly, trust banksubsidiaries in Luxembourg and New York are in a process of
consolidation. The local consolidation of these subsidiaries will
result in a better operational network for Mizuho Securities andMizuho Trust & Banking. Another important target is theeventual consolidation of the investment banking sections of
the three banks with Mizuho Securities. MHFG is planning toestablish a joint venture brokerage house specialized in Internet
transactions to start operation by the end of 2000. Also, MHFG
is exploring the possibility of forming joint venture with several
life insurance companies to handle Japanese-style 401(k)employee education and communication business. Also, MHFG
is considering forming a new trust bank in collaboration withcertain life insurance companies to specifically engage in themaster trust business.
The securities and investment banking business of MHFG will
be reorganised around Mizuho Securities as a core vehicle alongwith the overseas securities subsidiaries as well as the domestic
securities companies within MHFG and the Internet-based
brokerage house which is to be established. Mizuho Securities
will endeavor to offer its customers comprehensive financial
services of the highest quality.”

51

Review of Operations
Operational Review

Securities & Asset Management Unit
Through IBJ’s subsidiaries and affiliates in Japan and overseas,

IBJ Securities advises companies extensively on their financial

the Securities & Asset Management Unit provides sophisticatedstrategies and assists growing companies in their IPOs. IBJ

securities and asset management services including custody. In

Securities has built a solid position in the asset-backed securities

October 1999, the Unit began offering a full equities service

market by identifying the growing needs among corporate

after a deregulation permitted the securities subsidiaries ofcustomers for asset securitization to slim their balance sheetsbanks to enter this area. Continuing Japan’s Big Bang financial

and responding quickly to them.

reforms are expected to create more opportunities for the Unit,

In bond sales and trading, IBJ Securities is a major presence

including the asset management of Japanese-style 401(k)in the placement market. In the year under review, it

defined contribution pension plans to be introduced early next

successfully bid for 6.6% of Japanese Government Bonds put

year.

up for tender, ranking it third in the securities industry. Its
offerings for the institutional investor market cover the full

Securities

spectrum, from public bonds, corporate bonds and debentures

The Unit’s domestic securities business is handled by IBJ

to foreign bonds, investment trusts, commodity funds, andSecurities Co., Ltd., a wholly owned subsidiary of IBJ establishedsecuritization products. Working with the Bank’s overseas

in 1993. IBJ Securities specializes in the wholesale securities

subsidiaries, IBJ Securities offers medium-term notes and credit-business such as underwriting and brokerage of bonds andlinked bonds. It also engages in brokerage for bond futures, as

equities. In March 2000, the Bank expanded the subsidiary’s

well as bonds combined with swaps, options, and othercapabilities by increasing its capital by ¥30 billion.

derivatives.

In the year under review, IBJ Securities lead-managed 38

IBJ Securities now offers a broad range of equity products

domestic straight bond issues, accounting for an 8.8% share ofand services. These include underwriting and trading equities,

the market as lead manager and 7.4% as underwriter. These

convertible bonds, and bonds with warrants, and dealing inresults ranked IBJ Securities just behind Japan’s Big Threeequities futures and options. It has won a high reputation for

securities houses. It also did very well domestically in convertible

the quality and depth of its research and continues to build abonds and public offerings. The Unit also works with IBJ’s

menu of highly reliable, top-quality securities services thatoverseas subsidiaries to issue bonds in various markets outside

combine research and sales components.

Japan.
● Securities & Asset Management Unit Structure
IBJ•Business Planning Department (IBJ Group)•Securities Services Department

Securities•Financial Engineering Department
Asset Management and Administration

IBJ Securities [To be merged with DKB Securities and Fuji
Securities into Mizuho Securities on October 1, 2000]
Overseas Subsidiaries• IBJ International• The Industrial Bank of Japan-NJ (Schweiz)• Aubrey G. Lanston• IBJ Asia Securities

IBJ Trust and Banking [To be merged with Dai-Ichi Kangyo Fuji Trust& Banking into Mizuho Trust & Banking on October 1, 2000]
Overseas Subsidiaries• IBJ International• The Industrial Bank of Japan (Luxembourg)
Joint Projects with Dai-ichi Mutual Life Insurance• DLIBJ Asset Management (DIAM)• DLIBJ Asset Management U.S.A.
• DLIBJ Asset Management International

Joint Project with Nomura Securities• IBJ Nomura Financial Products (INFP)

Joint projects with Nomura Securities• Nomura-IBJ Investment Services (NIIS)• Japan Investor Solutions & Technologies (JIS&T)• Nomura IBJ Global Investment Advisors (NI-GIA)

Shinko Securities (20% holding by IBJ Group)

Other Related Activities• IBJ Investment

52• IBJ-DL Financial Technology (IBJ-DL FT)

The IBJ Group is actively engaged in the securities business

Other securities operations include IBJ Nomura Financial

on a global basis through subsidiaries in London, New York,

Products plc which offers innovative financial products

and other major financial centers. IBJ International plc inincluding derivatives.

London and The Industrial Bank of Japan-NJ (Schweiz) Limited

The IBJ Group also has a 20% equity stake in Shinko

in Zurich are particularly active in underwriting overseas bond

Securities Co., Ltd., Japan’s fourth-largest securities house.

issues and arranging medium-term note issues by Japanese-

Shinko Securities is the result of the merger between New Japan

affiliated corporations. These and other overseas subsidiaries

Securities Co., Ltd., and Wako Securities Co., Ltd in April 2000.

work closely with IBJ Securities to ensure that customers receive
quality services.

On October 1, 2000, IBJ Securities will merge with DKBSecurities Co., Ltd. and Fuji Securities Co., Ltd. to form Mizuho
Securities Co., Ltd. This new operation will combine domestic● Lead Manager League Table for Straight Bond Issues
in Japan for the Year Ended March 31, 2000(¥ million, %)Ranking

Underwritersecurities wholesaling and investment banking services.

Asset Management and Administration

Value of Issues
Number ofIssues as Lead Manager ShareIn October 1998, IBJ formed a comprehensive alliance with The

1

Nomura Securities

101

1,880,921 24.28

Dai-ichi Mutual Life Insurance Company (“Dai-ichi”) in order to2

Daiwa Securities SBCM

76

1,379,021 17.80

3

Nikko Salomon Smith Barney

54

844,182 10.90

build a solid presence in a wide range of business areas such as

4

Tokyo-Mitsubishi Securities

46754,785

9.74

asset management business. Since then, both partners have

5

IBJ Securities

38

681,295

8.79

engaged in the cross-marketing of investment trusts, worked

6

Sakura Securities

26

495,560

6.40

together in syndicated finance, and jointly developed real

7

Sanwa Securities

30

381,856

4.93

8

DKB Securities

24

261,500

3.38

9

Fuji Securities

24242,368

3.13

In October 1999, the two partners further solidified ties by

10

Morgan Stanley Dean Witter

10

157,614

2.03

merging three companies IBJ NW Asset Management Co., Ltd.,

Source: THOMSON DealWatch QUICK Screen

IBJ Investment Trust Management Co., Ltd., and Dai-ichi Lifeestate securitization offerings.

Asset Management Co., Ltd. to form DLIBJ Asset Management● Lead Manager League Table by Value of ABS Issues
by Public Subscription in Japan for the Year Ended
March 31, 2000

Co., Ltd. (DIAM). DIAM brings together the impressive asset
management know-how and human resources of IBJ and Dai-(¥ million, %)Number of
Value of Issues
Issues as Lead Manager

ichi. Its aim is to become a globally competitive asset

Ranking

Underwriter

Sharemanagement company, offering quality products and services.

1

IBJ Securities

12

198,250

32.49

To complement DIAM’s activities and serve growing

2

Daiwa Securities SBCM

11148,750

24.38

domestic interest in global investments, two new wholly

3

DKB Securities

8

131,500

21.55

4

BNP Paribas Securities

1

41,000

6.72

5Goldman Sachs Securities

1

30,000

4.92

Source: THOMSON DealWatch QUICK Screen

Management International Ltd. in London and DLIBJ AssetManagement U.S.A., Inc. in New York.
IBJ has a 50% stake in Nomura IBJ Global Investment● Financial Results of IBJ Securities

Advisors, Inc. (NI-GIA), an asset management advisory(¥ million)

1999

For the Fiscal Year
Operating Revenue

owned DIAM subsidiaries were formed. These are DLIBJ Asset¥

21,4551998¥

company, which started joint operation in June 1999.

22,805Gathering information on around 20,000 investment funds

Income before Income Taxes and Others

7,860

10,175around the world, NI-GIA combines this data with state-of-the-Net Income

4,486

5,310

art financial technology to evaluate and select funds, allocate

At March 31

2000

1999

65,00050,0003,988,752

3,274,479

Shareholders’ Equity
Total Assets

customers’ assets to form fund of funds, and monitor fundperformance.

53

Review of Operations
Operational Review

Securities & Asset Management Unit
Nomura-IBJ Investment Services Co., Ltd. (NIIS), establishedLife Insurance Co., The Dai-ichi Mutual Life Insurance Company,in December 1998, offers pension fund consulting services. This

Fukoku Mutual Life Insurance Company , and The Yasuda Mutual

joint venture is building an infrastructure in anticipation of theLife Insurance Company. The alliance will entail forming a trust

introduction of Japanese-style 401(k) defined contributionbank to specialize in custodial services, including the provision ofpension plans to the Japanese market. Japan Investor Solutions

Japanese-style master trust services. The objective is to position& Technologies Co., Ltd. (JIS&T), established in August 1999, isthe new trust bank as the leading custodian for pension assets

a venture with many other financial institutions that specializes

and other types of customer assets.

in the complex record-keeping services of such plans.

The IBJ Group provides a number of domestic and foreign

Another key operation is IBJ Trust and Banking Co., Ltd., afinancial institutions with a wide range of custody and clearing

wholly owned subsidiary established in October 1995. This

services. The custody assets IBJ manages total $140.7 billion,

subsidiary provides trust services for money claims such as loan

the fifteenth largest among the global custodians (as of May

claims, for securities such as Japanese Government Bonds, bank1999: Institutional Investor magazine).

debentures, equities, and other marketable securities, and for

The Bank’s major foreign customers include Euroclear andinvestment trusts, and money trusts for specified investment

Clearstream, two of the prominent international central securities

and others. It also provides clerical services for SPCs relating todepositaries, and other foreign institutional investors to whom it

securitization products both for fund raises and the investments

offers accurate and reliable custody services through the custodyof funds.

system ISAAC. In addition to custody service, it also provides the

IBJ Trust and Banking’s business has expanded strongly amid
growing interest among Japanese investors in securities

customers with updates of Japanese securities and taxationrelated legislations and regulations in a prompt manner.

investment trust-type financial instruments. As of March 31,

For domestic customers investing in overseas market, the Bank

2000, securities investment trust assets under management

provides custody services through Newton, a Windows-based

totaled ¥4,414.1 billion, the leading result for a bank-owned

global custody system. It also offers administrative services fortrust bank. IBJ Trust and Banking continues to reinforce its

privately placed offshore investment trusts.

position as the top domestic player in the securities trust

Venture Capitalbusiness, with particular expertise in bond repo trusts.
On October 1, 2000, IBJ Trust and Banking will merge withIn 1990, IBJ joined with 3i Group plc, Europe’s largest venture

Dai-Ichi Kangyo Fuji Trust & Banking Co., Ltd., to form Mizuho

capital company, to found IBJ Investment, Ltd. This joint venture

Trust & Banking Co., Ltd.

has spearheaded the Bank’s drive to become a leader in the

The Mizuho Financial Group has agreed to form an allianceJapanese venture capital business. IBJ Investment provides

with four closely related life insurance companies: Asahi Mutual

funding for, and itself invests in, promising small and mediumsized enterprises. It also provides these companies withcomprehensive advice and assists in their IPOs. In recent years,● Results of IBJ Trust and Banking(¥ million)

1999

For the Fiscal Year
Operating Revenue

2,372

¥

1998

health care sectors and other areas, which are set to become

2,514

the engines of growth of the Japanese economy over the next
decade.

Income before Income Taxes and Others

770

1,097

Net Income

434

505

At March 31
Shareholders’ Equity(Capital Surplus)

54¥

IBJ Investment has focused on the information technology and

2000

1999

15,000(5,000)15,000(5,000)Total Assets

99,14471,657

Trust Assets

4,414,114

4,165,569

Review of Operations
Technological Innovation
Financial technology and systems development are crucial to

The second focus is to develop various risk management

providing advanced, high value-added products and services. IBJ

systems. The Bank is building new international operation

therefore allocates considerable capital and human resources tosupport systems in foreign branches, and market and credit riskboth these areas.

management systems which support the detailed quantificationof market and credit risks. Also, the Bank is active in controlling

Financial Technology

system risks, which are inherent risks of the IT field itself—Y2K

The centerpiece of our financial technology development efforts

was a prime example.

is IBJ-DL Financial Technology Co., Ltd. (“IBJ-DL FT”). This was

The third priority is, in view of the greater emphasis on

originally a wholly owned subsidiary of the Bank, and became acompliance, the prompt response to change in the regulatory

joint venture with The Dai-ichi Mutual Life Insurance Company

environment. For instance, the Bank has developed systems that(“Dai-ichi”) in April 1998.

handle mark-to-market accounting standards and are

IBJ-DL FT leads the IBJ Group’s applied research anddevelopment efforts. Its work covers all the operations of thecompatible with the Bank of Japan’s RTGS, real-time grosssettlement system, which minimizes settlement risks.

Bank and Dai-ichi, including banking, securities, investment

In order to render the Bank’s system development moremanagement, insurance, and pension funds. This joint venture

efficient and flexible in its response, the bank reorganized its IT

focuses on managing credit risks, market risks, and aorganizational structure into “federated structure”. In othercombination of the two, as well as interest rate, currency, andwords, the system development function was transferred fromequity derivatives. It also explores investment technology,

an independent stand-alone department to the businessstructured finance, and actuarial techniques, including those forpromotion departments in each business unit. With theJapanese-style 401(k) defined contribution pension plans.

introduction of this structure, system development better

IBJ-DL FT takes full advantage of synergies with the Bank andDai-ichi. For example, it has cooperated with NTT DATA

meeting changes of the business environment quickly becomes
possible.

CORPORATION to develop and package Credit Scope, anMeanwhile, to promote teamwork among the business units

advanced credit risk evaluation and management tool. IBJ-DL FT

and to ensure that IT resource allocation is consistent with thehas deployed this software within the IBJ Group. All Japan’s

Bank’s management policies, a Chief Information Officer (CIO),

regional banks have also decided to use the software.

who is a managing director, oversees bank-wide information

Other achievements include a comprehensive interest ratetechnology operations. The Information Technology

risk model, a state-of-the-art, high-speed actuarial computation

Department supports the CIO and supply uniform IT

system, and a global asset management and allocation model.

measurements, new technological information and IT

This joint venture has created a range of financial support

infrastructures.

systems and is working on Internet finance businessapplications. It is also developing derivatives models to covermarket price and weather risks.

Systems Development
At IBJ, IT investment has concentrated on three core priorities inrecent years. The first is to improve customer service
capabilities. To that end, the Bank has created systems that
support telephone banking and investment trust sales, as well
as a system allowing the Bank’s customers to deposit andwithdraw funds through post office ATMs.

55

Review of Operations
Solid Research Capabilities
Research

Corporate Banking Unit, works from a long-term global

The Research Department focuses on economic developments

perspective to identify issues currently facing each industry andin Japan and overseas, the financial and capital markets,

the future directions of development and offer specific solutions

government policies, and trends among financial institutions. It

and policies that contribute to industrial restructuring. The

provides both macroeconomic and microeconomic analysis in its

Department issues research reports for use by customers andreports. IBJ has won high regard among its customers forthese publications have won wide acclaim.

providing timely, practical analysis. An excellent example is our

The Department draws on the broad network it has built

semiannual survey of capital investment plans, which has thethrough its research activities to advise customers on specificwidest coverage in the private sector in Japan and is frequently

and timely ways to formulate business strategies, restructure

employed as primary data for economic forecasts.

their business portfolios, and analyze enterprise value. The
Department also participates in projects by providing support

Industrial Researchfor private finance initiatives (PFIs) and securitization of real

Through industrial research, IBJ identifies trends in major

estate.

industries and companies, formulates business proposals for
specific customers, and provides high value-added, tailor-madeservices. Japanese industry is changing amid global production
oversupply and the technological revolution. At the corporate
governance level, it is becoming crucial for management toensure operating transparency, introduce new accounting
standards, and endeavor to enhance enterprise value. The
Industrial Research Department, which belongs to the● IBJ Major Publications
Name of Publication

Frequency

In English
Quarterly
Outlook for
the Japanese Economy

Description of Content
IBJ’s forecast for the Japanese economy
for approximately the next one-year period.
IBJ’s special report on trends and outlook
in Japanese major industries.

IBJ Industry Research

Annually

In Japanese
Kogin Chosa

Occasionally IBJ’s industrial report. Each issue focuses
on a specific industry.

● Demand for Management Who Is Aware of Need to Improve Corporate Value
Clarify survival of fittest

Permeation of market discipline(Elimination of cross-holdings, of equity higher share held by foreigners, etc.)<Actual Corporate Responses>
Reconstruct and Reinforce Business
Portfolio

Reason for Medium-Term
Structural Reform

Globalize

Embrace Technological Innovation
Supply-Demand Trends
Global Strategy
Deregulation
Technological Innovation
New Standards

Japanese Industry

Demand for
management who Is
aware of need to
improve corporate value

Exploit Deregulation to Enter New
Businesses

Implement Group Management Control

Implement Balance Sheet Control

Deteriorating earnings
environment

56

Introduction of new accounting standards(Consolidated reporting, market value accounting, etc.)

Address Environmental Issues

Review of Operations
Corporate Citizenship
IBJ and its employees contribute actively to the community inOverseas

Japan and abroad, promoting economic and social progress

IBJ Foundation

through banking operations, philanthropic programs, and grass-

IBJ established the IBJ Foundation in December 1989, the firstroots activities.

corporate foundation created by a Japanese bank in the U.S.
The Foundation makes charitable donations to U.S. not-for-Domestic

profit organizations, including community and housing

Kawakami Memorial Foundation

development organizations, museums and educational

IBJ established this foundation in 1957. It assists young

programs. In 1999, the Foundation made $470,500 in grants toengineering and legal researchers, awards prizes for essays on

37 organizations, bringing the cumulative total over ten years

law and economics, and provides foreign students with

to $5 million. The Foundation has an endowment of $12.5

scholarships at Japanese educational institutions. The

million.

foundation has provided a total of ¥766 million in assistanceover the years.

In September 1999, the Bank held the third annual IBJ USA
Cares Day, bringing together employees and family members ina day of community service in six cities around the U.S. The IBJ

Koeikaivolunteers arranged for local museums to host 100

IBJ started this foundation in December 1954 to commemorate

disadvantaged children for a day of educational andits 50th anniversary. Over the years, it has awarded scholarships

recreational activities.

to 652 people for their contributions to society.
Disaster AssistanceIn October 1999, executives and employees from IBJ, The DaiIchi Kangyo Bank, Limited, and The Fuji Bank, Limited, donatedActivities in Overseas Offices¥11 million to the Japan Red Cross Society to aid the victims of
Turkish earthquake. One month later, they collected donations

At the Bangkok Branch, IBJ released sea turtles,

for victims of the Taiwan earthquake.

donated goods including old clothes to anelementary school and planted the young trees.
At the offices in China, the Bank is supporting
underprivileged children and the construction ofschools. Also, at the offices in Indonesia, theBank is supporting such activities as the local
distribution of rice as a part of relief activities tolocal poverty regions.
These activities are carried out with thecontribution from the Bank’s employees.

One scene of IBJ USA Cares Day

57

Review of Operations
Environmental Initiatives
IBJ has done much in recent years to respond to growing global

system also considers how that customer tackles environmental

concern for the environment. The Bank maintains a range of in-issues.

house programs to recycle and save energy. It also assesses the

When providing funds for projects with clear objectives, theenvironmental contributions of potential borrowers and offers

Bank evaluates the environmental impact of such funding andadvice on ways for local governments and companies to bereflects such information in its credit assessments and lending

more environmentally friendly.

terms.

Internal Initiatives

Kyoto Mechanism

IBJ extensively uses recycled paper and buys remanufactured

The Industrial Research Department of the Bank and IBJ-DL

toner cartridges. The Bank reuses its uniforms and carefully

Financial Technology Co., Ltd. evaluate the environmental risks

separates all waste to aid recycling. Just as important, the Bank

that customers face and provide research and advice on how to

has instituted a program to reduce water and power

manage these issues in line with the Kyoto Mechanisms which

consumption – it has cut such consumption per employee by

includes emissions reduction, and emissions trading schemes.

almost 10% over the past two years.
Advisory Services

External Activities

IBJ joined forces with EX CORPORATION to offer project

Credit Approval Standards

consultation and financial advisory services for local

IBJ aims to meet customer requirements while endeavoring togovernments and companies launching privately financed waste

address the public interest in terms of environmental problems

disposaland thereby reducing credit risk. The Bank uses an internal

CORPORATION, jointly markets these services.

credit rating system to evaluate credit to each customer. Thisbusinesses.

The

Bank,

togetherwithEX

Private sector technology, expertise, and funding could
potentially help waste treatment operations in constructing andmanaging disposal and recycling facilities. The Bank leverages● Trend of IBJ’s Energy Consumption
Fiscal 1999 Fiscal 1998 Fiscal 1997

its years of expertise to provide funding and a comprehensive

1,869

2,109

range of services for local government bodies and private sector

348

380

Expended for light, heat, water (¥ million)

1,724

Per employee (¥ thousand)346

operators engaged in waste treatment.

Note: Number of employees is an average number in each fiscal year.

● Outline of the Kyoto Mechanisms
International Emissions
Trading
Money
Annex B countries whose
emissions are less thanthe limit

OTC Trade
Listed Trade

Annex B countries whose
emissions are more thanthe limit

Annex I countries whose
emissions are less thanthe limit

The Greenhouse Gas
Reduction Projects
Credit(Transfer)

The Greenhouse Gas
Reduction Projects

Non-Annex I
Countries
Non-Annex B
Countries

Allowance(Transfer)
Joint Implementation

Clean Development
Mechanism

Credit(Creation)
Annex I countries whose
emissions are more thanthe limit

Advanced countries / Countries thatare undergoing the process oftransition to a market economy
Developing countries
Source: Industrial Bank of Japan, Industrial Research Department

58

Corporate Information

Contents
61

The Senior Management and Auditors

62

Organization Chart

64

Overseas Offices

69

Domestic Offices, Subsidiaries and Affiliated Companies

59

60

The Senior Management and Auditors■ Chairmanof the Board of Directors
Yoshiyuki Fujisawa■ President
and Chief Executive Officer
Masao Nishimura■ Deputy Presidents
Yozo Okumoto
Kisaburo Ikeda

Yoshiyuki Fujisawa

Masao Nishimura

Chairmanof the Board of Directors

President
and Chief Executive Officer

Yozo Okumoto

Kisaburo Ikeda

Deputy President

Deputy President■ Managing Directors
Members of the Boardof Directors
Hiroshi Saito
Mitsunori Kanesaka
Shinji Kubo
Hiroshi Suzuki
Shoji Noguchi
Yuji Watanabe
Takashi Okamoto
Masayuki Yasuoka
Toshiaki Ohuchi
Ikuo Kaminishi
Takao Suzuki
Shizuhiro Yamauchi■ Managing Directors
Masatake Yashiro
Tsutomu Abe
Hiroki Yamada
Norio Nakajima
Makoto Kikkawa
Toyohiro Ozaki
Makoto Fukuda■ Directors
Tsunehiro Nakayama
Mikio Nakura
Kiyoshige Akamatsu
Masatsugu Nagato
Shinichi Watanabe
Nobushige Imai

Shoji Noguchi

Masatake Yashiro

Hiroki Yamada

Managing Director
Member of the Boardof Directors

Managing Director

Managing Director*In charge of Asia and Oceania*In charge of Europe and*In charge of Americas

the Middle East

■ Auditors
Standing Auditors
Yoshitada Shiratori
Shusai Nagai
Kunihiro Fukasawa
Masahiro Nozue
Auditors
Setsuo Umezawa
Kunihisa Hama
(As of June 28, 2000)

61

Organization Chart

GeneralMeeting of
Shareholders
Auditors
Board ofDirectors

Executive
Committee

Management
Committee

Board ofAuditors
Corporate
Auditors Office

Managing
Directors
Council for
Business
Coordination

Corporate Planning Dept.
Consolidation Promoting and Planning Dept.
Public Relations Dept.
Administration Dept.
Personnel Dept.
Secretariat
Information Technology Dept.
e-Business Promotion Planning Dept.
Operations Supervisory Dept.
Business Operations Dept.
Securities Processing Dept.
Bond-Recording Dept.
Market Business Operations Dept.
International Treasury Operations Dept.
Research Headquarters
Research Dept.
Credit Risk Management Dept.
Risk Management Dept.
Compliance Dept.
Legal Dept.
Credit Examination Dept.
Auditing Dept.

62

Financial Control & Tax Div.

Corporate
Banking Unit

Business Co-ordination Dept.
Syndicated Finance Dept.
Industrial Research Dept.
Private Banking Promotion Dept.
Employee Benefit Plan Business Promotion Dept.
Bank Debentures Dept.
Financial Institutions Dept. No.1~2
Corporate Banking Dept. No.1~11
Corporate Banking Dept. (Media & Telecommunication)
Loan Dept.
Securities Dept.
Securities Business Dept.
Network Business Promotion Dept.
International Dept.

Industrial Finance Seminar Div.

Americas Div.
China Dept.
Corporate Banking Dept. (International)International Finance Dept.
International Loan Dept.
International Business Dept.
Tokyo Corporate Banking Dept.
Tokyo Corporate Banking Dept. No.1~4Tokyo Finance Dept.
Osaka Branch
Osaka Corporate Banking Dept. No.1~3
Osaka Finance Dept.
Kansai Loan Dept.
Domestic Branches
New York BranchBusiness Administration and Control Div. (Americas)
New York Corporate Finance Div. No.1~2

Loan Production Office

Overseas Branches

Loan Production Office

Representative Offices

Marketing Office

Loan Production OfficeTreasury Dept.
Treasury Unit

Derivatives and Fixed Income Dept.
International Treasury Dept.
Forex Markets Dept.

