THE FUJI BANK, LIMITEDF
Y`98

F IS C A L

98

ANNUAL REPORT
April1998〜March1999

THE FUJI BANK, LIMITED

April1998〜March1999

Corporate Data
Head Office5-5, Otemachi 1-chome,
Chiyoda-ku,
Tokyo 100-0004, Japan
Phone: 03-3216-2211
Telex: 22367, 22722, 22170
Internet address:
http://www.fujibank.co.jp

Established
1880

Fiscal Year
April 1 to March 31

AuditorShowa Ota & Co.

Contents
page 2 .........................
Consolidated Financial Highlights
page 3 .........................
Report to Our Stockholders
page 8 .........................
Fuji Bank’s New Business Organization
page 11 ......................
Restructuring Approaches Completion
page 15 ......................
Review of Operations
16 Consumer and Commercial Banking
20 Global Corporate and Investment Banking
24 Asset Management Group
28 Processing Services andInformation Technology Group
page 32 ......................
Corporate Citizen
page 33 ......................
Corporate Information
34 Board of Directors and Senior Overseers
34 Fuji Bank Group Organization
36 Overseas Offices
36 The Americas
37 Asia and Oceania
39 Europe and The Middle East
40 Domestic Offices, Subsidiaries andAffiliated Companies
page 41 ......................
Financial Reports

1

CONSOLIDATEDFINANCIALHIGHLIGHTS
Fuji Bank Group

Fiscal 1997**

Fiscal 1998**(Millions)*

Yen

U.S. dollars***

Yen

U.S. dollars***¥ (748,568)$ (6,209)¥ (498,272)$ (4,133)Net Income (Loss)(422,030)(3,500)(345,309)(2,864)Net Income (Loss) per Share*(142.07)(1.17)(119.35)(0.99)Net Income per Share (diluted)

—

—

—

—

7.00

0.05

8.50

0.07

First Series Class I Preferred Stock

7.50

0.06

7.50

0.06

Second Series Class IV Preferred Stock

0.12

0.00

—

—

Third Series Class III Preferred Stock

0.04

0.00

—

—

Fourth Series Class III Preferred Stock

0.03

0.00

—

—

Total Assets¥ 57,933,043$480,572¥ 55,113,509$457,183

Deposits

34,646,230

287,401

34,552,361

286,622

Loans and Bills Discounted

34,815,843

288,808

34,028,201

282,274

Securities

6,668,759

55,3196,044,830

50,143

Total Stockholders’ Equity

2,175,818

18,0491,576,455

13,077For the Fiscal Year:
Income (Loss) before Income Taxes

Dividends Declared per Share*:Common Stock
Preferred Stock:

At Year-End:

Notes:* Figures for net income (loss) per share and dividends declared per share are in single currency units.
** Each fiscal year runs from April 1 to March 31 of the next year.
*** U.S. dollar amounts are converted for convenience only, at the rate of ¥120.55=US$1, the prevailing rate on March 31, 1999.

Net Income (Loss)

Total Stockholders’Equity(¥ Billion)(¥ Billion)

1,576

1,636

37.54
-142.07-119.35-112.31

1.6

94 95 96 97 98
Fiscal Year2

Geographical
Breakdown of Total
Income FY1998(Based on the Locationof Lending Offices)

Japan

61.8%

The Americas

24.5%

Asia and
Oceania
Europe8.8%-422.0-345.3-325.4

4.6

94 95 96 97 98
Fiscal Year

2,175

(¥)

1,934

1,984

109.0

Net Income (Loss)
per Share

95 96 97 98 99
March 31

4.9%

REPORT TO OUR STOCKHOLDERS

Toru Hashimoto
Chairman of the BoardThe Japanese financial industry, as well

Yoshiro Yamamoto
President andChief Executive Officer

We are facing an era of unprecedented

as the Japanese economy as a whole,competition as foreign financial institutions

experienced a year of volatile changes

and companies from different business sectors

and sweeping reforms in fiscal 1998. As Japanventure into the financial industry. The future

was gearing up for its Big Bang financialof Japanese banks will be shaped by changes inreforms last year, we witnessed dramaticbanking regulations that meet global standards

alliances that broke through business and geo-

and innovation in information technology

graphical barriers as confidence in the Japanese

which can lead to a paradigm shift. Therefore,

financial industry plummeted and the global

we too must reform our management infra-

financial market weathered a string of eco-structure and adopt a flexible corporate struc-nomic upheavals. In an effort to counter stag-

ture that can respond to changes in a timely

nation and asset deflation in the Japanesemanner. Hence, it is essential for us to establish

economy, the government has introduced vari-a strong and sound financial base in order toous economic stimulus measures, and corpora-

maintain our competitive edge.

tions are in the midst of restructuring in orderto survive.

3

Report to Our Stockholders
In fiscal 1998, we have strengthened our● Second, we have significantly improved andcapital base and implemented various strategies

strengthened our capital base. In May 1998, weand reforms in our management infrastructure

listed Heller Financial, Inc., our financial sub-with considerable results. In particular, we

sidiary in the US, on the New York Stockhave built a solid base to take bold steps in

Exchange and raised more than US$1 billion

strategic development by strengthening ourthrough an Initial Public Offering. Following

capital base. We are confident that we will capi-

that, in January 1999, we raised additional cap-

talize on these reforms to position ourselves toital by issuing approximately ¥217 billion in

make great strides into the future.

common stock. In accordance with the legislation passed by the Japanese government to cre-

Review of Fiscal 1998

ate an emergency financial system stabilization
package in March 1999, we received a capitalIn fiscal 1998, we have focused on establishing

injection of public funds amounting to ¥1 tril-a strong and sound financial base, reforming

lion (¥800 billion in preference shares andour management infrastructure and strengthen-¥200 billion in perpetual subordinated notes).

ing consolidated business management which

As a result, our BIS capital adequacy ratio

laid the groundwork for our medium-term

improved 1.80% over the same period last year

strategic plan.

to 11.21% as of the end of March 1999. With
the renewed strength in our capital base, we are4■ Building Financial Strength

well positioned to respond to the needs of our

In order to build our financial strength, wecustomers.

have set out to achieve three goals.

● Third, we have adopted aggressive measures● First, we have made significant progress intoward disclosure. We believe that a high levelupgrading the soundness of our assets. As theof disclosure is necessary for establishing theJapanese economy continued to stagnate, we

credibility of the Bank and improving the trans-

addressed the bad loan problem by accelerating

parency of our management structure. In orderthe disposal of non-performing loans withfor the public to have a better understanding of

write-offs and provisions amounting to overthe Bank’s financial position, in September¥700 billion. This resulted in lifting the burden

1998, we were the first Japanese city bank toof problem loans after fiscal 1999. We also took

disclose the results of our self-assessment of

the drastic step of eliminating approximately

our assets. Moreover, we conducted a special¥350 billion yen of latent losses on stockhold-investigation by engaging a major US auditor,

ings. This led to an unrealized gain of ¥183.9

including a review of market risk transactions

billion on our stockholdings as of the end ofand loan portfolios, in an effort to improve dis-March 1999.

closure and recover credibility in the market.

■ Strategic Reforms Supported by
Management Infrastructure Reforms● Second, in order to bolster our operations inasset management services, an area that isWith respect to strategic reforms, we are pur-expected to expand considerably in the future,suing three dynamic strategies.

we announced our strategic alliance with The● First, we have begun to implement our

Dai-Ichi Kangyo Bank, Ltd. last November. The

medium-term business plan -Strategic Plantrust banking subsidiaries of the Bank and Dai-

120- early in fiscal 1998. We have also focused

Ichi Kangyo Bank merged to form The Dai-Ichi

our management resources on corporate andKangyo Fuji Trust & Banking Co., Ltd. on April

consumer banking in the domestic market,

1. The new company will take over the pension

which are two areas where we have made thetrust, stock transfer agency services and custo-

enhancement of productivity a top priority. At

dial services operations of the asset manage-

the same time, we have reviewed our overlap-

ment department of The Yasuda Trust andping and non-strategic businesses, and have

Banking Co., Ltd. (YTB) on October 1, 1999.

actively reorganized our business portfolio. Our

The fusion of the customer bases of the Bank

actions in this area include the sale of our retailand of Dai-Ichi Kangyo Bank, and the highlybanking subsidiary in Hong Kong. In addition

specialized expertise of YTB will provide theto providing a wide range of finely-tuned prod-

impetus for propelling the new company into

ucts and services to respond to the needs of our

the leading role in the domestic asset manage-

customers, we have also established an effi-

ment and administration markets. Moreover, in

cient and timely service structure based on the

March, we made YTB a consolidated subsidiary

diversification of service channels throughwith the underwriting of ¥300 billion of new

information technology innovation. At theshares in order to strengthen important fields

same time, we have also stepped up our efforts

such as private banking operations and to maxi-

in restructuring. We have increased efficiency

mize its synergies with Fuji Bank. Capitalizing

by closing and consolidating our domestic andon these synergies, YTB is making solid

overseas offices, while at the same time main-

progress toward increasing its profitability andtaining our level of service to our customers.

strengthening its management base.

We have reduced the number of offices in ouroverseas network by 40 percent and have concentrated our remaining resources on corebranches. These branches will deal with overseas subsidiaries of Japanese corporations andstrengthen specific products such as MBO andproject finance. Furthermore, in addition totrimming our staff by 640 people, we havemade significant efforts to reduce expenses.

5

Report to Our Stockholders● Third, in order to support our strategic

Under these various changes, the net

reforms, we have made sweeping changes in ourbusiness profit for fiscal 1998 increased ¥15.1

management infrastructure with respect to cor-billion to ¥306.6 billion. However, since we had

porate organization, human resources systems

addressed problem loans and latent losses onand managerial accounting. In January 1998,

our stockholdings in order to improve our asset

we restructured our corporate organization, cre-portfolio, we posted a loss of ¥392.9 billion for

ating a flexible business group structure withthe term. Our capital base has been strength-

well-defined roles, tasks and responsibilities

ened considerably with the capital injection ofwhich allow us to respond swiftly to shifts inpublic funds, and we are now well-positioned

the business environment. In April 1998, weto take on the challenges that will lead to a

introduced a new managerial accounting systemprompt recovery in our business performance.

which enables us to control revenue on a con-

The annual dividend payment for com-solidated basis for each business group.

mon shares was set at ¥7 per share which was

Furthermore, in July of the same year, we abol-¥1.50 less than last year, and the annual divi-ished the seniority-based promotion and com-dend for preferred shares was maintained at a

pensation system and introduced a newlevel previously set by the board of directors.

personnel system that rewards performance.

Outlook for Fiscal 1999
■ Reinforcement of Consolidated Business
Management

6

The difficult economic environment is likely to

As customer needs become more diversified ascontinue in fiscal 1999. With the Japan Big

a result of the Big Bang financial reforms, con-Bang financial reforms in full swing, competi-

solidated business management is becoming antion is likely to intensify among Japanese andimportant means of providing the best special-major foreign financial institutions. Under theseized services to our customers. Recognizing

circumstances, we will focus our resources on

this, we have integrated more group companies

the following four objectives in order to become

into our consolidated accounting for fiscal

a leading bank in the 21st century.

1999 while applying the new consolidation● First, we will focus our efforts on improving

guidelines. This enables us to establish a more

the profitability of our corporate and consumer

dynamic consolidated business managementbanking businesses in the domestic market instrategy through integration of our group com-order to realize our profit targets. In corporate

panies and improves the transparency of thebanking, we will enhance efficiency by review-

management structure.

ing the business promotion structure. We will

focus on actively pursuing small- and medium-

In closing, looking back on 1998’s very chal-sized businesses and providing a comprehensive

lenging business environment, we believe that

range of services to large corporations. In con-

we have successfully remained on track bysumer banking, we will diversify our range ofincreasing transparency in our management

service channels for customer convenience andstructure and implementing well-defined man-reinforce our traditionally strong housing loan

agement policies in a timely manner. While weand promising asset management operations.

face additional challenges in fiscal 1999, the● Second, we will step up our restructuring

Fuji Bank Group is well-positioned to embraceefforts. We have already reorganized our opera-

these changes as we work toward becoming ations by consolidating branches, reducing per-highly profitable and efficient global financial

sonnel and reviewing employee benefits. In

services group supported by our stockholders

addition, we will streamline our management

and customers.

structure, optimize our branch network andreduce personnel further.

We look forward to continuing to serve you.

● Third, we will continue to strengthen ourgroup strategy. In 1999, The Dai-Ichi Kangyo

July 1999

Fuji Trust & Banking Co., Ltd. and The Yasuda
Trust and Banking Co., Ltd. will work together
to achieve the goals of the Fuji Bank Group.
● Fourth, we will continue to reinforce risk
management. We have already strengthened
our management controls by putting into place

Toru Hashimoto
Chairman of the Board

a new business organizational structure, which
we began to implement on May 21. A senior
executive has been designated as Chief Risk
Officer (CRO) to oversee the control of various
risks across business areas, and we have also
reinforced the audit structure and process

Yoshiro Yamamoto
President & Chief Executive Officer

throughout the organization.

7

FUJI BANK’S NEW BUSINESS ORGANIZATIONIn May 1999, we introduced a new business organization to secure our position as the customer’s first
choice in banking by focusing on speedy management, stronger risk management and consolidated business management. We believe the new business organization will enable us to achieve our goal of
becoming a leading bank as we head into the 21st century. It is designed to create a structure that can
speedily offer customers the best services available while strengthening managerial control throughmore effective handling of risk and management of group-wide activities on a consolidated basis.

I. Speedy Customer-oriented Management
1. Introduction of “Banking Unit” Structure andReorganization of Business Groups
We have installed an independent “banking unit” structure to accelerate the process of segmenting businesswithin the Bank, which we initiated through the introduction of business groups based on market products inJanuary 1998. This reorganization has led to the creationof two banking units and eight business groups.
The banking units offer ample scope for synergy inimplementing our business strategy. They function as organizational units consisting of multiple business groups with
common infrastructures, including business offices. They
thus enable us to manage individual business groups in an
integrated manner, allocating management resources withmaximum efficiency and encouraging inter-group synergy.

Consumer and Commercial Banking Unit
The Consumer and Commercial Banking unit is made up of
the Commercial Finance Group, which is primarily responsible for the middle, and small- and medium-sized businesses,
and the Consumer and Private Banking Group, which looks
after the individual consumer market.
The Consumer and Commercial Banking unit has
strengthened its relationship marketing approach to provide
customers with the services that best satisfy their requirements. In doing so, it makes use of multi-channel networkand customer database. These not only cover branches andspecialist divisions, including full-service branches, which
are branches specializing in consumer banking and in-store
branches, but also exploit advanced remote channels suchas telephone banking and cyber banking.

8

We have also introduced a sophisticated credit risk
management system that uses statistical analyses to allow
greater specialization in credit control and boost earnings
by setting the most appropriate interest rates. By making
more efficient use of our channels, we intend to enhance
our low-cost management and pursue greater synergy
between the components of the Fuji Bank Group, including The Yasuda Trust and Banking Co., Ltd.

Global Corporate and Investment Banking Unit
The former Global Corporate Group, the Overseas BusinessGroup, and the Investment Banking Products and TradingGroup (excluding asset management) have all been reorganized into the Global Corporate and Investment Banking
unit. This unit consists of four groups: the Corporate
Finance Group and the Investment Banking Group, which
are responsible for the major enterprise market at home andoverseas; the Trading Group, which handles market business; and the Public and Financial Institutions Group.
The Corporate Finance Group and the Investment
Banking Group actually operate as a single unit, transcending international borders and the boundaries
between commercial banking and investment banking toprovide customers with comprehensive, one-stop borderless banking services.
The Trading Group was established to build on our
acknowledged strengths in trading and the various derivatives businesses. The Credit Risk Trading Department
established within the Trading Group’s Derivative
Products Division helps to maximize earnings opportunities from credit risk market transactions in corporate
bonds and credit derivatives, while using advanced financial techniques to strengthen credit risk controls.

The Asset Management Group and the Processing
Services and Information Technology Group
Aside from the two banking units, we have also established the Asset Management Group and the Processing
Services and Information Technology Group.
Asset management is an area of high potential in which
we have made aggressive investments, establishing The
Dai-Ichi Kangyo Fuji Trust & Banking Co., Ltd. and reinforcing Fuji Investment Management Company. Separating
asset management into an independent group shows ourcommitment to strengthening our activities in this area.

We have also integrated our former Transaction &Information Delivery Services Group and our systems
divisions into the Processing Services and Information
Technology Group. We rank high among Japanese banks
in the use of information technology (IT). Among otherthings, we have played a leading role in standardizing
specifications and systems for the settlement of banking
transactions using the Internet, and in putting debit cards
into practical use. We continue to build on our solid IT
base to integrate and expand the common elements ofthese two business sectors.

FUJI BANK GROUP ORGANIZATION
GeneralMeeting ofStockholders

Board ofDirectors

President& CEO

Consumer and Commercial Banking
Commercial Finance Group
Consumer and Private Banking Group

SeniorOverseers

Executive
Committee

Global Corporate and Investment Banking
Chief Risk Officer (CRO)

Corporate Finance Group
Investment Banking Group

Corporate Center(Risk Management)

Chief Financial Officer (CFO)
Corporate Center(Consolidated Business Management)

Trading Group
Public and Financial Institutions GroupThe Yasuda Trust and Banking Co., Ltd.
Asset Management Group
Processing Services and Information Technology Group

Corporate Center(Others)

2. Executive Committee
Traditionally, the Executive Committee was in principle
attended by executives of the rank of Managing Director
and above. We have revamped the Executive Committee
so that its meetings will be attended by the members ofmanagement who are best equipped to deal with the matterson the agenda. This creates a more flexible decision-making
system in line with our more decentralized organization ofbanking units and business groups, enabling us to realize
speedy customer-oriented management.

9II. Stronger Management Controls Based on Risk Management
We believe that any world-class bank should possess asolid risk management system that covers all eventualities. We have therefore reorganized and strengthened ourmanagement control structure as a means of placing muchgreater emphasis on risk management (Please refer topages 54–62 for an overview of our risk management
structure).

1. Stronger Risk Management Structure
Our top management pays more attention than ever tomanaging risk. The Executive Committee meets regularly
to set policy for handling and monitoring various kinds ofrisks, and various other committees provide swift and flexible follow-up. Every six months, the Executive Committee
on Risk Management is convened to discuss overall policies
for all risk exposure, while the Executive Committee monitors and follows up risk at its regular monthly meetings.
We have also appointed an executive to the position ofChief Risk Officer (CRO) to specialize in exercising overall control of credit, market, operational, systems and legalrisk. The CRO is in charge of the Risk Assessment
Division, the Credit Risk Management Division and otherkey risk management divisions. The CRO also fulfils apowerful risk containment function by monitoring risk
across the board throughout the entire Fuji Bank Group.

2. Stronger Portfolio-based Credit Risk Management
With regard to credit risk management, we have established a Credit Guideline Committee headed by the Deputy
President to administer the credit risk portfolio of eachbanking unit. Based on the management policies determined by the Executive Committee, the Credit Guideline
Committee sets guidelines for handling credit proposals. It
also carries out specific risk portfolio management activities, monitoring management conditions and dynamicallyreviewing the guidelines.

3. Stronger Auditing Structure
To secure the independence of the inspection and auditing structure, we have separated the Credit Assessment &Auditing Department from the Credit Planning Division,
where it had been responsible for self-assessment of bankassets and other auditing functions, and have created the
independent Credit Assessment and Audit Division withsimilar responsibilities. We have also established theInternal Audit Division to provide a stronger function forauditing the operations of affiliated companies. To provide stronger control over computer systems risk, we have
set up the Information Technology Risk Control
Department within the Systems Planning Division, andthe Electric Data Processing Supervision Department
within the Inspection Division.
We have also established an auditing department to provide the Bank’s auditors with staff and operational support.

III. Creation of Corporate Value through Consolidated Business Management
We have integrated subsidiaries and affiliates into businessgroups while putting the management of business groups
and evaluations of their performance on a consolidated
footing. Internal restructuring has strengthened support for
consolidated business management. The former Corporate
Planning Division has been split into the Corporate
Planning Division and the Finance and Accounting
Division. The former is responsible for planning and drawing up medium to long-term strategies for business andbusiness portfolios, the latter for drawing up consolidated
financial strategies. In addition to strengthening our auditing functions for affiliates as outlined above, we haveappointed a Chief Financial Officer (CFO) who has overall
control of these business management functions.

10

The Dai-Ichi Kangyo Fuji Trust & Banking Co., Ltd.
was established through a strategic alliance with Dai-Ichi
Kangyo Bank and currently holds the highest credit ratingof any Japanese trust bank. The Yasuda Trust andBanking Co., Ltd. specializes in private banking and realestate-related business. In pursuing consolidated business
management that embraces subsidiaries and affiliates likethese, the Fuji Bank Group is working to fulfil its aspirations to become a full-scale global financial group thatoffers the best financial services in a speedy manner while
maximizing corporate value.

RESTRUCTURING APPROACHES COMPLETION
Since fiscal 1992, we have been working aggressively to improve our competitiveness. The main
thrust of these efforts has been to create a leaner, low-cost organization through cuts inpersonnel and business expenses.
Our medium-term “Strategic Plan 120” calls for the completion by fiscal 2000 of further
drastic reorganization as a means of establishing a streamlined management structure that will
lay the foundations for achieving our objective of becoming a leading bank in the 21st century.

1. Consolidate Corporate Banking Unit and Strengthen
Specialist Product Sectors■ We have resolved to establish a system whereby we canrapidly and efficiently provide services that meet theincreasingly diverse and sophisticated needs of corporate
customers. To this end, we have consolidated branches toallow them to focus on dealing with corporate customers,
and accelerated the redeployment of personnel to divisions
that specialize in providing sophisticated professional services in areas like securitization, M&A and derivatives.
■ We have also strengthened and expanded ourBusiness Finance Center, which serves as a direct marketing channel to smaller businesses, and have been
active in providing speedy, low-interest financing services through the Fuji Small- and Medium-size Business
Development Fund and other vehicles.

Corporate
customers

2. Stronger, Broader Private Banking Services■ One of our primary goals has been to create a stronger
multi-channel network that offers customers convenient,
low-cost services. In addition to diversifying services
based on personal relationships through branches thatspecialize in consumer and private banking, we havestrengthened our “remote channels,” which include telephone banking and cyber banking. We have also played aleading role in introducing debit cards. At the same time,
we have made great strides in cutting channel operation
costs through extensive efforts to consolidate and centralize operations.
■ We have also invested aggressively in advanced strategic systems in order to strengthen our relationship marketing. Our objective is to encourage our customers tocontinue and expand their transactions with us by providing the most appropriate services for each customer in themost convenient manner possible.

Branches dealing with corporate customers

Convenient, diverse channels(comprehensive services provided by small teams of highly professional relationship managers)(diversified channels, expanded remote channels)

Specialist product divisions(sophisticated professional services)

Individual
customers

Unique, attractive products and services(“Fuji First Club,” Fuji Management Accounts, etc.)

Business Finance Center

Relationship marketing using advanced marketing system(speedy, low-interest financing services)(providing most appropriate services through most appropriate channels)

11

3. Focus on Strengths in Overseas Banking■ In addition to concentrating our main management
resources in key locations like New York and London,
we now focus on one of our key strengths - transactions
with the overseas subsidiaries and affiliates of Japanesecompanies - as well as specialized key investment banking activities, including MBOs and project finance.

■ We also take advantage of advanced financial techniques and our team of highly experienced personnel todevelop new business in similar areas in the Japanesemarket, including MBOs, CBOs, PFIs and syndication.

MBO: Management Buy-out

PFI: Private Finance Initiatives

An MBO occurs when the management of a company’s
subsidiary or business division acquires the right to manage
the subsidiary or business division by purchasing its sharesfrom the parent company or owner. In December 1998, wearranged the first major MBO in Japan and provided thenecessary finance.

These schemes encourage the private sector to take the initiative in exploiting private capital and know-how to create social infrastructure, including roads and hospitals. We
are playing an active role in such schemes, providing thecentral and local governments with advice and finance.

CBO: Collateralized Bond Obligations

This involves the formation of syndicates consisting ofseveral financial institutions that join together in raising
the finance necessary for larger projects. Our syndication
record is among the best of the top banks in the international market, and we are increasingly making the most of
this know-how in the Japanese domestic market.

Syndication

These securities use plural corporate bonds as their underlying assets and are issued and sold in the financial markets. In December 1998, Fuji Securities Co., Ltd. put
together the first such package in Japan. These instruments
are attracting a great deal of attention as a new fund-raising
method for companies that issue corporate bonds.

Progress Made in Streamlining Management
1. Closure and Consolidation of Offices
Domestic Offices■ By consolidating the branches dealing with corporate clients, we will reduce the number of full-service
domestic branches to 170 (50% of total) and close orconsolidate a further 50 (15% of total) by the end of
fiscal 2000. The remaining 120 domestic branches are
to reduce their operational load by specializing in consumer banking. During fiscal 1998, we closed or

End of FY1997

340 domestic branches

consolidated 18 branches and transformed 59 into specialist consumer banking branches.

Overseas Offices■ Our plan is to reduce our 47 overseas offices to 20
key centers. In fiscal 1998, we closed or consolidated
16 offices.

End of FY1998(18 domestic branches closed or consolidated)

322

263 full-service branches

domesticbranchesin consumer banking

31 overseas offices(16 overseas offices closed or consolidated)

12

290
domesticbranches

59 branches specializing

47 overseas offices

End of FY2000(a total of 50 domestic branches closed or consolidated)
170 full-service branches
120 branches specializing in
consumer banking(excluding in-store branches)

27 overseas offices(a total of 20 overseas offices closed or consolidated)2. Personnel Reductions■ We expect closures and the consolidation of domestic
and overseas offices, as well as the centralization of operational processes, to free up some 2,200 personnel. Of
these, personnel cutbacks will affect 1,700 (1,350 employedin Japan and 350 employed overseas). Of the remaining
staff, we will reassign 200 people to specialist productEnd of FY1997

divisions and 300 to private banking divisions in order tostrengthen our services in the key areas of corporate andprivate banking. In fiscal 1998, we reduced our personnel
by 880, and reassigned 200 personnel each to specialist
product and private banking divisions to reinforce theiroperations.

End of FY1998
Private banking divisions

Corporate banking
divisionsOperations

End of FY2000

Private banking divisions

Corporate banking
divisionsOperations

Private banking divisions

Corporate banking
divisionsOperations

Support activities

Support activities
Support activities
Specialist product divisions

Personnel cuts
Specialist product divisions

Personnel cuts
Specialist product divisions

3. Expense Reductions
Personnel Expenses

Non-personnel Expenses■ While personnel reductions will have an impact on personnel expenses, we also plan to cut bonuses by 20-30%,
abolish or reduce housing and other allowances, and review
other employee benefits. Compared with fiscal 1997, we
expect this to yield savings on personnel expenses of ¥20
billion by fiscal 2000.

■ Several factors are likely to boost expenses. Greater useof outsourcing to increase operational efficiency will resultin higher outsourcing expenses. Strategic investments tostrengthen services will increase the depreciation burden.
And sales of commercial real estate will increase rental
expenses. Nevertheless, we will work hard to reduce total
non-personnel expenses by sharply reducing current
premises and equipment expenses and focusing our investments with a view to maximizing gain.

4. Reductions in the Numbers of Directors and Remuneration■ By the end of fiscal 1999, we intend to reduce the numbers of directors and overseers by 8 to 34. Establishing inhouse banking units and other recognization measures arealso expected to enhance operational efficiency.

■ Since fiscal 1998, we have reduced remuneration by
30% for the Chairman and the President and CEO, and by
an average of 20% for all member of the board of directors.
(Member of the board of directors have not been paidbonuses since fiscal 1995.)

13Plan for Strengthening of Management
In March of 1999 the Bank received public funds totaling¥1 trillion under the “Law Concerning Emergency
Measures for the Early Strengthening of the Function of
the Financial System.” Coinciding with this, the Bank
submitted its “Plan for Strengthening of Management” tothe Financial Reconstruction Commission as part of theapplication for public funds.
Accordingly, the Bank implemented a 5-year earnings
plan which started in fiscal 1998 as outlined below.*

Earnings Plan
The 5-year plan has been divided into two periods. They
are the restructuring period and the acceleration period.
■ Restructuring Period (fiscal 1998–2000): Three years ofbusiness prioritization and restructuring as set down in the
Bank’s medium-term business plan “Strategic Plan 120.”■ Acceleration Period (fiscal 2001–2002): Period of acceleration heading into the 21st century as a leading bank.

Preconditions of the Earnings Plan
Economic Trends
Real GDP Growth Rate(on the assumption Japanese economy gradually recovers from fiscal 2000)
2nd half FY1998
FY1999FY2000FY2001
-2.2%
-0.4%
0.7%
1.0%

FY2002
1.7%

Interest Rates(on the assumption interest rates gradually rise accompanied by the recovery of the Japanese economy)
2nd half FY1998
FY1999FY2000FY2001
FY20023-month TIBOR (ave. during term)
0.62%
0.68%
0.90%
1.75%
2.55%
5-year SWAPS (ave. during term)
1.02%
1.54%
2.35%
3.13%
2.85%
Foreign Exchange: Exchange rate at ¥120.00/US$ during the period
Nikkei Average: ¥13,500 during the period

Restructuring
PeriodEarnings Plan

Acceleration
Period(in billions of yen)

FY1997

FY1998FY1999FY2000FY2001

FY2002Gross Profits

670.1

670.0

635.0

685.0

752.0

795.0

General & Administrative Expenses

378.5

370.0

365.0

355.0

357.0

355.0

Personnel Expenses

158.5

153.0

143.0

138.0

138.0

138.0

Non-personnel Expenses

191.1

194.0

197.0

194.0

196.0

196.0

Net Business Profits (Before Transfers to General Reserve)

291.5

300.0

270.0

330.0

395.0

440.0

Credit Costs

980.6

580.0

120.0

112.0

80.0

60.0

Transfer to General Reserve for Possible Loan Losses

-28.8

120.0

-8.0

-8.0

-8.0

-8.0

Net Gains & Losses on Securities

209.5-280.0

-30.0

-40.0

-40.0

-10.0

Ordinary Profits-576.3-710.0

90.0

150.0

240.0

340.0

Net Income after Tax-518.7-380.0

60.0

90.0

150.0

200.0

BIS Capital Ratio

9.41%

10.61%

10.57%

10.74%

10.38%

10.77%

Note: FY1998 numbers are projected in the plan, not actual results.

Principal targets for such as profit, profit margin and restructuring have been achieved for fiscal 1998.
* The discussion regarding the Earnings Plan contains projections and statements that constitute forward looking statements,
which are based on numerous assumptions including but not limited to a change in economic trends, interest and foreignexchange rates, demand for credit, the value of real estate in Japan, and the effect of new legislation or government directives.
There is no assurance that all or any of such assumptions will be realized; accordingly, such forward looking statements are
not guarantees of the future performance and involve risks and uncertainties, and actual results may differ from those in theforward looking statements.

14

Review of Operations

15

CONSUMER AND COMMERCIAL BANKING

The Consumer and Commercial Banking unit is made up of the Commercial Finance Group,
which looks after the middle, and small- and medium-sized businesses, and the Consumer andPrivate Banking Group, which looks after the business with individuals. This division ofroles is designed to strengthen relationship marketing to provide services that are extremely
well matched to the needs of each customer.

Commercial Finance Group Strategy
The Group’s strategy is to provide speedy services that satisfy the increasingly diversified
and sophisticated requirements of customers
through advanced multiple channels.
1. The environment facing the Commercial
Finance Group and the Group’s role
As the backbone of Japan’s economy, Japan’shighly diversified middle, and small- andmedium-sized businesses constitute one of ourmost important target business sectors, and weare concentrating on it more and more. The
Commercial Finance Group specializes in thismarket, helping the Bank fulfil a major socialrole by providing energetic support for meeting customers’ funding needs, and ensuringthat the financial system functions andexpands smoothly. The Group works to satisfy
the increasingly diverse and sophisticatedneeds of customers by offering the most appropriate services speedily and more efficiently.
To this end, it is strengthening its multi-channel networks, which bring together the specialist functions of key business offices, head
office and subsidiaries in a dynamic fusionthat brings it closer to realizing its goal of
offering customers greater satisfaction thanany other bank.
It is also strengthening its credit risk management systems to maintain and improve thehealth of its loan assets and create a strong,sound financial structure.

16

2. Concrete strategies and key issues
The Commercial Finance Group emphasizes
the following three policies as a means ofachieving its goals.
First, we are responding positively to support
middle, and small- and medium-sized customers.
Hand-in-hand with the use of the Fuji PC
Banking Service and the Collection Management
Service, the Fuji Small- and Medium-size
Business Development Fund (amounting to 600
billion yen) allows companies to receive the most
preferential interest rates available according to
the loan maturity period.
We have established a new Commercial
Finance Business Division which is staffedwith selected expert personnel who can deal
with the wide-ranging management issues
that affect businesses in the middle market
and growth industries, including asset utilization, stock exchange listing support and business inheritance. In addition to providing
corporate and asset information, they engage
aggressively in consulting activities. To roundoff our unique, comprehensive services inthis area, we work together with The Yasuda
Trust and Banking Co., Ltd., which offers
superior financial advisory services.
In order to nurture and encourage new
business ventures, we provide support
through the Charitable Trust for Fuji New
Business Fund. The Fuyo New Business
Forum and the Fuyo Eco-Business Conference
also tackle the task by aggressively supporting
new business start-ups. In this way, we are
fulfilling an extremely important role in thedevelopment of the new technologies andReview of Operations

CONSUMER AND
COMMERCIAL BANKING

businesses that will underpin the Japanese
economy in the future. Furthermore, Fuji
Research Institute Corporation has established a home page on the Internet to provide
information on patents, technologies, business information and other intellectual property belonging to members of the Fuyo Groupand our customers. Known as the Fuyo
Techno Library, it aims to promote distribution and interchange of ideas as a means ofencouraging technology transfers between
companies. All these activities are designed toencourage the development of new enterprises and the improvement of industrial
technologies in a wide range of areas.
Second, we are constantly working toenhance our advanced, multi-channel network to provide our corporate customers
with greater convenience at low cost.

■ We are increasing the number of branches specializing in corporate transactions, deploying professionals
strategically in areas close to corporate customers sothat we can provide specialist products and services
on a highly competitive basis.
■ In addition to our commercial banking business, wehave established the new regional business unit
“Commercial Finance Division” to concentrate ontransactions with large and middle market enterprisesthat require more specialized services in areas likeinvestment banking.
■ We have boosted our head office staff of experts infinancing to strengthen the functions of our Business
Finance Center, which specializes in direct marketing
to small- and medium-sized businesses.
■ We have reinforced our specialist product divisions
which focus on areas like M&A, derivatives and ITbased settlement business in order to respond to theincreasingly sophisticated needs of our customers in atimely and accurate fashion.
■ Anticipating the imminent arrival of the new era of consolidated management and accounting, we are working
to enhance the synergy of our services through dynamic
fusion of our subsidiary company functions in areas likethe trust business, leasing, factoring and finance.

The Fuyo Techno Library is a completely new type ofInternet business site. Prepared by the expert staff of the Fuji
Research Institute Corporation, it matches the needs of organizations such as major companies and universities that wish
to sell the patents, technologies and other intellectual property or business information in their possession with those of
middle, and small- and medium-sized businesses who wish to
buy them. In addition to providing a forum whereby hidden
potential can be realized in this way, it also allows the networks of the Fuji Bank and the Fuyo Group to be used infollowing up any business developments that may ensue.

By aggressively creating multiple channels
for transactions with companies, we are
steadily establishing a structural frameworkthat enables us to provide customers withprompt, efficient services that match theirincreasingly diverse and sophisticated needs.
Third, we are striving to accelerate
progress in improving our asset and profit
structures. At the same time, as we enhance
the health and efficiency of loan assets, we are
creating a firmly established profit structurethat seeks to expand our profit sources without over-reliance on risk-adjusted assets. We
are strengthening our management control
structure, which is built around a risk management system that spans the entire bank.
Risk management itself has been reinforced
by a drastic overhaul of the credit divisions of
the Commercial Finance Group, improvements in our in-house credit rating systemand tougher credit risk management andcredit examination systems.
As a vitally important component of theConsumer and Commercial Banking unit, theCommercial Finance Group is aggressively
tackling these issues in order to ensure that
the Fuji Bank becomes a leading bank in the
21st century.
17Consumer and Commercial Banking

Consumer and Private Banking Group
Strategy
The Group’s strategy is to build the best possible relationship with each individual customer
and create a strong sense of mutual trust.
1. The environment facing the Consumer
and Private Banking Group and theGroup’s role
The first point to note about the environment
facing the Consumer and Private Banking
Group is that competition is intensifying asa result of Japan’s Big Bang financial reforms.
Increasingly, the companies offering financial
services include distribution companies, nonbanks and other entities from different business sectors, as well as foreign financial
institutions. Japan has really entered an eraof full-scale competition, and market conditions are becoming tougher by the day.
The second key factor is the growing focus
on individual customers. Since customers
face a rapidly increasing range of diversified
choices, they have the extremely tough taskof deciding which financial institution or
financial services best suit their own lifestyles
and sense of values. In other words, the true
value of banking as a service industry hascome under very close scrutiny. To ensurethat customers continue to select Fuji Bank
under such circumstances, it is essential that
we offer services that meet the needs of eachindividual and continue to provide customer
satisfaction.

18

2. Concrete strategies and key issues
The Consumer and Private Banking Groupemphasizes the following three issues as ameans of achieving its role.
The first issue is strong relationship marketing. This requires that we get to know
individual customers better so that we canprovide them with improved services andthus ensure a higher level of customer
satisfaction.
The first and core feature of our strategy is
the Fuji First Club (FFC). Its objective is tocreate a steadily increasing group of satisfied“Fuji fans” through closer, long-term relationships and mutual communications with
FFC members. Inaugurated in March 1998,
FFC has undergone numerous upgrades,
including a point system for deregulated
interest time deposits, and discounted charges
for using ATMs outside normal businesshours. We are delighted that in a period of
only 12 months, over 200,000 customers
have become FFC members.
The second feature of our efforts tostrengthen relationship marketing has been our
program to upgrade our database infrastructure. We believe this is the best way to build
closer relationships with our customers andensure better, more timely communications.
Development work has already been completed
and we are now making steady progress inputting the system into practical use.
The third feature of our efforts tostrengthen relationship marketing is our tieup with Yasuda Trust and Banking. Yasuda
Trust and Banking offers sophisticated services like asset management and investmentthat are beyond the capabilities of ordinary
commercial banks. Our relationship with
Yasuda Trust and Banking enables us to provide high quality services to customers withwidely diversified needs.
The second issue is making efforts todevelop better channels for individual
customers.

Review of Operations

CONSUMER AND
COMMERCIAL BANKINGFirst, we are creating branches that specialize in consumer banking. This meanstransforming former full banking branches
into branches that deal specifically with individual customers, which enables us to offer
services that are better tailored to individual
customers’ needs. In April 1999, we established our first in-store branch to offer fullservices on Saturdays and Sundays at a major
suburban shopping center.
Second, we are steadily enhancing the convenience of our ATM network. In September
1998, our ATMs commenced 24-hour operation. We have also expanded our 24-hourcash delivery points dramatically through tieups with Daiei and Lawson which are major
supermarket and convenience store chains.
Third, we have pushed ahead with thedevelopment of remote channels that can
respond to the rapid changes in individual
lifestyles. These include the introduction of
debit card services that allow the use of cash
cards for purchases, and the inauguration ofround-the-clock telephone banking services.
We have also greatly upgraded our Internet
banking service, the Fuji Cyber Bank. All ofthese channels are designed to provide individual customers with more convenient services.
The third issue is enhancing our products
and services. Our first priority has been tostrengthen our housing loan services. In addition to launching new 15- and 20-year fixedinterest housing loans and schemes to allow
borrowers to replace existing loans withloans on better terms, and loans for new
house purchases, we have established homeloan counters that open on weekends andholidays. We plan to develop and upgrade our
products so as to be able to provide customers
with expert financial assistance at importantstages in their lives.

Second, we have reinforced our asset management operations by selling investment
trusts in December 1998. We are uniqueamong Japanese banks in that we have established investment trust evaluation teams inboth Tokyo and New York, and now offer aportfolio of high quality products from a
global viewpoint. We have also establishedinvestment advisory desks at 75 branches andintroduced our Fuji Portfolio Advisory
System (F-PAS) at all our domestic branches,
thereby helping to meet customer needs for
portfolio proposals and ideas. Simultaneouslywith the start of investment trust sales, welaunched the Japanese equivalent of the CashManagement Account (CMA) called the Fuji
Management Account (FMA). In addition to
the standard functions traditionally offeredby banks, such as settlement and deposits,
our FMA with its groundbreaking investment
management function enables us to offer ourcustomers a more comprehensive range ofinvestment management services.

19

GLOBAL CORPORATE AND INVESTMENT BANKINGThe Global Corporate and Investment Banking unit consists of four groups: the Corporate
Finance Group and the Investment Banking Group, which are responsible for the major
enterprise market at home and overseas; the Trading Group, which handles market business;and the Public and Financial Institutions Group. The unit thus enables us to offer customers
one-stop access to high quality cross-border banking services that transcend the traditionalboundaries between commercial and investment banking.
Corporate Finance Group Strategy
The Group’s strategy is to exploit advanced
financial technologies in developing comprehensive proposals that match the businessstrategies of each customer.
1. Concrete strategies for the Japanese market
We are making every effort to strengthen our
one-stop approach to providing comprehensive services that satisfy the needs of large
Japanese and middle market Japanese corporate customers on a worldwide bases. To thisend, we are building a varied and sophisticated line-up of financial products andservices that employ not only traditionalcommercial banking skills, but also theadvanced financial techniques and information technology of the investment banking
business. At the same time, we are working todevelop the all-round competence necessary
for planning tailor-made proposals to match
individual customers’ business strategies.
To give a more specific example, we identify financial and capital issues of the customer based on their business strategy. We
then provide services such as calculating thevalue of their business using cash flow analysis and other financial services that will meetthe customer’s requirements.

