FISCAL

97

ANNUAL REPORT
April1997 March1998

THE FUJI BANK, LIMITEDREPORT TO
OUR STOCKHOLDERSCONSOLIDATEDFINANCIALHIGHLIGHTS
Fuji Bank Group

Fiscal 1996**

Fiscal 1997**(Millions)*

Yen

U.S. dollars***

Yen

U.S. dollars***¥ (456,076)$ (3,453)

99,103$Net Income (Loss)(345,309)(2,614)

109,044879

Net Income (Loss) per Share*(119.35)(0.90)

37.54

0.30

Net Income per Share (diluted)

—

—

37.27

0.30

Common Stock

8.50

0.06

8.50

0.07

Preferred Stock

7.50

0.06

3.75

0.03

For the Fiscal Year:
Income (Loss) before Income Taxes¥

799

Dividends Declared per Share:

At Year-End:Total Assets¥ 55,113,509$417,211¥ 56,211,154$452,950

Deposits

34,552,361

261,562

38,649,481

311,438

Loans and Bills Discounted

34,028,201

257,594

35,714,787

287,790

Securities

6,044,830

45,7605,607,096

45,182

Total Stockholders’ Equity

1,576,455

11,934

1,934,349

15,587

Toru Hashimoto
Chairman of the Board

Yoshiro Yamamoto
President and Chief Executive Officer

Introduction
The Japan Big Bang, which aims to transform the Tokyo market into a truly
international one in line with other major markets, will open the financial
market to intense competition among existing players and new, non-traditional participants, namely foreign financial institutions. Along with thisNotes:* Figures for net income 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 ¥132.10 per dollar, the prevailing rate on March 31, 1998.

transformation, the continuing rapid development of information technology
will change marketing channels and the way banks do business with theircustomers. While these drastic changes are challenging, they also provide
financial institutions with abundant business opportunities.

Net Income (Loss)Net Income (Loss)
Per Share

Total Stockholders’ Equity

Geographical Breakdownof Total Income FY 1997

The global economic environment, characterized in part by the steady(¥ Billion)(¥)(¥ Billion)(Based on the Location of Lending Offices)

expansion of the U.S. economy, has contributed to robust corporate earnings,

109.0

37.54

2,001 1,984

1,934Japan 52.6%
1,636

32.9

unification and the emerging markets of Eastern Europe continue to mature.

93
94
Fiscal Year

Several Asian economies, on the other hand, are suffering economic turmoil

1.60(325.4)2

mous potential, as the EU economies take the final step toward economic

1,576

11.37
4.6

95

97

The Americas 26.0%(112.31)(345.3)96

creating a very competitive business environment. Europe also offers enor-

93
94
Fiscal Year95

(119.35)

96

97

Asia and Oceania 12.4%
94
95
March 31

96

97

98

Europe 9.0%

which severely affects the business environment of the entire region.
Under these circumstances, we are confident that the Bank has the vision,
corporate strategy and management resources to both meet the challenges
and capitalize on the opportunities that lie ahead.

3

REPORT TO OUR STOCKHOLDERS
Financial Performance in Fiscal 1997
Overview

government has introduced various economic stimulus packages, but it will

With respect to our business performance, our net business profit (whichtake time for their effect on the economy to be felt. Given these unfavorable

measures the performance of our core business activities) was ¥320.3 billion

economic conditions and the rise in corporate bankruptcies in Japan, it is(US$2,424 million). Although this figure is lower compared to last fiscal

important for us to be prudent and cautious. Our lending exposure to theyear, it is nevertheless above our forecast and represents our strong andreal estate and construction industries, and non-bank financial institutions issound profitability, and once again ranks us among the top Japanese banks.

the lowest among our major Japanese peers. While this represents a rela-In fiscal 1997, we took all the steps necessary toward eliminating ourtively low level of potential problem loans, we will nevertheless continue toproblem loans. In accordance with the Prompt Corrective Action Policy,

be cautious in managing our loan assets.

which the Japanese Ministry of Finance introduced this April, we undertook

Loan Exposure in Asia

a comprehensive self-assessment of our entire loan portfolio and made appro-

In light of the recent turmoil in many of the economies in Asia, there has

priate provisions for potential loan losses. Regrettably, this action resulted inbeen keen interest in our loan exposure to the region. Total loans to Asianthe Bank posting a loss for the year. After deducting credit costs of approxi-

countries (South Korea, Indonesia, Thailand, Hong Kong, Singapore,mately ¥1 trillion (US$7.5 billion) for problem loans, we posted a full-year

Malaysia, China, and the Philippines) amounted to US$10,890 million, thenet loss of ¥518.7 billion (US$3,926 million), which was fully covered by ourlowest level among major Japanese banks, representing 4.5 percent of ourretained earnings. With respect to dividends, we decided to make an annual

total loans and bills discounted at the fiscal year end in March. Forty percent

dividend payment of ¥8.50 per common share and ¥7.50 per preferred shareof our loans in Asia were made to local subsidiaries of Japanese parent com-as originally scheduled.

panies, and we consider the risk associated with these loans to be ultimately

Problem Loans and Asset Quality Issues

that of the Japanese parent companies. In addition, 47 percent of our loans in

We made it a top management priority to quickly face the issue of our prob-

Asia were made to local companies, most of which represent exposure to lead-

lem loans and put all our efforts into reducing the level of problem loans on

ing corporate names as part of a syndicate, while the remaining 13 percent

our books. In particular, the introduction of the Prompt Corrective Action

consist of loans to government-owned or major local banks. Support from the

Policy now permits Japanese banks to make provisions against problem loans

International Monetary Fund and the international community has some-without prior approval or application to the tax authorities. Consequently,

what mitigated the crisis in the region; however, there are certain countries

we introduced a new, more precise internal system for classifying loan assets,that still require close monitoring. For example, the Bank’s loan portfolio in

undertook a comprehensive self-assessment of our entire loan portfolio, andIndonesia totals approximately US$1.4 billion, which is equivalent to 0.6 per-made wide-ranging and proactive provisions for any potential losses. We also

cent of the Bank’s total loans and bills discounted. We have made over ¥10.5

completed all necessary financial assistance to our affiliated finance compa-

billion (US$79 million) in provisions against our exposure to Indonesia.

nies and set up a special reserve to cover any potential future losses from

Capital Basethese companies.

In conjunction with our disposal of problem loans, we also undertook mea-

In the meantime, by accelerating the recovery and direct disposal of non-4

The outlook for the Japanese economy continues to be uncertain. The

sures to strengthen our capital base. In March this year, we raised US$1.6

performing loans, we were able to reduce the amount of problem loans on

billion overseas through a preferred share issue made by our subsidiary in the

our balance sheet by ¥621.2 billion (US$4,702 million) compared to the pre-U.S. In addition, in accordance with legislation passed by the Japanese gov-

vious fiscal year. Using the current standard, at fiscal year end in March,ernment to create an emergency financial system stabilization package, we

problem loans stood at ¥1,218.4 billion (US$9,223 million), which repre-

issued ¥100 billion (US$757 million) in subordinated debt to a special gov-

sented our loan loss reserve ratio of 74.3 percent of total problem loans. On

ernment purchase fund. As a result of these measures, our BIS capital ratio

a tax-adjusted basis, the reserve ratio went up to 118.6 percent.

was 9.4 percent at year end, with a Tier I capital ratio of 4.8 percent. We

In order to clarify our financial position, we have begun to disclose theplan to continue our efforts to improve our capital strength and are aiming

amount of our problem loans based on rules derived from the U.S. Securities

for a BIS ratio exceeding 10 percent by the end of fiscal 2000. On May 1 thisExchange Commission. On this basis, our total current problem loans at fis-year, our wholly owned U.S. subsidiary Heller Financial Inc. raised US$1,040

cal year end amounted to ¥1,692.7 billion (US$12,813 million), 53.5 percent

million through an Initial Public Offering on the New York Stock Exchange,of which were covered by our reserves for possible loan losses. On a tax-

aiming to strengthen its capital base. Consequently, it contributed a 0.3 per-adjusted basis, the reserve ratio increased to 85.4 percent.

cent increase to our consolidated base Tier I ratio.

5

REPORT TO OUR STOCKHOLDERS
Business Activities

itability through rationalization. Through Strategic Plan 120, we will work

During fiscal 1997, we developed and introduced new services to further

toward becoming a highly profitable and efficient global financial services

strengthen our relationships with our clients. In the domestic market, wegroup providing superior financial services with a high level of customer sat-launched the “Fuji First Club,” a membership reward program that offers

isfaction. In addition, under the policy of prioritizing our business areas andspecial benefits to sustain and enhance our strong customer base in Japan.

clients to enhance productivity, we will strive to further strengthen andIn the first three months of the program, more than 40,000 customers

streamline our organization, establish our competitive advantages in specificbecame members. In addition, we are introducing many new products target-

services and business areas, and realize a solid financial base. With respect

ing our domestic customers such as the Fuji International Cash Card (FICC)

to financial performance targets, we plan to achieve a return on equity ofthat can be used at ATMs around the world. We have already issued approxi-

more than 7 percent, a 10 percent BIS ratio, and a rating in the upper range

mately 70,000 FICCs. As for improvements to our existing services, amongof single A in three years.

other things, we have extended the hours of our ATMs to better accommo-

The five basic goals of Plan 120 are to:date our customers’ needs.

• establish a strong and sound financial base;In addition, we devoted considerable effort to develop our overseas busi-• bolster high-end risk management systems;

ness which generates a significant part of our business profit. In 1997, Fuji

• strengthen the five specific business areas, namely financial technology

Bank was ranked first among euro venture capital debt providers of acquisi-

and information services, personal loans, asset management, settlementtion finance in Corporate Money magazine and was selected for “The Deal ofservices, and trading;

the Year for Buyouts” in Corporate Finance magazine. We were also ranked• establish superior marketing channels; andfourth in the number of leveraged buy-out agent transactions in Gold Sheet’s• strengthen the expertise of all employees.

league table, which represents our strong position in the global acquisition

Our new strategy includes cost-cutting measures, such as staff reductions

finance market. We were ranked thirteenth in Euromoney Loanware project

and branch network consolidation, as well as reconstruction of our asset

finance global arranger league table. As for financial advisory services in

portfolio by focusing on more profitable transactions, especially in the

project finance, in 1997, we were ranked ninth in the Americas in Project

medium-size corporate market and consumer retail market in Japan. In our

Finance International.

overseas business, we will concentrate on providing superior financial prod-

In the field of yen-dominated custody service, our Fuji Kabuto Custodyand Proxy Services have been “Top Rated” among Japanese banks for six
consecutive years since 1992 according to Global Custodian magazine.

ucts that are competitive and highly profitable, such as acquisition finance,
project finance and syndicated loan placement.
In closing, we would like to express our appreciation for the kind assis-

During fiscal 1997, we won a number of large-scale custody mandates and,tance and support our shareholders and customers have extended to us overconsequently, handled over ¥15 trillion (US$113 billion) in equities andthe years. We look forward to continuing to serve you in the future.

bonds representing a 35 percent market share.
Financial Forecast for Fiscal 1998
We expect that the difficult business climate for Japanese banks will continue
in fiscal 1998. With interest rates hovering at historical lows, we foresee a
reduction in income from our bond trading during this fiscal year, and as aresult, our net business profit is projected to be approximately ¥280 billion(US$2,119 million). Due to our significant efforts to dispose of our problem

Toru Hashimoto
Chairman of the Board

loans in fiscal 1997, we anticipate that credit costs will fall substantially infiscal 1998, and therefore, we are forecasting a return to the black with ¥60
billion (US$454 million) in net income.
Medium-term Strategy

Yoshiro Yamamoto
President & Chief Executive Officer

In March this year, we announced a new three-year business plan —6“Strategic Plan 120” — aimed at improving efficiency, productivity, and prof-

7

MEDIUM-TERM BUSINESS PLAN
“Business Strategy Heading into the 21st Century”
Acknowledging the need to secure a strong, soundfinancial base, and to realize superiority in products and services that clearly distinguish us fromother financial institutions in order that we canenhance our a competitive advantage in the newfinancial era, we implemented a new mediumterm business plan —“Strategic Plan 120”— (running from fiscal 1998 through 2000) this April.
The plan aims to enhance our competitivenessthat will prepare us for heading into the 21st
century.
The objectives of the plan are outlined below:

Primary Objective
To make the Fuji Bank Group a highly efficient,highly profitable global financial services groupthat is the customer’s first choice and offers themost suitable services for each customer segment.

Measurable Targets
Targets to be attained by the end of Strategic Plan
120:
Consolidated return on equity of more than 7%
BIS capital adequacy ratio of 10%
Ratings in the upper range of single A

Basic Goals
Specifically, we will be paying particular attention
to the following five areas:q Establish a strong and sound financial base.
We will realize a strong and sound financialbase in accordance with global standards by
aggressively accelerating the recovery and disposal of problem loans.
w Bolster high-end risk management systems.
We will establish an advanced, comprehensive
risk management system for credit, market,
legal and operational risks that will cope withrisk of increasing diversity and complexity.
e Strengthen five specific business areas.
We will enhance our competitiveness in specific business areas in which we can claim tobe the first choice of our customers. They are
outlined below:
8*Financial technology and information services
Enhance specialized services that utilize
sophisticated risk management skills, advanced
financial techniques and high value-added
information, such as high-quality loan assets,
derivatives, securitization and other new typesof finance, project finance, provision of business information, assisting in businessalliances, M&A, and business consultation.
*Personal loans
Develop various types of consumer financesuch as housing, auto and card loans that
improve the quality of life of individual customers.
*Asset management
Offer profitable investment management products and services, namely investment trusts,
foreign currency deposits, investment advisory
and investment consultation.
*Settlement services
Provide safe, low-cost settlement services thatuse advanced data processing technologies
based on our accumulated expertise, such as
electronic banking, telephone banking, electronic money and cyber banking, global cash
management services (CMS), and domestic
and global custody services.
*Trading
Develop our dealing business by implementing
solid asset liability management and advanced
market risk management systems.
r Establish superior marketing channels.
We will build an organization capable of providing customers with optimal services speedily and efficiently through a wide range ofcustomer-friendly channels, including relationship managers, head office product development divisions, as well as technologicallyadvanced channels like telephone banking andcyber banking.
t Strengthen the expertise of all employees.
We will create a financial services group inwhich highly trained specialists can meet thesophisticated financial needs of our customers
worldwide.

Achieving the Primary Objectives,
Measurable Targets and Basic Goals
In order to achieve the primary objectives, measurable targets and basic goals of Strategic Plan
120 as quickly as possible, we have initiated four
concrete strategy programs. They are: Marketing
Strategy, Product Strategy, Managerial
Infrastructure Strategy and Restructuring.
I. Marketing Strategy
In order to establish superior marketing channels,
we realize that it is essential to grasp the specificneeds of each individual and corporate customer
and provide them with tailor-made products andservices via the most appropriate channels.
This means tailoring products and services tosuit the modes of customer activity while simultaneously striving to set appropriate pricing levels
according to the nature of the products and services provided and the transaction costs involved.
Customers who require sophisticated specialist
services can benefit from the joint efforts of relationship managers, who have expert knowledge ofcustomer needs, and the head office productdevelopment divisions, which specialize inadvanced services. Customers who seek convenience at low cost can make use of sophisticatedchannels such as dial centers and cyber banking.
II. Product Strategy
This strategy will focus on the allocation of management resources on the five specific businessareas referred to above. The aim is to sustain andstrengthen the areas in which we are particularly
strong by providing sophisticated specialist services
that match customer needs, and to establish newsources of profits that do not rely on risk-assets.
III. Managerial Infrastructure Strategy
1. Creation of a business group system

With the primary objective of strengthening our
specialist know-how, improving productivity, andachieving the objectives and goals of Strategic
Plan 120, we carried out organizational changes
that involved the introduction of a business groupstructure in January 1998. (Please refer to theorganizational chart on page 100.)More specifically, we built a flexible organizational structure which makes clear each group’s
roles, tasks and responsibilities which will enable
us to swiftly adapt and deal with changes in thebusiness environment. The overall structure(which includes our affiliates) has been formed
emphasizing specialization and comprises of fivegroups responsible for business with segmented
customers and two groups in charge of developing
and providing superior products and services.
Each group is responsible for making full andeffective use of management resources, maximizing customer satisfaction and business performance, and maintaining our competitive edge.
Through this organizational structure, we aim todevelop a cohesive flow among the groups,
improve the quality of our products and services,and enhance customer satisfaction which will subsequently boost our business performance.
2. Improvements in personnel system

In order to strengthen the expertise and increase
the motivation of all the employees, we abolishedthe system whereby employees in our domestic
operations are promoted according to seniority andintroduced a new personnel system that rewards
performance. We also intend to bolster our training program that focuses on specialization. We will
also make more use of experts outside the Bank.
3. Introduction of a new of management
accounting system

We have introduced a new management accounting system which enables us to monitor earnings
after deducting for various costs such as credit
and capital costs, and business indexes such as
ROE, on a consolidated basis by market segment,
product segment and business group.

9IV. Restructuring
Based on our awareness that our cost structure has adirect impact on our competitiveness, we have been
actively implementing restructuring programs since
fiscal 1992. Under Strategic Plan 120, we haveredoubled our efforts by adopting more sweeping
measures to streamline our management base andestablish a slimmer but more powerful managementbase that ensures far greater cost competitiveness.

Personnel Reduction
0
-200

-173

-400
-600
-800
-850
-1,000-1,165-1,200

1. Restructuring of domestic and overseas offices

In the domestic market, we will change our marketing channel strategy for our offices by reviewing
our current full service strategy. We will develop a
new marketing strategy which is supported by leading-edge information technology. This will enable
us to provide customers with greater convenience
while greatly reducing running costs. As a consequence, our domestic and overseas offices will be
subject to operational downsizing, and we will
limit the number of new offices to be opened to theabsolute minimum necessary.
Status of Office Restructuring (Fiscal 1993 – 2000)
FY1993 to FY1996 to
1995
1997

FY1998 to2000

Domestic Offices:
Change–13
Open
14
Close/Consolidation
27
Trimming of Business Areas —

–12
5
17
—

–38
2
40
60

Overseas Offices:
Change+3Open
9Close/Consolidation
6
Trimming of Business Areas —

+2
6
4
—

–4
4
8
6

2. Personnel reductions

By streamlining the workforce of our business outlets, we will allocate human resources to strategic
business areas in order to strengthen our capability
to provide our customers with superior, specialized
products and services. Over the next three years,
we plan to trim our workforce by 850 employees,
bringing total staff cuts to 2,000 since reductions
were initiated in fiscal 1996. This is a 13% reduction compared with the number of employees at theend of fiscal 1995.
10

FY 1993 to1995

FY 1996 to1997

FY 1998 to
2000

3. Reduction of Expenses(1) Investments
Overall investments will be strictly limited tocarefully selected strategic business areas as earlier mentioned. Consequently, the total amount ofinvestment will be reduced.
(2) Personnel expenses
By reviewing current levels of bonuses andallowances, together with the new personnel system and staff reductions, personnel expenses forfiscal 2000 will be reduced by ¥11 billion, or a 7%
decrease compared with fiscal 1997.

REVIEW OFOPERATIONS(3) Reduction of expenses
Excluding costs that significantly affect customer
services and costs that cannot be cut owing tolegal compliance or contractual obligation, we will
strive to reduce current expenses by 10% compared with the fiscal 1997 figure as soon as possible. The objective is to curb cost increases byusing these savings to cover extra investments
necessary for improving services.
4. Reduction in the number of board members
and decrease in remuneration

We will reduce the number of directors by three
from forty-one by fiscal 2000. At the same time,
remuneration to directors will be reduced by amaximum of 30% for the time being.

11

REVIEW OF OPERATIONS / INVESTMENT BANKING

We plan to vastly
upgrade our
product
development
capabilities andskills of ourbusiness promotion
staff so that we can
exploit thetechniques we havedeveloped in thederivatives market.

INVESTMENT BANKING

with only 1% in Japan. Many people expect securitization to become the most competi-

The operations and products offered by the Investment Banking Products & Trading

tive sector of the investment banking business.

Group cover two key areas, customer transactions and market dealing operations.

During the current financial year, steps are to be taken to streamline the legal

Customer transactions involve investment banking and asset management.

framework for asset-backed securities, making it much easier to liquidate a wide

Investment banking includes securitization, bond issues, equity finance, M&A,

range of assets, including trade receivables, lease receivables and guaranteed

derivative and foreign exchange transactions, investment trusts, and venture capital.

deposits. We intend to reinforce our structuring capabilities to ensure that the Fuji

Asset management covers the creation and sale of investment trusts, and pension

Bank becomes one of the leading banks in this field.

management services.
As a matter of priority, we are currently allocating managerial resources to thefollowing products with a view to achieving high levels of excellence in them.
Derivatives
Fuji Bank is one of the most active players in the interest and currency derivatives
markets.
Interest and currency derivative transactions are now used by corporate customers as basic, standard tools alongside deposits, loans and foreign exchange. We
plan to vastly upgrade our product development capabilities and the skills of ourbusiness promotion staff so that we can exploit the techniques we have developed in
the market. We also aim to take an aggressive approach to tackling credit derivatives

Our fund mix
strategy involves
systematic research,evaluation andselection of superior
trust funds aroundthe world in orderthat we can provide
combinations offunds that matchcustomers’ needs.

and other promising new derivative products.

Asset Management
Asset management is the business of managing burgeoning pension funds and the assets
of individuals who are no longer satisfied with simple deposits. To differentiate our asset
management operations from those of other institutions, we have adopted a fund mix
strategy. This strategy involves systematic research, evaluation and selection of superior
trust funds around the world in order that we can provide combinations of funds thatmatch customers’ needs. From December this year, banks will be allowed to sell investment trusts, and we intend to strengthen our efforts to satisfy the asset management
needs of corporate and private customers around this fund mix strategy. The same strategy will be applied to our corporate customers for investment management business.
Trading
In recent years, profit on trading has become one of our key sources of earnings.

Securitization

However, in order to maintain a constant level of trading profits over a continuous

Securitization has enjoyed rapid growth as a new method of raising funds and slimming

period of time, it is always necessary to develop new trading techniques. We will

down the financial positions of corporate customers since last year. In the United States,

continue to refine our dealing capabilities to handle a broad cross-section of prod-

approximately 25% of receivables held by corporations have been liquidated, compareducts, including interest, foreign exchange and equity products.

Investment Banking Products & Trading Group
Group Head

Planning Division

Atsushi Takano

Financial Engineering Division

Managing Director

Asset Management DivisionCorporate Advisory Division
Treasury Division
Capital Markets Trading DivisionInternational Treasury Division
Derivative Products Division12

As with the Big Bang in the U.K. in 1986,
Japan’s Big Bang will result in the complete
deregulation of the financial environment inJapan. And because of this development,
restrictions on banks will be lifted in terms of
securities services. In addition to debt transactions, which we already handle, equity transactions and direct sales of mutual funds will be
added to the services we can provide.
The medium-term business plan of theInvestment Banking Products & Trading Groupfocuses on ways in which Fuji can be fully prepared to face this new financial environment.
For customer transactions, there are two

major action plans in our plan. The first is to
set three target areas in our investment banking operations. And the second is tostrengthen our asset management.
With regard to the first, we are focusing ourattention on the following three areas: securitization, derivatives and equity.
In the field of securitization, once the regulatory barriers are removed this fall, the market is
expected to expand significantly. We will establish our leading position in this field by developing and adopting the most advanced techniques.
As for derivatives, we plan on working
closely with medium-sized corporations andexpanding our transactions considerably.
With regard to equity, we will focus ouremphasis on initial public offerings (IPO)
through our solid relationship with a large
number of medium-sized corporations.
In relation to the enhancement of investment banking operations, strengthening ourasset management will also be an important
goal of our plan.
Of the ¥1,200 trillion (approximately US$9
trillion) of domestic personal assets, only 3% isinvested in mutual funds, a remarkably low figure compared to the 10% in the U.S. The figure, however, is set to change in Japan. Major

deregulatory measures will be implemented in
December which will allow banks to sellmutual funds over the counter.
We are actively advancing our asset management operations and we aim to achieve a portfolio combining mutual fund and pension fundmanagement amounting to ¥2 trillion (approximately US$15 billion) in three years’ time.
As one of the groups in which the Bank isgoing to heavily invest in connection with its
medium-term plan, the Investment Banking
Products & Trading Group is confident that weare ready to face the challenges of this new eraof deregulation.
13

REVIEW OF OPERATIONS / OPERATIONAL PRODUCTS

OPERATIONAL PRODUCTS
Custody Services and Yen Fund Clearing Services
When investors invest in stocks, they normally entrust the management of custody,
clearing and proxy services (the exercising of stockholders’ rights) to financial institutions such as banks. Our FUJI KABUTO provides excellent custody services to institutional investors at home and abroad, and has earned a particularly strong
worldwide reputation for the speed and accuracy of the operational services that backthe yen custody services we offer institutional investors overseas. In fact, we are not

We have earned asolid reputation
among domestic
investors for our
global custody
services, which wehave built up on thebasis of our yen
custody know-how.

only the leading Japanese bank in terms of the balance of yen-denominated shares wehold in custody, but our services in this area have been “Top Rated” among Japanesebanks for six consecutive years according to the internationally respected Global

We are actively
participating in the
new generation ofservices that will
decide the future ofbanking, including
electronic money,
cyber banking,financial EDI andelectroniccommerce.

Custodian magazine, and as the best offered by any Japanese bank by ICB magazine.

involved in pooling and eliminating settlement risk.
Trade-related Business (Foreign Currency Exchange/Remittance/Deposit)
When the revised Foreign Exchange and Foreign Trade Control Law went into effect inApril 1998, we were the first bank to offer high-quality trade-related business services
through virtually all our domestic branches. We are also working to provide better services to customers by establishing new trade-related services, such as foreign currency
overdrafts and telephone banking services in connection with foreign currency deposits.
Electronic Banking
We are working hard to upgrade our electronic banking services, which many of ourcustomers are already using. Our product line-up is growing rapidly and now

We have been appointed by a number of large-scale global custodians as their

includes Windows 95-compatible packages and the Fuji Global Cash Management

local custodian, which has resulted in our yen custody assets increasing significantly.

Service (CMS). And, as mentioned earlier, we are actively participating in the new

Furthermore, we have responded to increasing demands of customers for high-grade

generation of services that will decide the future of banking, including electronic

services such as timely reporting, proxy voting, securities lending-related services

money, cyber banking, financial EDI and electronic commerce.

and daily evaluation of portfolios.
We have also earned a solid reputation among domestic investors for our global

Settlement Risk Control

custody services, which we have built up on the basis of our yen custody know-how.

As one of the leading banks in Japan, we have taken the initiative to reduce the settlement

With respect to our yen fund clearing services, we have developed advanced prod-risk not only in the Japanese but also in the global financial markets. We made a significant

ucts and services, and enhanced “SWIFT” reporting. Several major global banks

effort to change the Foreign Exchange Yen Clearing System in Japan, and we were an origi-

have already selected us as their main yen clearer and made use of our tailor-madenal member of the Continuous Linked Settlement Bank (CLSB) project in the global market.

products and other high-quality services including pooling facility and global cash

The CLSB project was initiated by the G20 (Group of Twenty) as a project to findmanagement. Based on our accumulated specialist know-how, we have started yen

a means, through collective private sector action, to significantly reduce foreign

fund clearing services on behalf of domestic financial institutions, and are actively

exchange settlement risk and to provide certainty with respect to finality of payment.