Treasury Div.
London Div.
New York Div.
Singapore Div.

Investment Banking Headquarters
Investment
Banking Unit

Structured Finance Dept.

Structured Finance Dept.
(Americas Div.)

Investment Banking Dept. (M&A, F.D.I.)

Securities& AssetManagement
Unit

Project Finance Dept.

Americas Div.

Private Equity Dept.

Hong Kong Div.

Business Planning Dept. (IBJ Group)
Securities Services Dept.
Financial Engineering Dept.

(As of July 25, 2000)

63

Overseas Offices

THE AMERICAS▼ San Francisco Office■ New York Branch

Kensaku Iwata
Senior Vice President

Shoji Noguchi
Managing Director and General Manager
1251 Avenue of The Americas,
New York, NY 10020, U.S.A.
Phone: 1-(212)282-3000
Telex: 420802(420802 KOGI UI),
170998 (170998 IBJBR UT)
Cable: KOGYOGINKO NEWYORK
Fax: 1-(212)282-4250▼ Chicago Branch
Masashi Sakai
General Manager
227 West Monroe Street, Suite 2600,
Chicago, IL 60606, U.S.A.
Phone: 1-(312)855-1111
Fax: 1-(312)855-8200
e-mail: ibjcbd@ibjusa.com

One Market Spear Tower,
Suite 1610, San Francisco,
CA 94105, U.S.A.
Phone: 1-(415)981-3131
Fax: 1-(415)982-1917■ Grand Cayman Branch
Shoji Noguchi
Managing Director
and General Manager
P.O. Box 1040, West Wind Building,
George Town, Grand Cayman,
Cayman Islands, B.W.I.
■ Nassau Branch
Shoji Noguchi
Managing Director
and General Manager▼ Atlanta Office

NatWest Building, West Bay Street,
Nassau, Bahamas

James Master
Senior Vice President● Mexico Representative Office

One Ninety One Peachtree Tower,
Suite 3825, 191 Peachtree Street,
N.E., Atlanta, GA 30303, U.S.A.
Phone: 1-(404)524-8770
Fax: 1-(404)524-8509▼ Houston Office
Michael N. Oakes
Senior Vice President
Three Allen Center, Suite 4850,
333 Clay Street,
Houston, TX 77002, U.S.A.
Phone: 1-(713)651-9444
Fax: 1-(713)651-9209

Masaki Oishi
Chief Representative
Edificio Omega,
Campos Eliseos No.345-11,
Col. Chapultepec Polanco,
Deleg. Miguel Hidalgo,
11560 México, D.F., México
Phone: 52-(5)281-5037,
52-(5)281-3206,
52-(5)281-5291,
52-(5)281-5162
Fax: 52-(5)281-5374
e-mail: yeibjmex@mpsnet.com.mx
ibjmex@infosel.net.mx● São Paulo Representative Office■ Los Angeles Agency
Kazutoshi Kuwahara
General Manager
350 South Grand Avenue, Suite 1500,
Los Angeles, CA 90071, U.S.A.
Phone: 1-(213)628-7241
Telex: 6831123(KOGIN LSA)
Fax: 1-(213)488-9840
URL: http://www.ibjla.com
e-mail: postmaster@ibjla.com

64

Hideo Yamaura
Chief Representative
Avenida Paulista, 1842-22o
Andar Conjunto 228, Edificio,
Cetenco Plaza-Torre Norte,
01310-200 São Paulo-SP, Brazil
Phone: 55-(11)289-2666
Fax: 55-(11)251-4241
e-mail: ibjbrsp@nethall.com.br▲ The Industrial Bank of Japan Trust
Company(Corporate Banking, Asset Management
and Administration Business)
Hajime Nakai
President and Chief Executive Officer
Head Office:1251 Avenue of The Americas,
New York, NY 10020, U.S.A.
Phone: 1-(212)282-3030
Telex: 425754 (425754 IBTC UI),
175598 (175598 IBJTC UT)Cable: KOGINTRUST NEWYORK
Fax: 1-(212)282-4252
Branch: Nassau, Bahamas
Representative Office: Atlanta, GA,
U.S.A.
▲ The Industrial Bank of Japan(Canada)(Corporate Banking, Treasury,
Investment Banking)Mitsuo Iwamoto
President and Chief Executive Officer
Head Office:Box 29, Suite 1102, 100 Yonge Street,Toronto, Ontario, Canada M5C 2W1
Phone: 1-(416)365-9550
Telex: 06-219881(IBJCDA TOR)
Fax: 1-(416)367-3452
Vancouver Branch
Robert Mackinnon
Senior Vice President
and General Manager
Suite 1220, 666 Burrard Street,
Vancouver, B.C., Canada V6C 2X8
Phone: 1-(604)682-4511
Fax: 1-(604)688-7079
e-mail: ibjcdav@direct.ca▲ IBJ Whitehall Bank
& Trust Company(Corporate Banking, Asset Management
and Administration Business, Treasury)
Dennis G. Buchert
President and Chief Executive Officer
Head Office:One State Street,
New York, NY 10004, U.S.A.
Phone: 1-(212)858-2000
Telex: 62820, 177754
Fax: 1-(212)425-0542
Branch: Grand Cayman,
Cayman Islands, B.W.I.

▲ Aubrey G. Lanston & Co. Inc.
(Futures Brokerage)
Ralph A. Hallenborg
President and Chief Executive Officer
One Chase Manhattan Plaza,
Fifty-Third Floor,
New York, NY 10005, U.S.A.
Phone: 1-(212)612-1600,
Telex: 233746, 971272
Fax: 1-(212)363-3423
URL: http://www.lanston.com
e-mail: aubrey@lanston.com

EUROPE AND THE MIDDLE EAST

●Bahrain Representative Office■ London BranchToshihiro Kodama
Chief Representative

Masataka Hama
General Manager
Bracken House, One Friday Street,
London EC4M 9JA, United Kingdom
Phone: 44-(20)7248-1111
Telex: 886939 (886939 KOGINL G)
Cable: KOGYOGINKO LONDON EC4
Fax: 44-(20)7248-1114▲ The Bridgeford Group■ Madrid Branch(Investment Banking)Haruhiko Masuda
President and Chief Executive Officer

Yasuo Nakamura
General Manager

399 Park Avenue, 18th Floor,
New York, NY 10022, U.S.A.
Phone: 1-(212)705-0880
Fax: 1-(212)755-8900
S Nomura IBJ Global Investment
Advisors, Inc.
(Asset Management and Administration
Business)
Toshinori Kurihara
President
2 World Finance Center, Building B,
New York, NY 10281, U.S.A.
Phone: 1-(212)667-9523
Fax: 1-(212)667-1099
S DLIBJ Asset Management
U.S.A., Inc.
(Asset Management and Administration
Business)
Susumu Okamura
President
399 Park Avenue 24th Floor,
New York, NY 10022, U.S.A.
Phone: 1-(212)350-7600
Fax: 1-(212)758-8990

Torre Picasso Planta 9,
Plaza Pablo Ruiz Picasso, s/n. AZCA,
28020 Madrid, Spain
Phone: 34-91-597-2612
Telex: 44066 KGN E
Fax: 34-91-597-4697
e-mail: ibj@sarenet.es■ Milan Branch
Shunsuke Imaoka
General Manager
Via Senato 14/16, 20121 Milan, Italy
Phone: 39-02-760861
Telex: 331541 (331541 IBJMIL)
Fax: 39-02-76015311
e-mail: ibjmilano@tin.it■ Frankfurt Branch
Kazuya Yoshida
General Manager
Taunustor 2,
60311 Frankfurt am Main,
F.R. Germany
Phone: 49-(69)27282-100
Telex: 414939 (414939 KOGIN D)
Fax: 49-(69)27282-511
e-mail: info@ibjg.de

Manama Centre (Entrance 4, 4th Floor),
P.O. Box 5759, Manama, Bahrain
Phone: 973-228868
Telex: 9775 (9775 IBJBAH BN)
Fax: 973-224828
e-mail: ibjbahcr@batelco.com.bh▲ Industriebank von Japan(Deutschland) Aktiengesellschaft–The Industrial Bank of Japan(Germany) –(Corporate Banking, Investment
Banking, Treasury, Securities
and Asset Management)
Tetsuo Narukawa
Chairman of the Boardof Managing Directors
Head Office:Taunustor 2,
60311 Frankfurt am Main,
F.R. Germany
Phone: 49-(69)27282-0
Telex: 414939 (414939 KOGIN D)
Fax: 49-(69)27282-512
e-mail: info@ibjg.de
Düsseldorf BranchToshihiro Kitamura
General Manager
Immermannstr. 45,
40210 Düsseldorf,
F.R. Germany
Phone: 49-(211)16830
Telex: 8582442
Fax: 49-(211)365602
e-mail: info@ibjg.de▲ The Industrial Bank of Japan(Luxembourg) S.A.
(Corporate Banking, Asset Management
and Administration Business)
Akira ImaiManaging Director(Mailing Address)
P.O. Box 68, L-2010 Luxembourg,
GD de Luxembourg(Address)
6, rue Jean Monnet,
L-2180 Luxembourg,
GD de Luxembourg
Phone: 352-4216171
Telex: 1289 (1289 IBJLX LU)
Fax: 352-421617-489

65

Overseas Offices▲ IBJ International plc(Capital Markets, Treasury, AssetManagement and Administration
Business)
Nobuo Oya
Chief Executive and Managing Director
Bracken House, One Friday Street,
London EC4M 9JA, United Kingdom
Phone: 44-(20)7236-1090
Telex: 925621 (925621 IBJITA G),
266582 (266582 IBJITA G)
Cable: IBJINTL LONDON EC4
Fax: 44-(20)7236-0484▲ The Industrial Bank of Japan-NJ(Schweiz) AG(Capital Markets, Treasury, AssetManagement and Administration
Business)
Takehiro Mikoda
President
Bahnhofstrasse 82a,CH-8023 Zurich, Switzerland
Phone: 41-(1)218-9595
Telex: 812298 (812298 IBJCH)
Fax: 41-(1)218-9945▲ Banque IBJ (France) S.A.

S DLIBJ Asset Management
International Ltd.

ASIA AND OCEANIA(Asset Management and Administration
Business)
Toyohide Tanaka
Chief Executive■ Singapore Branch

Bracken House, One Friday Street,
London EC4M 9JA, United Kingdom
Phone: 44-(20)7329-3777
Fax: 44-(20)7489-6932
S IBJ-BA Consulting
Investitionsberatung GmbH

16 Collyer Quay, #14-00,
Hitachi Tower, Singapore 049318,
Republic of Singapore
Phone: 65-5387366
Telex: RS21880 (KOGINPO RS21880)
Cable: KOGYOGINKO SINGAPORE
Fax: 65-5387779(Corporate Banking, Investment Banking)Tetsuo Narukawa
Managing Director■ Hong Kong Branch

Landhausgasse 4/7,
1010 Vienna, Austria
Phone: 43-(1)5355868
Fax: 43-(1)5355519
e-mail: ibj-ba.wien@aon.at

17th Floor, Two Pacific Place,
88 Queensway, Hong Kong, S.A.R.,
The People’s Republic of China
Phone: 852-21033000
Telex: 63035 IBJBR HX
Cable: KOGYOGINKO HONG KONG
Fax: 852-28459187

S IBJ Nomura Financial Products
Holding plc(Holding Company)
Shozo Nurishi
Chairman(Corporate Banking, Investment Banking,
Capital Markets)
Joji Takegami
President-Directeur Général

Bracken House, One Friday Street,
London EC4M 9JA, United Kingdom
Phone: 44-(20)7762-3306
Fax: 44-(20)7762-3338

Washington Plaza,42, rue Washington,
75408 Paris Cedex 08, France
Phone: 33-(1)53-83-41-00
Telex: 642247 (IBJFSA 642247F)
Fax: 33-(1)53-83-41-69

S IBJ Nomura Financial
Products plc(Capital Markets)
Shozo Nurishi
ChairmanBracken House, One Friday Street,
London EC4M 9JA, United Kingdom
Phone: 44-(20)7762-3333
Fax: 44-(20)7762-3338

66

Naoki Izawa
General Manager

Makoto Masuda
General Manager■ Shanghai Branch
Kiyoshige Akamatsu
Director and General Manager
6th Floor, Shanghai Senmao
International Building,
101 Yin Cheng East Road,
Pudong New Area,
Shanghai 200120,
The People’s Republic of China
Phone: 86-(21)6841-0000
Telex: 33144 (33144 IBJSH CN)
Fax: 86-(21)6841-0399■ Dalian Branch
Taizo Watanabe
General Manager
8th Floor, Senmao Building,
147 Zhong Shan Lu,
Xi Gang Qu, Dalian 116011,
The People's Republic of China
Phone: 86-(411)3692712
Telex: 86212 (86212 IBJDL CN)
Fax: 86-(411)3603581

■ Beijing Branch● Jakarta Representative Office● Seoul Representative Office

Kotaro Nakazawa
General Manager

Hareo Odashima
Chief Representative

Takafumi Yoshida
Chief Representative

8th Floor,
Chang-Fu-Gong Office Building,Jia 26, Jianguomenwai Street,
Chaoyang District, Beijing 100022,
The People's Republic of China
Phone: 86-(10)6513-9026
Telex: 22457 (22457 IBJPK CN)
Fax: 86-(10)6512-7126

BNI Building, 23rd Floor,
Jl. Jenderal Sudirman Kav. 1,
Jakarta 10220, Indonesia
Phone: 62-(21)251-2024~5,
62-(21)570-1010
Telex: 65263 (65263 IBJIND IA),65495 (65495 IBJIND IA)
Fax: 62-(21)570-1225~6,
62-(21)574-3581(direct)

Press Center Building, 10th Floor, 25,
Taepyung-Ro 1-Ga, Chung-ku,
Seoul 100-101, Korea
Phone: 82-(2)736-2684~5
Fax: 82-(2)736-2686
e-mail: ibjseoul@chollian.dacom.co.kr■ Bangkok Branch
Hiroyuki Nishijima*
General Manager
15th Floor, Nantawan Building**,
161 Rajdamri Road,
Lumpini, Pathumwan,
Bangkok 10330, Thailand
Phone: 66-(2)255-5991
Telex: 20544 (20544 IBJBKK TH)
Fax: 66-(2)255-5990* As of August 1, 2000**As of September 1, 2000

● Kuala Lumpur Representative
OfficeTakahiko Matsushita
Representative
Suite No.1403, 14th Floor,
Kenanga International,
Jalan Sultan Ismail,50250 Kuala Lumpur, Malaysia
Phone: 60-(3)21615111
Telex: 32298 (IBJKL MA32298)
Fax: 60-(3)21615620■ Labuan Branch● Guangzhou Representative Office

Kohei Ohgaki
General Manager

Kiyofumi Ota
Chief Representative

Level 11(A), Main Office Tower,
Financial Park Labuan,
Jalan Merdeka, 87000
Federal Territory of Labuan, Malaysia
Phone: 60-(87)419115
Telex: 85061 (IBJLB MA85061)
Fax: 60-(87)419121

Room 1252, Garden Tower,
368 Huanshi Dong Lu,
Guangzhou 510064,
The People's Republic of China
Phone: 86-(20)83342017
Telex: 44263 (44263 IBJGZ CN)
Fax: 86-(20)83355847

Labuan Branch, Kuala Lumpur
Marketing Office
Suite No.1403, 14th Floor,
Kenanga International,
Jalan Sultan Ismail,50250 Kuala Lumpur, Malaysia
Phone: 60-(3)21636970
Fax: 60-(3)21636837▲ P.T. Bumi Daya–IBJ Leasing(Leasing Business)
Hiyoshi Kozaki
President Director
BNI Building, 21st Floor,
Jl. Jenderal Sudirman Kav. 1,
Jakarta 10220, Indonesia
Phone: 62-(21)570-2588
Telex: 65191 (65191 BDIBJL IA)
Cable: BDIBJL IA
Fax: 62-(21)570-1218▲ IBJ Lanston Futures Pte. Ltd.
–A subsidiary of Aubrey G. Lanston–(Futures Brokerage)
John C. Gavin
Chief Executive Officer
16 Collyer Quay,#14-00, Hitachi Tower,
Singapore 049318,
Republic of Singapore
Phone: 65-5383400
Fax: 65-5384100▲ IBJ Australia Bank Limited● Wuhan Representative OfficeChen Jianguo
Chief Representative
Room 305,
Holiday Inn Tian-an Wuhan,
868 Jiefang Dadao,
Wuhan 430022,
The People's Republic of China
Phone: 86-(27)8582-1155
Fax: 86-(27)8582-1177
e-mail: ibjwuhan@public.wh.hb.cn(Corporate Banking, Investment Banking,Asset Management and Administration
Business)
Tomoo Inose
Managing Director and Chief Executive
Level 21, Colonial Centre,
52 Martin Place,
Sydney, N.S.W. 2000, Australia
Phone: 61-(2)9377-8888
Fax: 61-(2)9377-8884
e-mail: ibja@ibj.com.au

67

Overseas Offices▲ PT. Bank IBJ Indonesia

S CCIC Finance Limited(Treasury, Corporate Banking)Junya Fujiwara
President Director(Advisory Business)
Paul S. Muther
Managing Director

BNI Building, 23rd Floor,
Jl. Jenderal Sudirman Kav. 1,
Jakarta 10220, Indonesia
Phone: 62-(21)570-1010
Telex: 65263 (65263 IBJIND IA),65495 (65495 IBJIND IA)
Fax: 62-(21)570-1225~6e-mail: sysdept@ibjjkt.co.id

38th Floor A, Bank of China Tower,
1 Garden Road, Central,
Hong Kong, S.A.R.,
The People's Republic of China
Phone: 852-28200888
Fax: 852-28772105▲ IBJ Asia Securities Limited(Capital Markets)
Jun Otsuka
Managing Director and CEO
17th Floor, Two Pacific Place,
88 Queensway, Hong Kong, S.A.R.,
The People's Republic of China
Phone: 852-2103-3883
Fax: 852-2103-3702

S Krung Thai IBJ Leasing Co., Ltd.
(Leasing Business)
Phinyavat Chantrakantanond
President
18th Floor, Nantawan Building*,
161 Rajdamri Road,
Lumpini, Pathumwan,
Bangkok 10330, Thailand
Phone: 66-(2)252-9620
Fax: 66-(2)254-6119*As of September 1, 2000

■ Branches and Agencies▼ Loan Production Offices● Representative Offices▲ Overseas Subsidiaries
S Overseas Affiliates
All telephone numbers given are fortelephone calls placed from outside the country.
(As of June 30, 2000)

68

Domestic Offices, Subsidiaries and Affiliated Companies★ Head Office3-3, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-8210, Japan
Phone: 81-(3)3214-1111
Telex: J22325 (KOGIN J22325),
J23215 (KOGIN J23215)
Cable: KOGIN TOKYO
Fax: 81-(3)3201-7643
SWIFT: IBJT JP JT■ Sapporo Branch
2, Kita 1-joh Nishi 5-chome,
Chuo-ku, Sapporo 060-0001
Phone: 81-(11)231-0101■ Sendai Branch
4-1, Ichibancho 2-chome,
Aoba-ku, Sendai 980-0811
Phone: 81-(22)266-3111■ Fukushima Branch
6-5, Motomachi, Fukushima 960-8035
Phone: 81-(24)523-1111■ Tokyo Corporate Banking
Department
2-16, Yaesu 1-chome,
Chuo-ku, Tokyo 103-8677
Phone: 81-(3)3272-1311■ Kichijoji Branch
14-5, Kichijoji-Honcho 1-chome,
Musashino, Tokyo 180-0004
Phone: 81-(422)21-0211■ Machida Branch
13-15, Morino 1-chome,
Machida, Tokyo 194-0022
Phone: 81-(42)723-2111■ Yokohama Branch
4-1, Kitasaiwai 1-chome,
Nishi-ku, Yokohama 220-0004
Phone: 81-(45)319-3320■ Fujisawa Branch
20-10-101, Minami-Fujisawa,
Fujisawa 251-0055
Phone: 81-(466)22-7111■ Niigata Branch5942 Rokubancho, Nishibori-dori,Niigata 951-8061
Phone: 81-(25)229-2331■ Toyama Branch
5-13, Sakurabashi-dori,
Toyama 930-0004
Phone: 81-(76)441-1111■ Shinjuku Branch
17-1, Nishi-Shinjuku 1-chome,
Shinjuku-ku, Tokyo 160-0023
Phone: 81-(3)3344-6111■ Shizuoka Branch
5-6, Miyukicho, Shizuoka 420-8715
Phone: 81-(54)251-2111■ Shibuya Branch
24-10, Shibuya 1-chome,
Shibuya-ku, Tokyo 150-0002
Phone: 81-(3)3498-3111■ Nagoya Branch
11-18, Nishiki 1-chome,
Naka-ku, Nagoya 460-0003
Phone: 81-(52)201-7151■ Ikebukuro Branch
12-1, Higashi-Ikebukuro 1-chome,
Toshima-ku, Tokyo 170-0013
Phone: 81-(3)3982-0111■ Kyoto Branch
630 Shichikannon-cho, Rokkaku-sagaru,
Karasuma-dori, Nakagyo-ku,
Kyoto 640-8162
Phone: 81-(75)223-1123■ Osaka Branch
1-1, Koraibashi 4-chome,
Chuo-ku, Osaka 541-0043
Phone: 81-(6)6202-2351■ Umeda Branch
8-17, Umeda 1-chome,
Kita-ku, Osaka 530-0001
Phone: 81-(6)6341-2111■ Nanba Branch
4-14, Nanba 3-chome,
Chuo-ku, Osaka 542-0076
Phone: 81-(6)6644-1123■ Kobe Branch
1-1, Onoe-dori 7-chome,
Chuo-ku, Kobe 651-0088
Phone: 81-(78)222-1101■ Hiroshima Branch
1-1, Kamiyacho 2-chome,
Naka-ku, Hiroshima 730-8710
Phone: 81-(82)247-7111■ Takamatsu Branch
6-8, Bancho 1-chome,
Takamatsu 760-8677
Phone: 81-(87)821-5051■ Fukuoka Branch
13-1, Tenjin 1-chome,
Chuo-ku, Fukuoka 810-0001
Phone: 81-(92)711-1234

69

▲ Japan Management Systems Inc.
4-1, Yaesu 2-chome, Chuo-ku,
Tokyo 104-0028, Japan
Tel: 81-(3)3274-1391
Fax: 81-(3)3275-0514
e-mail: info-jms@jmsinc.co.jp▲ IBJ Systems, Ltd.
15-1, Konan 2-chome,
Minato-ku, Tokyo 108-6008, Japan
Tel: 81-(3)5783-7800
Fax: 81-(3)5463-0163▲ IBJ Card Service Co., Ltd.
4-1, Yaesu 2-chome, Chuo-ku,
Tokyo 104-0028, Japan
Tel: 81-(3)3275-3051
Fax: 81-(3)3275-3223▲ IBJ Investment, Ltd.
12-2, Gobancho, Chiyoda-ku,
Tokyo 102-0076, Japan
Tel: 81-(3)3239-5670
Fax: 81-(3)3239-6828
e-mail: info@ibji.co.jp▲ IBJ Securities Co., Ltd.
5-1, Otemachi 1-chome, Chiyoda-ku,
Tokyo 100-0004, Japan
Tel: 81-(3)5252-3111
URL: http://www.ibjs.co.jp
e-mail: webmaster@ibjs.co.jp

S Shinko Securities Co., Ltd.
4-1, Yaesu 2-chome,
Chuo-ku, Tokyo 104-8481, Japan
Tel: 81-(3)5203-6000
Fax: 81-(3)5203-6418
URL: http://www.shinko-sec.co.jp
e-mail: info@shinko-sec.co.jp
S Nomura-IBJ Investment Services
Co., Ltd.
2-1, Marunouchi 2-chome,
Chiyoda-ku, Tokyo 100-0005, Japan
Tel: 81-(3)5223-2101
Fax: 81-(3)5223-2105
S 3i-Kogin Buyouts Ltd.
2-3, Uchisaiwaicho 2-chome,
Chiyoda-ku, Tokyo 100-0011, Japan
Tel: 81-(3)5251-4131
Fax: 81-(3)5251-4141
S DLIBJ Asset Management
Co., Ltd.
3-1, Marunouchi 3-chome,
Chiyoda-ku, Tokyo 100-0005, Japan
Tel: 81-(3)3216-0101
Fax: 81-(3)3216-0102*IBJ Securities Co., Ltd., DKB Securities Co., Ltd., andFuji Securities Co., Ltd., will be merged on October
1, 2000. The name of the merged company shall be
Mizuho Securities Co.,Ltd.

▲ IBJ Trust and Banking Co., Ltd.
11-19, Nibancho, Chiyoda-ku,
Tokyo 102-0084, Japan
Tel: 81-(3)3262-2011
Fax: 81-(3)3262-9550*IBJ Trust and Banking Co., Ltd., and The Dai-Ichi
Kangyo Fuji Trust & Banking Co., Ltd. will be mergedon October 1, 2000. The name of the merged
company shall be Mizuho Trust & Banking Co.,Ltd.