20

In developing and offering new products
and services, we not only draw on our product development divisions but also enlist the
support of the entire Group, including securities and trust banking subsidiaries. These
efforts have paid off. We were successful inclosing Japan’s first MBO and CBO transactions. We were also among the first Japanesebanks to offer settlement services to help
major corporate customers increase the efficiency of their funding operations and theirprocedures for collecting sales proceeds.
These services include debit cards and an
Internet-based electronic settlement systemcalled Fuji Cyber Bank, in which our highlevel information technology played a leadingrole. We are the only Japanese bank to havejoined the Inter-Bank Online System (IBOS),
which allows us to fulfil a need for crossborder cash flow management services.
Meanwhile, the number of customers making
use of the pension consulting services offeredby Fuji Research Institute Corporation isincreasing in response to the revisions occurring in the accounting principles governingcompany pensions.
On the organizational side, the corporatebanking divisions serve corporate customers inmajor cities and collect information on specificindustries as well as know-how that will help
satisfy customers’ needs with precision. Japan’s
industry is going through a period of unprecedented structural change, and many of our customers are actively joining alliances andundertaking strategic restructuring of theirbusinesses. To strengthen our sector-by-sector
approach, we have reorganized to concentrate

Review of Operations

responsibility for multimedia and data
communications customers into the Head
Office Corporate Banking Division V, andput the International Business Division in
charge of foreign companies operating inJapan.

GLOBAL CORPORATE ANDINVESTMENT BANKING

2. Concrete strategies for overseas
markets
Fiscal 1998 was a year in which the business environment surrounding us rapidlychanged as international rating agencies
downgraded Japanese banks. We responded by
drastically reorganizing our international operations to focus on certain key businesses. First,
we concentrated on our main strengths in foreign markets - transactions with Japanesecompanies operating overseas and investmentbanking operations such as acquisition financeand project finance - with a view to achieving
top bank status in these areas. We ranked
among the top 15 major banks in providing
finance to the acquisition finance markets in
America and Europe. In the area of project
finance, we succeeded in securing substantial
financial advisory business and played the roleof arranger in setting up financing for the TRI
ENERGY power generation project inThailand. These and our achievements in
putting together loan syndicates have earned
us a very good reputation in the markets.
The experience in providing new types of
products in advanced overseas financial markets, as well as financial techniques and knowhow acquired in markets outside of Japan havebeen actively utilized in our domestic business.
In the United States, we were the first Japanesebank to close an arbitraged-type CLO (collateralized loan obligation) management transaction, while at home we successfully arranged
the financing for the first full-scale MBO (management buy out) to take place in Japan.

With regard to the business with nonJapanese customers, we exploited our domestic strengths in expanding transactions withJapan-based foreign companies.
To further enhance the efficiency of ouroperations, we aggressively reorganized ouroverseas network, integrating 16 branches
and representative offices in fiscal 1998.
In fiscal 1999, we shall continue to sharpen
the focus of our overseas operations and makemore aggressive use of advanced financial
techniques and know-how from overseas in
the domestic market. At the same time, weshall move ahead with our ongoing measures
to cut costs and improve the efficiency of ourorganization and management, with special
emphasis on restructuring our international
network. With regard to the latter in particular, we are creating a business promotion system whose focal points are strategically placedin New York, London, Singapore and Hong
Kong so as to enable us to promote businessin line with market needs in the American,
European and Asian markets.
The Corporate Finance Group must
actively engage in international operations if
we are to survive the competition with majorinternational banks and become a leadingbank in the 21st century. We are firmly
resolved to continue concentrating our energies in certain key sectors while at the sametime giving domestic customers full access to
new financial techniques and know-how
from abroad.

21

Global Corporate and Investment Banking

Investment Banking Group Strategy
The Group’s goal is to become a leadingbank in the new millennium by offeringsuperior products that meet a wide rangeof requirements.
The Investment Banking Group offers
advanced, borderless services designed tomeet the variety of customer requirements.
One of the objectives of our recentlyadopted new management structure is toensure that the Investment Banking Groupand the Corporate Finance Group work
together seamlessly to satisfy the diversifying
needs of major enterprises and promising
growth companies through a wide range ofsuperior products and services.
The cornerstone of Japan’s Big Bang financial reforms is the complete deregulation ofcommissions on securities transactions, whichis due for implementation in the fall of 1999.
Most people expect competition to be so toughthereafter that only a few winners will survive. The investment banking business islikely to become one of the most contentiousof the Big Bang battle zones. However, we see
it as an integral element in our program tobecome a customer-oriented, one-stop bankand give us the momentum to succeed in the
21st century.

We have reinforced our ability tooffer products in theareas of securitization, M&A and project finance. The
environment facing
customers haschanged dramatically, especiallybecause the introduction of new accounting standards has
increased the need for balance sheet controls.
This has spurred us into developing new
businesses such as structured financing,which focuses on cash flow and the risks hidden in the balance sheet.
There are many other areas in which we
can draw on the overall strengths of the Fuji
Bank Group and offer services through subsidiaries at home and overseas. For example,
Fuji Securities Company serves various
issuers of bonds, securities and IPOs, while
Fujigin Capital Company provides capital for
corporate start-ups. As the regulations onmaintaining firewalls between banks andtheir securities subsidiaries are eased, theshift towards direct corporate financing will
accelerate, leading to environmental changes
in which MBOs, CBOs and other new financing methods will flourish. The Investment
Banking Group is committed to coping withthese changes by strengthening cooperative
ties with affiliates as a means of creating anorganizational structure that can better satisfy the increasingly diverse and sophisticatedrequirements of customers.
Trading Group Strategy
The Group’s strategy is to use its sophisticatedtrading techniques and strengths in numerical analysis to become an increasingly active
participant in the credit products market.

22

Review of Operations

GLOBAL CORPORATE ANDINVESTMENT BANKING

The Bank is a leading player in the interest,
exchange, derivatives and other markets, andthe Trading Group fulfils a key role inresponding attentively to customers’ needs on
the one hand and earning profits on the other.
The pace of change in this sector is dizzying, so it is absolutely essential that we constantly devise new trading tools that will
enable us to meet customers’ funding, investment and hedging needs.
Based on our sophisticated trading knowhow and skills in numerical analysis, we are
actively developing new types of interest- andexchange-based products. We are also activein the markets for credit-related products suchas credit derivatives, CBOs and CLOs, which
we expect to grow steadily in the future.
With the introduction of the new accounting standards from fiscal year 2000, a highlevel of risk management will be required
even more. Therefore, we are working toenhance and diversify our trading techniques.
For example, we have started research anddevelopment work on multi-product trading
methods that allow simultaneous transactions
covering interest rates, bonds, exchange andequities.

The Bank specializes in investment banking fields like project finance, and the Group
works together with investment banking divisions to satisfy our customers.
2. Strategies for financial institutions
Progress in introducing the Big Bang reformsof the Japanese financial system means thatthe transactional relationships between
financial institutions are far broader thanthey used to be.
Financial institutions have a growing needfor risk-hedging instruments and techniques
for making profitable investments at a time ofextremely low-interest rates in Japan. We areworking to deal with these requirements
through investment banking operations that
include the provision of market-related products and services such as derivatives andasset-backed securities.
We are also putting a great deal of effort
into providing products and services that
exploit the Fuji Bank Group’s specialist
know-how in many areas, particularly thosethat meet the needs of financial institutions
for out-sourcing services.

Public and Financial Institutions Group
Strategy
The Group’s strategy is to utilize its specialist
expertise in responding to its customers’ needs.
1. Strategies for public institutions
The Group’s primary mission is to provide
reliable handling of operational procedures
relating to public money. We also believe wehave an important role to play in dealing withmore recent funding requirements. These
include new fund-raising methods likePrivate Finance Initiatives (PFIs), whichhave been very much in the limelightrecently, even in the public finance markets.

23

ASSET MANAGEMENT GROUP

Asset management is a strategic business segment, which promises rapid growth. Since webegan to sell investment trusts, we have invested aggressively in the asset management business, establishing The Dai-Ichi Kangyo Fuji Trust & Banking Co., Ltd. and strengthening
Fuji Investment Management Company. Setting up the Asset Management Group as aseparate entity provided further reinforcement.

Asset Management Group Strategy
The Group’s strategy is to provide expert
responses to the diversifying needs of customers by leading the way in providing
advanced financial technologies and highquality services.
1. The environment facing the AssetManagement Group and the Group’s role
The asset management sector in Japan
appears poised for rapid growth as customer
needs diversify and steady progress is madein implementing the Big Bang reforms of thefinancial system.
Factors such as the removal of the ban onsales of investment trusts by banks and otherfinancial institutions will almost certainly
lead to a major diversification of the investment trust market. The scheduled introduction of defined contribution pension schemes
should also result in a steady increase in market size.
In the corporate pension market, the sheer
scale of the funds involved is likely to lead toan even greater emphasis on investment performance, providing more business opportunities than ever for investment managementcompanies and trust banks. On the other
hand, the new accounting standards for retirement benefits to be introduced in fiscal 2000
require that any shortfalls in the reserves for
retirement allowances be shown in the company’s balance sheet. Not surprisingly, such
shortfalls are now a major issue for the managements of many companies
Mindful of these environmental changes,
we have positioned asset management as oneof our key strategic business sectors. We havereinforced our efforts in this area by inaugurating sales of investment trusts and aggressively increasing our own investments,
establishing The Dai-Ichi Kangyo Fuji Trust &Banking Co., Ltd. and putting more capital
into Fuji Investment Management Company.
Further measures to reinforce our activities
followed the introduction of our new management structure in May 1999, when we
established the Asset Management Group as aseparate division that includes Dai-Ichi
Kangyo Fuji Trust & Banking and Fuji
Investment Management Company.
The Asset Management Group is involvedin the following business activities, and iswell positioned to satisfy the varied needs ofcustomers through expert services.
■ Sales of investment trusts.
■ Establishment and management of investment trusts(Fuji Investment Management Co.).
■ Investment management (Dai-Ichi Kangyo Fuji Trust& Banking, Fuji Investment Management Co.).
■ Custody and stock transfer agency (Dai-Ichi Kangyo
Fuji Trust & Banking).

24

Review of Operations

To prepare for the introduction of defined
contribution pension schemes, we are carefully examining all the relevant aspects ofinvestment management, trustee and pension
scheme designs while keeping a close eye on
actual developments.

ASSET
MANAGEMENT GROUP

2. Starting sales of investment trusts
Since the ban on bank sales of investment
trusts was lifted in December 1998, we havepositioned them alongside deposits in importance as pivotal products. To satisfy customers’ increasingly diverse and sophisticatedneeds for fund management services, we havebeen active in this area. We pay particularattention to selecting the investment trusts wehandle, and have established special teams inTokyo and New York to evaluate the performance of both the individual trusts and thecompanies that manage them from a global
viewpoint. This has enabled us to bring
together a high quality portfolio of various
products, which we call the “Fuji All-Stars.”
We continue to work on our high-quality
consulting sales, developing the Fuji Portfolio
Advisory System (F-PAS), and the Portfolio
Planning Service which advises individual customers on the most appropriate investment
instruments and other financial products
according to their lifestyles and the levels of risk
they can tolerate. We also provide customers
who have bought our products with full support
through thoroughgoing aftercare services.

the need to respond to the sweeping changes
triggered in Japan’s financial system by the
Big Bang reforms by offering customers
higher quality, broader-ranging investment
trust services.
As a result of this alliance, on April 1,
1999, Fuji Trust and Banking and Dai-Ichi
Kangyo Trust and Banking merged to form
The Dai-Ichi Kangyo Fuji Trust & Banking
Co., Ltd. Furthermore, in October 1999,
Yasuda Trust and Banking, is scheduled totransfer the pensions, custody business, andstock transfer agency business of its asset
management division to Dai-Ichi Kangyo
Fuji Trust & Banking.
Dai-Ichi Kangyo Fuji Trust & Banking has
obtained high ratings from domestic and foreign
ratings agencies. (Moody’s Investors Service:
long-term deposits - A3; Fitch IBCA: long-term A; R&I: long-term bonds - A.)
There are several reasons for these highratings. Fuji Bank, Dai-Ichi Kangyo Bank and
Yasuda Trust and Banking all have large, stable customer bases. They also possess
advanced financial expertise and know-how
and a solid presence in business sectors likeasset investment and asset management. By
fusing these advantages, Dai-Ichi Kangyo Fuji
Trust & Banking is well-placed to prosper inthe two areas where most growth is expectedin the future — pension funds and investment
trusts — and thus become a leading light in thefund investment and management business.

3. Establishment of The Dai-Ichi Kangyo
Fuji Trust & Banking Co., Ltd. andits strategic role
In June 1996, we set up The Fuji Trust andBanking Co., Ltd., a wholly-owned subsidiary,
to provide high-quality investment trust products and services to meet customers’ diversifying needs. In November 1998, we entered astrategic alliance with The Dai-Ichi Kangyo
Bank, Limited. The tie-up was motivated by25

Asset Management Group

Dai-Ichi Kangyo Fuji Trust & Banking —Key Features
Principal Business Activities
Pensions (scheduled from October 1999)
Dai-Ichi Kangyo Fuji Trust & Banking offersa full range of pension services, including:■ Asset investment and management for corporate pension schemes such as employees pension funds andtax-qualified retirement pension plans.
■ Planning and consulting in connection with pension
schemes.
■ Handling of administrative work relating to membersof pension schemes and pension recipients.

It is also working actively to devise
responses to two problems that are of rapidly
growing importance to company management- the treatment of retirement benefit claims
under new accounting rules to be introduced
soon, and the advent of defined contribution
pension products.
Custody BusinessAs part of its wide-ranging services in thefield of asset management, including investment trusts, pension trusts and specified
money trusts, it responds to customers’ diversifying needs by acting as the investor’s
agent, providing centralized control of securities deliveries and custody, and collecting
dividends.
Stock Transfer Agency Business (scheduledfrom October 1999)
Dai-Ichi Kangyo Fuji Trust & Banking iswell-placed to satisfy all customer requirements relating to the handling of stocks, fromstock transfers, preparing shareholders’ registers, custody, issuing stock certificates andpaying dividends, to consultation in connection with legal matters concerning stocks.

26

The Dai-Ichi Kangyo Fuji Trust & Banking Co., Ltd. opening ceremony.

Securitization of Assets (monetary claim
trusts, movable property in trust)
Dai-Ichi Kangyo Fuji Trust & Banking
accepts various kinds of assets from customers (trustors), then uses these assets toback issues of trust beneficiary rights which
it sells to investors. This satisfies the trustor’sneed for a wider range of lower-interest funding instruments that can be handled off thebalance sheet, while at the same time offering
investors all the advantages of trust beneficiary rights.
4. Strengthening Fuji Investment
Management Co., Ltd.
Fuji Investment Management Company specializes in investment management. It provides services for establishing and managing
investment trusts. It also offers discretionary
investment management services that are
carefully tailored to satisfy the needs of pension funds, institutional investors and similarcustomers.
To enhance its performance in the areas ofinvestment trust and investment management
services, the company is able to make highly
efficient use of a tripolar global network basedon its Tokyo head office, London, and New
York. Fuji-Lord Abbett International, Limited
is responsible for operations in London, andLord, Abbett & Co., a long-established independent US investment management company for operations in New York.

Review of OperationsASSET
MANAGEMENT GROUP

According to CAPS Ltd., a UK-based independent provider of specialist investment performance evaluation services, our London
subsidiary Fuji-Lord Abbett International,
Limited ranked first out of 54 funds in termsof equity investment management performance for pension funds in the seven years
through March 1998. The superior investment
capabilities developed by the company havealso been channeled into our “Fuji Global
Active Open” investment trust product.
On the personnel side, Fuji Investment
Management Company actively recruits capable staff from outside the Fuji Bank Group, in
the process creating a team of professional
specialists.
It is our firm intention to reinforce Fuji
Investment Management Company’s corporate strengths as a means of responding toour customers’ ever-diversifying needs.

History of Fuji Investment Management
Company
July 1985
The former Fuji Investment Management
Company, Ltd. established as the investment
management arm of the Fuji Bank Group.
June 1992
Fuji Investment Management Co. (Europe)
Ltd. established in London.
September 1993
Fuji Investment Trust Management Co., Ltd.
established as a subsidiary following theremoval of the ban on bank participation in
the investment trust management business.
November 1995
Following the removal of the ban on simultaneous engagement in the investment management and investment trust managementbusinesses, the former Fuji Investment
Management Company, Ltd. and Fuji
Investment Trust Management Co., Ltd. aremerged to create Fuji Investment
Management Company, Ltd.
September 1998
The capital of Fuji Investment Management
Co. (Europe) Ltd. is increased and its organization and business are strengthened. The
company’s name is changed to Fuji-Lord
Abbett International, Limited after new
investment is received from Lord, Abbett &Co. of the USA. The latter is a long-established independent investment manager withwhich Fuji Bank has developed a strong relationship since the founding of Fuji
Investment Trust Management Co., Ltd.

27

PROCESSING SERVICES AND INFORMATION TECHNOLOGY GROUP

The Processing Services and Information Technology Group is a new group formed from themerger of the Transaction and Information Delivery Services Group and the systems divisions. We have always ranked high among Japan’s banks in terms of information technology
and the new group is now able to take advantage of our leading position and solid IT base tostrengthen the overall operations of the Bank.

Processing Services Business Strategy
Our strategy is to offer customers evengreater convenience by building on Fuji
Bank’s superiority and expertise in settlement
services.
1. The environment facing the processing
services business and the Group’s role
We believe that our mission in the area ofprocessing services is to contribute to greater
customer convenience and respond to customer needs by offering high-quality, low-cost
processing services in the areas of clearing,
electronic commerce, foreign exchange, foreign currency deposits, and developing new
products.
We have developed our own strong expertise in yen fund clearing services, custody services and electronic commerce using
advanced information technologies. The highquality of our services in these areas has
earned us a solid reputation among customers
in Japan and overseas.

28

In general processing services, sophisticated know-how is essential, and it is necessary to maintain a consistently high level ofinvestment in costly systems. This means it is
not always a particularly efficient sector for
corporations and financial institutions to be
involved in. Traditionally, processing of thissort has been an internal function, but in thecurrent tough economic environment, whereoperational efficiency and profitability are
under close scrutiny, demand for outsourcing
services is growing steadily. Our objective is
to make maximum use of the know-how andexpertise we have accumulated to date, andfully exploit the merits of scale to respond to
customers’ requirements by offering higher
quality services at lower cost.
We are also actively engaged in developing
new foreign currency deposit products andour debit cards, cyber banking, electronicmoney and trade finance EDI (electronic datainterchange) services constitute part of alonger term project to build the framework
for a new generation of settlement systems.
Our foreign currency deposits with options
have proven to be extremely popular in satisfying the rapidly diversifying needs of customers. At the same time, as a leading player
among Japanese banks in fields like Internet
banking, debit cards and electronic money,
we are developing new instruments tailoredto customers’ needs, and working extremely
hard to develop better data processing procedures and higher security standards. In thearea of trade finance EDI, we have participated in domestic and international projects
such as BOLERO right from the start, and are

Review of Operations

PROCESSING SERVICES AND
INFORMATION TECHNOLOGY GROUP

engaged in testing and proving procedures forhandling the new trading and processing
flows engendered by progress in Internet
technology.
As interest in the internationalization of
the yen increases, it is important to consider
this type of new settlement framework from a
global point of view. We believe it is important for us to play a role in this type of project
bearing in mind the growing presence of theJapanese economy and the yen in the international arena.
2. Concrete strategies and key issues
Since the revised Foreign Exchange andForeign Trade Control Law went into force inApril 1998, we have offered foreign exchange
business services at all branches dealing withcorporate clients. Since the beginning of thecurrent fiscal year, we have been working
together with foreign banks to develop new
products in the trade finance sector, becoming
the first Japanese bank to offer a scheme tohandle export claims off the balance sheet,among other things. Furthermore, following
the launch of the euro at the beginning of
1999, we have started engaging in transactions in the new currency, setting trading
spreads and interest rates at very competitive
levels compared with those of other banks. As
mentioned above, in the area of trade finance
EDI, too, we have played a leading role in the
BOLERO project and in establishing a framework for providing fully electronic services.
To respond to customers’ needs for highinterest investment products that offer
greater convenience in a combination with
telephone banking, we launched the “FujiSuper Foreign Currency Time Deposit.” Wealso launched foreign currency time deposits
with options which offer higher interest rates
on a yen basis. We will continue to expand
our product lineup as a means of satisfying
our customers’ increasingly sophisticated anddiversifying needs.

Many of our customers already use ourelectronic banking services, and we continue
to work on improving them. Having led theway in creating new clearing services forindividual customers, including debit cards,
Internet banking and electronic money, ourreputation as an innovator is well established.
In the area of crossborder cash management
services, customers have for some time now
made extensive use of our Fuji Global CashManagement Service (CMS) (overseas version of an electronic banking product) inmanaging the assets of overseas subsidiaries
and affiliates, and controlling non-resident
deposit accounts registered in the name of thehead office. Our entry into the Inter-Bank
Online System (IBOS) in February 1999
helped us strengthen our overseas networkand offer more convenient services for customers planning to advance into overseas
markets. We will continue to develop new
products with an eye on constructing more
efficient all-round delivery channels.

29

Processing Services and Information Technology Group

When investors invest in securities, theynormally entrust banks and other financial
institutions to handle custody, clearing andproxy services (such as exercising stockholders’ rights) on their behalf. We provide suchcustody services to institutional investors athome and overseas, and have earned a particularly strong worldwide reputation among
overseas institutional investors for the speed
and accuracy of the processing services that
support our yen custody operations. We not
only lead Japanese banks in terms of the balance of yen-denominated shares we hold incustody, but our services in this area havebeen “Top Rated” for seven consecutive
years according to the internationallyrespected Global Custodian magazine.
Many overseas financial institutions haveentrusted us with their yen fund clearing
operations in Japan. And following changes
in the foreign exchange/yen clearing system
in December 1998, we have started yen fundclearing services on behalf of domestic financial institutions. We are involved in creating
new mechanisms to reduce settlement risk
through netting and were original membersof the Continuous Linked Settlement Bank(CLSB). CLSB is an international project
established to reduce the risk arising fromsettlements of different currencies across different time zones. As a financial institutionthat undertakes clearing services on behalf ofothers, we are working harder than ever toreduce settlement, operational and otherkinds of risk.

30

Information Technology Strategy
Our strategy is to utilize our existing, highly
advanced system infrastructure as a launching pad for a new generation of IT-based
businesses.

Fuji Multimedia Bank

1. The environment facing IT and theGroup’s role
As a result of Japan’s Big Bang financial system reforms, competition in banking andother financial sectors will intensify, and the
management strategies of each banking unit
and group and the IT strategies that support
them are of vital importance. The Processing
Services and Information Technology Groupis in charge of our IT strategies.
To date, we have moved steadily ahead
with measures to enhance our systems infrastructure, building a new computer center in
the Tama suburbs of Tokyo and establishinga network of leased circuits that link key centers around the country.
Our strategy of building a flexible systems
infrastructure has put us in a better position
to offer the sorts of services customers reallywant. These include round-the-clock ATM
services, cash machines in convenience storesand in-store branches in major supermarkets.
We have also taken a commanding lead increating advanced customer channels thatutilize the most advanced technologies available, including Fuji Cyber Bank, Fuji
Multimedia Bank and Fuji Telephone
Banking. Our efforts in these areas were rec-

Review of Operations

PROCESSING SERVICES AND
INFORMATION TECHNOLOGY GROUP

ognized in fiscal 1997 when we received anaward from the Ministry of International
Trade and Industry (MITI) for our contribution to bringing information technology intobusiness activities. We have thus carved out aleading position for ourselves in the use of IT,
and rank high among the very top Japanesebanks in this respect.
2. Concrete strategies and key issues
In the new millennium, systems will be
required to do much more than simply offer
greater streamlining of office procedures. We
need systems that support management
strategies through customer databases that
identify and analyze the needs of individual
customers. To this extent, the more effectively a company uses IT, the more likely it is
to demonstrate its superiority over others.
For this reason, the Bank will continue tobuild on its existing infrastructure to develop
systems that underpin the management strategies of the Bank’s market groups. At the sametime, we will explore ways of using the latest
IT in developing a new generation of financial
businesses as well as expanding the scope ofexisting business sectors.

It goes without saying that the Processing
Services and Information Technology Groupwill strengthen its cooperation with the processing services related divisions. This applies
in particular to those sectors in which werank highest among Japanese banks, including
firm banking, cash management services, custody services, foreign exchange/yen proxy settlement services, trade finance EDI and othersettlement businesses that use IT as a base.
As far as the development of future systems is concerned, it is absolutely essentialthat we devise solutions that meet the needsof increasingly sophisticated and diverse
financial operations. To this end, we intend
to keep on building up our well-rounded teamof experts with a view to developing systems
that offer higher value-added than ever.

31

CORPORATE CITIZEN

In the words of our founder Zenjiro Yasuda,“We serve the communities in which we dobusiness.” We have a long and proud historyof community service and the spirit of Mr.
Yasuda’s philosophy lives on stronger thanever today. Based on the theme of “Nurturing
the Next Generation of Dynamic Young
Citizens,” we are engaged in a wide range ofactivities, including education, traffic safety,
cultural support, social welfare, and support
for volunteer activities.

Traffic Safety Campaign
Fiscal 1998 marked the thirty-fifth year of theannual Traffic Safety Campaign, which provides automatic accident insurance for all
first graders in Japan who are involved intraffic accidents on their way to or fromschool. Along with Fuji Bank, the campaign
is co-sponsored by other affiliated companies
such as Yasuda Fire and Marine Insurance,
Yasuda Mutual Life Insurance and Yasuda
Trust and Banking. The program has provided insurance coverage for over 43 million
children since its start. The Bank also cosponsors other annual traffic safety campaigns, drawing on the funds contributed to
the Traffic Safety Fund by employees anddonations made by the Fuyo Traffic Safety
Association.

Fuji Memorial Foundation and Other
Welfare Activities
The Fuji Memorial Foundation was established in 1980 to commemorate the Bank’s
100th anniversary. Its contributions to thecommunity include grants for social welfare,
funds for translating books into Braille forvisually impaired university students,
and donations of electrically powered
wheelchairs - a total of 455 to date. The
Foundation also uses contributions from32

employees as funding for a special project
involving donations of specially-equippedbuses to facilities for the physically handicapped. Over the years, it has donated a totalof 160 such vehicles.
In 1993, the Bank, in response to requests
from employees who wish to engage in volunteer activities, provided support through aspecial program to allow them to take special
leave of absence.
On the local level, our domestic offices
contribute to community service activities bytaking part in fund-raising drives, by donating second-hand books and by promoting therecycling of used items.
Abroad, employees of our New Yorkbranch and the Fuji Bank and Trust
Company have been very active in volunteer
activities under the Community
Reinvestment Act (CRA). This has helped
the Bank earn high ratings from federal andstate regulators for seven consecutive years
since 1992.

Academic Support
In 1991, we established the Fuji BankInternational Foundation as part of our commemoration of the Bank’s 110th anniversary.
In fiscal 1998, the Foundation provided a
total of 20 students studying at Japanese universities with a monthly stipend of ¥120,000.
From 1995, the Foundation inaugurated
another scheme under which students attending universities in other Asian countries areprovided with an annual scholarship.
In other academic activities, we have instituted lecture series at Cambridge University,
Chicago University and the China Institute of
Financing in Beijing.

Corporate Information

Contents
page 34 ......................
Board of Directors and Senior Overseers
Fuji Bank Group Organization
page 36 ......................
Overseas Offices
36 The Americas
37 Asia and Oceania
39 Europe and The Middle East
page 40 ......................
Domestic Offices, Subsidiaries andAffiliated Companies

33

BOARD OF DIRECTORSANDSENIOR OVERSEERS

Chairman of the Board

Toru HASHIMOTO

Directors

Michio UENO

FUJI BANK GROUP
ORGANIZATION

GeneralMeeting ofStockholders

Board ofDirectors

President& CEO

SeniorOverseers

Executive
Committee

Tsutomu HAYANO
President & Chief
Executive Officer

Kazumi YANAGIHARA

Yoshiro YAMAMOTO

Kunioki ISHIBASHI

Fumito ISHIZAKA
Yoshiaki SUGITA

Deputy Presidents

Minoru ITOSAKA

Chief Risk Officer (CRO)Hajime SAKUMA
Tosaku HARADA

Saburo NISHIURA

Risk Assessment Division

Toshiyuki OGURA

Kazuo KASUGAKAWA

Credit Risk Management Division

Sumio UESUGISenior Managing Director

Masayoshi KANAJI
Akio TAKEUCHI

Masaaki SATO

Kenji MIYAMOTO

Credit Assessment and Audit DivisionInspection Division
Electric Data Processing SupervisionInternal Audit Division
Legal Division
Compliance
Compliance for Trading and Investment Banking

Managing Directors

Senior Overseers

Chief Financial Officer (CFO)
Isao HIRAIDE

Takeshi TAKAHASHI

Soichi HIRABAYASHI

Masayuki AMARI

Atsushi TAKANO

Takeie UKITA

Terunobu MAEDA

Yoriaki SAKATA

Hiroaki SHINODA

Yuji OSHIMA

Teruhiko IKEDA

Daiyu AOKI

Seiji SATOMURA
Yukio OBARA
Kenji WATANABE

Corporate Planning Division
Research
Social and Cultural Relations
Y2K Project

Finance and Accounting Division
Accounting
Investor Relations

Subsidiaries and Affiliates Division(as of June 29, 1999)

Customer Services Division
Public Relations Division
Human Resources Division
Premises and General Affairs Division
Systems and Operations Administration Division
Executive Secretariat
Regional Headquarters for Kansai
Credit Administration Division I
Credit Administration Division II
Credit Administration Division for Kansai
Corporate Credit Division(as of May 21, 1999)34

Consumer and Commercial Banking
Commercial Finance Group

Consumer and Private
Banking Group

Commercial Finance Business Division
Personal Banking Branches

Business Support & Coordination
Business Development Support

Business Finance Center
Fuyo General Lease Co., Ltd.
Fujigin Factors, Ltd.
Japan Mortgage Co., Ltd.

Full Banking Branches

Product Development & Marketing Division
Credit Division I
Credit Division II

BranchAdministration

Housing Loan Business Promotion Center
Private Banking Division
The Fujigin Credit, Ltd.
Product Development & Marketing Division
Sales Channel Management Division

Credit for Kansai

Credit Division III
Credit for New Business

Global Corporate and Investment Banking
Global Business Planning Division

Investment Banking Group

Corporate Finance Group
Corporate Banking Divisions I-III, V, VI
Osaka Corporate Banking Division
Shinjuku Shin-Toshin Corporate Banking Division
Kabutocho BranchInternational Business Division
Overseas Subsidiaries
Overseas Branches
Corporate Banking Division (U.S.A.) Heller Financial, Inc.

Corporate Advisory Division
Structured Finance Division
Project Finance Division
Fuji Securities Co., Ltd.

Fujigin Capital Company
Fuji Securities Inc.
Fuji Futures Inc.
Fuji International Finance

Credit Division for the Americas
Global Credit Division I
Credit Division for Europe,
Global Credit Division II
International Credit Division Africa & The Middle East

Trading Group
Capital Markets Trading Division
Derivative Products Division

Int’l Treasury Division
Fuji Capital Markets Corp.

Credit Risk Trading

Trading Business Planning

Treasury Division

Public and Financial
Institutions Group
Institutions Division
Municipal Divisions (HO, Osaka)
Institutions Marketing Division

The Yasuda Trust and Banking Co., Ltd.
Asset Management GroupThe Dai-Ichi Kangyo Fuji Trust & Banking Co., Ltd.
Fuji Investment Management Co., Ltd.
Fuji-Lord Abbett International Ltd.

Asset Management Division
Trust Business Planning Division

Processing Services and Information Technology Group[Processing Services]
Multimedia Business Division
Trade Services Division[Information Technology]
Settlement & Clearing Sevices
Division
Fuji Kabuto Custody & Proxy

Processing Services Business Planning Division

Fuji Research Institute Corporation
Fujigin Software Service, Ltd.
Systems Development Divisions I, II Systems Planning Division
Systems Operations Division
Information Technology Risk
Control35

OVERSEAS OFFICES(★ = Consolidated Subsidiaries)(as of May 1999)

THE AMERICAS
Branches, Agencies andRepresentative Offices
Chicago Branch
225 West Wacker Drive, Suite 2000,
Chicago, Illinois 60606, U.S.A.
Phone: 1-312-621-0500
Fax: 1-312-621-0305
Telex: (230) 284351, 253114

Grand Cayman Branch
Roywest House, West Bayroad,
P.O.Box 707, Grand Cayman,
British West Indies

Houston Agency
One Houston Center, Suite 4100,
1221 McKinney Street,
Houston, Texas 77010, U.S.A.
Phone: 1-713-759-1800
Fax: 1-713-759-0048
Telex: 790026

Los Angeles Agency
333 South Hope Street, 39th Floor,
Los Angeles, California 90071, U.S.A.
Phone: 1-213-680-9855
Fax: 1-213-253-4198
Telex: 673336

New York Branch
Two World Trade Center,
79th—82nd Floors,
New York, New York 10048, U.S.A.
Phone: 1-212-898-2000
Fax: 1-212-321-9407
Telex: 420626, 232440, 23125801

Colombia Representative Office
Carrera 7 No.71-52, Torre B Piso 9,
Santafe de Bogota, D.C., Colombia

São Paulo Representative Office
Avenida Brigadeiro Luiz Antonio,
2020-10° andar, 01318-911 São Paulo, Brazil
Phone: 55-11-289-1812
Fax: 55-11-287-7867
Telex: 1123932

Subsidiaries
Fuji America Holdings, Inc.★
(Holding company)
500 West Monroe Street,
Chicago, Illinois, 60661, U.S.A.
Phone: 1-312-441-7533
Fax: 1-312-441-7499

The Fuji Bank and Trust Company★
(Commercial banking and trust business)
Two World Trade Center,
79th—81st Floors,
New York, New York 10048, U.S.A.
Phone: 1-212-898-2400
Fax: 1-212-321-9649
Telex: 425777

Fuji Bank Canada★
(Commercial banking)
BCE Place, Canada Trust Tower,
P.O. Box 609, Suite 2800,
161 Bay Street,Toronto,
Ontario M5J 2S1, Canada
Phone: 1-416-865-1020
Fax: 1-416-865-9618
Telex: 06-22094

Fuji Bank International, Inc.★
(Offshore banking)International Building,
601 California Street, San Francisco,California 94108, U.S.A.
Phone: 1-415-362-4740
Fax: 1-415-362-4613
Telex: 176087

Fuji Capital Markets Corporation★
(Swaps and derivatives services)
Two World Trade Center, 80th Floor,
New York, New York 10048, U.S.A.
Phone: 1-212-898-2657
Fax: 1-212-321-9415
Telex: 425777

Fuji Futures Inc.★
(Futures commission merchant)
311 South Wacker Drive, Suite 2000,
Chicago, Illinois 60606-6620, U.S.A.
Phone: 1-312-294-8725
Fax: 1-312-294-8721

Fuji JGB Investment Holdings, Inc.★
(Holding company)
Two World Trade Center,
82nd Floor, New York,New York 10048, U.S.A.
Phone: 1-212-898-2562
Fax: 1-212-898-2770

36

Fuji JGB Investment L.L.C.★
(Investment company)(Same address as above)

Fujilease Corporation★
(Leasing)
Two World Trade Center,
79th—81st Floors,
New York, New York 10048, U.S.A.
Phone: 1-212-898-2400
Fax: 1-212-321-9649
Telex: 425777

Fuji Securities Inc.★
(Securities trading and dealing)
Two World Financial Center
South Tower 26th Floor, New York,New York 10281, U.S.A.
Phone: 1-212-417-2400
Fax: 1-212-786-3347

Heller Financial, Inc.★
(Commercial finance)
500 West Monroe Street,
Chicago, Illinois 60661, U.S.A.
Phone: 1-312-441-7000
Fax: 1-312-441-7499
31 offices in U.S.A.

Heller International Group, Inc.★
(Commercial finance)(Same address as above)
18 countries

Heller Financial (Mexico), S.A. de CV★
Monte Elbruz No.124-8 Piso,
Polanco, Mexico D.F. 11550
Phone: 52-5-728-0900
Fax: 52-5-728-0905

Spring Capital Corporation(Investment company)
c/o Two World Trade Center, 79th Floor,
New York, New York 10048, U.S.A.
Phone: 1-212-898-2064
Fax: 1-212-898-2399

Spring Capital Holdings, Inc.
(Holding company)
Two World Trade Center, 82nd Floor,
New York, New York 10048, U.S.A.
Phone: 1-212-898-2563
Fax: 1-212-898-2770

ASIA AND OCEANIA
Affiliates
America do Sul “Leasing” S.A.
Arrendamento Mercantil(Leasing)
Avenida Paulista, 688-7° andar,São Paulo, Brazil
Phone: 55-11-283-3288

Banco America do Sul S.A.
(Commercial and investment banking)Avenida Brigadeiro Luiz Antonio, 2020,
São Paulo, Brazil
Phone: 55-11-281-1822
Fax: 55-11-284-3859
Telex: 1137663

Yasuda Seguros S.A.
(Insurance)
Rue Cubatão, 320-15° andar,São Paulo, Brazil
Phone: 55-11-886-1411
Fax: 55-11-886-1160

Heller-Sud Servicios Financieros S.A.
(Commercial finance)
Maipu 311 Piso 1°, 1006 Buenos Aires,
Argentina
Phone: 54-1-394-0036
Fax: 54-1-394-0064

Heller Net-Sud(Commercial finance)
Augustinas 640, Piso 14 Santiago, Chile
Phone: 56-2-661-4700
Fax: 56-2-661-4794

Branches and Representative Offices
Bangkok International Banking Facility
6th Floor, Q. House Convent Building,
38 Convent Road, Silom, Bangrak,
Bangkok 10500, Thailand
Phone: 66-2-632-1900
Fax: 66-2-632-1919
Telex: 84433 FUJIBKB

Dalian Branch
14F, Dalian Senmao Building,
147 Zhongshan Lu, Dalian,
Liaoning Province,
The People’s Republic of China
Phone: 86-411-3608348
Fax: 86-411-3608328
Telex: 86247 FJBKD CN

Hanoi Branch
Suite 404-407, 63 LTT Building,
63 Ly Thai To Street, Hanoi,
Socialist Republic of Vietnam
Phone: 84-4-826-6553
Fax: 84-4-826-6665
Telex: 411368 FJBKHAN VT

Hong Kong Branch
26th Floor Gloucester Tower,
The Landmark, 11 Pedder Street,
Central, Hong Kong
Phone: 852-2521-4451
Fax: 852-2810-0048
Telex: 74604 FUJBK HXLabuan Branch
Kuala Lumpur Marketing Office30th Floor, UBN Tower,
No.10, Jalan, P. Ramlee,
50250 Kuala Lumpur, Malaysia
Phone: 60-3-201-5020
Fax: 60-3-201-5030
Telex: MA 30920 FUJLAKLabuan Office

Level 10 (A) Main Office Tower Financial
Park Labuan, Jalan Merdeka, 87000 Federal
Territory of Labuan, Malaysia
Phone: 60-87-41-7766
Fax: 60-87-41-9766
Telex: MA85062FUJLAB

Manila Branch
26th Floor, Citibank Tower, Valero Street
corner Villar Street, Salcedo Village,
Makati City, Metro Manila, Philippines
Phone: 63-2-848-0001
Fax: 63-2-815-3770
Telex: 45224 FUJI BNKPM

Mumbai Branch
Maker Chamber III, 1st Floor,
Jamnalal Bajaj Road, Nariman Point,
Mumbai, 400021 India
Phone: 91-22-288-6638
Fax: 91-22-288-6640
Telex: 81030 FUJI

Seoul Branch
15th Floor, Doosan Building, 101-1, 1-Ka,
Ulji-Ro, Chung-ku, Seoul, Republic of
Korea
Phone: 82-2-311-2000
Fax: 82-2-754-8177
Telex: K 27216

Shanghai Branch
7F, Shanghai Senmao International Building,
101 Yin Cheng East Road, Pudong New
Area, Shanghai,
The People’s Republic of China
Phone: 86-21-68411000
Fax: 86-21-68412000
Telex: 85-30168 FJBSH

Shenzhen Branch
21st Floor, Shenzhen International Financial
Building, 23 Jian She Lu, Shenzhen,
Guangdong Province,
The People’s Republic of China
Phone: 86-755-2221918
Fax: 86-755-2225390
Telex: 420304 FJBSZ CN

Singapore Branch
1 Raffles Place, #20-00, OUB Centre,
Singapore 048616
Phone: 65-5343500
Fax: 65-5327310
Telex: RS 24610 FUJIGIN

Taipei Branch
12th Floor, Hung Kuo Building,
167 Tun Hua North Road, Taipei, Taiwan
Phone: 886-2-25455466
Fax: 886-2-25460559
Telex: 26087 FUJITPI37

OVERSEAS OFFICES

Beijing Representative Office
Room No.802, CITIC Building,
19 Jianguo Men Wai Dajie, Beijing,
The People’s Republic of China
Phone: 86-10-65004694
Fax: 86-10-65002161
Telex: 22906 FJBBJCN

Guangzhou Representative Office
Room No.2659, Dongfang Hotel, 1 Liu HuaLu, Guangzhou, Guangdong Province,
The People’s Republic of China
Phone: 86-20-86669277
Fax: 86-20-86663814
Telex: 44596 FJBGZCN

Kuala Lumpur Representative Office30th Floor, UBN Tower,
No.10, Jalan P. Ramlee,
50250 Kuala Lumpur, Malaysia
Phone: 60-3-2307950
Fax: 60-3-2307951
Telex: MA 32351/FUJIKL

Nanjing Representative Office
Room No.801, Nanjing Grand Hotel,
208 Guangzhou Road, Nanjing,
Jiangsu Province
The People’s Republic of China
Phone: 86-25-3329379
Fax: 86-25-3319355

Tianjin Representative Office
Room 2202, Tianjin International Building,75, Nanjing Road, Tianjin,
The People’s Republic of China
Phone: 86-22-23305448
Fax: 86-22-23305489

Subsidiaries
Bangkok Fuji Holding Co., Ltd.★
(Consulting)175 18th Floor Sathorn City Tower,
South Sathorn, Bangkok 10500, Thailand

P.T. Fuji Bank International Indonesia★
(Commercial banking)24th Floor, BII Plaza Tower II
Jalan M.H. Thamrin No. 51,
Jakarta 10350, Indonesia
Phone: 62-21-3925222
Fax: 62-21-3926354
Telex: 69142 FBII IA

Fuji Capital Markets (HK) Limited★
(Swaps and derivatives services)2502 Gloucester Tower, The Landmark,11 Pedder Street, Central, Hong Kong
Phone: 852-2537-3815
Fax: 852-2826-4891

The Fuji Futures (Singapore) Pte., Limited★
(Operations in financial futures markets)
Six Battery Road #13-16,
Singapore 049909
Phone: 65-2213633
Fax: 65-2273038

Fuji International Finance (Australia) Limited★
(Corporate and merchant banking)Level 28, Maritime Centre, 201 Kent Street,
Sydney, N.S.W. 2000, Australia
Phone: 61-2-9251-2322
Fax: 61-2-9235-1750
Telex: 27307

Fuji International Finance (HK) Limited★
(Corporate and investment banking)2601 Gloucester Tower, The Landmark,11 Pedder Street, Central, Hong Kong
Phone: 852-25217233
Fax: 852-28459177
Telex: 76884 FIFHK HX

Fuji International Finance(Singapore), Limited★
(Investment banking)1 Raffles Place, #26-02, OUB Centre,
Singapore 048616, Singapore
Phone: 65-439-7600
Fax: 65-536-7364
Telex: RS24610 FUJIGIN

Heller Asia Capital (Singapore) Limited★
(Factoring)
6 Shenton Way, #20-08, DBS Building,Tower 2, Singapore 068809
Phone: 65-226-3822
Fax: 65-222-3198
Telex: 23339

38

Heller Financial Services Limited★
(Factoring)
234 Sussex Street, 6th Floor,
Sydney, N.S.W. 2000, Australia
Phone: 61-2-9372-2388
Fax: 61-2-9267-6032
Telex: 27500

Kwong On Holdings Limited★
(Holding company)
Asia Standard Tower,
59-65 Queen’s Road,
Hong Kong

Affiliates
China Kang Fu International Leasing Co., Ltd.
(Leasing)
Building No.3, Xiyuan Hotel, Erligou,
Haidian District, Beijing,
The People’s Republic of China
Phone: 86-10-6831-2540
Fax: 86-10-6831-1528
Telex: 222757 CKFLC CN

East Asia Heller Limited(Factoring)Suite 5904-07, Central Plaza,
18 Harbour Road, Wanchai, Hong Kong
Phone: 852-2-8272336
Fax: 852-2-8272632
Telex: 74142

Heller Factoring (M) Sdn. Bhd.
(Factoring)Suite 08.04, Level 8, Menara Lion 165 Jalan,
Kuala Lumpur, Malaysia Ampang, 50450
Phone: 60-3-262-6827
Fax: 60-3-262-6652

P.T. Jaya Fuji Leasing Pratama(Leasing)
9th Floor, Jaya Building,Jalan M.H. Thamrin 12, Jakarta, Indonesia
Phone: 62-21-331750
Fax: 62-21-325430
Telex: 61683 JFL IA

Thai Farmers Heller Factoring Co., Ltd.
(Factoring)
Phatra Insurance Building, 1st Floor,
252 Ratchadapisek Road, Huaykwang,
Bangkok 10310, Thailand
Phone: 66-2-2762030
Fax: 66-2-2755165

EUROPE AND THE MIDDLE EAST
Branches and Representative Offices

Fuji Bank (Schweiz) AG★

Handlowy-Heller S.A.