Transaction & Information Delivery Services Group
Group Head

Planning Division

Hiroaki Shinoda

Multimedia Business Division

Managing Director

Trade Services Division
Settlement & Clearing Services Division
Fuji Kabuto Custody & Proxy14

The primary mission of the Transaction &Information Delivery Services Group is todevelop safer, faster, cheaper clearing services
that better meet customers’ needs and provide
convenience, and make them available to customers via attractive delivery channels.
As a major international financial institution,
Fuji Bank is entrusted with yen fund clearing
business worth over 10 trillion yen per day, andyen custody business worth over 16 trillion yen.
We have already established our expertise inthese areas, but we intend in the future tocapture more of the expanding business inoutsourced clearing services by strengthening
our know-how, human resources and systems
still further. We believe a stronger position in
yen clearing will boost our international presence and contribute to improvements in service.
We continue to take up the challenge ofproviding our customers with world-class services that will win their ongoing support for
years to come. The infrastructure necessary
for providing world-class clearing services was
finally put into place last year when we established a new settlement processing center inTokyo. As a result, the progress we havemade in reengineering, including business tieups and sub-contracting, has enabled us tooffer services that are internationally competitive in terms of price and quality.
We are also active in establishing the newgeneration of clearing frameworks needed tocope with future businesses like trade finance
EDI (Electronic Data Interchange), cyber banking and electronic money. World interest in
settlement risk is also rising, and we are
actively participating in the creation of new
international mechanisms to reduce such risk
through netting and the elimination of Herstattrisk (risk arising from settlements of different
currencies across different time zones). In thisway, we continue to contribute to strengthening the yen’s presence in international currency markets.

15

REVIEW OF OPERATIONS / GLOBAL CORPORATEGLOBAL CORPORATEThe commercial banking expertise we have built up over the years is at the core of
our operations, but we are seeking to deepen our relationships with customers andwin their greater trust and support by responding to the overall financial needs ofmajor corporations by further strengthening our newly-established investment banking operations.
Commercial banking remains the most important element of our business.
Although the ongoing shift toward direct financing by major corporations meansthat bank borrowings continue to lose ground as a proportion of total finance raised,they remain firm in terms of the amount of money involved. Bank borrowings are
an extremely flexible way of raising funds, and the corporate need for services

We are seeking todeepen our
relationships withcustomers and win
their greater trustand support by
responding to theoverall financial
needs of major
corporations.

While making themost of ournationwide networkof offices, we areutilizing our
relationshipmanagers tostrengthen ourability to offer
highly sophisticatedservices.

• managing market risk based on derivatives; and• providing project financing.
We are reinforcing our cooperation with the two product groups that were greatly
strengthened by the Head Office reorganization that took place in January of thisyear, namely the Investment Banking Products & Trading Group, and theTransaction & Information Delivery Services Group. We believe this will enable us
to better satisfy the global financial and informational needs of major corporate customers by providing more specialized, more appropriate solutions.
As for our strategy toward dealing with business outlets of corporations, we havealways followed a sector-by-sector approach based on exploiting our specialist knowledge of individual business sectors, and strong risk management. We are dynami-offered by banks, including financing, is thought to be related to their borrowing

cally reorganizing our sectoral jurisdictions and responding to changes in industrial

requirements. Our business activities are now directed even more to boosting profits

structures so as to be able to concentrate more on companies involved in new growth

without relying on risk-assets. To this end, we seek to improve our asset efficiency

areas such as multimedia and data communications. While making the most of ourby combining the low-cost, low-risk fund-raising methods offered by our investment

nationwide network of offices, we are utilizing our relationship managers tobanking activities in areas like securitization and derivatives.

strengthen our ability to offer highly sophisticated services, and move ahead with

In addition to fund-raising, we are responding to the ever-widening needs ofconsolidating those branches dealing with major corporations, primarily in the

major corporate groups by:Tokyo Metropolitan area and the Kansai region.

• assisting to trim balance sheets through asset liquidation;

Based on our awareness that the Big Bang financial reforms will create new busi-• providing comprehensive services for their overseas operations;ness and provide many new opportunities, we are endeavoring to implement bolder,• providing fund-clearing and management networks for entire domestic and inter-more flexible business strategies and streamline our organization. These efforts

national corporate groupings;

include raising the level of expertise of each relationship manager and product group• restructuring and arranging M&A deals associated with industrial realignments

by introducing a business group system that will provide greater motivation.

and the reallocation of management resources within corporate groups;

Global Corporate Group
Group Head

Marketing and Credit Division

Mitsuru Annen

Global Corporate Credit Division

Senior Managing Director

16

Faced by structural stagnation brought about
by a maturing economy, Japan is now using
deregulation and information technology toeffect structural change and set the economy
back on the road to growth. Structuralchanges and intensifying international competition arising from the increasingly borderless
economy are leading to a performance-basedpolarization of companies. They are also
encouraging a shift to market-driven corporate
governance calibrated by the stock market andcredit ratings. The Global Corporate Group isin charge of dealing with the listed companies
that are at the head of Japan’s economic

restructuring, and their domestic and overseas
affiliates.
The finance industry is not exempt fromthese structural changes. The Big Bangfinancial reforms legislated in April 1998 haveushered in an era of unprecedented competition to meet the diversifying, increasingly
sophisticated global financial needs ofcustomers beginning with major corporations
operating in international markets. Morespecifically, the competition is between
financial institutions, both domestic and foreign, in areas such as technology, capital,
specialist knowledge and information-gathering capabilities.
As the trend toward global standards gathers pace, Japanese companies are gravitating
toward the use of consolidated accounting
standards, and many major corporations
are tackling the issue of consolidated
management and establishing consolidated
financial standards. In 1993, we were one of
the first Japanese banks to take concrete
steps in this direction. Since then we haveaimed to expand group-wide transactions covering not only the parent companies but also
their subsidiaries.

By exploiting our broad customer base that
we have built up in this fashion, we haveestablished:• a high degree of specialization through theknowledge and information accumulated inrelationship management;• strong integrated financial services utilizing
our offices both at home and abroad; and• the capability to provide appropriate solutions for customers’ needs.
Speeding up the creation of a highly efficient,highly profitable business structure based onthese elements is a key component of our current medium-term plan.
17

REVIEW OF OPERATIONS / PERSONAL BANKINGPERSONAL BANKING

an appropriate manner by creating a full lineup of products and services to cope withIn order to achieve the objectives set down in our medium-term business plan, thevarious investment requirements. We intend to offer advice for managing invest-

Personal Banking Group is in the process of implementing four concrete strategies.

ment portfolios that are tailored to each customer’s needs by placing special emphasis

The first of these is to strengthen relationship marketing so as to heighten customer

on investment trusts, which banks will be allowed to sell from December this year.

satisfaction through better knowledge of their needs. The core of this policy is a newservice known as the “Fuji First Club,” which was inaugurated in March 1998. The
purpose of this service is not simply to persuade customers to become members, but
to create a steadily increasing group of “Fuji fans” who are completely satisfied with
our services. It does this through close, long-term relationships and mutual communications with customers who take up membership. In order to strengthen relationships, it is vital to improve the quality of the bank personnel who actually come into
direct contact with customers in bank branches and offices. This involves raising
specialization levels among our staff by ensuring that they acquire the overall financial skills needed to respond satisfactorily to the increasingly diverse financial needs

In order tostrengthen
relationships, it isvital to improve thequality of the bankpersonnel who
actually come into
direct contact withcustomers in bankbranches and offices.

For customers withparticularly
sophisticated needs,
we are working todevelop tailor-madeinvestment productsthat makesynergistic use of thefull functions of the
Fuji Bank Group.

of each individual customer.

For this reason, we are developing investment portfolio simulation software that will
enable us to introduce and sell investment products that meet customer needs. At thesame time, we plan to establish investment advisory desks and hold seminars forinvestors.
For customers with particularly sophisticated needs, we are working to develop
tailor-made investment products that make synergistic use of the full functions of the
Fuji Bank Group, including the Fuji Trust and Banking Company. We are also
expanding the staff of the Private Banking Division and improving their specialist
knowledge in this area of business.
Our fourth strategy is to streamline our marketing infrastructure. We are steadilyenhancing the databases necessary for building closer customer relationships and

The second strategy is to reinforce one of our greatest strengths - our personalfacilitating more timely communications with them. We are also augmenting the tele-loan services - by reinforcing the Bank’s already well-established status in this area.

phone banking functions of the fund transfer service we initiated in March 1998,

This involves continuing our active ongoing program of developing products thatand are working both to expand the Fuji Cyber Bank into a fuller service and tomeet the varying needs of customers who use our housing loan services, and raising

improve customer convenience by putting ATMs into round-the-clock operation. To

the standards of the services themselves.

ensure that we can offer customers sophisticated specialist services, we plan to tie up

The third strategy is to strengthen still further Fuji Bank’s reputation for asset

with a wide range of specialist institutions and hire a number of mid-career person-

management services by improving our investment products and services to meetnel with professional skills and experience.

expanding demand as the Big Bang financial reforms get underway. To satisfy customers from now on, it will be necessary to be able to respond to their needs in

Personal Banking Group
Group Head

Product Development & Marketing Division

Masaaki Sato

Sales Channel Management Division

Managing Director

18

Private Banking Division

The first point to note about the environment
facing the Personal Banking Group is that it is
becoming increasingly competitive. Our
medium-term plan coincides with the full-scale
implementation of Japan’s Big Bang financial
reforms. This will usher in an era of ferocious
competition unprecedented in Japan. We will
be competing in the same markets with foreign
financial institutions and entities from different
business sectors, such as insurance and securities. Even the distribution sector, with its longand eminent history as a service industry, will
be a competitor.

The second point to note is the onset of“individualization,” the process by whichtoday’s individual customers become increasingly selective in demanding excellent services
from an ever-widening array of choices.
Unless banks can offer finely-tuned services
that take the different lifestyles and values ofindividual customers very much into consideration, they will not be able to provide the levelsof customer satisfaction that are increasingly
required.

In order to pull ahead of the competition
and truly satisfy our customers as a service
business, we are moving away from our conventional “mass marketing” approach, which
treats all customers in the same way. In its
place, we are adopting a “relationship marketing” approach toward individual customers
which aims to build closer relationships thatenable us to understand and satisfy theirneeds much better.

Under our current medium-term plan, therefore, the Personal Banking Group’s strategy is
to build stronger relationships with customers
and ensure their satisfaction as a service company by providing the most appropriate services for their individual needs andtransactional behavior. Instead of working simply to increase the number of accounts orboosting deposit balances, our key goal is toincrease the number of customers who favor
the Fuji Bank because our services are truly
satisfactory.

19

REVIEW OF OPERATIONS / CORPORATE BANKING

We are creating
multiple corporatetransaction
channels bybuilding a new
creative network to
respond todiversifying
corporate needs
speedily, flexibly
and with thenecessary specialist
knowledge.

CORPORATE BANKING

customers with advanced, world-class products and services that meet their sophisti-

To realize the goals of the medium-term business plan of the Corporate Banking

cated needs in a timely manner.

Group, we have been engaged in three high-priority strategies ever since the plan was

To this end we are aggressively developing and providing new products that accu-

inaugurated.

rately match a variety of customer requirements. These include:

The first strategy is the development of channels and personnel resources. We• investment products that use derivatives and other advanced financial tech-

have adopted a multi-faceted approach to establishing advanced, multipurpose chan-niques, such as derivative-based deposits and high-yield investment trusts;

nels so as to enhance customer convenience while reducing costs. To this end, we• clearing products that use information technology, such as Windows 98-based

are deploying personnel with professional expertise in handling corporate transactions in regional hub branches to provide specialist services and products that arecompetitive and of high quality. We are also concentrating staff members who arehighly familiar with financing operations at Head Office to strengthen our Business
Financing Desk, which uses direct marketing to initiate loan proposals for small andmedium-sized enterprises. Also, we are creating multiple corporate transaction channels by building a new creative network to respond to diversifying corporate needs
speedily, flexibly and with the necessary specialist knowledge. To round things off,
we are making strenuous efforts to create a sales structure that is efficient, powerfuland flexible. To this end, we are training and deploying relationship managers who
possess sufficient specialist knowledge to serve as partners for corporate managers
and are extremely well-acquainted with customers and the industrial sectors infirm banking services; andThe Group plays avital role in actively
nurturing andsupporting growthcompanies and new
business sectors,
helping to create the
new technologies
and industries on
which Japan’s
future depends.

which they operate.

• bill collection services through convenience stores.
More than ever before, the Group plays a vital role in actively nurturing and supporting growth companies and new business sectors, helping to create the new technologies and industries on which Japan’s future depends. And by establishing fairpricing levels for services, we can offer optimal value for money, thus raising customer satisfaction levels.
The third strategy is speeding up innovation in asset and profit structures. On
the one hand the Group endeavors to enhance the soundness and efficiency of its
loan assets. On the other, the Group works to create a solid profit base by identifying
and expanding new profit sources that do not depend on risk-assets. Further efforts
have been made to improve our in-house credit rating system. This strengthens ourcredit risk management procedures by improving the accuracy of the risk-measure-

The second strategy is the reform of corporate marketing. This involves provid-

ment facilities used in connection with lending transactions. Our goal is to create a

ing customers with the most appropriate services for their needs. More specifically,strong, sound financial structure that meets global standards.

we are creating a system whereby highly-trained relationship managers provide

Corporate Banking Group
Group Head

Product Development & Marketing Division

Isao Hiraide

Specific Corporate Marketing and Credit Division

Managing Director

Credit for New BusinessBusiness Information Division
Credit Division I
Credit Division II
Credit for Kansai

20

The Corporate Banking Group specializes inbusiness with small and medium-sized enterprises, which are the backbone of theJapanese economy. These enterprises are
the foundation of our corporate transactions
and are valuable assets for us.
The environment surrounding small andmedium-sized enterprises is becoming
increasingly difficult in the face of the sluggish
Japanese economy. Compounding this are
deregulation of the financial system brought
about by the Japan Big Bang and developments in information technology.

Consequently, the sophisticated needs ofsmall and medium-sized enterprises are diversifying and becoming more complex amidst
these great changes. The role of the
Corporate Banking Group is to accurately
respond to the various needs of these customers, discern their technological and business strengths, and support their growth inevery way.
Big Bang reforms have made the Tokyofinancial market increasingly borderless withthe entry of foreign financial institutions creating a highly competitive environment.

However, the entry of foreign financial institutions into the Japanese small and mediumsized corporate market is relatively difficult
because of its enormousness. Hence, theseenterprises have high expectations for the
specialized and convenient products and services that we provide.
To meet these expectations, the Corporate
Banking Group’s medium-term business plan
aims to dramatically increase productivity andbuild an efficient business promotion structurethat provides services tailored to our various
types of customers.

Ultimately, we aim to demonstrate thestrength of our products and services by
responding accurately and in a timely mannerto the ever diversifying needs of our customers
in order to achieve unsurpassable customer
satisfaction.

21

REVIEW OF OPERATIONS / PUBLIC & FINANCIAL INSTITUTIONSREVIEW OF OPERATIONS / OVERSEAS BUSINESSPUBLIC AND FINANCIAL INSTITUTIONSOVERSEAS BUSINESS

Public Institutions Market
Under our new medium-term plan, the key objectives with respect to the public
institutions market are as follows:First, in our transactions with public institutions, we aim for maximum efficiency
and precision in handling operational procedures relating to the various types of tax
revenues, government subsidies and other large sums of public funds.
Second, we endeavor to respond precisely to our customers’ fund procurement andfund management needs, which have become increasingly complex and diverse in recent
years. Meeting these needs in an appropriate manner is an extremely important issue.
Financial Institutions Market
Japan’s Big Bang reforms of the financial system will result in far broader interrelationships between financial institutions.
More specifically, the advent of new financial products that make use of advanced
financial technologies has resulted in a much wider range of transactions between financial institutions. At the same time, as bank sales of investment trusts and our expanding
guarantee business with non-life insurance companies have proved, deregulation has
been accompanied by an enormous increase in the number of opportunities for tie-ups.
Against this background, we have adopted a medium-term plan that tackles twobasic issues. The first of these is to increase revenues by providing market-related
products and services such as derivatives and asset-backed securities transactions.
The second is to build tie-ups in product development and operations in liquidatingdebts and yen clearing services to mention just a few, and strengthen the relationships that will lay the foundations for success in these areas.

Public & Financial Institutions Group
Group HeadTerunobu Maeda
Managing Director
Institutions Marketing & Credit Division

22

The Public and Financial Institutions Group is
responsible for the Bank’s transactions withlocal governments as well as the affiliatedorganizations of central government agencies
and Japanese financial institutions.
With respect to our business with local governments, we primarily deal with local governments who have appointed us their designatedfinancial institution. As for our business withother Japanese financial institutions, we provide
them with a wide range of “interbank” services.

Meeting the needs of these customers in an
appropriate and timely manner is an extremely
important issue for the Bank and our Group’s
medium-term business plan reflects our key
objectives with respect to these organizations.

23

REVIEW OF OPERATIONS / OVERSEAS BUSINESSThe Americas
Fiscal 1997 was the U.S. economy’s sixth consecutive year of sustained expansion
while inflation rates remained low and unemployment rates continued to drop, consumer expenditure and fixed investment rates grew. Low inflation was achieved
despite tight labor markets, due to downward price pressures from competitive markets
and to growth in productivity. Other factors, such as a disinflationary environment inglobal markets and U.S. dollar appreciation, also contributed to stable prices. Such atendency has been accelerated since the Asian currency turmoil during the summer.
Stocks continued on an upward trend, weathering even a dip when fear of effects
from Asian currency markets caused the Dow Jones Industrial average to fall 554

In the Americas, we
continued to growand respondefficiently andeffectively to therepaid changing
needs of ourcustomers in the
global financial
services market.

points, mirroring behavior of other financial markets. Individual investment and low

Division for the Americas, based in New York. Established in 1996, this division centralized our structuring and advisory capabilities for project financing in both North
and Latin America across a wide range of industries, including electric power, oil andgas, mining, telecommunications and chemicals. In 1997, the division acted as financial advisor on seven major project finance transactions in Latin America, resulting in
the Bank being ranked ninth overall among institutions providing financial advisory
services in the Americas. In addition, we were chosen to provide the financing for a
US$1 billion nitrogen plant to be built in Mexico, and we were appointed to be soleunderwriter and arranger to finance the first BOT (built, own and transfer) project in
Costa Rica, along with the Inter-American Development Bank.

inflation helped the recovery of U.S. and international markets.

Latin America continued its strong recovery in 1997. Many of its markets remained

The Fuji Bank Group continues to be on the forefront in customer service. The

Our manysuccessfultransactions in theAmericas illustrate
our global
management
relations, the joint
efforts of ourorigination,
structuring andsyndication groups.

In 1997, we continued to build the business operations of the Project Financerelatively unaffected by the turmoil in Asian financial markets. In order to serve theFuji Bank was selected as a co-arranger to assist in the high profile corporate divesti-

needs and tailor our services to Latin America and global customers, we continued build-ture of Pepsico Inc.’s IPO of Kentucky Fried Chicken, Pizza Hut, and Taco Bell to

ing on our local presence in Brazil, Chile and Mexico. The Bank’s presence in the region

create a newly public traded company, Tricon, Inc. The success of this transaction

consists of a full banking subsidiary, Fuji Bank(Mexico)S.A., a representative office inillustrates our global management relations, the joint efforts of our origination, struc-

Mexico and a representative office in Sao Paulo. In addition, we have factoring businessturing and syndication groups.

presence in the area through Fuji Group companies such as Heller-Sud Servicios

The Fuji Bank and Trust Company (FBTC) has continued to develop new leasing

Financieros in Argentine, HellerNet-Sud in Chile and Heller Financial (Mexico).

structures to enhance our ability to compete in a changing marketplace, taking into

On May 1, 1998, a Fuji Group company, Heller Financial, Inc. (Heller) brought

account in particular the increased funding environment experienced by Japanese

itself public and listed its shares on the New York Stock Exchange. Its US$1 billion

banks during fiscal 1997. As one example, FBTC, in conjunction with Key Global

Initial Public Offering was well accepted by the market and turned out to be the

Finance and Nomura Securities, closed an off-balance sheet lease structure enhanced

biggest of its kind in nearly two years in the U.S. We continue to support Heller andby both U.S. treasuries (equity portion) and a certificate of deposit (sub-debt portion)

we retain our majority ownership after the IPO. Heller, a leading commercial finan-with the remaining amount financed by a CMBS conduit.

cial services company, has a more than 75-year history of consistently serving theOverseas Business Group
Group Head

Overseas Business Division

Atsushi Takano

Americas Division

Managing Director

Europe, Africa, & The Middle East Division
Asia & Oceania Division
China

Project Finance Division
Credit Division for Overseas Business
Credit Division for The Americas
Credit Division for Europe, Africa, & The Middle East24

The Overseas Business Group is responsible
for promoting business with overseas customers such as European and American multinationals, Chinese and major Asian
conglomerates, sovereign customers andfinancial institutions. Also, the Group has beenpromoting such advanced products as project
finance, acquisition finance and syndication.
Although we are facing difficult issues in
the global market place which have been
exacerbated by the instability in the Asianfinancial markets and the downgrading ofJapanese banks, it remains very important for
the Bank to promote international financial

business in both Europe and America, where
we can develop the most advanced financial
techniques and skills, and in Asia, where we
expect medium to long-term growth and new
business opportunities.
We have been successful in developing ouroverseas business and cultivating our competitive advantages in such areas as project
finance and acquisition finance. In 1997, wewere ranked first among euro venture capitaldebt providers of acquisition finance inCorporate Money magazine and were ranked
fourth in the number of agency role transactions of leveraged buy-out finance in Gold

Sheet’s league table. Also,we were ranked
thirteenth in Euromoney magazine’s project
finance global arranger league table and wereranked ninth in the number of financial advisory in project finance in the Americas. These
facts highlight the strong market position of
Fuji and we will further strengthen our capability to provide world-class products and services in which we have a competitive edge inorder to satisfy our customers’ needs and toestablish ourselves as a top-tier bank worldwide through these business activities.
With the arrival of Japan’s Big Bang financial reforms, the advanced financial tech-niques we foster in the overseas markets willallow the Bank to prosper amidst our competitors which include major European andAmerican financial institutions. The know-how
we attain in turn will be indispensable tools inproviding our domestic customers with thehighest level of satisfaction. The Overseas
Business Group, cooperating with other business groups, will make every effort necessary
to enhance customers’ satisfaction.

25

REVIEW OF OPERATIONS / OVERSEAS BUSINESS
needs of small and mid-sized businesses in the U.S. and around the world. With
more than US$12 billion of its diversified assets, Heller provides products and services in cash-flow lending, real estate finance, asset-based lending, equipment
finance and leasing, factoring, and vendor finance. Coupled with strong asset quality,
Heller earned record profits in 1997 for the fifth consecutive year.
Our derivatives subsidiary, Fuji Capital Markets Corporation (FCMC), continued
to earn top billing as a market maker in interest rate and cross-currency derivative
products. FCMC was ranked at the top of its professional peers as a provider of yen
and U.S. dollar interest rate and cross-currency swaps by several industry magazines.

companies, and the affiliates and subsidiaries of Japanese companies, their creditworthiness is unimpeachable. This helped to minimize the impact of the crisis on ouroperations, and we were able to respond to the requests of local financial authorities
by setting aside the reserves necessary to deal with assets that had deteriorated by
the end of the fiscal year in March 1998.
Although economic activity in Asia and Oceania has decelerated somewhat as aresult of the recent business slowdown and exchange rate fluctuations, the region isstill one of the world’s economic powerhouses. Over the medium to long term, economic growth rates within the region are expected to remain high. Indeed, there are

The company offers a wide variety of customized structures in over 20 currencies toalready signs that foreign capital investment in South Korea and Thailand is on themeet customers’ specific needs. In the Americas, FCMC works closely with Fuji’sroad to recovery. In Asia and Oceania, trade, investment and other forms of economic

corporate customers to provide a wide variety of financing in the U.S. market as wellinterchange remain at very high levels, both within the region and with Japan and theas innovative structures for their increasing flow of Asian investments.

advanced nations of Europe and North America. Keeping this very much in mind, we

Fuji Securities, Inc.(FSI), our primary dealer in U.S. government securities and a

Although economic
activity in Asia andOceania has
decelerated
somewhat as aresult of the recent
business slowdown
and exchange rate
fluctuations, theregion is still one of
the world’s
economic
powerhouses.

In the financial
products sector, we
strengthened our
involvement in loan
syndication andproject finance insuch sectors as
natural resourcesand energy.

member of CME and CBOT, is a leader in the U.S. agency bond market andintend to maintain our focus on the region, building up our network of key centersand strengthening our ability to provide products that meet our customers’ needs.

Eurodollar futures brokerage in CME. In 1997, FSI became a selling member for

The opening of our Bangkok International Banking Facility in September 1997

Agency Discount Notes (FHLB) and was the leading firm in volume of Eurodollar

brought the total number of our offices in Asia and Oceania to 12 branches, 11 repre-

futures brokerage in CME. FSI has an around-the-clock global futures brokerage ser-sentative offices, and 14 subsidiaries, covering the entire region and delivering top-

vice through network operations including those in London(LIFFE) andquality financial services and information to our customers. In fiscal 1998 andSingapore(SIMEX).

beyond, we intend to respond to our clients’ demands to the maximum possible

Fuji Bank Canada continues to serve its increasingly globally focused manufacturing and natural resource clientele with corporate and project finance anywhere
within the Fuji network.
In 1997, Fuji Bank in the Americas continued to grow and respond efficiently andextent by opening new offices after taking current levels of economic development
and future growth prospects into consideration.
In the financial products sector, we strengthened our involvement in loan syndication and project finance in such sectors as natural resources and energy in fiscal

effectively to the rapidly changing needs of its customers in the global financial ser-1997. In Australia, for example, we strengthened our local reputation considerably

vices market. With a strong commitment to meeting customer needs and the highest

when we succeeded in securing the mandate to act as lead manager for the Bengalla

standards of customer service, Fuji Bank, Fuji Securities, Heller Financial, Fujicoal mining project. In our project clearing operations, we reinforced the capabilities

Capital Markets Corporation and other subsidiaries and affiliates form an increasinglyof our Hong Kong and Singapore offices in order to enhance the Fuji Global Cashintegrated network, providing a comprehensive range of sophisticated, high-quality

Management Service (CMS), and expanded our CMS service area to cover Taiwan

financial products and services to our customers in North and South America.

and other locations.
Against a background of growing customer interest in the currencies of Asia, weAsia and Oceania

increased the number of personnel in charge of handling these currencies both atSeveral developments during fiscal 1997 made it a turbulent year in the Asia andHead Office and in local offices overseas. We also held two seminars on Asian

Oceania regions. Two events in particular attracted the world’s attention: Hongcurrencies at Head Office, and worked hard to enhance our ability to provide

Kong’s historic reversion to China and the economic crises in South Korea, Thailand

information on the currencies of emerging markets and upgrade product develop-

and Indonesia. The IMF’s involvement in providing support to deal with the latter

ment capabilities.

was also very much in the limelight.
The financial crisis in Asia was a serious matter for the Bank because it gave rise

26

For the future, we intend to exploit the Bank’s vast experience in international
financial markets by focusing more on the financial advisory business and high-to concerns that the quality of our assets might deteriorate. Fortunately, since mostleveraged transactions. Through all our activities, we remain as committed as everof our principal clients in the region are sovereign entities, large regional blue-chip

to contributing to the region’s economy as an Asian financial institution.

27

REVIEW OF OPERATIONS / OVERSEAS BUSINESS

Europe, Africa and The Middle East
We achieved
remarkable resultsin various fields
such as leveraged
finance, project
finance andaircraft finance. In
particular, ourleveraged financebusiness has
continued to expand
over the past several
years.