▲ IBJ-DL Financial Technology
Co., Ltd.
5-1, Otemachi 1-chome,
Chiyoda-ku, Tokyo 100-0004, Japan
Tel: 81-(3)5200-7611
Fax: 81-(3)3201-0698★ Head Office■ Branches▲ Subsidiaries♦ Affiliates(As of June 30, 2000)

70

Financial Section

Contents
72

Six-Year Summary

73

Management’s Discussion and Analysis

88

Report of Independent Certified Public Accountants

89

Consolidated Balance Sheets

90

Consolidated Statements of Income

91

Consolidated Statements of Shareholders’ Equity

92

Consolidated Statement of Cash Flows93

Notes to Consolidated Financial Statements

120

Report of Independent Certified Public Accountants

121

Non-Consolidated Balance Sheets

122

Non-Consolidated Statements of Income

123

Non-Consolidated Statements of Shareholders’ Equity

124

Notes to Non-Consolidated Financial Statements

71
71

Six-Year Summary(in millions of yen)

Statements of Income

Fiscal 1999*

Fiscal 1998*

Fiscal 1997*

Fiscal 1996*

Fiscal 1995*

Fiscal 1994*

Total Income
Total Expense
Income (Loss) before Income Taxes
and Others
Net Income (Loss)¥2,999,663
2,832,600¥3,386,760
3,642,993

3,321,902
3,635,020¥3,403,347
3,358,870

3,731,847
3,838,173¥3,087,404
3,032,577

167,063
70,754(256,232)(181,276)(313,118)(202,660)

44,477
12,740(106,325)(63,551)

54,826
29,685

Fiscal 1997

Fiscal 1996

Fiscal 1995

Fiscal 1994

¥12.62n/a(in yen)

Per Share of Common Stock

Fiscal 1999

Fiscal 1998

Net Income (Loss)
Basic
Diluted¥25.5923.15¥(70.64)n/a¥(79.80)
n/a

¥5.24
n/a

¥(27.02)n/a

Balance Sheets

March 31, 2000

March 31, 1999

March 31, 1998

March 31, 1997

March 31, 1996

Total Assets
Cash and Due from Banks
Trading Assets
Trading Account Securities
Securities
Loans and Bills Discounted
Reserve for Possible Loan Losses¥42,466,450
652,704
3,926,059
7,580,782
22,779,689(920,029)¥46,166,409 ¥49,229,785 ¥46,966,968 ¥40,737,733 ¥40,858,245
2,987,739
806,910553,2032,318,157
3,951,856
3,729,005
3,466,255
537,932
943,457
726,995
6,686,872
6,808,045
6,351,897
8,942,151
8,847,249
23,327,907 24,001,429 25,518,440 24,267,385 23,808,552-

Total Liabilities
Debentures
Deposits
Trading Liabilities
Reserve for Possible Loan Losses
Acceptances and Guarantees
Total Shareholders’ Equity

40,556,917
20,471,200
6,636,501
1,361,118
1,060,417
1,627,417

44,308,984
20,461,865
8,116,321
2,854,950
1,066,714
1,516,602
1,561,350

47,909,766
20,840,941
10,053,551
2,286,959
922,235
2,024,337
1,320,019

45,422,988
22,137,519
10,871,309
576,950
2,382,608
1,543,979

39,412,622
21,470,815
8,960,767
497,3992,331,153
1,325,110

39,449,385
21,658,109
9,273,126
327,758
2,144,478
1,408,860

March 31, 2000

March 31, 1999

March 31, 1998

March 31, 1997

March 31, 1996

March 31, 1995

12.19%

11.34%

10.26%

9.04％

8.59％

8.82％

(in millions of yen)

Risk-Based Capital Ratio
Risk-Based Capital Ratios(BIS Capital Ratio)

March 31, 1995

All figures are on a consolidated basis.
*Fiscal 1999, 1998, 1997, 1996, 1995 and 1994 represent the fiscal years ended March 31, 2000, 1999, 1998, 1997, 1996 and 1995, respectively.

72

Management’s Discussion and Analysis
The figures are shown on the consolidated basis, except for those which are specifically stated as “non-consolidated”.

Summary for IBJ GroupFor the year ended March 31, 2000 (“fiscal 1999”), Total
Income for IBJ and its subsidiaries (the “IBJ Group”) decreased by¥387.0 billion to ¥2,999.6 billion. In contrast, Total Expensedecreased by ¥810.3 billion to ¥2,832.6 billion. As a result,
Income before Income Taxes and Others increased by ¥423.2
billion to ¥167.0 billion, and Net Income increased by ¥252.0
billion to ¥70.7 billion.
Retained Earnings at March 31, 2000 increased by ¥65.7
billion to ¥284.4 billion from a year ago.
Total Assets as of March 31, 2000, decreased by ¥3,699.9
billion to ¥42,466.4 billion due to a depreciation in the value of
assets denominated in foreign currencies from a significantly
stronger Japanese Yen and to the reclassification of a Reserve
for Possible Loan Losses from the liability section to the asset

section of the balance sheet at March 31, 2000.
Total Shareholders’ Equity as of March 31, 2000, increased by¥66.0 billion to ¥1,627.4 billion. Risk-Based Capital Ratio (BIS
Capital Ratio) increased by 0.85% to 12.19%.

Consolidation Policy
From fiscal 1998, IBJ has employed the effective-control
standard, replacing the percentage-of-ownership standard in
the classification and identification of its subsidiaries andaffiliates.
At March 31, 2000, the number of consolidated subsidiaries
and the number of affiliates being accounted for under theequity method were 63 and 18, respectively.

Number of Consolidated Subsidiaries and Affiliates Being Accounted for under the Equity Method
March 31, 2000 (a)March 31, 1999 (b)March 31, 1998(a)−(b)

63
18
81

67
14
81

42
0
42

(4)
4
0

Consolidated Subsidiaries
Affiliates Being Accounted for under the Equity Method
Total

Income Analysis
Net Interest Income decreased by ¥54.6 billion to ¥247.1 billion
due to a decrease in income from market operations. Net Fee &Commission Income decreased by ¥10.1 billion to ¥73.1 billion.
Net Trading Income decreased by ¥2.3 billion to ¥51.6 billion. Net
Other Operating Income decreased by ¥62.8 billion to a net loss of¥3.5 billion due primarily to a decrease in Net Gains/Losses
Related to Bonds. As a result, Gross Profits decreased by ¥129.9
billion to ¥368.3 billion. General and Administrative Expenses

decreased by ¥30.5 billion to ¥192.2 billion due to the efforts
to increase efficiency and to stronger Japanese Yen.
Income before Income Taxes and Others for fiscal 1999
amounted to ¥167.0 billion. Net Income, after Income Tax
Expenses and Minority Interests in Net Income for fiscal 1999
increased by ¥252.0 billion to ¥70.7 billion. Basic Net Income
per Share of Common Stock increased by ¥96.24 per share to¥25.59 per share.

Summary of Statements of Income
Gross Profits
Net Interest Income
Net Fee & Commission Income
Net Trading Income
Net Other Operating Income
General and Administrative Expenses
Expenses Relating to Portfolio Problems
Net Gains/Losses Related to Stocks and Other Securities
Equity in Earnings/Losses from Investment in Affiliates
OthersIncome (Loss) before Income Taxes and Others
Income Tax Expenses (Benefits)
Current
Deferred
Minority Interests in Net Income
Amortization of Consolidation Difference
Net Income (Loss)(in billions of yen)
Fiscal 1999 (a)Fiscal 1998 (b)Fiscal 1997(a)−(b)¥368.3
247.1
73.1
51.6
(3.5)
192.2
227.3
211.6
2.1
4.5
167.0

¥498.2
301.8
83.2
53.9
59.2
222.7
871.7
335.5
(9.8)
14.2
(256.2)¥435.6
290.0
103.1
1.0
41.5
217.4
n/a
n/a
n/a
n/a
(313.1)¥(129.9)(54.6)(10.1)(2.3)(62.8)(30.5)(644.3)(123.9)
11.9
(9.6)
423.2

45.5
37.9
12.7
¥ 70.710.8(94.0)
8.3¥(181.2)

3.9(114.6)0.1
0.1¥(202.6)

34.7
132.0
4.4
¥252.073Management’s Discussion and Analysis

Gross Profits(in billions of yen)
Fiscal 1999

Domestic

Net Interest
IncomeIncome¥212.3 ¥1,048.8

Net Fee & Commission
IncomeIncomeExpense¥ 836.4

Overseas
43.2
527.5
484.2
Elimination(8.5)(56.3)(47.8)
Total¥247.1 ¥1,519.9 ¥1,272.8

¥53.8

¥61.6

Expense
¥ 7.8

19.5
(0.3)
¥73.1

31.4
(3.5)
¥89.5

11.8
(3.2)
¥16.4

Net Trading
IncomeIncome
¥20.2
¥20.2
31.3
¥51.6

31.5
(0.0)
¥51.8

Expense
¥0.1
(0.0)
¥0.1

Net Other Operating
IncomeIncomeExpense¥(8.4) ¥ 983.3 ¥ 991.8
4.9
28.6
23.6
(0.0)
(0.0)
¥(3.5) ¥1,011.9 ¥1,015.5

Notes: 1. “Domestic” includes IBJ excluding overseas branches, and domestic subsidiaries.
“Overseas” includes overseas branches of IBJ and overseas subsidiaries.
2. “Elimination” represents reversal of internal transactions between “Domestic” and “Overseas”.

Interest Income and Expense(in billions of yen)
Fiscal 1999

Use of Funds

Domestic
Overseas
Elimination
Total

Average
Interest
Balance Interest
Rate

Loans and Bills Discounted
Average
Interest
Balance Interest
Rate

Securities
Average
Interest
Balance Interest
Rate

Call Loans and Bills Purchased
Average
Interest
Balance Interest
Rate¥30,655.4 ¥1,048.8
6,415.5 527.5(951.6) (56.3)¥36,119.2 ¥1,519.9¥20,175.6 ¥407.3
2,867.2 163.5(166.3)(5.4)¥22,876.6 ¥565.5¥8,163.5 ¥169.7
579.7
33.9
(394.2) (17.9)¥8,349.0 ¥185.6¥ 437.1 ¥ 0.9
2,122.8 188.3
(0.1)
(0.0)
¥2,559.9 ¥189.2

3.42%
8.22
4.20%

Source of Funds

Domestic
Overseas
Elimination
Total

2.01%
5.70
2.47%

0.21%
8.87
7.39%

¥235.0709.7(327.4)¥617.3¥10.3
28.9(12.5)
¥26.7

4.40%
4.07
4.32%

Average
Interest
Balance Interest
Rate

Debentures
Average
Interest
Balance Interest
Rate

Deposits
Average
Interest
Balance Interest
RateCertificates of Deposit
Average
Interest
Balance Interest
Rate

Borrowed Money
Average
Interest
Balance Interest
Rate¥28,627.3 ¥ 829.2
6,673.1 484.2(692.7) (47.8)¥34,607.7 ¥1,265.6¥19,813.4 ¥276.1
583.4
12.4
(7.0)
(0.3)
¥20,389.8 ¥288.2¥3,483.0 ¥ 60.5
2,289.5
83.1(324.5) (12.5)¥5,448.0 ¥131.1¥2,079.4
135.4¥2,214.8¥1,245.5
273.1(299.3)¥1,219.3

2.89%
7.25
3.65%

Source of Funds

1.39%
2.13
1.41%

Commercial Paper
Interest
Interest
Rate

Average
Balance
Domestic
Overseas
Elimination
Total

2.07%
5.85
2.22%

Cash and Due from Banks
Average
Interest
Balance Interest
Rate¥162.6¥162.6

¥0.2
¥0.2

0.17%
0.17%

1.73%
3.63
2.40%

¥2.9
6.7
¥9.6

0.14%
4.95
0.43%

¥45.8
2.9
(14.9)
¥33.8

3.68%
1.07
2.77%

Call Money and Bills Sold
Average
Interest
Balance Interest
Rate¥1,179.2 ¥ 2.7
3,318.0
239.6
(0.1)
(0.0)
¥4,497.1 ¥242.4

0.23%
7.22
5.39%

Notes: 1. IBJ calculates average balances on a daily basis. Subsidiaries calculate average balances annually.
2. Amounts in this table are stated after subtracting the average balance for non-interest-baring deposits for Use of Funds, and the average balancefor Money Held in Trust and related interest for Source of Funds.
3. “Domestic” includes IBJ excluding overseas branches, and domestic subsidiaries.
“Overseas” includes overseas branches of IBJ and overseas subsidiaries.
4. “Elimination” represents reversal of internal transactions between “Domestic” and “Overseas”.

74Fee & Commission Income and Expense(in billions of yen)
Fiscal 1999

Fee & Commission
IncomeDebentures
Deposits & Loans
Domestic
Overseas
Elimination
Total

¥62.0
31.7
(4.2)
¥89.5

Exchange

¥20.5
12.6
(0.0)
¥33.1

Fee & Commission
ExpenseSecurities Related
Transactions

Collateral Related
Transactions

¥20.2
3.7

¥2.5
3.2

¥ 8.2
12.1

¥2.0
0.0

(0.2)
¥23.7

(0.4)
¥5.4

(3.9)
¥16.4

¥2.0

¥4.2
1.0
¥5.2

Exchange

Notes: 1. “Domestic” includes IBJ excluding overseas branches, and domestic subsidiaries.
“Overseas” includes overseas branches of IBJ and overseas subsidiaries.
2. “Elimination” represents reversal of internal transactions between “Domestic” and “Overseas”.

Trading Income and Expense(in billions of yen)
Fiscal 1999

Trading Income

Trading Expense

Trading
Securities Held
Securities to Hedge Tradingand Derivatives
Transactions

Derivatives
for Trading
Transactions

Other Trading
Transactions

Trading
Securities Held
Securities to Hedge Tradingand Derivatives
Transactions

Derivatives
for Trading
Transactions

Other Trading
Transactions

Domestic
Overseas
Elimination

¥20.2
31.5
(0.0)

¥10.9
14.4
-

¥0.0

¥ 8.6

¥0.6

¥-

(0.0)

16.4
-

0.6
-

0.1
(0.0)

¥-

¥0.1
(0.0)

¥-

¥-

Total

¥51.8

¥25.4

¥-

¥25.0

¥1.2

¥0.1

¥-

¥0.1

¥-

¥-

Notes: 1. “Domestic” includes IBJ excluding overseas branches, and domestic subsidiaries.
“Overseas” includes overseas branches of IBJ and overseas subsidiaries.
2. Trading Income and Trading Expense in this table are netted. The netted amount appears in the Income section if Gross Trading Income
exceeds Gross Trading Expense and vice versa.

Expenses Relating to Portfolio Problems
In reference to IBJ’s handling of non-performing loans, it has
written-off ¥2,932.4 billion in aggregate in the past five years on
a non-consolidated basis because of such factors as theincidents relating to Japan’s housing loan companies in fiscal
1995, modification of the Standards for Write-offs andProvisions based on the Standards on Self-Assessment of Assets infiscal 1997, and its conservative approach to establishing thereserves in fiscal 1998 and 1999.
In fiscal 1999, IBJ Group continued to be diligent inestablishing Reserves for Possible Loan Losses to further improve its
balance sheet positions in accordance with the conservative andreasonable Standards on Self-Assessment of Assets, and theStandards for Write-offs and Provisions, both of which arejointly formulated by IBJ, The Dai-Ichi Kangyo Bank, Limited and

The Fuji Bank, Limited (the ”Three Banks”) based on the
Financial Inspection Manuals promulgated by the Financial
Supervisory Agency* (”FSA”). IBJ Group was also diligent in
disposing non-performing loans by means of bulk-sales anddirect write-offs. As a result, total Expenses Relating to Portfolio
Problems both on a consolidated basis and a non-consolidated
basis for fiscal 1999 amounted to ¥227.3 billion (¥271.9 billion,
excluding the net reversal of General Reserve for Possible Loan
Losses) and ¥221.6 billion (¥268.8 billion, excluding the net
reversal of General Reserve for Possible Loan Losses),
respectively. Such loss on a non-consolidated basis recorded infiscal 1999 was the smallest in the past five years. Expenses
Relating to Portfolio Problems are on a declining trend after
their peak in fiscal 1998.
*Financial Supervisory Agency changed to Financial Services Agency from
July 1, 2000.

75

Management’s Discussion and Analysis

Expenses Relating to Portfolio Problems(in billions of yen)

Losses on Write-offs of Loans
Net Provision of Specific Reserve for Possible Loan Losses
Losses on Sales of Loans to CCPC
Provision of Reserve for Possible Losses on Loans Sold
Provision of Reserve for Possible Losses on Support of Specific Borrowers
Provision (Reversal) of Reserve for Possible Losses on Loans to Restructuring Countries
Other Losses on Sales of Loans
Subtotal
Provision (Reversal) of General Reserve for Possible Loan Losses
Total

Fiscal 1999 (a)Fiscal 1998 (b)(a)−(b)¥ 12.5
220.9
4.8
18.8
(0.7)
15.4
271.9
(44.5)¥227.3¥140.6
543.2
2.1
44.0
8.6
62.4
801.2
70.4
¥871.7¥(128.1)(322.3)(2.1)(39.2)
18.8(9.3)(47.0)(529.3)(114.9)¥(644.4)

Expenses Relating to Portfolio Problems over Five Years (Non-Consolidated)
Expenses Relating to Portfolio Problems
Provision (Reversal) of General Reserve for
Possible Loan Losses
Total(in billions of yen)

Fiscal 1999

Fiscal 1998

Fiscal 1997

Fiscal 1996

Fiscal 1995

Total

¥268.8¥857.8¥633.8¥261.2¥856.0¥2,877.6(47.1)¥221.666.5¥924.314.0¥647.821.1¥282.30.4¥856.454.9¥2,932.4[Reference]
Pension Liabilities (Non-Consolidated)
April 1, 2000

Unrecognized Prior Service Cost, at beginning
The discount rate used in determining the actuarial present value ofthe projected benefit obligation
Amortization period for Unrecognized Prior Service Cost

After initial contribution*¥7.4 billion
3.5%
5 years*Marketable securities valued at ¥4.2 billion was contributed to the asset pool held in trust at inception of the Plan.

Balance Sheet Analysis
Total Assets at March 31, 2000, decreased by ¥3,699.9 billion to¥42,466.4 billion from a year ago. The decrease is due
principally to the higher exchange rate for the Japanese yen,reduction in the holding of national government bonds and callloans, and the reclassification of Reserve for Possible Loan
Losses from the liability section to the asset section inaccordance with a revision in the Implementation Guide to theLong-Term Credit Bank Law.
Loans and Bills Discounted, which represents more than half of
the Total Assets, decreased by ¥548.2 billion to ¥22,779.6
billion from a year ago. This is also due to a stronger Japanese yen
and to our diligent approach in dealing with non-performing

76

loans.
Total Liabilities at March 31, 2000, decreased by ¥3,752.0
billion to ¥40,556.9 billion from a year ago. This is due toa stronger Japanese yen as well as to a reduction in market
funding and to the reclassification of Reserve for Possible Loan
Losses.
Debentures, IBJ’s main vehicle for funding, increased by ¥9.3
billion to ¥20,471.2 billion.
Total Shareholders‘ Equity at March 31, 2000, increased by¥66.0 billion to ¥1,627.4 billion from a year ago.
Total Shareholders‘ Equity per Share of Common Stock increased by ¥25.03 per share to ¥483.94 per share.

Summary of Balance Sheets(in billions of yen)March 31, 2000 (a)March 31, 1999 (b)(a)−(b)

Total Assets
Trading Assets
Securities
Loans and Bills Discounted
Deferred Tax Assets
Total Liabilities
Debentures
Deposits
Trading Liabilities
Minority Interests in Consolidated Subsidiaries
Total Shareholders’ Equity¥42,466.4
3,926.0
7,580.7
22,779.6366.940,556.9
20,471.2
6,636.5
1,361.1
282.1
1,627.4¥46,166.4
3,729.0
8,942.1
23,327.9
400.1
44,308.9
20,461.8
8,116.3
2,854.9296.0
1,561.3¥(3,699.9)
197.0(1,361.3)(548.2)(33.2)(3,752.0)
9.3(1,479.7)(1,493.8)(13.9)
66.0

Total Liabilities, Minority Interests in Consolidated
Subsidiaries and Shareholders’ Equity¥42,466.4¥46,166.4¥(3,699.9)

Breakdown of Outstanding Loans
Outstanding Loans by Industry
On the basis of the industrial sector definitions by the Bank ofJapan (”BOJ”), loans to the ”finance and insurance” industry
totaled ¥3,661.5 billion, or 18.30% of all loans extended by
IBJ‘s domestic offices, excluding balances originating fromInternational Banking Facilities (IBF). This comparatively highratio is due to the fact that the loans to the finance companies ofour customers in industries such as electrical machinery, automobiles, steel, and trading are classified by BOJ as being in thefinancial sector.

Outstanding Loans by Industry(in billions of yen)March 31, 2000

for Domestic Offices, excluding loans booked in offshore markets
Manufacturing
Agriculture
Forestry
Fishery
MiningConstruction
Utilities
Transportation & Communication
Wholesale, Retail & Restaurants
Finance & Insurance
Real Estate
Services
Local Government
Othersfor Overseas Offices and International Business Facilities (IBF)Governments, etc.
Financial Institutions
OthersTotal

Loans¥20,010.5
3,458.6
8.2
0.1
43.3
50.9
548.3
1,579.9
1,717.1
1,733.0
3,661.5
2,313.2
3,617.7
13.1
1,265.0
2,769.1
114.3
92.6
2,562.0¥22,779.6

Ratio
100.00%
17.28
0.04
0.00
0.22
0.25
2.74
7.90
8.58
8.66
18.30
11.56
18.08
0.07
6.32
100.00
4.13
3.35
92.52

Note: ”Domestic” includes IBJ excluding overseas branches, and domestic subsidiaries.
”Overseas” includes overseas branches of IBJ and overseas subsidiaries.

77

Management’s Discussion and Analysis

Outstanding Loans to Emerging Markets
Asia

March 31, 2000
Japanese Borrowers
Non-Japanese Borrowers
Total (a)March 31, 1999
Japanese Borrowers
Non-Japanese Borrowers
Total (b)(a)-(b)March 31, 2000
Japanese Borrowers
Non-Japanese Borrowers
Total (a)March 31, 1999
Japanese Borrowers
Non-Japanese Borrowers
Total (b)(a)-(b)Latin America

March 31, 2000
Japanese Borrowers
Non-Japanese Borrowers
Total (a)March 31, 1999
Japanese Borrowers
Non-Japanese Borrowers
Total (b)(a)-(b)(in billions of yen)

Indonesia

Thailand

Malaysia

Singapore

The Philippines

South Korea

¥ 2.2
43.0
¥45.2

¥ 38.855.3¥ 94.1

¥ 9.4
24.9
¥34.4

¥29.2
5.8
¥35.1

¥0.5
3.2
¥3.8

¥ 0.0
92.4
¥92.4

¥18.9
63.1
¥82.0
(36.8)¥ 56.7109.2¥165.9(71.8)

¥ 7.7
36.4
¥44.1
(9.7)

¥44.4
21.8
¥66.3
(31.2)

¥0.0
4.5
¥4.5
(0.7)

¥ 0.0
94.3
¥94.3
(1.9)

China

Hong Kong

Taiwan

India

Total
& Others¥ 42.058.2¥100.3¥ 32.775.9¥108.6

¥ 0.0
17.0
¥17.0

¥ 0.0
13.6
¥13.6

¥155.6391.1¥546.7¥ 45.393.4¥138.7¥ 39.091.8¥130.9

¥ 0.0
25.1
¥25.1

¥ 0.0
24.3
¥24.3

¥212.2566.1¥778.3(38.4)(22.3)(8.1)(10.7)(231.6)

BrazilMexicoChile

Columbia

Total& Others

¥0.0
1.9
¥1.9

¥ 7.1
15.9
¥23.1

¥ 0.0
28.8
¥28.8

¥ 0.0
18.5
¥18.5

¥

7.1
77.0
¥ 84.2

¥0.0
1.1
¥1.1

¥0.0
7.2
¥7.2
(5.3)

¥ 0.0
22.4
¥22.4
0.7

¥ 0.0
29.2
¥29.2
(0.4)

¥ 0.0
24.9
¥24.9
(6.4)

¥ 0.3
102.1
¥102.4(18.2)

¥0.0
1.3
¥1.3
(0.2)

RussiaNotes: 1. The figures represent loans and guarantees.
2. Loans to subsidiaries of Japanese companies that are guaranteed by their parents are excluded from this table.

Outstanding Loans to Foreign Borrowers by Country(in billions of yen)March 31, 2000

Indonesia
Argentina
BrazilRussiaOther Four Countries
Total
Ratio to Total Assets

¥48.7
5.2
2.5
0.3
0.4
¥57.2
0.13%

Note: These figures represent loans to foreign government, financial institutions, and corporations of those countries that are used in calculation of Reserve
for Possible Losses on Loans to Restructuring Countries, as dictated by the Practical Guides issued by the Japanese Institute of Certified Public
Accountants.

78

Claims Subject to Disclosure Requirements (Non-Consolidated)
Disclosed Loans(in billions of yen)

1.
SELF-ASSESSMENT
ObligorCategorization NonCategory II
Categorization

Bankrupt andSubstantially Bankrupt
Obligors¥166.4¥166.4
Covered by Guarantee
and Collateral

Category III Category IV

Reserve
Ratio
100%(Note 5)

DirectWrite-offs
100%(Note 6)¥30.2
¥599.7
Intensive Control
Obligors¥630.0Covered by Guarantee
and CollateralReserve
Ratio
91.3%(Note 5)2.

3.