(Commercial and investment banking)Paradeplatz/Tiefenhöfe 6,8022 Zürich, Switzerland
Phone: 41-1-211-3313
Fax: 41-1-211-6629
Telex: 812138(Factoring)U1 Kasprzaka 18/20
01-211 Warsaw, Poland
Phone: 48-22-632-7780
Fax: 48-22-632-7087

Fuji Capital Markets (UK) Limited★
(Swaps and derivatives services)River Plate House, 7-11 Finsbury Circus,
London EC2M 7DH, U.K.
Phone: 44-171-972-9900
Fax: 44-171-972-9901(Factoring)
Postfach 2420, 55014 Mainz,
F.R. Germany
Phone: 49-6131-980-200
Fax: 49-6131-980-262
Telex: 4187638

Fuji International Finance PLC★

Heller Factoring Española, S.A.

26 Avenue des Champs-Elysées,
75008 Paris, France
Phone: 33-1-4413-6000
Fax: 33-1-4413-6060
Telex: 641779(Investment banking)River Plate House, 7-11 Finsbury Circus,
London EC2M 7NT, U.K.
Phone: 44-171-256-8888
Fax: 44-171-588-2033
Telex: 884275(Factoring)
Urgel, 240-8°D, 08036 Barcelona, Spain
Phone: 34-3-439-4806
Fax: 34-3-321-2506
Telex: 50093

Bahrain Representative OfficeFuji Leasing (Deutschland) GmbH★

(Factoring)
Edificio Castil, Rua Castilho, 39-14th Floor,
1200, Lisbon, Portugal
Phone: 351-1-381-5750
Fax: 351-1-381-5786
Telex: 18531

Düsseldorf Branch
Immermannstrasse 3, 40210 Düsseldorf,
F.R. Germany
Phone: 49-211-16930
Fax: 49-211-1789150
Telex: 8587388

London BranchRiver Plate House, 7-11 Finsbury Circus,
London EC2M 7DH, U.K.
Phone: 44-171-588-2211
Fax: 44-171-588-1400
Telex: 886352

Paris Branch

Manama Center, Part 4,
Government Road, P.O. Box 26899,
Manama, Bahrain
Phone: 973-224158
Fax: 973-224818
Telex: 9415

Tehran Representative Office
3rd Floor, No. 1, 14th Street,
Khaled Eslamboli Avenue,
Tehran, IranPhone: 98-21-8726593
Fax: 98-21-8723449
Telex: 215132

Subsidiaries
Fuji Bank (Luxembourg) S.A.★
(Commercial and investment banking)Centre Financier, 29 Avenue
de la Porte-Neuve 2227,
Luxembourg
Phone: 352-474681
Fax: 352-474688
Telex: 3213

Fuji Bank Nederland N.V.★
(Commercial and investment banking)Rivierstaete Amsterdam 166, 1079 LH,
Amsterdam, The Netherlands
Phone: 31-20-3018000
Fax: 31-20-6610201
Telex: 10395(Leasing)
Immermannstrasse 3-5, 40210 Düsseldorf,
F.R. Germany
Phone: 49-211-16930
Fax: 49-211-1789150
Telex: 8587388 ~ 9Fuji Leasing (UK) Limited★
(Leasing)
River Plate House, 7-11 Finsbury Circus,
London EC2M 7DH, U.K.
Phone: 44-171-826-3219
Fax: 44-171-588-1400
Telex: 886352

Affiliates
Belgo-Factors, N.V.
(Factoring)
Steenweg op Tielen 51,
B-2300, Turnhout, Belgium
Phone: 32-14-405411
Fax: 32-14-405600
Telex: 31045

Factofrance Heller, S.A.
(Factoring)Tour Facto, Cedex 88,
92988 Paris, France
Phone: 33-1-46-35-70-00
Fax: 33-1-46-35-69-00
Telex: 200134

Fuji-Lord Abbett International Limited(Asset management)
River Plate House, 7-11, Finsbury Circus,
London EC2M 7HJ, U.K.
Phone: 44-171-826-3380
Fax: 44-171-782-9165

Heller Bank A.G.

Heller Factoring Portuguesa, S.A.

NMB Heller N.V.
(Factoring)
Runnenburg 30,
3981 AZ Bunnik, The Netherlands
Phone: 31-30-65-93-193
Fax: 31-30-65-93-493
Telex: 47678

Nordisk Factoring A/S(Factoring)Teknikerkyen 21, DK-2830,
Virum, Denmark
Phone: 45-45-833-888
Fax: 45-45-833-212
Telex: 19008

OB Heller A.S.
(Factoring)
Kristanova 3 130 00 Prague 3,
Czech Republic
Phone: 420-2-627-37-01
Fax: 420-2-627-41-43

NMB-Heller Ltd.
(Factoring)
22 Park Street,
4th–5th Floors, Park House,
Croydon, CR9 1RD, U.K.
Phone: 44-181-681-2641
Fax: 44-181-681-8072
Telex: 27348

39

DOMESTIC OFFICES,SUBSIDIARIES AND
AFFILIATED COMPANIES(as of March 31, 1999)

The Fujigin Credit, Ltd.

Fuyo General Lease Co., Ltd.

The Diners Club of Japan, Inc.

Established: November 1974
Capitalization: ¥38,900 million
Percentage of Ownership: 100%

Established: May 1969
Capitalization: ¥4,800 million
Percentage of Ownership: 5%

Established: December 1960
Capitalization: ¥200 million
Percentage of Ownership: 5%

Fujigin Marketing Service, Ltd.

Fuyo Auto Lease Co., Ltd.

Daito Securities Co., Ltd.

Established: March 1988
Capitalization: ¥10 million
Percentage of Ownership: 100%

Established: January 1987
Capitalization: ¥240 million
Percentage of Ownership: 5%

Established: November 1927
Capitalization: ¥3,051 million
Percentage of Ownership: 20.7%

Fuji Securities Co., Ltd.

Fujigin Factors, Ltd.

The Yasuda Trust and Banking Co., Ltd.

Established: October 1994
Capitalization: ¥25,000 million
Percentage of Ownership: 100%

Established: April 1978
Capitalization: ¥500 million
Percentage of Ownership: 5%

Established: May 1925
Capitalization: ¥337,231 million
Percentage of Ownership: 56.3%

The Fuji Trust and Banking Co., Ltd.

Fujigin Capital Company

The Dai-Ichi Kangyo Fuji Trust & Banking Co., Ltd.

Established: June 1996
Capitalization: ¥10,000 million
Percentage of Ownership: 100%

Established: July 1983
Capitalization: ¥450 million
Percentage of Ownership: 5%

Established: April 1999
Capitalization: ¥40,000 million
Percentage of Ownership: 50%

Fuji International Business Service Co., Ltd.

Fuji Investment Management Co., Ltd.

Established: April 1993
Capitalization: ¥20 million
Percentage of Ownership: 100%

Established: September 1993
Capitalization: ¥2,050 million
Percentage of Ownership: 38.6%

Fuji Career Bureau, Ltd.

Fujigin Software Service, Ltd.

Established: May 1983
Capitalization: ¥70 million
Percentage of Ownership: 100%

Established: August 1982
Capitalization: ¥50 million
Percentage of Ownership: 5%

Fujigin Kousei Service, Ltd.

Fujigin Operation Service, Ltd.

Established: March 1988
Capitalization: ¥10 million
Percentage of Ownership: 100%

Established: June 1985
Capitalization: ¥20 million
Percentage of Ownership: 5%

Fuji Total Service, Ltd.

Fuji Research Institute Corporation

Established: March 1996
Capitalization: ¥20 million
Percentage of Ownership: 100%

Established: October 1988
Capitalization: ¥1,600 million
Percentage of Ownership: 5%

Fuji Business Agency, Ltd.

The Fudosan Appraisal Service, Ltd.

Established: November 1978
Capitalization: ¥50 million
Percentage of Ownership: 100%

Established: March 1982
Capitalization: ¥20 million
Percentage of Ownership: 5%

Fuji Business Service, Ltd.

Japan Mortgage Co., Ltd.

Established: June 1974
Capitalization: ¥20 million
Percentage of Ownership: 100%

Established: June 1973
Capitalization: ¥1,400 million
Percentage of Ownership: 5%

DOMESTIC BRANCH NETWORK
Branches: 284
Sub-branches: 34
ATMs: 3,226

The Fuji Sogo Kanri Co., Ltd.
Established: December 1994
Capitalization: ¥300 million
Percentage of Ownership: 100%

Tokyo

Osaka

Kobe
Yokohama

40

Financial Reports

Contents
page 42 ......................
Fiscal 1998 in Review (Consolidated / Non-Consolidated)page 54 ......................
Risk Management
page 63 ......................
Consolidated Five-Year Summary
page 64 ......................
Consolidated Financial Statements
64 Balance Sheets
66 Statements of Income
67 Statements of Earned Surplus
68 Statements of Cash Flows
69 Notes to Consolidated Financial Statements
79 Report of Independent Certified Public Accountants on the Financial Statements
page 80 ......................
Non-Consolidated Financial Statements
80 Balance Sheets
82 Statements of Income
82 Statements of Appropriation of Retained Earnings (Deficit)
83 Statements of Cash Flows
84 Notes to Non-Consolidated Financial Statements
91 Report of Independent Certified Public Accountants on the Financial Statements
page 92 ......................
Data Filepage 109 ...................
Stock Information
41

Operating Income andOperating Expenses(¥ Billion)

FISCAL 1998 IN REVIEW (CONSOLIDATED)

2,437

2,529

2,399

2,538

2,818

Fuji Bank Group

Scope of Consolidation

1,616

1,737

1,598

1,901

1,810

Fiscal Year

1998

1997

ChangeSubsidiaries.........................................................................................
Affiliates Accounted for by the Equity Method of Accounting ...........

182
52

114
16

68
36

1998

Billions of yen
1997

ChangeEarnings Performance
94 95 96 97 98

Fiscal Year

Fiscal Year

Operating Income .............................................................................. ¥2,437.7¥2,529.2 ¥ (91.4)
Operating Expenses............................................................................
1,616.5
1,737.0(120.5)General & Administrative Expenses ....................................................
494.5
470.0
24.4
Net Operating Profits.........................................................................
326.6
322.0
4.5
Net of Other Income and Expenses.................................................... (1,075.2)(820.3)(254.8)
Income (Loss) before Income Taxes ...................................................
(748.5)(498.2)(250.2)
Income Taxes
Current ........................................................................................
18.3
17.6
0.7
Deferred........................................................................................
(362.0)(178.1)(183.8)Others-net .........................................................................................
(17.1)(7.5)(9.5)
Net Income (Loss).............................................................................. ¥ (422.0) ¥ (345.3) ¥ (76.7)
Net Income (Loss) per Share (yen) ..................................................... ¥ (142.07) ¥ (119.35) ¥ (22.72)

Operating Income
Operating Expenses
Net Interest Income(¥ Billion)

677

718
608

94 95 96 97 98
Fiscal YearNet Fees &Commissions Income(¥ Billion)
128
88
81

83

CONSOLIDATED

503

542

Overview

69

In fiscal 1998, there were amendments to the Rules for Bank Accounting in Japan, whereby the previous consolidation
standards for subsidiaries and affiliates were changed. The previous standards simply considered the percentage of theparent company’s ownership of the voting stock in determining its degree of control over the company concerned. As aresult of the amendments, in addition to the ownership percentage of voting stock, other factors such as personnel,
funding arrangements, reliance on technical support, the number of bilateral transactions, etc. must now be considered indetermining the actual control over the company.
Consequently, the number of Fuji Bank’s subsidiaries increased by 68 from the previous year to 182, and the number
of affiliates accounted for by the equity method of accounting increased by 36 to 52. Another main factor of the increase
was the strengthened capital relationship with The Yasuda Trust and Banking Co., Ltd. (“Yasuda Trust”).
The Fuji Bank Group reported Operating Income of ¥2,437.7 billion, a decrease of ¥91.4 billion from the previous
year. This was a result of an increase in profits deriving from the larger scope of companies included in the consolidated
settlement, offset by a decline in profits at the parent company level. The Group’s Operating Expenses were ¥1,616.5
billion, and after deduction of General and Administrative Expenses, Net Operating Profits were ¥326.6 billion. Losses
before Income Taxes were ¥748.5 billion, a decrease of ¥250.2 billion with the continuation of the proactive disposal of
problem loans on a consolidated basis. Net Losses were ¥422.0 billion due to devaluation losses on the stock portfolio at
the parent company level in order to reduce unrealized losses. Net Losses per Share were ¥142.07.
Analysis of Net Operating Profits
Fiscal Year94 95 96 97 98
Fiscal Year

Income (Loss) before
Income Taxes and Others(¥ Billion)
96

50

42

-748

-498

-400

94 95 96 97 98
Fiscal Year

Interest Income ..................................................................................
Interest Expenses ................................................................................
Net Interest Income ...........................................................................
Net Fees & Commissions Income.......................................................
Net Trading Profits ............................................................................
Net of Other Operating Income and Expenses ...................................
General & Administrative Expenses ....................................................
Net Operating Profits.........................................................................

1998¥1,707.3
1,204.0
503.2
128.8
38.1
150.9
494.5
¥ 326.6

Billions of Yen
1997
Change¥2,183.0
1,640.9
542.0
88.5
56.9
104.6
470.0
¥ 322.0¥(475.6)(436.9)(38.7)
40.3(18.7)
46.2
24.4
¥ 4.5

The Group’s Net Interest Income decreased by ¥38.7 billion from the previous year to ¥503.2 billion, while Net
Interest Income was little changed at the parent company level. This was a result of reduced interest income due tosales of overseas banking subsidiaries, and new consolidation of subsidiaries whose income are recorded under Net of
Other Operating Income and Expenses, while their funding expenses are recorded under Operating Expenses. Net
Fees & Commissions Income increased by ¥40.3 billion from the previous year to ¥128.8 billion mainly due to theincrease in the number of consolidated companies. Net Trading Profits decreased by ¥18.7 billion to ¥38.1 billion.
Net of Other Operating Income and Expenses increased by ¥46.2 billion to ¥150.9 billion as a result of the increase
in Gains on Sales of Bonds at the parent company level and the increase in income from lease transactions in accordance with the expansion of the scope of consolidation. General & Administrative Expenses increased by ¥24.4
billion from the previous year to ¥494.5 billion mainly due to the increase in the number of consolidated companies, while expenses on the former consolidation base (before the expansion of the scope of consolidation) decreased
as a result of further rationalization and further improvement in efficiency throughout the Group’s operations.

Total Assets(¥ Trillion)

57.9

55.1

56.2

54.4

53.4

Analysis of Balance Sheet
March 31,

1999

Billions of yen
1998

ChangeDeposits (including NCDs)(¥ Trillion)

38.6
34.6

34.5

37.2

CONSOLIDATED

95 96 97 98 99
March 31

Loans and Bills
Discounted(¥ Trillion)
34.8

34.0

35.7

32.2

33.7

Total Assets increased by ¥2,819.5 billion from the previous year to ¥57,933.0 billion mainly due to the consolidationof Yasuda Trust. Total Loans and Bills Discounted, including Guarantors’ Rights of Indemnity, Leases Receivables,
etc. of consolidated guaranty companies, increased by ¥787.6 billion to ¥34,815.8 billion. Regarding problem loans on
a consolidated basis, Loans to Borrowers under Bankruptcy Procedure were ¥236.4 billion, Other Non-Accrual Loans
were ¥995.0 billion, Loans Past Due for 3 Months or More were ¥243.6 billion, and Restructured Loans were ¥301.4
billion. The total of Non-Accrual, Past Due, and Restructured Loans were ¥1,776.6 billion.
Total Liabilities increased by ¥2,094.4 billion from the previous year to ¥55,349.0 billion. Total Deposits (including NCDs) increased by ¥93.8 billion to ¥34,646.2 billion. The Land Revaluation Account which was formerly
recorded under Liabilities is now divided into two accounts; Deferred Tax Liability for Land Revaluation underLiabilities, and Land Revaluation Account under Stockholders’ Equity. Also, in conjunction with the amendments to
the Rules for Bank Accounting in Japan, Minority Interests, which were formerly recorded under Liabilities, is now
recorded independently between Liabilities and Stockholders’ Equity. Furthermore, following the consolidation of
Yasuda Trust, Due to Trust Account, which was formerly included in Other Liabilities under Liabilities, is now
independently recorded under Liabilities. As of March 31, 1999, Due to Trust Account was ¥1,927.7 billion.
Minority Interests increased by ¥125.7 billion from the previous year to ¥408.1 billion, mainly due to the increasein the number of consolidated companies.
Total Stockholders’ Equity increased from the previous year by ¥599.3 billion to ¥2,175.8 billion as a result of theparent company’s capital increase, although the Group recorded Net Losses.

95 96 97 98 99
March 3137.2

Total Assets ........................................................................................ ¥57,933.0 ¥55,113.5 ¥2,819.5
Loans and Bills Discounted ............................................................ 34,815.8
34,028.2
787.6
Securities.......................................................................................
6,668.7
6,044.8
623.9
Total Liabilities .................................................................................. 55,349.0
53,254.6
2,094.4
Deposits (including NCDs)............................................................ 34,646.2
34,552.3
93.8
Due to Trust Account ...................................................................
1,927.7—
1,927.7
Deferred Tax Liability for Land Revaluation .................................
94.4
—
94.4
Land Revaluation Account............................................................
—
326.5(326.5)
Minority Interests...............................................................................
408.1
282.3
125.7
Total Stockholders’ Equity .................................................................
2,175.8
1,576.4
599.3
Land Revaluation Account............................................................
131.7
—
131.7
Stockholders’ Equity per Share (yen) ..................................................
358.22471.58(113.36)

Capital Ratio (according to the MOF guidelines which follow the BIS standards)
Fiscal Year

1998

Billions of yen
1997

Change95 96 97 98 99
March 31

Capital Ratio
(%)
11.21

9.22

9.41

4.79

4.79

8.36

1.80%
0.93%
¥1,062.6
548.7
513.9
—
140.6
(45.1)
422.6
3,396.0
2,762.3
644.1(10.3)

8.74

Capital Ratio......................................................................................
11.21%
9.41%
Tier I Ratio .......................................................................................
5.73%
4.79%
Total Capital ...................................................................................... ¥ 4,617.2 ¥ 3,554.5
Tier I ............................................................................................
2,358.5
1,809.8
Tier II: Qualifying Capital .............................................................
2,258.6
1,744.6
Unrealized Gains on Securities, after 55% Discount ..................
——
Reserve for Possible Loan Losses, excluding Specific Reserves ..
261.4
120.7
Land Revaluation Accoount .....................................................
101.8
146.9
Others .....................................................................................
1,899.6
1,476.9
Risk-Adjusted Assets .......................................................................... 41,155.6
37,759.5
On Balance Sheet Exposure........................................................... 36,565.2
33,802.9
Off-Balance Sheet Exposure ..........................................................
4,258.7
3,614.6
Equivalent to Market Risk Amount / 8% ......................................
331.5
341.9

5.21
4.18

Total Capital under BIS standards increased by ¥1,062.6 billion from the previous year to ¥4,617.2 billion. This wasdue to the issuance of ¥216.9 billion of common stock through third-party allotment and the ¥1 trillion injection of
public funds (of which ¥800 billion is included in Tier I Capital, and ¥200 billion in Tier II Capital), though the large
amount of losses reduced the capital.
Risk-Adjusted Assets increased by ¥3,396.0 billion from the previous year to ¥41,155.6 billion. This was mainly
due to the acquisition of Yasuda Trust as a subsidiary, and the increase in the number of consolidated companies inaccordance with the application of the new consolidation guidelines, while the Bank continued to efficiently allocate
its assets as it can be seen in its reduction of overseas assets.
Overall, BIS Capital Ratio improved by 1.80% from the previous year to 11.21%, retaining a sufficient level. The
Bank will continue to improve its capital structure by accumulating retained earnings, efficiently allocate its riskadjusted assets, and endeavor to maintain a sufficient level of BIS Capital Ratio.

5.73

BIS Capital Ratio

95 96 97 98 99
March 31

Capital Ratio
Tier I Ratio

43

FISCAL 1998 IN REVIEW (NON-CONSOLIDATED)The Fuji Bank, Limited

Overview
Net Business Profits
and Net Income(¥ Billion)

467
306

291

329

289

Gross Profits and Adjusted
General & Administrative Expenses(¥ Billion)

Earnings Performance
Earnings Performance
1998

Billions of yen
1997

ChangeNet Interest Income (A) .....................................................................
Net Fees & Commissions Income (B).................................................
Net Trading Profits (C) ......................................................................
Net of Other Operating Income and Expenses (D).............................
Gross Profits (A+B+C+D) (E) ..........................................................
Adjusted General & Administrative Expenses (F) ................................
Net Business Profits (before Transfer to General Reserve) (E-F) (G)...

¥ 505.4
60.7
17.9
82.0
666.2
359.5
306.6

¥ 504.2
65.0
18.5
82.3
670.1
378.5
291.5

¥ 1.2
(4.2)
(0.5)
(0.2)
(3.8)
(18.9)
15.1

Transfer to General Reserve for Possible Loan Losses (H)...................
Net Business Profits (Gyomu Juneki) (G-H) ( I ) ................................
Net of Other Income and Expenses (J) ...............................................
Income (Losses) before Income Taxes (I+J) ........................................
Provision for Income Taxes................................................................
Deferred Income Tax.........................................................................
Net Income (Losses)...........................................................................
Net Income (Losses) per Share (yen)...................................................

113.9
192.7
(857.1)(664.3)0.3(271.7)¥(392.9)¥(130.54)(28.8)
320.3(835.1)(514.7)3.9—¥(518.7)¥(179.19)

142.7(127.6)21.9(149.5)(3.5)(271.7)¥125.7¥ 48.65

Fiscal Year
829
670

666

373

378

359

361

366

702

656

NON-CONSOLIDATEDNet Business Profits(before Transfer toGeneral Reserve)
Net Income

-392

-518

-429

53

34

94 95 96 97 98
Fiscal Year

The Bank’s Net Business Profits (before deduction of transfer to General Reserve), which are Gross Profits
deducted by Adjusted General & Administrative Expenses, increased by ¥15.1 billion from the previous fiscal
year to ¥306.6 billion.
For the Bank, fiscal 1998 was a year of enhancing financial strength. As measures to build a strong financial base, the Bank took the following three steps, which were the features of this fiscal year.
First, with respect to the problem loans issue, the Bank recorded ¥712.1 billion in credit costs (includingtransfers to General Reserve and Reserve for Loans to Less Developing Countries), as a result of writing offloans and providing reserves in accordance with the new Financial Supervisory Agency (“FSA”) and
Financial Reconstruction Commission (“FRC”) guidelines. Consequently, the Bank’s coverage ratio (ratio of
the total of collateral value, guarantees, and corresponding reserves to the total amount of problem loans)exceeded 80% based on the new problem loan disclosure standard under the Law Concerning the
Revitalization of the Financial System (“Revitalization Law”).
Second, with respect to the unrealized losses on its stock portfolio, the Bank incurred a total loss of¥346.0 billion on Devaluation Losses and Sales Losses on stocks, to resolve the issue. Consequently, theBank’s unrealized gains on its stock portfolio were ¥183.9 billion.
Third, to further enhance its financial strength, the Bank more than doubled its capital through a ¥216.9
billion third-party allotment and ¥1 trillion injection of public funds (¥800 billion of preferred stock and¥200 billion of unsecured perpetual subordinated notes) based on the Revitalization Law.
Overall, with the implementation of the tax effect accounting on a non-consolidated basis starting thisfiscal year, the Bank incurred Net Losses of ¥392.9 billion. As for the BIS Capital Ratio, the Bank retained ahigh standard of 11.21%, as a result of increasing capital and allocating assets efficiently.

94 95 96 97 98
Fiscal Year

Gross Profits
Adjusted General &Administrative Expenses

Net Business Profits
Net Business Profits (before deduction of transfer to General Reserve) were ¥306.6 billion, an increase of¥15.1 billion compared with the previous year. Net Business Profits after deduction of transfer to General
Reserve were ¥192.7 billion.

44

Gross Profits
Breakdown of Gross Profits

Breakdown of Gross Profits

82 18 65

82 17 60

504

505

601

94 95 96 97 98
Fiscal YearNet Interest Income
Net Fees & Commissions
IncomeNet Trading Profits
Net of Other Operating Income
and Expenses
Net Interest Income(¥ Billion)

Analysis of Interest Income

Total:
Interest Earning Assets (A) ...................... ¥ 40,548.3 ¥45,181.5 ¥(4,633.1) 3.96% 4.44% (0.47)%
Loans (B) ........................................... 31,994.4
34,345.6 (2,351.1) 2.71% 2.89% (0.18)
Investment Securities .........................
6,186.2
6,208.8(22.5) 2.55% 2.46% 0.08
Interest Bearing Liabilities (C)................. 39,272.6
44,005.4 (4,732.7) 2.81% 3.41% (0.60)
Deposits & NCDs (D) ....................... 32,330.9
37,757.2 (5,426.2) 1.24% 1.82% (0.57)
Interest Margin (A)–(C) ..........................
———
1.15% 1.02% 0.13
Loan and Deposit Rate Margin (B)–(D)........
———
1.47% 1.07% 0.39
Domestic:
Interest Earning Assets (A) ................. 31,941.1
29,337.2
2,603.9
2.13% 2.24% (0.10)
Loans (B) ...................................... 24,432.6
22,362.4
2,070.2
2.07% 2.19% (0.11)
Investment Securities ....................
5,476.8
5,552.4(75.6) 1.39% 1.69% (0.30)
Interest Bearing Liabilities (C)............ 30,583.7
28,118.1
2,465.6
0.98% 1.09% (0.11)
Deposits & NCDs (D)................... 25,001.4
23,294.1
1,707.2
0.48% 0.52% (0.04)
Interest Margin (A)–(C) .....................
———
1.15% 1.14% 0.00
Loan and Deposit
Rate Margin (B)–(D) .......................
———
1.59% 1.67% (0.07)
International:Interest Earning Assets (A) ................. 10,300.7
16,913.3 (6,612.5) 9.10% 8.02% 1.07
Loans (B) ......................................
7,561.8
11,983.2 (4,421.4) 4.78% 4.20% 0.57
Investment Securities ....................
709.4
656.3
53.0 11.47% 8.94% 2.53
Interest Bearing Liabilities (C)............ 10,382.4
16,956.3 (6,573.9) 7.83% 7.09% 0.74
Deposits & NCDs (D)...................
7,329.5
14,463.0 (7,133.5) 3.85% 3.91% (0.05)
Interest Margin (A)–(C) .....................
———
1.26% 0.92% 0.33
Loan and Deposit Rate Margin (B)–(D) ..
———0.92% 0.29% 0.63)%

504

Change

505

Yield
1997

601

1998

558

1998

662

Fiscal Year

Billions of yen
Average balance
1997
Change94 95 96 97 98
Fiscal Year45

NON-CONSOLIDATED

Gross Profits were ¥666.2 billion, a decrease of ¥3.8 billion from the previous year. Domestic Gross Profits(Gross Profits from yen-denominated transactions at domestic offices) increased by ¥55.4 billion, while
International Gross Profits (Gross Profits from foreign currency transactions at domestic offices and transactions at overseas offices) decreased by ¥59.3 billion.

662

¥ 1.2
31.2
(30.0)
(4.2)
(0.4)
(3.7)
(0.5)
3.9
(4.5)
(0.2)
20.7
(21.0)¥ (3.8)55.4(59.3)

37 64¥504.2
350.2
153.9
65.0
39.0
25.9
18.5
3.9
14.5
82.3
54.4
27.8
¥670.1
447.7
222.3

66

¥505.4
381.5
123.9
60.7
38.5
22.2
17.9
7.9
10.0
82.0
75.1
6.8
¥666.2
503.2
163.0

100

Net Interest Income ...........................................................................
Domestic ......................................................................................
International..................................................................................
Net Fees & Commissions Income.......................................................
Domestic ......................................................................................
International..................................................................................
Net Trading Profits ............................................................................
Domestic ......................................................................................
International..................................................................................
Net of Other Operating Income and Expenses ...................................
Domestic ......................................................................................
International..................................................................................
Gross Profits .......................................................................................
Domestic.......................................................................................
International..................................................................................

(¥ Billion)

Change

558

1998

40 57

Fiscal Year

Billions of yen
1997

FISCAL 1998 IN REVIEW (NON-CONSOLIDATED)The Fuji Bank, Limited

1. Net Interest Income
Net Fees &Commissions Income(¥ Billion)
64

65

66

60

57

Net Interest Income increased by ¥1.2 billion to ¥505.4 billion from the previous year. Net Interest Income
on domestic operations (yen-denominated transactions at domestic offices) increased by ¥31.2 billion to¥381.5 billion, while Net Interest Income on international operations (foreign currency transactions atdomestic offices and transactions at overseas branches) decreased by ¥30.0 billion to ¥123.9 billion.
Regarding Net Interest Income on domestic operations, the increase was a result of two factors. One, theincrease in the average balance of Interest Earning Assets by ¥2,603.9 billion, and the other, the reduction ofhedging costs regarding interest fluctuation risks. As to Interest Earning Assets, the average balance of loans
increased by ¥2,070.2 billion from the previous year mainly due to the increase in housing loans and the shift
from yen-denominated loans at overseas offices, while the average balance of Investment Securities decreasedby ¥75.6 billion.
Regarding Net Interest Income on international operations, the decrease was a result of the large reduction in assets such as the reduction of the average balance of loans by ¥4,421.4 billion, and the decrease in the
yen value of foreign currency denominated assets due to the appreciation of the yen.
<Interest Margins>Interest Margin, which is the difference of the yield on Interest Earning Assets and the yield on Interest
Bearing Liabilities, increased by 0.13% from the previous year, mainly due to the large decrease in lowinterest earning overseas assets.
As to the Loan and Deposit Rate Margin (after deduction of ratio of expenses to deposits), it improved by
0.39% from the previous year. Though the yield on loans decreased mainly due to the decrease of interest
rates in the domestic market and the decline in the short term prime rate, the improvement in domestic loan
spread and the reduction of low-interest earning loans and corresponding liabilities helped improve theoverall Loan and Deposit Rate Margin.

94 95 96 97 98

NON-CONSOLIDATEDFiscal Year

2. Net Fees and Commissions
Net Fees and Commissions Income decreased by ¥4.2 billion from the previous year to ¥60.7 billion, as Net
Fees and Commissions on domestic operations were ¥38.5 billion (nearly equal to the amount of the previousyear), and Net Fees and Commissions on international operations decreased by ¥3.7 billion to ¥22.2 billion.
The decrease in Net Fees and Commissions on international operations was a result of the decrease inloan-related fee income as the balance of loans was reduced.

3. Net Trading Profits
Net Trading Profits, which is an account that was introduced in fiscal 1997 in accordance with the introduction of mark-to-market accounting method for trading accounts, decreased by ¥0.5 billion from the previous
year to ¥17.9 billion. Net Trading Profits on domestic operations increased by ¥3.9 billion to ¥7.9 billion, asa result of the increase in realized profits such as interest on other debt purchased. However, Net Trading
Profits on international operations decreased by ¥4.5 billion to ¥10.0 billion, as a result of the decrease in net
of gains and losses on derivatives and other transactions, which were collectively included in Net Trading
Profits in fiscal 1997.
Breakdown of Net of Other Operating Income and Expenses
Net of Other Operating
Income and Expenses(¥ Billion)
100
37

46

82

82

40

94 95 96 97 98
Fiscal Year

Fiscal Year

1998

Billions of yen
1997

ChangeTotal: .................................................................................................
Net Profits from Foreign Exchange Transaction ............................
Net Profits from Sales of Bonds .....................................................
Others ...........................................................................................
Domestic:......................................................................................
Net Profits from Sales of Bonds ................................................
Others ......................................................................................
International:.................................................................................
Net Profits from Foreign Exchange Transaction .......................
Net Profits from Sales of Bonds ................................................
Others ......................................................................................

¥82.0
16.4
79.6
(14.0)
75.1
76.1
(0.9)
6.8
16.4
3.5
(13.1)

¥82.3
17.6
77.8
(13.1)
54.4
58.4
(3.9)
27.8
17.6
19.3
(9.1)

¥ (0.2)
(1.2)
1.8
(0.8)
20.7
17.6
3.0
(21.0)(1.2)(15.8)(3.9)

4. Net of Other Operating Income and Expenses
Net of Other Operating Income and Expenses decreased by ¥0.2 billion from the previous year to ¥82.0
billion.
Net of Other Operating Income and Expenses on domestic operations increased by ¥20.7 billion to¥75.1 billion primarily because income from government bonds and other bond-related transactions
increased by ¥17.6 billion, thanks to operations based upon the accurate judgement concerning the bondmarket movements.
Net of Other Operating Income and Expenses on international operations decreased by ¥21.0 billion to¥6.8 billion. This was a result of the decrease in income from government bonds and other bond-relatedtransactions, which performed well the previous year, while net profits from foreign exchange transactions
were nearly equivalent to those of the previous year.

Adjusted General and Administrative Expenses
Breakdown of Adjusted General and Administrative Expenses
Fiscal Year

147

158

188

191

22

28

158

157

174

190

28

94 95 96 97 98
Fiscal Year

Personnel Expenses
Non-Personnel Expenses
Taxes

NON-CONSOLIDATED

Overall expenses decreased by ¥18.9 billion from the previous year to ¥359.5 billion, as a result of further
rationalization and further improvement in efficiency throughout the Bank’s entire operations.
Personnel Expenses decreased by ¥10.5 billion to ¥147.9 billion owing to the reduction of employees by
639 from the previous year and the review of wages and allowances.
Non-Personnel Expenses also decreased by ¥2.2 billion to ¥188.8 billion, as exhaustive efforts were madeeven further to reduce expenses, while investments in important matters such as information technology
were retained.
Taxes decreased by ¥6.1 billion from the previous year to ¥22.7 billion, as securities transaction taxes
decreased and land value taxes were abolished.

(¥ Billion)
25¥(10.5)(10.2)(2.2)(6.1)¥(18.9)158

Change¥158.5
135.2
191.1
28.8
¥378.5180

1998¥147.9
125.0
188.8
22.7
¥359.528

Personnel Expenses ............................................................................
of which is Wages and Allowances ................................................
Non-Personnel Expenses....................................................................
Taxes .................................................................................................
Adjusted General and Administrative Expenses ...................................

Adjusted General &Administrative Expenses

Billions of yen
1997

Net of Other Income and Expenses, Income (Losses) before Income Taxes, Net Income (Losses)
Breakdown of Net of Other Income and Expenses
Fiscal Year

1998

Billions of yen
1997

Change(+) Net of Securities Gains and Losses ...............................................
Sales Gains ............................................................................
Sales Losses.............................................................................
Devaluation Losses .................................................................
(-) Expenses Relating to Portfolio Problems .....................................
Write-offs ..............................................................................
Transfer to Specific Reserve ...................................................
Losses Incurred from Sales to CCPC ......................................
Transfer to Reserve for Possible Losses on Sales of Loans........
Transfer to Reserve for Specific Borrowers under Support .....
Losses Incurred from Supporting Certain Borrowers...............
Other Losses Incurred from Sales of Loans..............................
(-) Transfer to Reserve for Loans to LDCs........................................
(-) Transfer to Reserve for Losses on Investment ..............................
(-) Disposal of Unrealized Losses of Investment Funds ......................
(+) Net of Other Gains and Losses.....................................................
Stock Devaluation Losses .......................................................
Net of Other Income and Expenses .............................................

¥(116.0)
79.0(74.8)(120.2)
587.6
282.4
145.2
34.0
90.9
17.3
5.6
11.9
10.5
16.7
—
(126.1)(150.9)¥(857.1)¥ 209.5
268.6(2.1)(56.9)
980.7
68.9
332.7
202.7
24.0
122.3
226.6
3.3
(0.3)
—
57.5
(6.8)
—
¥(835.1)¥(325.5)(189.6)(72.7)(63.2)(393.1)
213.5(187.4)(168.7)66.8(105.0)(220.9)
8.6
10.9
16.7
(57.5)(119.3)(150.9)¥ (21.9)

47

FISCAL 1998 IN REVIEW (NON-CONSOLIDATED)The Fuji Bank, Limited

Net of Other Income and Expenses
Net of Other Income and Expenses amounted to ¥857.1 billion in losses as a result of reducing unrealized
losses on the stock portfolio and disposing of problem loans.