In 1997 the economies of the European Union (EU) have recovered as expected as aresult of strong exports and rising domestic demand in spite of the sudden turbulence in
Asian financial markets whose adverse impact was felt throughout the world. This economic recovery is forecast to be sustained via domestic demand which will be stimulatedby the expectation of the start of the Economic and Monetary Union (EMU). Thesedevelopments have and will provide significant opportunities for us in the region.
In May 1998, the leaders of the EU gathered in Brussels to make one of the most
historic decisions in the history of the EU. They declared that the third stage of thesenior debt financing facility for the management buyout of Unipoly S. A. We also
successfully arranged senior debt for the acquisitions of Target Express Parcels
Limited, IPC Magazines, SEAT SpA and Impress Metal Packaging Holding B. V. As
a result of such achievements, Fuji Bank was ranked number one in Europe by
Corporate Money magazine as a provider of funds for venture capital debt. We also
won the Deal of the Year award from Corporate Finance magazine in 1997 for the
Imperial Metal Packaging transaction.
Corporate lending also remained a pivotal area where we maintained our strong
presence in an increasingly competitive corporate loans market. Priority was given to

EMU shall start in January 1999, which means that the “Euro” currency will comethe development of relationships with multinational corporates in the European top

into existence from that day forward. In this backdrop, we have taken all necessary

500, where greater opportunity exists for us to support their overseas business throughsteps in preparation for this event and we are ready to take full advantage of the

our international network and to offer customers complementary financial services.

potential business opportunities.

The buoyant U.K. economy stimulated further corporate mergers, acquisitions

Corresponding with these developments, we organized a series of EMU seminars inand rationalizations. Against this background, we enhanced our reputation in the

more than ten cities throughout Europe and in Japan in 1997. These seminars gave ourdynamic industrial sub-sectors of media and telecommunications, U.K. public utili-

customers a clear view of the business environment after the introduction of the euro.

ties and conglomerates by co-arranging and underwriting major transactions forIn other business areas, our syndicated loan business continued to be one of thecore components of our activities in the European market. In 1997, International

many of the key sector players, including Imperial Chemical Industries PLC, Orange
PLC, BAT Industries PLC and Cable and Wireless Communications PLC.

Financing Review ranked Fuji Bank thirteenth in the region (by number of deals

In the capital markets, we responded to our customers’ growing needs for fundarranged) and first among Japanese banks (Fuji Bank arranged transactions in theraising. In this area, our securities arm in Europe has achieved significant results.

European market totaling US$20.3 billion). We are particularly strong in the emerg-

Fuji International Finance PLC again acted as lead manager for a number of bonding markets such as South Africa, Poland and Turkey. We also have a significant

issues, for both Japanese and non-Japanese issuers. They were also active in the fieldpresence in the field of venture capital finance.

of structured finance, arranging various structured issuance programs, including an

Landmark transactions successfully arranged included such deals as First

asset-backed commercial paper program.

National Bank of Namibia, which was the first ever syndicated transaction in that

We have also been able to bolster our strength in the area of asset management.

country, Enterprise Miniere et Chimique in France, the Icelandic Investment Bank,

Our fund management arm, FIMCO(Europe) Ltd., now boasts the most successful

Imperial Group of South Africa, and Turkiye Is Bankasi and Toprakbank in Turkey.

performance track record among any U.K.-based pooled pension fund manager overWe have also expanded our syndicated loan business in Eastern Europe arranging

the last six years. An open-ended unit trust called Fuji Tax Exempt Equity Fundfacilities for Riga Commercial Bank in Latvia and Tallinna Pank in Estonia andwas ranked first (as of the end of March 1998) out of 56 U.K. pooled fund managers

many others.

by CAPS, a leading independent performance measurement company. This fundWe recognize that fundamental changes are necessary to create a standardized
framework for the numerous aspects related to secondary loan market trading. We
are one of the founding members of the Loan Market Association, established in

won the award for the Best Smaller Mixed Managed Fund over a five-year period
from Professional Pension magazine in 1997.
Although FIMCO(Europe) is a London-based company, it has been acting as the

1996, together with JP Morgan, HSBC, BZW, Credit Suisse, NatWest and SBC. The

investment advisor for the international equity mutual fund promoted by Lord

members of the association have committed to work on establishing this framework

Abbett, the second largest independent asset management group in the United States.

for the trading of secondary debt.

This fund was launched successfully in December 1996, and Lipper Analytical

We achieved remarkable results in other fields as well, such as leveraged finance,
project finance and aircraft finance. In particular, leveraged finance has continued
to expand over the past several years. Following the success in the final quarter ofServices has ranked it the best performing fund among U.S. International Small-Cap
Funds in 1997.
We focus not only on the above-mentioned areas but also on other financial ser-1996, we maintained the top position among debt arrangers for cross-border

vices, including treasury operations and derivatives products. We continually strive

European leveraged acquisitions in 1997.

to satisfy our customers in Europe by providing high-quality products and a very

The highlight of the year was our sole lead arranger role in the £395 million
28

Corporate lending
also remained apivotal area where
we maintained ourstrong presence in
an increasinglycompetitive
corporate loans
market.

comprehensive range of services through our global network.
29

CORPORATE CITIZEN
Serving the Global Community

In the U.S., many employees are involved in

In keeping with our corporate philosophy of serv-

company-sponsored volunteer activities that

ing all communities in which we do business, theinclude taking part in walk-a-thons, public school

Fuji Bank Group has a long and proud history ofeducation and beautification programs, and collect-activities for the betterment of communities

ing and distributing gifts to the poor. In recogni-

around the world.

tion of the Bank’s commitment to community
service, The Fuji Bank and Trust Company,

Traffic Safety

a wholly-owned subsidiary located in New Yorkand the driving force behind the Bank’s corporate

Every year we co-sponsor the annual Traffic
Safety Campaign. In cooperation with traffic
safety organizations and police, the campaign provides for automatic accident insurance for all firstgraders in Japan if they are involved in a traffic
accident on their way to or from school. Now incitizen programs in the U.S., has received top
Community Reinvestment Act (CRA) ratings fromfederal and state regulators for seven consecutive
years. In 1997, The Fuji Bank and Trust Company
financed over US$25 million to nonprofit organizations serving low-income people or communities.

its thirty-fourth year, the program has covered
approximately 42 million children.

Social Welfare

Academic Support
Through various academic activities, we play an

FINANCIAL REPORTS

active role in supporting education around the
Involvement in social welfare activities by the Fuji
Bank Group and its employees is actively promoted.
A major social welfare activity of the Group is the
Fuji Memorial Foundation which is dedicated to
improve the general welfare of society. Establishedin 1980 to commemorate the Bank’s 100th anniversary, the Foundation makes such contributions tothe community as donations of electric wheelchairs
and vehicles for the handicapped, and providing
funds for research and translating books into
Braille for sight impaired university students.
To encourage involvement in community service
activities by employees, the Bank has initiatedsuch programs as leaves of absence for employees
so that they may take part in volunteer work.

world with the view to contributing to the development of individuals who will lead the world

Contents

into the twenty-first century.

FISCAL 1997 IN REVIEW (CONSOLIDATED / NON-CONSOLIDATED)32

RISK MANAGEMENT

42

Foundation provides monthly stipends to foreign

CONSOLIDATED FIVE-YEAR SUMMARY

51

students studying in Japanese universities. We

CONSOLIDATED FINANCIAL STATEMENTS

52

have also created scholarships abroad for students

Balance Sheet

In Japan, the Fuji Bank International

attending universities in other Asian countries.
We have also made contributions to higher education by establishing lecture series on economics
and finance at Chicago University, Cambridge
University and the China Institute of Financing in
Beijing.

52

Statement of Income

54

Statement of Earned Surplus
Statement of Cash Flows

55
56

Notes to Consolidated Financial Statements

57

Report of Independent Certified Public Accountants on the Financial Statements
NON-CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet

70

70

Statement of Income

72

Statement of Appropriation of Profit
Statement of Cash Flows

72

73

Notes to Non-Consolidated Financial Statements

74

Report of Independent Certified Public Accountants on the Financial Statements
DATA FILE (NON-CONSOLIDATED)

30

69

75
76

31

Operating Income andOperating Expenses(¥ Billion)
2,692

2,399

Earnings Performance

1,901

1,810

55.1 53.4 54.4 56.2 55.1

2,529

1,737

1,598

Earnings Performance
Fiscal year

94

95

96

97

Fiscal Year
Operating Income
Operating Expenses

Net Interest Income(¥ Billion)

718
629

(¥ Trillion)

Fuji Bank Group

2,818
2,538

1,895

93

Total Assets

FISCAL 1997 IN REVIEW (CONSOLIDATED)

677

608

Operating Income ...............................................................................
Operating Expenses.............................................................................
General & Administrative Expenses .....................................................
Net Operating Profit ...........................................................................
Net of Other Income and Expenses *..................................................
Net of Extraordinary Gains and Losses.................................................
Income (Loss) before Income Taxes ....................................................
Income Taxes:
Current ...........................................................................................
Deferred..........................................................................................
Others-net...........................................................................................
Net Income (Loss)...............................................................................
Net Income (Loss) per Share (yen) .....................................................

Analysis of Balance Sheet
1997

Billions of yen
1996

ChangeMarch 31,¥,000.00
2,529.2
1,737.0470.0
322.0(839.3)61.2(456.0)¥ 2,399.2
0,000.0
1,598.8
443.8
356.5(281.1)23.6
99.1¥(000.0)
129.9
138.1
26.2
(34.4)(558.2)37.5(555.1)

Total Assets .........................................................................................
Loans and Bills Discounted..............................................................
Securities.........................................................................................
Total Liabilities....................................................................................
Deposits* ........................................................................................
Total Stockholders’ Equity ..................................................................
Stockholders’ Equity per share (yen)....................................................

17.5(133.1)(4.8)¥,000.00)(345.3¥0,00.045)(119.3

7.5(18.3)(0.8)¥ 0,000.0
109.0¥ 0,000.04
37.5

9.9
(114.7)(3.9)¥(000.0)(454.3¥(00.009)(156.8

Note: * Excluding Net of Extraordinary Gains and Losses.

CONSOLIDATED

95

96

97

Analysis of Net Operating Profit

Fiscal YearNet Fees &Commissions Income(¥ Billion)

83
65

93

88
81

69

94

95

96

97

Fiscal Year

Income (Loss) before
Income Taxes and Others(¥ Billion)
99

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 Profit..................................................................................

Change55,113.5¥00,000.00
34,028.2
6,044.8
53,537.0
31,366.8
1,576.4471.5¥00,000.008

56,211.1¥00,000.00
35,714.7
5,607.0
54,276.8
34,723.4
1,934.3595.0¥00,000..9(1.097.6¥0,000.00)(1.686.5)
437.7(739.7)(3,356.5)(357.8)(123.5¥0,000.01)

94

95

1997

Billions of yen
1996

Change2,183.0¥0,000.0
1,640.9
542.0
88.5
56.9
104.6
470.0
322.0
¥0,000.0

2,173.6¥0,000.0
1,496.2
677.3
81.3
—
41.6
443.8
356.5
¥0,000.0

9.3¥(000.0
144.6(135.3)
7.1
56.9
63.0
26.2
(34.4
¥(000.0)

Net interest income was ¥542.0 billion, which declined by ¥135.3 from the previous year. This owes
mainly to a decrease in money trading profit and an increase in hedging costs resulting from the rise indomestic interest rates although profits from foreign subsidiaries such as Heller International Corporation
increased.
Net fees & commissions income was ¥88.5 billion, an increase of ¥7.1 billion from the previous year.
Net of other operating income and expenses climbed by ¥63.0 billion to ¥104.6 billion. The major
reason for this increase was a rise in net gains on sales of bonds of the parent company.
General & administrative expenses totaled ¥470.0 billion, an increase of ¥26.2 billion. This increase wasattributed to the depreciation of the yen, which increased general & administrative expenses in overseas
branches and subsidiaries, and to rising theValue Added Tax rate in Japan.

96

97

98

March 31

Deposits(¥ Trillion)

Total assets dropped by ¥1,097.6 billion to ¥55,113.5 billion. This reduction reflects the Bank’s asset efficiency to reduce loans and cash and due from overseas banks. Loans also decreased by ¥1,686.5 billion to¥34,028.2 billion. This decrease was attributed to the large amount of loan sales and securitization, thewrite-off of non-performing loans, and the reduction of unprofitable loans overseas.
Total liabilities declined by ¥739.7 billion to ¥53,537.0 billion due to the decrease of deposits by ¥3,356.5
billion to ¥31,366.8 billion reflecting a reduction in loans and cash and due from overseas banks in accord
with the Bank’s asset efficiency policy.
Total stockholders’ equity fell by ¥357.8 billion to ¥1,576.4 billion owing to a net loss which stemmed
from large expenses related to the parent company’s problem portfolio.

36.8

35.1 34.4 34.7
31.3

Capital Ratio (according to the MOF guidelines which follow the BIS standards)
March 31,
Capital Ratio................................................................................
Tier 1 Ratio .................................................................................
Total Capital ................................................................................
Tier 1: ......................................................................................
Tier 2: Qualifying Capital.........................................................
Unrealized Gains on Securities, after 55% Discount ..............
Reserve for Possible Loan Losses, excluding Specific Reserves ...
Land Revaluation Account .....................................................
Others ..................................................................................
Risk-Adjusted Assets ....................................................................
On-Balance Sheet Exposure .....................................................
Off-Balance Sheet Exposure .....................................................
Equivalent to Market Risk Amount / 8% ................................

1998
9.41%
4.79%
¥00,000.0%
3,554.5
1,809.8
1,744.6
—
120.7
146.9
1,476.9
37,759.5
33,802.9
3,614.6
341.9

Billions of yen
1997
9.22%
4.79%
¥00,000.0%
3,752.1
1,950.6
1,801.5
174.2
141.9
—
1,485.2
40,663.8
36,251.0
4,412.8—

Change0.19%
0.00%¥0,000.0%)(197.6(140.8)(56.8)(174.2)(21.2)
146.9(8.2)(2,904.3)(2,448.0)(798.1)
341.9

Calculated in accordance with BIS standards, the Bank’s total capital decreased by ¥197.6 billion to¥3,554.5 billion. While the Bank tried to build up its Tier 1 capital by issuing US$1.6 billion in noncumulative preferred securities through its subsidiary and Tier 2 capital by issuing subordinated bonds based on theJapanese government’s financial system stabilization legislation, reduction of total capital was the result of theloss recorded in fiscal 1997.
Risk-adjusted assets declined by ¥2,904.3 billion to ¥37,759.5 billion resulting from the Bank’s effort toimprove efficiency of asset utilization such as asset sales and securitization. The capital ratio at year-end,
therefore, stood at 9.41%.
In addition, in May 1998, Tier 1 ratio improved by approximately 0.3% due to an increase in Tier 1 capital by approximately US$1 billion resulting from an IPO by Heller Financial, Inc., an American subsidiary of
the Bank, which was listed on the New York Stock Exchange.
The Bank will continue its efforts to improve its capital ratio through more effective risk asset management and increase stockholders’ equity, primarily by building up its retained earnings.

94

95

96

97

98

March 31

Loans and Bills Discounted(¥ Trillion)

33.0 32.2 33.7

94

95

96

35.7

97

34.0

98

March 31

Capital Ratio
(%)
9.66
8.74

9.22 9.41
8.36

64

39

(385)

(456)

94
93

94

Fiscal Year

32

95

96

97

95

96

97

98

March 31
Tier I Ratio

Capital Ratio

33

CONSOLIDATEDThe Fuji Bank Group’s net operating profit fell by ¥34.4 billion from the previous year to ¥322.0 billion.
The major cause of this decrease owes to a decline in profit from money market trading and an increase inhedging costs due to rising domestic interest rates. Net of other income and expenses amounted to a negative figure of ¥839.3 billion. This was attributable to the large cost the parent company incurred in its problem portfolio preparing for Japanese Prompt Corrective Action Policy issued by the Japanese Ministry of
Finance in April 1998.
As a result, loss before income taxes was ¥456.0 billion and net loss was ¥345.3 billion.
94

Billions of yen
1997

Note: * Deposits do not include NCDs.

542

93

1998

FISCAL 1997 IN REVIEW (NON-CONSOLIDATED)The Fuji Bank, Limited

Gross Profit
Breakdown of Gross Profit
Net Business Profit(Gyomu Juneki) and Net Income(¥ Billion)
466
362
327
288

26

34

93

94

320

53
(518)

(429)

95

96

97

Fiscal Year

Gross Profit and Adjusted
General & Administrative Expenses(¥ Billion)
702

656

670

Earnings Performance
Fiscal year

357

93

366 361 373 378
94
95
96
97

Fiscal Year
Gross Profit
Adjusted General &Administrative Expenses

Breakdown of Gross Profit(¥ Billion)
829
721

702

656

670

Net Interest Income* (A)..................................................................................
Net Fees & Commissions Income (B) ...............................................................
Net Trading Profit............................................................................................
Net of Other Operating Income and Expenses (C) ...........................................
Gross Profit (A+B+C) (D)................................................................................
Domestic ......................................................................................................
International .................................................................................................
Adjusted General & Administrative Expenses** (E)...........................................
Transfer to General Reserve for Possible Loan Losses (F) .................................
Net Business Profit (Gyomu Juneki) (D - E - F) (G) ..........................................
Net of Other Income and Expenses (H)............................................................
Income (Loss) before Income Taxes (G+H) ......................................................
Provision for Income Taxes ..............................................................................
Net Income (Loss) ............................................................................................
Net Income (Loss) per Share (yen)....................................................................

1997

Billions of yen
1996
Change601.1¥(0,000¥(000.0
504.2
64.6
65.0
—
18.5
37.2
82.3
702.9
670.1
457.4
447.7
245.5
222.3
373.6
378.5
2.1
(28.8)
327.1
320.3(272.3)(835.1)54.7(514.7)
0.7
3.9
53.9
¥(0,000)¥(000.0(518.718.5(179.1¥(0,0009)¥(000.04(96.8¥(00.00)
0.3
18.5
45.0
(32.8)(9.7)(23.1)
4.8(31.0)(6.7)(562.8)(569.5)
3.1(572.6¥(0,000)(197.7¥(0,0003)

Notes: ** Interest expenses on money held in trust is deducted from interest expenses and included in net of otherincome and expenses.
Notes: ** Adjusted general & administrative expenses represents expenses after deducting nonrecurring expenses,
which is included in net of other income and expenses, from general and administrative expenses.

Net Business Profit (Gyomu Juneki)
Net business profit was ¥320.3 billion, a decline of ¥6.7 billion compared with the previous year mainly due
to the decrease in gross profit.
93

94

95

96

97

Fiscal YearNet Interest Income
Net Fees & Commissions Income
Net of Other Operating Income
and Expenses

34

1997

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

504.2¥000.0)
350.2
153.9
65.0
39.0
25.9
18.5
3.9
14.5
82.3
54.4
27.8
670.1
¥0,000)601.1¥000.0)
387.0
214.0
64.6
38.7
25.8
—
—
—
37.2
31.6
5.6
702.9
¥0,000(96.8¥(00.0)(36.8)(60.0)
0.3
0.2
0.1
18.5
3.9
14.5
45.0
22.8
22.2
(32.8
¥(,000)Net Interest Income(¥ Billion)
662
582

601
558
504

93

94

95

96

97

Fiscal Year

Analysis of Interest Income

Fiscal year

Earnings Performance

829
721

The Bank’s net business profit, which measures the performance of its core business activities, was ¥6.7 billion lower compared with the previous year, at ¥320.3 billion. Although profits from bond trading
increased, they were adversely impacted by a decrease in dealing profits and an increase in hedging costs.
In fiscal 1997 the Bank made concerted efforts to reduce its problem loans. In accordance with the aforementioned Prompt Corrective Action Policy, the Bank undertook a comprehensive self-assessment of its
entire loan portfolio and made significant provisions for potential losses. It also completed all necessary financial assistance to its affiliated financial companies and set up a special reserve to cover any potential future
losses from these companies.
This meant an increase in credit costs of ¥657.4 billion to ¥980.7 billion in fiscal 1997. Net of securities
gains and losses rose by ¥109.4 billion compared with the previous year to ¥209.5 billion. A contributing
factor was the decline in losses from securities devaluation which resulted from a changeover in calculating
the value of long-term securities holdings at the cost basis method from the lower of cost or market value
method. The cost basis method was used because the Bank feels that its long-term securities holdings should
not reflect market fluctuations on a given day, in this case March 31.
The credit costs associated with the above-mentioned problem loans resulted in the posting of a full-year
net loss of ¥518.7 billion. As a result, the Bank has provided adequate reserves to cover its problem loan
portfolio. It was decided to make an annual dividend payment of ¥8.50 per common share and ¥7.50 per
preferred share as originally proposed.
Mark-to-market accounting was introduced in March 1997 for trading accounts.

Billions of yen
1996
ChangeFiscal year

Billions of yen
Average Balance
1997
1996
Change

1997

Yield
1996

ChangeDomestic:
Interest Earning Assets.................................
Loans ......................................................
Investment Securities ..............................
Interest Bearing Liabilities ...........................
Deposits*................................................
Interest Margin ...........................................

29,337.2¥00,000.0
22,362.4
5,552.4
28,118.1
20,900.9—

29,344.9¥00,000.0
21,718.0
5,400.9
28,308.3
20,829.3—(7.6¥0,000.0)
644.3
151.4
(190.2)
71.5
—

2.24
0.00%
2.19
1.69
1.09
0.51
1.14

2.39
0.00%
2.35
1.87
1.11
0.60
1.27

(0.15
0.00)%(0.16)(0.17)(0.02)(0.09)(0.13)

International:Interest Earning Assets.................................
Loans ......................................................
Investment Securities ..............................
Interest Bearing Liabilities ...........................
Deposits*................................................
Interest Margin ...........................................

16,913.3
11,983.2
656.3
16,956.3
13,569.9—

16,770.4
11,577.3
597.4
16,745.4
13,776.5
—

142.8
405.9
58.9
210.8
(206.6)
—

8.02
4.20
8.94
7.09
3.75
0.92

8.50
4.01
3.74
7.23
3.56
1.26

(0.47)
0.19
5.20(0.14)
0.19(0.33)

Total:
Interest Earning Assets.................................
Loans ......................................................
Investment Securities ..............................
Interest Bearing Liabilities ...........................
Deposits*................................................
Interest Margin ...........................................

45,181.5
34,345.6
6,208.8
44,005.4
34,470.8—

45,041.5
33,295.3
5,998.3
43,980.0
34,605.9—

139.9
1,050.2
210.4
25.3(135.1)
—

4.44
2.89
2.46
3.41
1.78
1.02%

4.71
2.93
2.05
3.45
1.78
1.25%

(0.26)(0.03)
0.40(0.03)
0.00(0.22)%NON-CONSOLIDATEDNON-CONSOLIDATEDNet Business Profit (Gyomu Juneki)
Net Income

Overview

Note: * Deposits do not include NCDs.

1. Net Interest Income
Net interest income fell by ¥96.8 billion to ¥504.2 billion.
Domestic operations (yen-denominated transactions at domestic offices) posted net interest income of¥350.2 billion, a year-on-year decrease of ¥36.8 billion. Two factors contributed to this decrease. The first
factor is that interest margin (difference between interest earning asset yields and interest bearing liabilities
yields) fell by 0.13% compared with the previous year although the average balance on interest earning assets
almost stayed the same, this accounted for a decrease of ¥7.6 billion from the previous year. The second factor is that the method of accounting of profits was changed by introducing the mark-to-market accounting
method.
In the case of interest earning assets, housing loans continued to increase, but stagnant growth in domestic
yen-denominated high-quality loans to companies and other factors meant that average loans outstandingrose by ¥644.3 billion compared with the previous year. The average balance for investment securities also
increased by ¥151.4 billion.
Interest margin shrank by 0.13% compared with the previous year to 1.14%. The reason for this was thatthe year-on-year decline in yields on lending (-0.16%) was larger than the fall in yield on deposits (-0.09%),
and that the Bank went ahead with hedging against future increases in interest rates.
In the area of international operations (foreign currency transactions at domestic offices and transactions atoverseas branches), net interest income fell by ¥60.0 billion to ¥153.9 billion. The main cause of thedecrease was the decline in profit from money market trading and the influence from introducing the markto-market accounting method although the average loan balance increased by 405.9 billion compared withthe previous year due to the depreciation of the yen.

35

Net Fees &Commissions Income(¥ Billion)
66

64

65

57
50

2. Net Fees and Commissions Income

4. Net of Other Operating Income and Expenses

Net fees and commissions income came to ¥65.0 billion, an increase of just ¥0.3 billion compared with theprevious year.
Domestic net fees and commissions was ¥39.0 billion, which was an increase of ¥0.2 billion. Remittancecharges increased as a result of continuing efforts to increase the number of money transfer transactions.
International net fees and commissions income climbed to ¥25.9 billion, which was an increase of ¥0.1
billion as a result of an increase in project finance, syndication and other loan-related fee income in spite ofthe decrease in fees and commissions on derivatives-related transactions due to the introduction of the markto-market accounting method.

Net of other operating income and expenses increased by ¥45.0 billion compared with the previous year to¥82.3 billion. Domestic net of other operating income rose by ¥22.8 billion to ¥54.4 billion primarily
because income from government and other bond-related transactions increased by ¥27.8 billion comparedto the previous year due to rising bond prices with long-term interest rate falling during the fiscal year.
Internationally, net of other operating income and expenses increased by ¥22.2 billion compared with theprevious year to ¥27.8 billion mainly due to an increase in income from government and other bond-relatedtransactions and an increase in income from foreign currency dealing.

Breakdown of Trading Profit

93

94

96

97

100
89
82

40

Adjusted General and Administrative Expenses

37

Breakdown of Adjusted General & Administrative Expenses
Billions of yen
1997
1996
ChangeFiscal year

1997
158.5
¥000.0
135.2
191.1
28.8
378.5
¥000.0Billions of yen
1996
Change157.7¥000.0
135.4
190.6
25.3
373.6
¥000.0

0.8
¥00.0
(0.1)
0.4
3.5
4.8
¥00.0

¥(0.0
(0.5)
1.6
2.7
3.9

¥—
—
—
—
—

¥(0.0
(0.5)
1.6
2.7
3.9

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

—
(0.0)
14.5
0.0
14.5

—
—
—
—
—

—
(0.0)
14.5
0.0
14.5

0.0
(0.5)
16.2
2.7
¥18.5

—
—
—
—
¥—

0.0
(0.5)
16.2
2.7
¥18.5

Although bank-wide efforts were made to rationalize operations and increase efficiency, overall expenses
rose by ¥4.8 billion to ¥378.5 billion. This increase was attributable to taxes which increased by ¥3.5 billion
due to the hike in the VAT and to the depreciation of the yen which increased expenses in the overseas
operations.
Although the Bank continued to review wages and allowances and took steps to rationalize personnel levels, personnel expenses increased by ¥0.8 billion to ¥158.5 billion owing to an increase in personnel expenses
in overseas branches as a result of the depreciation of the yen. At year-end, the number of employees had
fallen by 553 to 14,615.
While exhaustive efforts were made to reduce non-personnel expenses, non-personnel expenses increasedby ¥0.4 billion to ¥191.1 billion mainly due to the depreciation of the yen which increased non-personnel
expenses in overseas branches.

93

94

95

96

97

Fiscal Year

Adjusted General &Administrative Expenses(¥ Billion)

3. Net of Trading Profits
Net of trading profits, which is a mark-to-market accounting method introduced for trading accounts, was¥18.5 billion in fiscal 1997. Domestic net of trading profits was ¥3.9 billion mainly due to interest on commercial paper and other debt purchased, while international net of trading profits was ¥14.5 billion mainly
due to unrealized gains of derivatives.
Before introducing the net of trading profits, profits-related trading accounts, such as trading securities andderivatives, were appropriated in several accounts, such as net interest income. From fiscal 1997, trading
accounts with unrealized gains and losses are accounted in net trading accounts due to the introduction of themark-to-market accounting method.
Breakdown of Net of Other Operating Income and Expenses

36(¥ Billion)

NON-CONSOLIDATEDNON-CONSOLIDATEDFiscal Year

95

Fiscal year
Domestic:
Net Profit from Trading Securities and Derivatives .......................................
Net Profit from Trading-related Securities and Derivatives............................
Net Profit from Trading-related Financial Derivative Transactions................
Others ..........................................................................................................
Total Domestic.........................................................................................
Internatioanl:
Net Profit from Trading Securities and Derivatives .......................................
Net Profit from Trading-related Securities and Derivatives............................
Net Profit from Trading-related Financial Derivative Transactions................
Others ..........................................................................................................
Total International....................................................................................
Total:Net Profit from Trading Securities and Derivatives .......................................
Net Profit from Trading-related Securities and Derivatives............................
Net Profit from Trading-related Financial Derivative Transactions................
Others ..........................................................................................................
Total ........................................................................................................