Disclosed Claims
under the Financial
Reconstruction Law

Non-Accrual,
Past Due &Restructured Loans

Claims against
Bankrupt and QuasiBankrupt Obligors¥166.4Loans to Bankrupt
Borrowers¥46.1

Coverage Ratio
100%
Claims with
Collection Risk

Non-Accrual
Delinquent Loans¥630.0¥737.0Coverage Ratio
95.2%¥13.3 (Note 4)

Watch
Obligors

Claims forSpecialAttention

Claims forSpecial Attention(Note 1)

Reserve Ratio for
Un-Covered Portion
42.2%¥860.1¥860.1(Claims for Special
Attention Obligors)¥244.1(Note 7)

Total
¥25,197.3

Restructured Loans¥850.2

Coverage Ratio
58.0%(Note 2)Claims against
Other Watch
Obligors

Normal Obligors

Loans Past Due for
3 Months or More
¥9.9

(Note 3)
Reserved basedon estimatedcredit losses

Aggregate
Coverage Ratio
76.0%

Total
¥1,656.6

Total¥1,643.2

Notes: 1. Categorization of Claims for Special Attention is determined on a loan-by-loan basis. It consists of Loans Past Due for 3 Months or More and Restructured Loans.
Categorization of Claims for Special Attention Obligors is determined on a borrower-by-borrower basis, thus including all claims to such obligors in addition to Claims
for Special Attention.
2. Coverage Ratio for Claims for Special Attention Obligors.
3. Includes Coverage Ratio for Claims for Special Attention Obligors.
4. The difference between total Non-Accrual, Past Due & Restructured Loans and total Disclosed Claims under the Financial Reconstruction Law represents claims included
in Disclosed Claims under the Financial Reconstruction Law other than loans.
5. Reserved portion is moved to Not-Categorized.
6. These balances are not written-off, but are 100% reserved on the financial statements.
7. Claims for Special Attention Obligors that are guaranteed or collateralized.
(At March 31, 2000)

79

Management’s Discussion and Analysis

Disclosed Claims under the Financial Reconstruction Law
and Non-Accrual, Past Due & Restructured Loans
As of March 31, 2000, Claims Disclosed under the Financial
Reconstruction Law (Non-Consolidated), which is a sum ofClaims against Bankrupt and Quasi-Bankrupt Obligors, Claims
with Collection Risk, and Claims for Special Attention decreased by¥215.7 billion to ¥1,656.6 billion (net of uncollectable portions).
The Coverage Ratios for Claims against Bankrupt and QuasiBankrupt Obligors, Claims with Collection Risk, and Claims forSpecial Attention are 100%, 95.2%, and 58.0%, respectively, andare deemed adequate.
Total Consolidated Non-Accrual, Past Due & Restructured
Loans decreased by ¥119.5 billion to ¥1,651.9 billion. Total
Non-Consolidated Non-Accrual, Past Due & Restructured Loansdecreased by ¥200.9 billion to ¥1,643.2 billion (net of uncollectable portions).

This is primarily due to collection, sales and write-offs of suchamounts and a decline in delinquency from new loans. It is also
due to the fact that Claims Subject to Disclosure Requirement on
IBJ’s balance sheets mainly consists of Restructured Loans andClaims for Special Attention, both of which bare relatively low
collection risks. These Claims are included in Claims in NonAccrual, Past Due & Restructured Loans and Claims Disclosed
under the Financial Reconstruction Law because they meetcertain conditions, which does not necessarily represent
collection risks.
In conjunction with greater cave of credit risk management
in extending new loans, the IBJ Group expects Expenses Relating
to Portfolio Problems to decline significantly in the future.

Disclosed Claims under the Financial Reconstruction Law
Disclosed Claims under the Financial Reconstruction Law (Non-Consolidated)
Claims against Bankrupt and Quasi-Bankrupt Obligors
Claims with Collection Risk
Claims for Special Attention
Subtotal
Normal Claims
Total(in billions of yen)March 31, 2000 (a)March 31, 1999 (b)

¥

¥

166.4
630.0
860.1
1,656.6
23,540.7¥25,197.3

111.6
1,197.7
562.9
1,872.3
25,437.5¥27,309.8(a)-(b)¥54.8(567.7)297.2(215.7)(1,896.8)¥(2,112.5)

Note: Claims against Bankrupt and Quasi-Bankrupt Obligors are stated net of uncollectable portions.
Such portions amounted to ¥363.5 billion and ¥272.4 billion as of March 31, 2000 and 1999, respectively.

Coverage of Claims (Non-Consolidated)(in billions of yen)March 31, 2000 (a)March 31, 1999 (b)(a)-(b)Coverage Amounts¥1,265.0¥1,412.2¥(147.2)
Reserve for Possible Loan Losses
419.5
711.4
(291.9)Reserve for Possible Losses on Support of Specific Borrowers
167.1
167.1
Collateral, Guarantees, etc.
678.3
700.8
(22.5)
Coverage Ratio
76.4%
75.4%
1.0%
Claims against Bankrupt and Quasi-Bankrupt Obligors
100.0
100.0
Claims with Collection Risk
95.2
83.8
11.4
Claims for Special Attention
58.0
52.7
5.3
Reserve Ratio against Non-Collateralized Claims
60.0%
60.7%
(0.7%)
Claims against Bankrupt and Quasi-Bankrupt Obligors
100.0
100.0
Claims with Collection Risk
91.3
77.1
14.2
Claims for Special Attention
42.2
15.0
27.2
Reserve Ratio for All Claims
Claims against Watch Obligors excluding Claims for Special Attention
4.56%
3.98%
0.58%
Normal Claims
0.11
0.08
0.03
Notes: 1. The figures of Coverage Amounts, Coverage Ratio and Reserve Ratio against Non-Collateralized Claims are stated net of uncollectable portions.
2. Reserve for Possible Loan Losses are stated net of uncollectable portions.
Such portions Amountd to ¥363.5 billion and ¥272.4 billion as of March 31, 2000 and 1999, respectively.
3. Coverage Ratio = (Collateral and Guarantees + Reserve for Possible Loan Losses + Reserve for Possible Losses on Support of Specific
Borrowers) / Loan Amount
4. Reserve Ratio against Non-Collateralized Claims = (Reserve for Possible Loan Losses + Reserve for Possible Losses on Support of Specific Borrowers)/ Non-Collateral Claims Not Covered
5. Reserve Ratio for All Claims = General Reserve for Possible Loan Losses / All Claims

80

Disclosed Claims under the Financial Reconstruction Law by Industry (Non-Consolidated)(in billions of yen)March 31, 2000

Loans
¥1,586.8
50.6
2.6
191.1
3.9
30.2
273.3
176.0
557.6
293.8

for Domestic Offices, excluding loans booked in offshore markets
Manufacturing
Agriculture
Forestry
Fishery
MiningConstruction
Utilities
Transportation & Communication
Wholesale, Retail & Restaurants
Finance & Insurance
Real Estate
Services
Local Government

7.1
69.8
6.0
0.6
2.4
60.6
¥1,656.6

Othersfor Overseas Offices and International Business Facilities (IBF)Governments, etc.
Financial Institutions
Commerce and Industry
OthersTotal
Note: Claims against Bankrupt and Quasi-Bankrupt Obligors are stated net of uncollectable portions.
Such portions amounted to ¥355.2 billion as of March 31, 2000.

Non-Accrual, Past Due & Restructured Loans
Non-Accrual, Past Due & Restructured Loans(in billions of yen)March 31, 2000 (a)Loans to Bankrupt Borrowers
Non-Accrual Delinquent Loans
Loans Past Due for 3 Months or More
Restructured Loans
Total

¥

46.8
740.3
10.6
854.2
¥1,651.9

March 31, 1999 (b)¥ 46.81,160.9
8.9
554.6¥1,771.4(a)−(b)¥(420.6)
1.7
299.6¥ (119.5)

Note: Loans to Bankrupt Borrowers and Non-Accurual Delinquent Loans are stated net of uncollectable portions. As of March 31, 2000, ¥75.6 billion and¥284.5 billion were netted from Loans to Bankrupt Borrowers and Non-Accrual Delinquent Loans, respectively. As of March 31, 1999, ¥100.9 billionand ¥146.2 billion were netted from Loans to Bankrupt Borrowers and Non-Accrual Delinquent Loans, respectively.

Ratio to Total Loans
Loans to Bankrupt Borrowers
Non-Accrual Delinquent Loans
Loans Past Due for 3 Months or More
Restructured Loans
Total

March 31, 2000 (a)March 31, 1999 (b)(a)−(b)

0.2%
3.3
0.0
3.8
7.4%

0.2%
5.0
0.0
2.4
7.6%

-%
(1.7)
1.4
(0.2%)

Note: The figures are stated net of uncollectable portions.

81

Management’s Discussion and Analysis

Reserve for Possible Loan Losses(in billions of yen)March 31, 2000 (a)March 31, 1999 (b)(a)-(b)¥559.8
138.5
415.1
6.1
167.1
47.5

¥819.5
189.1
622.7
7.5
48.1

¥(259.7)(50.6)(207.6)
(1.4)
167.1
(0.6)

March 31, 2000 (a)March 31, 1999 (b)(a)-(b)

54.0%
44.0

52.8%
46.3

1.2%
(2.3)

Reserve for Possible Loan Losses
General Reserve for Possible Loan Losses
Specific Reserve for Possible Loan Losses
Reserve for Possible Losses on Loans to Restructuring Countries
Reserve for Possible Losses on Support of Specific Borrwers
Reserve for Possilbe Losses on Loans Sold
Note: The figures are stated net of uncollectable portions.

Reserve Ratio for Non-Accrual, Past Due & Restructured Loans
Before Direct Write-offs of Uncollectable Portions
After Direct Write-offs of Uncollectable Portions

Note: Reserve Ratio = (Reserve for Possible Loan Losses + Reserve for Possible Losses on Support of Specific Borrowers) / Non-Accrual, Past Due &Restructured Loans

Non-Accrual, Past Due & Restructured Loans (Non-Consolidated)
Loans to Bankrupt Borrowers
Non-Accrual Delinquent Loans
Loans Past Due for 3 Months or More
Restructured Loans
Total(in billions of yen)March 31, 2000 (a)March 31, 1999 (b)(a)-(b)

¥

¥

¥ 0.9
(499.0)1.5295.8¥(200.9)

46.1
737.0
9.9
850.2
¥1,643.2

45.2
1,236.0
8.4
554.4¥1,844.1

Note: Loans to Bankrupt Borrowers and Non-Accurual Delinquent Loans are stated net of uncollectable portions. As of March 31, 2000, ¥73.1 billion and¥282.0 billion were netted from Loans to Bankrupt Borrowers and Non-Accrual Delinquent Loans, respectively. As of March 31, 1999, ¥100.9 billionand ¥146.2 billion were netted from Loans to Bankrupt Borrowers and Non-Accrual Delinquent Loans, respectively.

Ratio to Total Loans (Non-Consolidated)
Loans to Bankrupt Borrowers
Non-Accrual Delinquent Loans
Loans Past Due for 3 Months or More
Restructured Loans
Total

March 31, 2000 (a)March 31, 1999 (b)(a)-(b)

0.2%
3.4
0.0
3.9
7.5%

0.2%
5.4
0.0
2.4
8.1%

-%
(2.0)
1.5
(0.6%)March 31, 2000 (a)March 31, 1999 (b)(a)-(b)¥537.5
125.6
405.8
6.1
167.1
47.5

¥843.8
172.8
663.4
7.5
48.1

¥(306.3)(47.2)(257.6)
(1.4)
167.1
(0.6)

March 31, 2000 (a)March 31, 1999 (b)(a)-(b)

53.5%
42.9

53.4%
45.8

0.1%
(2.9)

Note: The figures are stated net of uncollectable portions.

Reserve for Possible Loan Losses (Non-Consolidated)
Reserve for Possible Loan Losses
General Reserve for Possible Loan Losses
Specific Reserve for Possible Loan Losses
Reserve for Possible Losses on Loans to Restructuring Countries
Reserve for Possible Losses on Support of Specific Borrwers
Reserve for Possible Losses on Loans Sold(in billions of yen)

Note: The figures are stated net of uncollectable portions.

Reserve Ratio for Non-Accrual, Past Due & Restructured Loans (Non-Consolidated)
Before Direct Write-offs of Uncollectable Portions
After Direct Write-offs of Uncollectable Portions

Note: Reserve Ratio = (Reserve for Possible Loan Losses + Reserve for Possible Losses on Support of Specific Borrowers) / Non-Accrual, Past Due &Restructured Loans

82

Outstanding Loans and Non-Accrual, Past Due & Restructured Loans by Industry (Non-Consolidated)
Loans

for Domestic Offices, excluding loans booked
in offshore markets
Manufacturing
Agriculture
Forestry
Fishery
MiningConstruction
Utilities
Transportation & Communication
Wholesale, Retail & Restaurants
Finance & Insurance
Real Estate
Services
Local Government
Others(in billions of yen)

Non-Accrual, Past Due & Restructured Loans

March 31,2000 (a)March 31,1999 (b)(a)-(b)¥19,654.7
3,411.2
8.2
0.1
43.3
50.9
534.8
1,579.9
1,707.0
1,700.8
3,743.0
2,135.8
3,505.8
13.1¥20,061.7
3,451.3
7.4
0.2
40.6
56.6
502.6
1,494.5
1,647.5
1,898.0
3,949.5
2,349.0
3,312.0
19.6¥(407.0)(40.1)
0.8
(0.1)
2.7
(5.7)
32.2
85.4
59.5
(197.2)(206.5)(213.2)
193.8
(6.5)

1,220.1

1,332.3(112.2)

March 31,2000 (a’)

March 31,1999 (b’)(a’)−(b’)¥1,576.0
50.2
191.1
3.9
30.2
271.5
175.5
557.3
288.7

¥1,766.7
55.6
0.0
0.6
129.8
0.1
20.8
293.0
143.1
716.1
395.8

¥(190.7)
(5.4)
(0.6)
61.3
3.8
9.4
(21.5)
32.4(158.8)(107.1)

7.1

11.5

(4.4)

Note: Loans and Non-Accrual, Past Due & Restructured Loans are stated net of uncollectable portions. Such portions amounted to ¥338.0 billion and ¥237.4
billion as of March 31, 2000 and 1999, respectively.

Outstanding Loans and Non-Accrual, Past Due & Restructured Loans to Emerging Markets (Non-Consolidated)
Loans

Asia

Latin
America

Russia(in billions of yen)

Non-Accrual, Past Due & Restructured Loans

March 31,2000 (a)March 31,1999 (b)(a)-(b)March 31,2000 (a’)

March 31,1999 (b’)(a’)−(b’)

Hong Kong
South Korea
ThailandChina
Indonesia
Malaysia
Singapore¥105.9
92.4
75.9
71.6
33.8
26.7
20.1

¥123.6
94.2
143.8
116.4
51.7
38.9
54.8

¥(17.7)(1.8)(67.9)(44.8)(17.9)(12.2)(34.7)

¥ 5.3
0.4
10.4
12.5
12.7
3.7

¥10.5
11.0
13.5
20.4
3.9

¥(5.2)
0.4
(0.6)
(1.0)
(7.7)
(0.2)

TaiwanIndia
The Philippines
OthersChile
MexicoColumbia

13.9
13.6
3.8
459.6
28.0
18.6
17.7

21.9
23.6
4.5
675.5
28.2
21.2
23.7

(8.0)
(10.0)(0.7)(215.9)
(0.2)
(2.6)
(6.0)

BrazilOthers

1.9
77.4
1.1

7.2
96.1
1.3

(5.3)
(18.7)
(0.2)

45.2
0.0
2.1

0.0
59.7
0.0
3.2

(14.5)(1.1)

Notes: 1. Loans to subsidiaries of Japanese companies that are guaranteed by their parents are excluded from this table.
2. Loans and Bills Discounted and Non-Accrual, Past Due & Restructured Loans in this table are stated net of uncollectable portions.

83

Management’s Discussion and Analysis

Definition of Claims Subject to Disclosure Requirements
Self-Assessment of Assets, and Write-offs and Reserves
In order to preserve viability of financial institutions in Japan,
the Financial Services Agency (“FSA“) takes Prompt Corrective
Actions by issuing orders to improve operations to financial
institutions when their Risk-Based Capital Ratio (BIS Capital
Ratio) falls below a certain level.
In conjunction with such measures, financial institutions inJapan are now required to assess recoverability of loans andother receivables on their balance sheets in a good faith inorder to submit to such inspection by FSA.
IBJ classifies its assets and borrowers into categories inaccordance with the Standards for Self-Assessment of Assets,
which is formulated by the Three Banks and is in accordancewith the Financial Inspection Manuals issued by FSA.
These categories are as follows:

Self-Assessment of Assets
Bankrupt Obligors:

Obligors who have already gone bankrupt, from both legal and practical perspectives.

Substantially
Bankrupt Obligors:

Obligors for which formal and legal bankruptcy causes have not yet occurred, but whose financial
positions are extremely distressed, and whose prospects for financial rehabilitation are so low as to renderit substantially bankrupt.

Intensive Control Obligors:

Obligors who are not currently facing bankruptcy but are having business difficulties, and whose
progress state of the business improvement plan or other measures are not satisfactory, so that there isa high probability that the obligor will go bankrupt.

Watch Obligors:

Obligors who require increased credit watching, including obligors with problematic loan conditions, suchas interest payments suspended or reduced, obligors with problems in payment, such as those who are
in arrears in the principal payment or the interest payment, obligors whose business conditions are
unstable or poor, and obligors who have problems in their financial conditions.

Normal Obligors:

Obligors generally recognized to be experiencing good business conditions and having no significant
financial problems.

Asset Classifications

84

Category IV:

Assets that are unrecoverable or are worthless.

Category III:

Assets that pose significant collection risks and present significant likelihood of losses.

Category II:

Assets that bear collection risks, which are greater than normal conditions.

Category I:

Assets other than those categorized in Categories II, III, or IV.

Write-offs and Reserves for Assets
IBJ writes-off or provides reserves for assets based on theStandards for Write-offs and Provisions formulated by the Three
Banks, which are in accordance with the Financial Inspection

Manuals, the Practical Guides issued by the Japanese Institute ofCertified Public Accountants, as well as Japanese commercial
laws and generally accepted accounting principles in Japan.

Bankrupt Obligors:

Reserved for or written off 100% of loan balance less amounts deemed recoverable from collateral andguarantees. These reserves are included in Specific Reserve for Possible Loan Losses.

Substantially
Bankrupt Obligors:

Reserved for or written off 100% of loan balance less amounts deemed recoverable from collateral andguarantees. These reserves are included in Specific Reserve for Possible Loan Losses.

Intensive Control Obligors:

Reserved for either [1] amount calculated based on comprehensive analyses on the obligors’
creditworthiness (three years worth of estimated losses) based on total loan balance less amounts
recoverable from collateral and guarantees, or [2] amount calculated by multiplying the estimated loss
ratio to the loan amounts less amounts deemed recoverable from collateral and guarantees*. Thesereserves are included in Specific Reserve for Possible Loan Losses.

Watch Obligors:

Reserved for three years worth of estimated losses based on the estimated loss ratio. Loans to Watch
Obligors that are Restructured or Past Due for 3 Months or More are reserved for the amount deemednecessary* based on the amounts deemed recoverable from collateral and guarantees. Thesereserves are included in Specific or General Reserve for Possible Loan Losses.

Normal Obligors:

Reserved for one year worth of estimated losses based on the estimated loss ratio. These reserves areincluded in General Reserve for Possible Loan Losses.

*In accordance with “The Methodology on Write-offs and Reserves for Strengthening Capital” issued by the Financial Reconstruction Commission.

Disclosed Claims Under the Financial Reconstruction Law

Corresponding to Classificatins of Self-Assessment

Claims against bankrupt obligors under bankruptcy,
Claims against Bankrupt
and Quasi-Bankrupt Obligors: corporate reorganization, composition or any
other equivalent procedures, and claims corresponding to the said conditions.

Claims against “Bankrupt Obligors” or claims
against “Substantially Bankrupt Obligors”

Claims with Collection Risk:

Claims against obligors who are not currently
bankrupt, but whose financial position andbusiness results have deteriorated materiallywith a high probability that the principal andinterest will not be paid in accordance with thecontracts.

Claims against “Intensive Control Obligors”

Claims for Special Attention:

Loans Past Due for 3 Months or More: Claims forwhich principal repayment or interest payment isin arrears for three months or more calculated
from the next day of the contractual due date ofpayments.

Among claims against “Watch Obligors”

Restructured Loans: Claims which are given acertain modification on the lending conditions infavor of the obligors for the purpose ofrestructuring and supporting the obligors infinancial difficulties and for the purpose of
progress in collection of the claims.

85

Management’s Discussion and Analysis

Non-Accrual, Past Due & Restructured Loans
Loans to Bankrupt Borrowers: Loans to be non-accrual loans for which borrowers are under bankruptcy, corporate reorganization,
composition, or suspension of banking transaction.
Starting fiscal 1998, the year ended March 31, 1999, IBJ Group suspended accruing for interest forloans to Borrowers who are categorized in Intensive Control, Substantially Bankrupt, or Bankrupt
categories on Self-Assessment basis. Prior to the fiscal 1998, it did not accrue for interest on loans only
when recovery could not be expected because of delayed payments for principal or interest for more thancertain periods or other reasons.
Non-Accrual Delinquent Loans: Loans to be non-accrual loans for which there are no prospects for collection or repayment ofprincipal or interest for which payment of principal or interest has not been received for a substantial
period or for other reasons.
Starting fiscal 1998, the year ended March 31, 1999, Loans to Intensive Control Obligors,
Substantially Bankrupt Obligors, and Bankrupt Obligors on Self-Assessment basis are classified as
Non-Accrual Delinquent Loans regardless of whether the loans are in fact overdue or delinquent.

86

Loans Past Due for
3 Months or More:

Loans for which payments of principals or interest have not been received for a period of threemonths or more beginning with the next business day following the last due date for such payment,
and are not included in Loans to Bankrupt Borrowers or Non-Accrual Delinquent Loans.

Restructured Loans:

Loans for which the Bank and its subsidiaries and affiliates have provided more favorable terms andconditions−including reducing interest rates, rescheduling interest and principal payments, or thewaving of claims on the borrower−to the borrower than those in original loan agreement, with the aimof providing restructuring assistance and support. Such loans exclude Loans to Bankrupt Borrowers, NonAccrual Delinquent Loans, and Loans Past Due for 3 Months or More.

Consolidated Risk-Based Capital Ratio (BIS Capital Ratio)
As of March 31, 2000, consolidated Risk-Based Capital Ratio(BIS Capital Ratio) was 12.19%, 6.61% for Tier I capital, an
increase of 0.85 points during the year .
The numerator, or the total capital, increased by ¥44.0
billion to ¥3,317.5 billion, ¥1,799.4 billion for Tier I and¥1,518.0 billion for Tier II. This net increase mainly consists of thefollowing elements: an increase of ¥64.1 billion in Retained
Earnings, an increase of ¥48.3 billion in inclusion of term
subordinated debts and other items into the total capital, adecrease of ¥13.3 billion in preferred stocks issued by overseas

SPCs due to the higher exchange rate for the Japanese yen, anda decrease of ¥50.5 billion in General Reserve for Possible Loan
Losses.
The denominator, or the risk-weighed assets, decreased by¥1,664.8 billion to ¥27,200.4 billion. This net decrease consists ofthe following elements: a decrease of ¥825.1 billion in onbalance-sheet exposure, a decrease of ¥729.9 billion in offbalance-sheet exposure, and a decrease of ¥109.7 billion inmarket risk-related exposure.

Risk-Based Capital Ratio (BIS Capital Ratio)(in billions of yen)March 31, 2000

175.0
498.5
570.1
273.6
278.4
3.7
1,799.4-

March 31, 1999

¥

175.0
498.6
570.1
209.4
291.7
4.3
1,749.2-

March 31, 1998

Preferred Stock
Common Stock
Capital Surplus
Retained Earnings
Minority Interests: Preferred Stocks Issued by SPCs
OthersTotal Tier I Capital (A)
45% Unrealized Gains on Securities¥

45% Unrealized Gains on Land Used in Business
General Reserve for Possible Loan Losses
Subordinated Debts
Sub-total
Total Tier II Capital (B)Total Tier III Capital (C)Capital (D) = (A) + (B) + (C)On-Balance-Sheet Exposure
Off-Balance-Sheet Exposure
Credit Risk Asset (E)Market Risk Related Exposure (F)Total (G) = (E) + (F)Risk-Based Capital Ratio (BIS Capital Ratio)=(D) / (G)×100

73.2
138.5
1,306.2
1,518.0
1,518.0
3,317.5
24,731.5
2,195.7
26,927.3
273.1¥27,200.4

77.1
189.1
1,257.9
1,524.2
1,524.2
3,273.4
25,556.6
2,925.7
28,482.3
382.8¥28,865.2

183.4
81.2
116.4
1,074.6
1,455.8
1,399.7
2,844.1
24,121.1
3,385.3
27,506.5
210.2¥27,716.8

12.19%

11.34%

10.26%¥ 1,444.4

Notes: 1. These figures are calculated in accordance with the instruction from the Financial Supervisory Agency, the Ministry of Finance, based on the Bank
Law Article 14-2 as referred by the Long-Term Credit Bank Law Article 17, represent indices on consolidated figures, and are in accrodance with
the Uniform Internatonal Standards.
2. Consolidated Retained Earnings balances in this table are presented net of divided distributions and directors’ bonus to be disbursed from current
earnings.
3. The components of Tier I were disclosed starting from March 31, 1999.

[Reference]
Return on Equity
Net Income Basis

Fiscal 1999

Fiscal 1998

Fiscal 1997

5.4%

(14.3%)(14.2%)

Note:
ROE =

Net Income-Total Dividend Payment on Preferred Stocks{(Total Shareholders’ Equity at the beginning of the Fiscal Year - Number of Preferred Shares Issued
at the beginning of the Fiscal Year × Issue Price) + (Total Shareholders’ Equity at the end of the Fiscal Year
- Number of Preferred Shares Issued at the end of the Fiscal Year× Issue Price)} /2

87

Report of Independent Certified Public Accountants

To the Board of Directors,
The Industrial Bank of Japan, Limited:
We have audited the accompanying consolidated balance sheets of The Industrial Bank of Japan, Limited ("IBJ") and its subsidiaries asof March 31, 2000 and 1999, the related consolidated statements of income, shareholders' equity for each of the three years in the period
ended March 31, 2000, and the related consolidated statement of cash flows for the year ended March 31, 2000, all expressed in Japanese
Yen. Our audits were made in accordance with auditing standards, procedures and practices generally accepted and applied in Japan
and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in thecircumstances.
In our opinion, the consolidated financial statements referred to above present fairly the consolidated financial position of IBJ and its
subsidiaries as of March 31, 2000 and 1999, the consolidated results of their operations for each of the three years in the period ended
March 31, 2000, and the consolidated result of their cash flows for the year ended March 31, 2000, in conformity with accounting
principles and practices generally accepted in Japan (See Note 1(a)) consistently applied during the periods, except for the change withwhich we concur, in the accounting for Securities as described in Note 1(e) to the accompanying consolidated financial statements.
The amounts expressed in U.S. dollars, which are provided solely for the convenience of the reader, have been translated on the basis
set forth in Note 1(a) to the accompanying consolidated financial statements.