Expenses Relating toPortfolio Problems

1. Net of Securities Gains and Losses(¥ Billion)

980

1,108

587

525

Net of Securities Gains and Losses decreased by ¥325.5 billion from the previous year to ¥116.0 billion inlosses. This was because the Bank incurred a total of ¥346.0 billion in Sales Losses and Devaluation Losses(¥74.8 billion of Sales Losses and ¥120.2 billion of Devaluation Losses under Net of Securities Gains andLosses, ¥150.9 billion of Stock Devaluation Losses under Net of Other Gains and Losses), as the Bank soldoff its stock in the course of reviewing its stock portfolio, and lowered the book value of stocks in order toeliminate unrealized losses.
Consequently, unrealized gains on the stock portfolio as of March 31, 1999 were ¥183.9 billion.

2. Expenses Relating to Portfolio Problems
323

94 95 96 97 98

NON-CONSOLIDATEDFiscal YearTo maintain and enhance the quality of its assets, the Bank has placed the early resolution of the problem
loans issue as one of its primary management objectives and has continued to work aggressively to makenecessary disposals. As the Japanese economy continued to struggle in fiscal 1998, the Bank appropriately
wrote off loans and provided reserves in line with the new FSA examination manual and FRC guidelines forprovisioning, to prepare for future losses. Consequently, the Bank recorded ¥587.6 billion of Expenses
Relating to Portfolio Problems, besides the expense of ¥113.9 billion Transfer to General Reserve.
The breakdown of the Expenses Relating to Portfolio Problems is as follows: ¥282.4 billion for Writeoffs, ¥145.2 billion for Transfer to Specific Reserve, ¥34.0 billion for Losses Incurred from Sales (of Loanscollateralized by real estate) to the Cooperative Credit Purchasing Company (“CCPC”), ¥90.9 billion forTransfer to Reserve for Possible Losses on Sales of Loans, ¥17.3 billion for Transfer to Reserve for Specific
Borrowers under Support, ¥5.6 billion for Losses Incurred from Supporting Certain Borrowers, and ¥11.9
billion for Other Losses Incurred from Sales of Loans.
Transfer to Reserve for Loans to Less Developing Countries (LDCs), which is a reserve for possible losses
regarding country risks, was ¥10.5 billion as additional transfers were made to the reserve for loans toIndonesia. This was the result of Indonesia becoming a new LDC, as the MOF guidelines (which formerly
decided which countries were to be regarded as LDCs) were abolished in fiscal 1998 and each bank established its own guidelines for LDCs.
(See P.52 for details on the disclosure of problem loans)
Consequently, Losses before Income Taxes were ¥664.3 billion. As the Bank started to apply tax effectaccounting for non-consolidated financial statements from fiscal 1998, it recorded ¥271.7 billion of Deferred
Income Taxes.
Overall, the Bank’s Net Losses were ¥392.9 billion. Net Losses per Share were ¥130.54.

48

Balance Sheet
Analysis of Balance Sheets
March 31,

Total Assets
1999

Billions of yen
1998(¥ Trillion)

Change46.3

51.0(¥ Trillion)

29.7

32.0

34.0

95 96 97 98 99
March 31

AssetsTotal assets decreased by ¥4,703.6 billion from the previous year to ¥46,384.4 billion. This was mainly
because assets such as overseas assets, Deposits with Banks, and Securities were reduced from the standpointof efficient asset allocation, and the yen-base value of foreign currency denominated assets decreased due tothe appreciation of the yen. ¥732.5 billion of Deferred Tax Assets was newly recorded in accordance withthe application of the tax effect accounting from this fiscal year (¥460.7 billion of the Deferred Tax Assets
was tax effects for past years, and ¥271.7 billion was for the current year).

Cash and Due from Banks
Cash and Due from Banks decreased by ¥721.0 billion from the previous year to ¥2,028.8 billion, mainly due
to the large reduction in Deposits with Banks from the standpoint of efficient asset allocation in international
operations.

Trading Assets
Trading Assets decreased by ¥766.3 billion from the previous year to ¥1,507.5 billion. This was mainly
because of the large reduction in derivatives and Commercial Paper, and the decrease of the yen-base valueof foreign currency denominated assets due to the appreciation of the yen.

49

NON-CONSOLIDATED

Loans and Bills
Discounted

30.9

508.7
515.4
131.7
25.1
¥ 1,181.0

529.0
509.1
—
102.5
¥ 1,140.7

95 96 97 98 99
March 31

32.3

Capital Stock......................................................................................
1,037.8
Legal Reserve.....................................................................................
1,024.5
Land Revaluation Account.................................................................
131.7
Retained Earnings ..............................................................................
127.6
Total Stockholders’ Equity ................................................................. ¥ 2,321.8

50.9¥(4,352.7)
2,033.2(1,257.1)
400.0(526.4)
22.7
200.0
(6.9)
(1,095.3)(401.9)
16.7
(2.3)
76.9
(37.3)
0.0
94.4(722.0)(326.5)¥(5,884.7)

52.0

Liabilities and Stockholders’ Equity
Deposits ............................................................................................. ¥26,964.0 ¥31,316.7
Negotiable Certificates of Deposit ......................................................
5,159.1
3,125.9
External Debts....................................................................................
4,339.1
5,596.2
Commercial Paper..............................................................................
400.0—
Trading Liabilities...............................................................................
932.0
1,458.5
Foreign Exchange ..............................................................................
148.4
125.7
Bonds ................................................................................................
300.0
100.0
Convertible Bonds .............................................................................
5.6
12.5
Other Liabilities .................................................................................
1,792.8
2,888.1
Reserve for Possible Loan Losses ........................................................
455.5
857.4
Reserve for Losses on Investment.......................................................
16.7—
Reserve for Retirement Allowances ...................................................
45.8
48.2
Reserve for Possible Losses on Sales of Loans......................................
129.7
52.7
Reserve for Specific Borrowers under Support ...................................
84.9
122.3
Other Reserves ..................................................................................
0.0
0.0
Deferred Tax Liability for Land Revaluation ......................................
94.4—
Acceptances and Guarantees ...............................................................
3,193.9
3,915.9Land Revaluation Account.................................................................
—
326.5
Total Liabilities .................................................................................. ¥44,062.5 ¥49,947.3

50.7

AssetsCash and Due from Banks .................................................................. ¥ 2,028.8 ¥ 2,749.9 ¥ (721.0)
Call Loans ..........................................................................................
329.7
235.5
94.1
Bills Purchased ...................................................................................
484.4
30.0
454.4
Other Debt Purchased........................................................................
50.8
29.8
21.0
Trading Assets ....................................................................................
1,507.5
2,273.8(766.3)
Money Held in Trust .........................................................................
60.3
85.4
(25.0)
Securities............................................................................................
5,837.7
6,250.7(412.9)Loans and Bills Discounted.................................................................
29,793.3 32,030.5 (2,237.2)
Foreign Exchange ..............................................................................
421.8
549.4
(127.5)
Other Assets .......................................................................................
1,391.1
2,263.6(872.4)
Premises and Equipment ....................................................................
552.0
673.0
(121.0)
Deferred Tax Assets............................................................................
732.5
—
732.5
Customers’ Liabilities for Acceptances and Guarantees........................
3,193.9
3,915.9(722.0)Total Assets ........................................................................................ ¥46,384.4 ¥51,088.0 ¥(4,703.6)

FISCAL 1998 IN REVIEW (NON-CONSOLIDATED)The Fuji Bank, Limited

Loans and Bills Discounted
Breakdown of Loans and Bills Discounted
March 31,

1999

Billions of yen
1998

ChangeDomestic Offices (A).......................................................................... ¥24,581.7 ¥23,442.0 ¥ 1,139.6
of which from Housing Loans .......................................................
5,420.7
5,256.0
164.7
Manufacturing...............................................................................
3,240.0
3,016.8
223.2
Wholesale, Retail, and Food Service .............................................
3,665.4
3,656.2
9.1
Real Estate ....................................................................................
2,233.5
2,271.9(38.3)
Service ..........................................................................................
4,716.6
4,369.2
347.3% Loans to Small and Medium-sized Companies ................................
70.6%
75.7%
(5.1%)
Overseas Branches and Japan Offshore Market Account (B)................
5,211.6
8,588.4 (3,376.8)
Commerce and Industry ................................................................
4,019.1
6,668.1 (2,648.9)
Total Loans and Bills Discounted (A+B)............................................. ¥29,793.3 ¥32,030.5 ¥(2,237.2)

NON-CONSOLIDATED

Total Loans and Bills Discounted decreased by ¥2,237.2 billion from the previous year to ¥29,793.3 billion.
This was a result of reduction of overseas loans from the standpoint of efficient asset allocation, and the implementation of direct write-off of problem loans, while domestic housing loans continued to steadily increase.
An analysis of lending by domestic branches according to industrial sector reveals that the services sector
accounted for 19.1%, wholesale, retail and restaurants for 14.9%, manufacturing for 13.1%, and real estate for9.0%. Compared with the previous year, the real estate sector saw its share of loans and bills discounted decline
by 0.6%, while the shares of manufacturing and services increased by 0.3% and 0.5%, respectively. Loans andBills Discounted to small and medium-sized companies decreased by ¥400.3 billion to account for 70.6% of thetotal Loans and Bills Discounted by domestic branches. This decrease was partly due to the restraint on capital
investment and less demand for funds due to the propulsion of corporate restructuring. In addition, large
corporations’ repayment of their affiliates’ debts toward the end of their accounting periods from the standpointof efficient asset allocation within their groups, also was one of the reasons of the decrease.

Liabilities
From fiscal 1998, in accordance with the change in the Law Concerning Land Revaluation, the former Land
Revaluation Account was divided into two accounts; Deferred Tax Liability for Land Revaluation (underLiabilities) and Land Revaluation Account (under Stockholders’ Equity).

Deposits
Total Deposits decreased by ¥4,352.7 billion from the previous year to ¥26,964.0 billion, as Deposits in international operations decreased due to the large reduction in loans, while Deposits in domestic operations increased.
Negotiable Certificates of Deposit increased by ¥2,033.2 billion from the previous year to ¥5,159.1 billion.

External Debts
External Debts (defined as the sum of call money, bills sold and borrowings) decreased by ¥1,257.1 billion
from the previous year to ¥4,339.1 billion.

Commercial Paper
Due to changes in regulations, banks are now allowed to issue commercial paper as means of funding. As of
March 31,1999, the balance of Commercial Paper was ¥400.0 billion.

Bonds
Bonds increased by ¥200.0 billion as the Bank issued subordinated debts based on the Revitalization Law.

50

Reserves for Possible Loan Losses
Reserves for Possible Loan Losses and Other Reserves on the Loan Portfolio
March 31,

1999

General Reserve (A)...........................................................................
Specific Reserve (B) ...........................................................................
Reserve for Loans to LDCs (C) ..........................................................
Reserves for Possible Loan Losses (A+B+C).......................................
Reserve for Specific Borrowers under Support (D) .............................
Reserve for Possible Losses on Sales of Loans (E)................................
Total of Reserves (A+B+C+D+E).....................................................

¥185.2
258.8
11.3
455.5
84.9
129.7
¥670.1

Billions of yen
1998

¥

74.0
782.6
0.8
857.4
122.3
52.7
¥1,032.5

Change¥ 111.2(523.7)10.5(401.9)(37.3)
76.9¥(362.3)

NON-CONSOLIDATED

The total of General Reserve for Possible Loan Losses, Specific Reserve for Possible Loan Losses, Reserve for
Loans to LDCs, Reserve for Specific Borrowers under Support, and Reserve for Possible Losses on Sales ofLoans decreased by ¥362.3 billion from the previous year to ¥670.1 billion. This is a result of reversal fromthe Specific Reserve for Possible Loan Losses in connection with the direct write-offs of Category IV
exposures and the elimination of the Bank’s problem loans. The Bank also significantly increased General
Reserve to cover any future losses, and Reserve for Possible Losses on Sales of Loans to cover any future
losses deriving from the devaluation of real estate collateral which cover the loans sold to the Cooperative
Credit Purchasing Company.

Stockholders’ Equity
Stockholders’ Equity
March 31,

Total Stockholders’ Equity .................................................................
Stockholders’ Equity per Share (yen) ..................................................
Dividends per Share of Common Stock (yen).....................................

1999

Billions of yen
1998

Change¥2,321.8 ¥1,140.7 ¥1,181.0
396.50321.22
75.28
7.00
8.50
(1.50)

Total Stockholders’ Equity increased by ¥1,181.0 billion from the previous year to ¥2,321.8 billion, as¥216.9 billion of new common stock was issued through third-party allotment, and ¥800.0 billion of new
preferred stock was issued with the injection of public funds.
Due to the application of tax effect accounting from this fiscal year, ¥460.7 billion of past-year tax effects
were recorded. Stockholders’ Equity per Share stood at ¥396.50, an increase of ¥75.28 from the previous year.

Dividend Payment Policy
Regarding dividend payments, the Bank has continuously prioritized the maintenance of a stable level ofpayment from the standpoint of sound management, in light of its public role. At the same time, the Bank
takes the long-term profit trend into consideration and is fully aware of the importance of increasing its
retained earnings.
In fiscal 1998, the Bank incurred large losses as it disposed of its problem loans by a significant amount andreduced unrealized losses on securities, to maintain and enhance sound asset quality. Under such circumstances, to further enhance financial strength, annual dividend payment per share of common stock was
reduced by ¥1.50 from the previous year to ¥7.00, and annual dividend payments per share for various
preferred stocks were as resolved at the board of directors’ meeting.
The Japanese financial institutions still face difficult conditions. However, the Bank will continue toimprove its profitability by further enhancing its business base and strengthening its management structure,accumulate retained earnings, and endeavor to maintain stable dividend payments throughout the future.

51

FISCAL 1998 IN REVIEW (NON-CONSOLIDATED)The Fuji Bank, Limited

STATUS OF PROBLEM LOANS
Summary■ Accurate recognition of asset quality and appropriate write-off of loans and provisioning of reserves based on the self-assessment■ Legally required disclosures are consistent with the self-assessment results■ Reserve Ratios exceed those ratios suggested in the FRC guidelines■ Coverage Ratio is 81.2 %(¥ Billion, rounded off)
1.

2.

3.

New Disclosure Standard

Non-Accrual,
Past Due &Restructured Loans

Exposures toBankrupt
Borrowers or
Similar Exposures¥330.5Loans to Borrowers
under Bankruptcy
Procedure¥159.6

Self-Assessment
Category

Category I

Category II

Category III

Borrower
Classification
qBankrupt &¥101.8¥228.7

Substantially¥330.5

Covered byReserves,
Good Quality
Collateral,
Guarantees

Covered by
Collateral(Real Estate)/
Guarantees

wIntensive Control¥356.5¥226.2¥105.7

Borrowers

Covered byReserves,
Good Quality
Collateral,
Guarantees

Covered by
Collateral(Real Estate)/
Guarantees

Reserve Ratio
74.7%¥688.4

eWatch Borrowers

NON-CONSOLIDATEDBankrupt Borrowers

Category IV(Non-Collateralized)¥58.5

SpecialAttention
Borrowers¥473.1

Reserve Ratio
100%

DirectWrite-offs

Loans with
Reserves areincluded in
Category I

Coverage Ratio:
100%
Exposures Containing
Collection Risks¥688.4Loans with
Reserves areincluded in
Category I

Coverage Ratio:
84.6%¥414.7
Reserve Ratio
15.3%

With Collateral¥167.5
Without Collateral ¥305.6
Other Watch
Borrowers

Formerly Undisclosed ¥64.9

Special Attention Loans(*1)¥369.7(*2)
Loans Past Due for
3 Months or More
¥171.2

Coverage Ratio:
58.0%

Restructured Loans¥198.6¥1,527.9
Total Coverage Ratio:
81.2%

Provisioning based on
historical loss ratiorNormal Borrowers

tTotal¥33,600.7

Other Non-AccrualLoans¥832.3Category I¥31,097.5

Category II¥2,397.5

Category III¥105.7

Category IV
¥0.0

Total
¥1,388.6

Total¥1,361.7(*1) Includes loans only and is equal to the total of Loans Past Due for 3 Months or More and Restructured Loans. The figure under Special Attention Borrowers
represents the total exposure amount for the borrowers of Special Attention Loans(*2) Represents the amount of exposures besides loans under the New Disclosure Standard

Borrower Classification
q Bankrupt & Substantially
Bankrupt Borrowers:
w Intensive Control Borrowers:
e Watch Borrowers:
Special Attention Borrowers:r Normal Borrowers:

Borrowers who are bankrupt both legally and formally, or borrowers who are substantially bankrupt.
Borrowers who have high potential risks of going bankrupt.
Borrowers who need to be monitored carefully.
Borrowers who need to be monitored carefully, as they are Watch Borrowers with Loans Past Due for 3 Months or More or
Restructured Loans
Borrowers who have no problems in particular concerning their business performances and their financial conditions.

Asset Categorization
Category I:

All exposures to Normal Borrowers, and exposures to other borrower classifications which are covered by good quality collateral (i.e. deposits) or
guarantees
Category II: Exposures to Watch Borrowers (excluding Category I), exposures to Intensive Control Borrowers, Bankrupt & Substantially Bankrupt Borrowers
covered by collateral (i.e. real estate) or guarantees
Category III: Exposures to Intensive Control Borrowers (excluding Categories I & II), market value of collateral exceeding its appraised value for Bankrupt &Substantially Bankrupt Borrowers (exposures containing risks on collection, with possible potential losses)
Category IV: Exposures to Bankrupt/Substantially Bankrupt Borrowers (excluding Categories I ~ III)(exposures which cannot be collected or have no value)52

In fiscal 1998, Fuji continued to proactively dispose of its problem
loans and improve its standard of disclosure. Regarding the disposalof problem loans, the Bank appropriately wrote off loans andprovided reserves in line with FSA and FRC guidelines. Regarding
disclosure of asset quality, the Bank has disclosed its asset quality
under three standards; New Disclosure by the Revitalization Law(New Disclosure Standard), Non-Accrual, Past Due, andRestructured Loans, and the self-assessment results. While disclosures under the first two standards are mandatory, the Bank’s disclosure of its self-assessment results is voluntary. Such voluntary
disclosure reflects the Bank’s continuous attitude in improving its
transparency. In this page, details of the disclosure of asset quality
under these three standards are described using the charts on the left
page (P.52).

1. Self-assessment ~ Recognition of Asset Quality and
the Process of Write-off/Provisioning (Chart 1)

2. New Disclosure by the Revitalization Law (Chart 2)
Starting from March 31, 1999, the New Disclosure by the
Revitalization Law (New Disclosure Standard) has become mandatory. This disclosure is based on the borrower classification of the

3. Non-Accrual, Past Due, and Restructured Loans(Chart 3)
Non-Accrual, Past Due, and Restructured Loans, which is the totalof Loans to Borrowers under Bankruptcy Procedure, Other NonAccrual Loans, Loans Past Due for 3 Months or More, andRestructured Loans, was continuously disclosed. As this disclosure
mainly focuses the repayment status of the loans and interests of theborrowers, it may not reflect the accurate financial situation of theborrowers. Therefore, it did not necessarily match the results of theself-assessment. From March 31, 1999, the Bank modified thestandard of the Non-Accrual, Past Due, and Restructured Loans, sothat it would be more consistent with the results of the self-assessment. The modified standard more accurately reflects the substantial
situation of the borrowers. Concretely, the criteria for suspension ofinterest accrual have changed. The previous criteria were consistent
with the tax regulation standards (interest receivable on loans had tobe for legally bankrupt borrowers or on loans past due for 6 months
or more). The new criteria are based on the borrower classificationof the self-assessment process, so that no accrued interest receivable
on loans to Bankrupt Borrowers, Substantially Bankrupt Borrowers
and Intensive Control Borrowers is recognized. Under the modified
standard of Non-Accrual, Past Due, and Restructured Loans, allloans to Bankrupt Borrowers, Substantially Bankrupt Borrowers andIntensive Control Borrowers are currently disclosed as either Loans
to Borrowers under Bankruptcy Procedure or Other Non-Accrual
Loans.
Consequently, Other Non-Accrual Loans as of March 31, 1999,
includes loans that would not have been disclosed under the previous
standard. Such newly disclosed loans amount to only ¥64.9 billion,
which amount is less than 5% of the total of Non-Accrual, Past Due
and Restructured Loans (under the Modified Standard). This is anindication that the Bank has been continuously making efforts tomaintain a high transparency of disclosure.

53

NON-CONSOLIDATEDThe Bank self-assesses all of its assets every 6 months to accurately
recognize its asset quality. This self-assessment is very important, as
loans will be written-off and reserves will be provided in accordancewith the results. There are two steps in the process of this selfassessment. The first step is to classify the borrowers from Bankrupt& Substantially Bankrupt Borrowers to Normal Borrowers (q ~ r)
as shown on P.52, Chart 1, according to their financial and management situation. (Please refer to the definitions of the borrowerclassification.) The second step is to categorize the assets in order ofcollection risks from low to high or from Category I to IV, taking
into consideration the collectability of the assets by borrower, basedon their corresponding collateral and guarantees. (Please refer to thedefinitions of the asset categorization.)
In fiscal 1998, loans were written off and reserves were provided
as follows, based upon the above self-assessment:
For Exposures to Bankrupt and Substantially Bankrupt Borrowers (q):Category IV: directly written-off, Category III: 100% provided
with reserves(Categories I and II are exposures fully covered by reserves, collateral and guarantees)
For Exposures to Intensive Control Borrowers (w):Category III: 74.7% provided with reserves(Categories I and II are exposures fully covered by reserves, collateral and guarantees)
For Exposures to Watch Borrowers (e):Reserves are provided based on the annual historical loss ratio
multiplied by three.
For Special Attention Borrowers, 15.3% of the exposures notcovered by collateral or guarantees are provided with reserves.
For Exposures to Normal Borrowers (r):Reserves are provided based on the annual historical loss ratio.
Consequently, as of March 31, 1999, the total of Categories II~IV
was ¥2,503.2 billion, as shown on P.52 (t). This was a decrease of¥295.6 billion from September 30, 1998.

above-mentioned self-assessment. As shown on P.52, Chart 2, under
this disclosure, exposures to Bankrupt Borrowers and Substantially
Bankrupt Borrowers are disclosed as Exposures to Bankrupt
Borrowers or Similar Exposures, exposures to Intensive Control
Borrowers as Exposures Containing Collection Risks, and loans toWatch Borrowers which are either Loans Past Due for 3 Months orMore or Restructured Loans as Special Attention Loans. As of
March 31, 1999, there were ¥330.5 billion of Exposures to Bankrupt
Borrowers or Similar Exposures, ¥688.4 billion of Exposures
Containing Collection Risks, and ¥369.7 billion of Special Attention
Loans. They totaled ¥1,388.6 billion, which account for 4.1% ofTotal Exposure.
As shown on P.52, the New Disclosure Standard includes
exposures with collateral or guarantees, and exposures provided withreserves. Coverage Ratio, which is an appropriate measure of protection, is the ratio of the total of collateral, guarantees, and corresponding reserves to these disclosed exposures (problem loans). The
Coverage Ratios of Exposures to Bankrupt Borrowers or Similar
Exposures, Exposures Containing Collection Risks, and Special
Attention Loans, as of March 31, 1999, were 100%, 84.6%, and58.0%, respectively. The total Coverage Ratio of these exposures
was at a sufficient level of 81.2%.

RISK MANAGEMENT

The business environment is changing dramatically under the impact offinancial liberalization, globalization and securitization. As a result, the risks
inherent in banking operations are rapidly becoming more complex anddiverse. This makes it more important than ever to ensure that bankmanagement identify, analyze and manage many kinds of risk, including
credit risk and market risk. We have made risk management one of our key
managerial priorities, reorganizing and strengthening our operational andadministrative structures as a means of reinforcing our corporate health.
The Board of Directors
Executive Committee

Credit Guideline Committee(meets quarterly+when necessary)decides credit standards,
monitoring of portfolio

ALM • Market Risk
Management Committee

1. Credit Assessment and Monitoring of Individual Transactions
IT Strategy Committee(meets quarterly+when necessary)(meets monthly)
decides development of IT,
decides ALM hedging andfollow up
interest rate policies,
monitoring of liquidity risk

Various Management Committees:● Executive Committee on Credit Risk Management ● Executive Committee on Y2K Management● Executive Committee on Market Risk Management ● Executive Committee on Compliance Management

Specifically, special risk management meetings are convened to decidepolicies on and monitor specific risks, and various risk committees follow
up flexibly on these policies. In addition to holding monthly meetings,
the committees meet twice yearly to discuss comprehensive policies for
all risks. (See organization of risk committee structure above.)
Furthermore, we established the specialist post of Chief Risk Officer(CRO) to consolidate bank-wide control and supervision of credit risk,
market risk, operational risk, systems risk, legal risk and other kinds ofrisk. The CRO thus fulfils a crucial function by monitoring andcontaining risk throughout the Bank.

I. Credit Risk
Of the various kinds of risk that banks face, credit risk is associated witha wide range of operations, from lending and market transactions in
products such as derivatives to settlements. We are striving to ascertain
all possible sources of risk and devise appropriate means of dealing withthem. The most important issue in the area of credit risk management isensuring the soundness of loan assets, which account for the lion’s shareof credit risk. We take a dual approach to this issue. On the one hand,
we assess and monitor each individual loan transaction; on the other, wemanage the entire loan asset portfolio on an all-inclusive basis.
To provide overall control of credit risk management, we establishedthe Executive Committee on Risk Management and charged it with thespecific task of controlling the entire risk portfolio. The Committee sets
guidelines for dealing with credit transactions on the basis of the portfolio
management policies set forth by management meetings. It also serves acredit risk portfolio management function by monitoring the management
situation and initiating flexible reviews of the guidelines as necessary.
The Credit Risk Management Division and the International Credit
Division are responsible, respectively for domestic and overseas credit
matters. They specialize in devising means of examining and managing
individual loan transactions, and in planning and developing methods foranalyzing the risk inherent in the overall loan portfolio. They are also incharge of the in-house credit rating system and self-assessment of bank assets.

*In-house credit rating system
Our in-house rating system uses 16 grades and in principle is applied to all loan assets otherthan housing loans. First, the marketing or credit division in charge prepares rating studies
on the basis of a manual. Then, the Credit Assessment and Audit Division, which iscompletely independent of our operational and credit divisions, confirms the validity of theresults from a neutral, objective viewpoint. Reviews are conducted at least once every
twelve months, but they may also be carried out at any time on a case-by-case basis when
there are changes in the customer’s position.

54

To strengthen our credit risk management of our portfolio, we established the Credit Guideline Committee with the specific task of controlling the credit risk portfolio for each banking unit. The Committee
consists of the Deputy President in charge, the heads of the related groups,
the Chief Risk Officer, the executive in charge of credit and others.
The Committee sets guidelines for dealing with credit transactions on
the basis of the portfolio management policies set forth by the Executive
Committee. It also fulfils a concrete credit risk portfolio management
function for each banking unit by monitoring the management situationand initiating flexible reviews of the guidelines as necessary.

Each proposed loan transaction is carefully assessed for risk andprofitability by the branch in charge. If the amount involved exceeds
the branch manager’s authority, the appropriate credit division at Head
Office carries out the assessment. At this stage, active use is made of
the in-house credit rating system*, which provides the standards
needed for assessing the risk and profitability of each loan application as
well as the tools for monitoring the transaction after its execution.
Within the head office credit divisions, specialist departments are set
up to deal with large and medium-sized enterprises by type of industry
and operational scale, and with individuals and smaller businesses byregion. To cope with the rapid structural changes taking place in industry, we have also established an evaluation system based on a pool of
specialist know-how that embraces sectoral knowledge and the ability toevaluate new technologies. For example, we set up the Credit for New
Business Department to specialize in advanced sectors where technological innovation is progressing rapidly. The credit divisions thus provide
branches with appropriate advice in a timely manner according to thecharacteristics of the customers and markets involved.
Overseas, credit divisions have been established in New York andLondon with responsibility for America and Europe, respectively, while
credit personnel have been assigned to Hong Kong who work withhead office credit divisions to deal with the Asian region. These staffers
engage in information-gathering activities in connection with the laws,
commercial customs, and political and economic conditions in theirrespective jurisdictions, and use this information as the basis for carefully
focused credit assessment and management activities in each region.
In December 1998, we formulated the “Credit Operation Fundamentals
and Policy” to clarify the rules that should be observed in credit operations,such as laws and regulations, and lay down the basic principles involved
when making credit decisions. “Credit Operation Fundamentals and Policy”
serves to define our lending policy by stipulating the standard approaches
and mechanisms on which our lending procedures are based. In this way,
we have endeavored to lay down common rules to be observed by all bankstaff in lending operations as a means of promoting the formation of auniversal lending stance and assuring the soundness of our loan assets.
We have also established departments at home and abroad to carryout industrial surveys designed to gather and analyze information on
sectoral trends, and new products and technologies, and make theresults available for use in credit decisions.
Nurturing human resources to support this credit evaluation system
is extremely important. In addition to making efforts to train specialists
in assessing loans, the management team is paying particular attention
to implementing practical training programs according to the type of
specialization involved.
This system is used in analyzing and quantifying the overall credit risk associated with ourloan portfolio. In fact, we make use of our credit ratings at all phases of the lending process,from pricing for individual cases and evaluations of an industry’s performance through to therisk-assessment process.
The system provides infrastructural support for the examination and management of
individual transactions, as well as the basis for managing the loan portfolio and credit risk. It
has been revised and upgraded repeatedly, and now provides an objective indication of thecredit risk associated with our loan assets. We have also endeavored to ensure ample
consistency between it and the ratings of rating agencies, asset self-assessment systems andthe asset classifications used by the financial supervisory authorities.

2. Portfolio Management
While assessing and managing individual projects and proposals is
important, we also go to great lengths to ensure the overall soundnessof our loan assets by analyzing and managing the loan portfolio, whichis the aggregate of all individual loans.
Our Executive Committee and Credit Guideline Committee
regularly monitor and analyze the entire loan portfolio by businesssector, region, in-house rating and other criteria. This enables us to
manage the credit risk held both by each banking unit and the Bank as
a whole by keeping it within levels that are appropriate.
(1) Breakdown of Loan Portfolio by Business Sector
Generally speaking, we do not specify upper limits on outstanding loans inadvance according to business sector. We do, however, through the
Executive Committee and Credit Guideline Committee, monitor the makeup
of our portfolio constantly to ensure that there is no bias toward any specificindustrial sector and to avoid any adverse changes in portfolio structure.

(2) Breakdown of Loan Portfolio by Region
Through the country risk/exposure system, upper limits are set for eachcountry for all credit transactions, including loans. This upper limit isreviewed at least once every six months to reflect conditions in theworld economy and political and economic conditions in each country.
As of the end of March 1999, loans to Asian countries were asshown below in Table 1. Affiliates of Japanese companies accounted
for just under 40 % of loans to the private sector.
Almost all of the loans to non-Japanese borrowers are to the largest
business groups in each country.
[Chart 2] Breakdown of Loan Portfolio (by region)(March 1999)
2%

Japan

2%
4%

USA

5%

Asia (excl. Japan)
87%

EuropeOther[Chart 1] Breakdown of Loan Portfolio (by business sector)(March 1999)
( %)
13.2

Manufacturing
Agriculture, forestry and fisheries

0.4

25.0

Construction
4.4
0.2
3.3

0.8

Electricity, gas, heat supplies, water supplies
Transportation and communications
Wholesaling, retailing, restaurants

14.9

Note: Non-consolidated basis.

Finance and insurance
Real estate

19.2

Services
9.5
9.1

Municipal corporations
Individuals and others

Note: Domestic offices (excluding loans booked in the Japan offshore market)[Table 1] Loans to Asian Countries

South Korea .....................................................
Indonesia ..........................................................
Thailand ...........................................................
Hong Kong ......................................................
Singapore .........................................................
Malaysia ............................................................
China ...............................................................
Philippines ........................................................
India .................................................................
Taiwan .............................................................
Vietnam ...........................................................
Other ...............................................................
Total ..........................................................

BalancePublic Sector/
Financial Institution$1,172
797
1,062
2,550
408
490
1,048
202
319
352
22
3
$8,431

$ 762
167
87
94
11
229
357
89
147
89
—
0
$2,036

Millions of U.S. dollars
Project
Finance
Total

$ —
135
191
126
—
—
30
8
11
0
18
2
$526

$ 410
494
783
2,330
397
260
660
105
160
261
4
—
$5,868

Private Sector
Japanese (% of total)

$

81
202
458
765
217
39
269
54
8
28
0
—
$2,125(19.8%)(40.9 )
(58.5 )
(32.8 )
(54.7 )
(15.0 )
(40.8 )
(51.4 )
( 5.0 )
(10.7 )
(14.4 )
( — )(36.2%)

Non-Japanese

$ 329
291
325
1,565
179
220
391
50
152
233
3
—
$3,743

Note: Non-consolidated basis.

3. Measuring Credit Risk
Our approach to measuring credit risk is multifaceted, focusing on
integrating the management of credit and market risk, and promoting
the efficiency of portfolio management and the allocation of management resources. We now quantify the credit risk associated with
virtually all credit transactions, including derivative and other offbalance sheet transactions, on a daily basis. After measuring and analyzing credit risk according to such criteria as transaction type, rating,region and business sector, we submit reports on our findings. Our
management then uses this information in decisions relating tointegrated risk management. The information is also applied in marketing strategies to ensure appropriate loan spreads, and in management
information systems to compute profits following adjustment for risk
according to bank division.
55

Risk Management

II . Market Risk Management and Derivative Transactions
1. Market Risk Management Structure
Since we act as a global dealer, we engage in market making forinterbank dealers and customers, and the development of derivatives
and other new products. Our policy for business related to market
transactions is to maximize the profitability of our market divisions
while controlling risk in an appropriate manner.

Accordingly, we have established a sophisticated organization for
managing market risks, including the asset liability management (ALM)
of interest rate risk on yen deposits and loans. Since this gives us an
overall grasp of market risk, we are better able to control such risk andthus ensure greater stability in earnings. Figure 1 outlines our market
risk management organization.

[Figure 1]
The Board of Directors●Determination of overall policy on various risks

Executive Committee on
Risk Management

Executive Committee on
Net Business Profit Plan

Executive Committee on

Market Risk Management
3 4●Determination of net business profit plan
●Determination of market risk limits

ALM • Market Risk
Management Committee●ALM hedging policies●Follow up of status ofmarket risk-taking

Group Heads

Chief Risk Officer (CRO)

Front Office(Market Sections)Middle Office(Risk Management Sections)

Divisions of Trading Group
Asset Management DivisionMarket sections of overseas branches
and affiliated companies

Checks andBalances

1 2

Risk Assessment Division
Risk management sections of overseas
branches and subsidiaries
Risk management divisions of affiliated companies

Settlement and Clearing Services Division
Section in charge of operations
for overseas offices
Back Office(Operations)

The following five features constitute the main elements of our market risk management organization.
q Establishment of an independent risk management division.
w Sophisticated methodologies for measuring and managing
market risk.
56

e Market risk management policy determined by the Board.
r Risk limits determined by the Board.
t Regular reporting to the Board and senior management.

●Daily e-mail reports to management
on status of risk and profits

5

President and CEO

① Establishment of an independent risk management division.

⑤ Regular reporting to the Board and senior management.

In 1994, we became the first Japanese bank to set up a risk control unit
to identify, assess and control our overall market risk on a consolidated
basis. The responsibilities of the Market Risk Assessment Division(now the Risk Assessment Division) extend not only to domestic
activities but also to overseas branches and subsidiaries. To guarantee
the neutrality of the Division’s decisions, it is completely independentof front office sections involved in transactions, dealing and otherbusiness activities.
Overseas branches and subsidiaries have also established their own
market risk management sections that are independent from trading
units involved in market activities. Duties within each office are therefore segregated by the separation of the front office (market activities),
the middle office (risk management) and the back office (operations),
thus allowing checks and balances between them to work effectively.
② Sophisticated methodologies for measuring andmanaging market risk.
Virtually all the business units engaged in market activities manage
profit and loss on a mark-to-market basis. In order to obtain clearly an
overall grasp of profit and loss, it is important to have a clear picture
not only of a bank’s realized profit and loss as we are used to, but alsoof its unrealized gains and losses.
We use the Value at Risk (VaR) methodology to manage market
risk. To manage and control the risk that cannot be ascertained by
VaR alone, we supplement it with additional market risk informationand tools. We set limits on other risk sensitivities such as Basis Point
Value (BPV), carry out stress tests and back tests, and set stop-loss limits
according to actual transactions in each division. For further information, refer to “3. Overall Market Risk Activities.”
The Risk Assessment Division is constantly striving to absorb andmake use of advanced financial theory and know-how. It conducts
research into upgrading management techniques, and devotes a great
deal of energy to constructing improved and streamlined systems andinfrastructure.
③ Market risk management policy determined by the Board.
We have drawn up our own risk management policies in order toclarify our standards for setting risk-taking limits, organizational structures, lines of authority, procedures and techniques for evaluating andcontrolling risks. Risk management policy is reviewed every six
months and approved by the board of directors. The policy is also
fully consistent with the risk management principles issued by banking
regulators in Japan and the Bank of International Settlements (BIS).
④ Risk limits determined by the Board.
We believe that our exposure to potential losses arising from all kinds ofrisk, including market, credit and operational risk, should be kept
within levels that can be covered by our own capital. We incorporate
this principle into our business strategies for market activities, setting
aggregate limits for VaR by earmarking a portion of our capital ascoverage for market risk. We then set VaR limits for each division by
allocating a portion of the aggregate VaR according to the market
outlook, business strategies and other criteria. The President and CEO
and the board of directors set risk-taking limits at the aggregate andbusiness unit levels every six months.

[Daily] E-mailA daily report summarizing VaR, trading activities, profits and losses
and market risk by division is sent by e-mail to the Chairman, thePresident and CEO and other members of the board of directors andsenior management.

Value at Risk (VaR)
VaR is one of the methods used to measure market risk. It is defined as
the maximum possible loss that could be incurred on our portfolio as aresult of adverse market movements within a certain time horizon anddegree of probability. The actual amount of the VaR may vary according
to the confidence interval and the length of the holding periods, as wellas the models used for measuring the volatility of market risk factors.

[Monthly] ALM • Market Risk Management Committee
The presiding Deputy President convenes the ALM • Market Risk
Management Committee every month. The Committee reviews
trading activities, profits and losses and market risk by division, as wellas liquidity risk to close our position and in funding, and makes
decisions on ALM hedging strategy.
The above procedures provide senior management with an accurate
and timely grasp of our market risk exposure, and create an organizational structure that makes appropriate management decisions swiftly.
The following measures have also been adopted to deal with ALM
activities, particularly in respect of interest rate risk on yen deposits andloans:• The Treasury Division deals exclusively with ALM hedging
operations.
• To upgrade ALM procedures in managerial accounting, theHead Office-Branch rate has been abolished in favor of individual settlement rates for different products and maturities basedon market interest rates.
• Each month, the ALM • Market Risk Management Committee
sets its ALM hedging strategy. The Treasury Division follows
this strategy in its actual ALM hedging operations, submitting its
report to the Committee the following month.

2. Special Investigation Project on the Market Risk
Management Function through the Engagement with
Ernst & Young LLP
We performed a “special investigation” through the engagement with
Ernst & Young, LLP (EY), in November 1998.
Although the procedures did not constitute an “audit” of the financial statements, the results of the investigation indicate the following:• The net unrealized gains and losses related to market risks are
fairly stated. There are no undisclosed losses in derivative
contracts or other financial products.
• The market risk management function at Fuji Bank is on thedefacto standard of most sophisticated global banks.

3. Overall Market Risk Activities(1) Level of Market Risk
Chart 3 shows the trend in market risk (VaR - amount) in fiscal 1998.
Market risk amount (VaR) covers almost all market risk on a consolidated basis, including most of our overseas branches and subsidiaries,
and also the trading sections of The Yasuda Trust and Banking Co., Ltd.
However, it excludes price fluctuation risk in the form of stocks held
for strategic purposes, such as stocks held for long-term appreciation.

Basis Point Value (BPV)
BPV shows how much net present value on transactions varies wheninterest rates change by 1 basis point (0.01%).

57

Risk Management[Chart 3] Aggregate Market Risk

[Table 2] Yen Interest Rate (BPV) Sensitivity by PeriodVaR( ¥ billion)
35
30
25
20
15
10
Max.: ¥33.4 billion
Min.:¥20.0 billion
Average: ¥24.6 billion

5
0

98/4

5

6

7

8

9

10

11

12

99/1

2

3

* The standards used for calculating VaR in Chart 3 are as follows.
From this fiscal year, the figure used for the confidence interval wasaltered from 97.5% to 99.0%.
one-tailed 99.0% (two-tailed 98.0%)• Confidence interval:• Holding period:
one day• Historical observation period: six months• Discretion to recognize empirical correlations across broad risk categories• Measurement models:variance/covariance method(delta plus method)
We have been using our own internal models for calculating VaR using theabove parameters for many years. This has enabled us to confirm on an ongoingbasis that our capital and other business resources are enough to cover VaR.
(2) Component of Market Risk
Chart 4 gives a breakdown of our market risk on a value basis by risk
category as of March 31, 1999. It shows the impact each risk element
has on overall market risk. For example, “Interest rate-related risk
(Japanese yen) = 69.5%” indicates that fluctuations in Japanese yeninterest rates affect 69.5% of total market risk.
[Chart 4] Market Risk (by risk category)
excluding equity investment securities held for long-term appreciation(as of March 31, 1999)
1.4

( %)

7.6
3.9
1.1
6.2

10.3

69.5

Interest rate-related risk
(Japanese yen)Interest rate-related risk
(U.S. dollar)
Interest rate-related risk
(Euro)
Interest rate-related risk(others)
Foreign Exchange-related risk
Equity-related risk
Option-related risk

As Chart 4 shows, while risk in other categories is dispersed in a wellbalanced fashion, most of our market risk consists of yen interest raterisk, an area in which we are fully capable of exploiting our strengths asa Japanese bank. Meanwhile, non-linear risk arising from options andother derivatives transactions accounts for a very small 1.4% of the total.
(3) Yen Interest Rate Risk
Table 2 provides a more detailed analysis of yen interest rate risk, whichforms the largest portion of our aggregate market risk. It shows yen interest
rate risk in terms of interest rate sensitivity by period (grid sensitivity).
58

March 31, 1999

1 yearor less

Interest rate (BPV) sensitivity .............