Net of Other Operating
Income and Expenses

Billions of yen
1996
ChangeFiscal year

1997

Domestic:
Net Profit from Foreign Exchange Transactions............................................
Net Profit from Sales of Bonds......................................................................
Others ..........................................................................................................
Total Domestic.........................................................................................

¥(000.()
—
58.4
(3.9)
54.4

—
¥000.0)
30.5
1.0
31.6

—
¥(000.0
27.8
(4.9)
22.8

International:
Net Profit from Foreign Exchange Transactions............................................
Net Profit from Sales of Bonds......................................................................
Others ..........................................................................................................
Total International....................................................................................

17.6
19.3
(9.1)
27.8

6.6
5.6
(6.6)
5.6

10.9
13.7
(2.5)
22.2

Total:Net Profit from Foreign Exchange Transactions............................................
Net Profit from Sales of Bonds......................................................................
Others ..........................................................................................................
Total ........................................................................................................

17.6
77.8
(13.1)¥(000.()
82.3

6.6
36.2
(5.6)
37.2
¥000.0)

10.9
41.5
(7.4)
45.0
¥(000.0

Other Income and Expenses, Income before Income Taxes, Net Income

366

361

373

378

357

93

94

95

96

97

Fiscal Year

Breakdown of Other Income and Expenses
Fiscal year

Billions of yen
1997
1996
ChangeNet of Securities Gains and Losses.....................................................................
Sales Gains....................................................................................................
Devaluation ..................................................................................................
Expenses Relating to Portfolio Problem............................................................
Write-offs .....................................................................................................
Specific Reserves ..........................................................................................
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 .....................................
Losses Incurred from Sales of Loans...............................................................
Net of LDC-related Gains and Losses................................................................
Disposal of Unrealized Losses of Investment Funds............................................
Other Losses .....................................................................................................
Net of Other Income and Expenses ..................................................................

209.5¥0(00.0
268.6
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¥(000.0)100.0¥(000.0
291.3
191.0
323.2
25.7
140.0
83.1
38.8
—
35.4
—
0.1
—
49.2
(272.3¥(000.0)

Personnel Expenses
Non-Personnel Expenses
Taxes

109.4
¥(000.1(22.6)(134.0)
657.4
43.1
192.6
119.6
(14.8)
122.3
191.1
3.3
0.1
57.5
(42.4)(562.8¥(000.0)

Total of other income and expenses dropped by ¥562.8 billion over the previous year to stand at ¥(835.1)
billion. This was as a result of the Bank working aggressively to make necessary disposals of its bad loan portfolio.

37

Balance Sheet
Analysis of Balance Sheet (Major Breakdown)
Expenses Related to
Portfolio Problem(¥ Billion)
1,108
980

1. Net of Securities Gains and Losses
Net of securities gains and losses climbed by ¥109.4 billion over the previous year to ¥209.5 billion. In
addition to the sales gains on securities of ¥268.6 billion, a contributing factor was the fall in the loss on thedevaluation of securities of ¥134.0 billion to ¥56.9 billion resulting from this year’s changeover to the costbasis method to value securities from the lower of cost or market value method.

2. Expenses Relating to Portfolio Problem
525
323

257

93

94

96

97

For the above reasons, net loss was ¥518.7 billion, which included ¥45.6 billion from gains on the disposalof real estate as part of the ongoing review of the Bank’s real estate holdings. Net loss per share was ¥179.19.

AssetsCash and Due from Banks..........................................................................
Call Loans ..................................................................................................
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 ............................................................................
Customers’ Liabilities for Acceptances and Guarantees................................
Total Assets................................................................................................

Billions of yen
1997
Change1998
2,749.9¥ 00,000.0
235.5
30.0
29.8
2,273.8—85.4
6,250.7
32,030.5
549.4
2,263.6
673.0
3,915.9¥ 51,088.0
00,000.0

4,320.8¥00,000.0
588.7
429.3
55.8
—
64.8
117.2
5,774.4
34,037.3
524.6
1,759.1
342.8
4,051.3
52,066.8¥00,000.0(1,570.9¥(0,000.0)(353.2)(399.3)(26.0)
2,273.8(64.8)(31.8)
476.2(2,006.7)
24.7
504.5
330.1
(135.4)(978.7¥(0,000.0)

Total Assets(¥ Trillion)

52.4 50.7
50.9 52.0 51.0

94

95

96

97

98

March 31

Loans and Bills Discounted

Liabilities and Stockholders’ Equity
Deposits .....................................................................................................
NCDs ........................................................................................................
External Debts* .........................................................................................
Trading Liabilities ......................................................................................
Foreign Exchange ......................................................................................
Bonds ........................................................................................................
Convertible Bonds and Notes ....................................................................
Other Liabilities .........................................................................................
Reserve for Possible Loan Losses ................................................................
Reserve for Retirement Allowances ...........................................................
Reserve for Possible Losses on Sales of Loans .............................................
Reserve for Specific Borrowers under Support ...........................................
Other Reserves ..........................................................................................
Acceptances and Guarantees.......................................................................
Land Revaluation Account.........................................................................
Total Liabilities ..........................................................................................
Total Stockholders’ Equity .........................................................................

(¥ Trillion)¥ 31,316.7
00,000.0
3,125.900,000.0
5,596.2
1,458.5
125.7
100.0
12.5
2,888.1
857.4
48.2
52.7
122.3
0.0
3,915.9326.5¥ 49,947.3
00,000.0
1,140.7¥ 00,000.0

34,394.6¥00,000.0
3,884.4
00,000.0
5,386.6
—
96.4
—
12.5
1,476.3
983.6
48.8
38.8
—
20.8
4,051.3—
50,394.7¥00,000.0
1,672.0¥00,000.0(3,077.9¥(0,000.0)(758.5(0,000.0)
209.5
1,458.5
29.3
100.0
—
1,411.7(126.1)
(0.5)
13.8
122.3
(20.8)(135.4)326.5(447.4¥(0,000.0)(531.2¥(0,000.0)

31.6 30.9 32.3

94

95

96

34.0

97

NON-CONSOLIDATEDNON-CONSOLIDATEDFiscal Year95

To maintain and enhance the quality of its assets, the Bank has continued to work aggressively to make necessary disposals. With the introduction of the Prompt Corrective Action Policy in April 1998, the Bank
introduced a new, more precise internal system for classifying loan assets, undertook a comprehensive selfassessment of its entire loan portfolio, and made wide-ranging and proactive provisions for any potential
losses. The Bank also reduced its problem loans through an aggressive program of pursuing recoveries on its
loans, write-offs, and sales of bad loans to such entities as the Cooperative Credit Purchasing Company(CCPC). As a result, the Bank was able to increase the amount of credit costs by ¥657.4 billion compared tothe previous year to ¥980.7 billion.
Credit costs for the Bank’s problem loan portfolio include loan write-offs which rose ¥43.1 billion compared to the previous year to ¥68.9 billion, transfers to specific reserves for possible loan losses which climbed¥192.6 billion to ¥332.7 billion, losses on sales of loans collateralized by real estate to the CCPC which rose
¥ 119.6 billion to ¥ 202.7 billion, and other sales losses which stood at ¥3.3 billion.
The Bank also completed all necessary financial assistance to its affiliated finance companies, and set up
special reserves to cover any potential future losses from these companies. As a result, losses incurred fromsupporting certain borrowers rose ¥191.1 billion over the previous year to ¥226.6 billion, and ¥122.3 billion
was transferred to the newly-established reserve for specific borrowers under support.
The Bank transferred ¥24.0 billion to the reserve for possible losses on sales of loans to make the necessary
provisions against possible future losses arising in connection with the value of loans collateralized by realestate that were sold to the CCPC.
The loss on mutual funds of ¥ 57.5 billion represents provisions against the latent loss in mutual funds
which is due to fall in fiscal 1998 or later.

March 31,

32.0

98

March 31

Note: * The sum of borrowed money, bills sold and call money.

AssetsTotal assets decreased by ¥978.7 billion compared with the previous year to ¥51,088.0 billion. This reflects
the effort made to enhance the quality of the Bank’s loan portfolio and utilize assets, such as loan sales andsecuritization, reduction of unprofitable loans and on-balance trading assets more efficiently.
Mark-to-market accounting was introduced in March 1997 for trading assets.

Loans
Breakdown of Loans
March 31,
Domestic Offices* (A) ........................................................................
of which Housing Loans..................................................................
Manufacturing.................................................................................
Wholesale & Retail, and Food Services ...........................................
Real Estate ......................................................................................
Services ...........................................................................................
% Loans to Small and Medium-sized Companies .................................
Overseas Branches and Japan Offshore Market Account (B) ................
Commerce and Industry..................................................................
Total Loans and Bills Discounted (A+B) .............................................

1998
23,442.0¥23,442.0
5,256.0
3,016.8
3,656.2
2,271.9
4,369.2
75.7%
8,588.4
6,668.1
32,030.5¥00,000.0

Billions of yen
1997

Change22,601.3 ¥(0,000.0
840.7¥00,000.0
5,090.6
165.3
2,601.3415.5
3,452.6203.6
2,230.0
41.8
4,489.3(120.0)78.1%(2.4%)
11,435.9(2,847.4)
8,602.1(1,934.0)
34,037.3 ¥(0,000.0)%(2,006.7¥00,000.0

Note: * “Domestic Offices” covers yen-denominated loans and foreign currency-denominated loans made bydomestic branches.

38

39

Total loans and bills discounted at year-end decreased by ¥2,006.7 billion compared with the previous
year to ¥32,030.5 billion. This reduction was due to loan sales and securitization, write-off of non-performing loans and reduction of unprofitable loans overseas in spite of enhancement of housing loans. An analysisof lending by domestic branches according to industrial sector reveals that services accounted for 18.6%,
wholesaling, retailing and restaurants for 15.6%, manufacturing for 12.9%, and real estate for 9.7%. Comparedwith the previous year, therefore, services and real estate saw their share of loans decline by 1.2% and 0.2%,
respectively, while manufacturing increased by 1.4%. Loans to such borrowers as individuals and small andmedium-sized enterprises increased by ¥97.2 billion to account for 75.7% of loans by domestic branches.

Problem Loan Portfolio
Breakdown of Problem Loans

Current Standard
1997
ChangeDeposits
Total deposits decreased by ¥3,077.9 billion from the previous year to ¥31,316.7 billion. While domestic
deposits increased, international deposits decreased due to the reduction of international loans and due frombanks. Negotiable certificates of deposit (NCDs) decreased by ¥758.5 billion from the previous year to ¥3,125.9
billion.

External Debts
New
Stadard1998

March 31,1998

Loans to Borrowers in Bankruptcy Proceedings ....................
Loans Past Due for over Six Months .....................................
Total (A) ...........................................................................
% A to Total Loans and Bills Discounted ..........................
Loans Past Due for over Three Months .................................
Restructured Loan ................................................................
Renegotiated Loans ...........................................................
Loans to Companies under Support Programs ....................
Total (B) ...........................................................................
% B to Total Loans and Bills Dicounted.............................

272.2
(14.7
257.5
257.5
¥0,000.0¥0,000.0%¥(000.0))%
874.8(141.1)733.7
733.7
1,147.0(155.8)
991.2
991.2
3.37%
(0.28%)
3.09%
3.09%
—
—
—
337.8
—
—
—
363.5
434.8
(248.4)
186.3
—
257.7
(216.9)40.7—
1,839.6 0(¥,000.0)(621.2
1,218.4
1,692.7¥0,000.0¥0,000.0¥0,000.0
5.40%(1.6 0%)
3.80%
5.28%

An even greater effort was made this year by the Bank to reduce the level of its problem loans setting up
proactive loan recovery efforts such as aggressively collecting, writing-off and selling problem loans. As aresult, the Bank was able to reduce the level of its problem loans by ¥404.2 billion compared with the previous year, with the balance of loans to borrowers in bankruptcy proceedings, loans past due for six months ormore and renegotiated loans at fiscal year-end standing at ¥257.5 billion, ¥733.7 billion and ¥186.3 billion,
respectively. Accordingly, the ratio of these loans to the Bank’s total loan portfolio improved by 0.97% fromthe previous year to 3.68% at the end of March 1998.
By completing all necessary financial assistance to our affiliated finance companies, the balance of our loans
to companies under support programs decreased ¥216.9 billion compared with the previous year to stand at¥40.7 billion.
As a result of the above measures, the balance of our disclosed problem loans decreased ¥621.2 billion
compared to the previous year to ¥1,218.4 billion. The ratio of these loans to the Bank’s total loan portfolio
stood at 3.80% at the end of fiscal 1997, an improvement of 1.60% from the previous year.

Problem Loan Portfolio under New Standard
From this year onwards, in response to calls for more disclosure of financial information by banks, the Bank
disclosed details of its problem loans referring to guidelines set down by the U.S. Securities Exchange
Commission. The expanded information of the Bank covers loans past due for three months or more, inwhich the payment of principal or interest is delayed three months or more from the day following the dateagreed as the payment date, and restructured loans*, which are loans provided to support the rehabilitation ofcertain borrowers, ensuring the recovery of the loan by amending existing terms and conditions to reflect
more adequately the borrower’s present circumstances. While the above problem loans represent loans
which require cautious management, these loans also include those with a minimal risk of becoming badloans or those with a possibility of recovery by supporting the rehabilitation of the borrower. Loans coming
under these categories cannot be classified as problem loans under previously used criteria. Hence, our current problem loans under the new standard at fiscal year end amounted to ¥1,692.7 billion.
* Restructured loans: Under the new standard for disclosing problem loans, an additional item, restructured loans, hasbeen established. Restructured loans are loans provided to support the rehabilitation of certain
borrowers, ensuring the recovery of funds lent by amending existing terms and conditions toreflect more adequately the borrower’s present circumstances.

Cash and Due from Banks
Cash and due from banks decreased by ¥1,570.9 billion to ¥2,749.9 billion due to a sharp reduction in due
from banks in the area of international operations resulting from the efficient use of assets.

Trading Assets
In fiscal 1997, the Bank introduced the mark-to-market accounting method. This resulted in trading assets,such as trading securities, derivatives and hedging transactions amounting to ¥2,273.8 billion.

40

In fiscal 1997, three new accounting categories were established. They are, trading liabilities, as a result of
the introduction of the mark-to-market method, a reserve for specific borrowers under support whichreflects future support for affiliated non-bank financial companies, and land revaluation based on a law concerning land revaluation.

External debts (defined as the sum of call money, bills sold and borrowings) increased by ¥209.5 billion to¥5,596.2 billion. Subordinated debts increased by ¥111.4 billion to ¥1,842.2 billion due to funding to build
up Tier 2 capital.

Reserves for Possible Loan Losses, etc.
Breakdown
March 31,
General Reserve.........................................................................................
Specific Reserves........................................................................................
Reserve for Specific Borrowers under Support ...........................................
Reserve for Possible Losses on Sales of Loans .............................................
Reserve for Loans to LDCs ........................................................................
Total..................................................................................................

1998

Billions of yen
1997

Change74.0¥0000.0
782.6
122.3
52.7
0.8
1,032.5¥0000.0103.5¥0000.0
878.8
—
38.8
1.1
1,022.4¥0000.0(29.5¥00.00)(96.2)
122.3
13.8
(0.3)
10.0
¥00.00NON-CONSOLIDATEDNON-CONSOLIDATED

Billions of yen

Liabilities

Reserve for possible loan losses consists of a general reserve for possible loan losses, a specific reserve for possible loan losses, a reserve for specific borrowers under support, a reserve for possible losses on sales of loans,
and a reserve for loans to LDCs. It amounted to ¥1,032.5 billion, which is an increase of ¥10.0 billion fromthe previous year.
This resulted from a reversal from the reserve for possible losses on certain doubtful loans in connection
with the reduction of our problem loans. The Bank also made provisions for any potential losses deemednecessary as a result of its comprehensive self-assessment of its loan portfolio, setting up special reserves tocover any future potential losses from its affiliated companies, and also from making provisions against possible future losses arising in connection with the value of loans collateralized by real estate that were sold to the
Cooperative Credit Purchasing Company.

Stockholders’ Equity
Stockholders’ Equity
March 31,
Total Stockholders’ Equity........................................................................
Stockholder’s Equity per Share (yen).........................................................
Dividends per Share of Common Stock (yen) ...........................................
Dividends per Share of Preferred Stock (yen) ............................................

1998

Billions of yen
1997¥ 1,140.7,000.00¥ 1,672.0,000.00
504.58321.22
8.50
8.50
3.7
7.5¥0 ¥0,000.005

Change¥ ((531.2
00.00)(183.36)—¥000.005
3.7

Total stockholders’ equity declined by ¥531.2 billion to ¥1,140.7 billion, due to the posting of a net lossof ¥518.7 billion. The unappropriated loss at the end of fiscal 1997 was not carried forward into fiscal 1998
which was covered by deducting voluntary reserves.
Stockholders’ equity per share stood at ¥321.22, a decline of ¥183.36 compared with the previous year.

Dividend Policy
Fuji Bank is always aware that it must first satisfy its shareholders by providing stable dividend payments utilizing its financial and management resources in the most effective way to consolidate its retained earnings.
This fiscal year the Bank incurred a large net loss as a result of taking write-offs and setting aside reserves
deemed necessary. However, the Bank has been able to provide appropriate reserves on its problem loan
portfolio, including those pertaining to its affiliated financial companies, and it can now work on the job ofrecovering its financial soundness. An annual dividend payment per share of common stock was ¥8.50, while
an annual dividend payment per share of preference stock was ¥7.50.
The Japanese economy still faces some difficult times ahead. However, the Bank will continue to pursue
strengthening and building its financial fundamentals, taking advantage of the many new profit opportunities,
while at the same time maintaining stable regular dividend payments to shareholders in the future.

41

RISK MANAGEMENT

As a result of rapid advances in financial technology and major changes inthe business environment, the risks inherent in banking operations are
swiftly becoming more diverse and complex. As a result, it is more
important than ever that bank management identify and carefully manage
various types of risks including credit risk and market risk. Fuji Bank has
made risk management one of its key managerial priorities.
Through the inspections and supervision carried out by our
Inspection Division and external organizations such as the financial
supervisory authorities, we are establishing organizational proceduresthat continually check the efficiency of our risk management systems.
We also carry out comprehensive inspection of our entire risk management system at least once a year.
To facilitate statistical methods for measuring various types of riskon the basis of common criteria, we reorganized the former Market
Risk Assessment Division into the Risk Assessment Division in January
1998. The new division follows a neutral approach to evaluating market risk and credit risk as well.

I. Credit Risk
Credit risk is associated with a 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 with them. The most important issue inthe area of credit risk management is ensuring the soundness of loan
assets, which account for the lion’s share of credit risk. We take a dual
approach to this issue. On the one hand, we assess and monitor eachindividual loan transaction; on the other, we manage the entire loan
asset portfolio on an all-inclusive basis.
Overall control of credit risk management is in the hands of the Loan
Strategy Committee chaired by the President and CEO. This committee determines lending strategy and policies, and monitors the entire
loan portfolio. At the same time, the Credit Planning Division and theCredit Division for Overseas Business specialize in devising the meansof assessing and managing individual loan transactions, and for planningand developing methods for analyzing our overall loan portfolio.

1. Credit Assessment and Monitoring of Individual
Transactions
Each proposed loan transaction is carefully assessed for risk and profitability by the branch in charge. If the amount involved exceeds thebranch 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 proposal aswell 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. The credit divisions also provide branches with appropriate
advice in a timely manner according to the characteristics of the customers and markets involved. The Credit for New Business
Department, for example, was set up to specialize in sectors where technological innovation is progressing rapidly.
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 workwith head office credit divisions to deal with the Asian region. These
staffers engage in information-gathering activities in connection withthe laws, commercial customs, and political and economic conditionsin their respective jurisdictions, and use this information as the basis
for carefully focused credit assessment and management activities ineach region.
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.
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.
*In-house credit rating system
Our in-house credit rating system has 16 grades and in principle isapplied to all loan assets other than housing loans among others. The
marketing or credit division in charge prepares rating studies on thebasis of a manual, and the Credit Assessment & Auditing Department,
which is completely independent of our credit divisions, confirms thevalidity of the results. In recent years, reviews have been conducted atleast once every twelve months.
This system provides infrastructural support for the assessment andmanagement of individual transactions, as well as the base for managing
the loan portfolio and measuring credit risk. In addition, our credit ratings are applied to the pricing process for individual cases.
The system has been revised and upgraded repeatedly, and now provides an objective indication of the credit risk associated with our loan
assets. We have also endeavored to ensure ample consistency between
it and the ratings of rating agencies, self-assessment systems and theasset classifications used by the financial supervisory authorities.

2. Portfolio Management
So far, we have looked at the assessment and management of individualtransactions. It is also extremely important to ensure the overallsoundness of loan assets by analyzing and managing the loan portfolio,
which is the aggregate of all individual loans.
In order to ensure that credit risk held by the Bank is kept at an
appropriate level, the Loan Strategy Committee monitors andperiodically analyzes the entire loan portfolio by business sector,
region, in-house credit rating and other criteria.
(1) Breakdown of Loan Portfolio by Business Sector
Generally speaking, we do not specify upper limits on outstandingloans in advance according to business sector. We do, however,monitor the makeup of our portfolio constantly to ensure that there
is no bias toward any specific industrial sector and to avoid any adversechanges in portfolio structure.

(2) Breakdown of Loan Portfolio by Region
Through the country risk/exposure system, upper limits are set foreach country for all credit transactions, including loans. This upper
limit is reviewed at least once every six months to reflect conditions in
the world economy and political and economic conditions in eachcountry.
As of the end of March 1998, loans to Asian countries were asshown below in Table 1. Affiliates of Japanese companies accounted
for over 45 % of loans to the private sector.
Almost all of the loans to non-Japanese borrowers are for project
financing and to the largest business groups in each country.
[Graph 2] Breakdown of Loan Portfolio(by region)(March 1998)

3%
5%

1%

Japan
USA

[Graph 1] Breakdown of Loan Portfolio

Asia (excl. Japan)

8%(by business sector)

83%(March 1998)

EuropeOther( %)Manufacturing
12.9

Agriculture, forestry and fisheries

0.3

23.9

0.1
4.7
0.2
4.2

0.7

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

15.6
18.6

Finance and insurance

Note: Non-consolidated basis.

Real estate
Services
9.0

9.7

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 ........................................................
Total ..........................................................

BalancePublicSector$00,885
1,415
1,816
3,494
821
604
1,541
312
$10,890

$023
127
76
3
8
193
119
34
$584

Millions of U.S. dollars
Financial
Institutions
Total

$162
98
132
131
11
—
278
—
$815

$0,699
1,189
1,608
3,358
801
410
1,144
277
$9,491

Private Sector
Japanese (% of total)$0,045
541
845
1,423
651
143
589
95
$4,336(06.5%)(45.5%)(52.6%)(42.4%)(81.3%)(35.0%)(51.5%)(34.5%)(45.7%)

Non-Japanese$0,654
648
762
1,935
150
267
555
182
$5,155

Note: Non-consolidated basis.

3. Measuring Credit Risk
We have been tackling the issue of measuring credit risk from several
viewpoints: promoting integrated risk management (combining credit
and market risk), and portfolio management. Now the credit risk associated with virtually all credit transactions (including derivative andother off-balance sheet transactions) is measured on a daily basis.

42

We measure and analyze credit risk according to such criteria as transaction type, rating, region and business sector, and submit reports on ourfindings to top management. The information thus derived is reflected
in managerial decisions relating to integrated risk management.

43

II . Market Risk Management
1. Market Risk Management Structurerisks through a centralized risk measurement system, and at the sametime, we generate earnings through market trading. The following
chart outlines our market risk management structure.

We have established a solid structure for managing market risks
including ALM (Asset Liability Management of interest rate risk on
yen deposits and loans). We can adequately manage market

The Board

Daily reports of risk-taking
and profit/loss

4 Risk limits determined by the Board

Risk-taking Limits(Semiannually)

Executive Board Meetingon Net Business Profit Plan

• ALM hedging policies• Risk-taking and profit/loss• Risk-taking limits at the aggregate andbusiness unit levels• Net business profit plan

1 Independent risk management division

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

Risk Management Sections ofOverseas Branches and Subsidiaries

2 Sophisticated and advanced
methodologies and systems

Investment Banking Products & Trading Group
Overseas Branches, Subsidiaries

We have formulated our own risk management policy in order to clarify our standards on setting risk-taking limits, organizational structures,lines of authority, procedures, and techniques to evaluate and control
risks. The risk management policy is reviewed every six months andapproved by the President and CEO. This is consistent with the risk
management principles issued by Japanese banking regulators and the
Bank for International Settlements.

Checks andBalances

Back Office(Operations)
Our market risk management structure has the following key characteristics:
q Establishment of an independent risk management division.
w Sophisticated and advanced methodologies and systems for managing market risk.
e Basic risk management policy determined by the Board.
r Risk limits determined by the Board.
t Regular reporting to the Board and senior management.

① Establishment of an independent risk management
division.
In 1994, we became the first Japanese bank to set up the Market Risk
Assessment Division (now the Risk Assessment Division), an independent risk control unit to identify, assess and control our overallmarket risk on a consolidated basis. This division is independent frombusiness units involved in market activities, and reports directly to the

We believe that the potential loss from our aggregate risks such as market, credit and operational risk and other risks should be kept within levels that can be covered by our own capital. Therefore, we set aggregate
VaR limits by allocating some portion of our capital to market risk basedon our business strategy for market activities. Each division’s VaR limit isset by allocating the Bank’s aggregate VaR according to such criteria as
the market outlook and business strategy. Risk-taking limits at the aggregate and business unit levels are decided every six months by the
President and CEO.

⑤ Regular reporting to the Board and senior management.
[Daily] E-mailA daily report that summarizes our aggregate VaR, and trading
activities, profits and losses, and market risk-taking of each division issent to the Chairman, the President and CEO and other members of
the Board and senior management through E-mail.

Settlement & Clearing Services Division
Operations Divisions of Overseas Offices

44

In this way, we have established a solid structure for managing market risks including ALM activities.

2. Aggregate Market Risk Activities(1) Level of Market Risk
Market risk amount (Value at Risk) in fiscal 1997 is shown in Graph
3 below. Market risk amount (Value at Risk) covers almost all financial instruments in our consolidated books including most of our
subsidiaries (excluding equity investment securities held for longterm appreciation).

④ Risk limits determined by the Board.

5 Regular reporting to the Board

Risk Assessment Division

The following measures have also been adopted to deal with ALM
activities:• The Treasury Division has been set up to carry out ALM hedging operations.
• Each month, the Market Risk Management Committee sets its
ALM hedging policies. The Treasury Division follows thesepolicies in its actual ALM hedging operations, and submits its
report to the Committee the following month.

③ Basic risk management policy determined by the Board.

3 Basic risk management policy determined by the Board

Market Risk Management
Committee (Monthly)risk. For managing and controlling risk that cannot be ascertained by
VaR alone, we also set limits on other risk sensitivities such as BPV(Basis Point Value), carry out stress tests and back tests, and set stoploss limits, according to market risk activities in each business unit.
For further information, refer to the following sections regarding
market risk profiles.
The Risk Assessment Division is continuously striving to absorb
risk management innovation, to develop advanced financial theories
and methodologies, and to improve information systems for risk
management.

Deputy President of the Bank to make proper and timely businessjudgments without influence from business units.
Overseas branches and subsidiaries have also established their own
market risk management sections that are independent from thebusiness units involved in market activities. Therefore, each officesegregates duties by separating the front office (market activities), themiddle office (risk management) and the back office (operations) andestablishes checks and balances between them effectively.