Tokyo, Japan
June 28, 2000

88

Consolidated Balance Sheets

March 31, 2000
AssetsCash and Due from Banks
Call Loans and Bills Purchased (Note 19)
Commercial Paper and Other Debt Purchased
Trading Assets (Notes 3 and 19)
Money Held in Trust (Note 33)
Securities (Notes 4, 19 and 32)
Loans and Bills Discounted (Notes 5 and 19)
Foreign Exchanges (Note 6)
Other Assets (Notes 7 and 19)
Premises and Equipment (Notes 8 and 19)
Deferred Debenture Charges (Note 9)
Deferred Tax Assets (Note 10)
Customers’ Liabilities for Acceptances and Guarantees (Note 18)
Reserve for Possible Loan Losses (Note 11)
Total Assets(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1999

March 31, 2000¥

652,704
2,004,913
31,4393,926,059
10,1237,580,782
22,779,689
254,281
4,423,709
285,835
9,625
366,900
1,060,417(920,029)¥42,466,450¥

806,9102,712,690
133,008
3,729,005
54,331
8,942,151
23,327,907
290,585
3,923,235
313,726
16,055400,198
1,516,602¥46,166,409$

6,148,889
18,887,547
296,178
36,985,956
95,36571,415,760
214,599,053
2,395,491
41,674,136
2,692,751
90,6783,456,430
9,989,799(8,667,263)$400,060,770(in millions of yen)(in thousands of
U.S. dollars)

March 31, 2000

March 31, 1999

March 31, 2000

Liabilities, Minority Interests in Consolidated Subsidiaries
and Shareholders’ Equity
Liabilities
Debentures (Note 12)
Deposits (Notes 13 and 19)
Call Money and Bills Sold (Note 19)
Commercial Paper
Borrowed Money (Notes 14 and 19)
Trading Liabilities (Note 3)
Foreign Exchanges (Note 6)
Other Liabilities (Note 15)
Reserve for Possible Loan Losses (Note 11)
Reserve for Retirement Allowances
Reserve for Possible Losses on Loans Sold
Reserve for Possible Losses on Support of Specific Borrowers
Reserve for Contingency
Other Reserves (Note 16)
Deferred Tax Liabilities (Note 10)
Deferred Tax Liabilities related to Land Revaluation
Acceptances and Guarantees (Note 18)
Total Liabilities¥20,471,200
6,636,501
3,726,195
164,000
946,969
1,361,118
59,412
5,779,352
50,57847,506167,198
13,93847
8,997
63,484
1,060,417
40,556,917¥20,461,865
8,116,321
4,857,493
30,0001,390,208
2,854,950
23,3993,810,402
1,066,714
53,08848,14429
7,245
72,5181,516,602
44,308,984$192,851,630
62,520,032
35,103,112
1,544,984
8,921,049
12,822,592
559,699
54,445,151
476,485
447,539
1,575,111
131,306
444
84,767598,063
9,989,799
382,071,763

Minority Interests in Consolidated Subsidiaries (Note 17)282,116

296,074

2,657,711

175,000
498,605
570,132
99,212
284,475(8)
1,627,417

175,000
498,605
570,132
98,920218,694(2)
1,561,350

1,648,610
4,697,176
5,371,005
934,646
2,679,942(83)
15,331,296¥42,466,450¥46,166,409$400,060,770

Shareholders’ Equity
Preferred Stock (Note 20)
Common Stock (Note 21)
Capital Surplus
Surplus from Land Revaluation (Note 8)
Retained Earnings (Note 22)
Treasury Stock
Total Shareholders’ Equity
Total Liabilities, Minority Interests in Consolidated Subsidiaries andShareholders’ Equity

See accompanying “Notes to Consolidated Financial Statements” which are an integral part of these statements.

89

Consolidated Statements of Income

IncomeInterest Income (Note 23)
Fee & Commission Income
Trading Income (Note 24)
Other Operating Income (Note 25)
Other Income (Note 26)
Reversal of Other Reserves
Total Income
ExpenseInterest Expense (Note 23)
Fee & Commission Expense
Trading Expense (Note 24)
Other Operating Expense (Note 27)
General and Administrative Expenses
Other Expense (Note 28)
Provision of Other Reserves
Total Expense
Income (Loss) before Income Taxes and Others
Income Tax Expenses (Benefits) (Note 29):
Current
Deferred
Minority Interests in Net Income
Amortization of Consolidation Difference
Net Income (Loss)

Per Share of Common StockNet Income (Loss)
Basic
DilutedCash Dividends(in thousands of
U.S. dollars)

Fiscal 1999*

Fiscal 1998*

Fiscal 1997*

Fiscal 1999*¥1,519,988
89,56851,802
1,011,984
326,319
2,999,663¥1,974,674
97,50553,936854,050
406,143450
3,386,760¥2,305,998
122,8499,467
473,434
397,938
12,2133,321,902$14,319,255
843,787
488,016
9,533,534
3,074,134
28,258,726

1,272,875
16,462171
1,015,512
192,237
335,324
17
2,832,600
167,063

1,672,871
14,264
794,768
222,792
938,295
03,642,993(256,232)

2,015,962
19,7388,452
431,913217,453
941,4973
3,635,020(313,118)

11,991,292
155,083
1,617
9,566,764
1,810,994
3,158,966
167
26,684,883
1,573,843

45,55337,97010,816(94,093)3,935(114,695)

429,146
357,705

12,78570,7548,321¥ (181,276)

169
131¥ (202,660)

120,443666,549¥$(in yen)(in U.S. dollars)¥25.5923.15¥(70.64)n/a¥(79.80)n/a$0.241
0.218

7.00

7.00

8.50

0.066

See accompanying “Notes to Consolidated Financial Statements” which are an integral part of these statements.
* Fiscal 1999, 1998 and 1997 represent the fiscal years ended March 31, 2000, 1999 and 1998, respectively.

90(in millions of yen)Consolidated Statements of Shareholders’ Equity(in millions of yen)Preferred
Stock(Note 20)¥-

CommonStock(Note 21)¥465,105

CapitalSurplus¥361,632

Surplusfrom Land
Revaluation(Note 8)¥-Cash Dividends
Net Loss
Treasury Stock Transactions

-

-

-

-

280
(21,586)(202,660)-

7

280(21,586)(202,660)
7

Balance at March 31, 1998
Issuance of Preferred Stock

175,000

Issuance of Common Stock
Transfer from Liabilities-

465,105
33,500-361,632
175,000
33,500-98,920-493,287-(5)-

1,320,019
350,000
67,000(19,681)-

98,920(19,681)

-

-

-

-

(20,900)-(20,900)

-

-

-

-

(52,733)(181,276)-3(52,733)(181,276)
3

Balance at March 31, 1999
Transfer from Surplus from Land
Revaluation to Retained Earnings
Transfer from Deferred Tax Liabilities
Related to Land Revaluation and Others
Exclusion from Consolidation of Affiliates
Previously Accounted for under the
Equity Method
Cash Dividends
Net Income
Treasury Stock Transactions

175,000

498,605

570,132

98,920218,694(2)

1,561,350---(3,035)

3,035

-

-

-

-

-

3,328

-

-

3,328

-

-

-

-

12,079(20,088)
70,754-(6)

12,079(20,088)
70,754(6)

Balance at March 31, 2000

¥175,000¥498,605¥570,132¥99,212¥284,475¥ (8)¥1,627,417

Balance at March 31, 1997
Initial Consolidation of a Subsidiary
Not Consolidated in the Previous Year

Cash Dividends
Initial Consolidation of Subsidiaries
Not Consolidated in the Previous Year
Initial Adoption of Equity Method ofAffiliates Stated at Cost in the Previous Year
Net Loss
Treasury Stock Transactions

Retained
Earnings(Note 22)¥717,253

Treasury
Stock
¥(12)

Total
Shareholders’Equity¥1,543,979(in thousands of U.S. dollars)

Surplusfrom Land
Retained
Revaluation
Earnings(Note 8)(Note 22)$931,890 $2,060,243

Preferred
Stock(Note 20)
$1,648,610

CommonStock(Note 21)
$4,697,176

CapitalSurplus$5,371,005

-

-

-

(28,597)---

Cash Dividends
Net Income
Treasury Stock Transactions--

Balance at March 31, 2000

$1,648,610$4,697,176

Balance at March 31, 1999
Transfer from Surplus from Land
Revaluation to Retained Earnings
Transfer from Deferred Tax Liabilities
Related to Land Revaluation and Others
Exclusion from Consolidation of Affiliates
Previously Accounted for under the
Equity Method

Treasury
Stock
$(21)

Total
Shareholders’Equity$14,708,903

28,597--31,353--31,353--

113,799(189,246)
666,549-(62)

113,799(189,246)
666,549(62)$5,371,005$934,646$2,679,942$(83)$15,331,296

See accompanying “Notes to Consolidated Financial Statements” which are an integral part of these statements.

91Consolidated Statement of Cash Flows

Cash Flows from Operating Activities
Income before Income Taxes and Others
Depreciation and Amortization
Equity in Earnings from Investments in Affiliates
Decrease in Reserve for Possible Loan Losses
Decrease in Reserve for Possible Losses on Loans Sold
Increase in Reserve for Contingency
Decrease in Reserve for Retirement Allowances
Increase in Reserve for Possible Losses on Support of Specific Borrowers
Interest Income - Accrual BasisInterest Expense - Accrual Basis
Gains and Losses on Securities
Profit from Money Held in Trust
Translation Differences
Gains and Losses on Dispositions of Premises and Equipment
Net Increase in Trading Assets
Net Decrease in Trading Liabilities
Net Decrease in Loans and Bills Discounted
Net Increase in Deposits (Liabilities)
Net Decrease in Certificates of Deposit (Liabilities)
Net Increase in Debentures (excluding Subordinated Debentures)
Net Decrease in Borrowed Money (excluding Subordinated Borrowed Money)
Net Increase in Commercial Paper
Net Decrease in Call Loans
Net Increase in Cash Placed as Collateral on Securities Borrowed
Net Decrease in Call Money
Net Increase in Cash Received as Collateral on Securities Lent
Net Decrease in Due from Banks (excluding Due from Central Banks)
Net Decrease in Certificates of Deposit (Assets)
Net Decrease in Foreign Exchanges (Assets)
Net Increase in Foreign Exchanges (Liabilities)
Interest Income - Cash BasisInterest Expense - Cash Basis
OthersSubtotal
Cash Paid in Income Tax
Net Cash used in Operating Activities
Cash Flows from Investing Activities
Payments from Purchase of Securities
Proceeds from Sale of Securities
Proceeds from Redemption of Securities
Payments from Increase in Money Held in Trust
Proceeds from Decrease in Money Held in Trust
Payments from Purchase of Premises and Equipment
Proceeds from Sale of Premises and Equipment
Net Cash Provided by Investing Activities
Cash Flows from Financing Activities
Payments to Subordinated Borrowed Money
Proceeds from Issuance of Subordinated Debentures
Payments from Redemption of Subordinated Debentures
Dividends Paid
Dividends Paid for Minority Interests
OthersNet Cash Provided by Financing Activities
Effects of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at the Beginning of the Year
Cash and Cash Equivalents at the End of the Year(in millions of yen)(in thousands of
U.S. dollars)

Fiscal 1999*

Fiscal 1999*

167,0638,303(2,111)(129,763)(637)
13,938(2,509)167,198(1,519,988)
1,272,875(203,318)(5,027)58,666(11,110)(546,688)(1,216,057)
68,680259,566(1,143,422)
13,287(335,367)
134,000
305,707(125,523)(619,664)
204,454(15,821)648
9,586
37,6901,555,932(1,324,708)
1,701,203(1,222,918)(21,192)(1,244,111)$ 1,573,843
78,223(19,890)(1,222,453)(6,010)131,306(23,642)
1,575,111(14,319,255)
11,991,292(1,915,392)(47,358)
552,672(104,668)(5,150,147)(11,456,026)
647,0102,445,276(10,771,763)
125,174(3,159,378)
1,262,365
2,879,959(1,182,509)(5,837,628)
1,926,095(149,052)
6,113
90,311
355,072
14,657,866(12,479,594)
16,026,409(11,520,668)(199,651)(11,720,319)(19,265,494)
20,248,077
211,138(1,038,067)
1,092,161(21,495)
12,5041,238,825(181,493,123)
190,749,672
1,989,061(9,779,247)
10,288,851(202,501)
117,804
11,670,517(22,500)
78,992(8,358)(20,088)(12,859)(6)
15,179(3,111)
6,781
290,232
297,013(211,964)
744,154(78,740)(189,246)(121,143)(61)
143,000(29,309)63,8892,734,169$ 2,798,058¥¥

See accompanying “Notes to Consolidated Financial Statements” which are an integral part of these Statements.
* Fiscal 1999 represent the fiscal year ended March 31, 2000.

92

Notes to Consolidated Financial Statements

1. Basis of Presentation and Summary of
Significant Accounting Policies
The Industrial Bank of Japan, Limited (“IBJ”) is a long-term credit
bank under the Long-Term Credit Bank Law in Japan, providing
global financial services together with its subsidiaries (“IBJGroup”). The subsidiaries of IBJ includes IBJ Securities Co., Ltd. (adomestic corporation), IBJ Trust and Banking Co., Ltd. (a domestic
corporation), The Industrial Bank of Japan Trust Company (a U.S.
corporation), IBJ Whitehall Bank & Trust Company (a U.S.
corporation), Aubrey G. Lanston & Co. Inc. (a U.S. corporation)and IBJ International plc (a U.K. corporation).
(a) Basis of Presentation: The accompanying consolidated
financial statements have been prepared from the accounts
maintained by IBJ and its consolidated subsidiaries in accordancewith the provisions set forth in the Japanese Commercial Code(the “Code”) and in conformity with accounting principles andpractices generally accepted in Japan, which are different incertain respects as to application and disclosure requirementsfrom International Accounting Standards.
Certain items presented in the consolidated financial statements submitted to the Director of Kanto Finance Bureau (the“DKFB”) in Japan are reclassified for the convenience of readers
outside Japan. In addition, the Consolidated Statements ofShareholders’ Equity are prepared and included in consolidated
financial statements, though they are not required to be filed with
the DKFB. In place of the Consolidated Statements of Shareholders’ Equity, the Consolidated Statements of Retained Earnings
are filed with the DKFB, the information of which are all includedin the Consolidated Statements of Shareholders’ Equity.
The amounts indicated in millions of yen are rounded down
by truncating the figures below one million. Totals may not add
up exactly because of such truncation.
The consolidated financial statements are not intended to present
the consolidated financial position, results of operations and cash
flows in accordance with accounting principles and practices
generally accepted in countries and jurisdictions other than Japan.
Amounts in U.S. dollars are included solely for the convenienceof readers outside Japan. The rate of ¥106.15 = US$1.00, the rateof exchange on March 31, 2000, has been used in translation.
The inclusion of such amounts is not intended to imply thatJapanese yen has been or could be readily converted, realized or
settled into U.S. dollars at that rate or any other rate.

(b) Principles of Consolidation: The consolidated financial
statements include the accounts of IBJ and its subsidiaries. The
number of the consolidated subsidiaries was 63 at March 31,
2000, 67 at March 31, 1999 and 42 at March 31, 1998.
Investments in affiliates and unconsolidated subsidiaries,
except for those immaterial to the consolidated financial
statements which are carried at cost, are accounted for under theequity method. The number of the affiliates accounted for underthe equity method was 18 at March 31, 2000, 14 at March 31,
1999. No affiliate was accounted for under the equity method at
March 31, 1998. These investments are included in Securities, andthe net equity in income from these investments is included in
Other Income.
In fiscal 1998, in determining subsidiaries and affiliates, IBJ
adopted “Implementation Guideline on Revised Definition ofSubsidiaries and Affiliates under Reporting System ofConsolidated Financial Statements” issued by the BusinessAccounting Deliberation Council in October 30, 1998. Under thisnew guideline, companies controlled by IBJ are accounted for as
subsidiaries regardless of the ownership percentage by IBJ, andcompanies influenced by IBJ in material degree on their financial
and operating or business policies through investment, personnel,
finance, technology, trading or other relationship, are accounted
for as affiliates regardless of the ownership percentage by IBJ.
Before fiscal 1997 IBJ determined subsidiaries and affiliates only
by ownership.
Any difference between the cost of an investment in a
subsidiary and the amount of underlying equity in net assets ofthe subsidiary is allocated to applicable accounts where
identifiable, and the remaining portion is charged or credited toincome, as the case may be, in the year in which it occurs.
All material intercompany transactions, account balances andunrealized profits have been eliminated in consolidation.
The majority of domestic subsidiaries are consolidated basedon the fiscal years ended March 31, and the majority of foreignsubsidiaries are consolidated based on the fiscal years ended
December 31.
(c) Statement of Cash Flows: Presentation of Consolidated
Statement of Cash Flows is required effective for fiscal 1999 inaccordance with a new accounting standard. The Consolidated
Statements of Cash Flows for prior years are not presented asthey were prepared in a different format and not considered
comparable. For the purpose of the Consolidated Statement of
Cash Flows, Cash and Cash Equivalents consists of cash and duefrom central banks on the Consolidated Balance Sheets.

93Notes to Consolidated Financial Statements(d) Trading Assets and Liabilities: In fiscal 1997, tradingtransactions intended to take advantages of short-term
fluctuations and arbitrage in interest rates, currency exchange
rates, market prices of securities and related indices are recognizedon the contract date basis and recorded in Trading Assets or
Trading Liabilities on the Consolidated Balance Sheets.
Securities and other short-term credit instruments held for
trading purposes are stated at fair value at the balance sheet date.
Derivative financial products such as swaps, forward contracts andoption transactions are stated at their hypothetical termination
values, assuming that such transactions were terminated andsettled at the balance sheet date.
Trading Income and Trading Expense are recorded as interest
income or expense actually paid or received plus:
Marketable securities and commercial paper
The difference in valuation gains or losses between
beginning balance and ending balance; orDerivative financial products
The difference in hypothetical settlement gains or losses
between beginning balance and ending balance
Establishing trading accounts in accordance with the Bank Law,
Article 17-2, referred by the Long-Term Credit Bank Law, Article
17, had the following effect on the Consolidated Statements ofIncome for fiscal 1997:¥ 97,372 million
Net decrease in Total Income:Decrease in Interest Income ¥121,926 million¥ 24,553 million
Increase in Trading Income¥115,525 million
Net decrease in Total Expense:
Decrease in Interest Expense ¥117,194 million¥ 1,669 million
Increase in Trading Expense
Decrease in Loss
¥ 18,152 million
before Income Taxes and Others

Some elements in Trading Income and Trading Expense wereoffset in presentation of the Consolidated Statements of Income.
The consolidated subsidiaries record Trading Transactions andother similar transactions in the same manner as IBJ.
(e) Securities: Securities are stated at cost, cost being determinedby the moving-average method. As of and prior to March 31,
1998, corporate bonds, stocks and shares and other securities
listed on stock exchanges were stated at the lower of cost or
market, and Japanese national and local government bonds werestated at cost, cost being determined by the moving-averagemethod. As a result of this change, Other Expense and Loss before
Income Taxes and Others decreased by ¥190,464 million for fiscal
1998.

94

Corporate bonds, stocks and shares and other listed securities
in Money Held in Trust for short-term investments in designatedsecurities are stated at the lower of cost or market, cost being
determined by the moving average method. Non-listed securities
in Money Held in Trust are stated at cost: cost being determinedby the moving average method.
Securities held by the consolidated subsidiaries are valued atcost as determined principally by the moving-average method.
(f) Translation of Foreign Currencies: (1) Assets and liabilities
denominated in foreign currencies as well as assets and liabilities
of foreign branches are translated into yen primarily using theexchange rates in effect at the balance sheet date. Certain assets
and liabilities denominated in foreign currencies, including certain
investments in foreign companies, are valued at historicalexchange rates prevailing at the transaction dates if funded inJapanese yen.
Forward foreign contracts except for those relating to fundingtransactions are valued at the forward rates prevailing at thebalance sheet date for the remaining maturity of the contract.
Gains and losses on these forward foreign exchange contracts arerecognized in Other Operating Income. Premiums or discounts onspot and forward exchange swaps related to funding transactions
are recognized as part of interest income or expense over the lifeof the contract.
(2) Foreign currency accounts of the consolidated overseas
subsidiaries are translated into their home currencies at therespective exchange rates in effect at the balance sheet date.
The financial statements of the consolidated overseas
subsidiaries are translated into yen at the exchange rates in effectat the balance sheet date, except for accounts in shareholders’equity which are translated at the historical rates. Translationdifferences resulting from the changes in the exchange rates fromyear to year are accumulated in Other Assets.
(g) Premises and Equipment: Premises and Equipment is statedat cost less accumulated depreciation. Depreciation of IBJ is
computed as follows:
Buildings: Depreciation of buildings, excluding building equipment and structures, acquired on or after April 1, 1998, iscomputed using the straight-line method in accordance with
the Japanese Tax Law and the Japanese Tax Law Enforcement
Regulation Article 48-1 as amended. For other buildings, thedeclining-balance method is used at rates prescribed under
the Japanese Tax Law. This change of method in accordancewith the Japanese Tax Law Enforcement Regulation as
amended resulted in a decrease in Loss before Income Taxes

and Others by ¥6 million for fiscal 1998. The Japanese Tax
Law was also amended in fiscal 1998 to shorten depreciation
periods for buildings. This change in line with theamendment resulted in an increase in Loss before Income
Taxes and Others by ¥202 million for fiscal 1998.
Equipment: Depreciation of equipment is computed using thedeclining-balance method, based on rates prescribed under
the Japanese Tax Law.
Other premises and equipment: Depreciation of other premises
and equipment is computed in accordance with methods
prescribed under the Japanese Tax Law.
IBJ changed the depreciation rates for building from fiscal
1997. Until fiscal 1996, depreciation expenses for buildings wascalculated under the declining balance method at 160% of rates
under Japanese Tax Law. This change resulted in a decrease in
Loss before Income Taxes and Others by ¥2,306 million in fiscal
1997.
Premises and Equipment of the consolidated subsidiaries are
depreciated principally by the declining balance method over theestimated useful life of each asset.
(h) Software: Development costs for internal-use software arecapitalized and amortized under the straight-line method overestimated useful life of 5 years. In accordance with the transitional
provision of “the Practical Guidance for Accounting for Researchand Development Costs and Software Costs”, issued by JICPA
Accounting Committee on March 31, 1999, costs for internal-use
software that are already capitalized and included in Other Assets
are and will continue to be accounted for under the accounting
method previously in effect.
(i) Deferred Debenture Charges: Deferred Debenture Charges
consists of discounts on and issuance costs of debentures.
Discounts on debentures are amortized over the term of thedebenture.
Debenture issuance costs are amortized over the term of suchdebentures up to 3 years, which is the maximum period permitted
by the Code.
Deferred Debenture Charges of consolidated subsidiaries aremainly amortized over the term of the debenture.
( j ) Reserve for Possible Loan Losses: Reserve for Possible Loan
Losses of IBJ is maintained in accordance with Standards for Writeoffs and Provisions internally established.
-For credits extended to Bankrupt or Substantially Bankrupt
Obligors, reserves are maintained for 100% of the said credits lessamounts recoverable from collateral and guarantees.
-For credits extended to Intensive Control Obligors, reserves

are maintained for the amount deemed necessary based on overall
solvency analyses less amounts recoverable from collateral andguarantees.
-For credits extended to other obligors, reserves aremaintained at rates formulated from historical credit loss
experiences.
-Reserves for credits extended to specific foreign borrowers
are maintained in order to cover possible losses based on analysesof political and economic climates of the countries.
All credits are assessed by each credit origination department,
and a result of the assessments is verified and audited by anindependent examination department. Reserve for Possible Loan
Losses is provided on the basis of such audited assessments.
Reserve for Possible Loan Losses of the consolidated subsidiaries is provided at the amount considered necessary basedon the management’s risk assessment of the loan portfolio.
From fiscal 1999, Reserve for Possible Loan Losses, which was
included in the Liability section in prior years, is included in the
Asset section of the balance sheet as a result of a revision in the
Implementation Guide of Long-Term Credit Bank Law (Ministryof Finance Ordinance No.13, 1982). Decrease in both Total Assets
and Total Liabilities of ¥920,029 million resulted from thisreclassification.
(k) Reserve for Retirement Allowances and Pension Plan:
In Reserve for Retirement Allowances of IBJ is provided for
payments to employees based on the amount that would havebeen required assuming the voluntary retirement of all employeeson the date of the balance sheet. In addition, IBJ has a noncontributory funded pension plan for eligible employees. IBJ’s
policy for the plan is to fund and charge to income normal costs
as accrued on the basis of an actuarial method accepted in Japan.
The consolidated subsidiaries principally have funded pension
plans for their employees.
(l) Reserve for Possible Losses on Loans Sold: Reserve for
Possible Losses on Loans Sold is maintained to cover contingent
losses on loans sold to the Cooperative Credit Purchasing
Company, Limited, taking into account the value of collateralpledged. This reserve is provided in accordance with Article 2872 of the Code.
(m) Reserve for Possible Losses on Support of Specific
Borrowers: Reserve for Possible Losses on Support of Specific
Borrowers is maintained to cover losses on write-offs of loans toassist or facilitate the restructuring of certain borrowers. This
reserve is provided in accordance with Article 287-2 of the Code.