¥0.1

Billions of yen
1-5
5 years
years
or more¥(1.3)¥(1.1)

Basis Point Value (BPV) is an index of interest rate sensitivity thatshows how much unrealized gains increase when interest rates rise by 1
basis point (0.01%). In Table 2, the negative numbers thus show that
unrealized gains decline when interest rates increase during the periods
in question. The impact of interest rate movements on unrealized gains
can therefore be gauged more accurately even when short- and longterm interest rates behave differently.
(4) Simulation of Earnings at Risk
Regular simulations of earnings at risk regarding interest rate portfolios
on the accrued banking account in various major currencies excluding
securities investments enable us to measure in greater detail the impact
of interest rate levels on our term earnings. Table 3 shows how
earnings at risk (March 31, 1999 figures) would be affected shouldinterest rates rise by 0.5%.
[Table 3] Earnings at Risk
(Difference between estimated accrued term earnings under current conditions
and in the case where interest rate rise by 0.5%.)

April 1999 – September 1999 ..........
October 1999 – March 2000 ............

Yen

Billions of yen
U.S. dollar

Euro¥(3.3)¥(7.4)¥(1.8)¥(1.8)¥(1.4)¥(2.3)We have enough capital and earnings to cover potential negative
impact on accrued term earnings as a result of changes in interest rates.
In this way, we evaluate market risk by VaR methodology, other risk
sensitivities such as BPV and earnings simulations even more sensitively.
(5) Liquidity Risk to Close Positions
In the case where a particular bank accounts for an unusually large
share of total market transactions in a particular instrument, it may takeseveral days before it is able to offset the position risk. There is thus apossibility that price fluctuations might cause it to incur far greater
losses than VaR. This sort of risk is known as liquidity risk to close
positions. In our case, we calculate the volume that we can trade ineach instrument at a reasonable price on a single day and compute thenumber of days it takes to close our positions based on that dailyvolume. We then calculate potential loss for the market risk (VaR) for
the number of days to close our positions, and manage this kind of risk
accordingly. In this way, we are confident that if necessary we canoffset our positions at reasonable prices in a very short time.
At the end of March 1999, liquidity risk to close our position stoodat ¥76.2 billion. In terms of the market size and the time to close ourpositions, our capital and earnings are enough to cover the maximum
possible loss on liquidity risk to close our position. (This is based ona conservative measurement that does not include the correlation
between market risk factors.)
The President and CEO sets the limit on total liquidity risk to close
our position every six months, and reports on the status of liquidity risk
to close our position are submitted to the ALM • Market Risk
Management Committee every month.
(6) Liquidity Risk in Funding
Liquidity risk in funding is the risk of potential inability to raise thefunding necessary for executing transactions. We have managed
liquidity risk in funding strictly. Based on analyzing the gap between
asset and liability, and funding resources, our President and CEO sets
position limits on the gap every six months while reports are submitted
to the ALM • Market Risk Management Committee every month.

4. Methodologies for Evaluating Market-related Transactions(1) Trading Transactions
To estimate fair market values in trading transactions, we use current
market prices (fair market value) when they are available. When they
are not available, we use discounted present value or other evaluation
techniques. Our valuations and valuation methods incorporate significant assumptions that we regard as adequate, and different valuations
may result in cases where different assumptions are used.
(2) Non-trading Transactions
Although we use accured accounting for non-trading transactions, formanagement purpose we calculate unrealized gains and losses using
mark-to-market evaluations as in trading transactions.
(3) Evaluation Adjustments in Management Accounting
Although they are not reflected in financial accounts, we monitor
close-out costs (costs arising from the difference of market rates
between mid price and bid or offer price) and credit costs (possible
potential losses computed by quantitative methods) and use them in
evaluation adjustments for management accounting purposes.
[Table 4] Close-out and Credit Cost

The dots above the diagonal line in the above chart show the numberof days on which profits and losses exceeded the VaR predictions. In
fiscal 1998, this happened on three business days. In other words,
profits and losses exceeded VaR predictions in 1.2% of all cases, very
close to the probability of 2% (100%-98%) predicted by our models.
We believe this confirms that our VaR models are sufficiently accurate
in measuring our market risk exposure.
(3) Stress Testing
Since markets are inherently unstable, price fluctuations sometimes far
exceed normal expectations. To prepare for such situations, we draw up
worst-case scenarios that analyze the maximum potential losses that mightoccur. The procedure is known as “stress testing,” and the scenarios we
prepare are called “stress scenarios.” Reports on the results of such tests are
submitted to the Board and reflected in business decisions.
We use two approaches to stress testing. The first scenario postulates
a confidence interval that, at 99.9%, is tougher than usual while
maintaining the correlation between market risk factors. The second
postulates the most extreme price movement based on historical pricefluctuation data over a period of ten years and assumes the correlation
between market risk factors is destroyed.
[Table 5] Stress TestingBillions of yen
Close-out cost Credit cost

March 31, 1999

Trading Transactions .........................................
Non-trading Transactions .............................
Total .............................................................

¥6.6
0.3
¥6.9

¥5.6
3.4
¥8.9

Billions of yen
Maximum potential loss
VaR (confidence interval 99.0%) .........................
Stress Scenario (confidence interval 99.9%) ..........
Stress Scenario (worst case) ..................................

¥ 5.1
6.8
27.2

5. Risk-taking of Trading Transactions
The following sections provide more detailed information on transactions subject to mark-to-market accounting, which include foreignexchange transactions as well as trading transactions.
(1) VaR[Chart 5] VaR in Trading Transactions( ¥ billion)
6.0

VaR
Daily profits and losses for trading
Quarterly average of VaR(4) Risk-adjusted Return
It is necessary for bank management to recognize accurately the risk it ispossible to take, to allocate assets properly and to ensure appropriate
profit levels. For this reason, it is extremely important to monitor
whether the trade off between risk and profits is healthy, and whether
potential losses are being kept within safe limits.
[Chart 7] Risk-adjusted Returns on Trading Transactions(including foreign exchange transactions)

5.0
4.0

35

3.0

30

1.0
0
-1.0
-2.0
-3.0
-4.0
-5.0
-6.0 98/4

5

6

7

8

9

10

11

12

99/1

2

3

(2) Back Testing
To evaluate the accuracy of the models we use for measuring risk, we carryout “back tests” to compare actual profits and losses with VaR predictions.

Absolute Value of Profit and Loss
Evaluated by Market Price ( ¥ billion)[Chart 6] Back Testing (FY 1998)
5.0
4.0

25
20
15

Line A10
50Line B
-2.00
-1.80
-1.60
-1.40
-1.20
-1.00
-0.80
-0.60
-0.40
-0.20
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00

Frequency distribution

2.0

Revenue to VaR ratio (daily profits and losses/VaR)

Chart 7 shows the relationship between our risk and profits/losses byfrequency (profits and losses/VaR = risk-adjusted return). Line A(normal distribution curve) depicts risk-adjusted return calculated on
the basis of the probability distribution of our revenues. Line B depicts
the probability distribution for risk-adjusted return in the case wheretransactions are executed without interest rate or market predictions.

3.0
2.0
1.0
0

0

1.0

2.0

3.0

VaR ( ¥ billion)

4.0

5.0

59

Risk Management

We can draw the following conclusions from a comparison ofLine A and Line B.

[Table 7] Credit Risk of Derivative Transactions (not calculated
into BIS capital adequacy ratio)• The peak of the curve described by Line A (the mean), which
represents our performance during the fiscal year ended March 1999,
is skewed more to the positive side than Line B. This confirms that
we were effective overall in earning revenues.
• Line A’s distribution peak is sharper than that of Line B, showing thatfluctuations in daily revenue are very small. In other words, while wewere able to post stable revenues, we kept conspicuous losses at avery low frequency.
Our ability to achieve the stable revenue distribution demonstrated byChart 7 results from our solid client transaction base and our welldiversified trading portfolio. Risk-adjusted returns are thus a key
indication of our ability to obtain an overall grasp of risk and returns,
and make effective decisions on distributing risk limits among ourdivisions.
In this way, we use VaR supported by other methods to evaluate
and manage overall market risk effectively. This has enabled us toconfirm that our capital and other business resources are enough tocover our market risk.

6. Derivative Transactions[Table 6] Credit Risk of Derivative Transactions (calculated into
BIS capital adequacy ratio)
Billions of yen
Credit risk equivalent
Notional amount(BIS base)
1999
1998
1999
1998

Interest Rate Swaps.. ¥ 301,291.7 ¥265,698.7
Currency Swaps.......
7,307.0
4,919.8
FX Forward ............
13,374.0
34,008.5
Interest Rate Options(buying) ................
3,464.4
3,723.5
Currency Options(buying) ................
1,442.3
2,415.6
FXA ........................
2,287.9
154.3
FRA ........................
34,482.2
26,860.6
Other Derivatives ....
—
7.5
Effect of Netting
Arrangement ......
Total................. ¥ 363,649.9 ¥337,788.8

Financial Futures Transactions ...........................
Interest Rate Swaps ...........................................
Currency Swaps.................................................
FX Forward ......................................................
Interest Rate Options (buying) .........................
Currency Options (buying) ...............................
Interest Rate Options (selling) ..........................
Currency Options (selling) ................................
FRA, FXA ........................................................
Others .............................................................
Total...........................................................

¥63,236.3——
2,009.9
1,111.5
98.3
4,584.3
1,389.9—
117.6¥72,547.9

Note: Since counterparties have lodged deposits with the relevant exchange and the transactions
themselves are very short-term, the risks involved are extremely small. As a result, thesetransactions are excluded from calculations of credit risk equivalents under BIS international
capital adequacy standards.

The following tables show quantitative data concerning credit risk inderivative transactions. The data cover virtually all of our non-consolidated and consolidated derivative transactions.

¥ 4,181.2
363.6
504.7

¥3,098.7
506.3
1,518.3

41.1

40.4

41.1
134.1
44.3
—

73.8
3.8
25.7
0.1

(3,742.6)¥ 1,567.7(3,040.4)¥2,227.0

Billions of yen
Credit Maximum
CreditCreditrisk
potential
exposure
cost
amountloss

Non-consolidated Base:
Customers whose creditworthiness isgenerally equivalent to AAA/Aaa BBB/Baa rating from rating agencies ... ¥ 845.5 ¥0.3
Customers whose creditworthiness isgenerally equivalent to BB/Ba ratingfrom rating agencies .........................
101.2 0.5
Others ...................................................
49.2 2.8
Total ............................................... ¥ 995.9 ¥3.6
Consolidated Base:
Customers whose creditworthiness isgenerally equivalent to AAA/Aaa BBB/Baa rating from rating agencies ... ¥1,366.7 ¥0.7
Customers whose creditworthiness isgenerally equivalent to BB/Ba ratingfrom rating agencies .........................
121.9 0.6
Others ...................................................
58.8 3.4
Total ............................................... ¥1,547.4 ¥4.6

¥2.1

¥ 2.4

1.1
0.7
¥3.9

1.6
3.5
¥ 7.5

¥5.5

¥ 6.2

1.3
1.9
1.2
4.6
¥7.9 ¥12.5

Notes: 1. Based on our own standards, which differ slightly from the BIS capital ratio standards.
Notes: 2. “Credit cost” is a statistical forecast of possible potential loss amounts based on pastdefaults.
Notes: 3. “ Credit risk volume” is a statistical forecast of the unexpected potential loss amounts
derived after taking into account possible future deviations in the default ratio.
Notes: 4. “Maximum potential loss” refers to the total of credit cost and credit risk volume,and is a worst-case statistical forecast of maximum losses.

[Table 9] Breakdown by Region
Billions of yen
Credit Maximum
CreditCreditrisk
potential
exposure
cost
amountloss

Non-consolidated Base:Japan ...............................................
Asia .................................................
USA ................................................
Europe ...................................................
Others ....................................................
Total................................................

¥519.0 ¥3.1
33.2 0.4
270.1 0.0
151.7 0.1
21.9 0.0¥995.9 ¥3.6

Note: Based on countries in which head offices are located.

60¥66,329.3——
3,796.1
1,249.8
51.9
6,862.8
2,480.7—
10.1¥80,780.7[Table 8] Breakdown by Creditworthiness(1) Status and Purpose of Derivative Transactions
Derivative transactions are transactions that are not recorded in thebalance sheet because there are no fund transfers involving the principal. We use derivative transactions, particularly transactions in swaps,
futures, options and others, to satisfy the risk-hedging needs ofcustomers, to hedge against the interest and exchange risk held by us in
asset liability management, and in market transactions.
(2) Derivative Transactions and Market Risk
For further information on the market risk, liquidity risk to close ourposition and in funding to which derivative transactions may be
exposed, please turn to Page 57, “3. Overall Market Risk Activities.”(3) Derivative Transactions and Credit Risk
Tables 6 and 7 show the contract amounts, notional amounts andcredit risk equivalents for derivative transactions.
“Credit risk equivalent” in derivatives is the equivalent amount of loans.
To control credit risk for individual customers, our credit departments set
and regularly monitor transaction limits according to their creditworthiness.
Furthermore, limits are set according to the type of transaction.

March 31,Billions of yen
1999
1998

March 31,

¥2.2
0.8
0.4
0.5
0.1
¥3.9

¥5.3
1.2
0.4
0.6
0.1
¥7.5

[Table 10] Breakdown by Industry
Billions of yen
Credit Maximum
CreditCreditrisk
potential
exposure
cost
amountloss

Non-consolidated Base:
Banking, Securities, Insurance ..........
Manufacturing .................................
Wholesale ........................................
Transportation and Communications ...
Services ...........................................
Construction ....................................
Real Estate ......................................
Other Financial Institutions .............
Others .............................................
Total................................................

¥600.9 ¥0.7
63.4 0.1
50.7 0.4
39.7 0.1
16.9 0.2
9.1 0.0
12.9 0.5
108.2 0.5
94.2 1.1¥995.9 ¥3.6

¥2.8
0.1
0.1
0.2
0.1
0.0
0.1
0.5
0.1
¥3.9

¥3.5
0.2
0.5
0.3
0.3
0.0
0.6
1.0
1.2
¥7.5

The most important figure for grasping the credit risk on our derivative transactions is ¥12.5 billion as shown in Table 8 “Breakdown by
Creditworthiness” (Consolidated Base). This figure is a statistical
forecast and indicates that the probability that we may suffer losses ofapproximately ¥12.5 billion following the bankruptcy of counterparties
is once in one hundred years. It does not represent a loss or unrealized
loss affecting our financial position. In other words, even if the worst
case occurs once in one hundred years, the impact on our management
will be negligible in light of our net worth and profitability.
As the above tables show, approximately 85% of “credit risk equivalent” of our derivative transactions on a non-consolidated basis, andapproximately 88% on a consolidated basis, were conducted withcounterparties whose creditworthiness was the investment-grade
ratings awarded by independent ratings agencies.
The majority of the counterparties for derivative transactions arethose from developed countries such as Japan, United States and thosein Europe. There were very few transactions with countries in Asiaand other regions.
By business sector, also, most of our transactions were with banks
and other financial institutions that deal with derivative products as partof their regular business.
We have almost no derivative transactions considered to be highly
speculative.

III. Other Risks
We have established an organizational structure that enlists the fullparticipation of top management in obtaining a clear grasp of thenature and size of risk other than credit and market risk, and spare noeffort in ensuring that it runs at maximum efficiency.
In addition to clarifying divisional lines of authority to deal with
operational risk, systems risk and other important risk factors, wemonitor all kinds of risk across the board. We have also prepared
comprehensive disaster recovery plans and manuals to deal with various
emergency scenarios, such as disasters that affect wide areas.
(1) Operational Risk
Operational risk refers to the danger that losses may result from
accidents arising in back-office operations as a result of inappropriate
procedures performed by personnel.
The System and Operations Administration Division is responsible
for operational risk and is independent of the Bank’s various businessgroups. The Division has established rules and procedures to befollowed by domestic branches, overseas offices and market divisions
when dealing with each type of operational activity. It also designates a
responsible person in each division to check periodically that theprescribed procedures are being properly observed.

We have separated the front, middle and back offices in our market
divisions and instituted other measures to provide a system of mutual
checks and balances within the organization. We are also incorporating
the latest results of technical innovation into a program to computerizeand centralize data processing functions at our computer center as partof our efforts to build an efficient operational processing system that
reduces human error to a minimum.
Every year, the Inspection Division carries out inspections to checkthe status of operational and office management activities at eachbranch, and submits reports on its findings directly to top management.
The Inspection Division is thus in a position to prevent problematic
incidents, evaluate the efficiency of our system for managing operational risk and, where necessary, put forward proposals for improvement to top management.
(2) Computer-related Risk
We have adopted a dual approach to dealing with computer systems
risk. One of these involves measures to forestall system problems bymaking our systems better able to withstand natural disasters and faults
arising from various other causes. The other covers operational procedures to deal with possible system malfunctions.
On the preventive side, we have worked for many years to create an
extremely reliable system. Among other things, we have installed our
computer systems in specially-designed buildings that incorporate thevery latest in earthquake-proofing technology, created a dual-centerorganization that boasts fully redundant hardware and software systems
for foolproof backup, and a state-of-the-art network that features anautomatic rerouting function to avoid circuit faults. We have alsoestablished a separate department that is independent of the systems
development divisions to check and supervise system configurations andsecurity when new systems are being designed and installed. In this way,
everything is done to eliminate possible problems.
A full range of contingency plans lay down procedures to befollowed and emergency measures to be adopted in the case of system
malfunctions. We also hold regular drills to provide practice throughdealing with simulated emergencies.
To strengthen our measures for dealing with systems risk, we haverecently established the Information Technology Risk Control
Department to evaluate, monitor and manage systems risk in acomprehensive manner. The Department is responsible for streamlining basic policies and regulations dealing with systems risk management, and its jurisdiction extends to overseas offices and branches, andsubsidiaries.
(3) Legal Risk
We established the Legal Division to specialize in the management oflegal risk, which we consider to be a matter of the greatest importance.
The Legal Division serves in an advisory capacity and is responsible foranalyzing the legal risk involved in the Bank’s domestic and international business operations, and for devising means to deal with it. It isalso working to create a healthy operational system in which bank
employees from all divisions can go about their work in full knowledgeof the legal risks involved. To this end, and to ensure that legal
requirements are observed, the Legal Division holds seminars on legal
matters, and has prepared and distributed a compliance manual to all
employees. (See “Compliance” on following page.)(4) Settlement Risk
Settlement risk arises not only from timing differences in the payments
and receipts involved in settling foreign exchange transactions, but also
from various transactions within the same domestic market. We view
such settlement risk as a sort of credit risk, and are working to shorten
the settlement timing difference and use netting to reduce the amounts
involved in settlements.
61

Risk Management

Year 2000 Compliance Measures
The Year 2000 (“Y2K”) problem could have a major impact onbanking operations unless appropriate, timely measures are taken to deal
with it. We have given such measures top priority status and are doing
everything necessary to ensure that the issue is properly dealt with.

Countermeasures
We have planned for measures to deal with the possible impact of theY2K problem on our computer systems since 1996 and have been
following up on their progress. And, since July of 1998, we havebeen focusing on the Y2K issue on a bank-wide basis. We established the Executive Committee on Y2K Management with the
President and Chief Executive Officer as its Chairman, and set up theY2K Project, Corporate Planning Division to deal exclusively with
the Y2K problem. The Bank’s countermeasures involve not just theparent company but the entire Fuji Bank Group, extending fromprincipal subsidiaries and affiliates in Japan to overseas subsidiaries.

Progress in Implementing Countermeasures
Our measures to deal with the Y2K problem cover clearing andother key systems as well as end user systems and systems associatedwith subcontracted businesses undertaken by the Bank on behalf ofoutside entities. Measures also cover all equipment that use
microchips, including meters associated with telecommunications
equipment, and machinery and equipment associated with electric
power facilities.
According to the current schedule, all measures to ensure Y2K
compliance for vital systems associated with the Bank’s account andsettlement operations will be completed by June 1999. Measures forother systems will be in place by September 1999. We are also inthe process of carrying out full-scale testing of connections with key
settlement centers, such as the Bank of Japan, Zengin Center,
SWIFT, CHIPS, and FEDWIRE, as well as customers that use ourfirm banking electronic services.

Contingency Plan
We have long-standing contingency plans for dealing with normal
computer system failures and crises arising from disasters. We havealso drawn up separate contingency plans based on analyses of thevarious risks specifically associated with the Y2K problem, and standready to review and reformulate these plans swiftly and flexibly
should the need arise.

Compliance
Banking is of vital importance to the public interest, and banks havea major social role to play in contributing to economic development
at home and abroad through their transactions with customers andother activities.
Based on a renewed awareness of this and in order to fulfil our
responsibilities and earn the unwavering trust of society, we havepositioned compliance as one of the most important issues facing
management. Our basic policy is to comply strictly with all laws,
ordinances, rules and regulations, and carry out our business activities
with honesty and integrity and according to social models.
For this reason, our Legal Division is responsible for compliancethroughout the Bank, and the Compliance Department is the focal
point for streamlining our compliance structure and carrying out
activities to promote compliance. Further details on our thoroughgoing efforts in this area are given below.

Compliance Structure
Our compliance structure comprises of the board of directors, theExecutive Committee on Compliance Management, complianceofficers and the Legal Division. The Executive Committee on
Compliance Management was established to debate issues of key
importance to compliance within the Bank and meets on a regularbasis under the chairmanship of the President and CEO. The boardof directors then approves matters discussed by the Committee.
Compliance officers are deployed at head office and all businessoffices at home and abroad. In addition to ensuring full compliancewithin their respective organizational sectors, these officers serve asadvisors to other bank employees, and as a liaison with theCompliance Department. In light of the specialist nature of themarket securities business and the risks it involves, we have established the Compliance for Trading and Investment Banking
Department. This office is independent of the business divisions andfalls under the jurisdiction of the Legal Division, where its task is toensure maximum compliance. We have also retained the services oflegal advisors and accounting firms in Japan and overseas to provide
us with maximum specialist support.
62

Compliance Activities
Each year, we draw up a practical compliance program to streamline
our compliance structure and organize activities to promotecompliance.
We also compile compliance manuals to serve as detailed guides toour corporate principles of behavior, scope of activities and the key
laws, ordinances and in-house rules that have to be observed. Thesemanuals are distributed to all employees, who are expected to
become very familiar with its contents.
To promote the strict observance of rules on compliance by eachhead office division and each business office, we have established asystem of primary checks conducted by the compliance officers in
the respective organizations, and secondary checks conducted by the
Inspection Division and the Internal Audit Division.
We provide various levels of education in compliance, ranging
from training for general staff to more advanced studies for compliance officers, in order to ensure that the basic framework of ourcompliance structure is well-understood.
Compliance remains the bedrock of the banking business. To
ensure the continued trust of our customers, we are committed toreviewing our compliance structure on an ongoing basis with a view tomaking improvements that will maintain and enhance its effectiveness.
Compliance Structure
The Board of Directors

Executive Committee on Compliance Management
Legal Division
Head Office, Domestic/Overseas Business Offices(Compliance Officers)

CONSOLIDATED FIVE-YEAR SUMMARY
Fuji Bank Group

Millions of yen
Years ended March 31,

1999

1998

1997

1996

1995

¥ 2,434,580
1,793,282
85,4412,930,820—
108,228
6,668,759
34,815,843
448,583
4,372,807
745,616
1,069,255
67,3762,392,446¥57,933,043¥ 2,821,634
1,453,230
43,2163,265,412—
84,9896,044,830
34,028,201
580,018
3,326,086
693,955
441,043
8,153
2,322,736¥55,113,509¥ 4,341,701
2,230,223
188,430—
845,037
117,271
5,607,096
35,714,787
541,7933,480,573
357,330
256,925—
2,529,984¥56,211,154¥ 5,626,067
1,617,672
126,295—
1,104,386
148,150
5,646,405
33,793,990
460,804
2,703,193
344,468
223,163—2,606,804¥54,401,403¥ 7,201,305
1,267,896
264,440—
1,049,045
170,959
5,970,789
32,277,715
373,913
1,988,362
326,753
135,113—2,402,900¥53,429,197¥34,646,230
3,833,529
1,823,830
3,520,453
137,789
1,356,075
15,464
1,927,770
4,669,740
684,674
57,051
189,542
94,4812,392,446—
55,349,080
408,144¥34,552,361
3,755,273
2,057,167
2,947,169
113,2211,657,224
12,582—
4,381,799
904,217
48,312
176,066—
2,322,736
326,529
53,254,661
282,392¥38,649,481
4,310,517—
2,252,185
82,0001,322,494
12,582—
3,943,584
1,022,030
48,81660,243—
2,529,984—
54,233,919
42,885¥37,280,377
4,812,472—
2,892,475
77,051
904,255
13,009—3,100,789
980,737
48,877
21,262—2,606,804—
52,738,113
26,683¥37,212,285
5,186,289—
2,817,529
52,956
609,883
13,231—2,323,258
732,756
48,52520,602—
2,402,900—
51,420,219
24,078559,216
478,616
928,196
131,767
106,725(12)(28,692)
2,175,818¥57,933,043

424,087
105,000
419,954—
627,426(11)—
1,576,455¥55,113,509

424,087
105,000
419,954—985,313(4)—
1,934,349¥56,211,154

423,873—
314,740—
898,000(7)—
1,636,606¥54,401,403

423,762—
314,629—
1,246,510(1)—
1,984,900¥53,429,197¥ 1,185,925
108,194413,230
176,880
38,142515,395
215,673
2,653,442¥1,399,707
121,337
661,991
137,765
56,913
151,504
354,805
2,884,025¥1,283,411
138,348
751,895
128,630—
96,938350,632
2,749,856¥1,344,629
165,474
980,419
128,083—
200,100
308,993
3,127,701¥1,409,873
188,551
719,784
114,639—
105,249
457,818
2,995,916

396,071388,333
419,654
48,031
364,449494,565
1,290,904
3,402,011(748,568)

703,442
418,061
519,472
49,247
46,816
470,091
1,175,172
3,382,303(498,277)

697,473
313,706
485,11147,26555,291
443,807610,867
2,653,523
96,332884,722
303,880
583,498
44,52884,552418,786
1,208,310
3,528,280(400,579)

986,240
330,462
392,547
44,84555,915416,583
718,610
2,945,205
50,71018,362(362,022)
17,121¥ (422,030)

17,614(178,167)
7,584¥ (345,309)

7,549(25,152)
4,891¥ 109,044

8,364(87,385)
3,863¥ (325,420)

5,332
37,351
3,377
4,649

Balance Sheets

Statements of Income
IncomeInterest on Loans and Discounts........................................................
Interest and Dividends on Securities..................................................
Other Interest Income ......................................................................
Fees and Commissions ......................................................................
Trading Revenue..............................................................................
Other Operating Income ..................................................................
Other Income...................................................................................
Total Income .............................................................................
Expenses
Interest on Deposits ..........................................................................
Interest on Borrowings and Bonds ....................................................
Other Interest Expenses ....................................................................
Fees and Commissions ......................................................................
Other Operating Expenses ................................................................
General and Administrative Expenses ................................................
Other Expenses.................................................................................
Total Expenses ...........................................................................
Income (Loss) before Income Taxes and Others ......................
Income Taxes:
Current.........................................................................................
Deferred .......................................................................................
Minority Interests in Net Income......................................................
Net Income (Loss).........................................................................

Note: Amounts less than one million yen have been omitted. As a result, the totals shown in the financial statements
for the years ended do not necessarily agree with the sum of the individual amounts respectively.

¥

63

CONSOLIDATEDAssetsCash and Due from Banks ................................................................
Call Loans and Bills Purchased ..........................................................
Commercial Paper and Other Debt Purchased ..................................
Trading Assets...................................................................................
Trading Account Securities ...............................................................
Money Held in Trust........................................................................
Securities ..........................................................................................
Loans and Bills Discounted ...............................................................
Foreign Exchange .............................................................................
Other Assets......................................................................................
Premises and Equipment ...................................................................
Deferred Tax Assets ..........................................................................
Consolidation Difference ..................................................................
Customers’ Liabilities for Acceptances and Guarantees ......................
Total Assets ................................................................................
Liabilities, Minority Interests and Stockholders’ Equity
Liabilities
Deposits............................................................................................
Call Money and Bills Sold.................................................................
Trading Liabilities .............................................................................
Borrowed Money .............................................................................
Foreign Exchange .............................................................................
Bonds ..............................................................................................
Convertible Bonds............................................................................
Due to Trust Account.......................................................................
Other Liabilities ................................................................................
Reserve for Possible Loan Losses.......................................................
Reserve for Retirement Allowances..................................................
Other Reserves.................................................................................
Deferred Tax Liability for Land Revaluation.....................................
Acceptances and Guarantees..............................................................
Land Revaluation Account ...............................................................
Total Liabilities ..........................................................................
Minority Interests .............................................................................
Stockholders’ Equity
Common Stock ................................................................................
Preferred Stock .................................................................................
Capital Surplus..................................................................................
Land Revaluation Account ...............................................................
Earned Surplus..................................................................................
Treasury Common Stock, at cost ......................................................
Shares in Parent Company Held by Subsidiaries ................................
Total Stockholders’ Equity ......................................................
Total Liabilities, Minority Interests and Stockholders’ Equity ...

CONSOLIDATED FINANCIAL STATEMENTS
Fuji Bank Group

Balance Sheets
Thousands of
U.S. dollars (Note 1)

Millions of yen
March 31,

1999

1998

1999

Cash and Due from Banks .................................................................

¥ 2,434,580¥ 2,821,634$ 20,195,604

Call Loans and Bills Purchased...........................................................

1,793,282

1,453,230

14,875,839

Commercial Paper and Other Debt Purchased...................................

85,441

43,216

708,764

Trading Assets (Note 3) .....................................................................

2,930,820

3,265,412

24,312,076

Money Held in Trust ........................................................................

108,228

84,989897,790

Securities (Note 4).............................................................................

6,668,759

6,044,830

55,319,444

Loans and Bills Discounted (Note 5)..................................................

34,815,843

34,028,201

288,808,328

Foreign Exchange .............................................................................

448,583

580,018

3,721,140

Other Assets (Note 6) ........................................................................

4,372,807

3,326,086

36,273,809

Premises and Equipment (Note 7) .....................................................

745,616

693,955

6,185,122

Deferred Tax Assets ..........................................................................

1,069,255

441,0438,869,810

Consolidation Difference ..................................................................

67,376

8,153

558,912

Customers’ Liabilities for Acceptances and Guarantees (Note 14).......

2,392,446

2,322,736

19,846,095

Total Assets ........................................................................

¥57,933,043¥55,113,509$480,572,740

CONSOLIDATEDASSETS

The accompanying notes are an integral part of these statements.

64Thousands of
U.S. dollars (Note 1)

Millions of yen
March 31,

1999

¥34,552,361
3,755,273
2,057,167
2,947,169
113,2211,657,224
12,582—
4,381,799
904,217
48,312
176,066—
2,322,736
326,529
53,254,661
282,392$287,401,330
31,800,325
15,129,247
29,203,261
1,143,006
11,249,070
128,281
15,991,456
38,736,963
5,679,590
473,259
1,572,315
783,753
19,846,095—
459,137,956
3,385,689

559,216
478,616
928,196
131,767
106,725(12)(28,692)
2,175,818

424,087
105,000
419,954—
627,426(11)—
1,576,455

4,638,876
3,970,273
7,699,683
1,093,050
885,322(102)(238,011)
18,049,094¥57,933,043¥55,113,509$ 480,572,740

LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITY
Liabilities
Deposits (Note 8) .............................................................................. ¥34,646,230
Call Money and Bills Sold .................................................................
3,833,529
Trading Liabilities..............................................................................
1,823,830
Borrowed Money (Note 9)................................................................
3,520,453
Foreign Exchange..............................................................................
137,789
Bonds (Note 10)................................................................................
1,356,075
Convertible Bonds (Note 11) ............................................................
15,464Due to Trust Account .......................................................................
1,927,770
Other Liabilities (Note 12) ................................................................
4,669,740
Reserve for Possible Loan Losses .......................................................
684,674
Reserve for Retirement Allowances ..................................................
57,051Other Reserves (Note 13) .................................................................
189,542
Deferred Tax Liability for Land Revaluation......................................
94,481
Acceptances and Guarantees (Note 14) ..............................................
2,392,446
Land Revaluation Account (Note 15)................................................
—
Total Liabilities ....................................................................
55,349,080
Minority Interests...........................................................................
408,144
Stockholders’ Equity
Common Stock (Note 16).................................................................
Preferred Stock (Note 16)..................................................................
Capital Surplus (Note 16) ..................................................................
Land Revaluation Account (Note 15)................................................
Earned Surplus ..................................................................................
Treasury Common Stock, at cost.......................................................
Shares in Parent Company Held by Subsidiaries.................................
Total Stockholders’ Equity....................................................
Total Liabilities, Minority Interests
and Stockholders’ Equity .............................................

65

CONSOLIDATED

1998

1999

CONSOLIDATED FINANCIAL STATEMENTS
Fuji Bank GroupStatements of Income
Thousands of
U.S. dollars (Note 1)

Millions of yen
Years ended March 31,

INCOMEInterest Income:Interest on Loans and Discounts ..........................................................
Interest and Dividends on Securities ....................................................
Other Interest Income ........................................................................

CONSOLIDATED

Fees and Commissions.............................................................................
Trading Revenue (Note 18)....................................................................
Other Operating Income (Note 19) ........................................................
Other Income (Note 19) .........................................................................
Total Income..............................................................................
EXPENSESInterest Expenses:
Interest on Deposits.............................................................................
Interest on Borrowings and Bonds.......................................................
Other Interest Expenses ......................................................................
Fees and Commissions ............................................................................
Other Operating Expenses (Note 20) ......................................................
General and Administrative Expenses.......................................................
Other Expenses (Note 20) .......................................................................
Total Expenses............................................................................
Income (Loss) before Income Taxes and Minority Interests .....................
Income Taxes (Note 21):
Current...............................................................................................
Deferred..............................................................................................
Minority Interests in Net Income ............................................................
Net Income (Loss) ..............................................................................

1999

1998

1999

¥1,185,925
108,194413,230
1,707,350
176,880
38,142515,395
215,673
2,653,442¥1,399,707
121,337
661,991
2,183,037
137,765
56,913
151,504
354,805
2,884,025$ 9,837,619
897,510
3,427,879
14,163,009
1,467,280
316,4024,275,364
1,789,079
22,011,136

396,071388,333
419,654
1,204,059
48,031
364,449494,565
1,290,904
3,402,011(748,568)

703,442
418,061
519,472
1,640,975
49,247
46,816
470,091
1,175,172
3,382,303(498,277)

3,285,534
3,221,349
3,481,167
9,988,051
398,439
3,023,226
4,102,571
10,708,458
28,220,747(6,209,611)

18,362(362,022)
17,121¥ (422,030)

17,614(178,167)
7,584¥ (345,309)

152,325(3,003,092)
142,028$(3,500,872)

Yen

Net Income (Loss) per Share ...................................................................
Dividend Declared per Share:
Common Stock ..................................................................................
Preferred Stock:
First Series Class I Preferred Stock...................................................
Second Series Class IV Preferred Stock ...........................................
Third Series Class III Preferred Stock..............................................
Fourth Series Class III Preferred Stock ............................................
The accompanying notes are an integral part of these statements.

66

U.S. dollars (Note 1)¥ (142.07)¥ (119.35)$ (1.17)

7.00

8.50

0.05

7.50
0.12
0.04
0.03

7.50
—
—
—

0.06
0.00
0.00
0.00

CONSOLIDATED FINANCIAL STATEMENTS
Fuji Bank GroupStatements of Earned Surplus
Thousands of
U.S. dollars (Note 1)

Millions of yen
Years ended March 31,

Balance at Beginning of Year...................................................................
Increase:
Effect of the Change in Scope of Consolidated Subsidiaries and Affiliates...
Decrease:
Effect of the Change in Scope of Consolidated Subsidiaries and Affiliates...
Dividends............................................................................................
Bonuses to Directors and Statutory Auditors........................................
Net Income (Loss) ..................................................................................
Balance at End of Year ............................................................................

1999

1998

1999

¥627,426¥985,313$5,204,697

6,708

—

55,651(69,840)(35,536)(1)(422,030)¥106,725—(12,577)—(345,309)¥627,426(579,351)(294,785)(16)(3,500,872)$ 885,322

The accompanying notes are an integral part of these statements.

CONSOLIDATED
67

CONSOLIDATED FINANCIAL STATEMENTS
Fuji Bank GroupStatements of Cash Flows
Thousands of
U.S. dollars (Note 1)

Millions of yen

CONSOLIDATED

Years ended March 31,
CASH FLOWS FROM OPERATING ACTIVITIESInterest on Loans and Discounts Received......................................................................................
Interest and Dividends on Securities Received................................................................................
Other Interest Received .................................................................................................................
Fees and Commissions Received ....................................................................................................
Other Operating Revenue .............................................................................................................
Total ......................................................................................................................................
Interest on Deposits Paid ................................................................................................................
Interest on Borrowings and Bonds .................................................................................................
Other Interest Paid .........................................................................................................................
Fees and Commissions Paid ............................................................................................................
Other Operating Expenditures .......................................................................................................
General and Administrative Expenses Paid ......................................................................................
Total ......................................................................................................................................
Net Decrease in Due from Banks ...................................................................................................
Net Decrease (Increase) in Call Loans and Bills Purchased ..............................................................
Net Decrease (Increase) in Commercial Paper and Other Debt Purchased ......................................
Net Decrease (Increase) in Trading Accounts..................................................................................
Net Proceeds from (Expenditures of) National Government Bonds and Other Transactions ...........
Net Decrease in Loans and Bills Discounted ..................................................................................
Net Decrease (Increase) in Foreign Exchange .................................................................................
Net Increase in Other Assets...........................................................................................................
Total ......................................................................................................................................
Net Decrease in Deposits and Other...............................................................................................
Net Decrease in Call Money and Borrowed Money .......................................................................
Net Increase in Foreign Exchange ..................................................................................................
Net Increase in Other Liabilities .....................................................................................................
Total ......................................................................................................................................
Net Cash Used in Operating Activities ............................................................................
CASH FLOWS FROM OTHER ACTIVITIES
Proceeds from Sales of Stocks and Other ........................................................................................
Proceeds from Settlements of Money Held in Trust........................................................................
Proceeds from Sales of Premises and Equipment .............................................................................
Other Proceeds .............................................................................................................................
Total ......................................................................................................................................
Purchases of Stocks and Other ........................................................................................................
Investments on Money Held in Trust .............................................................................................
Purchases of Premises and Equipment.............................................................................................
Other Payments..............................................................................................................................
Total ......................................................................................................................................
Net Cash Used in Other Activities ...................................................................................
DIVIDENDS AND INCOME TAXESDividends Paid ...............................................................................................................................
Income Taxes Paid .........................................................................................................................
Total ......................................................................................................................................
CASH FLOWS FROM FINANCING ACTIVITIESIssuance of Preferred Stock and Capital Stock .................................................................................
Issuance of Preferred Securities of Subsidiaries ................................................................................
Issuance of Bonds ..........................................................................................................................
Total ......................................................................................................................................
Principal Payments of Bonds and Convertible Bonds .....................................................................
Total ......................................................................................................................................
Net Cash Provided by Financing Activities ....................................................................
Net Increase (Decrease) in Cash and Cash Equivalents .............................................................
Cash and Cash Equivalents at Beginning of Year.......................................................................
Effect of the Increase in Scope of Consolidated Subsidiaries and Affiliates,
Net of Cash and Cash Equivalents .............................................................................................
Effect of the Decrease in Scope of Consolidated Subsidiaries and Affiliates,
Net of Cash and Cash Equivalents .............................................................................................
Cash and Cash Equivalents at End of Year .................................................................................
The accompanying notes are an integral part of these statements.