② Sophisticated and advanced methodologies andsystems for managing market risk.
Profits and losses in virtually all business units engaging in market
activities are managed on a mark-to-market basis. This approach has
been adopted because we believe that not only realized profits andlosses but also unrealized gains are important to have a clear overall
grasp of profit and loss.
We use the Value at Risk (VaR) methodology to manage market[Monthly]Market Risk Management Committee
The Market Risk Management Committee is convened every monthby the presiding Deputy President. The Committee reviews trading
activities, profits and losses, market risk-taking of each division, as
well as liquidity risk, and makes decisions on ALM hedging policies.
The above procedures provide senior management with an accurate and timely grasp of our market risk exposure, creating an organizational structure that enhances appropriate and rapid management
decision-making.
Overall, this management system has been functioning very well.
For example, since the Asian market crisis in 1997, branches in theregion have been managing their positions carefully according to theinformation provided by the risk management divisions in Singaporeand Hong Kong, which have been monitoring the situation carefully. Not only has this helped forestall a number of problems, but
the Market Risk Management Committee has enabled senior management to make quick decisions on proposals to reduce risk-taking
limits according to changes in the market environment.

[Graph 3] Aggregate Market Risk

VaR

( ¥ billion)
30
25
20
15
10
Max.: ¥28.0 billionMin.:¥17.3 billion
Average: ¥22.6 billion

5
0 97/4

5

6

7

8

9

10

11

12

98/1

2

3

Value at Risk
Value at Risk (VaR) is defined as the potential loss for a certain period
from an adverse market movement which could occur in a certain
probability. Actual VaR may vary with degree of probability, lengthof holding period, or the nature of models used to identify the risks.
The following standards apply for the purpose of calculating VaR as
shown in the graph above.
• Confidence interval
one-tailed 97.5% (two-tailed 95%)
• Holding period
one day• Historical observation period 6 months• Discretion to recognize empirical correlations across broad risk categories
We have been calculating VaR with our internal models to monitor
and control our market risk effectively. We have continuously confirmed that potential loss calculated using VaR methodology is far
below our own capital.

45

[Graph 4] Market Risk

(4) Simulations of Earnings at Risk
Periodically, we conduct simulations of earnings at risk regarding
interest rate portfolios on the banking account of major currencies,
other than securities investments. This enables us to obtain a moreaccurate analysis of the influence of changes in interest rate levels on
our earnings. Table 3 below shows earnings at risk in the case whereinterest rates rise by 0.5%.
[Table 3] Earnings at Risk(by risk category)
excluding equity investment securities held for long-term appreciation(as of March 31, 1998) ( %)1.0Interest rate-related risk
(Japanese yen)Interest rate-related risk
(U.S. dollar)
Interest rate-related risk
(German mark)Interest rate-related risk(others)
Foreign Exchange-related risk
Equity-related risk
Option-related risk

55.0
18.0

3.2
1.5
5.7

15.7

As shown in Graph 4 above, the majority of our market risk comesfrom Japanese yen interest rate instruments. This fact implies that wecommand good control of market risk since we have considerable accessto the yen market. Also, this graph shows that market risks other thanJapanese yen interest rate risk are well-diversified among various categories of market risks. Option-related risk which has non-linear pricecharacteristics is only 1% of our overall market risk.
Since interest rate and foreign exchange risk of Asian currencies
totaled approximately 2% overall, the Asian market crisis in 1997 had
relatively little effect on our earnings.

[Table 2] Yen Interest Rate Sensitivity Table by Period(grid sensitivity)

March 31, 1998

1 yearor less

Interest rate sensitivity .........................

¥0.1

Billions of yen
1-5
5 years
years
or more¥(1.3)¥(1.7)

Note: This table covers the same instruments as in Graph 3.

¥(5.3)¥(8.0)¥(2.7)¥(6.0)¥(0.5)¥(2.1)(Difference between estimated profits in the current situation and estimated profits
in the 0.5% rise in interest rates)

Taking into account that net present value of interest rate portfolios
at the end of March 1998 exceeded 200 billion yen by a large margin,
we believe a potential negative impact on earnings shown on theabove table is negligible in terms of the amount of our overall earnings
and capital.
We manage market risk not only by VaR methodology,
but also by using other risk sensitivities such as BPV (Basis Point Value)and earnings simulations to evaluate and manage risk even moresensitively.

(1) VaR[Graph 5] Value at Risk (VaR) for Trading Transactions( ¥ billion)
3.5
Max.: ¥3.0 billion
3.0 Min.:¥0.1 billion
2.5 Average: ¥1.1 billion

VaR
Daily profits and losses
for trading
Quarterly average of VaR

2.0(3) Stress TestingIn times of stress, market conditions change dramatically. Sharp andvolatile price movement destroys liquidity and correlation between
instruments. As VaR is a figure to determine potential losses in trading
activities when the market is in normal conditions and liquid, it fails toevaluate the loss in stress condition. Stress testing is an alternativetechnique for evaluating the exposure under worst-case scenarios whichplays an important role together with VaR in market risk management
because it enables senior management to explore potential risks.
Stress testing can take several forms. We prepare several kinds ofstress tests according to management needs. Some of the results of thestress testing is presented in the table below. Results are reviewed regularly by senior management and are reflected in the policies and limits
which are approved by the President and CEO.
The table shows two stress scenarios and one worst-case scenario.
With respect to the two stress scenarios, the results of the severe confidence interval scenarios tell the potential loss under abnormal conditions while still maintaining liquidity and correlation among
instruments. The worst-case scenario is based on the market’s mostextreme movement according to historical data over ten years. It shows
the potential loss when the market moves sharp and volatile in the casewhen the correlation among instruments are destroyed.

1.5[Table 4] Stress Testing

1.0
0.5

Billions of yen

0

Potential loss

-0.5(5) Liquidity Risk
Liquidity risk is defined as the risk of being unable to offset or hedge
positions in a timely manner at a reasonable cost. This risk states thatthe loss might exceed normal VaR. We confirm our ability to offset
or hedge positions in a short time at a reasonable cost by monitoring
and reviewing the liquidity and turnover of certain asset inventories
on a periodic basis.
Specifically, first, we estimate the one-day volume that we cantrade at a reasonable cost for each financial instrument. Second, we
calculate time to offset or hedge our positions based on estimated
one-day volume. Then we compute market liquidity risk amount(VaR) by setting our holding period equal to time to offset or hedge
positions calculated above.
Market liquidity risk amount as of March 31, 1998 is ¥ 74.6 billion.
Therefore, even by taking the market liquidity and time to offset or
hedge positions into consideration in computing VaR, we haveenough capital and profitability to absorb market liquidity risk (Nocorrelation among instruments is taken into consideration. Market liquidity risk amount includes the same instruments as in Graph 3 onpage 45).
The President and CEO sets the limit on market liquidity risk
amount every six months, and the Risk Assessment Division reviews
and reports market liquidity risk amount to the Market Risk
Management Committee every month.
The other type of liquidity risk is the risk of the potential inability
to meet funding requirements of transactions. We develop andenhance the procedure to identify, measure, and monitor our liquidity sources and use it in order to strictly control this type of liquidity
risk. The President and CEO sets the limit every six months and theliquidity profile is reported monthly to the Market Risk
Management Committee.

-1.0-1.5 97/4

5

6

7

8

9

10

11

12

98/1

2

3

(2) Back Testing
We routinely compare daily profits and losses with model-generated
risk measures to gauge the quality and accuracy of our risk measurement model. This process is known as “back testing.”[Graph 6] Back Testing (FY 1997)

3.5
2.8
2.1
1.4

¥03.0
3.5
4.7
19.0

(4) Revenue to VaR Ratio
It is our basic policy to optimize risk-adjusted return by monitoringand managing risks we take. Therefore, it is extremely important tomonitor if risk-adjusted return is sufficient, and if we have enoughprofitability to absorb any potential losses.
The frequency distribution of our daily combined trading-related
revenue to VaR ratio during the twelve-month period ended March
31, 1998 is presented below. Line A shows the theoretical profit-andloss distribution (normal distribution : mean = 0). Line B is the distribution curve based on our actual profits (mean > 0).
• Line B has a skewed shape toward the positive side. This clearlyshows our good performance with respect to daily revenue.

0.7
0VaR (confidence interval 97.5%) .........................
Stress Scenario (confidence interval 99.0%) ........
Stress Scenario (confidence interval 99.9%).........
Stress Scenario (worst case) .................................

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

VaR (¥ billion)

The graph above shows the absolute value of the daily profit andloss flows to VaR. Dots that lie above the diagonal line indicate thedays when the absolute value of the profits and losses exceeded VaR.
According to the statistical specification underlying our VaR
methodology, only approximately 5% ( 2.5% × 2 as this considers
both profit & loss ) of the observations should lie above the diagonalline. As shown in Graph 6, ten dots lie above the diagonal line,
which is about 4% of all data. Accordingly, the comparison of actual
trading results with model-generated risk measures is close enough,and the back test raises no issues regarding the quality of our risk
measurement model.

• The deviation of Line B is smaller than that of the theoretical profitand-loss distribution curve (Line A). This shows the fluctuation ofdaily revenue is very small.
[Graph 7] Frequency Distribution of Combined Trading-related Revenue to VaR
30
25Frequency distribution

The interest rate sensitivity above shows how much net present value
increases when interest rates go up by 1 basis point (0.01%). The negative numbers in the above table thus show that net present value
declines when interest rates increase during the periods in question.
We can obtain a more accurate analysis of the influence of the shift ofinterest rates on net present value, even if short-term and long-term
interest rates move differently.

April 1998 – September 1998 ..........
October 1998 – March 1999 ............

Billions of yen
U.S. dollar German markSince fiscal 1997, mark-to-market accounting has been introduced in
the trading books of Japanese financial institutions. The following sections describe trading transactions, which include transactions for trading purpose accounted for in the trading books and foreign exchangetransactions (non-consolidated).
We value financial instruments by using quoted market prices (fairvalue) if they are available. If quoted market prices are not available, fairvalues are estimates derived from using discounted cash flows or othervaluation techniques. Valuation includes the significant assumptions
which we regard as adequate, and if different assumptions were used, thevaluation may differ from our estimates.

Absolute Value of Profit and Loss
Evaluated by Market Price (¥ billion)(3) Yen Interest Rate Risk
Table 2 takes a more detailed look at yen interest rate risk, which is
the majority of our aggregate market risk. It shows yen interest raterisk in terms of interest rate sensitivity by period (grid sensitivity).

Yen

3. Profile of Risk-taking of Trading Transactions

20
15

Line B1050Line A
-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

(2) Structure of Market Risk
Graph 4 shows the breakdown of our market risk amount by each risk
category as of March 31, 1998 (excluding equity investment securities
held for long-term appreciation). This graph shows the sensitivity of
our market risk profile by each risk category. (This graph covers thesame instruments as in Graph 3.)

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

46

47

Due to our well-diversified trading portfolio and client-oriented natureof our trading activities, we achieved the good performance and stability of daily revenue such as indicated in the graph above.
We use not only the Value at Risk (VaR) methodology, but also
other risk management methods such as stress tests and back tests tomanage market risks more effectively, and we have continuously confirmed that potential loss from market risk is far below our own capital,
profitability and other resources.

4. Off-Balance Sheet Financial Instruments(1) Purpose of Off-Balance Sheet Transactions
Off-balance sheet transactions are those which are not recorded on
the balance sheet because fund transfer does not occur for the principal of those transactions. We deal with off-balance sheet transactions,especially derivative products, for the risk hedging needs of customers, for hedging in asset liability management, and for earning
profits from trading.
(2) Market Risk of Off-Balance Sheet Transactions
As previously explained, off-balance sheet transactions are also
exposed to market risk. (Refer to the previous sections regarding
market risk profile.)

Billions of yen
Credit risk equivalent
Notional amount(BIS base)
1998
1997
1998
1997

¥3,098.7
506.3
1,518.3¥2,183.4
457.2
1,304.1

34.4

17.2

73.8
35.6

49.3
45.7

(3,040.4)¥2,227.0(833.6)¥3,223.5

Note: Consolidated basis.

Credit Risk Equivalent (which is basically calculated using thecurrent exposure method) of off-balance sheet transactions shown in
the above table is different from potential default loss. Potential
default losses arise from the possibility that counterparties may
default on their obligations to the Bank.
We establish credit limits to manage credit risk for individual customers, and review these limits regularly. Limits are set on each typeof transaction and these limits are strictly observed.
Other quantitative data regarding credit risk of off-balance sheettransactions as of March 31, 1998 (non-consolidated) are presented in
the following tables. These tables include virtually all off-balance sheettransactions (excluding our transactions with Fuji Capital Markets
Group, our swap house subsidiary).

48

Customers whose creditworthiness isgenerally equivalent to AAA/Aaa BBB/Baa rating from rating agencies .... ¥2,471.2
Customers whose creditworthiness isgenerally equivalent to BB/Ba ratingfrom rating agencies ..............................
79.8
Others ...........................................................
47.6
Total ....................................................... ¥2,598.6

¥0.6

¥7.1

0.2
6.4
¥7.2

0.3
0.9
¥8.3

Notes: 1. Credit exposure in the table is similar to Credit Risk Equivalent, bothof which are basically calculated using current exposure method andare different from potential default loss. However, details of calculation methods are different.
Notes: 2. Credit cost is expected losses computed using statistical models.
Notes: 3. Credit risk amount is potential default loss (volatility of expected
losses) computed using statistical models.

Billions of yen
CreditCredit Credit risk
exposure
cost
amount[Table 5] BIS Base Credit Risk of Off-Balance Sheet Transactions

Interest Rate Swaps.. ¥265,698.7 ¥176,325.6
Currency Swaps.......
4,919.8
4,030.2
FX Forward ............
34,008.5
31,726.9
Interest Rate Options
2,837.9
2,019.4(buying) ................
Currency Options
2,415.6
1,541.5(buying) ................
Other Derivatives ....
27,908.1
17,230.5
Effect of Netting
Arrangement ......
Total................. ¥337,788.8 ¥232,874.5

Billions of yen
CreditCredit Credit risk
exposure
cost
amount[Table 7] Breakdown by Region(3) Credit Risk of Off-Balance Sheet Transactions
When calculating BIS-based capital, credit risk of off-balance sheettransactions is calculated as follows.

March 31,

III. Other Risks[Table 6] Breakdown by CreditworthinessJapan ....................................................... ¥1,410.3
Asia ........................................................
45.5
USA .......................................................
550.1
Europe ...........................................................
493.9

¥6.4
0.4
0.1
0.2

¥4.6
0.3
1.6
1.6

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

[Table 8] Breakdown by Industry
Billions of yen
CreditCredit Credit risk
exposure
cost
amountBanking, Securities, Insurance ................. ¥2,023.0
Manufacturing ........................................
99.1
Wholesale ...............................................
51.8
Transportation and Communications ......
31.8
Services ...................................................
18.7
Nonbank ................................................
107.3
Others ....................................................
,267.1

¥0.6
0.3
0.5
0.1
1.3
1.9
2.6

¥6.3
0.2
0.1
0.1
0.1
0.2
1.3

The tables above show that over 95% of the credit exposure of off-balance sheet (derivative) transactions arises from transactions with customers whose creditworthiness is generally equivalent to theinvestment-grade ratings from rating agencies. Moreover, by type ofcustomers, most of the credit exposure of off-balance sheet (derivative)
transactions is with commercial bank and other financial institution
counterparties, most of whom are dealers in these products. We deal invirtually no transactions of off-balance sheet (derivative) transactions
which are considered to be highly leveraged.

We are making strenuous efforts to put in place an organizational
structure that, with the full participation of top management, is able toobtain a clear grasp of the nature and size of risk other than credit andmarket risk. We have established divisional lines of authority for dealing with operational risk, system risk and other important risk factors.
We also prepared comprehensive disaster recovery plans to deal withvarious emergency scenarios such as major disasters affecting a widearea.
(1) Operational Risk
Operational risk refers to the danger that losses may result from accidents arising as a result of inappropriate procedures performed by personnel.
The Systems & Operations Administration Division is primarily
responsible for establishing systems to deal with operational risk. First,
it establishes procedures to be followed in all operational processes. In
addition, it designates a responsible person in each division whose job
is to check periodically that the prescribed procedures are being properly observed.
The separation of front, middle and back offices in market divisions
and other measures are designed to provide a system of mutual checks
and balances within the organization. As part of our efforts to build
an efficient operational processing system that reduces human error toa minimum, we are pushing ahead with computerization and the centralization of data processing functions at our computer center.
The Inspection Division performs various operational inspections
annually to check the status of 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, as well as evaluate the efficiency of the operational risk management system and, where necessary, to put forward proposals for
improvement to top management.
(2) Computer-related Risk
We are working very hard on measures to deal with systems risk by setting
up procedures for responding to various disasters and systems troubles.
These focus on two aspects: measures to forestall systems troubles resulting
from facilities and technical problems; and operational procedures in theevent of system malfunctions.
With regard to measures to prevent systems troubles from occurring,
we have worked for many years on building an extremely reliable system. Among other things, hardware is housed in a building specificallybuilt for that purpose with its own electric generating facilities, anddeveloped hardware and software systems with a full-scale backup function. Furthermore, we have established a department which is independent of systems development divisions to check the nature and securityof new systems at the design stage, as well as the procedures involved in
the use of the systems.

We have also greatly enhanced the safety of our network systems, introducing advanced networking technology which makes it possible to transmit data between branches. Hence, in the event of systems trouble
between the computer center and a branch, data are automatically diverted
through other branches eliminating the disruption of the flow of data.
We also have a full range of contingency plans which lay down procedures to be followed and emergency measures to be adopted in thecase of systems malfunctions.
In addition, we have taken necessary steps to cope with the Year
2000 issue. (Refer to following page.)(3) Legal Risk
We established the Legal Division to specialize in the managementof legal risk, and appointed compliance officers at all marketingbranches and head office divisions to ensure that all legal requirements are fully met. The Legal Division is directly in charge of analyzing the legal risk to which the Bank is exposed in its business, andof devising measures to deal with it. It also supervises the activitiesof the compliance officers. To ensure that legal requirements areobserved, a compliance manual has been prepared and distributed toall employees. (Refer to following page.)(4) Settlement Risk
Although the risk arising from timing differences in payments andreceipts, such as those in settling foreign exchange transactions, is a sortof credit risk, it is necessary to adopt a different approach. We haveinstituted standard measures for managing limits on receivables. We
are also successfully improving our track record in reducing risk byaltering the rules for fund settlements with correspondent banks inorder to shorten the settlement timing difference and by using netting
to reduce the amounts involved in settlements.
(5) Other Risk
The growing sophistication and complexity of financial technology
have led to the emergence of various new types of risk. For example, in the case where the risk involved in a particular type of product is not fully explained to customers when the contract isconcluded, there is a danger that complications (including legal)
involving customers will arise later. This is particularly true of complex new products such as derivatives.
For some considerable time now, we have been working toensure that staff who deal with customers are well trained in propersales procedures through our education and training programs.
Derivatives and related products in particular are given ratings
according to the nature of each product, and sales procedure rules
are formulated for each rating. Where necessary, risk management
information is disseminated to customers.
We will continue to deal appropriately with new types of risks
which accompany the ever-changing financial business environment.

49

CONSOLIDATED FIVE-YEAR SUMMARY
Fuji Bank GroupYear 2000 Compliance Program
Realizing that the Year 2000 problem is an important management issue, the Bank commenced a Year 2000 Compliance
Program (Y2K Program) in fiscal 1996 coordinated by our Systems
Planning Division.

Year 2000 Strategy
The scope of our Y2K program is to ensure that all domestic andinternational systems (including those in our branches, representative offices and subsidiaries) are Y2K compliant. Of particularimportance are the accounting systems and related applications
which comprise the majority of our systems resources.
Domestically, these systems were upgraded in 1988, at which time
we conducted and completed Y2K compliance testing. The
remaining systems, therefore, are the current focus of the Y2K
program.

Year 2000 Compliance Definition

TimingIn March 1998, we completed a comprehensive analysis of all
mainframe internal systems, externally linked systems and microcomputer systems. At that time, specific plans and schedules werecreated for the development and implementation of any changes
necessary for compliance, and this system development and testingis proceeding on schedule. Our Y2K program for major systems is
expected to be completed by December 31, 1998.

Legal Compliance
Banking is a business based on mutual trust between a financial
institution and its customers. And with the globalization of banking proceeding at an accelerated pace, banks are expected not only
to be responsible corporate citizens that conduct business honestly,with integrity and according to solid business ethics, but also to
conduct their worldwide operations in compliance with anincreasingly complex web of local laws and regulations in the
countries they operate. In this environment, the Bank focuses
increasingly on the importance of compliance and hence has established a global compliance system.
Our Legal Division at Head Office is responsible for the Bank’s
legal affairs and has compliance officers in the Division. The
Division has directed all head office divisions/departments andbranches in Japan to designate an employee as a compliance officer
as well. Overseas, we have a compliance officer in each country
where our branches are located and in addition to this, we havealso retained the services of local law and accounting firms in order

50

Specific action plans for each system are made by the division (orbranch) in charge, and are reported to the System Strategy
Committee (headed by the Deputy President), which discusses andmonitors the progress of the whole Y2K program and each specificaction plan. For some overseas branches and subsidiaries, in-house
Y2K project teams control the Y2K program and monitor the status of each system.

Testing
The testing of all technology components is proceeding according
to the program. The testing process includes testing of modifications made to hardware and software components as well as interfaces with our customers, vendors and other systems. Internal
testing is expected to be completed by December 31, 1998.
Accordingly, we will undertake external testing to ensure theintegrity of the system applications with third party data providers
and the environment.

Business Contingency Plan
Our current Disaster Recovery Plan is being reviewed and will be
modified where necessary by contingency plans specially designed
to deal with the Y2K problem. The modification is expected tobe completed by December 31, 1998.

Budgeting
The total cost required to implement the Y2K program is currently estimated to be approximately ¥5 billion (US$37 million)
and has already been approved and budgeted in our medium-termManagement Resource Plan. Furthermore, all necessary personnel
resources related to the project has been approved as well.
Our management fully recognizes the importance and seriousness of system compliance for the Y2K problem. The complianceprogram is being implemented with the highest priority to ensure
an event-free transition to the year 2000, and to prevent any
inconvenience to our customers.

to implement a support system for the execution of contracts andto set up a program to ensure conformity to legal and complianceissues. The general manager of the Legal Division, who is also the
Bank’s chief compliance officer, instructs compliance officers
directly to investigate and take the necessary measures for legal
matters. Our compliance objectives are to ensure that all banking
business is conducted in compliance with laws, regulations andsupervisory requirements in each country where our branches arelocated. Therefore, our global compliance program is being
implemented in line with standards and guidelines issued by local
regulatory authorities and we have modified internal bank policies,and compliance manuals, including our code of conduct and procedures, accordingly. These objectives must be met in order toprotect the Bank’s franchise and reputation. We continually monitor and evaluate our compliance system in accordance withchanging internal and external conditions, and will enhance thesystem as necessary to maintain its effectiveness.

Years ended March 31,

1998

1997

1996

1995

1994

¥00,000,000
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¥00,000,000
55,113,509¥00,000,000
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¥00,000,000
56,211,154¥00,000,000
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¥00,000,000
54,401,403¥00,000,000
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¥00,000,000
53,429,197¥00,000,000
8,735,186
1,049,362
173,886—
1,023,600
181,2715,660,362
33,006,897
408,287
1,587,556
318,923
174,251—
2,796,516¥00,000,000
55,116,101¥00,000,000
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
282,392
2,322,736
326,52953,537,054¥00,000,000
38,649,481
4,310,517—
2,252,185
82,0001,322,494
12,582
3,943,584
1,022,030
48,81660,24342,8852,529,984—
54,276,804¥00,000,000
37,280,377
4,812,472—
2,892,475
77,051
904,255
13,0093,100,789
980,737
48,877
21,262
26,6832,606,804—
52,764,796¥00,000,000
37,212,285
5,186,289—
2,817,529
52,956
609,883
13,2312,323,258
732,756
48,52520,602
24,0782,402,900—
51,444,297¥00,000,000
39,081,545
5,121,449—
2,825,781
76,739649,484
31,7201,898,074
541,654
48,27618,92524,4692,796,516—
53,114,638

424,087
105,000
419,954
89,216538,210(11)
1,576,455¥00,000,000
55,113,509

424,087
105,000
419,954
86,616
898,696(4)
1,934,349¥00,000,000
56,211,154

423,873—
314,740
82,253815,747(7)
1,636,606¥00,000,000
54,401,403

423,762—
314,629
77,8691,168,640(1)
1,984,900¥00,000,000
53,429,197

423,316—
314,184
72,807
1,191,166(11)
2,001,463¥00,000,000
55,116,101

1,399,707¥00,000,000
121,337
661,991
137,765
56,913
151,504
350,069
2,879,290

1,283,411¥00,000,000
138,348
751,895
128,630—
96,938345,469
2,744,693

1,344,629¥00,000,000
165,474
980,419
128,083—
200,100
305,417
3,124,125

1,409,873¥00,000,000
188,551
719,784
114,639—
105,249455,6812,993,779

1,550,400¥00,000,000
210,304
676,864
111,728—
143,169
27,0212,719,489

703,442
418,061
519,472
49,247
46,816
470,091
1,128,236
3,335,366(456,076)

697,473
313,706
485,11147,26555,291
443,807602,934
2,645,590
99,103884,722
303,880
583,498
44,52884,552418,786
1,189,423
3,509,393(385,267)

986,240
330,462
392,547
44,84555,915416,583
727,417
2,954,013
39,766

1,066,511
340,667
400,451
46,51741,754404,232
355,280
2,655,414
64,074

17,528(133,182)
7,584
2,038
4,735
(345,309¥00,000,000)

7,549(18,390)
4,891
1,171
5,163
109,044¥00,000,000

8,180(68,454)
3,863
139
3,575
(325,420¥00,000,000))

5,026
28,850
3,377
—
2,137
4,649
¥00,000,000

29,757
(674)
3,468
1,131
2,548
32,939¥00,000,000

Balance Sheet
AssetsCash 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 Taxes .................................................................................
Consolidation Difference ..................................................................
Customers’ Liabilities for Acceptances and Guarantees ......................
Total Assets ........................................................................
Liabilities and Stockholders’ Equity
Liabilities
Deposits............................................................................................
Call Money and Bills Sold.................................................................
Trading Liabilities .............................................................................
Borrowed Money .............................................................................
Foreign Exchange .............................................................................
Bonds and Notes...............................................................................
Convertible Bonds............................................................................
Other Liabilities ................................................................................
Reserve for Possible Loan Losses.......................................................
Reserve for Retirement Allowances..................................................
Other Reserves.................................................................................
Minority Interest in Consolidated Subsidiaries ..................................
Acceptances and Guarantees..............................................................
Land Revaluation Account ...............................................................
Total Liabilities ..................................................................
Stockholders’ Equity
Common Stock ................................................................................
Preferred Stock .................................................................................
Capital Surplus..................................................................................
Legal Reserve ...................................................................................
Earned Surplus..................................................................................
Treasury Common Stock, at cost ......................................................
Total Stockholders’ Equity...............................................
Total Liabilities and Stockholders’ Equity .....................

Profit and Loss AccountIncomeInterest 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......................................................................
Expenses
Interest Expenses:
Interest on Deposits ......................................................................
Interest on Borrowings, Bonds and Notes .....................................
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 Interest in Net Income.......................................................
Amortization of Consolidation Difference ........................................
Equity in Earnings of Affiliates and Unconsolidated Subsidiaries .......
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 notnecessarily agree with the sum of the individual amounts respectively.

51

CONSOLIDATEDOur Y2K program is being implemented in accordance with standards issued by local regulatory institutions such as the Japanese
Ministry of Finance and the Bank of Japan, as well as with international benchmark standards set down in the U.S. Federal Financial
Institutions Examination Council (FFIEC) Y2K ProjectManagement Awareness Statement, and the British Standards
Institution Y2K Compliance Statement.