95

Notes to Consolidated Financial Statements(n) Reserve for Contingency: Reserve for Contingency ismaintained to cover losses arising from matters not covered byother specific reserves that are probable to take place and thatare determinable in amounts. This reserve is provided inaccordance with Article 287-2 of the Code.
(o) Income Taxes: Accounting for allocation of income taxes,
which is corporate income tax, inhabitant tax and enterprise tax,
is adopted. The asset and liability method is applied to provide
income taxes on all transactions recorded in the consolidated
financial statements. Deferred Tax Assets and Deferred Tax
Liabilities are determined based on the difference between thefinancial statement and tax bases of assets and liabilities, using
enacted tax rates which will be in effect when the differences are
expected to reverse. The aggregate tax rates were approximately
39.0% for fiscal 1999, 42.3% for fiscal 1998, 47.9% for fiscal
1997.
(p) Earnings per Share: Basic Net Income (Loss) per Share ofCommon Stock is computed by dividing Net Income (Loss)applicable to Common Stock by weighted-average number ofshares of Common Stock outstanding during each year.
Calculation of Diluted Net Income per Share of Common Stockreflects the potential dilution that could occur if dilutive securities
were converted into Common Stock. Diluted Net Loss per Shareof Common Stock is not presented as this information is not

required in Net Loss years under accounting principles generally
accepted in Japan.
(q) Lease Transactions: Accounting principles applicable tooperating leases are applied for finance leases of IBJ and its
domestic subsidiaries that do not involve transferring of ownershipto the lessees at the end of lease terms.
(r) Changes in Presentation: Due to the change of the Rules
for the Consolidated Financial Statements, effective March 31,
1999, IBJ has changed the format of consolidated financial
statements as follows:(1) Legal Reserve is included in Retained Earnings in theConsolidated Balance Sheets and the Consolidated Statements ofShareholders’ Equity. The amounts at March 31, 1998 and priorhave been reclassified to conform to the presentation at March
31, 2000 and 1999.
(2) Enterprise Taxes is included in Income Tax Expenses(Benefits). It was previously included in Other Expense in theConsolidated Statements of Income for fiscal 1997.
(3) Amortization of Consolidation Difference is included in
General and Administration Expenses. It was presented as theitem of increase/decrease of Income (Loss) before Income Taxes
and Others in the Consolidated Statements of Income for fiscal
1997.

2. Cash and Cash Equivalents
Cash and Cash Equivalents at March 31, 2000 was reconciled toCash and Due from Banks on the Consolidated Balance Sheets asfollows:

Cash and Due from Banks
Less: Due from Banks except for due from central banks
Cash and Cash Equivalents

96(in millions of yen)March 31, 2000
¥652,704(355,690)¥297,013(in thousands of U.S. dollars)
March 31, 2000
$6,148,889(3,350,831)$2,798,058

3. Trading Assets and Liabilities
Trading Assets and Liabilities at March 31, 2000 and 1999,
consisted of the following:
March 31, 2000

(in millions of yen)March 31, 1999

(in thousands of U.S. dollars)
March 31, 2000

Trading Assets:
Trading Securities
Derivatives for Trading Securities
Securities Held to Hedge Trading Transactions
Derivatives for Securities Held to Hedge Trading Transactions
Derivatives for Trading Transactions
Other Trading Assets
Total¥2,609,334
34
27,161
716
928,726
360,085¥3,926,059¥1,635,269
112,762
23,193143
1,443,051
514,585¥3,729,005$24,581,577
320
255,881
6,753
8,749,194
3,392,231$36,985,956

Trading Liabilities:
Trading Securities Oversold
Derivatives for Trading Securities
Securities Oversold to Hedge Trading Transactions
Derivatives for Securities Held to Hedge Trading Transactions
Derivatives for Trading Transactions
Total¥ 450,751
036,41558873,892¥1,361,118¥ 746,636
689,469
24,375108
1,394,360¥2,854,950$ 4,246,359
7343,057547
8,232,622$12,822,592

March 31, 2000
¥2,405,738
143,478
339,691
2,870,455
1,821,418¥7,580,782(in millions of yen)March 31, 1999
¥3,321,912
167,675
362,710
2,661,519
2,428,333¥8,942,151(in thousands of U.S. dollars)
March 31, 2000
$22,663,577
1,351,660
3,200,107
27,041,507
17,158,909$71,415,760

4. Securities
Securities at March 31, 2000 and 1999, consisted of the following:

Japanese National Government Bonds
Japanese Local Government Bonds
Japanese Corporate Bonds
Japanese Stocks and Shares (1)Others (2)Total(1) Japanese Stocks and Shares included investments in affiliates of ¥28,491 million and ¥8,416 million at March 31, 2000 and 1999, respectively.
(2) Others included investments in affiliates of ¥1,388 million and ¥1,577 million at March 31, 2000 and 1999, respectively.

5. Loans and Bills Discounted
Loans and Bills Discounted at March 31, 2000 and 1999, consistedof the following:

Bills Discounted
Loans on Notes
Loans on Deeds
Overdrafts
Total

March 31, 2000
¥ 103,229
4,216,138
15,280,454
3,179,867¥22,779,689(in millions of yen)March 31, 1999
¥ 133,341
4,528,129
15,769,648
2,896,787¥23,327,907(in thousands of U.S. dollars)
March 31, 2000$
972,483
39,718,688
143,951,526
29,956,356$214,599,053

97Notes to Consolidated Financial Statements

Loans and Bills Discounted at March 31, 2000 and 1999, included
the following:
Loans to Bankrupt Borrowers (1)Non-Accrual Delinquent Loans (2)Loans Past Due for 3 Months or More (3)Restructured Loans (4)Total

March 31, 2000
¥ 122,459
1,024,884
10,655854,224¥2,012,224(in millions of yen)March 31, 1999
¥ 147,785
1,307,274
8,944
554,669¥2,018,673(in thousands of U.S. dollars)
March 31, 2000
$ 1,153,641
9,655,062
100,385
8,047,333$18,956,421(1) Loans to Bankrupt Borrowers represent nonaccrual loans to borrowers who are legally bankrupt as defined in Article 96-1-3 and 4 of the Japanese Tax Law
Enforcement Regulation (Article 97 of 1965 Cabinet Order).
(2) Non-Accrual Delinquent Loans represent nonaccrual loans other than (i) Bankruptcy Loans and (ii) loans of which payments of interest are deferred in order
to assist or facilitate the restructuring of borrowers in financial difficulties.
(3) Loans to Bankrupt Borrowers or Non-Accrual Delinquent Loans, both of which are classified as nonaccrual, are not included in this category.
(4) Restructured Loans represent loans on which contracts were amended in favor of borrowers (e.g., the reduction of or exemption from stated interest, thedeferral of interest payments, the extension of maturity dates, renunciation of claims) in order to assist or facilitate the restructuring of borrowers in financial
difficulties.

6. Foreign Exchange Assets and Liabilities
Foreign Exchange Assets and Liabilities at March 31, 2000 and
1999, consisted of the following:
Foreign Exchange Assets:
Foreign Bills Bought
Foreign Bills Receivable
Advance to Foreign Banks
Due from Banks (Foreign)
Total
Foreign Exchange Liabilities:
Foreign Bills Sold
Foreign Bills Payable
Advance from Foreign Banks
Due to Banks (Foreign)
Total

March 31, 2000

(in millions of yen)March 31, 1999

(in thousands of U.S. dollars)
March 31, 2000

¥130,149
85,04018,09820,993¥254,281¥124,974
77,17133,29255,147¥290,585$1,226,087
801,132
170,498
197,774$2,395,491

¥

15
357
1,697
57,341¥ 59,412

¥

10
1,253
4,564
17,570¥ 23,399

$

146
3,372
15,987
540,194$ 559,699

March 31, 2000
¥ 380,272
6,437
1,222,649
1,679,387
1,134,962¥4,423,709(in millions of yen)March 31, 1999
¥ 422,080
9,509
1,326,515
1,347,016
818,112¥3,923,235(in thousands of U.S. dollars)
March 31, 2000
$ 3,582,405
60,644
11,518,126
15,820,894
10,692,067$41,674,136

7. Other Assets
Other Assets at March 31, 2000 and 1999, consisted of thefollowing:Accrued Income
Prepaid Expense
Cash placed as Collateral on Securities Borrowed
Securities in Custody and Other (1)Others (2)Total(1) Securities in Custody and Other represents securities borrowed from financial institutions under contracts which allow IBJ to use these securities for thesettlement of securities sold and securities deposited by customers as collateral for margin.
(2) Others at March 31, 2000 and 1999 included provisional tax payments of ¥222,682 million. IBJ made these payments upon receipt of the Correction Noticefrom the Tokyo Regional Taxation Bureau on August 23, 1996 in connection with the write-off of credits due from Japan Housing Loan, Inc., amounting to¥376,055 million recorded in fiscal 1996. IBJ disputed the rationale for the proposed correction and filed an application seeking to void the proposed correction
to the National Tax Tribunal for administrative review, which was dismissed on October 28, 1997. IBJ filed a lawsuit at Tokyo District Court on October 30,
1997.

98

8. Premises and Equipment
Premises and Equipment at March 31, 2000 and 1999, consistedof the following:

Land
Buildings
Equipment
OthersSubtotal
Less: Accumulated DepreciationTotal

In accordance with the Land Revaluation Law, land used forbusiness operations of IBJ was revalued as follows:
Date of revaluation: March 31, 1998
Method of revaluation set forth in Article 3-3 of above law:
In accordance with Article 119 of 1998 Cabinet Order - Article
2-4 of the Enforcement Ordinance relating to the Land
Revaluation Law, revaluation is performed by the method of
calculating land value for a taxable basis of Land Value Tax
amounts along with reasonable adjustments, such as shape ofland and accessibility. This method is established and publishedby the Director General of National Tax Administration.
The difference between the total fair value of land used inbusiness at the year-end and the total book value after revaluationof said land used in business in accordance with Article 10 of the

March 31, 2000
¥200,671
126,553
48,136
26,560401,921116,086¥285,835(in millions of yen)March 31, 1999
¥212,167
131,183
50,17842,484
436,012122,286¥313,726(in thousands of U.S. dollars)
March 31, 2000
$1,890,449
1,192,212
453,477
250,221
3,786,359
1,093,608$2,692,751

above law: ¥6,776 million and ¥3,148 million, at March 31, 2000
and 1999, respectively.
At March 31,1998, the entire excess on revaluation waspresented as Surplus from Land Revaluation included in Liabilities.
At March 31, 1999, due to the revision of the above law on March
31, 1999, the taxable portion of the excess on revaluation ispresented as Deferred Tax Liabilities related to Land Revaluation
which is included in Liabilities, and the remainder, net of income
taxes portion of the excess on revaluation, is presented as Surplus
from Land Revaluation which is included in Shareholders’ Equity.
As a result of this change, Total Liabilities decreased by ¥98,920
million and Total Shareholders’ Equity increased by ¥98,920
million.

9. Deferred Debenture Charges
Deferred Debenture Charges at March 31, 2000 and 1999,
consisted of the following:

Deferred Discounts on Debentures
Deferred Debenture Issuance Costs
Total

March 31, 2000
¥6,512
3,113¥9,625(in millions of yen)March 31, 1999
¥13,191
2,863¥16,055(in thousands of U.S. dollars)
March 31, 2000
$61,351
29,327$90,67899

Notes to Consolidated Financial Statements

10. Deferred Tax Assets and Liabilities
The components of Deferred Tax Assets and Liabilities at March
31, 2000 and 1999, were as follows:

Deferred Tax Assets:
Reserve for Possible Loan Losses
Reserve for Possible Losses on Support of Specific Borrowers
Investments in Stocks and Others
Reserve for Possible Losses on Loans Sold
Reserve for Retirement Allowances
Net Loss Carryforwards
Investments in Subsidiaries and Affiliates
Others
Total
Deferred Tax Liabilities:
Depreciation and Others

March 31, 2000

(in millions of yen)March 31, 1999

(in thousands of U.S. dollars)
March 31, 2000

¥229,771
65,24020,425
18,536
14,030-¥246,077
11,30820,365
15,53155,506
31,221$2,164,595
614,608
192,418
174,630
132,175-

18,895¥366,900

20,189¥400,198

178,004$3,456,430

¥

¥

$

8,997

7,245

84,767

Deferred Tax Assets and Liabilities are netted on the Consolidated Balance Sheets if they belong to the same taxpayer.

11. Reserve for Possible Loan Losses
Reserve for possible Loan Losses at March 31, 2000 and 1999,
consisted of the following:

General Reserve for Possible Loan Losses
Specific Reserve for Possible Loan Losses
Reserve for Possible Losses on Loans to Restructuring Countries
Total

100

March 31, 2000
¥138,546
775,348
6,134¥920,029(in millions of yen)March 31, 1999
¥ 189,120
870,008
7,586¥1,066,714(in thousands of U.S. dollars)
March 31, 2000
$1,305,197
7,304,275
57,791$8,667,263

12. Debentures
to attract more investors. Debentures and other long-term debts
of IBJ Group outstanding at March 31, 2000 and 1999, were as
follows:

IBJ issues debentures twice a month and offer them to institutional
and private investors as a main source of funds for its operations.
It provides debentures with a variety of different terms in order

Issuer
IBJ

Interest Rates
March 31, 2000
0.19%-0.49%
1.00%-4.00%

Description of Bonds and Notes
One-Year Discount Debentures
Five-Year Coupon Debentures (Series ”A”)

March 31, 2000
¥ 5,577,907
10,285,631

Five-Year Coupon Debentures (Series ”B”)

236,247

255,151

2,225,599

0.50%-3.90%

Five-Year Coupon Debentures(with compounding interests)
Five-Year Coupon Debentures (savings-type)1,020,210
810,555

1,030,886
812,5099,611,028
7,635,942

0.50%-3.90%
0.50%-3.90%

94,301
1,508,400

93,931
1,373,800

888,384
14,210,080

0.50%-3.90%
0.30%-1.40%

353,100

353,100

3,326,425

0.70%-3.00%

26,017

29,834

245,099

3.60%-8.40%

558,829¥ 20,471,200

595,006¥ 20,461,865

Five-Year Coupon Debentures(savings types with compounding interests)
Two-year coupon debentures
Subordinated Debentures, due fromMarch 2008 and thereafter
Debentures denominated in foreign currencies,
due from July 2004 through September 2010
Consolidated
Subsidiaries (1)Total(in thousands of
U.S. dollars)
March 31, 2000
$ 52,547,412
96,897,137(in millions of yen)March 31, 1999
¥ 5,799,005
10,118,640

Straight Bonds

5,264,524 0.10%-25.00%$192,851,630(1) The Industrial Bank of Japan Finance Company N.V., IBJ International plc, and IBJ Australia Bank Limited.
Repayments for Debentures are scheduled for the next 5 years as follows:

Fiscal 2000
2001
2002
2003
2004

¥9,352,946 million¥3,428,082 million¥2,428,836 million¥2,364,140 million¥2,303,350 million

13. Deposits
Deposits at March 31, 2000 and 1999, consisted of the following:

Current Deposits
Ordinary Deposits
Deposits at NoticeTime Deposits
Certificates of Deposit
OthersTotal

March 31, 2000
¥ 432,595
880,681334,5232,494,728
1,384,995
1,108,976¥ 6,636,501(in millions of yen)March 31, 1999
¥ 359,531
680,482
287,710
2,711,244
2,545,055
1,532,297¥ 8,116,321(in thousands of U.S. dollars)
March 31, 2000
$ 4,075,327
8,296,577
3,151,420
23,501,921
13,047,529
10,447,258$ 62,520,032101

Notes to Consolidated Financial Statements

14. Borrowed Money
Borrowed Money at March 31, 2000 and 1999, consisted of thefollowing:

Bills Rediscounted
Other Borrowing (2), (3)Total

March 31, 2000
¥ 26,403
920,566¥ 946,969(in millions of yen)March 31, 1999¥
30,174
1,360,033¥ 1,390,208(in thousands of
U.S. dollars)
March 31, 2000
$ 248,733
8,672,316$8,921,049

Average
Interest Rates (1)March 31, 2000
5.73%
3.27%
3.33%

(1) Average interest rates are weighed-average interests of debts calculated from the interest rates and outstanding balances at year-end.
(2) Other Borrowing included subordinated debts of ¥729,500 million and ¥752,000 million at March 31, 2000 and 1999, respectively.
(3) Repayments for Other Borrowing are scheduled for the next 5 years as follows: Fiscal 2000 ¥151,002 million
2001 ¥ 31,204 million
2002 ¥195,278 million
2003 ¥ 7,458 million
2004 ¥ 20,058 million

15. Other Liabilities
Other Liabilities at March 31, 2000 and 1999, consisted of thefollowing:Accrued Expense
Unearned Income
Income Taxes Payable
Cash Received as Collateral on Securities Lent
Securities Borrowed
OthersTotal

March 31, 2000
¥ 349,739
21,26623,881
994,042
1,647,582
2,742,840¥5,779,352(in millions of yen)March 31, 1999
¥ 404,644
27,131
16,856
831,2141,313,737
1,216,818¥3,810,402(in thousands of U.S. dollars)
March 31, 2000
$ 3,294,765
200,347
224,978
9,364,503
15,521,268
25,839,290$54,445,151

March 31, 2000
¥14
32
¥47

(in millions of yen)March 31, 1999
¥13
16
¥29

(in thousands of U.S. dollars)
March 31, 2000
$133
311
$444

16. Other Reserves
Other Reserves at March 31, 2000 and 1999, consisted of thefollowing:Reserve for Contingent Liabilities from Futures Transactions
Reserve for Contingent Liabilities from Securities Transactions
Total

17. Minority Interests in Consolidated Subsidiaries
Minority Interests in Consolidated Subsidiaries included preferredstocks issued by the IBJ subsidiaries of ¥278,428 million and¥291,700 million at March 31, 2000 and 1999, respectively. These

102

stocks are preferred as to distribution at liquidation of the issuing
subsidiaries.

18. Acceptances and Guarantees
All commitments and contingent liabilities of material nature
resulting from guarantees or otherwise are included in the contraaccounts “Acceptances and Guarantees” and “Customers’

Liabilities for Acceptances and Guarantees”.
Outstanding commitments and contingent liabilities at March
31, 2000 and 1999, consisted of the following:

Acceptances
Letters of Credit
Guarantees
Total

March 31, 2000¥
1,377
53,025
1,006,013¥1,060,417(in millions of yen)March 31, 1999¥
3,670
75,205
1,437,726¥1,516,602(in thousands of U.S. dollars)
March 31, 2000
$ 12,980
499,533
9,477,286$9,989,799

19. Assets Pledged as Collateral
Disclosure of assets pledged as collateral is required effective forthe year ended March 31, 2000, in accordance with a new
accounting standard.

Call Loans and Bills Purchased
Trading Assets
Securities
Loans and Bills Discounted
Other Assets
Premises and Equipment

The following assets have been submitted as collateral at March
31, 2000:(in millions of yen)March 31, 2000¥
5,000
458,495
1,354,775
209,886
26,537191(in thousands of U.S. dollars)
March 31, 2000$
47,103
4,319,318
12,762,838
1,977,259
250,000
1,801(in millions of yen)March 31, 2000
¥ 58,985
1,985,491
1,620(in thousands of U.S. dollars)
March 31, 2000
$ 555,682
18,704,582
15,262

The following liabilities are collateralized in security interests inabove assets:

Deposits
Call Money and Bills Sold
Borrowed Money

In addition, Trading Assets, Securities, Loans, and Other Assets amounting to ¥9,862 million, ¥1,203,482 million, ¥121,260 million and ¥1,700 million, respectively,
have been submitted as collateral in lieu of the deposits for settlement on foreign currency transactions and futures transactions.
No asset has been submitted as collateral to cover for debts of affiliates.

103Notes to Consolidated Financial Statements

20. Preferred Stock
In connection with the Financial Function Early Strengthening Law,
IBJ issued 140,000,000 shares of Preferred Stock First Series ClassII and 140,000,000 shares of Preferred Stock Second Series Class
II to the Resolution and Collection Corporation at March 31, 1999.
Preferred Stock First Series Class II has no par value, is entitledto a non-cumulative annual dividend of ¥17.50, has a liquidationpreference of ¥1,250, and is convertible to common stock from
September 1, 2003 to August 31, 2009, at which time all remain-

Authorized Shares:
Preferred Stock Class I
Preferred Stock Class II
Issued and Outstanding Shares:
Preferred Stock Class I
Preferred Stock First Series Class II
Preferred Stock Second Series Class II

ing shares will be converted to common stock.
Preferred Stock Second Series Class II has no par value, isentitled to a non-cumulative annual dividend of ¥5.38, has aliquidation preference of ¥1,250, and is convertible to common
stock from July 1, 2003 to August 31, 2009, at which time allremaining shares will be converted to common stock.
The numbers of authorized, issued and outstanding shares ofPreferred Stock at March 31, 2000 and 1999 were as follows:
March 31, 2000

(shares)March 31, 1999

200,000,000
400,000,000

200,000,000
400,000,000

140,000,000
140,000,000

140,000,000
140,000,000

Cash dividend per Preferred Stock First Series Class II for Fiscal 1999 and 1998 was ¥17.50 and ¥0.05, respectively.
Cash dividend per Preferred Stock Second Series Class II for Fiscal 1999 and 1998 was ¥5.38 and ¥0.02, respectively.

21. Common Stock
In connection with the mutual business corporation agreement,
IBJ issued 100,000,000 shares of Common Stock to Dai-Ichi
Mutual Life Insurance Company at ¥670 per share at December

Authorized Shares
Issued and Outstanding Shares25, 1998.
The numbers of authorized, issued and outstanding shares ofCommon Stock at March 31, 2000 and 1999, were as follows:
March 31, 2000
6,000,000,000
2,639,579,392(shares)March 31, 1999
6,000,000,000
2,639,579,392

22. Retained Earnings
Retained Earnings includes legal reserve. In accordance with theLong-Term Credit Banking Law, IBJ is required to appropriate aslegal reserve an amount equivalent to at least 20% of the amountof cash disbursements until such reserve equals 100% of its
common stock.
The legal reserve is not available for dividends but may be used104

to reduce a deficit by approval at the shareholders’ meeting or
may be capitalized by resolution of the Board of Directors.
The legal reserve, totaling ¥84,387 million and ¥80,369 million
at March 31, 2000 and 1999, respectively, is included in Retained
Earnings.

23. Interest Income and Expense
Interest Income and Expense for fiscal 1999, 1998 and 1997,
consisted of the following:
Fiscal 1999

Fiscal 1998

(in millions of yen) (in thousands of U.S. dollars)
Fiscal 1997
Fiscal 1999

Interest Income:Interest on Loans and Bills Discounted
Interest and Dividends on Securities
Interest on Call Loans and Bills Purchased
Interest on Due from Banks
Interest on Interest Swap
OthersTotal
Interest Expense:
Interest on Debentures
Amortization of Debenture Discounts
Interest on Deposits
Interest on Borrowed Money
Interest on Commercial Paper¥ 565,526
185,632
189,233
26,704487,41365,479¥1,519,988¥ 700,371
279,617260,098
40,539617,258
76,790¥1,974,674¥ 859,112
243,380
186,133
79,123814,933
123,316¥2,305,998$ 5,327,615
1,748,780
1,782,695
251,569
4,591,739
616,857$14,319,255¥ 267,992
20,224
140,739
33,829284¥ 309,620
27,117
244,686
51,50691¥ 374,840
34,952352,186
53,153$ 2,524,660
190,524
1,325,852
318,692

Interest on Call Money and Bills Sold
Interest on Interest Swap
OthersTotal
Net242,456
509,374
57,974¥1,272,875¥ 247,113

356,006
592,524
91,317¥1,672,871¥ 301,803

268,435
800,983
131,409¥2,015,962¥ 290,036

2,683
2,284,096
4,798,627
546,158$11,991,292$ 2,327,963

Fiscal 1999

Fiscal 1998

¥25,431¥22,995¥8,630$239,584

25,0991,271¥51,802

5,280
21,6693,991¥53,936

837¥9,467

236,454
11,978$488,016

¥

¥

¥ 401
8,051
¥8,452¥1,014

24. Trading Income and Expense
Trading Income and Expense for fiscal 1999, 1998 and 1997,
consisted of the following:
Trading Income:Net Gains on Trading Securities and Derivatives
Net Gains on Securities Held to Hedge Trading Transactions
Net Gains on Derivatives for Trading Transactions
Other Trading Income
Total
Trading Expense:
Net Losses on Securities Held to Hedge Trading Transactions
Other Trading Expense
Total
Net

171
¥ 171
¥51,631¥¥53,936

Fiscal 1999¥
8,550
993,790
4,800
4,842¥1,011,984

Fiscal 1998
¥ 17,127
817,294
10,635
8,993¥854,050(in millions of yen) (in thousands of U.S. dollars)
Fiscal 1997
Fiscal 1999

-

$

1,617
$ 1,617$486,399

25. Other Operating Income
Other Operating Income for fiscal 1999, 1998 and 1997, consistedof the following:

Gains on Foreign Exchange Transactions
Gains on Sales of Bonds
Gains on Redemption of Bonds
OthersTotal(in millions of yen) (in thousands of U.S. dollars)
Fiscal 1997
Fiscal 1999
¥ 12,066$ 80,549
444,595
9,362,137
11,37245,2275,400
45,621¥473,434$9,533,534

105

Notes to Consolidated Financial Statements

26. Other Income
Other Income for fiscal 1999, 1998 and 1997, consisted of thefollowing:

Gains on Sales of Stocks and Other Securities
Gains on Money Held in Trust
Gains on Sales of Premises and Equipment
Others
Total

Fiscal 1999
¥280,787
5,053
15,28725,190¥326,319

Fiscal 1998
¥383,365201
7,506
15,069¥406,143(in millions of yen) (in thousands of U.S. dollars)
Fiscal 1997
Fiscal 1999
¥373,162$2,645,198
8,751
47,606
5,418
144,018
10,606237,312¥397,938$3,074,134

Fiscal 1999¥
4,637
1,006,020
474
386
3,992
¥1,015,512

Fiscal 1998
¥ 5,132
768,513
9,144
69
11,908¥794,768(in millions of yen) (in thousands of U.S. dollars)
Fiscal 1997
Fiscal 1999
¥ 6,849$ 43,693
418,194
9,477,351
2,234
4,472
2,058
3,640
2,577
37,608¥431,913$9,566,764

Fiscal 1999
¥175,645
12,53831,68537,49326
4,176
73,758¥335,324

Fiscal 1998
¥613,741
140,667
35,356
12,416300
1,016
134,796¥938,295(in millions of yen) (in thousands of U.S. dollars)
Fiscal 1997
Fiscal 1999
¥522,358$1,654,687
62,468118,120
35,297
298,498
267,247
353,210
1,187
248(34,416)
1,585
39,35085,768694,853¥941,497$3,158,966

27. Other Operating Expense
Other Operating Expense for fiscal 1999, 1998 and 1997,
consisted of the following:

Amortization of Debenture Issuance Costs
Losses on Sales of Bonds
Losses on Redemption of Bonds
Losses on Devaluation of Bonds
OthersTotal

28. Other Expense
Other Expense for fiscal 1999, 1998 and 1997, consisted of thefollowing:

Provision of Reserve for Possible Loan Losses
Written-off Claims
Losses on Sales of Stocks and Other Securities
Losses on Devaluation of Stocks and Other Securities
Losses on Money Held in TrustEnterprise Taxes (1)Losses on Dispositions of Premises and Equipment
Others (2)Total(1) Enterprise Taxes for fiscal 1999 and 1998 were included in Income Tax Expenses (Benefits) in the Consolidated Statements of Income. Enterprise Taxes forfiscal 1997 had credit balances due to recognition of deferred income taxes.
(2) Others included the following IBJ losses:

Fiscal 1999
¥ 4,840

Fiscal 1998
¥44,026

Provision of Reserve for Possible Losses on Support of Specific Borrowers

18,892

Provision of Reserve for Contingency
Losses on Sales of Loans to CCPC
Other Losses on Sales of Loans

13,93815,4182,158
60,471

Provision of Reserve for Possible Losses on Loans Sold106

(in millions of yen) (in thousands of U.S. dollars)
Fiscal 1997
Fiscal 1999
¥15,805$ 45,601
21,701
28,882

177,980
131,306
145,250

29. Income Taxes
Starting March 31, 1999, the reconciliation of the difference
between the Legally Defined Effective Tax Rate and Ratio of

Legally Defined Effective Tax Rate
Influence of the Change of Tax Rate (1) (2)Dividend Received Deduction
OthersRatio of Income Taxes on Income before Income Taxes and Others

Income Taxes on Income before Income Taxes and Others wasdisclosed under the new disclosure requirement as follows:
Fiscal 1999
41.9%
18.2%
(8.1%)(2.0%)
49.9%

Fiscal 1998
47.9%
(16.3%)
n/a
0.9%
32.5%

(1) Tokyo Metropolitan Government enacted the Municipal Ordinance Relating to Special Business Taxes for Banks in Tokyo (Tokyo Municipal Ordinance No. 145,
April 1, 2000). This resulted in a change in the effective tax rate used in calculation of Deferred Tax Assets and Liabilities from 42.3% at March 31, 1999, to39.0% at March 31, 2000. Therefore, Deferred Tax Assets at March 31, 2000 decreased by ¥30,409 million and Income Taxes Expenses - Deferred for fiscal
1999 increased by the same amount. Deferred Tax Liabilities related to Land Revaluation as of March 31, 2000, decreased by ¥5,336 million, and Surplus fromLand Revaluation as of March 31, 2000, increased by the same amount.
(2) Adjustments due to the change of tax rate resulted in the decrease of Deferred Tax Assets of ¥27,652 million at March 31, 1999.
On June 9, 2000, Osaka Prefectural Government promulgated the Municipal Ordinance Relating to Special Business Taxes for Banks in Osaka (Osaka Municipal
Ordinance No. 131, June 9, 2000). This ordinance, when it becomes effective for fiscal 2001, changes the effective tax rate used in calculation of Deferred Tax
Assets and Liabilities from 39.0% at March 31, 2000, to 38.4% at March 31, 2001. Had this rate been used in calculation of deferred tax assets and liabilities asof March 31, 2000, Deferred Tax Assets at March 31, 2000, would have decreased by ¥5,191 million, and Income Taxes Expenses - Deferred for fiscal 1999
would have increased by the same amount. Deferred Tax Liabilities related to Land Revaluation as of March 31, 2000, would have decreased by ¥911 million,
and Surplus from Land Revaluation as of March 31, 2000, would have increased by the same amount. However, actual changes in deferred tax assets and liabilities
would be different from these amounts as they will be calculated using temporary differences in existence at March 31, 2001.