68

1999

1998

1999

¥1,042,571
109,371
724,756
132,485
25,4012,034,586
448,967
373,079
518,332
49,00331,245
411,718
1,832,346
875,383(325,517)(10,666)
135,363
262,222
1,786,022
125,720(539,958)
2,308,570(2,444,182)(1,191,676)
25,057250,068(3,360,732)(849,921)¥1,157,721
123,581
919,027
134,140
58,7272,393,198
702,069
408,574
435,337
52,69914,984
417,823
2,031,489
1,327,070
776,993
145,214(465,862)(81,925)
1,148,344(38,520)(989,472)
1,821,840(4,097,119)(279,667)
31,221
1,524,678(2,820,886)(637,337)$ 8,648,461
907,267
6,012,078
1,099,013
210,711
16,877,530
3,724,324
3,094,812
4,299,731
406,497259,189
3,415,334
15,199,887
7,261,584(2,700,268)(88,480)
1,122,886
2,175,214
14,815,613
1,042,890(4,479,121)
19,150,318(20,275,256)(9,885,332)
207,861
2,074,400(27,878,327)(7,050,366)

413,545
206,439
102,772
9,378
732,135
469,898
181,438
40,912
188,290
880,539(148,404)

1,281,553
239,591
55,363
6,971
1,583,479
1,340,433
209,136
58,432
488,306
2,096,308(512,829)

3,430,487
1,712,483
852,529
77,797
6,073,296
3,897,954
1,505,090
339,379
1,561,932
7,304,355(1,231,059)

35,55810,51946,078

12,577
12,072
24,649294,971
87,263382,234

1,016,988—
200,000
1,216,988
26,97926,9791,190,008
145,604
1,040,512—
227,681
1,029,093
1,256,774
274,955
274,955
981,819(192,996)
1,233,508

8,436,239—
1,659,063
10,095,302
223,806
223,806
9,871,496
1,207,837
8,631,373

24,346—201,960

2,786¥1,207,676—¥1,040,512

23,115$10,018,055

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fuji Bank Group

1. Basis of Presentation

2. Summary of Significant Accounting Policies(a) Principles of Consolidation
The consolidated financial statements include the accounts of The
Fuji Bank, Limited (“the Bank”) and 182 of its consolidated
subsidiaries (the “Fuji Bank Group”) including The Yasuda Trustand Banking Company Ltd. (a Japanese corporation), Fuji
Securities Co., Ltd. (a Japanese corporation), The Fuji Trust andBanking, Co., Ltd. (a Japanese corporation), The Fujigin Credit,
Ltd. (a Japanese corporation), Fuyo General Lease Co., Ltd. (aJapanese corporation), Fujigin Factors, Ltd. (a Japanese corporation), The J.M.C. Credit, Ltd. (a Japanese corporation), Fuji Bank
(Schweiz) AG (a Swiss corporation), The Fuji Bank and Trust
Company (a U.S. corporation), and Fuji America Holdings, Inc.
(a U.S. corporation) and its subsidiaries (including the Heller
Group), principally Heller Financial, Inc. The number of theconsolidated subsidiaries was 182 and 114 for the years ended
March 31, 1999 and 1998, respectively.
Certain domestic subsidiaries have not been consolidated sincethese subsidiaries are not significant and their results have nomaterial impact on the consolidated financial statements of the
Bank and its consolidated subsidiaries.
All significant intercompany accounts and transactions havebeen eliminated.

The Bank early adopted a new accounting standard for consolidated financial statements for the year ended March 31, 1999 whichbecame effective for the year ended after March 31, 1999. The newstandard requires a company to consolidate any subsidiaries of which
the company controls the operations, irrespective of whether or not
the company owns a majority of their shares. Control is considered
to exist where the company has (a) the power to appoint or remove
the majority of the Board of Directors or an equivalent governing
body, or (b) the power to cast the majority of the votes at a meetingof the Board of Directors or an equivalent governing body.
The financial statements of the consolidated subsidiaries whosebalance sheet dates are principally December 31 are included in the
consolidated financial statements on the basis of their respective
fiscal years after making the appropriate adjustments for any significant transactions during the periods from their respective balance
sheet dates to the date of the consolidated financial statements.
The difference between cost and underlying interest in Heller
International Group, Inc., Fuji America Holdings, Inc. andYasuda Trust and Banking Co., Ltd. at the respective dates ofacquisition is amortized over a period of five years on a straightline basis. Such a difference, if incurred in the acquisition of otherconsolidated subsidiaries, is charged or credited to income in theyear of acquisition.

(b) Trading Assets and Liabilities
Effective April 1, 1997, the Bank introduced a new method for thevaluation of trading accounts included in trading assets and trading
liabilities as prescribed under Article 17-2 of the Banking Law of Japan.
The effects of the introduction of the new method for tradingtransactions resulted in a decrease of loss before income taxes andothers of ¥21,551 million and increases in total assets and liabilitiesof ¥1,842,739 million and ¥1,814,168 million, respectively.
Trading assets and liabilities are valued using quoted market
prices, where available. However, quoted market prices are notavailable for a substantial portion of the financial instruments. Fairvalue for such financial instruments is estimated using thediscounted cash flow models or other valuation techniques.

(c) Translation of Foreign Currencies(i) The financial statements of consolidated foreign subsidiaries
and affiliates are translated into Japanese yen at the exchange
rates prevailing at the ends of their respective fiscal years forthe consolidated financial statements for the years ended
March 31, 1999 and 1998, except for the beginning andending balances of their earned surpluses which are translated at historical exchange rates.
(ii) a) Foreign currency accounts held by the Bank are translated into Japanese yen at the exchange rates prevailing at
the end of the fiscal year, except that certain special
accounts, as approved by the Japanese regulatory authorities, are translated at historical exchange rates.
b) Foreign currency accounts held by the consolidated
foreign subsidiaries are translated into the currency of eachsubsidiary at the respective year-end exchange rates.
(iii) Foreign exchange trading positions, including spot, forward,
currency futures and currency options contracts, are valued
at fair value and the resulting gains and losses are included in
the accompanying consolidated statements of income.
69

CONSOLIDATEDThe accompanying consolidated financial statements have been
prepared on the basis of accounting principles and practices
generally accepted in Japan and have been compiled from theconsolidated financial statements filed with the Minister ofFinance as required by the Securities and Exchange Law of Japan.
Certain items presented in the consolidated financial statements
filed with the Minister of Finance have been reclassified for theconvenience of readers outside Japan.
Certain previously reported amounts have been reclassified toconform with the current period’s presentation.
Although not required to be filed with the Minister of Finance,
consolidated statements of cash flows for the years ended March
31, 1999 and 1998 have been prepared and included in theaccompanying consolidated financial statements. For the purposesof reporting cash flows, cash and cash equivalents consist of cash
and demand deposits with the Bank of Japan in accordance with
the Guidelines for Statements of Cash Flows issued in June 1991.
As permitted by the Securities and Exchange Law of Japan,
amounts of less than one million yen have been omitted. As a result,
the totals in yen shown in the consolidated financial statements do notnecessarily agree with the sum of the individual amounts.
Amounts in U.S. dollars are included solely for the convenienceof readers outside Japan. The rate of ¥120.55=U.S.$1, the rate ofexchange in effect on March 31, 1999, has been used in translation.
The inclusion of such amounts is not intended to imply thatJapanese yen have been or could be readily converted, realized or
settled in U.S. dollars at that rate or any other rate.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fuji Bank Group(d) Securities(f) Reserve for Possible Loan Losses

Securities are stated at cost determined by the moving average
cost method.
Effective April 1, 1997, the Bank changed its method ofvaluation of listed securities and listed securities held in separately
managed trusts including in the securities account, from the lowerof cost or market to the moving average cost method. Japanese
government bonds had been stated at cost determined by themoving average cost method prior to this change. The effect of
this change resulted in a decrease of loss before income taxes andminority interests of ¥433,195 million.
Securities owned by the consolidated subsidiaries are carried
principally at cost or at the lower of cost or market, cost being
determined by the moving average cost method.

The Bank and its major domestic subsidiaries implemented a new
methodology for calculating reserves for possible loan losses
effective April 1, 1997 and 1998, respectively.
The reserves for possible loan losses of the Bank and its majordomestic trust bank are made in accordance with the policies
regarding write-offs and reserve standards stipulated in the
Uniform Accounting Standards for Banks. Pursuant to the internal
rules for self-assessment of asset quality and the Bank’s internal
rules for providing reserves for possible credit losses, a reserve forpossible loan losses is provided as described below:
For loans to borrowers which are classified as substantiallybankrupt or which are bankrupt in the formal legal sense a reserve
is provided based on the amount remaining after deduction of theamount of collateral considered to be disposable and amounts
recoverable under guarantees.
For loans to borrowers which although not actually bankrupt
in the legal sense, have experienced serious management difficulties and whose failure is imminent, a reserve is provided based on
the amount remaining after deduction of the amount of collateralconsidered to be disposable and the amounts recoverable underguarantees as well as an overall comprehensive analysis of thelikelihood of repayment.
For other loans, a reserve is provided based on historical loan
loss experience.
The reserve relating to loans to certain lesser developed
countries is provided based on the prospective loss after consideration of the relevant country’s political and economic situation,etc. (including reserves for losses on overseas investments asprescribed under Article 55-2 of the Exceptions to Corporation
Tax Law).
The above procedures for providing reserves have been developed on the basis of the quality of all the Bank’s loan assets, using
the Bank’s internally established rules for self-assessment.
Effective the year ended March 31, 1999, the Bank adopted a
new method of charge-offs of secured loans under which amounts
deemed uncollectible by means of disposition of collateral, or
through guarantees for loans to borrowers which are classified as
substantially bankrupt or are bankrupt in the formal legal sense,are charged off against the respective loan balances. The amountof charge-offs during the year ended March 31, 1999 totaled¥1,176,863 million.
Other consolidated subsidiaries provide reserves for possible
loan losses at amounts considered reasonable in accordance withlocal accounting standards and also based on their management’s
assessment of the loan portfolio.

CONSOLIDATED(e) Depreciation of Premises and Equipment
Premises and equipment are carried at cost less accumulated
depreciation.
Depreciation of premises other than buildings and equipment
owned by the Bank is computed by the declining-balance method
at the rates prescribed in the Corporation Tax Law.
Prior to April 1, 1998, depreciation of buildings owned by the
Bank was calculated by the declining-balance method. Effective April
1998, the Corporation Tax Law requires adoption of the straight-line
method for buildings acquired on and after that date. The Bank hastaken this opportunity to adopt the straight-line method for all its
buildings, because it is considered reasonable that the same methodof depreciation be applied to the same assets as the reorganizationof the Bank’s network proceeds and it is also deemed reasonable
that the usable value of a building remains constant over its usefullife and thus depreciating the same amount over its useful life
presents periodic profit and loss more appropriately.
The effect of this change was a decrease in ordinary loss and loss
before income taxes and minority interests of ¥2,111 million for theyear ended March 31, 1999.
In addition, due to a revision in the Corporation Tax Law
effective April 1, 1998, the useful lives of buildings were shortened. This resulted in an increase in ordinary loss and loss before
income taxes and minority interests of ¥676 million for the year
ended March 31, 1999.
Prior to April 1, 1997, depreciation of buildings owned by the
Bank was calculated by the declining-balance method at 160 percentof the depreciation expense allowable under the Corporation Tax
Law. However, due to a revision in the Uniform AccountingStandards for Banks effective April 1, 1997, depreciation of buildings
was calculated by the declining-balance method at 100 percent of
the depreciation expense allowable under the Corporation Tax Law.
The effect of this change in depreciation was a decrease in loss
before income taxes and minority interests by ¥6,940 million for theyear ended March 31, 1998.
Depreciation of premises and equipment owned by consolidated subsidiaries is mainly computed by the straight-line method
over the estimated useful lives of the assets.
The estimated useful lives for premises range from three to 65
years and for equipment from two to 20 years.

70(g) Reserve for Retirement Allowances and Pension Plans
The reserve for retirement allowances of the Bank and its majordomestic subsidiaries is provided in accordance with the Rules for
Bank Accounting, based on the amount which would have beenrequired to be paid if all employees covered by the retirement
plan had voluntarily terminated their employment at the balance
sheet date.

In addition, the Bank has a contributory pension plan for eligible employees. The unamortized balance of prior service cost at
March 31, 1998 (based on the most recent available information on
the pension plan) was ¥19,915 million. Prior service cost is being
amortized over a period of 15 years and nine months.
The consolidated subsidiaries principally have funded pension
plans for their employees.

(h) Land Revaluation AccountLand used for the Bank’s business activities has been revalued on
the basis prescribed by the Law Concerning Land Revaluation.

(i) Lease Transactions
Finance leases under which the ownership of the leased property
is deemed to have been transferred to the lessee are capitalized,
while other finance leases are accounted for as operating leases.
However, lease transactions of certain foreign consolidated
subsidiaries are classified and accounted for as either capital or
operating leases.

(j) Income Taxes(k) Appropriation of Earned Surplus
Cash dividends and bonuses to the directors and the senioroverseers are recorded in the fiscal year in which the proposed
appropriations of earned surplus are approved by the Board of
Directors and/or at the general meeting of the stockholders.

Trading Assets
Trading assets at March 31, 1999 and 1998 consisted of thefollowing:
Millions of yen
1999
1998

Trading securities.................................... ¥1,204,750
Derivatives of trading securities...............
1,747
Securities related to trading transactions ..
56,143
Trading-related financial derivatives........ 1,005,252
Other trading assets.................................
662,927¥2,930,820¥ 877,934
409
111,068
1,391,380
884,619¥3,265,412

Trading Liabilities
Trading liabilities at March 31, 1999 and 1998 consisted of thefollowing:
Millions of yen
1999
1998

Trading securities sold for short sales ....... ¥ 859,755
Derivatives of trading securities...............
384
Securities related to trading transactions
sold for short sales.................................
4,595
Derivatives of securities related to
trading transactions ...............................
50
Trading-related financial derivatives........
959,044¥1,823,830¥ 561,405
294
12,231—
1,483,235¥2,057,167

4. Securities
Securities at March 31, 1999 and 1998 were as follows:
Millions of yen
1999
1998

Japanese national government bonds ....... ¥1,111,524
Japanese local government bonds ............
306,800
Japanese corporate bonds and financial
debentures ............................................
698,553
Japanese corporate stocks ........................ 3,610,195
Other securities ......................................
941,685¥6,668,759¥1,090,825
368,933
538,052
3,474,758
572,261¥6,044,830(l) Net Income (Loss) per Share
Net income (loss) per share is computed based on the average
number of shares of common stock outstanding during the year.
Net income per share (diluted) is computed based on the
average number of shares of common stock outstanding during
the year, after giving effect to the dilutive potential of the sharesof common stock to be issued upon the conversion of convertible
bonds and preference shares. It was not necessary to disclose net
income per share (diluted) for the year ended March 31, 1999 and1998 because a net loss was recorded.

71

CONSOLIDATED

Effective the year ended March 31, 1999, the Bank and its majordomestic subsidiaries adopted the asset liability method foraccounting for income taxes in accordance with the amendment
to the Regulation of the Consolidated Financial Statements.
Under the asset liability method, deferred tax assets and liabilities
are determined based on differences between financial reporting
and tax basis of assets and liabilities and are measured using theenacted tax rates and laws that will be in effect when the differences are expected to be reversed. Prior to the adoption of theasset liability method, income tax expense was determined using
the deferred method. Under the deferred method deferred tax
expense was based on items of income and expense that werereported in different years in the financial statements and tax
returns and were measured at the tax rate in the year the differences originated. The effect of this change resulted in an increase
in total assets of ¥37,039 million and a decrease in net loss of¥73,244 million for the year ended March 31, 1999.

3. Trading Assets and Trading Liabilities

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fuji Bank Group

5. Loans and Bills Discounted

6. Other Assets

Loans and bills discounted at March 31, 1999 and 1998 consistedof the following:

Other assets at March 31, 1999 and 1998 consisted of the following:

Millions of yen
1999
1998

CONSOLIDATED

Bills discounted....................................... ¥ 236,043 ¥ 726,927
Loans on notes and deeds........................ 27,549,165 27,583,391
Overdrafts............................................... 6,273,535
5,408,580
Financing receivables, including factoring,leasing and property financing...............
757,099309,301¥ 34,815,843 ¥34,028,201

Loans to borrowers under bankruptcy procedures and othernonaccrual loans totaled ¥236,441 million and ¥995,089 million,
respectively at March 31, 1999.
A loan is placed on nonaccrual status when substantial doubt as
to the collectibility of its principal or interest is judged to exist, if
payment is past due for a certain period of time or for other reasons.
Other nonaccrual loans are nonaccrual loans other than loans
to borrowers under bankruptcy procedures and loans of whichinterest payments have been deferred in order to assist the restructuring of the borrowers.
Due to the charge-offs of loans deemed uncollectible as statedin Note 2. “Summary of Significant Accounting Policies,” loans
to borrowers under bankruptcy procedures and other nonaccrualloans decreased by ¥661,914 million and ¥847,781 million,
respectively at March 31, 1999.
Loans past due for 3 months or more totaled ¥243,657 million
at March 31, 1999. Loans past due for 3 months or more are thoseof which interest or principal payments are past due for 3 months
or more but which are not included in loans to borrowers underbankruptcy procedures or other nonaccrual loans.
Restructured loans totaled ¥301,461 million at March 31, 1999.
Restructured loans are those to which the Bank granted concessions, such as reduction of contractual interest rates or principal
amounts and deferral of interest/principal payments, in order toassist the restructuring of the borrowers. Excluded from restructured loans are loans to borrowers under bankruptcy procedures,
other nonaccrual loans, and loans past due for 3 months or more.
Loans to borrowers under bankruptcy procedures, other nonaccrual loans, loans past due for 3 months or more and restructuredloans amounted to ¥1,776,650 million in the aggregate at March 31,
1999.

Millions of yen
1999
1998

Accrued income and prepaid expenses .... ¥ 427,750
Securities in custody ............................... 1,357,438
Other ..................................................... 2,587,619¥4,372,807¥ 583,851
1,327,847
1,414,387¥3,326,086

7. Premises and Equipment
Premises and equipment at March 31, 1999 and 1998 consisted of
the following:
Millions of yen
1999
1998

Land ...................................................... ¥Buildings ................................................
Equipment..............................................
Other .....................................................

359,047
386,275
280,636
133,827
1,159,787
Accumulated depreciation.......................
414,170
Net book value....................................... ¥ 745,616¥ 408,168
297,937
234,549
96,2491,036,905
342,950¥ 693,955

8. Deposits
Deposits at March 31, 1999 and 1998 consisted of the following:
Millions of yen
1999
1998

Current deposits ..................................... ¥ 1,617,111 ¥ 1,492,644
Ordinary deposits.................................... 5,536,451
5,713,618
Deposits at notice ................................... 1,344,490
1,081,426
Time deposits ......................................... 16,791,132 19,429,290
Other deposits ........................................ 3,989,022
3,649,892
29,278,208 31,366,873
Negotiable certificates of deposit............. 5,368,021
3,185,488¥34,646,230 ¥34,552,361

9. Borrowed Money
Borrowed money at March 31, 1999 and 1998 consisted of thefollowing:
Millions of yen
1999
1998

Bills rediscounted.................................... ¥—Borrowings from the Bank of Japan andother financial institutions..................... 2,794,984
Commercial paper ..................................
725,468¥3,520,453

¥

8,741

2,636,846
301,580¥2,947,169

Subordinated borrowed money amounting to ¥1,176,620 million atMarch 31, 1999 and ¥891,300 million at March 31, 1998 wasincluded in “Borrowings from the Bank of Japan and other financial
institutions.”72

10. Bonds

12. Other Liabilities

Bonds at March 31, 1999 and 1998 consisted of the following:
Millions of yen
1999
1998

Subordinated bonds ............................... ¥ 1,319,261
Other .....................................................
36,814¥ 1,356,075¥ 818,075
839,148¥1,657,224

Other liabilities at March 31, 1999 and 1998 consisted of thefollowing:
Millions of yen
1999
1998

Accrued expenses and unearned income . ¥ 628,755
Accrued income taxes.............................
26,913
Securities borrowed ................................ 1,333,366
Other ..................................................... 2,680,705¥4,669,740¥ 650,369
18,391
1,312,619
2,400,418¥4,381,799

11. Convertible Bonds
Convertible bonds at March 31, 1999 and 1998 consisted of thefollowing:
Millions of yen
1999
1998

¥ 2,854¥ 2,854

2,811

9,727

¥

361

¥

—

4,691

—

4,744
¥ 15,464—¥12,582

The convertible bonds, unless previously redeemed, are convertible into shares of common stock of the respective issuing companies. The conversion price of each issue is subject to adjustment incertain cases including stock splits.
The conversion prices per share were as follows:
Conversion priceper share atMarch 31, 1999

The Bank:
2 3/4 percent U.S. dollar convertible
bonds due 2000 ........................... ¥1,368.90
1 3/4 percent U.S. dollar convertible
bonds due 2002 ........................... ¥2,875.60
Consolidated subsidiary:
2 3/8 percent U.S. dollar convertible
bonds due 2001 ........................... ¥1,119.30
1 3/4 percent U.S. dollar convertible
bonds due 2002 ........................... ¥2,163.90
2 7/8 percent U.S. dollar convertible
bonds due 2003 ........................... ¥1,814.90

Fixedexchangerate¥239.60=U.S.$1¥146.45=U.S.$1¥157.00=U.S.$1¥144.65=U.S.$1

Other reserves at March 31, 1999 and 1998 consisted of thefollowing:
Millions of yen
1999
1998

Reserve for possible losses on loans sold off ... ¥140,399
Reserve for specific borrowers under support..
49,073
Reserve for possible losses from trading
account securities transactions ...............
—
Reserve for financial futures transaction
liabilities ...............................................
63
Reserve for securities transaction liabilities.....
6¥189,542¥ 52,717
122,300995
47
5¥176,066

The reserve for possible losses on loans sold off has been provided
by the Bank at March 31, 1998 and by the Bank and its majordomestic subsidiaries at March 31, 1999 against possible future
losses after consideration of the value of the collateral of the loans
sold off to the Cooperative Credit Purchasing Company.
The reserve for specific borrowers under support has been
provided by the Bank at March 31, 1998 and by the Bank and its
major domestic subsidiaries at March 31, 1999 for loans to support
the rehabilitation of specific borrowers. An estimate has been madeof the future amount likely to be required in supporting suchborrowers and the necessary amount is accounted for under theabove reserve. This reserve is stipulated under Article 287-2 of theCommercial Code of Japan.
The reserve for possible loss from trading account securities
transactions, which was provided by certain consolidated
subsidiaries at March 31, 1998, has not been provided at March 31,
1999 as a result of a recent amendment to the Securities andExchange Law.

¥134.50=U.S.$1

73

CONSOLIDATEDThe Bank:
2 3/4 percent U.S. dollar convertible
bonds due 2000 .............................
1 3/4 percent U.S. dollar convertible
bonds due 2002 .............................
Consolidated subsidiary:
2 3/8 percent U.S. dollar convertible
bonds due 2001 .............................
1 3/4 percent U.S. dollar convertible
bonds due 2002 .............................
2 7/8 percent U.S. dollar convertible
bonds due 2003 .............................

13. Other Reserves

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fuji Bank Group

14. Acceptances and Guarantees
All contingent liabilities arising from acceptances and guarantees
are included in this account. As a contra-account, “Customers’
Liabilities for Acceptances and Guarantees” is shown on the assets
side of the balance sheets and represents the Fuji Bank Group’s
right of indemnity from its customers.
Acceptances and guarantees at March 31, 1999 and 1998
consisted of the following:
Millions of yen
1999
1998

Acceptances ............................................ ¥ 22,020
Letters of credit.......................................
190,858
Guarantees.............................................. 2,179,567¥ 2,392,446

41,164257,351
2,024,220¥2,322,736

CONSOLIDATED

Millions of yen
1999
1998

¥

15. Land Revaluation
Pursuant to the Law Concerning Land Revaluation, land used for
the Bank’s business activities was revalued on March 31, 1998.
The excess of the revalued carrying amount over the book value
before revaluation, which was included in liabilities at March 31,
1998, is included in shareholders’ equity in the amount net of tax
effect at March 31, 1999 due to the revision in the Law enacted
on March 31, 1999. The corresponding income tax is included inliabilities at March 31, 1999 as deferred tax liability for land
revaluation. This resulted in a decrease in total liabilities of¥131,767 million and an increase in total shareholders’ equity of¥131,767 million.
The land prices for revaluation were determined based on theprices in the official notice published by the Commissioner of the
National Tax Agency in accordance with Article 2, Paragraph 4 of
the Enforcement Ordinance Concerning Land Revaluation, after
making reasonable adjustments.
The difference between the revalued carrying amount and thefair value of the land revalued in accordance with Article 10 of the
Law was ¥17,185 million.

16. Common Stock, Preferred Stock and Capital Surplus
The Bank’s authorized number of shares of capital stock (common
stock and preferred stock) as of March 31, 1999 was as follows:(i) 10 billion shares of common stock, voting and ranking equallywith any other class of shares (except for preference shares)
with respect to the payment of dividends and distributions on
the liquidation or winding-up of the Bank. The dividend rate
and redemption and conversion rights, if any on such shares,
are to be determined by the Board of Directors of the Bankprior to issuance.

74(ii) Class I 82,411,000 shares, Class II 500,000,000 shares, Class III
500,000,000 shares and Class IV 500,000,000 shares ofpreferred stock, non-voting and ranking prior to shares ofcommon stock with respect to the payment of dividends anddistributions on the liquidation or winding-up of the Bank.
The dividend rate and redemption and conversion rights, if
any on such shares, are to be determined by the Board of
Directors of the Bank prior to issuance.
The information relating to Common Stock, Preferred Stockand Capital Surplus is as follows:

Common Stock:
Balance at beginning of year................ ¥424,087
Increase:
Issuance...........................................
108,746
Conversion of convertible
preferred stock ..............................
26,383
Balance at end of year ............................. ¥559,216(Shares issued and outstanding at end of year) (3,441,618
thousand shares)
Preferred Stock:
Balance at beginning of year................ ¥105,000
Increase:
Issuance...........................................
400,000
Decrease:
Conversion of convertible
preferred stock ..............................
26,383
Balance at end of year ............................. ¥478,616(Shares issued and outstanding at end of year)(452,411
thousand shares)
Capital Surplus:
Balance at beginning of year................ ¥419,954
Increase:
Issuance of common stock ...............
108,242Issuance of preferred stock ...............
400,000
Balance at end of year ............................. ¥928,196¥424,087——¥424,087(2,897,614
thousand shares)¥105,000——¥105,000(70,000
thousand shares)¥419,954——¥419,954

Preferred stock issued and outstanding at March 31, 1999 and1998 consisted of the following:
Millions of yen
1999
1998

First Series Class I Preferred Stock ..........
Second Series Class IV Preferred Stock ...
Third Series Class III Preferred Stock......
Fourth Series Class III Preferred Stock ....

¥ 78,616
150,000
125,000
125,000¥478,616¥105,000———¥105,000First Series Class I Preferred Stock was issued on December 28,
1996 at an issue price of ¥3,000 per share, and Second Series Class
IV, Third Series Class III and Fourth Series Class III Preferred
Stock were all issued on March 31, 1999 at an issue price of¥2,000 per share.

17. Legal Reserve
Under the Banking Law of Japan, an amount equivalent to at least
20 percent of any distribution of retained earnings must be appropriated to the legal reserve until the reserve equals 100 percent of
the stated capital. This reserve is not available for dividends but
may be used to reduce a deficit or may be transferred to thecommon stock account.

18. Trading Revenue
The components of trading revenue for the years ended March
31, 1999 and 1998 were as follows:
Millions of yen
1999
1998

Revenue from trading securities andderivatives .........................................
Revenue from securities and derivatives
related to trading transactions .............
Revenue from trading-related financial
derivatives transactions .......................
Other trading revenue..........................

¥17,881¥28,298

6,549

6,239

8,735
4,975
¥38,142

19,366
3,008¥56,913

19. Other Operating Income and Other Income
Other Operating Income
The components of other operating income for the years ended
March 31, 1999 and 1998 were as follows:
Millions of yen
1999
1998

Gains on foreign exchange transactions ... ¥ 18,893
Gains on sales of bonds ...........................
151,612
Gains on redemption of bonds ................
978
Other .....................................................
343,911¥515,395¥ 18,822
105,512
3,834
23,334¥151,504

Other Income
The components of other income for the years ended March 31,
1999 and 1998 were as follows:
Millions of yen
1999
1998

Gains on sales of stocks and other securities ... ¥105,650
Gains on money held in trust..................
1,576
Gains on disposal of premises and equipment ...
80,648
Collection of written-off claims ..............
1,330
Reversal of reserve for price fluctuationof Japanese national government bonds...
—
Reversal of reserve for possible losses on
trading account securities ......................
995
Reversal of reserve for securities
transaction liabilities..............................
—
Other .....................................................
25,471¥215,673¥275,928
904
45,81470
7,513
13,362
5
11,205¥354,805

75

CONSOLIDATEDAnnual dividends per share on First Series Class I, Second
Series Class IV, Third Series Class III and Fourth Series Class III
Preferred Stock are payable at ¥7.50 through February 1, 2002,¥42.00, ¥11.00 through February 1, 2011, and ¥8.00 throughFebruary 1, 2009, respectively, exclusive of interim dividends per
share of ¥3.75, ¥21.00, ¥5.50 and ¥4.00, respectively, if any,
except that dividends per share on Second Series Class IV, Third
Series Class III and Fourth Series Class III Preferred Stock for theyear ended March 31, 1999 are payable at ¥0.12, ¥0.04 and ¥0.03,
respectively.
First Series Class I, Third Series Class III and Fourth Series
Class III Preferred Stock are convertible into shares of common
stock at the option of the shareholders from July 1, 1997 to
January 31, 2002, from October 1, 2006 to January 31, 2011 andfrom October 1, 2004 to January 31, 2009, respectively, at conversion prices determined based on the market price of the Bank’scommon stock every October 1 applied subsequent to the firstdates of the respective convertible periods, subject to floor pricesof 65 percent, 80 percent and 70 percent, respectively, of theinitial conversion prices. The initial conversion price of First Series
Class I Preferred Stock is ¥2,002, and those of Third Series Class
III and Fourth Series Class III Preferred Stock are determined bymultiplying the market price of the Bank’s common stock at
October 1, 2006 and 2004 by 1.025 and are subject to floor pricesof ¥420 and ¥540, respectively. The conversion prices are subject
to a certain adjustment as to the issuance of new shares of common
stock at the price below the then current market price of theBank’s common stock, stock splits, etc.
The Bank may, at its option, redeem Second Series Class IV,
Third Series Class III and Fourth Series Class III Preferred Stockat ¥2,000 plus accrued dividends per share from April 1, 2004 andthereafter, from April 1, 2004 to September 30, 2006 and from
April 1, 2004 to September 30, 2004, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fuji Bank Group

20. Other Operating Expenses and Other Expenses

21. Income Taxes

Other Operating Expenses

Income taxes in Japan applicable to the Bank and its domestic
subsidiaries for the years ended March 31, 1999 and 1998
comprised corporation tax, inhabitants’ taxes and enterprise tax at
the approximate rates indicated below:

The components of other operating expenses for the years ended
March 31, 1999 and 1998 were as follows:
Millions of yen
1999
1998

Losses on sales of bonds ..........................
Losses on redemption of bonds ...............
Losses on devaluation of bonds ...............
Other .....................................................

¥ 69,029
3,458
287
291,674¥ 364,449¥28,561
2,864
472
14,917¥46,816

Other Expenses
The components of other expenses for the years ended March 31,
1999 and 1998 were as follows:

CONSOLIDATED

Millions of yen
1999
1998

Provision for possible loan losses ................ ¥ 285,732
Write-offs of loans ..................................
490,179
Losses on sales of stocks and other securities...
75,254Losses on devaluation of stocks andother securities .....................................
121,678
Losses on money held in trust .................
1,887
Losses on disposal of premises and equipment ..
6,653
Provision for possible losses on
trading account securities transactions ...
—Provision for financial futurestransaction liabilities..............................
16
Provision for securities
transaction liabilities..............................
0
Losses on sales of loans collateralized byreal estate to Cooperative Credit
Purchase Company...............................
34,021Other .....................................................
275,481¥ 1,290,904¥ 326,519
68,9662,137
56,999
1,817
5,027
503

1
202,768
510,414¥1,175,172

1998

34.5%
7.1%
11.5%
53.1%

37.5%
7.7%
12.5%
57.7%

Unlike other income taxes, enterprise tax is deductible for tax
purposes when paid. Accordingly, the effective income tax rates
were approximately 47.6 percent and 51.3 percent, respectively forthe years ended March 31, 1999 and 1998.
The consolidated foreign subsidiaries are subject to the income
taxes of the respective countries in which they operate.

22. Lease Transactions
Finance Leases
Lessees:
The acquisition cost equivalent, accumulated depreciation equivalent and book value equivalent as of March 31, 1999 relating tofinance lease transactions accounted for as operating leases are
summarized as follows:

16“Other” in “Other Expenses” for the year ended March 31, 1999
includes losses of ¥5,676 million incurred from supporting certain
borrowers. It also includes a loss of ¥150,985 million derived fromthe write-down of the Bank’s securities portfolio whose fair value,
it was determined, would not recover in the short-term. The
purpose of the write-down was to remove promptly the unrealized
loss on the Bank’s securities portfolio and to implement a change inits policy of cross shareholdings with certain of its major customers
in accordance with the Bank’s “Plan for Ensuring Sound
Management” prepared pursuant to Article 5 of the Law
Concerning Emergency Measures to Stabilize Financial Function.
“Other” in “Other Expenses” for the year ended March 31,
1998 includes losses of ¥226,637 million incurred from supporting
certain borrowers, including Japan Mortgage Co., Ltd.

76

Corporation tax....................................
Inhabitants’ taxes ..................................
Enterprise tax .......................................

1999

Millions of yen
Equipment
Other
Total

Acquisition cost equivalent ................
Accumulated depreciation equivalent...
Book value equivalent .......................

¥348
279
¥ 68

¥14
9
¥ 4

¥362
288
¥ 73

Lease expense relating to finance leases accounted for as operatingleases amounted to ¥29 million and ¥697 million, respectively forthe years ended March 31, 1999 and 1998. The related depreciation equivalent for the year ended March 31, 1999 amounted to¥29 million.
Future lease payments subsequent to March 31, 1999 for financeleases accounted for as operating leases (including the interest
portion thereon) are summarized as follows:
Millions of yen

Due in one year or less .....................................
Due after one year............................................

¥31
42
¥73

Lessors:
The acquisition cost, accumulated depreciation, book value, andfuture lease payments to be received subsequent to March 31,
1999, relating to finance lease transactions accounted for as operating leases at March 31, 1999 are summarized as follows:

The statutory tax rates used to calculate deferred tax assets andliabilities for the years ended March 31, 1999 and 1998 were
41.76% and 47.6%, respectively. The effect of the change in thestatutory tax rate resulted in a decrease in deferred tax assets of¥87,913 million and an increase in income taxes of ¥51,708 million.

Millions of yen
Equipment
Other
Total

Acquisition cost ................................ ¥886,309 ¥ 1,349 ¥887,658
Accumulated depreciation .................. 443,502
761 444,263
Book value ....................................... ¥442,807 ¥587 ¥443,395
Due in one Due after
year or less one year

Total

Future lease payments to be received .. ¥165,083 ¥299,065 ¥464,149

24. Segment Information(a) Business Segment Information
Certain consolidated subsidiaries are engaged in securities, trust,leasing, and other businesses in addition to commercial banking
business. As those activities are not deemed material, businesssegment information has not been disclosed.

(b) Geographic Segment Information

Operating Leases
The future lease rentals to be paid to lessors subsequent to March
31, 1999 for operating lease transactions are summarized as follows:
Millions of yen

Due in one year or less .....................................
Due after one year............................................

¥ 7,144
48,213¥55,357

Total adjusted income represents total income excluding “Gains on
disposal of premises and equipment,” “Collection of written-off
claims” and reversals of “Other Reserves.”
Total adjusted expenses represents total expenses excluding “Losses
on disposal of premises and equipment” and transfers to “Other
Reserves.”
The following tables represent the geographic segment information on the Total adjusted income, Ordinary profit (loss) and Assetsof the Bank’s head office, branches and subsidiaries according to
the country of domicile of the respective entities.
The Bank changed its method of accounting for securities as
described in Note 2 (d). This has influenced the results as indicatedin the segment information on Japan for the year ended March 31,
1998.

23. Deferred Taxes
Major components of deferred tax assets and liabilities as of March
31, 1999 are summarized as follows:
Millions of yen

Deferred tax assets:
Reserve for possible loan losses .....................
Tax loss carryforwards...................................
Other ...........................................................
Subtotal ........................................................
Valuation allowance......................................
Total: deferred tax assets ...................................
Deferred tax liabilities:
Lease financing .............................................
Undistributed retained earnings inconsolidated subsidiaries..............................
Other ...........................................................
Net: deferred tax assets .....................................

¥ 482,021
366,462
362,999
1,211,483(130,442)
1,081,040(7,035)(3,674)(1,074)¥1,069,255

77

CONSOLIDATED

Lease income relating to finance leases accounted for as operatingleases amounted to ¥202,084 million and ¥497 million, respectively forthe years ended March 31, 1999 and 1998. The related depreciationand interest income equivalent for the year ended March 31, 1999
amounted to ¥170,001 million and ¥15,832 million, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fuji Bank Group

Millions of yen
Year ended March 31, 1999

Japan

I. Total adjusted income:Customers............................... ¥ 1,557,193
Intersegment ...........................
329,050
1,886,244
Total adjusted expenses...............
2,483,542
Ordinary profit (loss) .................. ¥ (597,298)
II. Assets......................................... ¥ 53,637,767

The Americas

Asia and
Oceania¥ 649,394
64,911
714,306
687,206¥ 27,100¥ 8,194,643¥ 233,265
116,184
349,449
375,506¥ (26,056)¥4,876,576

The Americas

Asia and
Oceania

Europe¥ 753,210
47,581
800,791
727,706¥ 73,084¥9,447,530¥ 356,614
102,053458,668
456,434¥
2,234¥8,235,922¥ 259,048
109,774
368,822337,658¥ 31,164¥3,864,420

EuropeCombined
Total

Intercompany
Transactions

Consolidated
Total¥ 130,613 ¥ 2,570,467 ¥— ¥ 2,570,467
71,390581,537(581,537)—
202,003
3,152,004(581,537)
2,570,467
214,577
3,760,833(516,478)
3,244,355¥ (12,573) ¥ (608,828) ¥(65,059) ¥ (673,888)¥2,438,453 ¥69,147,442 ¥(11,214,398) ¥57,933,043
Millions of yen

CONSOLIDATEDYear ended March 31, 1998

Japan

I. Total adjusted income:Customers............................... ¥ 1,448,385
Intersegment ...........................
158,201
1,606,586
Total adjusted expenses...............
2,234,132
Ordinary profit (loss) .................. ¥ (627,545)
II. Assets......................................... ¥44,653,364

Combined
Total

Intercompany
Transactions

Consolidated
Total¥ 2,817,258 ¥— ¥ 2,817,258
417,610(417,610)—
3,234,868(417,610)
2,817,258
3,755,931(379,176)
3,376,754¥ (521,062) ¥(38,433) ¥ (559,496)¥66,201,238 ¥(11,087,728) ¥55,113,509(c) Total Adjusted Income from International Operations
Millions of yen
Years ended March 31,(i) Total adjusted income from international operations .............................................................
(ii) Consolidated total adjusted income ......................................................................................
(i)/(ii) .......................................................................................................................................

Total adjusted income from international operations represents thesum of total adjusted income generated from the international
operations of the Bank and its domestic consolidated subsidiaries

1999

1998

¥1,329,959¥2,570,467
51.7%¥1,779,636¥2,812,522
63.2%

and total adjusted income of its consolidated foreign subsidiaries
after excluding all intercompany transactions within the Fuji Bank
Group.

25. Subsequent Events
At a general meeting of stockholders held on June 29, 1999
year-end dividends of ¥3.50 per share of common stock totalling¥12,045 million, and of ¥3.75 per share of First Series Class I
preferred stock totalling ¥196 million, ¥0.12 per share of Second
Series Class IV preferred stock totalling ¥18 million, ¥0.04 per shareof Third Series Class III preferred stock totalling ¥5 million and¥0.03 per share of Fourth Series Class III preferred stock totalling¥3 million were approved in respect of the year ended March 31,
1999. In accordance with Japanese accounting practice, these
dividends were not accrued and have not been reflected in the
consolidated financial statements for the year ended March 31, 1999.
Fuji Trust and Banking Co., Ltd., one of the Bank’s
subsidiaries, was merged with DKB Trust and Banking Co., Ltd.
on April 1, 1999. As a result of the merger, the new company,
referred to as Dai-Ichi Kangyo Fuji Trust and Banking Co., Ltd.
(“DKFTB”), is now equally owned by the Bank and Dai-Ichi
Kangyo Bank Co., Ltd.
The objective of the merger is to provide quality trust businessservices based on a stable financial foundation, that satisfy its

78

customers’ increasingly diversified and advanced needs. This is inline with an agreement regarding a Strategic Alliance in Trust
Banking Operations entered into by the Bank and Dai-Ichi
Kangyo Bank Co., Ltd. The amount of common stock of
DKFTB after the merger amounted to ¥40,000 million.
Yasuda Trust and Banking Co., Ltd. (“YTB”), one of theBank’s subsidiaries, entered into an agreement with DKFTB on
April 16, 1999, in which DKFTB acquires the asset management
and administration business of YTB. The objective of the agreement is to perform trust banking operations more efficiently
within the Fuji Bank Group and to strengthen the financial
foundation of YTB. Acquired operations include (a) asset management and related administrative services for corporate pension andother funds, (b) custodial services for various trusts such as specified money trusts and securities investment trusts, and (c) stocktransfer agency services. The date of acquisition is October 1,
1999 and the acquisition price is ¥140 billion. This acquisition is
subject to the approval of a YTB general meeting of shareholders
and to all necessary regulatory and governmental approvals.

Report of Independent Certified Public
Accountants on the Consolidated Financial Statements

The Board of Directors
The Fuji Bank, Limited
We have examined the consolidated balance sheets of The Fuji Bank, Limited and consolidated
subsidiaries as of March 31, 1999 and 1998, and the related consolidated statements of income, earned
surplus and cash flows for the years then ended, all expressed in Japanese yen. Our examinations weremade in accordance with auditing standards, procedures and practices generally accepted and applied inJapan and, accordingly, included such tests of the accounting records and such other auditing procedures as
we considered necessary in the circumstances.