Millions of yen

Organization

CONSOLIDATED FINANCIAL STATEMENTS
Fuji Bank Group

Balance Sheet
Thousands of
U.S. dollars

Millions of yen
March 31,

1997

1998

March 31,

1998

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

2,821,634¥ 00,000,000

4,341,701¥ 00,000,000

21,359,834$000,000,000

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

1,453,230

2,230,223

11,000,989

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

43,216

188,430

327,152

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

3,265,412—

24,719,248

Trading Account Securities................................................................

—

845,037—

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

84,989117,271643,369

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

6,044,830

5,607,096

45,759,507

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

34,028,201

35,714,787

257,594,257

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

580,018

541,793

4,390,753

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

3,326,086

3,480,573

25,178,551

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

693,955

357,330

5,253,257

Deferred Taxes ..................................................................................

441,043

256,925

3,338,712

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

8,153

—

61,724

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

2,322,736
55,113,509¥ 00,000,000

2,529,984
56,211,154¥ 00,000,000

17,583,168
417,210,521$000,000,000

1998

1997

1998

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Deposits (Note 8) ..............................................................................
Call Money and Bills Sold .................................................................
Trading Liabilities ..............................................................................
Borrowed Money (Note 9)................................................................
Foreign Exchange..............................................................................
Bonds and Notes (Note 10) ...............................................................
Convertible Bonds (Note 11) ............................................................
Other Liabilities (Note 12).................................................................
Reserve for Possible Loan Losses........................................................
Reserve for Retirement Allowances ...................................................
Other Reserves (Note 13)..................................................................
Minority Interest in Consolidated Subsidiaries ...................................
Acceptances and Guarantees (Note 14)..............................................
Land Revaluation Account ................................................................
Total Liabilities ....................................................................

¥ 34,552,361
00,000,000
3,755,273
2,057,167
2,947,169
113,2211,657,224
12,582
4,381,799
904,217
48,312
176,066
282,392
2,322,736
326,52953,537,054

38,649,481¥ 00,000,000
4,310,517—
2,252,185
82,0001,322,494
12,582
3,943,584
1,022,030
48,81660,24342,8852,529,984—
54,276,804

261,562,164$000,000,000
28,427,509
15,572,803
22,310,138
857,087
12,545,228
95,24833,170,318
6,844,945
365,727
1,332,829
2,137,717
17,583,168
2,471,834
405,276,715

Stockholders’ Equity
Common Stock (Note 15) .................................................................
Preferred Stock (Note 15)..................................................................
Capital Surplus (Note 15)..................................................................
Legal Reserve (Note 16)....................................................................
Earned Surplus ..................................................................................
Treasury Common Stock, at cost .......................................................
Total Stockholders’ Equity ....................................................
Total Liabilities and Stockholders’ Equity......................

424,087
105,000
419,954
89,216538,210(11)
1,576,455¥ 55,113,509
00,000,000

424,087
105,000
419,954
86,616
898,696(4)
1,934,349
56,211,154¥ 00,000,000

3,210,348
794,852
3,179,064
675,369
4,074,262(89)
11,933,806$000,000,000
417,210,521

The accompanying notes are an integral part of these statements.

52

53

CONSOLIDATEDCONSOLIDATEDASSETS

Thousands of
U.S. dollars

Millions of yen

CONSOLIDATEDFINANCIAL STATEMENTSCONSOLIDATEDFINANCIAL STATEMENTS

Fuji Bank Group

Fuji Bank GroupStatement of Income

Statement of Earned Surplus
Thousands of
U.S. dollars

Millions of yen
Years ended March 31,

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

EXPENSESInterest Expenses:
Interest on Deposits.............................................................................
Interest on Borrowings, Bonds and Notes ...........................................
Other Interest Expenses.......................................................................
Fees and Commissions ............................................................................
Other Operating Expenses (Note 19) ......................................................
General and Administrative Expenses ......................................................
Other Expenses (Note 19) .......................................................................
Total Expenses ............................................................................
Income (Loss) before Income Taxes and Others .......................................
Income Taxes (Note 20):
Current...............................................................................................
Deferred .............................................................................................
Minority Interest in Net Income .............................................................
Amortization of Consolidation Difference ...............................................
Equity in Earnings of Affiliates and Unconsolidated Subsidiaries ............
Net Income (Loss) ..............................................................................
Net Income (Loss) per Share (single currency unit)..................................
Net Income per Share (diluted) ...............................................................
Dividend Declared per Share (single currency unit):
Common Stock...................................................................................
Preferred Stock ...................................................................................

1997

Years ended March 31,

1998¥ 1,399,707
0,000,000
121,337
661,991
2,183,037
137,765
56,913
151,504
350,069
2,879,290

1,283,411¥ 0,000,000
138,348
751,895
2,173,655
128,630—
96,938345,469
2,744,693

10,595,818$00,000,000
918,531
5,011,292
16,525,641
1,042,885
430,834
1,146,893
2,650,038
21,796,291

703,442
418,061
519,472
1,640,975
49,247
46,816
470,091
1,128,236
3,335,366(456,076)

697,473
313,706
485,111
1,496,291
47,26555,291
443,807602,934
2,645,590
99,103

5,325,076
3,164,732
3,932,416
12,422,224
372,802354,398
3,558,604
8,540,772
25,248,800(3,452,509)

17,528(133,182)
7,584
2,038
4,735
¥ 0,000,000)(345,309

7,549(18,390)
4,891
1,171
5,163
109,044¥ 0,000,000

132,694(1,008,198)
57,414
15,43235,849$00,000,000)(2,614,002(119.35¥(116.35)—¥ 37.54
00.00
37.27

(0.90
$(0.00)
—

8.50
7.50

8.50
3.75

0.06
0.06

Balance at Beginning of Year...................................................................
Deductions:
Transfer to Legal Reserve....................................................................
Dividends............................................................................................
Net Income (Loss) ..................................................................................
Balance at End of Year ............................................................................

1998

1997

1998

¥ 898,696
000,000

815,747¥ 0,000,000

6,803,157$0,000,000(2,600)(12,577)(345,309)¥ 538,210
000,000(4,362)(21,731)
109,044898,696¥ 0,000,000(19,682)(95,211)(2,614,002)
4,074,262$0,000,000

The accompanying notes are an integral part of these statements.

CONSOLIDATEDCONSOLIDATED

Fees and Commissions.............................................................................
Trading Revenue (Note 17) ....................................................................
Other Operating Income (Note 18).........................................................
Other Income (Note 18) .........................................................................
Total Income ..............................................................................

1998

Thousands of
U.S. dollars

Millions of yen

The accompanying notes are an integral part of these statements.

54

55

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTSCONSOLIDATEDFINANCIAL STATEMENTS
Fuji Bank Group

Fuji Bank GroupStatement of Cash Flows
Thousands of
U.S. dollars

Millions of yen

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, Bonds and Notes ......................................................................................
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 Increase in Trading Accounts...................................................................................................
Net Proceeds from Trading Account Securities Transactions ..........................................................
Net Proceeds from (Expenditures of) National Government Bonds and Other Transactions ...........
Net Decrease (Increase) in Loans and Bills Discounted ..................................................................
Net Increase in Foreign Exchange ..................................................................................................
Net Increase in Other Assets...........................................................................................................
Total ......................................................................................................................................
Net Increase (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 .............................................................................................................
Issuance of Preferred Securities of Subsidiaries ................................................................................
Issuance of Bonds and Notes ..........................................................................................................
Total ......................................................................................................................................
Principal Payments of Convertible Bonds, Bonds and Notes...........................................................
Total ......................................................................................................................................
Net Cash Provided by Financing Activities ....................................................................
Net Decrease in Cash and Cash Equivalents ...............................................................................
Cash and Cash Equivalents at Beginning of Year.......................................................................
Cash and Cash Equivalents at End of Year .................................................................................

1998

1997

1998

¥0,000,0000
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)¥0,000,000
1,096,621
142,353596,948
131,950
59,9632,027,836
710,000
308,862
32,63846,900
6,916
403,413
1,508,732
999,013(612,551)(62,135)—
262,383
186,951(2,133,099)(81,370)(529,182)(1,969,991)
1,369,103(830,373)
4,949
404,482
948,162(502,724)$00,000,000(
8,763,974
935,517
6,957,060
1,015,444
444,570
18,116,565
5,314,679
3,092,919
3,295,516
398,939
113,430
3,162,937
15,378,420
10,045,954
5,881,857
1,099,275(3,526,593)—(620,178)
8,692,991(291,600)(7,490,332)
13,791,374(31,015,287)(2,117,087)
236,344
11,541,853(21,354,177)(4,824,658)

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)

1,359,380
82,316
38,102
10,3481,490,148
1,352,885
47,51960,69097,406
1,558,502(68,354)9,701,390
1,813,712
419,100
52,773
11,986,975
10,147,111
1,583,165
442,334
3,696,493
15,869,103(3,882,128)

12,577
12,072
24,64921,731
3,765
25,497

95,211
91,387
186,598—
227,681
1,029,093
1,256,774
274,955
274,955
981,819(192,996)
1,233,508¥0,000,0000
1,040,512

210,000—
296,629506,629
190,262
190,262
316,367(280,208)
1,513,717¥0,000,000
1,233,508—
1,723,555
7,790,259
9,513,814
2,081,419
2,081,419
7,432,395(1,460,989)
9,337,688$00,000,000(
7,876,699

The accompanying consolidated financial statements have been prepared on the basis of accounting principles andpractices generally accepted in Japan and have been compiled from the consolidated financial statements filed with
the Minister of Finance 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 the convenience ofreaders outside Japan.
Certain previously reported amounts have been reclassified to conform with the current period presentation.
Although not required to be filed with the Minister of Finance, consolidated statements of cash flows for theyears ended March 31, 1998 and 1997 have been prepared and included in the accompanying consolidated
financial statements. For the purposes of reporting cash flows, cash and cash equivalents consist of cash and demand
deposits with the Bank of Japan in accordance with the guideline for Statement 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 not necessarily agree withthe sum of the individual amounts.
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of¥132.10=U.S.$1, the rate of exchange on March 31, 1998, has been used in translation. The inclusion of suchamounts is not intended to imply that Japanese yen have been or could be readily converted, realized or settled in
U.S. dollars at that rate or any other rate.
Differences between the accounting policies followed by The Fuji Bank, Limited (“the Bank”) and its consolidated
subsidiaries (the “Fuji Bank Group”) and International Accounting Standards (“IAS”) are described in Note 2. (m) below.

2. Summary of Significant
Accounting Policies(a) Principles of Consolidation
The consolidated financial statements include the accounts of the Bank and 114 of its subsidiaries including Fuji
Securities Co., Ltd. (a Japanese corporation), The Fuji Trust and Banking, Co., 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. and Heller International Group, Inc.
The unconsolidated subsidiaries and affiliated companies of Fuji America Holdings, Inc. are accounted for by
the equity method. Investments in other unconsolidated subsidiaries (majority-owned) and other affiliates (20 to50 percent owned) are carried at cost as they are not material.
Fuji Business Agency, Ltd. and other domestic subsidiaries have not been consolidated since these subsidiaries
are not significant and their results have no material impact on the consolidated financial statements of the Bank.
All significant intercompany accounts and transactions have been eliminated.
The financial statements of the consolidated subsidiaries whose fiscal year-ends are principally December 31 areincluded in the consolidated financial statements on the basis of their respective fiscal years after making appropriate adjustments for significant transactions during the periods from their respective year-end dates to the date of
the consolidated financial statements.
The difference, not significant in amount, between the cost and underlying interest in the net assets of consolidated subsidiaries is charged or credited to income in their acquisition year.
(b) Trading Assets and Liabilities
Effective April 1, 1997, the Bank introduced a new method of valuation 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 trading transactions resulted in a decrease of loss before
income taxes and others of ¥21,551 million and increases in total assets and liabilities of ¥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 not available for a substantial portion of financial instruments. Fair value for such financial instruments
is estimated using discounted 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 theexchange rates prevailing at the ends of their respective fiscal years for the consolidated financial statements for theyears ended March 31, 1998 and 1997, except for the beginning and ending balances of their earned surpluses
which are translated at historical exchange rates.

The accompanying notes are an integral part of these statements.

56

57

CONSOLIDATEDCONSOLIDATED

Years ended March 31,

1. Basis of Presentation

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS
Fuji Bank GroupCONSOLIDATED
58(g) Reserve for Retirement Allowances and Pension Plans
The reserve for retirement allowances of the Bank is provided in accordance with the Rules for Bank Accounting,based on the amount which would have been required 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 contributory pension plans for eligible employees. The unamortized balance of priorservice cost at March 31, 1997 (based on the most recent available information on the pension plan) was ¥21,785
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
revaluation of land. The difference between the book value and the revaluation is included in liabilities.
(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.
(j) Income Taxes
Deferred income taxes arising from timing differences between financial and tax reporting are provided for consolidated financial statement purposes.
(k) Appropriation of Earned Surplus
Cash dividends, transfers to the legal reserve and bonuses to the directors and the senior overseers are recordedin the fiscal year in which the proposed appropriations of earned surplus are approved by the Board of Directors
and/or the general meeting of the stockholders.
(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 common stock to be issued upon theconversion of convertible bonds and preference shares. It was not necessary to disclose net income per share(diluted) for the year ended March 31, 1998 because a net loss was recorded.
(m) Differences between Japanese Accounting Principles and Practices and International
Accounting Standards (IAS)The accompanying consolidated financial statements of the Fuji Bank Group are prepared in conformity withaccounting principles and practices generally accepted in Japan. Such principles and practices differ fromInternational Accounting Standards in a number of material respects which include accounting for income taxes(IAS 12), accounting for leases (IAS 17), retirement benefit cost (IAS 19), foreign translation (IAS 21), cash flow
statements (IAS 7), disclosures in the financial statements of banks and similar financial institutions (IAS 30) andother disclosures.

59

CONSOLIDATED(ii) a) Foreign currency accounts held by the Bank are translated into Japanese yen at the exchange rates prevailingat 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 ofthe subsidiary at their 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.
(d) Securities
Securities are stated at the moving average cost method.
Effective April 1, 1997, the Bank changed its method of valuation of listed securities and listed securities heldin 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 and others of ¥433,195 million.
Securities owned by the consolidated subsidiaries are carried principally at cost or at the lower of cost or
market value.
(e) Depreciation of Premises and Equipment
Premises and equipment are carried at cost less accumulated depreciation.
Depreciation of premises and equipment owned by the Bank is computed under the declining-balancemethod over the estimated useful lives of the assets and is provided in the full amount permitted under the Rules
for Bank Accounting issued by the Ministry of Finance.
Effective April 1, 1997, the Bank introduced a new method of depreciation of buildings using the decliningbalance method at the standard rate in accordance with amendments to the Uniform Accounting Standards for
Banks.
The effects of the change in accounting for depreciation resulted in a decrease of loss before income taxes
and others of ¥6,940 million.
Depreciation of premises and equipment owned by consolidated subsidiaries is mainly computed by thestraight-line method over the estimated useful lives of the assets.
Estimated useful lives for premises range between three and 65 years and for equipment between two
and 20 years.
(f) Reserve for Possible Loan Losses
Effective April 1, 1997, the Bank implemented a new methodology of calculating reserves for possible loan losses.
The reserves for possible loan losses of the Bank are made in accordance with the policies regarding writeoffs and reserve standards in the Uniform Accounting Standards for Banks. Pursuant to the internal rules for selfassessment of asset quality and the internal rules for providing reserves for possible credit losses, a reserve forpossible loan losses is provided for as described below:
For loans to borrowers which are classified as substantially bankrupt or which are bankrupt in the formal legal
sense a reserve is provided based on the amount remaining after deduction of the amount 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. In this case, a reserve is provided based on the amountremaining after deduction of the amount of collateral considered to be disposable and amounts recoverable
under guarantees and an overall comprehensive analysis of the likelihood 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 as prescribed under Article 55-2 of the Exceptions to Tax Laws Act).
The above procedures for providing reserves are made on the basis of the quality of all the Bank’s loan
assets, using the Bank’s internally established rules for self-assessment.
Consolidated subsidiaries provide reserves for possible loan losses at the amounts considered reasonable inaccordance with local accounting standards and also based on their management’s assessment of the loan portfolio.

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS
Fuji Bank Group

3. Trading Assets andTrading Liabilities

Trading Assets
Trading assets at March 31, 1998 and 1997 consisted of the following:

7. Premises andEquipment

Premises and equipment at March 31, 1998 and 1997 consisted of the following:
Millions of yen
1998
1997

Millions of yen

Trading securities .........................................................................
Derivatives of trading securities....................................................
Securities related to trading transactions .......................................
Derivatives of securities related to trading transactions..................
Trading-related financial derivatives.............................................
Other trading assets ......................................................................

1998

*1997

¥ 0,000,000
877,934409
111,0680
1,391,380
884,619¥ 0,000,000
3,265,412¥ 0,000,000
—
—
—
—
—
—
¥ 0,000,000—

Land .................................................................................................... ¥ 000,000
408,168
Buildings ...............................................................................................
297,937
Equipment ............................................................................................
234,549
Other ....................................................................................................
96,2491,036,905
Accumulated depreciation .....................................................................
342,950
Net book value ..................................................................................... ¥ 000,000
693,955

8. Deposits

Trading Liabilities
Trading liabilities at March 31, 1998 and 1997 consisted of the following:

CONSOLIDATED*1997¥ 0,000,000
561,405294
12,231
1,483,235¥ 0,000,000
2,057,167¥ 0,000,000————¥ 0,000,000—

Current deposits........................................................................... ¥ 00,000,000
1,492,644
Ordinary deposits ........................................................................
5,713,618
Deposits at notice.........................................................................
1,081,426
Time deposits............................................................................... 19,429,290
Other deposits..............................................................................
3,649,892
31,366,873
Negotiable certificates of deposit..................................................
3,185,488¥ 00,000,000
34,552,361

9. Borrowed Money

Borrowed money at March 31, 1998 and 1997 consisted of the following:

Millions of yen

5. Loans and Bills
Discounted

1998

1997

¥ 0,000,000
1,090,825
368,933
538,052
3,474,758
572,261¥ 0,000,000
6,044,830¥ 0,000,000
1,052,713
235,094
468,161
3,292,109
559,017¥ 0,000,000
5,607,096

Millions of yen
1997

1998

Bills rediscounted............................................................................. ¥ 0,000,0000
8,741
Borrowings from the Bank of Japan and other financial institutions...... 2,636,846
Commercial paper ...........................................................................
301,580¥ 2,947,169¥ 0,000,000
11,7691,880,264
360,151¥ 2,252,185

Subordinated borrowed money amounting to ¥ 891,300 million at March 31, 1998 and¥ 1,021,800 million at March 31, 1997 was included in “Borrowings from the Bank of Japanand other financial institutions”.

Loans and bills discounted at March 31, 1998 and 1997 consisted of the following:
Millions of yen
1997

1998

Bills discounted ............................................................................ ¥ 00,000,000
726,927
Loans on notes and deeds ............................................................. 27,583,391
Overdrafts....................................................................................
5,408,580
Financing receivables, including factoring, leasing andproperty financing .....................................................................
309,301¥ 00,000,000
34,028,201

6. Other Assets¥ 00,000,000
1,979,431
4,997,303
1,015,713
23,229,608
3,501,387
34,723,445
3,926,036¥ 38,649,481
00,000,000¥ 00,000,000
823,032
30,831,007
3,943,665
117,082¥ 35,714,787
00,000,000

10. Bonds and Notes

Bonds and Notes at March 31, 1998 and 1997 consisted of the following:
Millions of yen
1998
1997

818,075
Subordinated bonds and notes ............................................................... ¥ 0,00,000
839,148
Other .....................................................................................................
¥ 1,657,224

708,938¥ 0,000,000
613,555¥ 1,322,494

Other assets at March 31, 1998 and 1997 consisted of the following:
Millions of yen

Accrued income and prepaid expenses .........................................
Securities in custody ....................................................................
Other...........................................................................................
60

1998

1997

¥ 0,000,000
583,851
1,327,847
1,414,387¥ 0,000,000
3,326,086¥ 1,673,269
0,000,000
509,426
1,297,877¥ 3,480,573
0,000,000

61

CONSOLIDATED

1998

Securities at March 31, 1998 and 1997 were as follows:

Japanese national government bonds ............................................
Japanese local government bonds .................................................
Japanese corporate bonds and financial debentures .......................
Japanese corporate stocks..............................................................
Other securities............................................................................

1997

1998

* Differences in the basis of presentation mean that figures for 1997 are not comparable, andhave therefore been excluded.
4. Securities

Deposits at March 31, 1998 and 1997 consisted of the following:
Millions of yen

Millions of yen

Trading securities sold for short sales ............................................
Derivatives of trading securities....................................................
Securities related to trading transactions sold for short sales ..........
Trading-related financial derivatives.............................................

¥ 000,000
84,400300,977
230,201
79,984
695,563338,232¥ 357,330
000,000

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS
Fuji Bank Group

11. Convertible Bonds

Convertible bonds at March 31, 1998 and 1997 consisted of the following:
Millions of yen
1998
1997

2 3/4 percent U.S. dollar convertible bonds due 2000 ............................... ¥ 00,000
2,854
1 3/4 percent U.S. dollar convertible bonds due 2002 ...............................
9,727¥ 12,582

14. Acceptances andGuarantees¥ 00,000
2,854
9,727
¥ 12,582

Millions of yen

CONSOLIDATEDConversion priceper share atMarch 31, 1998

Fixed
exchangerate¥ 1,394.00¥ 2,928.40¥ 239.60 = U.S.$1¥ 146.45 = U.S.$1

Other liabilities at March 31, 1998 and 1997 consisted of the following:
Millions of yen
1997

1998

Accrued expenses and unearned income.......................................... ¥ 0,000,000
650,369
Accrued income taxes......................................................................
18,391
Securities borrowed.........................................................................
1,312,619
Securities sold not yet purchased......................................................
—
Other ..............................................................................................
2,400,418¥ 0,000,000
4,381,799¥ 0,000,000
1,754,730
12,853482,978
689,917
1,003,104¥ 0,000,000
3,943,584

15. Common Stock,
Preferred Stock andCapital Surplus

Acceptances .................................................................................... ¥ 0,000,000
41,164
Letters of credit ...............................................................................
257,351
Guarantees ......................................................................................
2,024,220¥ 0,000,000
36,370304,6112,189,002¥ 2,322,736
0,000,000¥ 2,529,984
0,000,000

The Bank’s authorized number of shares of capital stock (common stock and preferred stock)
as of March 31, 1998 and 1997 was as follows:(i) 4 billion shares of common stock, voting and ranking equally with any other class ofshares (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
Bank prior to issuance.
(ii) 100 million preference shares, non-voting and ranking prior to shares of common stockwith respect to the payment of dividends and distributions on the liquidation or winding-upof 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 Stock and Capital Surplus is asfollows:
Millions of yen

13. Other Reserves

Other reserves at March 31, 1998 and 1997 consisted of the following:
Millions of yen
1998
1997

Reserve for possible losses on loans sold off ............................................... ¥ 00,000
52,717
Reserve for specific borrowers under support ............................................ 122,300
Reserve for price f luctuation of Japanese national government bonds........
—
Reserve for possible losses from trading account securities transactions........
995
Reserve for financial futures transaction liabilities......................................
47
Reserve for securities transaction liabilities.................................................
5¥ 176,066¥ 00,000
38,834—
7,513
13,85531
9¥ 60,243

The reserve for possible losses on loans sold off has been provided 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 for loans to support
the rehabilitation of specific borrowers. An estimate has been made of the future amount
likely to be required in supporting such borrowers and the necessary amount is accounted
for under the above reserve. This reserve is stipulated under Article 287-2 of theCommercial Code of Japan.

62

Common Stock:
Balance at beginning of year........................................................
Add:
Conversion of convertible bonds ............................................
Balance at end of year......................................................................
(Shares issued and outstanding at end of year) ..................................
Preferred Stock:
Balance at beginning of year........................................................
Add:
Issuance...................................................................................
Balance at end of year......................................................................
(Shares issued and outstanding at end of year) ..................................
Capital Surplus:
Balance at beginning of year........................................................
Add:
Issuance of Preferred Stock......................................................
Conversion of convertible bonds ............................................
Balance at end of year......................................................................

1998

1997

¥ 424,087
000,000¥ 423,873
000,000—¥ 424,087
000,000213¥ 424,087
000,000(2,897,614(2,897,614

thousand shares)

thousand shares)¥ 105,000
000,000¥ 000,000——¥ 105,000
000,000

105,000¥ 000,000
105,000(70,000(70,000

thousand shares)

thousand shares)¥ 419,954
000,000¥ 000,000
314,740——¥ 419,954
000,000

105,000
213¥ 000,000
419,954

63

CONSOLIDATED

12. Other Liabilities

1997

1998

These convertible bonds unless previously redeemed are convertible into shares ofcommon stock of the Bank. The conversion price of each is subject to adjustment
in certain cases including stock splits.
The conversion prices per share were as follows:

2 3/4 percent U.S. dollar convertible bonds due 2000 ................
1 3/4 percent U.S. dollar convertible bonds due 2002 ................

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 indemnityfrom its customers.
Acceptances and guarantees at March 31, 1998 and 1997 consisted of the following:

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS
Fuji Bank GroupOn December 28, 1996, the Bank issued 70 million preference shares at a price of ¥3,000 per share for grossproceeds of ¥210,000 million, of which ¥105,000 million was credited to the capital surplus account. The
issuance costs were expensed when paid. The preference shareholders are entitled, with priority over any payment
of dividends and distributions on the liquidation of the Bank to any other class of shares of the Bank, to annual
noncumulative dividends of ¥7.5 per preference share and a distribution of ¥3,000 per preference share.
The preference shares are convertible on or after July 1, 1997 and up to and including January 31, 2002, atthe option of the holders, into fully-paid shares of common stock of the Bank at an initial conversion price of¥2,002 per share of common stock, subject to adjustment in certain limited circumstances. The conversion pricewill be reset initially on October 1, 1997 and on October 1 of each year thereafter through October 1, 2001 to
the then prevailing average market price of the shares of common stock, if lower than the conversion priceprior to such reset, but not lower than 65% of the initial conversion price. All outstanding preference shares on
February 1, 2002 will be subject to mandatory conversion into shares of common stock.
The number of preference shares can be obtained by multiplying (i) the number of such preference shares by(ii) the product obtained by dividing ¥3,000 by the higher of (a) the average of the closing prices of the Bank’s
shares of common stock for 30 consecutive trading days commencing on the 45th trading day prior to the final
mandatory conversion date, and (b) 35% of the initial conversion price, and such shares of common stock will bedelivered to the holders of the preference shares.

Millions of yen
1998
1997

Gains on foreign exchange transactions ................................................ ¥ 000,000
18,822
Gains on trading account securities transactions.....................................
—
Gains on sales of bonds..........................................................................
105,512
Gains on redemption of bonds...............................................................
3,834
Other ....................................................................................................
23,334¥ 151,504

Other Income
The composition of other income for the years ended March 31, 1998 and 1997 was as follows:
Millions of yen
1998

Gains on sales of stocks and other securities........................................... ¥ 275,928
000,000
Gains on money held in trust ................................................................
904
Gains on disposal of premises and equipment ........................................
45,814
Collection of written-off claims ............................................................
70
Reversal of reserve for price f luctuation of Japanese national
government bonds ..............................................................................
7,513
Reversal of reserve for possible losses on trading account securities........
13,362
Reversal of reserve for securities transaction liabilities............................
5
Other ....................................................................................................
6,469¥ 350,069
000,000

Millions of yen
1998
1997

17. Trading Revenue¥ 00,000
82,253
4,362¥ 00,000
86,616The composition of trading revenue for the years ended March 31, 1998 and 1997 was
as follows:
Millions of yen
1998
*1997

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

¥ 000,00
28,298¥ ——6,239
19,366
3,008¥ 56,913

—
—
—
—

¥

* Differences in the basis of presentation mean that figures for 1997 are not comparable, andhave therefore been excluded.

64¥ 00,000
5,840
3,034
83,095
1,806
3,161¥ 96,938

Due to the amendment of the Enforcement Regulations of the Banking Law, “Gains on
trading account securities transactions” has been included in “ Trading revenue” since thefiscal year ended March 31, 1998.