30. Subsequent Events
Merger Agreement of IBJ Securities Co., Ltd.
On May 25, 2000, IBJ Securities Co., Ltd., a subsidiary of IBJ,
entered into a merger agreement with DKB Securities Co., Ltd.,and Fuji Securities Co., Ltd. A summary of the merger agreement
is as follows:(1) Purpose
This merger will be effected in accordance with the consolidation agreement between IBJ, The Dai-Ichi Kangyo Bank
Limited, and The Fuji Bank Limited signed in December 1999.
(2) Details of the Merger
a. Merger date: October 1, 2000
b. This will be an equal merger of IBJ Securities Co., Ltd.,DKB Securities Co., Ltd., and Fuji Securities Co., Ltd.

Cash Dividends:
Preferred Stock First Series Class II
Preferred Stock Second Series Class II
Common StockIBJ Securities Co., Ltd. will be the surviving legal entity.
c. Merger ratio for stocks: The merger will be effected using
the following merger ratios:
IBJ Securities DKB Securities Fuji Securities
Merger Ratio
1.00
1.12
0.87
(3) IBJ Securities Co., Ltd. will change its name to Mizuho Securities
Co., Ltd. after the merger.
(4) Common Stock after the merger will be ¥150.2 billion.
(5) This merger will be subject to approval from regulators.
Appropriation of Retained Earnings
The following appropriation of Retained Earnings of IBJ wasapproved at the shareholders’ meeting held on June 28, 2000:(in millions of yen)(in thousands of U.S. dollars)¥1,225376
9,238$11,540
3,548
87,032107

Notes to Consolidated Financial Statements

31. Segment Information(a) Segment Information by Type of Business
The IBJ Group is engaged in securities, trust, leasing and otheractivities. Such segment information, however, has not beenpresented, as the percentages of those activities are insignificant.

(b) Segment Information by Geographic Area
Segment Information by geographic area for fiscal 1999, 1998
and 1997 were as follows:(in millions of yen)
Fiscal 1999 March 31, 2000

Ordinary Inter-segment
Income from
Ordinary
Geographic Area
Outside Customers
IncomeJapan¥2,369,538¥38,909
Americas372,888
16,893
Europe166,280
15,572
Asia/Oceania excluding Japan
75,279950
Total
2,983,986
72,326
Elimination and General Corporate Assets(72,326)
Consolidated Results¥2,983,986¥-

Ordinary
Income¥2,408,447
389,782
181,853
76,2303,056,313

Ordinary
Expense¥2,287,952
361,247
173,693
69,7382,892,632

Ordinary
Profit¥120,495
28,534
8,159
6,491
163,680

Total
Assets¥35,153,327
4,552,117
2,946,463
1,473,170
44,125,078(72,326)¥2,983,986(64,227)¥2,828,405(8,099)¥155,581(1,658,627)¥42,466,450(in millions of yen)
Fiscal 1998 March 31, 1999
Ordinary
Income from
Geographic Area
Outside Customers
Japan¥2,455,776
Americas528,673
Europe270,990
Asia/Oceania excluding Japan
123,154
Total
3,378,594
Elimination and General Corporate Assets
Consolidated Results¥3,378,594

Inter-segment
Ordinary
Income¥22,670
3,519
20,451
585
47,226

Ordinary
Income¥2,478,446
532,192
291,442
123,739
3,425,821(47,226)¥-(47,226)(44,438)(2,788)(2,264,453)¥3,378,594¥3,641,975¥(263,381)¥46,166,409

Ordinary
Expense¥2,690,213
508,626
297,542
190,032
3,686,414

Ordinary
Profit (Loss)¥(211,766)
23,566(6,099)(66,292)(260,592)

Total
Assets¥35,802,233
6,575,174
3,665,924
2,387,531
48,430,862(in millions of yen)
Fiscal 1997 March 31, 1998
Ordinary
Income from
Geographic Area
Outside Customers
Japan¥2,150,983
Americas
512,243
Europe337,136
Asia/Oceania excluding Japan
303,890
Total
3,304,253
Elimination and General Corporate Assets
Consolidated Results¥3,304,253

108

Inter-segment
Ordinary
Income¥37,772
20,27830,609617
89,277(89,277)¥-

Ordinary
Income¥2,188,755
532,522367,745304,5073,393,530(89,277)¥3,304,253

Ordinary
Expense¥2,488,417
514,477
403,542
312,820
3,719,258(85,826)¥3,633,431

Ordinary
Profit (Loss)¥(299,661)
18,045(35,797)(8,313)(325,727)(3,450)¥(329,178)

Total
Assets¥36,334,490
7,064,997
5,367,504
2,856,405
51,623,398(2,393,612)¥49,229,785

(in thousands of U.S. dollars)
Fiscal 1999 March 31, 2000
Ordinary Inter-segment
Income from
Ordinary
Geographic Area
Outside Customers
IncomeJapan$22,322,545$366,555
Americas
3,512,848
159,148
Europe1,566,466
146,706
Asia/Oceania excluding Japan
709,180
8,955
Total
28,111,039
681,364
Elimination and General Corporate Assets(681,364)
Consolidated Results$28,111,039$-

Ordinary
Income$22,689,100
3,671,996
1,713,172
718,135
28,792,403(681,364)

Ordinary
Expense$21,553,959
3,403,184
1,636,303
656,981
27,250,427(605,061)

Ordinary
Profit$1,135,141
268,81276,86961,154
1,541,976(76,303)

Total
Assets$331,166,529
42,883,822
27,757,546
13,878,193
415,686,090(15,625,320)$28,111,039$26,645,366$1,465,673$400,060,770(1) Geographic analyses of the IBJ Group’s operation are presented based on geographic contiguity, similarities in economic activities, and relation of business
operations.
(2) Ordinary Income represents Total Income less certain special income and Ordinary Expense represents Total Expense less certain special expense.
(3) Ordinary Profit represents Ordinary Income less Ordinary Expense.
(4) Americas includes the United States of America and Canada, etc., Europe includes the United Kingdom and Republic of France, etc., and Asia/Oceania excluding
Japan includes Hong Kong and the Republic of Singapore, etc.
(5) Effects of changes in accounting policies for fiscal 1998 on the segment information are as follows:(i) The change in valuation method of Securities resulted in a decrease in Ordinary Expense of ¥189,666 million, ¥54 million, and ¥742 million for “Japan”,“Europe” and “Asia/Oceania excluding Japan”, respectively.
(ii) The change in depreciation methods and depreciable life for property and equipment resulted in an increase in Ordinary Expense of ¥189 million, ¥1
million, ¥2 million, and ¥2 million for “Japan”, “Americas”, “Europe” and “Asia/Oceania excluding Japan”, respectively.
(6) As noted in the Note 1(j) to the consolidated financial statements, IBJ Group changed its balance sheet classification for Reserve for Possible Loan Losses inaccordance with a revision in the Implementation Guide to the Long-Term Credit Bank Law. Such change resulted in a decrease in total assets of ¥841,318
million, ¥19,157 million, ¥6,003 million, and ¥53,550 million for “Japan”, “Americas”, “Europe”, and “Asia/Oceania excluding Japan”, respectively.

(c) Ordinary Income of Overseas Entities
Ordinary Income of overseas entities for fiscal 1999 was analyzed
as follows:

Ordinary Income of Overseas Entities (1)Total Ordinary Income
Ordinary Income of Overseas Entities’ Ratio (2)(in millions of yen)
Fiscal 1999
¥ 614,448
2,983,986
20.5%(in thousands of U.S. dollars)
Fiscal 1999
$ 5,788,494
28,111,039
20.5%(1) For fiscal 1999, Ordinary Income of Overseas Entities is presented in lieu of Sales as is the case for non-financial companies.
(2) Ordinary Income of Overseas Entities replaced Ordinary Income from International Operations so as to reflect more accurately the overseas transactions of IBJ
Group. Ordinary Income of Overseas Entities represents Ordinary Income recorded by overseas branches of IBJ and overseas subsidiaries excluding internaltransactions. These transactions are very voluminous, and therefore, geographic analyses relating to Ordinary Income of Overseas Entities are not presented.
(3) Ordinary Income from International Operations for fiscal 1998 and 1997 was as follows:

Ordinary Income from International Operations (4) (5)Total Ordinary Income
International Operations’ Ratio

Fiscal 1998
¥1,429,157
3,378,594
42.3%(in millions of yen)
Fiscal 1997
¥1,555,875
3,304,253
47.0%(4) For fiscal 1998 and 1997, Ordinary Income from International Operations is presented in lieu of Sales as is the case for non-financial companies.
(5) Ordinary Income of International Operations for fiscal 1998 and 1997, includes ordinary income from domestic transactions denominated in foreign currencies,
transactions denominated in Japanese yens relating to letters of credit for imports/exports, transactions denominated in Japanese yens with non-resident aliens,
Special International Finance Transactions, as well as Ordinary Income recorded by overseas branches of IBJ and overseas subsidiaries excluding internaltransactions. These transactions are very voluminous and therefore, geographic analyses relating to Ordinary Income from International Operations are notpresented.

109Notes to Consolidated Financial Statements

32. Market Value of Securities
The market value of Securities at March 31, 2000 was as follows:(in millions of yen)March 31, 2000
Listed Securities:
Japanese Bonds
Japanese Stocks and Shares
Others
Total

Book Value

Market Value¥1,047,478
2,752,529
993,194¥4,793,202¥1,024,099
2,910,639
983,230¥4,917,969

Net Unrealized Gain
Unrealized Gain
¥ (23,379)¥ 2,119
158,109609,353(9,963)
7,322¥124,766¥618,794

Unrealized Loss
¥ 25,498
451,243
17,285¥494,027(in thousands of U.S. dollars)
March 31, 2000
Listed Securities:
Japanese Bonds
Japanese Stocks and Shares
Others
Total

Book Value

Market Value$ 9,867,912
25,930,562
9,356,518$45,154,992$ 9,647,666
27,420,056
9,262,652$46,330,374

Net Unrealized Gain
$ (220,246)
1,489,494(93,866)$1,175,382

Unrealized Gain
$ 19,966
5,740,491
68,979$5,829,436

Unrealized Loss
$ 240,212
4,250,997
162,845$4,654,054(1) Trading Securities and Securities Held to Hedge Trading Transactions are included in Trading Assets and excluded from the above tables as they are marked
to market and the valuation gains or losses are recognized in the Consolidated Statements of Income.
(2) Japanese Bonds include Japanese National Government Bonds, Japanese Local Government Bonds and Japanese Corporate Bonds.
(3) The market value of listed securities is mainly based on the closing prices on the Tokyo Stock Exchange.
(4) Others consisted mainly of foreign securities.
(5) The estimated market value of non-listed securities for which it is practicable to evaluate market value was as follows:(in millions of yen)March 31, 2000
Non-listed Securities:
Japanese Bonds
Japanese Stocks and Shares
Others
Total

Book Value

Estimated
Market Value¥1,423,099
29,566
161,180¥1,613,846¥1,419,660
68,088167,651¥1,655,400

Net Unrealized Gain
Unrealized Gain
¥ (3,438)¥ 1,384
38,521
40,953
6,471
7,894¥41,554¥50,232

Unrealized Loss
¥4,822
2,432
1,423¥8,678(in thousands of U.S. dollars)
March 31, 2000
Non-listed Securities:
Japanese Bonds
Japanese Stocks and Shares
Others
Total

Book Value

Estimated
Market Value$13,406,492
278,539
1,518,423$15,203,454$13,374,099
641,433
1,579,387$15,594,919(6) The market value of non-listed securities is mainly based on the following:(i) Over-the-Counter securities
Trading price table published by the Japan Securities Dealers Association.
(ii) Publicly offered non-listed securities
Securities bid-offer table published by the Japan Securities Dealers Association.
(iii) Beneficiary certificates of securities investments trusts
Market prices announced by authorized fund management companies.
(iv) Over-the-Counter securities in the United States of America
Trading price table published by NASDAQ.

110

Net Unrealized Gain
Unrealized Gain
$ (32,393)$ 13,042
362,894
385,81060,96474,371$391,465$473,223

Unrealized Loss
$45,435
22,916
13,407$81,758

(7) The book value of securities excluded from above tables consisted of the following:(in millions of yen)March 31, 2000
¥418,330
88,359667,043

Japanese Bonds
Japanese Stocks and Shares
Others(in thousands of U.S. dollars)
March 31, 2000
$3,940,941
832,405
6,283,969

Information on market value of Securities at March 31, 1999, wasprepared on a non-consolidated basis only, therefore is notpresented.

33. Market Value of Money Held in Trust
The Market Value of Money Held in Trust at March 31, 2000 was
as follows:

Money Held in Trust(in millions of yen)March 31, 2000

Book Value

Market Value¥10,123¥10,135

Net Unrealized Gain
Unrealized Gain Unrealized Loss¥11
¥11¥(in thousands of U.S. dollars)
March 31, 2000

Money Held in TrustBook Value

Market Value$95,365$95,478

Net Unrealized Gain
Unrealized Gain Unrealized Loss
$113
$113
$-

(1) The market value is calculated by the trustee of the money held in trust as following:(i) The market value of listed securities is mainly based on the closing prices on the Tokyo Stock Exchange.
(ii) The market value of over-the-counter securities is based on the Trading Price Table published by the Japan Securities Dealers Association.

Information on market value of Money Held in Trust at March 31,
1999, was prepared on a non-consolidated basis only, therefore
is not presented.

34. Derivatives Information(a) Derivatives Transactions
Derivative Financial Products Dealt
Derivative financial products that IBJ and Consolidated Subsidiaries transacts include interest rate related products (interest
swaps, forward rate agreements, caps, floors, swaptions, interest
futures, and interest futures options), foreign exchange rate related products (forward rate contracts, currency options, currency
futures, and currency swaps), commodity related products (commodity swaps) and other such as weather derivative products.
Policies and Objectives
IBJ Group utilizes derivative financial products for banking
purposes and trading purposes. For banking purposes, derivative
products such as interest swaps are used to mitigate risks related
to assets and liabilities of IBJ Group as a part of asset liability
management (“ALM”). For trading purposes, derivative products

such as interest swaps and options are used to meet various needsof the customers or for short-term trading activities of IBJ Group.
The banking and trading activities are conducted by independentgroups within IBJ Group.
Risks Involved in Derivative Transactions
Dealing with derivative financial products involves market risks,credit risks and liquidity risks. Market risks represent risks to IBJ
Group’s income arising from fluctuation in market values. Credit
risks represent risks involving inability of the counter-parties tofulfill their obligations to IBJ Group as well as risks of increased
cost to re-engage in the transactions in the market at a later date
(potential exposure). Liquidity risks represent risks involving
unavailable or stagnating markets for the derivative products ornegative impact on IBJ Group’s cash flows from subsequentcancellation of the derivative products.

111Notes to Consolidated Financial Statements

Risk Management for Derivative Transactions
Recognizing the potential impact of derivative financial products
on its income, IBJ Group has established the ALM Committee.
This committee monitors market economy, earning power, andcapital adequacy; formulates policies relating to market activities;
and overseas market operations of IBJ Group.
IBJ Group has created strict risk control framework based on
various existing internal policies. The risk management, risk
control procedures, and early-warning reporting system aresummarized in IBJ Group’s”Policies & Procedures”.
IBJ Group separated market front groups from back support
groups for each of the market-related divisions in order tostrengthen their risk control functions. IBJ Group also established
the Risk Management Department (“RMD”) to monitor overallrisk management. RMD is responsible for comprehensively
managing risks within IBJ Group including those of the banking
and trading transactions, and periodically report the results to theboard of directors.

VaR

VaR

MAX
¥3,365

MAX$31,703

Utilizing sophisticated ALM methodology, RMD monitors risks
involved in banking derivative transactions by comprehending thenature of the transactions for both on-balance and off-balance
items such as loans, coupon debentures and interest swaps by
converting them into various risk indices (Delta, Gamma, etc.).
This methodology enables IBJ Group to quickly react and adjust
its risk exposures by analyzing in detail its risk environment.
For trading derivative transactions, IBJ Group is equipped witha system that enables it to monitor fair values and risk exposuresreal time. Risk exposures for the trading transactions as a wholeis measured on a daily basis using Value at Risk (“VaR”) internal
modeling. Volatility and correlation factors are updated daily so
as to reflect up-to-date market conditions in measurement of risks.
Credit risks are controlled on a re-engaged cost basis alongwith loans through quantified maximum allowable risk exposures.
IBJ Group also reduces credit risk amounts by entering into legallybinding netting contracts.
VaR as of March 31, 2000, and for fiscal 1999 were as follows:

MIN¥1,855

Fiscal 1999
Average¥2,473MIN$17,484

Fiscal 1999
Average$23,305(in millions of yen)March 31, 2000
¥2,162(in thousands of U.S. dollars)
March 31, 2000
$20,373

The figures in these tables are indices related to trading accounts and foreign exchange accounts assuming the holding period of one day and the confidence
interval of ninety-nine percentile (99%).

Credit Equivalent Amount at March 31, 2000 was as follows:

Interest Swap
Currency Swap
Forward Foreign ExchangeInterest Option (Bought)
Currency Option (Bought)
OthersNet
Total(in millions of yen)March 31, 2000
¥1,259,543
514,563598,750
29,34227,801
32,930(852,834)¥1,610,098

The figures in this table are credit equivalent amounts based on the consolidated risk-based capital ratio (BIS capital ratio).

112(in thousands of U.S. dollars)
March 31, 2000
$11,865,699
4,847,517
5,640,603
276,425
261,910310,223(8,034,236)$15,168,141

(b) Market Value of Derivatives
The market value of derivatives at March 31, 2000 was as follows:
In the following tables:(i) Contract value represents notional amounts for swap
transactions and contract amounts for other transactions.
(ii) Amounts shown in italic characters represent book values of
option premium assets/liabilities on the Consolidated Balance
Sheets.

(iii) Market value of standardized contracts are based on theclosing prices of the Tokyo Stock Exchange and the Tokyo
International Financial Futures Exchange and others. Market
value of over-the-counter contracts are based on the discounted value of future cash flows or option pricing models.

(1) Interest Rate Related Transactions

Over 1 Year(in millions of yen)March 31, 2000
Market Value
Unrealized
Gain (Loss)¥21,373,075
21,013,696¥7,355,902
7,281,242¥21,249,089
20,885,257¥123,986(128,438)

1,359,423
572
2,105,900
1,044
1,096,798
770
2,537,278
2,059

212,300306

266

1,110,146
1,738,353

Contract Value
Standardized Contracts
Futures
Sold
BoughtOptions
Sold
Call
Put
BoughtCall
PutOver-the-Counter Contracts
FRAs
Sold
BoughtSwaps
Rec: Fix
Pay: Flt
Rec: Flt
Pay: Fix
Rec: Flt
Pay: Flt
Rec: Fix
Pay: Fix
Swaptions
Sold
Call
Put
Bought

Call
Put

Caps
Sold
BoughtFloorsSold
BoughtTotal

Contract Value(in thousands of U.S. dollars)
March 31, 2000
Market Value UnrealizedOver 1 Year
Gain (Loss)$201,347,866
197,962,281$69,297,241
68,593,904
2,000,000$200,179,834 $1,168,032
196,752,306 (1,209,975)

2,503

443

12,806,623
5,393
19,838,915
9,840
10,332,530
7,254
23,902,769
19,406

-

376
(454)

379
(458)

10,458,280
16,376,383

-

3,548
(4,285)

3,575(4,323)27,323,701

20,413,441

381,634

171,336

257,406,516

192,307,506

3,595,234

1,614,097

20,853,874

17,488,536(472,782)(339,055)

196,456,656

164,753,055(4,453,905) (3,194,120)

5,384,321

4,608,019

13,30010,81350,723,710

43,410,456

125,298

101,872

75,69075,6902,147

969

713,054713,054

20,2299,137

22,932327
42,449398
3,027
35,449714

13,000130

216,040
3,085
399,898
3,755
28,518333,959
6,735

122,468

197

1,857

1,228

9,745

(5,012)

-

-

1,532

(5,203)44,150(39,371)

47,06941,000

1,293

(589)

465

(23)
$(1,519,783)

212,300
1,220

(175)

53,075224(545)

265,375

11,536
1,034

(531)

-

-

11,853

552,437761
342,002686

334,341

153,623
9
5,671
9

409

162

(552)

4,686

(4,179)314,495
4,996

4,352

137

(62)

2,457
49

(2)
¥(161,324)

2,886

2,507

11,496(1,656)

2,117(5,137)

23,5844,178

2,000,000
500,000
2,500,000

108,676
111,666

5,204,310
7,175
3,221,876
6,468

3,149,706

1,447,233
93
53,43288

3,859

2,962,748

23,152113

Notes to Consolidated Financial Statements(1) Derivatives included in Trading Transactions at March 31, 2000 are excluded from the previously mentioned tables, as they were marked to market and thevaluation gains or losses were recognized in the Consolidated Statements of Income. The contract value and market value of derivatives included in Trading
Transactions at March 31, 2000 were as follows:Standardized Contracts
Futures
Sold
BoughtOptions
Sold
Call
Put
BoughtCall
PutOver-the-Counter Contracts
FRAs
Sold
BoughtSwaps
Rec: Fix
Pay: Flt
Rec: Flt
Pay: Fix
Rec: Flt
Pay: Flt
Rec: Fix
Pay: Fix
Swaptions
Sold
Call
Put
Bought

Call
Put

Caps
Sold
BoughtFloorsSold
Bought114

Contract Value(in millions of yen)March 31, 2000
Market ValueContract Value(in thousands of U.S. dollars)
March 31, 2000
Market Value¥ 8,200,849
8,310,085¥8,151,380
8,262,347$ 77,257,174
78,286,252$76,791,154
77,836,528

594,744480
460,347546
959,203662
420,045467

731

5,602,869
4,528
4,336,763
5,146
9,036,306
6,245
3,957,093
4,401

1,486,315
1,500,208

170
(187)

14,002,032
14,132,907

1,606(1,763)34,277,384

438,939

322,914,600

4,135,091

34,612,625(450,795)

326,072,783(4,246,781)

1,705,528(3,132)

16,067,158(29,510)

178,456(5,598)

1,681,172(52,743)

542,7217,295
511,365
5,571
537,960
5,830
546,160
7,654
1,779,788
12,114
1,421,662
9,121
540,9074,184
624,356
4,405