CONSOLIDATED

In our opinion, the financial statements referred to above, expressed in Japanese yen, present fairly the
consolidated financial position of The Fuji Bank, Limited and consolidated subsidiaries at March 31, 1999
and 1998, and the consolidated results of their operations and their cash flows for the years then ended inconformity with accounting principles and practices generally accepted in Japan applied on a consistent basis.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 1999 are presented solely for convenience. Our examination also included the translationof Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on
the basis described in Note 1 to the consolidated financial statements.
Tokyo, Japan
June 29, 1999

Showa Ota & Co.

Statement on Accounting Principles and Auditing Standards
This statement is to remind users that accounting principles and practices as well as auditing standards, procedures andpractices may vary from country to country and could thus affect, possibly materially, the reported financial position
and results of operations. The accompanying financial statements are prepared based on accounting principles andpractices generally accepted in Japan, and the auditing standards, procedures and practices are those generally accepted
and applied in Japan. Accordingly, the accompanying financial statements and auditors’ report presented above are forusers familiar with Japanese accounting principles and auditing standards.

79NON-CONSOLIDATED FINANCIAL STATEMENTS
The Fuji Bank, Limited

Balance Sheets
Thousands of
U.S. dollars (Note 1)

Millions of yen
March 31,

1999

1998

1999

Cash and Due from Banks .................................................................

¥ 2,028,844¥ 2,749,927$ 16,829,898

Call Loans and Bills Purchased...........................................................

814,134

265,542

6,753,500

Commercial Paper and Other Debt Purchased...................................

50,882

29,858422,090

Trading Assets ...................................................................................

1,507,525

2,273,891

12,505,396

Money Held in Trust ........................................................................

60,39885,432501,026

Securities ...........................................................................................

5,837,796

6,250,780

48,426,350

Loans and Bills Discounted ................................................................

29,793,318

32,030,589

247,144,910

Foreign Exchange .............................................................................

421,850

549,415

3,499,383

Other Assets ......................................................................................

1,391,143

2,263,624

11,539,971

Premises and Equipment....................................................................

552,012

673,037

4,579,118

Deferred Tax Assets...........................................................................

732,556—

6,076,789

Customers’ Liabilities for Acceptances and Guarantees .......................
Total Assets ........................................................................

3,193,984¥46,384,449

3,915,992¥51,088,094

26,495,104$384,773,535

NON-CONSOLIDATEDASSETS

The accompanying notes are an integral part of these statements.

80Thousands of
U.S. dollars (Note 1)

Millions of yen
March 31,

1998

1999

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Deposits ............................................................................................
Call Money and Bills Sold .................................................................
Commercial Paper.............................................................................
Trading Liabilities..............................................................................
Borrowed Money..............................................................................
Foreign Exchange..............................................................................
Bonds................................................................................................
Convertible Bonds.............................................................................
Other Liabilities.................................................................................
Reserve for Possible Loan Losses .......................................................
Reserve for Retirement Allowances ..................................................
*Other Reserves................................................................................
Deferred Tax Liability for Land Revaluation ....................................
Acceptances and Guarantees .............................................................
Land Revaluation Account ...............................................................
Total Liabilities .....................................................................

¥32,123,178
2,383,687
400,000
932,049
1,955,418
148,493
300,000
5,666
1,792,816
455,51945,866
231,435
94,481
3,193,984—
44,062,598¥34,442,706
2,256,587—
1,458,546
3,339,624
125,762
100,000
12,5822,888,177
857,491
48,241
175,065—
3,915,992
326,529
49,947,308$266,471,824
19,773,438
3,318,125
7,731,644
16,220,807
1,231,801
2,488,594
47,002
14,871,974
3,778,674
380,478
1,919,834
783,754
26,495,104—
365,513,053

Stockholders’ Equity
Common Stock ................................................................................
Preferred Stock .................................................................................
Capital Surplus ..................................................................................
Legal Reserve....................................................................................
Land Revaluation Account ................................................................
Voluntary Reserve.............................................................................
Special Reserves ................................................................................
Unappropriated Retained Earnings (Deficit) ......................................
Total Stockholders’ Equity....................................................
Total Liabilities and Stockholders’ Equity .....................

559,216
478,616
928,196
96,397
131,767
40,90017
86,7392,321,851¥46,384,449

424,087
105,000
419,954
89,216—589,900
21(487,393)
1,140,785¥51,088,094

4,638,876
3,970,274
7,699,684
799,644
1,093,051
339,278147
719,528
19,260,482$384,773,535* Includes “Reserve for Specific Borrowers under Support,” the balance of which as of March 31, 1999 was ¥84,966 million.

81

NON-CONSOLIDATED

1999

NON-CONSOLIDATED FINANCIAL STATEMENTS
The Fuji Bank, Limited

Statements of Income
Thousands of
U.S. dollars (Note 1)

Millions of yen
Years ended March 31,

NON-CONSOLIDATEDINCOMEInterest Income:Interest on Loans and Discounts ...............................................................
Interest and Dividends on Securities.........................................................
Other Interest Income..............................................................................
.......................................................................................................
Fees and Commissions..................................................................................
Trading Revenue ........................................................................................
Other Operating Income .............................................................................
Other Income ..............................................................................................
Total Income ..................................................................................
EXPENSESInterest Expenses:
Interest on Deposits .................................................................................
Interest on Borrowings and Rediscounts ..................................................
Other Interest Expenses ...........................................................................
.......................................................................................................
Fees and Commissions..................................................................................
Trading Expenses .........................................................................................
Other Operating Expenses............................................................................
General and Administrative Expenses............................................................
Other Expenses ............................................................................................
Total Expenses ................................................................................
Loss before Income Taxes.............................................................................
Income Taxes:
Current....................................................................................................
Deferred ..................................................................................................
Net Income (Loss) ....................................................................................

1999

1998

1999

¥ 877,477
157,893
573,881
1,609,253
106,635
17,978167,591
170,444
2,071,902¥1,011,179
152,901
844,525
2,008,606
109,787
19,060126,928
340,906
2,605,290$ 7,278,950
1,309,780
4,760,528
13,349,258
884,578
149,138
1,390,220
1,413,890
17,187,084

403,139
111,725589,633
1,104,499
45,883—85,557
367,664
1,132,654
2,736,259(664,356)

688,618
110,991
705,985
1,505,595
44,776517
44,614
385,780
1,138,715
3,120,000(514,710)

3,344,172
926,800
4,891,193
9,162,165
380,617—709,729
3,049,894
9,395,722
22,698,127(5,511,043)

332(271,758)¥ (392,929)

3,991—¥ (518,701)

2,755(2,254,325)$ (3,259,473)

Statements of Appropriation of Retained Earnings (Deficit)
Thousands of
U.S. dollars (Note 1)

Millions of yen
Years ended March 31,

Net Income (Loss)........................................................................................
Unappropriated Retained Earnings (Deficit) at Beginning of Year ................
Transfer from Special Reserves .....................................................................
Prior Year’s Adjustment for Deferred Taxes..................................................
Transfer from Reserve for Losses on Overseas Investments in
Conjunction with Adopting Accounting for Deferred Taxes ......................
Total...............................................................................................
Appropriations:
Legal Reserve ..........................................................................................
Voluntary Reserve ...................................................................................
Special Reserves.......................................................................................
Dividends ................................................................................................
Total...............................................................................................
Unappropriated Retained Earnings (Deficit) at End of Year..........................
The accompanying notes are an integral part of these statements.

82

1999

1998

1999

¥(392,929)(487,393)
549,003
460,798¥(518,701)
55,4807—$(3,259,473)(4,043,081)
4,554,157
3,822,464

12
129,491—(463,214)106
1,074,173

7,180
—
12
35,55842,752¥ 86,739

2,600
9,000
1
12,577
24,179¥(487,393)

59,567—
107294,971354,645$ 719,528

NON-CONSOLIDATED FINANCIAL STATEMENTS
The Fuji Bank, Limited

Statements of Cash Flows
Thousands of
U.S. dollars (Note 1)

Millions of yen
Years ended March 31,

The accompanying notes are an integral part of these statements.

1999

1998

1999

¥ 907,403
159,359
7,645
996
68,034
957,939
107,504307
2,209,191
447,707
30,77279,754
1,987
1,726
122
940,372
44,65931,533332,063
1,910,697
825,074(94,191)(454,400)(21,024)
256,863
246,526
1,398,205
123,345415
333,9312,614,747(2,319,528)
263,138(1,520,244)
400,000
22,730(323)(706,992)(3,861,220)(947,978)¥ 993,666
155,559
16,419180
156,364
597,961
109,739
34,5472,064,438
692,706
28,11977,249——191
550,70947,537
13,547343,381
1,753,441
1,378,454
353,251
399,300
26,038(732,334)(160,096)
1,486,641(25,057)551(503,938)
2,222,811(3,836,435)(516,950)
726,472—
29,347(593)
1,251,823(2,346,336)
187,471$ 7,527,199
1,321,937
63,424
8,266
564,370
7,946,407
891,786
2,549
18,325,938
3,713,870
255,264
661,590
16,486
14,3191,016
7,800,684
370,461
261,578
2,754,569
15,849,837
6,844,249(781,347)(3,769,390)(174,402)
2,130,766
2,045,016
11,598,555
1,023,188
3,450
2,770,068
21,690,153(19,241,215)
2,182,812(12,610,902)
3,318,125
188,557(2,681)(5,864,726)(32,030,030)(7,863,776)

440,717
206,439
103,7359,359
760,252
467,226
181,438
36,518194,214879,397(119,145)

1,302,161
239,591
55,3904,923
1,602,066
1,330,997
209,136
48,607477,370
2,066,111(464,044)

3,655,889
1,712,483
860,522
77,6386,306,532
3,875,789
1,505,089
302,933
1,611,067
7,294,878(988,346)

35,558899
36,457

12,577
3,313
15,891

294,971
7,459
302,430

1,016,988
200,000(6,916)
106,491
1,034,294¥1,140,785—
100,000—(192,463)
1,226,758¥1,034,294

8,436,240
1,659,062(57,372)
883,378
8,579,798$ 9,463,176

83

NON-CONSOLIDATEDCASH FLOWS FROM OPERATING ACTIVITIESInterest on Loans and Discounts Received .........................................................................................
Interest and Dividends on Securities Received ...................................................................................
Interest on Call Loans ........................................................................................................................
Interest on Bills Purchased .................................................................................................................
Interest on Due from Banks ...............................................................................................................
Interest on Interest Rate Swaps, etc....................................................................................................
Fees and Commissions Received........................................................................................................
Other Operating Revenue.................................................................................................................
Total .........................................................................................................................................
Interest on Deposits Paid....................................................................................................................
Interest on Call Money Paid ..............................................................................................................
Interest on Bills Sold Paid, etc. ..........................................................................................................
Interest on Commercial Paper Paid ...................................................................................................
Interest on Bonds Paid .......................................................................................................................
Interest on Convertible Bonds Paid....................................................................................................
Interest on Interest Rate Swaps Paid ..................................................................................................
Fees and Commissions Paid................................................................................................................
Other Operating Expenditures...........................................................................................................
General and Administrative Expenses Paid .........................................................................................
Total .........................................................................................................................................
Net Decrease in Due from Banks (excluding Deposits with the Bank of Japan) ..................................
Net Decrease (Increase) in Call Loans ................................................................................................
Net Decrease (Increase) in Bills Purchased .........................................................................................
Net Decrease (Increase) in Commercial Paper and Other Debt Purchased..........................................
Net Decrease (Increase) in Trading Accounts .....................................................................................
Net Proceeds from (Expenditures of ) National Government Bonds and Other Transactions..............
Net Decrease (Increase) in Loans and Bills Discounted ......................................................................
Net Decrease (Increase) in Foreign Exchange.....................................................................................
Net Decrease in Domestic Exchange Settlement Debits .....................................................................
Net Decrease (Increase) in Other Assets .............................................................................................
Total .........................................................................................................................................
Net Decrease in Deposits and Other ..................................................................................................
Net Increase (Decrease) in Call Money and Borrowed Money ...........................................................
Net Increase (Decrease) in Bills Sold ..................................................................................................
Net Increase in Commercial Paper.....................................................................................................
Net Increase in Foreign Exchange......................................................................................................
Net Decrease in Domestic Exchange Settlement Credits ....................................................................
Net Increase (Decrease) in Other Liabilities........................................................................................
Total .........................................................................................................................................
Net Cash Provided by (Used in) Operating Activities ......................................................
CASH FLOWS FROM OTHER ACTIVITIES
Proceeds from Sales of Stocks and Other............................................................................................
Proceeds from Settlements of Money Held in Trust ...........................................................................
Proceeds from Sales of Premises and Equipment.................................................................................
Other Proceeds .................................................................................................................................
Total .........................................................................................................................................
Purchases of Stocks and Other ...........................................................................................................
Investments on Money Held in Trust.................................................................................................
Purchases of Premises and Equipment ................................................................................................
Other Payments .................................................................................................................................
Total .........................................................................................................................................
Net Cash Used in Other Activities.......................................................................................
DIVIDENDS, INCOME TAXES AND OTHER PAYMENTS
Dividends Paid...................................................................................................................................
Income Taxes Paid.............................................................................................................................
Total .........................................................................................................................................
CASH FLOWS FROM FINANCING ACTIVITIESIssuance of Preferred Stock and Capital Stock ....................................................................................
Issuance of Bonds and Notes..............................................................................................................
Redemption of Convertible Bonds ....................................................................................................
Net Decrease (Increase) in Cash and Cash Equivalents ....................................................
Cash and Cash Equivalents at Beginning of Year ..........................................................................
Cash and Cash Equivalents at End of Year.....................................................................................

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
The Fuji Bank, Limited

NON-CONSOLIDATED

1. Basis of Presentation
The Fuji Bank, Limited (“the Bank”) maintains its accounting records andprepares its financial statements in accordance with accounting principles
and practices generally accepted in Japan, the Commercial Code of Japan,
the Banking Law of Japan and the Rules for Bank Accounting issued by
the Ministry of Finance and the accompanying non-consolidated financial
statements have been prepared from the non-consolidated financial
statements filed with the Minister of Finance as required by the Banking
Law of Japan and the Securities and Exchange Law of Japan.
For the convenience of readers outside Japan, certain items presented
in the original financial statements have been reclassified and rearranged.
In addition, certain previously reported amounts have been reclassified to conform with the current year’s presentation.
As permitted by the Securities and Exchange Law of Japan,
amounts less than one million yen have been omitted. As a result,
the totals in yen shown in the accompanying non-consolidated
financial statements for the years ended March 31, 1999 and 1998
do not necessarily agree with the sum of the individual amounts.
Amounts in U.S. dollars are included solely for the convenienceof readers outside Japan. The rate of ¥120.55=U.S.$1, the rate ofexchange in effect on March 31, 1999, has been used in translation.
The inclusion of such amounts is not intended to imply thatJapanese yen have been or could be readily converted, realized or
settled in U.S. dollars at that rate or any other rate.

2. Significant Accounting Policies of The Fuji Bank, Limited(a) Securities
Securities are stated at the moving average cost method.
Effective April 1, 1997, the Bank changed its method of valuationof listed securities and listed securities held in separately managed
trusts, including in the securities account from the lower of cost or
market to the moving average cost method. Japanese government
bonds have been stated at the moving average cost method prior tothis change. The effect of this change in accounting for securities
resulted in a decrease of loss before income taxes of ¥433,195 million.

(b) Reserve for Devaluation of Investment Securities
Effective April 1998, the Bank implemented a new reserve to coverany future potential losses on investments in subsidiaries and affiliated companies. Consideration is given to the financial situation of
the relevant companies in determining the necessary amount to beaccounted for under this reserve.

(c) Deferred Tax Accounting
Effective April 1998, the Bank introduced accounting for deferringincome taxes using the asset liability method. Under the asset liability
method, deferred tax assets and liabilities are determined based on
differences between financial reporting and basis of assets and liabilities and are measured using the enacted tax rates and laws that will bein effect when the differences are expected to reverse. The effect of
this change resulted in an increase of assets of ¥732,556 million, adecrease of net loss of ¥271,758 million and an increase of unappropriated retained earnings (deficit) at end of fiscal year of ¥732,556
million. In addition, the effect of the adoption on unappropriatedretained earnings (deficit) at April 1, 1998 was included in theStatements of Appropriation of Retained Earnings (Deficit) as prioryear’s adjustment for deferred taxes.

(d) Land Revaluation
Pursuant to the Law Concerning Land Revaluation, land used for
the Bank’s business activities was revalued on March 31, 1998. The
excess of the revalued carrying amount over the book value before
84

revaluation, which was included in liabilities at March 31, 1998, is
included in shareholders’ equity in the amount net of tax effect at
March 31, 1999 due to the revision in the Law enacted on March
31, 1999. The corresponding income tax is included in liabilities at
March 31, 1999 as deferred tax liability for land revaluation. This
resulted in a decrease in total liabilities of ¥131,767 million and anincrease in total shareholders’ equity of ¥131,767 million.

(e) Other Significant Accounting Policies
Refer to Notes to Consolidated Financial Statements.

3. Loans and Bills Discounted
Loans to borrowers under bankruptcy procedures and other nonaccrual loans totaled ¥159,589 million and ¥832,336 million respectively at March 31, 1999.
Effective the year ended March 31, 1999 a loan is placed on
nonaccrual status when substantial doubt as to the collectibility of
its principal or interest is judged to exist, if payment is past due for acertain period of time or for other reasons. Other nonaccrual loans
include loans of ¥117,437 million and ¥205,066 million which
would have been included in loans past due for 3 months or more
and restructured loans, respectively, if the previous standards of the
tax regulation were applied. They also include loans of ¥64,882
million which would have been treated as accruing loans if suchstandards were applied. Other nonaccrual loans are nonaccrual loans
other than loans to borrowers under bankruptcy procedures andloans of which interest payments have been deferred in order toassist the restructuring of the borrowers.
Due to the charge-offs of loans deemed uncollectible as stated in
Note 2. to the consolidated financial statements, “Summary of
Significant Accounting Policies,” loans to borrowers under bankruptcy
procedures and other nonaccrual loans decreased by ¥447,178 millionand ¥454,205 million, respectively, at March 31, 1999.
Loans past due for 3 months or more totaled ¥171,153 million atMarch 31, 1999. Loans past due for 3 months or more are those ofwhich interest or principal payments are past due for 3 months ormore but which are not included in loans to borrowers underbankruptcy procedures or other nonaccrual loans.
Restructured loans totaled ¥198,588 million at March 31, 1999.
Restructured loans are those in which the Bank granted concessions, such as reduction of contractual interest rates or principal
amounts and deferral of principal/interest payments, in order toassist the restructuring of the borrowers. Excluded from restructured loans are loans to borrowers under bankruptcy procedures,
other nonaccrual loans and loans past due for 3 months or more.
Loans to borrowers under bankruptcy procedures, other nonaccrual loans, loans past due for 3 months or more and restructuredloans amounted to ¥1,361,668 million in the aggregate at March
31, 1999.

4. Net Income (Loss) per Share
The information of net income (loss) per share of common stock is
as follows:
Yen
Years ended March 31,

1999

Net Income (Loss) .................................. ¥(130.53)

1998¥(179.19)

Net income (loss) per share of common stock is computed based on
the average number of shares of common stock outstanding during
the year, adjusted for the preferred stock dividend.

NON-CONSOLIDATED FINANCIAL STATEMENTS
The Fuji Bank, Limited

Book Value and Market Value Information
Market Prices of Marketable Securities
Billions of yen
1998

1999
Book
value

March 31,

Unlisted Securities
Trading Account Securities:
Bonds .......................................................................
Investment Securities:
Bonds .......................................................................
Stocks .......................................................................
Others ......................................................................
Total Investment Securities .......................................
Total ...................................................................

¥

—

235.6
3,016.9
99.7
0.4
3,352.3¥3,352.3

¥

—

229.9
3,141.4
94.2
1.3
3,465.5¥3,465.5

Unrealized gain (loss)
Net Loss portion

¥

—

(5.7)
124.4
(5.5)
0.8
113.2
¥113.2

¥

—

10.4
222.4
7.2
—
240.1
¥240.1

Book
value

¥

Market
value

—

¥

595.2
3,270.6
59.9
7.5
3,925.8¥3,925.8—

602.6
3,021.8
73.9
20.0
3,698.4¥3,698.4(estimate)
¥

—

970.1
192.0
185.1
1,347.3¥1,347.3

¥

—

973.1
251.5
182.6
1,407.3¥1,407.3

¥

—

2.9
59.5
(2.4)
60.0
¥ 60.0

Unrealized gain (loss)
Net Loss portion

¥

—

7.3
(248.7)14.0
12.5(227.4)¥(227.4)

¥

—

0.2
434.1
2.5
2.4
436.8
¥436.8(estimate)
¥

—

5.2
8.0
3.3
16.6
¥ 16.6

¥

—

¥

822.8
60.8
117.7
1,001.4¥1,001.4

—

832.8
50.1
116.4
999.5
¥ 999.5¥—

10.0(10.6)(1.3)(1.9)¥ (1.9)

¥

—

0.4
23.5
2.0
26.0
¥ 26.0Notes: 1. Bonds include Japanese national government bonds, Japanese local government bonds and Japanese corporate bonds and financial debentures. The market
prices of listed securities are primarily calculated using the closing prices on the Tokyo Stock Exchange.
2. The estimated market values of unlisted securities are determined as follows:
Securities traded over the counter: transaction prices announced by the Japan Securities Dealers Association.
Publicly placed bonds: prices calculated using indicated yield announced by the Japan Securities Dealers Association.
Securities of investment trust: market prices announced by authorized fund management companies.
3. The book values of securities not included in the two tables above are primarily as follows:
Billions of yen
March 31,

Trading Account Securities:
Unlisted Bonds (redemption period less than one year) ..............................................................................
Investment Securities:
Unlisted Notes ..........................................................................................................................................
Unlisted Bonds (redemption period less than one year) ..............................................................................
Unlisted Foreign Bonds .............................................................................................................................
Unlisted Foreign Stocks .............................................................................................................................

1998

1999

¥

—
395.0
14.3
37.3
474.5

¥

—
506.2
13.5
152.8
415.8

85

NON-CONSOLIDATED

Listed Securities
Trading Account Securities:
Bonds .......................................................................
Investment Securities:
Bonds .......................................................................
Stocks .......................................................................
Others ......................................................................
of which Foreign Affiliates ........................................
Total Investment Securities .......................................
Total ...................................................................

Marketvalue

NON-CONSOLIDATED FINANCIAL STATEMENTS
The Fuji Bank, Limited

Interest Rate Transactions
Billions of yen
1998

1999

NON-CONSOLIDATEDMarch 31,

Contract value
Term overTotal
one yearContract value
Term overTotal
one year

Optionpremium*

Marketvalue

Unrealized
gain (loss)

181.9
115.7

—
—

¥ ....
....

¥ 182.1
115.8¥

Optionpremium*

Marketvalue

Unrealized
gain (loss)¥ ....
....

¥364.1149.6¥ (0.0)
0.2

93
—
—
—

0.1
—
—
—

(0.0)
—
—
—

274.5
221.7
39.6
184.9

—
—
—
—

60
48
10
55

0.0
0.0
0.0
0.0

0.0
(0.0)
(0.0)
0.0

....
....

—
—

—
—

—
—

—
—

....
....

—
—

—
—

....
....
....
....

608.9
(666.7)
(0.3)
0.0

608.9
(666.7)(0.3)
0.0

48,905.3
49,110.5
182.1
5.9

17,041.2
13,623.9
93.8
5.9

....
....
....
....

1,001.7(1,048.0)0.1
0.0

1,001.7(1,048.0)
0.1
0.0

—
—
—
—

(0.0)
—
0.0
0.0

(0.0)
—
(0.0)
(0.0)

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
....

(0.7)
0.8
....

2.3
(2.1)
¥(57.9)

230.8
250.8
....

93.9
124.1
....

—
—
....

(0.5)
2.1
0.3
(2.3)
.... ¥ (46.6)

ListedInterest Futures:
Sell .................................................. ¥ 364.1 ¥—Buy .................................................
149.4—
Interest Rate Option:
Sell Call ........................................
150.0—
Put .........................................
——
Buy Call ........................................
——
Put .........................................
——
Over the Counter
FRA:
Sell ..................................................
——
Buy .................................................
——
Interest Rate Swap:
Receive Fixed Pay Floating ............. 37,125.8 20,165.3
Receive Floating Pay Fixed ............. 38.687.3 18,410.3
Receive Floating Pay Floating .........
91.2
72.2
Receive Fixed Pay Fixed .................
16.2
16.2
Interest Rate Option:
Sell Call ........................................
20.0—
Put .........................................
——
Buy Call ........................................
9.1
6.6
Put .........................................
8.5
6.0
Others:Sell ..................................................
239.4
210.1
Buy .................................................
251.8
233.4
....
....
Total..........................................

¥

¥

(0.2)
0.0

Notes: 1.*In millions of yen. Option premiums are included in the Balance Sheets.
2. Calculation of market value.
The market values of listed transactions are calculated using the closing prices on the Tokyo Financial Futures Exchange, etc.
The market value of over the counter transactions are calculated using discounted cash flow method and option valuation model, etc.
3. Market value and evaluation profit and loss include transactiions made for the purpose of hedging on-balance sheet transactions.
4. Interest rate swap market value and evaluation profit and loss includes accrued interest of ¥61,070 million entered in the Statements of Income.
5. Details of interest rate swap notional amounts and average rates according to when due are as follows:
Billions of yen
1998

1999
One yearor lossMore than
one year to
three years

Receive Fixed Pay Floating:
Notional Amount ...................................... ¥16,960.5 ¥15,537.8
Average Receive Rate ..............................
4.06%
3.56%
Average Pay Rate ......................................
3.18%
3.11%
Receive Floating Pay Fixed:
Notional Amount ...................................... 20,276.9 13,228.9
Average Receive Rate ..............................
3.11%
3.03%
Average Pay Rate ......................................
3.93%
3.55%
Receive Floating Pay Floating:
Notional Amount ......................................
18.9
32.7
Average Receive Rate ..............................
4.68%
3.37%
Average Pay Rate ......................................
4.33%
3.17%
Receive Fixed Pay Fixed:
Notional Amount ......................................
——
Average Receive Rate ..............................
——
Average Pay Rate ......................................
——One yearor lossMore than
one year to
three years

Over
three years

Total¥4,627.4 ¥37,125.8
2.83%
3.72%
2.21%
3.13%

¥31,864.0
4.91%
4.29%

¥14,675.9
4.39%
3.59%

¥2,365.3
3.89%
1.82%

¥48,905.3
4.73%
4.01%

5,181.3
1.73%
2.51%

38,687.3
2.92%
3.57%

35,486.6
4.17%
4.82%

11,401.4
2.96%
4.31%

2,222.5
2.44%
4.50%

49,110.5
3.89%
4.72%

39.4
4.87%
4.79%

91.2
4.36%
4.24%

88.3
5.62%
5.27%

48.7
4.62%
4.03%

45.1
8.74%
5.36%

182.1
6.05%
4.95%

16.2
1.19%
1.19%

16.2
1.19%
1.19%

—
—
—

—
—
—

5.9
1.34%
1.33%

5.9
1.34%
1.33%

Over
three years

Total

Notes: 6. Derivative transactions included in trading account transactions are valued at the market price and the evaluation profit or loss calculated is includedin the Statements of Income. Therefore it is not included in the above table.
86

NON-CONSOLIDATED FINANCIAL STATEMENTS
The Fuji Bank, Limited

The contract value, etc. of derivative transactions in trading account is as follows:
Billions of yen
Market
value

....
....

¥2,285.2
2,167.4

152.2
268.9
244.5
31.8

56
92
72
38

0.0
0.0
0.0
0.0

0.0
(0.0)

13.7
22.2

....
....

0.0
(0.0)

....
....
....
....

843.1
(780.6)(1.5)
11.0

42,653.3
40,690.1
480.0
26.1

....
....
....
....

802.1
(746.4)
(0.8)
9.8

427.5
453.1
325.1
385.5

4,974
4,507
2,652
3,099

(19.0)
(2.0)
8.2
2.7

524.9
572.0
445.1
467.0

5,568
5,549
3,996
4,231

(18.6)
(2.5)
10.2
2.8

976.1
1,104.7....

13,82014,533
....

(4.4)
3.9
....

822.0
1,077.5....

11,98914,410
....

(4.0)
3.4
....

Contract
value

March 31,

ListedInterest Futures:
Sell ...................................................................
Buy ...................................................................
Interest Rate Option:
Sell Call.............................................................
Put..............................................................
Buy Call.............................................................
Put..............................................................
Over the Counter
FRA:
Sell ...................................................................
Buy ...................................................................
Interest Rate Swap:
Receive Fixed Pay Floating .................................
Receive Floating Pay Fixed .................................
Receive Floating Pay Floating .............................
Receive Fixed Pay Fixed .....................................
Interest Rate Option:
Sell Call.............................................................
Put..............................................................
Buy Call.............................................................
Put..............................................................
Others:Sell ...................................................................
Buy ...................................................................
Total .............................................................

Marketvalue

Contract
value

....
....

¥ 2,307.2
2,482.7¥ 2,283.8
2,165.4

254.9
136.9
74.0
50.4

98
27
73
11

0.0
0.0
0.0
0.0

9.9
9.9

....
....

45,712.8
43,965.4
837.2
44.9

¥ 2,302.2
2,475.7¥¥

Note: * In millions of yen. Option premiums are the original premiums received/paid relating to the contract value, etc.

Currency Transactions
Billions of yen
1998

1999

March 31,Over the Counter
Currency Swap:
US$ ..............................................................
STG £ .........................................................
C ..................................................................
–DM ..............................................................
A$ ...............................................................
Others ..........................................................
Total.......................................................

Contract value
Term overTotal
one year¥3,091.0
219.5
149.4
10.4
4.2
226.4
¥3,741.1¥ 875.2
60.8
0.8
10.4
—
98.2
¥ 1,045.6

Marketvalue

Unrealized
gain (loss)¥ 85.6 ¥ 85.6
8.2
8.2
2.4
2.4
1.4
1.4
(0.0)
(0.0)
(144.6) (144.6)¥ (46.9) ¥ (46.9)

Contract value
Term overTotal
one year¥2,422.4
222.8
—
177.9
24.1
528.2
¥3,375.5¥1,100.4
1.9
—
11.2
4.8
111.1
¥1,229.7

Marketvalue

Unrealized
gain (loss)¥ 157.4(10.2)—
4.7(0.4)(127.3)¥ 24.1¥ 157.4(10.2)—
4.7(0.4)(127.3)¥ 24.1

Notes: 1. Market value and evaluation profit and loss include transactions made for the purpose of hedging on-balance sheet transactions.
2. Market value and the evaluation profit and loss includes accrued interest of ¥2,462 million entered in the Statements of Income.
3. Derivative transactions included in trading account are valued at the market price and the evaluation profit or loss calculated is includedin the Statements of Income. Therefore it is not indicated in the above table.

87

NON-CONSOLIDATED

1998
Optionpremium*

1999
Optionpremium*

NON-CONSOLIDATED FINANCIAL STATEMENTS
The Fuji Bank, Limited

The contract value, etc. of derivative transaction in trading account transactions is as follows:
Billions of yen
1998

1999
March 31,

Contract
value

Marketvalue

Contract
value

Marketvalue

Over the Counter
Currency Swap:
US$ .............................................................................................................
C .............................................................................................................
–DM .............................................................................................................
A$ .............................................................................................................
Other ..........................................................................................................
Total .....................................................................................................

¥2,938.7
4.0
65.8
518.8
124.3
¥3,651.7¥(16.3)0.0(1.7)(14.8)(0.4)¥(33.2)¥3,338.8
—
56.9
639.3
159.2
¥4,194.3¥(15.7)—(1.2)(16.4)(1.0)¥(34.5)

NON-CONSOLIDATED

4. In a foreign exchange contract, currency options, etc. are revalued at the end of the fiscal year.
The profit or loss calculated is included in the Statements of Income.
5. The table below indicates the contract value of derivative transactions relating to currency transactions which are revalued.
Billions of yen
1998

1999
March 31,

ListedCurrency Futures:
Sell ..........................................................................
Buy ..........................................................................
Currency Option:
Sell Call ...................................................................
Put ....................................................................
Buy Call ...................................................................
Put ....................................................................
Over the Counter
Foreign Exchange Contract:
Sell ..........................................................................
Buy ..........................................................................
Currency Option:
Sell Call ...................................................................
Put ....................................................................
Buy Call ...................................................................
Put ....................................................................
Others:Sell ..........................................................................
Buy ..........................................................................
Total ...................................................................

Contractvalue

Optionpremium*

¥

¥

0.7
0.3

¥

—
22.3

Optionpremium*

¥

….
….

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

6,900.2
7,708.1....
....

15,227.7
27,326.8

….
….

810.3
675.7
798.9
637.4

13,18013,06913,40614,157

1,124.1
1,342.0
1,059.4
1,398.6

37,32913,80935,686
14,936

—
—
....

....
....

—
—
….

….
….

Note: * In millions of yen. Option premiums are included in the Balance Sheets.

88

....
....

Contract
value

....

….

NON-CONSOLIDATED FINANCIAL STATEMENTS
The Fuji Bank, Limited

Securities Transactions
Billions of yen

Unrealized
gain (loss)

1998
Contract value
Term over Option
Total
one year premium*

1999

March 31,

Contract value
Term over
Option Market
Total
one year premium* valueMarketvalue

Unrealized
gain (loss)

¥42.2
50.1

—
—

¥ ….
….

¥43.1
50.9

¥ (0.9)
0.8

¥—
—

—
—

¥ ….
….

¥—
—

¥—
—

Bond Futures Option:
Sell Call ......................................................
Put.......................................................
Buy Call ......................................................
Put.......................................................

11.6
0.7
11.6
0.2

—
—
—
—

231
2
79
0

0.0
0.0
0.0
0.0

0.1
0.0
(0.0)
(0.0)

—
—
1.5
4.0

—
—
—
—

—
—
8
27

—
—
0.0
0.0

—
—
(0.0)
(0.0)

Cver the Counter
Securities-related Option:
Sell Call ......................................................
Put.......................................................
Buy Call ......................................................
Put.......................................................

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

….
….
….
….

….
….
….
….

….
….
….
….

….
….
….
….

….
….
….
….

Securities-related Swap:
Receive Stock Index, Pay Floating ...............
Pay Stock Index, Receive Floating ...............

—
—

—
—

….
….

—
—

—
—

….
….

….
….

….
….

….
….

….
….

Others:Sell ............................................................
Buy ............................................................
Total ......................................................

—
—
….

—
—
….

—
—
….

—
—
….

—
—
¥ 0.0

….
….
….

….
….
….

….
….
….

….
….
….

….
….
¥(0.0)

Notes: 1. * In millions of yen. Option premiums are included in the Balance Sheets.
2. Calculation of market value.
The market values of listed securities are calculated using the closing prices on the Tokyo Stock Exchange, etc.
3. There are no trading account transactions for equity securities.

89

NON-CONSOLIDATED

ListedBond Futures:
Sell ............................................................
Buy ............................................................

NON-CONSOLIDATED FINANCIAL STATEMENTS
The Fuji Bank, Limited

Bond-Related Transactions
Billions of yen

Unrealized
gain (loss)

1998
Contract value
Term over Option
Total
one year premium*¥ 272.4
13.2¥ (2.5)0.0¥ 117.6
—

—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
4.2
—
3.6

—
—
—
—

—
—
15
—

—
—
—
—

—
—
(0.0)
—

—
—
....

....
....

—
—
....

—
—

NON-CONSOLIDATED

1999March 31,

Contract value
Term over
Option Market
Total
one year premium* value

ListedBond Futures:
Sell ............................................................
Buy ............................................................

¥ 269.8
13.2——¥ ....
....

Bond Futures Option:
Sell Call ......................................................
Put.......................................................
Buy Call ......................................................
Put.......................................................

—
—
—
—

—
—
—
—

Over the Counter
Bond-related Option:
Sell Call ......................................................
Put.......................................................
Buy Call ......................................................
Put.......................................................

—
—
3.0
—

—
—
....

Others:Sell ............................................................
Buy ............................................................
Total ......................................................

....

¥ (2.5)Marketvalue

Unrealized
gain (loss)

¥ ….
….

¥ 118.4—¥(0.7)
—

—
—
—
—

—
2
—
3

—
0.0
—
0.0

—
0.0
—
0.0

116.6
—
3.9
—

—
—
—
—

370
—
8
—

0.4
—
—
—

(0.0)
—
(0.0)
—

—
—
….

—
—
….

….
….

—
—
….

—
—

….

¥ (0.8)Notes: 1. * In millions of yen. Option premiums are included in the Balance Sheets.
2. Derivative transactions included in trading account are valued at the market price and the evaluation profit or loss calculated is included in theStatements of Income. Therefore it is not indicated in the following table. The contract value, etc. of derivative transaction in trading account is as follows:
Billions of yen

March 31,

ListedBond Futures:
Sell ..........................................................................
Buy ..........................................................................
Bond Futures Option:
Sell Call ...................................................................
Put ....................................................................
Buy Call ...................................................................
Put ....................................................................
Over the Counter
Bond Related Swap:
Sell Call ...................................................................
Put ....................................................................
Buy Call ...................................................................
Put ....................................................................
Others:Sell ..........................................................................
Buy ..........................................................................
Total ....................................................................

Contract
value

1999
Optionpremium*

Marketvalue

Contract
value

1998
Optionpremium*

Market
value

¥14.0
56.1

¥ ....
....

¥14.0
56.9

¥21.3
9.7

¥….
….

¥21.3
9.7

—
12.0
—
7.1

—
26
—
42

—
0.0
—
0.0

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
....

—
—
....

—
—
....

—
—
….

—
—
….

—
—
….

Note: * In millions of yen. Option premiums are the original premiums received/paid relating to the contract value, etc.
90

Report of Independent Certified Public
Accountants on the Non-Consolidated Financial Statements

The Board of Directors
The Fuji Bank, Limited
We have examined the non-consolidated balance sheets of The Fuji Bank, Limited as of March 31, 1999
and 1998, and the related non-consolidated statements of income, appropriation of retained earnings(deficit) and cash flows for the years then ended, all expressed in Japanese yen. Our examinations weremade in accordance with auditing standards, procedures and practices generally accepted and applied inJapan and, accordingly, included such tests of the accounting records and such other auditing procedures as
we considered necessary in the circumstances.

NON-CONSOLIDATED

In our opinion, the financial statements referred to above, expressed in Japanese yen, present fairly
the non-consolidated financial position of The Fuji Bank, Limited at March 31, 1999 and 1998, and thenon-consolidated results of its operations and its cash flows for the years then ended in conformity withaccounting principles and practices generally accepted in Japan applied on a consistent basis.
The U.S. dollar amounts in the accompanying non-consolidated financial statements with respect to theyear ended March 31, 1999 are presented solely for convenience. Our examination also included thetranslation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has
been made on the basis described in Note 1 to the non-consolidated financial statements.
Tokyo, Japan
June 29, 1999

Showa Ota & Co.

Statement on Accounting Principles and Auditing Standards
This statement is to remind users that accounting principles and practices as well as auditing standards, procedures andpractices may vary from country to country and could thus affect, possibly materially, the reported financial position
and results of operations. The accompanying financial statements are prepared based on accounting principles andpractices generally accepted in Japan, and the auditing standards, procedures and practices are those generally accepted
and applied in Japan. Accordingly, the accompanying financial statements and auditors’ report presented above are forusers familiar with Japanese accounting principles and auditing standards.

91

DATA FILE
The Fuji Bank, Limited

Earnings Performance
Average Balances, Interest and Average Interest Rates
Billions of yen
1998

1999
Years ended March 31,

Averagebalance

Interest

Averagerate

Averagebalance

Interest-earning Assets
Loans:
Domestic .........................................
International ....................................
Total ..........................................

¥24,432.6
7,561.8
31,994.4¥ 507.4
362.0
869.5

2.07%
4.78
2.71

Trading Account Securities:
Domestic .........................................
International ....................................
Total ..........................................

—
—
—

—
—
—

Investment Securities:
Domestic .........................................
International ....................................
Total ..........................................

5,476.8
709.4
6,186.2

Call Loans:
Domestic .........................................
International ....................................
Total ..........................................

1997

Interest

Averagerate

Averagebalance

Interest

Averagerate¥22,362.4
11,983.2
34,345.6¥ 491.2
504.3
995.5

2.19%
4.20
2.89

¥21,718.0
11,577.3
33,295.3¥ 512.4
464.9
977.4

2.35%
4.01
2.93

—
—
—

—
—
—

—
—
—

—
—
—

324.8
—
324.8

2.0
—
2.0

0.63
—
0.63

76.4
81.4
157.8

1.39
11.47
2.55

5,552.4656.3
6,208.8

94.2
58.6
152.9

1.69
8.94
2.46

5,400.9597.4
5,998.3

101.0
22.3
123.4

1.87
3.74
2.05

46.2
125.6
171.9

0.2
6.6
6.8

0.58
5.27
4.01

247.9
241.3
489.2

1.4
13.8
15.3

0.58
5.73
3.12

408.0
284.1
692.1

2.3
16.0
18.3

0.56
5.63
2.64

Bills Purchased:
Domestic .........................................
International ....................................
Total ..........................................

216.1
—
216.1

1.0
—
1.0

0.47
—
0.47

41.6
—
41.6

0.3
—
0.3

0.73
—
0.73

14.4
—
14.4

0.0
—
0.0

0.67
—
0.67

Interest-bearing Deposits in Other Banks:
Domestic .........................................
International ....................................
Total ..........................................