Under the Banking Law of Japan, an amount equivalent to at least 20 percent of any distribution of earned surplus 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 toreduce a deficit or may be transferred to the common stock account.
Information relating to the legal reserve is summarized as follows:

Balance at beginning of year...................................................................... ¥ 00,000
86,616
Transfer from earned surplus .....................................................................
2,600
Balance at end of year ............................................................................... ¥ 00,000
89,216

Other Operating Income
The composition of other operating income for the years ended March 31, 1998 and 1997
was as follows:

19. Other Operating
Expenses andOther Expenses

1997¥ 000,000
301,495
485
33,32948——
3
10,107¥ 000,000
345,469

Other Operating Expenses
The composition of other operating expenses for the years ended March 31, 1998 and 1997
was as follows:
Millions of yen
1998
1997

Losses on sales of bonds ............................................................................. ¥ 00,000
28,561
Losses on redemption of bonds ..................................................................
2,864
Losses on devaluation of bonds..................................................................
472
Other ........................................................................................................ 14,917¥ 00,000
46,816¥ 45,908
00,000
2,267
186
6,928
¥ 55,291
00,00065

CONSOLIDATEDCONSOLIDATED

16. Legal Reserve

18. Other Operating
Income andOther Income

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS
Fuji Bank Group

Other Expenses
The composition of other expenses for the years ended March 31, 1998 and 1997 was as follows:
Millions of yen
1997

Transfer to reserve for possible loan losses........................................... ¥ 000,000
326,519
Write-off of loans...............................................................................
68,966
Losses on sales of stocks and other securities .......................................
2,137
Losses on devaluation of stocks and other securities ............................
56,999Losses on money held in trust.............................................................
1,817
Losses on disposal of premises and equipment.....................................
5,027
Transfer to reserve for price f luctuation of Japanese national
government bonds............................................................................
—
Transfer to reserve for possible losses on trading accountsecurities transactions........................................................................
503
Transfer to reserve for financial futures transaction liabilities ..............
16
Transfer to reserve for securities transaction liabilities .........................
1
Losses on sales of loans collateralized by real estate to
Cooperative Credit Purchase Company ............................................
202,768
Other .................................................................................................
463,478¥ 1,128,236

20. Income Taxes¥ 0,000,000
151,951
25,767233
191,048
3,234
9,553

Millions of yen

Due within one year...........................................................................
Greater than one year .........................................................................
..................................................................................................
Total lease amounts received...............................................................

33
101
14
1

1998

1997

¥ 355
627
¥ 983
¥ 497

¥ *—
*—
¥ *—
¥ 213

Lessees
The total lease amounts due to the lessor under other finance leases, where the ownershipof the property is not deemed to have been transferred to the lessee, and total lease amounts
paid at March 31, 1998 and 1997 were as follows:

83,157
137,836¥ 602,934

Millions of yen
1998

1997

“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.
“Other” in “Other Expenses” for the year ended March 31, 1997 includes losses of ¥ 35,467
million incurred from supporting certain borrowers.

Due within one year........................................................................... ¥ 0,574
Greater than one year .........................................................................
949.................................................................................................. ¥ 1,524
Total lease amounts paid..................................................................... ¥ 0,697

¥ *—
*—
¥ *—
¥ 547

Income taxes in Japan applicable to the Bank and its domestic subsidiaries for the years ended
March 31, 1998 and 1997 comprised corporation tax, inhabitants’ taxes and enterprise tax at
the approximate rates indicated below:

Operating Leases
The total lease amounts due to the lessor under operating leases at March 31, 1998 and1997 were as follows:

1998

1997

Corporation tax................................................................................................ 37.5%
Inhabitants’ taxes .............................................................................................. 7.7%
Enterprise tax ................................................................................................... 12.5%
57.7%

37.5%
7.7%
12.5%
57.7%

Enterprise tax is included in “Other Expenses” in the accompanying consolidated statements
of income.
Unlike other income taxes, enterprise tax is deductible for tax purposes when paid.
Accordingly, the effective tax rate on income was approximately 51.3 percent for the years ended
March 31, 1998 and 1997.
The consolidated foreign subsidiaries are subject to the income taxes of the respective countries in which they operate.

66

Other Finance Leases
Lessors
The total lease amounts due from the lessee under other finance leases, where the ownershipof the property is not deemed to have been transferred to the lessee, and total lease amounts
received at March 31, 1998 and 1997 were as follows:

Millions of yen
1998

Due within one year........................................................................... ¥ 06,704
Greater than one year .........................................................................
43,540Total lease amounts received............................................................... ¥ 50,245

*1997
¥—
—
¥—

* Differences in the basis of presentation mean that figures for 1997 are not comparable, andhave therefore been excluded.
22. Segment Information(a) Business Segment Information
Certain consolidated subsidiaries are engaged in securities, trust, leasing, and other businesses
in addition to the commercial banking business. As those activities are not deemed material,business segment information has not been disclosed.
(b) Geographic Segment Information
Total adjusted income represents total income excluding “Gains on disposal of premises andequipment”, “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 geographic segment information on the Total adjusted
income, Ordinary profit (loss) and Assets of the Bank’s head office, branches and subsidiaries
according to the country of domicile of the respective entities.
The Bank changed the method of accounting for securities referred to in Note 2 (d).
This inf luenced the result as indicated in the segment information on Japan.
67

CONSOLIDATEDCONSOLIDATED

1998

21. Lease Transactions

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS
Fuji Bank Group

Report of Independent Certified Public
Accountants on the Consolidated Financial Statements

Year ended March 31, 1998

Japan

Foreign*

Millions of yen
Combined
Total

Elimination/Corporate

Consolidated
Total

Year ended March 31, 1997

The Americas

Millions of yen
Asia and Oceania

EuropeI. Total adjusted income:Customers ................... ¥ 0,748,474
Intersegment ............... ¥ 00,47,581................................... ¥ 00,796,055
I. Total adjusted expenses ....... ¥ 00,725,667
I. Ordinary profit (loss) ......... ¥ 00,70,387
II. Assets................................. ¥ 9,447,530¥ 0.356,614¥ 0,102,053¥ 0,458,668¥ 0,456,434¥ 00.02,234¥ 8,235,922¥ 0,259,048¥ 0,109,774¥ 0,368,822¥ 0,337,658¥ 0.031,164¥ 3,864,420

Domestic

Foreign

Millions of yen
Combined
Total

Elimination/Corporate

Consolidated
Total

I. Total adjusted income:Customers................. ¥ 01,617,297 ¥ 01,094,014 ¥ 02,711,312 ¥(00,00,0— ¥ 02,711,312
Intersegment .............
278,985
186,809465,794(465,794)—.................................
1,896,283
1,280,823
3,177,106(465,794)
2,711,312
Total adjusted expenses..
1,929,828
1,168,207
3,098,035(462,148)
2,635,887
Ordinary profit (loss).... ¥ 000(33,545) ¥ 00,112,616 ¥ 00(079,071 ¥ 0,00(3,646) ¥ 0(0075,425
II. Assets ........................... ¥ 38,791,585 ¥ 23,238,311 ¥ 62,029,897 ¥(5,818,743) ¥ 56,211,154

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, 1998 and 1997, and the related consolidated statements of income, earned surplus andcash f lows for the years then ended, all expressed in Japanese yen. Our examinations were made in accordance with auditing standards generally accepted in Japan and, accordingly, included such tests of theaccounting records and such other auditing procedures as we considered necessary in the circumstances.
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, 1998
and 1997, and the consolidated results of their operations and their cash f lows for the years then ended inconformity with accounting principles generally accepted in Japan consistently applied during the period
except for the change, with which we concur, in the method of accounting for securities as described in
Note 2 (d) to the consolidated financial statements.

CONSOLIDATEDCONSOLIDATED

I. Total adjusted income:Customers................. ¥ 01,448,385 ¥ 01,094,014 ¥ 02,812,522 ¥ 00,0(384— ¥ 02,812,522
Intersegment .............
158,201
417,610(417,610)—.................................
1,606,586
3,230,133(417,610)
2,812,522
Total adjusted expenses ..
2,189,234
3,708,994(379,176)
3,329,817
Ordinary profit (loss) .... ¥ 00(582,647) ¥ 01,094,014 ¥ 00(478,861) ¥ 00.0(38,433) ¥ 00(517,295)
II. Assets ........................... ¥ 44,653,364 ¥ 01,094,014 ¥ 66,201,238 ¥(11,087,728) ¥ 55,113,509* Foreign amounts consisted of the following:

The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 1998 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 26, 1998

Showa Ota & Co.

(c) Total Adjusted Income from International Operations
Millions of yen
Years ended March 31,

1998(i) Total adjusted income from international operations..................... ¥ 0,000,000
1,779,636(ii) Consolidated total adjusted income ............................................. ¥ 0,000,000
2,812,522(i)/(ii) ..............................................................................................
63.2%

1997

¥ 0,000,000
1,578,911¥ 0,000,000
2,711,312
58.2%

Total adjusted income from international operations represents the sum of total adjusted
income generated from the international operations of the Bank and domestic consolidated
subsidiaries, and total adjusted income of its consolidated foreign subsidiaries excluding allintercompany transactions within the Fuji Bank Group.
23. Subsequent Events

68

At a general meeting of stockholders held on June 26, 1998 a year-end dividend of ¥ 8.50
per share of common stock totalling ¥ 24,629 million, and of ¥ 7.50 per share of preferredstock totalling ¥ 525 million were approved in respect of the year ended March 31, 1998. In
accordance with Japanese accounting practice, these dividends were not accrued and havenot been ref lected in the financial statements for the year ended March 31, 1998.

69

NON-CONSOLIDATED FINANCIAL STATEMENTS
The Fuji Bank, Limited

Balance Sheet
Thousands of
U.S. dollars

Millions of yen
March 31,

1997

1998

March 31,

1998

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

¥ 00,000,000
2,749,927

4,320,845¥ 00,000,000$000,000,000
20,817,012

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

265,542

1,018,094

2,010,167

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

29,85855,897226,032

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

2,273,891—

17,213,413

Trading Account Securities................................................................

—

64,899—

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

85,432

117,271646,723

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

6,250,780

5,774,496

47,318,553

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

32,030,589

34,037,300

242,472,293

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

549,415524,653

4,159,090

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

2,263,624

1,759,101

17,135,691

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

673,037

342,876

5,094,911

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

3,915,992
51,088,094¥ 00,000,000

4,051,392¥ 52,066,828
00,000,000

29,644,149
386,738,034$000,000,000

The accompanying notes are an integral part of these statements.

70

1998

1997

1998

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

¥ 34,442,706
00,000,000
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

38,279,142¥ 00,000,000
2,943,951—
2,442,739
96,415—
12,582
1,476,390
983,607
48,81659,726
4,051,392—
50,394,764

260,732,073$000,000,000
17,082,422
11,041,232
25,281,033
952,029757,002
95,247
21,863,566
6,491,232
365,193
1,325,250
29,644,149
2,471,834
378,102,262

Stockholders’ Equity
Capital Stock ....................................................................................
Capital Surplus..................................................................................
Legal Reserve....................................................................................
Voluntary Reserve.............................................................................
Special Reserves ................................................................................
Unappropriated Profit (Loss) .............................................................
Total Stockholders’ Equity ....................................................
Total Liabilities and Stockholders’ Equity......................

529,087
419,954
89,216589,900
21(487,393)
1,140,785¥ 51,088,094
00,000,000

529,087
419,954
86,616580,900
26
55,4801,672,064
52,066,828¥ 00,000,000

4,005,201
3,179,063
675,369
4,465,556
162(3,689,579)
8,635,772$000,000,000
386,738,034* Includes “Reserve for Specific Borrowers under Support,” the balance of which as of March 31, 1998 was ¥122,300 million.

71

NON-CONSOLIDATEDNON-CONSOLIDATEDASSETS

Thousands of
U.S. dollars

Millions of yen

NON-CONSOLIDATEDFINANCIAL STATEMENTS

NON-CONSOLIDATEDFINANCIAL STATEMENTS

The Fuji Bank, Limited

The Fuji Bank, Limited

Statement of Income

Statement of Cash Flows
Thousands of
U.S. dollars

Millions of yen
Years ended March 31,

INCOMEInterest Income:Interest on Loans and Discounts ..........................................................
Interest and Dividends on Securities....................................................
Other Interest 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 ............................................................................
Income (Loss) before Income Taxes..........................................................
Provision for Income Taxes......................................................................
Net Income (Loss) ...............................................................................

1998¥ 1,011,179
0,000,000
152,901
844,525
2,008,606
109,787
19,060126,928
340,906
2,605,290

995,864¥ 0,000,000
125,479
1,000,584
2,121,928
107,584—
92,535331,859
2,653,908

7,654,653$00,000,000
1,157,465
6,393,079
15,205,197
831,097
144,289
960,851
2,580,671
19,722,105

688,618
110,991
705,985
1,505,595
44,776517
44,614
385,780
1,138,801
3,120,086(514,796)
3,905(518,701¥ 0,000,000)

679,350
98,880744,216
1,522,447
42,941—
55,296
380,434
598,004
2,599,125
54,783787
53,995¥ 0,000,000

5,212,856
840,208
5,344,326
11,397,390
338,960
3,917
337,7292,920,371
8,620,756
23,619,123(3,897,018)
29,566(3,926,584$00,000,000)

Statement of Appropriation of Profit
Thousands of
U.S. dollars

Millions of yen
Years ended March 31,

Net Income (Loss)...................................................................................
Unappropriated Profit at Beginning of Year ............................................
Transfer from Special Reserves ................................................................
Total...........................................................................................
Appropriations:
Legal Reserve .....................................................................................
Voluntary Reserve ..............................................................................
Special Reserves..................................................................................
Dividends............................................................................................
Total...........................................................................................
Unappropriated Profit (Loss) at End of Year ............................................
The accompanying notes are an integral part of these statements.

1998

1997

1998

¥ (518,701000(,000)
55,4807(463,214)

53,995¥ 0000,000(407,427)
435,007
81,574(3,926,584$0,0(00,000)
419,98753(3,506,544)

2,600
9,000
1
12,577
24,179¥ (487,393000(,000)

4,362
—
—
21,731
26,09455,480¥ 0000,000

19,682
68,13012
95,211
183,035(3,689,579$0,0(00,000)

Years ended March 31,
CASH 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 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 in Commercial Paper and Other Debt Purchased .........................................................
Net Increase in Trading Accounts ......................................................................................................
Net Proceeds from Trading Account Securities Transactions..............................................................
Net Proceeds from (Expenditures of ) National Government Bonds and Other Transactions..............
Net Decrease (Increase) in Loans and Bills Discounted ......................................................................
Net Increase in Foreign Exchange......................................................................................................
Net Decrease in Domestic Exchange Settlement Debits .....................................................................
Net Increase in Other Assets ..............................................................................................................
Total .........................................................................................................................................
Net Increase (Decrease) in Deposits and Other...................................................................................
Net Decrease in Call Money and Borrowed Money...........................................................................
Net Increase (Decrease) in Bills Sold ..................................................................................................
Net Increase in Foreign Exchange......................................................................................................
Net Decrease in Domestic Exchange Settlement Credits ....................................................................
Net Increase 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 ................................................................................................................
Issuance of Bonds and Notes..............................................................................................................
Net Decrease in Cash and Cash Equivalents ......................................................................
Cash and Cash Equivalents at Beginning of Year ..........................................................................
Cash and Cash Equivalents at End of Year.....................................................................................

1998

1997

1998

¥0,000,000
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¥0,000,000
956,422
129,538
19,356
209
179,706
706,366
107,190
57,9982,156,789
693,909
31,571
68,093—
178
639,876
42,645
7,035
339,085
1,822,395
969,351(51,660)(116,400)
26,150—331,992
182,423(1,858,538)(76,996)
4,812(234,920)(823,784)
1,314,045(855,339)(635,057)
12,454(4,672)
276,102
107,531(381,859)$00,000,000
7,522,081
1,177,590
124,294
1,368
1,183,681
4,526,583
830,727
261,523
15,627,847
5,243,803
212,865584,777—
1,449
4,168,881
359,861
102,5532,599,405
13,273,594
10,434,931
2,674,119
3,022,710
197,110(5,543,788)—(1,211,931)
11,253,910(189,684)
4,176(3,814,822)
16,826,731(29,041,903)(3,913,325)
5,499,412
222,162(4,492)9,476,329(17,761,817)
1,419,167

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

1,326,568
82,316
37,8476,800
1,453,532
1,344,613
47,51953,876
96,794
1,542,804(89,272)

9,857,390
1,813,712
419,306
37,271
12,127,679
10,075,678
1,583,165
367,959
3,613,706
15,640,508(3,512,829)

12,577
3,313
15,891

21,731
767
22,49995,211
25,085120,296—
100,000(192,463)
1,226,758¥0,000,000
1,034,294

210,000—(283,631)
1,510,389¥0,000,000
1,226,758—
757,002(1,456,956)
9,286,590$00,000,000
7,829,634

The accompanying notes are an integral part of these statements.

72

73

NON-CONSOLIDATEDNON-CONSOLIDATED

Fees and Commissions.............................................................................
Trading Revenue ....................................................................................
Other Operating Income ........................................................................
Other Income .........................................................................................
Total Income ..............................................................................

1997

1998

Thousands of
U.S. dollars

Millions of yen

NOTES TO NON-CONSOLIDATEDFINANCIAL STATEMENTS
The Fuji Bank, Limited

2. Significant Accounting
Policies of The Fuji
Bank, Limited

The Fuji Bank, Limited (“Fuji Bank”) maintains its accounting records and prepares 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 theRules 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.
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, 1998 and 1997 do
not necessarily agree with the sum of the individual amounts.
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan.
The rate of ¥ 132.10 =U.S.$1, the rate of exchange on March 31, 1998, has been used intranslation. The inclusion of such amounts is not intended to imply that Japanese yen havebeen or could be readily converted, realized or settled in U.S. dollars at that rate or any
other rate.
(a) Securities
Securities are stated at the moving average cost method.
Effective April 1, 1997, the Bank changed its method of valuation of listed securities and listed securities heldin 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) Other Significant Accounting Policies
Refer to Notes to 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, 1998
and 1997, and the related non-consolidated statements of income, appropriation of profit and cash f lows
for the years then ended, all expressed in Japanese yen. Our examinations were made in accordance withauditing standards generally accepted in Japan and, accordingly, included such tests of the accounting
records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the financial statements referred to above, expressed in Japanese yen, present fairly
the non-consolidated financial position of The Fuji Bank, Limited at March 31, 1998 and 1997, and thenon-consolidated results of its operations and its cash f lows for the years then ended in conformity withaccounting principles generally accepted in Japan consistently applied during the period except for thechange, with which we concur, in the method of accounting for securities as described in Note 2 (a) to
the non-consolidated financial statements.

NON-CONSOLIDATEDNON-CONSOLIDATED

1. Basis of Presentation

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

The U.S. dollar amounts in the accompanying non-consolidated financial statements with respect to theyear ended March 31, 1998 are presented solely for convenience. Our examination also included the translation 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 of the Notes to the non-consolidated financial statements.
Tokyo, Japan
June 26, 1998

Showa Ota & Co.
3. Loans and Bills
Discounted

In accordance with the Rules for Bank Accounting in Japan, the balance of “Loans and Bills
Discounted” at March 31, 1998 includes the following nonaccrual loans; loans to customers
under bankruptcy procedures, amounting to ¥ 257,512 million, and loans past due for 6
months or more as to interest payment, amounting to ¥ 733,762 million.
The balance of renegotiated loans at the end of March, 1998 was ¥ 186,390 million.
Renegotiated loans include loans of which the interest rates were cut to or below the official
discount rate at the time of restructuring, or loans extended on a negative spread basis inorder to support borrowers’ rehabilitation, and nonaccrual loans which were approved assuch by the National Tax Agency. Items which until now have been classified as restructuredloans are now called renegotiated loans.
The balance of loans to companies under support programs as of March 31, 1998 was¥ 40,770 million. Loans to companies under support programs refers to loans extended toborrowers which have encountered economic difficulty and which the Bank supports invarious ways with the approval of the National Tax Agency.

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,

Net Income (Loss) ............................................................................

1998

1997

¥(179.19)¥ 18.54

Net income (loss) per share of common stock is computed based on the average number ofshares of common stock outstanding during the year, adjusted for the preferred stock dividend.
74

75

DATA FILE (NON-CONSOLIDATED)The Fuji Bank, Limited

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

Years ended March 31,

Averagebalance

Interest

Averagerate

AssetsInterest-Earning Assets
Interest-Bearing Deposits in Other Banks:
Domestic .......................................... ¥00,000,000¥0,000,000
0.45
52.7
0.2 00.00%
International ......................................
4.34
3,426.2
148.9
Total .............................................
4.28
3,479.0
149.1

Averagebalance¥00,000,000
91.5
3,780.8
3,872.4

Interest¥0,000,0
0.5
153.1
153.7

1996
Averagerate

00.00%
0.61
4.05
3.97

Averagebalance

Interest

1997

1998
Averagerate¥00,000,000¥0,000,000
1.7 00.00%
113.6
1.57
266.4
5,107.7
5.21
268.2
5,221.3
5.13

Years ended March 31,

Averagebalance

Interest

Averagerate

Liabilities and Stockholders’ Equity
Interest-Bearing Liabilities
Deposits:
Domestic .......................................... ¥00,000,000¥0,000,000
0.51
20,900.9
106.8 00.00%
International ...................................... 13,569.9
3.75
509.2
Total ............................................. 34,470.8
1.78
616.0

Averagebalance

Interest

1996
Averagerate

Averagebalance¥00,000,000
20,829.3
13,776.5
34,605.9¥0,000,000
126.4 00.00%
0.60
490.5 3.56
617.0 1.78

¥00,000,000
20,645.4
13,849.5
34,494.9

Interest

Averagerate¥0,000,000
00.00%
221.2
1.07
566.7
4.09
787.9
2.28

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

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

310.4
326.4
636.8

2.1
20.2
22.4

0.70
6.19
3.52

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

3,001.9238.7
3,240.7

17.2
12.7
29.9

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

3,717.5350.3
4,067.9

31.9
21.5
53.5

0.85
6.16
1.31

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

—
—
—

—
—
—

—
—
—

324.8
—
324.8

2.0
—
2.0

0.63
—
0.63

312.7
—
312.7

0.9
—
0.9

0.30
—
0.30

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

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

1,708.0
326.2
2,034.3

48.7
11.7
60.4

2.85
3.60
2.97

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

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

5,619.6
569.7
6,189.3

128.0
19.5
147.5

2.27
3.42
2.38

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

2,393.2
893.1
3,286.3

15.4
57.0
72.5

0.64
6.39
2.20

2,322.9
849.7
3,172.7

12.8
49.4
62.3

0.55
5.81
1.96

1,760.6
825.3
2,585.9

14.5
51.3
65.8

0.82
6.22
2.54

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

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

22,225.8
9,704.8
31,930.7

639.8
441.2
1,081.0

2.87
4.54
3.38

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

201.0
192.4
393.5

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

540.3
241.3
781.7

4.1
13.9
18.0

0.75
5.78
2.31

29,344.9
1,073.8
16,770.4¥00,000,000
45,041.5704.0
7.9
1,425.7¥ 0,0,000
2,121.9

2.39
....
8.50
00.00%
4.71

856.9
29,572.6
2.89
....
554.5
6.7
16,150.9
1,627.9 10.07¥ 45,169.0
00,000,000 ¥0,000,000
5.48
2,478.1 00.00%

28,308.3
16,745.4
1,073.8¥00,000,000
43,980.0

316.9 1.11
1,211.7 7.23....
7.9
¥0,000,000
3.45
1,520.8 00.00%

Total Interest-Earning Assets:
Domestic .......................................... 29,337.2
2.24
658.8
........................................
1,069.0
7.2....
International ...................................... 16,913.3
1,357.0
8.02
Total ............................................. ¥ 45,181.5
00,000,000 ¥ 2,008.6
0,000,000 00.00%
4.44*

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

76

Total Interest-Bearing Liabilities:
Domestic .......................................... 28,118.1
1.09
308.5
International ...................................... 16,956.3
7.09
1,203.1..........................................
1,069.0
7.2....
Total ............................................. ¥ 44,005.4
00,000,000 ¥ 1,504.3
0,000,000 00.00%
3.41*

28,344.9
16,204.4554.5¥00,000,000
43,994.7

408.1
1.43
1,414.1
8.72
....
6.7
¥0,000,000
00.00%
4.12
1,815.4

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.

77

NON-CONSOLIDATEDNON-CONSOLIDATED

Billions of yen

1997

1998

Breakdown of Changes of Net Interest Income

Breakdown of Fee & Commission Income
Billions of yen

Interest Income
Interest-Bearing Deposits in Other Banks:
Domestic ..........................................
International ......................................
Total .............................................
Call Loans:
Domestic ..........................................
International ......................................
Total .............................................
Investment Securities:
Domestic ..........................................
International ......................................
Total .............................................
Trading Account Securities:
Domestic ..........................................
International ......................................
Total .............................................
Loans:
Domestic ..........................................
International ......................................
Total .............................................
Total Interest Income:Domestic ..........................................
International ......................................
Total .............................................
Interest Expense
Deposits:
Domestic ..........................................
International ......................................
Total .............................................
Call Money:
Domestic ..........................................
International ......................................
Total .............................................
Negotiable Certificates of Deposit:
Domestic ..........................................
International ......................................
Total .............................................
Bills Sold:
Domestic ..........................................
International ......................................
Total .............................................
Borrowed Money:
Domestic ..........................................
International ......................................
Total .............................................
Total Interest Expense:
Domestic ..........................................
International ......................................
Total .............................................

1996

Years ended March 31,

VolumeRate

Net Change

VolumeRate

Net Change

VolumeRate

Net Change(0.2¥ (00.0)(14.3)(15.6)(0.1¥ (000.0)
10.1
11.0

(0.3
¥ (000.0)
(4.2)
(4.5)

(0.1
¥ (00.0)(62.0)(61.9)(1.0¥ (000.0)(51.1)(52.5)(1.2¥ (000.0)(113.2)(114.4)0.4¥ (00.0(36.6)(34.8)

0.2¥ (000.0
32.0
30.9

0.7
¥ (000.0
(4.6)
(3.9)

(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)

1.9
(0.1)
9.7

(0.5)
3.3
(5.0)

1.4
3.2
4.6

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)

7.2
0.5
7.9

(29.2)
1.1(28.2)(21.9)
1.7(20.2)

—
—
—

—
—
—

—
—
—

0.0
—
0.0

1.0
—
1.0

1.1
—
1.1

(0.3)
—
(0.3)

(2.8)
—
(2.8)

(3.1)
—
(3.1)

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)(23.4)
88.6
39.3(171.2)(23.4)(168.9)(194.7)65.1(129.5)

(0.1)
11.4
6.2
¥ (00.0(45.1)(80.1)(119.5¥ (000.0)(45.2)(68.6)¥ (113.3(000.0)

(5.5)
52.6
(6.0
¥ (00.0)(147.3)(254.8)(350.1¥ (000.0)(152.8)(202.1)(356.2¥ (000.0)

6.5
87.2
58.2
¥ (00.0(251.2)408.3
194.0¥ (000.0(244.7)495.6
252.2¥ (000.0

0.3¥ (00.0
(7.3)
(2.4)

(19.9
¥ (000.0)
26.0
1.4

(19.6
¥ (000.0)
18.6
(0.9)

1.1
¥ (00.0
(2.6)
1.9

(95.9
¥ (000.0)(73.5)(172.8)(94.7¥ (000.0)(76.1)(170.9)0.9¥ (00.0
20.9
13.4¥ (156.2(000.0)7.8(140.0)¥ (155.2(000.0)28.7(126.5)

(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)

0.5
0.2
0.8

(50.0)
2.5(47.6)(49.5)
2.8(46.7)

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)

2.8
21.7
17.7

(19.9)
3.5(9.6)(17.1)
25.3
8.1

(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)

0.3
0.8
1.4

(7.3)
1.8
(5.6)

(6.9)
2.7
(4.1)

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)

(7.9)
4.0
(4.4)

(12.6)(2.5)(14.7)(20.5)
1.4(19.1)

(2.0)
14.9
0.8
¥ (00.0(6.3)(23.5)(17.3¥ (000.0)

(8.4)
(8.5)
(16.4
¥ (000.0)

(0.4)
39.1
(0.5
¥ (00.0)(90.7)(241.5)(294.1¥ (000.0)(91.1)(202.3)(294.6¥ (000.0)

3.2
79.5
46.2
¥ (00.0(273.6)337.1
101.3¥ (000.0(270.4)416.6
147.6¥ (000.0

1998

1997

1996

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

¥0,000,000
4.1
16.1
20.2

¥0,000,000
3.6
14.4
18.1

¥0,000,000
3.6
11.9
15.5

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

37.6
11.3
49.0

35.8
10.6
46.5

34.3
9.9
44.2

Securities-Related:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

6.4
0.1
6.6

7.9
0.3
8.3

11.7
0.1
11.9

Safe Deposit Box:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

2.9
—
2.9

2.9
0.0
2.9

3.0
0.0
3.0

Guarantees:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

0.6
7.4
8.1

0.6
7.3
7.9

0.5
7.2
7.7

Agent:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

9.7
1.5
11.3

10.3
1.3
11.7

10.1
0.8
10.9

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

70.7
39.0
¥0,000,000
109.7

68.5
38.9
¥0,000,000
107.5

70.3
39.3
¥0,000,000
109.6

ExpenseRemittance:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

¥0,000,000
9.5
4.0
13.5

¥0,000,000
8.8
3.5
12.4

¥0,000,000
8.7
3.3
12.1

Total Expenses:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

31.6
13.0
¥0,000,000
44.7

29.8
13.1
¥0,000,000
42.9

29.0
14.3
¥0,000,000
43.3

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.”