57
708
218

7,274
4,901
6,425
5,948

13,396
16,027

2,151
3,130

5,112,780
68,725
4,817,384
52,487
5,067,930
54,9295,145,172
72,107
16,766,727
114,128
13,392,962
85,934
5,095,693
39,4195,881,835
41,503

543
6,674
2,058
6,892

68,52846,17660,52956,041

126,206
150,985

20,26929,496

(2) Currency-Related Transactions(in millions of yen)March 31, 2000
Contract Value

Market Value
Over 1 Year

Unrealized
Gain (Loss)(in thousands of U.S. dollars)
March 31, 2000
Contract Value

Currency
Over-the-Counter Contracts
Currency Swaps
USD
GBP
EUR
Others¥3,449,557
71,438
221,784
340,221¥2,909,411
71,049158,445249,366¥27,243
5,118
35,331
27,349¥19,790(812)(1,501)(305)$32,497,005
672,9992,089,348
3,205,101

Total¥4,083,001¥3,388,272¥95,042¥17,169$38,464,453

Market Value

Unrealized
Gain (Loss)$27,408,493
669,333
1,492,654
2,349,186$256,649
48,221
332,846
257,647$186,435(7,657)(14,148)(2,878)$31,919,666$895,363$161,752

Over 1 Year

(1) The difference between market value and unrealized gains or losses for over-the-counter contracts is a sum of differences in rates between contract date andyear-end for the currency swaps recorded on the Consolidated Balance Sheets and the accrued interest.
(2) Derivatives included in Trading Transactions at March 31, 2000 are excluded from the previously mentioned tables, as they were marked to market and thevaluation gains or losses were recognized in the Consolidated Statements of Income. The contract value and market value of derivatives included in Trading
Transactions at March 31, 2000 were as follows:

Currency
Over-the-Counter Contracts
Currency Swaps
USD
GBP
EUR
OthersContract Value(in millions of yen)March 31, 2000
Market Value(in thousands of U.S. dollars)¥5,654,125
149,899
704,169
799,728¥(69,774)(17,570)
102,595
105,649$53,265,429
1,412,153
6,633,718
7,533,950$ (657,318)(165,530)
966,513995,288

Total¥7,307,923¥120,899$68,845,250$1,138,953

March 31, 2000
Contract Value

Market Value

115

Notes to Consolidated Financial Statements(3) The contract value of foreign exchange forward contracts and currency options at March 31, 2000 was as follows:(in millions of yen)March 31, 2000
Contract Value
Standardized Contracts
Futures
Sold
BoughtOptions
Sold
Call
Put
BoughtCall
PutOver-the-Counter Contracts
Forwards
Sold
BoughtOptions
Sold
Call
Put
BoughtCall
Put

Others
Sold

Call
Put

Bought

Call
Put

116

¥

69,522-(in thousands of U.S. dollars)
March 31, 2000
Contract Value$

654,950---

9,647,508
8,140,027

90,885,620
76,684,192

473,226
4,466
677,092
11,998510,562
7,025
551,927
9,962

4,458,089
42,081
6,378,637
113,0314,809,820
66,182
5,199,502
93,854--

(3) Stock-Related Transactions

Contract Value
Over 1 Year
Standardized Contracts
Index Futures
Sold
BoughtIndex Options
Sold
Call
Put
BoughtCall
PutOver-the-Counter Contracts
Options
Sold
Call
Put
BoughtCall
Put

OthersSold
Bought

¥ -

¥ -

-

-

-

-

-

-

(in millions of yen)March 31, 2000
Market Value
Unrealized
Gain (Loss)

¥ -

¥ -

-

-

(in thousands of U.S. dollars)
March 31, 2000
Contract Value
Market Value UnrealizedOver 1 Year
Gain (Loss)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

$ -

$ -

-

-

-

-

-

-

$ -

$ -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(1) Derivatives included in Trading Transactions at March 31, 2000 are excluded from the previously mentioned tables, as they were marked to market and thevaluation gains or losses were recognized in the Consolidated Statements of Income. The contract value and market value of derivatives included in Trading
Transactions at March 31, 2000 were as follows:Standardized Contracts
Index Futures
Sold
BoughtIndex Options
Sold
Call
Put
Bought Call
Put
Over-the-Counter Contracts
Options
Sold
Call
Put
Bought Call
Put
OthersSold
BoughtContract Value(in millions of yen)March 31, 2000
Market ValueContract Value(in thousands of U.S. dollars)
March 31, 2000
Market Value¥18,659
1,263¥19,008
1,253$175,781
11,903$179,071
11,812

11,171
230
34,35532
13,964
183
11,163
99

188
5
188
5
-

176
72
277
69

105,243
2,169
323,646304
131,554
1,728
105,163
935

-

1,771
53
1,771
51
-

-

-

10
10

1,667
679
2,612
654

97
97
-

-

117

Notes to Consolidated Financial Statements(4) Bond-Related Transactions

Contract Value
Over 1 Year
Standardized Contracts
Futures
Sold
BoughtFutures Options
Sold
Call
Put
BoughtCall
PutOver-the-Counter Contracts
Options
Sold
Call
Put
BoughtCall
Put¥14,428,098
13,419,901(in millions of yen)March 31, 2000
Market Value
Unrealized
Gain (Loss)¥ - ¥14,559,226- 13,406,667

30,606(155)
63,690(1,272)30,606(373)
63,690(1,446)---

Contract Value
Over 1 Year¥(131,127) $135,921,797(13,233)
126,423,939$-$137,157,105
126,299,271$(1,235,308)(124,668)

288,3281,461
600,000
11,984
288,3283,518
600,000
13,625-

3,585(2,124)

3,656

8,328

3,585

67

3,656

(9,969)

-

-

-

-

-

-

-

-

$(1,363,674)

380

(225)

388

884

380

7

388

(1,058)

-

-

-

-

-

-

-

-

Total

(in thousands of U.S. dollars)
March 31, 2000
Market Value
Unrealized
Gain (Loss)¥(144,753)--(1) Derivatives included in Trading Transactions at March 31, 2000 are excluded from the previously mentioned tables, as they were marked to market and thevaluation gains or losses were recognized in the Consolidated Statements of Income. The contract value and market value of derivatives included in Trading
Transactions at March 31, 2000 were as follows:Standardized Contracts
Futures
Sold
BoughtFutures Options
Sold
Call
Put
BoughtCall
PutOver-the-Counter Contracts
Swaptions
Sold
Call
Put
Bought

Call
Put

118

Contract Value(in millions of yen)March 31, 2000
Market Value¥121,477
69,430¥121,691
69,981

28,335
202
32,11964
33,489173
33,835146

25,000156
79,383214
31,500
40

158
42
258
76

62
311
15

(in thousands of U.S. dollars)
March 31, 2000
Contract Value
Market Value$1,144,392
654,082
266,935
1,905
302,585603
315,494
1,634
318,750
1,380

235,516
1,474
747,8452,016
296,750384$1,146,406
659,273

1,494
401
2,432
723

591
2,932
150

(5) Commodity-Related Transactions

The contract value and market value of derivatives included in
Trading Transactions at March 31, 2000 were as follows:

Contract Value
Over-the-Counter Contracts
Options
Sold
Bought¥5,351
228
5,351
206

(in millions of yen)March 31, 2000
Market Value

¥ 228
228

Contract Value$50,4132,154
50,413
1,947(in thousands of U.S. dollars)
March 31, 2000
Market Value$2,154
2,154(6) Weather Derivatives Transactions

The contract value and market value of derivatives included in
Trading Transactions at March 31, 2000 were as follows:

Contract Value
Over-the-Counter Contracts
Sold
Bought

¥125
25
125
13

(in millions of yen)March 31, 2000
Market Value¥7
7

Contract Value$1,178
236
1,178
130

(in thousands of U.S. dollars)
March 31, 2000
Market Value$68
68

Information on market value of derivatives at March 31, 1999,
was prepared on a non-consolidated basis only, therefore is notpresented.

119Report of Independent Certified Public Accountants

To the Board of Directors,
The Industrial Bank of Japan, Limited:
We have audited the accompanying non-consolidated balance sheets of The Industrial Bank of Japan, Limited ("IBJ") as of March 31, 2000
and 1999, and the related non-consolidated statements of income and shareholders' equity for each of the three years in the period ended
March 31, 2000, all expressed in Japanese Yen. Our audits were made in accordance with auditing standards, procedures andpractices generally accepted and applied in Japan and, accordingly, included such tests of the accounting records and such other auditing
procedures as we considered necessary in the circumstances.
In our opinion, the non-consolidated financial statements referred to above present fairly the non-consolidated financial position of IBJ
at March 31, 2000 and 1999, and the non-consolidated results of its operations for each of the three years in the period ended March
31, 2000, in conformity with accounting principles and practices generally accepted in Japan (See Note 1) consistently applied during theperiods, except for the change with which we concur, in the accounting for Securities as described in Note 2 to the accompanying nonconsolidated financial statements.
The amounts expressed in U.S. dollars, which are provided solely for the convenience of the reader, have been translated on the basis
set forth in Note 1 to the accompanying non-consolidated financial statements.

Tokyo, Japan
June 28, 2000

120

Non-Consolidated Balance Sheets

March 31, 2000

(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1999

March 31, 2000

AssetsCash and Due from Banks¥

841,161¥ 1,167,336$

Call Loans and Bills Purchased
Commercial Paper and Other Debt Purchased
Trading Assets
Money Held in Trust
Securities
Loans and Bills Discounted
Foreign Exchanges
Other Assets
Premises and Equipment
Deferred Debenture Charges
Deferred Tax Assets
Customers’ Liabilities for Acceptances and Guarantees
Reserve for Possible Loan Losses
Total Assets

558,002
7,197
2,163,616
10,123
7,703,889
22,232,483
222,663
3,090,749
257,462
8,742
363,922
1,491,724(901,118)¥38,050,621

1,345,925
128,064
2,197,033
59,806
9,024,595
22,872,065
277,8212,377,508
278,285
15,396406,253
1,939,210¥42,089,303

5,256,739
67,805
20,382,637
95,36572,575,503
209,444,028
2,097,630
29,116,814
2,425,458
82,364
3,428,379
14,052,983(8,489,109)$358,460,868(in millions of yen)(in thousands of
U.S. dollars)

March 31, 2000

March 31, 1999

March 31, 2000

¥19,933,842
6,299,480
2,084,358
164,000
1,537,621
908,652
60,271
3,561,784
49,33247,506167,198
13,938
1
63,484
1,491,724
36,383,195¥19,866,858
8,175,082
3,261,224
30,0001,585,575
1,465,170
20,3902,833,002
1,116,278
51,88848,144
5
72,5181,939,210
40,465,350$187,789,380
59,345,081
19,635,970
1,544,984
14,485,362
8,560,079
567,797
33,554,259
464,744447,539
1,575,111
131,306
12
598,063
14,052,983
342,752,670

175,000
498,605
570,132
84,387
99,212240,087
1,667,425¥38,050,621

175,000
498,605
570,132
80,36998,920200,926
1,623,953¥42,089,303

1,648,610
4,697,176
5,371,005
794,981934,646
2,261,780
15,708,198$358,460,868

Liabilities and Shareholders’ Equity
Liabilities
Debentures
Deposits
Call Money and Bills Sold
Commercial Paper
Borrowed Money
Trading Liabilities
Foreign Exchanges
Other Liabilities
Reserve for Possible Loan Losses
Reserve for Retirement Allowances
Reserve for Possible Losses on Loans Sold
Reserve for Possible Losses on Support of Specific Borrowers
Reserve for Contingency
Other Reserves
Deferred Tax Liabilities Related to Land Revaluation
Acceptances and Guarantees
Total Liabilities
Shareholders’ Equity
Preferred Stock
Common Stock
Capital Surplus
Legal Reserve
Surplus from Land Revaluation
Retained Earnings
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity

7,924,272

See accompanying “Notes to Non-Consolidated Financial Statements” which are an integral part of these statements.

121

Non-Consolidated Statements of Income

IncomeInterest Income on:
Loans and Bills Discounted
Securities
OthersFee & Commission Income
Trading Income
Other Operating Income
Other Income
Reversal of Other Reserves
Total Income
ExpenseInterest Expense on:
Debentures
Deposits
Borrowings and Rediscounts
OthersFee & Commission Expense
Trading Expense
Other Operating Expense
General and Administrative Expenses
Other Expense
Total Expense
Income (Loss) before Income Taxes
Income Tax Expenses (Benefits):
Current
Deferred
Net Income (Loss)

Per Share of Common StockNet Income (Loss)
Basic
DilutedCash Dividends(in millions of yen)(in thousands of
U.S. dollars)

Fiscal 1999*

Fiscal 1998*

Fiscal 1997*

Fiscal 1999*¥ 531,095
180,375
621,769
66,515
18,1601,007,451
298,78242,724,155¥ 656,425
239,541795,316
67,30025,334
843,416
398,8192
3,026,156¥ 800,004
212,073
1,069,039
94,774
2,788
470,977
390,874
12,467
3,053,000$ 5,003,252
1,699,254
5,857,465
626,620
171,082
9,490,831
2,814,721
40
25,663,265

255,932
128,825
50,904
662,691
14,861171
1,005,385
140,684
326,266
2,585,723
138,432

293,581
231,601
54,839826,549
17,624
3,206
778,830
156,809
1,008,522
3,371,565(345,408)

350,756
356,871
57,542
1,038,649
18,744
9,077
428,075
166,498
968,564
3,394,779(341,778)

2,411,045
1,213,618
479,549
6,242,972
140,003
1,617
9,471,367
1,325,340
3,073,633
24,359,144
1,304,121

37,811
40,38860,232

74(149,754)¥ (195,727)

190

356,211
380,485
567,425

¥

¥

21.60
19.59
7.00

¥

(76.27)n/a
7.00

See accompanying “Notes to Non-Consolidated Financial Statements” which are an integral part of these statements.
* Fiscal 1999, 1998 and 1997 represent the fiscal years ended March 31, 2000, 1999 and 1998, respectively.

122¥ (341,969)¥$(in yen)(in U.S. dollars)(134.65)
n/a
8.50

$

0.203
0.185
0.066

Non-Consolidated Statements of Shareholders’ Equity(in millions of yen)

Balance at March 31, 1997
Transfer from Retained Earnings to
Legal Reserve
Cash Dividends
Net Loss
Balance at March 31, 1998
Adoption of Accounting for Deferred Tax
Issuance of Preferred Stock
Issuance of Common Stock
Transfer from Retained Earnings to
Legal Reserve
Transfer from Liabilities
Cash Dividends
Net Loss
Balance at March 31, 1999
Transfer from Retained Earnings
to Legal Reserve
Transfer from Surplus from Land Revaluation
to Retained Earnings
Transfer from Deferred Tax Liabilities Related
to Land Revaluation and Others
Cash Dividends
Net Income
Balance at March 31, 2000

Surplus from
Legal
Land
Reserve Revaluation

Total
Retained Shareholders’Earnings
Equity-¥531,649¥1,430,500(4,318)(21,586)(341,969)
163,775
256,498-(21,586)(341,969)
1,066,944
256,498
350,000
67,000Preferred
Stock
¥
-

CommonStockCapitalSurplus¥465,105¥361,632¥72,112-465,105-

361,632-

4,318
76,431--

175,000-

33,500175,000
33,500--175,000

498,605

570,132

3,937
80,36998,92098,920(3,937)-

98,920(19,681)(195,727)
200,926(19,681)(195,727)
1,623,953

-

-

-

4,018

-

(4,018)

-

-

-

-

-

(3,035)

3,035-¥175,000¥498,605¥570,132¥84,387

3,328¥99,212(20,088)
60,232¥240,087

3,328(20,088)
60,232¥1,667,425¥-(in thousands of U.S. dollars)

Total
Retained Shareholders’Earnings
Equity$1,892,855 $15,298,664

Preferred
Stock$1,648,610

CommonStock$4,697,176

CapitalSurplus$5,371,005

-

-

-

37,852-(37,852)

-

-

-

-

-

(28,597)

28,597-$1,648,610$4,697,176$5,371,005$794,980

31,353$934,646

Balance at March 31, 1999
Transfer from Retained Earnings
to Legal Reserve
Transfer from Surplus from Land Revaluation
to Retained Earnings
Transfer from Deferred Tax Liabilities
Related to Land Revaluation and Others
Cash Dividends
Net Income
Balance at March 31, 2000

Surplus from
Legal
Land
Reserve Revaluation$757,128$931,890

31,353(189,245)(189,245)
567,425
567,425$2,261,780 $15,708,197

See accompanying “Notes to Non-Consolidated Financial Statements” which are an integral part of these statements.

123Notes to Non-Consolidated Financial Statements

1. Basis of Presentation
The accompanying non-consolidated financial statements havebeen prepared from the accounts maintained by The Industrial
Bank of Japan, Ltd. (“IBJ”) in accordance with the provisions set
forth in the Japanese Commercial Code and in conformity withaccounting principles and practices generally accepted in Japan,
which are different in certain respects as to application and disclosure requirements from International Accounting Standards.
Certain items presented in the non-consolidated financial
statements submitted to the Director of Kanto Finance Bureau(the “DKFB”) in Japan are reclassified for the convenience ofreaders outside Japan. In addition, the Non-Consolidated
Statements of Shareholders’ Equity is prepared and included in
non-consolidated financial statements, though they are notrequired to be filed with the DKFB.
The amounts indicated in millions of yen are rounded down by
truncating the figures below one million. Totals may not add up
exactly because of such truncation.

124

The non-consolidated financial statements are not intended
to present the non-consolidated financial position and results ofoperations in accordance with accounting principles andpractices generally accepted in countries and jurisdictions otherthan Japan.
Amounts in U.S. dollars are included solely for the conveni-enceof readers outside Japan. The rate of ¥106.15 = US$1.00, the rateof exchange on March 31, 2000, has been used in translation. The
inclusion of such amounts is not intended to imply thatJapanese yen has been or could be readily converted, realized or
settled into U.S. dollars at that rate or any other rate.

2. Significant Accounting Policies
Refer to Notes to Consolidated Financial Statements.

3. Subsequent Events
Refer to Notes to Consolidated Financial Statements.

Investor Information on The Industrial Bank of Japan, Limited

THE INDUSTRIAL BANK OF JAPAN, LIMITED■ Head Office■ Number of Shareholders

3-3, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-8210, Japan
Phone: 81-(3)3214-1111
Telex: J22325 (KOGIN J22325),
J23215 (KOGIN J23215)
Cable: KOGIN TOKYO
Fax: 81-(3)3201-7643
SWIFT: IBJT JP JT

Common StockFirst Series Class w Preferred Stock
Second Series Class w Preferred Stock■ Number of Employees
30,6361
1

Consolidated:
Non-consolidated:

7,394
4,807

■ Stock Exchange Listings
Tokyo Stock Exchange
Osaka Securities Exchange■ Independent Certified Public
Accountants■ Established
1902

ChuoAoyama Audit Corporation■ Capital■ Branches in Japan
23 Branches¥673,605 million■ Overseas Network■ Authorized Shares
Common StockClass q Preferred StockClass w Preferred Stock

6,000,000,000
200,000,000
400,000,000■ Outstanding Shares

15 Branches and Agencies
4 Loan Production Offices
1 Marketing Office
8 Representative Offices
60 Subsidiaries and Affiliates

Common Stock2,639,579,392
First Series Class w Preferred Stock
140,000,000
Second Series Class w Preferred Stock 140,000,000

URL: http://www.ibjbank.co.jp■ Principal Shareholders<Common Stock>
Name of Shareholder

Number of Shares Held(thousands)

Percentage of Total
Shares Outstanding (%)

184,204
98,83180,41555,31643,51943,312
38,597
38,21537,27735,444

6.97
3.74
3.04
2.09
1.64
1.64
1.46
1.44
1.41
1.34

Name of Shareholder

Number of Shares Held(thousands)

Percentage of Total
Shares Outstanding (%)

The Resolution and Collection BankThe Resolution and Collection Bank

140,000,000
140,000,000

100.00100.00The Dai-ichi Mutual Life Insurance Company
Meiji Life Insurance Company
Nippon Life Insurance Company
The Sumitomo Trust and Banking Company, Limited
The Mitsui Trust and Banking Co., Limited
The Mitsubishi Trust and Banking Corporation
Nissan Motor Co., Ltd.
The Daiwa Bank, Limited
Nippon Steel Corporation
STATE STREET BANK AND TRUST COMPANY<Preferred Stock>
First Series Classw
Second Series Classw■ Changes in Paid-in Capital
Date
February 1, 1972
February 1, 1975
February 1, 1978
August 1, 1981
October 1, 1987
October 1, 1988
November 1, 1996
December 25, 1998
March 31, 1999

Amount of
Capital Increase

Paid-in Capital
after Increase¥ 16,000
16,00022,40017,280108,898
139,466
113,059
33,500175,000¥ 48,000
64,00086,400103,680
212,578
352,045465,105
498,605
673,605

Type of Issue(¥ million)

Allotment (Par value, 0.5 share for 1 share held)
Allotment (Par value, 1/3 share for 1 share held)
Allotment (Par value, 0.35 share for 1 share held)
Allotment (Par value, 0.2 share for 1 share held)
Allotment (Price between par and market, 0.05 share for 1 share held)
Allotment (Price between par and market, 0.08 share for 1 share held)
Allotment (Price between par and market, 0.08 share for 1 share held)
A third-party allotment of shares
A third-party allotment of shares

For further information, please contact the Public Relations Department.
(As of March 31, 2000)

125

Investor Information on Mizuho Holdings, Inc.

■ Purpose■ Convocation of General Meetings of Shareholders

The purpose of Mizuho Holdings, Inc. (the “Company”) shallbe to engage in the following businesses as a bank holding
company and a long-term credit bank holding company:(i) operation and management of banks, long-term credit
banks, specialized securities companies or other companies
which the Company may own as its subsidiaries under the
Banking Law or the Long-Term Credit Bank Law; and(ii) any other business incidental to the foregoing.

A regular general meeting of shareholders of the Company
shall be convened no later than three months from the last dayof each business year, and an extraordinary general meeting ofshareholders shall be convened whenever necessary.

■ Paid-in Capital

The Company shall deem shareholders having voting rights
appearing on the last register of shareholders (including theregister of beneficial shareholders; the same shall apply
hereinafter) as of March 31 of each year as the shareholders
who shall be entitled to exercise their rights at the regular
general meeting of shareholders for the corresponding fiscal
term.
The Company may, whenever necessary, set an
extraordinary record date, pursuant to a resolution of the Boardof Directors and upon issuing prior public notice thereof.

¥2,572 billion■ Dividends■ Head Office
Marunouchi Center Building, 6-1 Marunouchi 1-chome,
Chiyoda-ku, Tokyo■ Date of Establishment
September 29, 2000

■ Total Number of Shares
Common Stock:
Class I Preferred Stock:
Class II Preferred Stock:
Class III Preferred Stock:
Class IV Preferred Stock:
Class V Preferred Stock:
Class VI Preferred Stock:
Class VII Preferred Stock:
Class VIII Preferred Stock:
Class IX Preferred Stock:
Class X Preferred Stock:

9,205,856.53 shares
33,000 shares
100,000 shares
100,000 shares
150,000 shares
52,411 shares
150,000 shares
125,000 shares
125,000 shares
140,000 shares
140,000 shares■ Accounting Auditors

Dividends on shares shall be paid to the shareholders or
registered pledgees appearing on the last register ofshareholders as of March 31 of each year and to the holders offractional shares appearing on the last register of holders offractional shares as of March 31 of each year.

■ Interim Dividends
The Company may, by a resolution of the Board of Directors,
make cash distributions pursuant to the provisions of Article
293-5 of the Japanese Commercial Code to the shareholders or
registered pledgees appearing on the last register ofshareholders as of September 30 of each year and to theholders of fractional shares appearing on the last register ofholders of fractional shares as of September 30 of each year.

Century Ota Showa & Co.
ChuoAoyama Audit Corporation■ Transfer Agent■ Stock Listing* The Dai-Ichi Kangyo Fuji Trust & Banking Co., Ltd. and IBJ Trust and Banking
Co., Ltd. will be merged into Mizuho Trust & Banking Co., Ltd. on October 1,
2000.

Application will be made for the listing of the common stock(as a new listing) of the Company on the Tokyo Stock Exchange
and the Osaka Securities Exchange.
The listing date(s) will be determined in accordance with therules of each stock exchange. However, at present the listingdate is planned for September 28, 2000, the date on which thestock-for-stock exchange is to be effected.*
In connection with the stock-for-stock exchange, each of
The Dai-Ichi Kangyo Bank, Limited, The Fuji Bank, Limited and
The Industrial Bank of Japan, Limited will delist their currentlylisted common stock as of September 22, 2000.
* With respect to the share transfer, one share of Mizuho Holdings, Inc. shall beallocated to 1,000 shares of each of the three banks.

126■ Record Date

The Dai-Ichi Kangyo Fuji Trust & Banking Co., Ltd.

Profile
The Industrial Bank of Japan, Limited (“IBJ”) was founded in1902 as a public sector bank and became a private sector longterm credit bank under the Long-Term Credit Bank Law in1952. IBJ pursues the development of its industrial financeactivities by integrating the functions of commercial andinvestment banking, and offers its customers a diverse range ofhigh value-added financial services through its global networkthat meet their needs promptly and appropriately. IBJ
contributes to develop the nation’s economy and industry as aJapan’s leading bank with unique independence from any
keiretsu grouping. IBJ shall be consolidated with The Dai-Ichi
Kangyo Bank, Limited, and The Fuji Bank, Limited to form theMizuho Financial Group (“MHFG”) on September 29, 2000.
MHFG will be the world’s largest bank in terms of assets andwill endeavor to become the world’s premier financial
institution in terms of the quality of services offered.

Contents
1

Financial Highlights

2

To Our Shareholders and Customers

6

Foundation of the Mizuho Financial Group ("MHFG") throughthe Consolidation of DKB, Fuji Bank, and IBJ

25

Review of Operations

59

Corporate Information

71

Financial Section

125

Investor Information on The Industrial Bank of Japan, Limited

126

Investor Information on Mizuho Holdings, Inc.

“Environmental Protection Product Awarded by
the Eco Mark Office of the Japan Environmental Association”

000731

The Industrial Bank of Japan, Limited

Printed in Japan