48.4
1,145.1
1,193.5

0.3
59.2
59.5

0.63
5.17
4.98

52.7
3,426.2
3,479.0

0.2
148.9
149.1

0.45
4.34
4.28

91.5
3,780.8
3,872.4

0.5
153.1
153.7

0.61
4.05
3.97

Total Interest-earning Assets:
Domestic .........................................
.......................................
International ....................................
Total ..........................................

31,941.1
1,693.5
10,300.7¥40,548.3

682.4
10.8
937.5
¥1,609.2

2.13
....
9.10
3.96%

29,337.2
1,069.0
16,913.3¥45,181.5

658.8
7.2
1,357.0¥2,008.6

2.24
....
8.02
4.44%

29,344.9
1,073.8
16,770.4¥45,041.5

704.0
7.9
1,425.7¥2,121.9

2.39
....
8.50
4.71%

*

Note : * Internal transaction between domestic sector and international sector.

92

Billions of yen
1998

1999
Years ended March 31,

Interest-bearing Liabilities
Deposits:
Domestic .........................................
International ....................................
Total ..........................................

¥21,438.9
7,100.9
28,539.8

Negotiable Certificates of Deposit:
Domestic .........................................
International ....................................
Total ..........................................

3,562.5
228.5
3,791.1

22.0
14.7
36.8

0.61
6.47
0.97

2,393.2
893.1
3,286.3

15.4
57.0
72.5

0.64
6.39
2.20

Call Money:
Domestic .........................................
International ....................................
Total ..........................................

3,903.0
105.0
4,008.1

24.9
5.4
30.4

0.63
5.23
0.75

3,001.9238.7
3,240.7

17.2
12.7
29.9

Bills Sold:
Domestic .........................................
International ....................................
Total ..........................................

220.4
61.5
281.9

1.0
3.8
4.9

0.48
6.31
1.75

201.0
192.4
393.5

Commercial Paper:
Domestic .........................................
International ....................................
Total ..........................................

320.8
—
320.8

1.9
—
1.9

0.61
—
0.61

Borrowed Money:
Domestic .........................................
International ....................................
Total ..........................................

1,053.5
984.1
2,037.7

32.7
43.5
76.3

Total Interest-bearing Liabilities:
Domestic .........................................
International ....................................
.......................................
Total ..........................................

30,583.7
10,382.4
1,693.5¥39,272.6

300.9
813.6
10.8
¥1,103.7*¥

Interest

Averagerate

Averagebalance

98.1
268.1
366.2

0.45%
3.77
1.28

1997

Averagebalance

Interest

Averagerate

Averagebalance

Interest

Averagerate¥20,900.9 ¥
13,569.934,470.8

106.8
509.2
616.0

0.51%
3.75
1.78

¥20,829.3
13,776.5
34,605.9

126.4
490.5
617.0

0.60%
3.56
1.78

2,322.9
849.7
3,172.7

12.8
49.4
62.3

0.55
5.81
1.96

0.57
5.33
0.92

3,190.7275.1
3,465.9

16.2
13.4
29.6

0.50
4.89
0.85

1.2
10.8
12.0

0.63
5.61
3.07

423.7
217.8
641.5

2.0
11.0
13.1

0.49
5.05
2.04

....
....
....

....
....
....

....
....
....

....
....
....

....
....
....

....
....
....

3.10
4.42
3.74

1,672.7
812.5
2,485.3

40.8
28.0
68.9

2.44
3.45
2.77

1,590.0474.9
2,064.9

42.8
13.2
56.1

2.69
2.79
2.71

0.98
7.83
....
2.81%

28,118.1
16,956.3
1,069.0¥44,005.4

308.5
1,203.1
7.2¥1,504.3

1.09
7.09
....
3.41%

28,308.3
16,745.4
1,073.8¥43,980.0

316.9
1,211.7
7.9¥1,520.8

1.11
7.23
....
3.45%

¥

Notes : 1. *Internal transaction between domestic sector and international sector.
2. Interest expenses on money held in trust is deducted from total interest bearing liabilities.

93Breakdown of Changes of Net Interest Income
Billions of yen
1998

1999
Years ended March 31,

1997

VolumeRate

Net Change

VolumeRate

Net Change

VolumeRate

Net ChangeInterest Income
Loans:
Domestic .........................................
International ....................................
Total ..........................................

¥ 42.9(186.0)(66.1)¥ (26.7)
43.8(59.8)¥ 16.2(142.2)(126.0)

¥14.1
16.6
30.4

¥ (35.4)
22.7(12.3)¥ (21.2)
39.4
18.1¥(12.2)75.1
40.0¥(115.0)(51.4)(143.6)¥(127.3)
23.7(103.5)

Trading Account Securities:
Domestic .........................................
International ....................................
Total ..........................................

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

0.0
—
0.0

1.0
—
1.0

1.1
—
1.1

Investment Securities:
Domestic .........................................
International ....................................
Total ..........................................

(1.0)
5.0
(0.5)

(16.6)
17.6
5.5(17.7)
22.7
4.9

2.5
2.4
4.4

(9.4)
33.9
25.0

(6.8)
36.3
29.5

(4.2)
0.9
(4.0)

(22.7)
1.8(20.1)(26.9)
2.8(24.1)

Call Loans:
Domestic .........................................
International ....................................
Total ..........................................

(1.1)
(6.5)
(9.9)

0.0
(0.6)
(1.5)

(1.1)
(7.2)
(8.4)

(0.9)
(2.4)
(5.3)

0.0
0.2
2.3

(0.8)
(2.1)
(3.0)

0.5
(2.5)
1.4

(0.4)
(1.7)
(5.5)

0.1
(4.2)
(4.1)

Bills Purchased:
Domestic .........................................
International ....................................
Total ..........................................

0.8
—
0.8

(0.1)
—
(0.1)

0.7
—
0.7

0.1
—
0.1

0.0
—
0.0

0.2
—
0.2

(0.2)
—
(0.2)

(0.0)
—
(0.0)

(0.2)
—
(0.2)

Interest-bearing Deposits in Other Banks:
Domestic .........................................
International ....................................
Total ..........................................

(0.0)(99.1)(97.9)

0.0
9.4
8.3

0.0
(89.6)(89.6)(0.2)(14.3)(15.6)

(0.1)
10.1
11.0

(0.3)
(4.2)
(4.5)

(0.1)
(62.0)(61.9)(1.0)(51.1)(52.5)(1.2)(113.2)(114.4)

Total Interest Income:Domestic .........................................
International ....................................
Total ..........................................

55.6(530.5)¥(194.6)(31.9)
111.0¥(204.6)

23.6(419.5)¥(399.3)

(0.1)
11.4
¥ 6.2

(45.1)(80.1)¥(119.5)(45.2)(68.6)¥(113.3)

(5.5)
52.6
¥ (6.0)(147.3)(254.8)¥(350.1)(152.8)(202.1)¥(356.2)

Note : Allocation of the rate volume variance is based on the percentage relationship of changes in volume and changes in rate to the total “net change.”94

Billions of yen
1998

1999

1997

Years ended March 31,

VolumeRate

Net Change

VolumeRate

Net Change

VolumeRate

Net ChangeInterest Expense
Deposits:
Domestic .........................................
International ....................................
Total ..........................................

¥ 2.4(242.7)(87.4)¥ (11.1)
1.6(162.3)¥ (8.6)(241.1)(249.7)

¥ 0.3
(7.3)
(2.4)

¥(19.9)26.0
1.4¥(19.6)
18.6
(0.9)

¥ 1.1
(2.6)
1.9

¥ (95.9)(73.5)(172.8)¥ (94.7)(76.1)(170.9)Negotiable Certificates of Deposit:
Domestic .........................................
International ....................................
Total ..........................................

7.2(42.4)
4.9

(0.6)
0.1
(40.6)

6.5(42.2)(35.6)

0.3
2.6
2.2

2.1
5.0
7.9

2.5
7.6
10.2

3.1
1.4
11.5

(4.7)
(3.3)
(15.0)

(1.6)
(1.9)
(3.5)

Call Money:
Domestic .........................................
International ....................................
Total ..........................................

5.6
(7.1)
5.8

2.0
(0.1)
(5.3)

7.6
(7.2)
0.4

(0.9)
(1.7)
(1.9)

2.0
1.0
2.2

1.0
(0.7)
0.3

(3.1)
(4.1)
(5.9)

(12.5)(3.9)(17.8)(15.7)(8.1)(23.8)

Bills Sold:
Domestic .........................................
International ....................................
Total ..........................................

0.0
(7.3)
(2.5)

(0.3)
0.4
(4.6)

(0.2)
(6.9)
(7.1)

(1.0)
(1.2)
(5.0)

0.2
1.0
4.0

(0.8)
(0.2)
(1.0)

(0.6)
(1.2)
(3.0)

(1.3)
(1.6)
(1.8)

(2.0)
(2.9)
(4.9)

Commercial Paper:
Domestic .........................................
International ....................................
Total ..........................................

1.9
—
1.9

—
—
—

1.9
—
1.9

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

Borrowed Money:
Domestic .........................................
International ....................................
Total ..........................................

(15.1)
6.6(12.4)

7.0
8.8
19.8

(8.0)
15.5
7.4

2.0
11.0
11.6

(4.0)
3.6
1.1

(1.9)
14.7
12.7

(3.2)
4.1
0.8

(2.6)
(2.6)
(5.2)

(5.8)
1.4
(4.3)

Total Interest Expense:
Domestic .........................................
International ....................................
Total ..........................................

24.2(466.4)¥(143.8)(31.8)
76.9¥(256.7)(7.5)(389.5)¥(400.6)

(2.0)
14.9
¥ 0.8

(6.3)
(23.5)¥(17.3)

(8.4)
(8.5)
¥(16.4)(0.4)
39.1¥(0.5)(90.7)(241.5)¥(294.1)(91.1)(202.3)¥(294.6)95

Breakdown of Fee & Commission Income
Billions of yen
Years ended March 31,

1999

1998

1997

IncomeDeposit and Loan-related:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

¥ 4.4
12.5
17.0

¥ 4.1
16.1
20.2

¥ 3.6
14.4
18.1

Remittance:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

38.0
9.1
47.1

37.6
11.3
49.0

35.8
10.6
46.5

Securities-related:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

6.4
0.0
6.5

6.4
0.1
6.6

7.9
0.3
8.3

Agent:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

9.4
1.8
11.3

9.7
1.5
11.3

10.3
1.3
11.7

Safe Deposit Box:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

2.9
0.0
2.9

2.9
—
2.9

2.9
0.0
2.9

Guarantees:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

0.7
6.6
7.4

0.6
7.4
8.1

0.6
7.3
7.9

Total Income:Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

73.2
33.4
¥106.670.7
39.0¥109.768.5
38.9¥107.5

ExpenseRemittance:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

¥ 9.7
2.5
12.3

¥ 9.5
4.0
13.5

¥ 8.8
3.5
12.4

Total Expenses:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

34.6
11.2
¥ 45.831.6
13.0¥ 44.729.8
13.1¥ 42.996

Market Transactions
Breakdown of Net of Other Operating Income and Commissions
Billions of yen
Years ended March 31,

1999

1998

1997

Foreign Exchange Sales Income:Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

¥ —
16.4
16.4

¥ —
17.6
17.6

¥ —
6.6
6.6

Net Gains on Trading Account Securities:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

....
....
....

....
....
....

1.0
—
1.0

Net Gains on Sales of Bonds:
Domestic................................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

76.1
3.5
79.6

58.4
19.3
77.8

30.5
5.6
36.2

Others:Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

(0.9)(13.1)(14.0)(3.9)(9.1)(13.1)

(0.0)
(6.6)
(6.6)

Total:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

75.1
6.8
¥82.0

54.4
27.8
¥82.3

31.6
5.6
¥37.2

Breakdown of Adjusted General & Administrative Expenses
Billions of yen
Years ended March 31,

1999

1998

1997

Salaries, Allowances ....................................................................................................................
Retirement Allowances ..............................................................................................................
Transfer to Reserve for Retirement Allowance ...........................................................................
Benefits ......................................................................................................................................
Depreciation ...............................................................................................................................
Lease on Buildings and Equipment .............................................................................................
Repair Expenses .........................................................................................................................
General Supplies .........................................................................................................................
Lighting and Heating Expenses ...................................................................................................
Travel Expenses ..........................................................................................................................
Telephone, Fax, etc. ...................................................................................................................
Advertising Expenses ..................................................................................................................
Taxes ..........................................................................................................................................
Other .........................................................................................................................................
Total ................................................................................................................................

¥125.0
5.3
4.1
25.6
39.7
36.8
0.7
4.8
4.9
2.4
7.2
5.2
22.7
82.5
¥367.6¥135.2
3.7
4.4
27.0
40.7
35.8
0.9
5.0
5.1
2.7
7.4
5.7
28.8
82.6
¥385.7¥135.4
3.5
4.3
26.1
40.8
34.8
0.9
5.5
4.7
2.7
7.6
5.5
25.3
82.7
¥380.497

Deposits
Breakdown of Deposits
Billions of yen
March 31,

1999

1998

1997

Liquid Deposits※:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

¥ 8,865.5
62.5
8,928.1¥ 8,148.2
46.5
8,194.7¥ 7,738.9
155.7
7,894.6

Time Deposits:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

13,178.0
1,874.3
15,052.4

12,996.9
6,482.6
19,479.5

12,852.8
10,148.2
23,001.1

Negotiable Certificates of Deposit:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

5,050.4
108.7
5,159.1

2,609.6
516.3
3,125.9

2,872.0
1,012.4
3,884.4

Other:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

725.0
2,258.4
2,983.5

603.5
3,038.8
3,642.3

672.3
2,826.6
3,498.9

Total Deposits:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

27,819.1
4,304.0¥32,123.1

24,358.4
10,084.2¥34,442.7

24,136.1
14,143.0¥38,279.1

Note: ※Liquid deposits include current deposits, ordinary deposits, savings deposits and deposits at notice.

98

Average Amount of Deposits
Billions of yen
Years ended March 31,

1999

1998

1997

Liquid Deposits※:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

¥ 7,269.8
87.6
7,357.5¥ 6,905.0
158.6
7,063.7¥ 6,241.4
171.8
6,413.3

Time Deposits:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

13,838.7
4,234.8
18,073.6

13,683.5
10,572.6
24,256.1

14,267.3
10,824.0
25,091.4

Negotiable Certificates of Deposit:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

3,562.5
228.5
3,791.1

2,393.2
893.1
3,286.3

2,322.9
849.7
3,172.7

Other:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

330.3
2,778.3
3,108.6

312.3
2,838.5
3,150.9

320.5
2,780.6
3,101.2

Total Deposits:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

25,001.4
7,329.5¥32,330.9

23,294.1
14,463.0¥37,757.2

23,152.3
14,626.3¥37,778.7

Note: ※Liquid deposits include current deposits, ordinary deposits, savings deposits and deposits at notice.

Breakdown of Depositors
Billions of yen
1998

1999
March 31,

Individuals ........................................................................
Corporations .....................................................................
Total.......................................................................

1997

Amount% of total

Amount% of total

Amount% of total¥11,294.2
12,805.1¥24,099.3

46.87%
53.13
100.00%¥11,391.8
11,410.9¥22,802.7

49.96%
50.04
100.00%¥11,027.1
11,511.4¥22,538.5

48.93%
51.07
100.00%Note: Figures have not been adjusted for deposits in transit between the Bank’s head office and branches.

99

Loans and Bills Discounted
Breakdown of Loans and Bills Discounted
Billions of yen
1998

1999

1997

Years ended March 31,

AveragebalanceEndbalance

AveragebalanceEndbalance

AveragebalanceEndbalance

Loans on Notes:
Domestic .....................................................................
International ................................................................
Total ......................................................................

¥ 3,439.3
999.7
4,439.0¥ 3,332.7
737.1
4,069.8¥ 3,369.4
1,689.5
5,058.9¥ 3,026.6
1,331.5
4,358.1¥ 3,521.9
1,549.3
5,071.2¥ 3,467.8
1,592.3
5,060.2

Loans on Deeds:
Domestic .....................................................................
International ................................................................
Total ......................................................................

14,310.0
6,538.2
20,848.3

14,458.7
4,971.2
19,430.0

13,891.4
10,264.7
24,156.2

13,824.9
7,776.1
21,601.1

13,799.2
10,000.1
23,799.4

13,811.1
10,449.1
24,260.3

Overdrafts:
Domestic .....................................................................
International ................................................................
Total ......................................................................

6,069.2
18.2
6,087.4

6,052.1
13.9
6,066.1

4,332.0
17.6
4,349.6

5,333.8
13.6
5,347.5

3,596.6
14.4
3,611.0

3,883.7
13.9
3,897.7

Bills Discounted:
Domestic .....................................................................
International ................................................................
Total ......................................................................

613.9
5.6
619.6

227.2
0.0
227.2

769.5
11.3
780.8

713.2
10.5
723.7

800.1
13.4
813.5

807.2
11.7
819.0

Total:
Domestic .....................................................................
International ................................................................
Total ......................................................................

24,432.6
7,561.8¥31,994.4

24,070.9
5,722.3¥29,793.3

22,362.4
11,983.2¥34,345.6

22,898.7
9,131.8¥32,030.5

21,718.0
11,577.3¥33,295.3

21,970.0
12,067.2¥34,037.3

Loans to Retail Sectors
Billions of yen
1998

1999
March 31,

Total Loan Balance ...........................................................
Loans to Small/Medium Businesses ...................................
% of Total Loans ...............................................................

1997

Number ofcustomersEndbalance

Number ofcustomersEndbalance

Number ofcustomersEndbalance

1,183
1,177
99.53%¥ 24,581.7
17,355.9
70.61%

1,198
1,193
99.56%¥23,442.0
17,756.3
75.75%

1,194
1,190
99.61%¥22,601.3
17,659.0
78.13%

Notes: 1. “Number of customers” is shown in thousands.
2. Overseas branches and the Japan Offshore Market Account are not included.
3. The Bank’s domestic business is conducted mainly in two sectors: the retail sector, which includes small and medium-sized businesses and individual
customers, and the wholesale sector, which focuses on serving the large corporate customer base in Japan.

100Breakdown of Loans by Purpose of Funds
Billions of yen
March 31,

Funds for Capital Investment ......................................................................................................
Funds for Working Capital .........................................................................................................
Total ................................................................................................................................

1999

1998

1997

¥11,023.3
18,769.9¥29,793.3¥11,550.1
20,480.3¥32,030.4¥11,709.1
22,328.1¥34,037.3

Major Lending Classifications
Billions of yen
March 31,

1999

1998

1997

Domestic Offices (excludes loans booked in the Japan offshore market):
Manufacturing .......................................................................................................................
Agriculture ............................................................................................................................
Forestry .................................................................................................................................
Fisheries ................................................................................................................................
Mining ..................................................................................................................................
Construction .........................................................................................................................
Utilities .................................................................................................................................
Transportation and Communications .....................................................................................
Wholesale and Retail .............................................................................................................
Finance and Insurance ...........................................................................................................
Real Estate ............................................................................................................................
Services .................................................................................................................................
Local Government ................................................................................................................
Individuals and Others ...........................................................................................................
Total Domestic ................................................................................................................

¥ 3,240.0
48.2
2.8
12.2
27.8
1,092.0
45.2
805.5
3,665.4
2,338.5
2,233.5
4,716.6
192.4
6,160.9
24,581.7¥ 3,016.8
61.7
2.5
10.8
27.6
1,094.0
54.0
985.2
3,656.2
2,119.9
2,271.9
4,369.2
167.8
5,603.7
23,442.0¥ 2,601.3
64.8
2.7
6.2
25.9
1,082.9216.3
978.5
3,452.6
1,893.6
2,230.0
4,489.3
176.5
5,380.1
22,601.3

Overseas Offices (includes loans booked in the Japan offshore market):Public Sector ..........................................................................................................................
Financial Institutions...............................................................................................................
Commerce and Industry.........................................................................................................
Others....................................................................................................................................
Total Overseas .................................................................................................................
Total.................................................................................................................................

155.6
998.4
4,019.1
38.3
5,211.6¥29,793.3

264.5
1,549.3
6,668.1
106.4
8,588.4¥32,030.5

305.3
2,388.9
8,602.1
139.5
11,435.9¥34,037.3

Collateral Information
Billions of yen
March 31,

Securities ....................................................................................................................................
Commercial Claims ....................................................................................................................
Commodities ..............................................................................................................................
Real Estate .................................................................................................................................
Others ........................................................................................................................................
Total Secured Loans .........................................................................................................
Guarantees ..................................................................................................................................
Unsecured ..................................................................................................................................
Total ................................................................................................................................

1998

1999

¥

420.1
675.8
—
3,190.2
860.1
5,146.4
13,113.9
11,532.8¥29,793.3

¥

486.5
825.0
—
3,716.9
1,042.1
6,070.7
13,711.7
12,248.0¥32,030.5

1997

¥

480.9
919.6
—
4,143.7923.5
6,467.9
13,862.0
13,707.2¥34,037.3
101

Housing / Consumer Loans
Billions of yen
March 31,

1999

1998

1997

Housing Loans ............................................................................................................................
Consumer Loans .........................................................................................................................

¥5,420.7
439.6¥5,256.0
491.3¥5,090.6
476.4

Loans to Developing Countries
Billions of yen
March 31,

1999

1998

1997

Number of Countries .................................................................................................................
Balance of Loans .........................................................................................................................
Balance of Loans as a Percentage of Total Assets...........................................................................

4¥113.7
0.24%

10
¥8.3
0.01%

7
¥13.4
0.02%

Securities
Breakdown of Securities Holdings
Billions of yen
1998

1999

1997

Years ended March 31,

AveragebalanceEndbalance

AveragebalanceEndbalance

AveragebalanceEndbalance

Japanese Government Bonds:
Domestic .....................................................................
International ................................................................
Total ......................................................................

¥1,131.1—
1,131.1¥1,014.0—
1,014.0¥1,101.2—
1,101.2¥1,090.2—
1,090.2¥1,225.9—
1,225.9¥1,054.7—
1,054.7

Japanese Local Government Bonds:
Domestic .....................................................................
International ................................................................
Total ......................................................................

307.5
—
307.5

237.5
—
237.5

334.5
—
334.5

368.9
—
368.9

261.5
—
261.5

235.0
—
235.0

Corporate Bonds:
Domestic .....................................................................
International ................................................................
Total ......................................................................

412.8
—
412.8

367.1
—
367.1

474.8
—
474.8

481.0
—
481.0

465.2
—
465.2

411.3
—
411.3

Corporate Stocks:
Domestic .....................................................................
International ................................................................
Total ......................................................................

3,425.4—
3,425.4

3,439.2—
3,439.2

3,397.6—
3,397.6

3,474.6—
3,474.6

3,232.1—
3,232.1

3,292.0—
3,292.0

Other:
Domestic .....................................................................
International ................................................................
Total ......................................................................

199.7
709.4
909.1

179.9
599.8
779.8

244.1
656.3
900.4

195.6
640.2
835.8

216.0
597.4
813.4

230.3
550.8
781.1

Total Securities:
Domestic .....................................................................
International ................................................................
Total ......................................................................

5,476.8
709.4¥6,186.2

5,237.9
599.8¥5,837.7

5,552.4
656.3¥6,208.8

5,610.5
640.2¥6,250.75,400.9
597.4¥5,998.3

5,223.6
550.8¥5,774.4

102

Asset Liability Management
Composition of Time Deposits by Type and Maturity
Billions of yen

March 31, 1999

Time Deposits with DeregulatedInterest Rates (fixed) ................................
Time Deposits with DeregulatedInterest Rates (floating) ............................
Total ...............................................

Less thanthreemonthsThree months
to less
than sixmonthsSix months
to less
than oneyear

One yearto less
than twoyears

Two years
to less
than three
years

Three
years and
over

Total

¥ 6,016.2¥2,183.9¥ 2,462.9¥1,640.8¥614.2¥ 204.4¥13,122.4

0.6¥ 7,672.4

0.7¥ 2,363.2

3.2¥ 2,510.2

1.2¥1,648.6

0.4¥638.00.0¥ 209.6

6.3¥15,042.0

Total

Note: Time deposits outstanding do not include installment time deposits.

Composition of Loans by Type and Maturity
Billions of yen

March 31, 1999

Floating Interest Rate..................................
Fixed Interest Rate ....................................
Total ...............................................

One yearor less¥….
….

¥8,102.3

More than
one year to
three years

More than
three years
to five
years

More than
five years
to seven
years

Over sevenyears

Unspecified
term¥1,668.5
1,055.7¥2,724.3¥1,906.1
1,133.4¥3,039.6¥ 788.4
443.4¥1,231.8¥5,693.7
2,757.4¥ 8,451.1¥ 6,243.9—¥ 6,243.9

¥

….
….

¥ 29,793.3

Composition of Securities Holdings by Type and Maturity
Billions of yen

March 31, 1999

Japanese Government Bonds ......................
Japanese Local Government Bonds..............
Corporate Bonds ........................................
Corporate Stocks .......................................
Other .........................................................
Foreign Corporate Bonds .......................
Foreign Corporate Stocks ......................
Securities Lent ............................................

One yearor lessMore than
one year to
three years

More than
three years
to five years

More than
five years
to seven years

More thanseven years
to ten yearsOver
ten years

Unspecified
Term

¥ 0.3
11.8
34.6
….

¥15.0
24.1
95.0
….

¥411.16.5
88.9….

¥364.4
93.7
47.5
….

¥219.5
96.8
100.8
….

¥ —
4.4
—
….

¥

31.5
29.2
….

38.1
33.4
….

63.9
47.1
….

26.1
8.1
….

67.2
48.0
….

48.9
48.9
….

—

1.8

—

0.3

1.3

—

—
—
—
3,439.2
503.8
—
384.6
—

Total

¥1,010.5
237.5
367.1
3,439.2
779.8
215.0
384.6
3.4

103

Facilities and Premises/Personnel
Number of Branches
March 31,

Domestic:
Branches ...............................................................................................................................
Sub-branches .........................................................................................................................
Overseas:
Branches ...............................................................................................................................
Sub-branches .........................................................................................................................
(Representative offices) .........................................................................................................
Total ................................................................................................................................

1999

1998

1997

284
34

290
43

290
49

19
2
(10)
339

25
1
(21)
359

24
1
(22)
364

Investment in Facilities
Billions of yen
March 31, 1999

BudgetPaid

Expected
expenditure

Head Office ................................................................................................................................
Branches .....................................................................................................................................
Others ........................................................................................................................................
Office Appliances ........................................................................................................................
Other Office Equipment .............................................................................................................
Total.................................................................................................................................

¥ 2.1
3.7
8.2
13.6
1.9
¥ 29.7

¥1.3
0.5
6.5
0.0
—
¥ 8.5

¥ 0.7
3.2
1.6
13.6
1.9
¥ 21.1March 31,

1999

1998

1997

Cash Dispensers ...........................................................................................................................
Automatic Tellers .......................................................................................................................
Automatic Passbook Entry Machines ..........................................................................................
Total ................................................................................................................................

359
3,226
369
3,954

519
3,399
369
4,287

547
3,325
369
4,241

Number of ATMs

Personnel
1998

1999
March 31,

Administrative Staff:
Male .......................................
Female ....................................
Sub-total or Average...........
General Operating Staff:
Male .......................................
Female ....................................
Sub-total or Average...........
Total or Average ................

Number of
employees

Averageage

Average length Average monthlyof employment
salary (yen)years - months

years - months

8,983
4,578
13,561

39-0
30-3
36-1

17-2
10-0
14-9

¥ 604,961
265,250
491,939415—
415
13,976

53-11
—
53-11
36-7

17-2
—
17-2
14-10

362,464—
362,464¥ 486,484

Number of
employees

Averageage

Average length Average monthlyof employment
salary (yen)years - months

years - months

9,429
4,716
14,145

39-1
29-11
36-1

17-5
9-9
14-10

¥ 594,495
264,550
484,490470—
470
14,615

53-7
—
53-7
36-7

17-0
—
17-0
14-11

367,003—
367,003¥480,712

Notes: 1. “Total number of employees” does not include non-regular or locally hired staff at the overseas offices which total 2,737 as of March 31, 1998.
2. “Average monthly salary” was calculated on the basis of total salary paid in March plus overtime allowance. This figure does not include annual bonus payments.
3. The stipulated age of retirement for employees is 60 years of age.
However, in certain cases where deemed necessary by the Bank, employees may be rehired as a non-regular employee for a fixed term.
104Principal Ratios
Consolidated Capital Ratio
Billions of yen
March 31,

Tier I Capital...............................................................................................................................
Tier II Capital:
Unrealized Gains on Securities, after 55% Discount ...............................................................
Revalued Gains on Securities, after 55% Discount .................................................................
Reserve for Possible Loan Losses ...........................................................................................
Subordinated Term Debt and Other ......................................................................................
Total.................................................................................................................................
Tier II Capital Included as Qualifying Capital ........................................................................
Less ............................................................................................................................................
Total Qualifying Capital .............................................................................................................
Risk-Adjusted Assets:
On-Balance Sheet Items ........................................................................................................
Off-Balance Sheet Items ........................................................................................................
Amount related to Market Risk Equivalent ...........................................................................
Total.................................................................................................................................
Total Capital Ratio......................................................................................................................

1999

1998

1997

¥ 2,358.5¥ 1,809.8¥ 1,950.6

—
101.8
261.4
1,899.6
2,262.9
2,262.9
4.3¥ 4,617.2

—
146.9
120.7
1,476.9
1,744.6
1,744.6—¥ 3,554.5

174.2
—
141.9
1,485.2
1,801.5
1,801.5—¥ 3,752.1¥36,565.2
4,258.7
331.5¥41,155.6¥33,802.9
3,614.6
341.9¥37,759.5¥36,251.0
4,412.8—¥40,663.8

9.41%

9.22%

11.21%

Note: Figures in this table were calculated in accordance with guidelines established by the Financial Supervisory Agency and the Ministry of Finance.

Non-consolidated Capital Ratio
Billions of yen
March 31,

Tier I Capital...............................................................................................................................
Tier II Capital:
Unrealized Gains on Securities, after 55% Discount ...............................................................
Revalued Gains on Securities, after 55% Discount .................................................................
Reserve for Possible Loan Losses ...........................................................................................
Subordinated Term Debt and Other ......................................................................................
Total.................................................................................................................................
Less ............................................................................................................................................
Total Qualifying Capital .............................................................................................................
Risk-Adjusted Assets:
On-Balance Sheet Items ........................................................................................................
Off-Balance Sheet Items ........................................................................................................
Amount related to Market Risk Equivalent ...........................................................................
Total.................................................................................................................................
Total Capital Ratio......................................................................................................................

1999

1998

1997

¥ 2,360.5

….

….

—
101.8
185.2
1,507.5
1,794.6
300.9¥ 3,854.1

….
….
….
….
….
….
….

….
….
….
….
….
….
….

¥29,942.4
3272.9196.9¥33,412.3

….
….
….
….

….
….
….
….

….

….

11.53%

Notes: 1. Figures in this table were calculated in accordance with guidelines established by the Financial Supervisory Agency and the Ministry of Finance.
2. Disclosed beginning with the term under review.

105Return on Equity and Assets
Years ended March 31,

1999

1998

1997

Net Income as a Percentage of:
Average Total Assets, excluding Customers’ Liabilities for Acceptances and Guarantees (ROA) ....
Average Shareholders’ Equity....................................................................................................

—
—

—
—

0.11%
3.59%

1999

1998

1997

Domestic .................................................................................................................................
International ............................................................................................................................
Total ..................................................................................................................................

2.13%
9.10
3.96

2.24%
8.02
4.44

2.39%
8.50
4.71

Cost of Funds (Yield on Interest Bearing Liabilities) – B :Domestic .................................................................................................................................
International ............................................................................................................................
Total ..................................................................................................................................

1.92
8.48
3.71

2.18
7.50
4.27

2.20
7.63
4.30

Overall Margin on Funds (A – B):
Domestic .................................................................................................................................
International ............................................................................................................................
Total ..................................................................................................................................

0.21
0.61
0.25%

0.06
0.52
0.17%

0.19
0.86
0.40%

Margin on Funds
Years ended March 31,

Yield on Funds (Yield on Interest Earning Assets) – A :Ratio of Loans to Deposits
Billions of yen
March 31,

1999

1998

1997

Loans:
Domestic .................................................................................................................................
International ............................................................................................................................
Total ..................................................................................................................................

¥24,070.9
5,722.3¥29,793.3¥22,898.7
9,131.8¥32,030.5¥21,970.0
12,067.2¥34,037.3

Deposits:
Domestic .................................................................................................................................
International ............................................................................................................................
Total ..................................................................................................................................

¥27,819.1
4,304.0¥32,123.1¥24,358.4
1,0084.2¥34,442.7¥24,136.1
14,143.0¥38,279.1

Ratio of Loans to Deposits:
Domestic .................................................................................................................................
International ............................................................................................................................
Total ..................................................................................................................................

86.52%
132.9592.74%

94.00%
90.55
92.99%

91.02%
85.32
88.91%

Average Balance Outstanding During Year:
Domestic .................................................................................................................................
International ............................................................................................................................
Total ..................................................................................................................................

97.72%
103.1698.95%

96.00%
82.85
90.96%

93.80%
79.15
88.13%

106

Deposit / Loan Balance per OfficeBillions of yen
March 31,

1999

1998

1997

Deposits per Office:Domestic ...............................................................................................................................
Overseas ................................................................................................................................
Total ................................................................................................................................

¥105.9106.3¥106.0¥ 96.1262.2¥109.3¥ 91.7485.7¥121.9Loans per Office:Domestic ...............................................................................................................................
Overseas ................................................................................................................................
Total ................................................................................................................................

¥ 86.5273.9¥ 98.3¥ 80.8343.2¥101.6¥ 77.9476.3¥108.3

Number of Offices:
Domestic ...............................................................................................................................
Overseas ................................................................................................................................
Total ................................................................................................................................

284
19
303

290
25
315

290
24
314

Note: Sub-branches are not included in the number of offices.

Deposit / Loan Balance per Employee
Billions of yen
March 31,

1999

1998

1997

Deposits per Employee:
Domestic ...............................................................................................................................
Overseas.................................................................................................................................
Total ................................................................................................................................

¥ 2.3
1.1
¥ 2.2

¥ 2.1
3.2
¥ 2.2

¥ 1.9
6.3
¥ 2.4

Loans per Employee:
Domestic ...............................................................................................................................
Overseas.................................................................................................................................
Total ................................................................................................................................

¥ 1.9
2.9
¥ 2.0

¥ 1.7
4.2
¥ 2.1

¥ 1.6
6.2
¥ 2.1

Note: Number of employees denotes average number of employees for the year. The number of employees for domestic offices includes head office employees.

107Common Stock
Stockholder Information
1999
March 31,

Central/Local Government .................................................................................................................................
Financial Institutions ...........................................................................................................................................
Securities Companies ..........................................................................................................................................
Other Corporate Entities ....................................................................................................................................
Foreign Corporations, etc. ..................................................................................................................................
Individuals and Other .........................................................................................................................................
Total ........................................................................................................................................................

Number ofstockholders

Number of stocks held
(thousands)

4
236
84
6,487
477
64,06071,3486,182 ( 0.18%)
975,664 ( 28.45 )19,694 ( 0.58 )1,942,756 ( 56.64 )200,812 ( 5.85 )
284,805 ( 8.30 )3,429,913 (100.00%)

Breakdown of Stockholders’ Interests
1999
Number ofstockholders

March 31,1,000 share units and above..................................................................................................................................
377 ( 0.53%)
500 share units and above.....................................................................................................................................
191 ( 0.27 )100 share units and above.....................................................................................................................................
787 ( 1.10 )50 share units and above ......................................................................................................................................
678 ( 0.95 )10 share units and above ...................................................................................................................................... 8,460 ( 11.86 )5 share units and above ........................................................................................................................................ 9,951 ( 13.95 )1 share unit and above.......................................................................................................................................... 50,904 ( 71.34 )Total ........................................................................................................................................................ 71,348 (100.00%)

Number of stocks held
(thousands)

2,779,664 ( 81.04%)
138,062 ( 4.03 )176,723 ( 5.15 )45,544 ( 1.33 )139,691 ( 4.07 )61,659 ( 1.80 )88,570 ( 2.58 )3,429,913 (100.00%)

Fuji Bank Stock Price
Yen
Years ended March 31,

1999

1998

1997

Highest .......................................................................................................................................
Lowest ........................................................................................................................................

¥829
252

¥1,840440¥2,4401,140

Note: Fuji Bank stocks are listed on the first section of the Tokyo Stock Exchange.

108

STOCK INFORMATION

Paid-in Capital¥ 1,037,833 million

Preferred Stock
Number of
Stocks Held(in thousands)

Number of Authorized Stocks
Common StockClass I Preferred StockClass II Preferred StockClass III Preferred StockClass IV Preferred Stock

10,000,000,000 shares
82,411,000 shares
500,000,000 shares
500,000,000 shares
500,000,000 shares

Number of Outstanding Stocks
Common Stock
3,441,618,014 sharesFirst Series Class I Preferred Stock
52,411,000 shares
Second Series Class IV Preferred Stock 150,000,000 shares
Third Series Class III Preferred Stock
125,000,000 shares
Fourth Series Class III Preferred Stock
125,000,000 shares

Number of Stockholders
Common StockFirst Series Class I Preferred Stock
Second Series Class IV Preferred Stock
Third Series Class III Preferred Stock
Fourth Series Class III Preferred Stock

Listings
Tokyo Stock Exchange
Osaka Securities Exchange
Kyoto Stock Exchange

80,5051
1
1
1

Sapporo Stock Exchange
London Stock Exchange
Paris Stock Exchange

Stockholders’ Meeting
General stockholders’ periodic meeting is scheduled inJune every year at the Bank’s headquarters. Apart from that,extraordinary meetings can be held whenever necessary.
Principal Stockholders
Common Stock
The ten principal stockholders of the Bank and theirrespective stockholdings as of March 31, 1999:
Number of
Stocks Held(in thousands)

Percentage in
Total Stocks
Issued (%)

The Yasuda Mutual Life Insurance Company ........
The Dai-ichi Mutual Life Insurance Company .......
The Yasuda Fire and Marine Insurance Co., Ltd. ...
The Yasuda Trust and Banking Co., Ltd.* .............
Nippon Life Insurance Company ...........................
Nissan Motor Co., Ltd. .........................................
Marubeni Corporation ..........................................
Taisei Corporation ................................................
Taiheiyo Cement Corporation ..............................
The Mitsui Trust & Banking Co., Ltd.*.................

217,073
105,874
104,724
83,96572,66861,50754,19353,72052,55949,602

6.30
3.07
3.04
2.43
2.11
1.78
1.57
1.56
1.52
1.44

Total .....................................................................

855,888

24.86

First Series Class I
FIFB Holding Services (BVI) Ltd.* ........................ 52,411
Second Series Class IV
The Resolution and Collection Bank** ................. 150,000
Third Series Class III
The Resolution and Collection Bank** ................. 125,000
Fourth Series Class III
The Resolution and Collection Bank** ................. 125,000

Percentage in
Total Stocks
Issued (%)
100.00100.00100.00100.00* FIFB Holding Services (BVI) Ltd. is the trustee for Fuji International Finance(Bermuda) Trust.
** The Resolution and Collection Bank merged with the Housing Loan
Administration Corporation on April 1, 1999 to become the Resolution andCollection Corporation.

Board of Directors & Senior Overseers (as of June 29, 1999)
Number of
Stocks Held(in thousands)*

Chairman of the Board
Toru Hashimoto ................ 51
President & CEO
Yoshiro Yamamoto............ 34
Deputy Presidents
Tosaku Harada................... 28
Toshiyuki Ogura ............... 18
Senior Managing Director
Masaaki Sato ...................... 12
Managing Directors
Isao Hiraide ....................... 16
Soichi Hirabayashi ............. 22
Atsushi Takano .................. 17
Terunobu Maeda ............... 22
Hiroaki Shinoda................. 12
Teruhiko Ikeda .................. 16
Seiji Satomura.................... 11
Yukio Obara........................ 7
Kenji Watanabe ................. 11

Directors
Michio Ueno..................... 13
Tsutomu Hayano ............... 15
Kazumi Yanagihara ............ 10
Fumito Ishizaka ................... 9
Kunioki Ishibashi ................. 4
Yoshiaki Sugita .................. 10
Minoru Itosaka .................... 6
Hajime Sakuma ................... 8
Saburo Nishiura ................... 9
Kazuo Kasugakawa .............. 0
Sumio Uesugi ...................... 1
Masayoshi Kanaji ................. 0
Akio Takeuchi..................... 3
Kenji Miyamoto .................. 2
Senior Overseers
Takeshi Takahashi ............... 7
Masayuki Amari................. 21
Takeie Ukita...................... 13
Yoriaki Sakata...................... 4
Yuji Oshima ........................ 0
Daiyu Aoki ........................ 40*as of March 31, 1999

None of the Directors have any interest in any transactions
which are or were unusual in their nature or conditions or
significant to the business of the Fuji Bank Group andwhich were effected by the Bank during the current or
immediately preceding financial year or which wereeffected by the Bank during an earlier financial year andremain in any respect outstanding or unperformed.

* Regarding the stockholding of The Yasuda Trust and Banking Co., Ltd., and The
Mitsui Trust & Banking Co., Ltd., such holdings as designated fund trust for separate
account investment are included.

For further information, please contact
the Global Business Planning Division
located at our head office.

109

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