78

79

NON-CONSOLIDATEDNON-CONSOLIDATED

Years ended March 31,

Billions of yen

1997

1998

Market Transactions

Deposits

Breakdown of Net of Other Operating Income and Commissions

Breakdown of Deposits
Billions of yen

Billions of yen
1998

1997

1996

Foreign Exchange Sales Income:Domestic ..............................................................................................................................
International ..........................................................................................................................
Total ..............................................................................................................................

¥000,000,000—
1,762.5
1,762.5¥0,000,000
—
6.6
6.6

¥0,000,000—(8.0 )(8.0 )Net Gains on Trading Account Securities:
Domestic ..............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

…
…
…

1.0
—
1.0

6.2
—
6.2

Net Gains on Sales of Bonds:
Domestic ..............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

5,842.9
1,938.8
7,781.7

30.5
5.6
36.2

100.9
4.4
105.3

Others:Domestic ..............................................................................................................................
International ..........................................................................................................................
Total ..............................................................................................................................

(394.9 )(917.8 )(1,312.8 )0,000,000)(0.0(6.6 )(6.6 )

0,000,000)(1.5(1.0 )(2.5 )

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

5,447.9
2,783.4
8,231.4

31.6
5.6
37.2

105.5
(4.6 )
100.9

Billions of yen

Salaries, Allowances ....................................................................................................................
Retirement Allowances ..............................................................................................................
Transfer to Reserve for Retirement Allowance ...........................................................................
Social Contributions ...................................................................................................................
Depreciation ...............................................................................................................................
Lease on Buildings and Equipment .............................................................................................
Repair Expenses .........................................................................................................................
General Supplies .........................................................................................................................
Lighting and Heating Expenses ...................................................................................................
Travel Expenses ..........................................................................................................................
Telephone, Fax, etc. ...................................................................................................................
Advertising Expenses ..................................................................................................................
Taxes ..........................................................................................................................................
Other .........................................................................................................................................
Total ................................................................................................................................

80

1998

1997

1996

Liquid Deposits :Domestic ................................................................................................................
International ...........................................................................................................
Total ..................................................................................................................

¥00,000,000
8,148.2
46.5
8,194.7¥00,000,000
7,738.9
155.7
7,894.6¥00,000,000
7,522.6
144.1
7,666.7

Time Deposits:
Domestic ................................................................................................................
International ...........................................................................................................
Total ..................................................................................................................

12,996.9
6,482.6
19,479.5

12,852.8
10,148.2
23,001.1

13,707.7
9,435.4
23,143.1

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

2,609.6
516.3
3,125.9

2,872.0
1,012.4
3,884.4

2,176.0
597.7
2,773.7

Other:
Domestic ................................................................................................................
International ...........................................................................................................
Total .................................................................................................................

603.5
3,038.8
3,642.3

672.3
2,826.6
3,498.9567.8
2,813.4
3,381.3

24,136.1
14,143.0¥ 38,279.1
00,000,000

23,974.1
12,990.9¥00,000,000
36,965.0※

Breakdown of Adjusted General & Administrative Expenses

Years ended March 31,

March 31,

1998

1997

1996

¥000,000
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
¥000,000
385.7¥ 135.4000,000
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
¥ 380.4000,000¥ 136.4000,000
3.4
4.5
27.9
40.3
28.8
1.0
5.5
4.7
2.4
7.4
6.6
28.5
70.6
¥ 368.7000,000

Total Deposits:
Domestic ................................................................................................................
24,358.4
International ...........................................................................................................
10,084.2
Total ................................................................................................................. ¥ 34,442.7
00,000,000
Note: ※Liquid deposits include current deposits, ordinary deposits, savings deposits and deposits at notice.

81

NON-CONSOLIDATEDNON-CONSOLIDATED

Years ended March 31,

Loans and Bills Discounted
Average Amount of Deposits

Breakdown of Loans and Bills Discounted
Billions of yen

March 31,Billions of yen

1997

1998

1996

3,369.4 ¥00,000.0
3,026.6¥00,000.0
1,689.5
1,331.5
5,058.9
4,358.1

3,521.9 ¥00,000.0
3,467.8¥00,000.0
1,549.3
1,592.3
5,071.2
5,060.2

3,826.6 ¥00,000.0
3,777.7¥00,000.0
1,362.3
1,302.3
5,189.0
5,080.1

14,883.8
11,243.8
26,127.7

Loans on Deeds:
Domestic ............................................................
International .......................................................
Total ..............................................................

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

13,791.5
8,318.9
22,110.5

13,835.7
8,807.2
22,642.9

2,322.9
849.7
3,172.7

1,760.6
825.3
2,585.9

Overdrafts:
Domestic ............................................................
International .......................................................
Total ..............................................................

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

3,731.1
10.9
3,742.1

3,665.6
7.4
3,673.1

320.5
2,780.6
3,101.2354.1
2,470.7
2,824.9

Bills Discounted:
Domestic ............................................................
International .......................................................
Total ..............................................................

769.5
11.3
780.8

713.2
10.5
723.7

800.1
13.4
813.5

807.2
11.7
819.0

876.4
12.6
889.1

968.1
11.7
979.9

6,241.4¥00,000.0
171.8
6,413.3

5,407.3¥00,000,0
134.9
5,542.3

Time Deposits:
Domestic ................................................................................................................
International ...........................................................................................................
Total

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

2,393.2
893.1
3,286.3

Other:
Domestic ................................................................................................................
International ...........................................................................................................
Total

312.3
2,838.5
3,150.9

NON-CONSOLIDATED

23,152.3
14,626.3¥ 37,778.7
00,000.0

23,294.1
14,463.0¥ 37,757.2
00,000.0

22,406.0
14,674.8¥ 37,080.9
00,000,0

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

22,362.4 22,898.7
11,983.2
9,131.8
32,030.5¥ 34,345.6
00,000.0 ¥ 00,000.0

AveragebalanceEndbalance

21,718.0 21,970.0
11,577.3 12,067.2
33,295.3 ¥ 00,000.0
34,037.3¥ 00,000.0

AveragebalanceEndbalance

22,225.8 22,247.3
9,704.8 10,128.8
31,930.7 ¥ 32,376.1¥ 00,000.0
00,000.0.......................................................................

Note: ※Liquid deposits include current deposits, ordinary deposits, savings deposits and deposits at notice.

Loans to Retail Sectors
Billions of yen

Breakdown of Depositors
Billions of yen
1997

1998
March 31,

Individuals ...............................................................
Corporations ............................................................
Total...............................................................

82

1996

March 31,

Amount% of total

Amount% of total

Amount% of total¥00,000,000
11,391.8
11,410.9¥00,000,000
22,802.7

0.00%
49.96
50.04
0.00%
100.00¥00,000,000
11,027.1
11,511.4¥00,000,000
22,538.5

00.00%
48.93
51.07
00000%
100.00¥00,000,000
10,496.2
13,243.7¥00,000,000
23,740.0

000.0%
44.21
55.79
000.0%
100.00Note: Figures have not been adjusted for deposits in transit between the Bank’s head office and branches.

1997

1998

Total Loan Balance ..................................................
Loans to Small/Medium Businesses ..........................
% of Total Loans ......................................................
.......................................................................

Number ofcustomersEndbalance

0,000% ¥ 00,000.0
1,198
23,442.0
1,193
17,756.3
99.56%
75.75%

1996

Number ofcustomersEndbalance

Number ofcustomersEndbalance

0,000%
1,194
1,190
99.61%¥ 00,000.0
22,601.3
17,659.0
78.13%

0,000%
1,173
1,168
99.61%¥ 00,000.0%
22,836.1
17,727.0
77.62%

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.

83

NON-CONSOLIDATED

Loans on Notes:
Domestic ............................................................
International .......................................................
Total ..............................................................

6,905.0¥00,000.0
158.6
7,063.7

Endbalance

1996

March 31,

Liquid Deposits :Domestic ................................................................................................................
International ...........................................................................................................
Total

Total Deposits:
Domestic ................................................................................................................
International ...........................................................................................................
Total .................................................................................................................

1997

1998
Averagebalance※Breakdown of Loans by Purpose of Funds

Collateral Information
Billions of yen

March 31,

Funds for Capital Investment .......................................................................................
Funds for Working Capital ..........................................................................................
Total ..................................................................................................................

Billions of yen

1998

1997

1996

¥00,000,00
11,550.1
20,480.3¥00,000,00
32,030.4¥00,000,00
11,709.1
22,328.1¥00,000,00
34,037.3¥00,000,0
11,388.5
20,987.6¥000,000.
32,376.1

Major Lending Classifications
Billions of yen
1998

1997

1996

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

3,016.8¥00,000)
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

2,601.3¥00,000)
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

2,747.6¥000,000)
67.7
2.2
7.5
31.0
1,057.8
237.7
901.0
3,534.3
2,120.9
2,323.3
4,477.2
187.4
5,139.9

Total Domestic .................................................................................................................

23,442.0

22,601.3

22,836.1

Overseas Offices (includes loans booked in the Japan offshore market):Public Sector ..........................................................................................................................
Financial Institutions...............................................................................................................
Commerce and Industry.........................................................................................................
Others....................................................................................................................................

264.5
1,549.3
6,668.1
106.4

305.3
2,388.9
8,602.1
139.5

286.1
2,137.9
6,981.3
134.5

Total Overseas .................................................................................................................

8,588.4

11,435.9

9,539.9

Total.................................................................................................................................

32,030.5¥00,000)

34,037.3¥00,000)

32,376.1¥000,000)

84

Securities .....................................................................................................................
Commercial Claims .....................................................................................................
Commodities ...............................................................................................................
Real Estate ...................................................................................................................
Others .........................................................................................................................
Total Secured Loans ...........................................................................................
Guarantees ...................................................................................................................
Unsecured ...................................................................................................................
Total ..................................................................................................................

1998

1997

1996

¥ 00,000.0
486.5
825.0
—
3,716.9
1,042.1
6,070.7
13,711.7
12,248.0¥ 32,030.5
00,000.0¥ 00,000.0
480.9
919.6
—
4,143.7923.5
6,467.9
13,862.0
13,707.2¥ 34,037.3
00,000.0¥ 00,000.0
521.1
813.7
—
4,542.8
667.1
6,544.7
13,593.6
12,237.7¥ 32,376.1
00,000.0

Housing / Consumer Loans
Billions of yen
March 31,

Housing Loans .............................................................................................................
Consumer Loans ..........................................................................................................

1998

1997

1996

¥ 5,256.0
0,000.0
491.3¥ 5,090.6
0,000.0
476.4¥ 4,909.3
0,000.0
445.1

Loans to Developing Countries
Billions of yen
March 31,

1998

1997

Number of Countries ..................................................................................................
Balance of Loans ..........................................................................................................
Reserve for Loans to Developing Countries .................................................................
Balance of Loans as a Percentage of Total Assets............................................................

10¥),000)8.3
0.8
0.01 %

7¥,0.000
13.4
1.1
0.02 %

1996

7
¥,000
6.8
2.3
0.01%

85

NON-CONSOLIDATEDNON-CONSOLIDATEDMarch 31,

March 31,

Securities

Book Value and Market Value Information

Breakdown of Securities Holdings

Market Prices of Marketable Securities
Billions of yen

Billions of yen
March 31,1,090.2¥0,000,000—
1,090.2

1997

1,054.7¥0,000,000—
1,054.7

1996

1,054.1¥0,000,000—
1,054.1

Japanese Local Government Bonds:
Domestic ................................................................................................................
International ...........................................................................................................
Total ..................................................................................................................

368.9
—
368.9

235.0
—
235.0

287.0
—
287.0

Corporate Bonds:
Domestic ................................................................................................................
International ...........................................................................................................
Total ..................................................................................................................

481.0
—
481.0

411.3
—
411.3

512.6
—
512.6

Corporate Stocks:
Domestic ................................................................................................................
International ...........................................................................................................
Total ..................................................................................................................

3,474.6—
3,474.6

3,292.0—
3,292.0

3,184.4—
3,184.4

Other:
Domestic ................................................................................................................
International ...........................................................................................................
Total ..................................................................................................................

195.6
640.2
835.8

230.3
550.8
781.1

215.9
544.9
760.8

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

5,610.5640.2
6,250.7¥0,000,000

5,223.6
550.8
5,774.4¥0,000,000

5,254.2
544.9
5,799.1¥0,000,000

1997

1998
March 31,

Book
value

Market Unrealized gain (loss)
value
Net loss portion

Listed Securities
Trading Account Securities:— ¥00,00.0— ¥(000.0— ¥.(00.0—
Bonds ................................................ ¥0,000.0
Investment Securities:
595.2
602.6
7.3
0.2
Bonds ................................................
3,270.6 3,021.8 (248.7) 434.1
Stocks ................................................
59.9
73.9
14.0
2.5
Others ...............................................
7.5
20.0
12.5
2.4
of which Foreign Affiliates .................
3,925.8 3,698.4 (227.4) 436.8
Total Investment Securities ................
3,925.8 ¥ 00,00.0
3,698.4 ¥ (227.4
436.8
Total ............................................ ¥ 0,000.0
000.0) ¥000.0
Unlisted Securities
Trading Account Securities:
Bonds ................................................
Investment Securities:
Bonds ................................................
Stocks ................................................
Others ...............................................
Total Investment Securities ................
Total ............................................

1996

Book
value

Marketvalue

Unrealized
gain (loss)

Book
value

Marketvalue

Unrealized
gain (loss)

1.7¥0,000.0

1.7¥0,000.0

0.0¥000.01.5¥0,000.0

1.6¥0,000.0

0.0¥000.0436.9
451.1
3,086.6 3,421.9
98.7
134.2
6.6
25.7
3,622.3 4,007.2
3,624.0 ¥ 0,000.0
4,009.0¥ 0,000.0

14.1
335.2
35.5
19.1
384.9
384.9
¥ 000.0

340.6
347.9
2,995.7 3,966.1
87.1
89.7
4.3
2.6
3,423.4 4,403.9
3,425.0 ¥ 0,000.0
4,405.5¥ 0,000.0

7.3
970.4
2.6
(1.7)
980.4
980.5
¥ 000.0(estimate)(estimate)(estimate)— ¥00,00.0—¥0,000.0—¥000.0

—
¥00.0

1.7
¥0,000.0

1.8¥0,000.0

0.0¥000.00.5¥0,000.0

0.5¥0,000.0

0.0¥000.0

822.8
832.8
60.8
50.1
117.7
116.4
1,001.4
999.5
1,001.4 ¥00,00.0
999.5¥0,000.0

10.0
0.4(10.6)
23.5
(1.3)
2.0
(1.9)
26.0
(1.9 ¥000.0
26.0¥000.0)

802.8
58.5
145.8
1,007.2
1,009.0¥0,000.0

815.6
67.8
92.0
975.5
977.3
¥0,000.0

12.7
9.2(53.8)(31.7)(31.7¥000.0)

965.2
55.2
167.7
1,188.2
1,188.7¥0,000.0

946.6
93.0
121.5
1,161.2
1,161.8¥0,000.0(18.5)
37.8(46.2)(26.9)(26.9¥000.0)Notes: 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 by 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 ...........................................................................................

86

1998

1997

1996

—
¥00.0061.3¥ 000,0393.6¥ 000,0

506.2
13.5
152.8
415.8

451.9
5.2
88.5
385.4

488.2
26.8
99.5
375.3

87

NON-CONSOLIDATEDNON-CONSOLIDATEDJapanese Government Bonds:
Domestic ................................................................................................................
International ...........................................................................................................
Total ..................................................................................................................

1998

Interest Rate Transactions
Billions of yen

Marketvalue

Unrealized
gain (loss)

Contract value
Term over Option Market Unrealized
Total
one year premium* value gain (loss)

ListedInterest Futures:
137.3.... ¥ 000.0
17.9 ¥ 0.0)
137.4
(0.2 ¥ 00,000.0
182.1.... ¥ 0,000.0— ¥ 00.0
181.9 ¥ 0,000.0
Sell ................................................................ ¥ 00,000.0¥ 0000.0)0,000.... 126.5
4.9
126.6
0.0
115.8
....
—
115.7
Buy ..............................................................
Interest Rate Option:
0.0
13
—
65.8
0.0
0.0
60
—
274.5
Sell Call ......................................................
0.0
16
—
115.4
(0.0)
0.0
48
—
221.7
Put.......................................................
0.0
17
—
84.8
(0.0)
0.0
10
—
39.6
Buy Call ......................................................
0.0
42
—
215.1
0.0
0.0
55
—
184.9
Put.......................................................
Over the Counter
FRA:
....
....
49.7
1,019.2
....
—
....
—
—
Sell ...............................................................
....
....
49.7
1,018.6
....
—
....
—
—
Buy ..............................................................
Interest Rate Swap:
....
....
64,737.2 27,958.6
1,001.7
1,001.7....
48,905.3 17,041.2
Receive Fixed Pay Floating ..........................
....
....
.... (1,048.0) (1,048.0) 66,654.9 27,119.2
49,110.5 13,623.9
Receive Floating Pay Fixed ..........................
....
....
392.4
432.9
0.1
0.1
....
93.8
182.1
Receive Floating Pay Floating ......................
0.0
0.0
....
5.9
5.9
Receive Fixed Pay Fixed ..............................
Interest Rate Option:
....
—
157.0
247.0
—
—
—
—
—
Sell Call ......................................................
....
—
142.0
250.0
—
—
—
—
—
Put.......................................................
....
—
79.5
185.9
—
—
—
—
—
Buy Call ......................................................
....
—
86.5
192.6
—
—
—
—
—
Put.......................................................
Others:
....
—
395.0
581.4
2.1
(0.5)
—
93.9
230.8
Sell ............................................................
....
—
565.5
801.6
(2.3)
0.3
—
124.1
250.8
Buy ............................................................
....
....
....
....
(46.6
....
....
....
....
Total .........................................................
000.0¥ 0000.0)......................................................................
Notes: 1.*In millions of yen. Option premiums are included in the balance sheet.
2. Calculation of market value.
The market values of listed securities are calculated using the closing prices on the Tokyo Financial Futures Exchange, 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 124,124 millions of yen entered in the Statement of Income.
5. Details of interest rate swap notional amounts and average rates according to when due are as follows:

Receive Fixed Pay Floating:
Notional Amount ..................................................................................................
Average Receive Rate ..........................................................................................
Average Pay Rate ..................................................................................................
Receive Floating Pay Fixed:
Notional Amount ..................................................................................................
Average Receive Rate ..........................................................................................
Average Pay Rate ..................................................................................................
Receive Floating Pay Floating:
Notional Amount ..................................................................................................
Average Receive Rate ..........................................................................................
Average Pay Rate ..................................................................................................
Receive Fixed Pay Fixed:
Notional Amount ..................................................................................................
Average Receive Rate ..........................................................................................
Average Pay Rate ..................................................................................................

0.0
(0.0)
(0.0)
(0.0)
....
....
....
....
....
....
....
....
....
....
....
¥ 0.0

March 31, 1998
ListedInterest Futures:
02,283.8
Sell .......................................................................................................................................... 0¥02,283.8
2,165.4
Buy ........................................................................................................................................
Interest Rate Option:
152.2
Sell Call ................................................................................................................................
268.9
Put.................................................................................................................................
244.5
Buy Call ................................................................................................................................
31.8
Put.................................................................................................................................
Over the Counter
FRA:
13.7
Sell .........................................................................................................................................
22.2
Buy ........................................................................................................................................
Interest Rate Swap:
42,653.3
Receive Fixed Pay Floating ....................................................................................................
40,690.1
Receive Floating Pay Fixed ....................................................................................................
480.0
Receive Floating Pay Floating ................................................................................................
26.1
Receive Fixed Pay Fixed ........................................................................................................
Interest Rate Option:
524.9
Sell Call ................................................................................................................................
572.0
Put.................................................................................................................................
445.1
Buy Call ................................................................................................................................
467.0
Put.................................................................................................................................
Others:822.0
Sell .........................................................................................................................................
1,077.5
Buy ........................................................................................................................................
....
Total ..............................................................................................................................

Billions of yen
Optionpremium*

Marketvalue....
¥ 14,410....

2,285.2¥ 2,283.8
2,167.4

56
92
72
38

0.0
0.0
0.0
0.0

....
....

0.0
(0.0)

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

802.1
(746.4)
(0.8)
9.8

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

(18.6)
(2.5)
10.2
2.8

11,98914,410
....

(4.0)
3.4
....

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

Currency Transactions
Billions of yen
1997

1998

One yearor loss

Billions of yen
More than
one year toOverthree years
three years¥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%

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%

88.3
5.62%
5.27%

48.7
4.62%
4.03%

45.1
8.74%
5.36%

182.1
6.05%
4.95%

—
—
—

—
—
—

5.9
1.34%
1.33%

5.9
1.34%
1.33%

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 Statement of Income. Therefore it is not included in the following table.

880.1¥ (0.0)(0.1)

Contract
value

March 31,
Total

Contract value
Term overTotal
one yearMarketvalue

Unrealized
gain (loss)

Contract value
Term overTotal
one yearMarketvalue

Unrealized
gain (loss)

Over the Counter
Currency Swap:
....
....
157.4 ¥(000.0
157.4
2,633.1
US$ ..............................................................
¥ 2,422.4¥ 1,100.4
0,000.0¥(000.0¥ 3,591.8
2,422.4 ¥ 2,422.4
....
....
(10.2)(10.2)
83.7
1.4
222.8
1.9
STG £ .........................................................
....
....
4.7
4.7
162.3
62.1
177.9
11.2
DM ..............................................................
....
....
(0.4)
(0.4)
810.2
765.4
24.1
4.8
A$ ................................................................
....
....
(127.3) (127.3)
362.4
196.2
528.2
111.1
Others ..........................................................
....
....
24.1 ¥(000.0
24.1
3,658.3
Total .........................................................
¥ 3,375.5
2,422.4¥ 1,229.7
2,422.4¥(000.0¥ 5,010.5
2,422.4 ¥ 2,422.4......................................................................
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 4,094 millions of yen entered in the Statement of Income.
3. Derivative transactions included in trading account transactions are valued at the market price and the evaluation profit or loss calculated is included in theStatement of Income. Therefore it is not indicated in the above table.
The contract value, etc. of derivative transaction in trading account transactions is as follows:
Billions of yen

March 31, 1998
Over the Counter
Currency Swap:
US$ ..........................................................................................................................................................................
DM ..........................................................................................................................................................................
A$ ............................................................................................................................................................................
Other .......................................................................................................................................................................
Total .................................................................................................................................................................

Contract
value

Marketvalue

3,338.80,000.0
56.9
639.3
159.2
4,194.3(15.7
0,000.0)(1.2)(16.4)(1.0)(34.5)

89

NON-CONSOLIDATEDNON-CONSOLIDATEDMarch 31,

Contract value
Term over
OptionTotal
one year premium*The contract value, etc. of derivative transactions in trading account transactions is as follows:

1997

1998

Bond-Related Transactions
Notes: 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 statement of income.
5. The table below indicates the contract value of derivative transactions relating to currency transactions which are revalued.

Billions of yen

March 31,Billions of yen
1997

1998

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

Optionpremium*

Contractvalue

Optionpremium*¥ 00000—
22.3

000....
¥000....
....

00000—¥ 00000—
12.1

000....
¥000....
....

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

15,227.7
27,326.8

....
....

29,477.9
14,200.5

....
....

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

37,32913,80935,686
14,936

863.5
821.3
863.5
768.7

30,3587,404
30,893
8,124

—
—
....

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

—
—
....

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

Note: * In millions of yen. Option premiums are included in the balance sheet.

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

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

Unrealized
gain (loss)

117.6¥ 000.0
—

—
.....
—

....
¥ .....
....

¥ 118.4
000.0—¥ (0.7
(0.0)
—

268.7
¥ 000.0
103.5

—
.....
—

....
¥ .....
....

269.6¥ 000.0103.8(0.8¥(0.0)
0.3

—
4.2
—
3.6

—
—
—
—

—
2
—
3

—
0.0
—
0.0

—
0.0
—
0.0

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

116.6
—
3.9
—

—
—
—
—

370
—
8
—

0.4
—
—
—

(0.0)
—
0.0
—

—
—
—
1.2

—
—
—
—

—
—
—
16

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

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

—
—
....

—
—
....

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

—
—
....

—
—
(0.8
¥ (0.0)

—
—
....

—
—
....

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

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

....
....
(0.4
¥ (0.0)Notes: 1. * .........................................................
In millions of yen. Option premiums are included in the balance sheet.
2. Derivative transactions included in trading account transactions are valued at the market price and the evaluation profit or loss calculated is included in theStatement of Income. Therefore it is not indicated in the following table.
The contract value, etc. of derivative transaction in trading account transactions is as follows:

Securities Transactions
March 31, 1998

Billions of yen

Unrealized
gain (loss)

1997
Contract value
Term over Option
Total
one year premium*Marketvalue

Unrealized
gain (loss)

¥—
00
—

—
¥ (0.0
—

—
¥ 00
—

—
.....
—

¥ ....
....

—
¥ 00
—

—
¥(0.
—

—
—
0.0
0.0
....

—
—
(0.0)
(0.0)
(0.0
¥ (0.0)

—
—
—
—
....

—
—
—
—
....

—
—
—
—
....

—
—
—
—
....

—
—
—
—
—
(0.

1998

March 31,

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

ListedBond Futures:....
—
Sell .........................................................
¥—
00
.....
¥ ....
....
——
Buy .........................................................
Bond Futures Option:———
Sell Call ...................................................
———
Put ....................................................
8
1.5—
Buy Call ...................................................
27
4.0—
Put ....................................................
Notes: 1. * In millions of yen. Option premiums are included in the balance sheet.
....
....
....
................................................
2.TotalCalculationof market value.

.........................................................
The market values of listed securities are calculated using the closing prices on the Tokyo Stock Exchange, etc.

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

Billions of yen
Optionpremium*

Marketvalue

21.3
0¥00.0
9.7¥ ....
—
....

21.3
¥00.0
9.7

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
....

—
—
....

—
—
....

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

90

91

NON-CONSOLIDATEDNON-CONSOLIDATEDMarch 31,

Contract
value

Unrealized
gain (loss)

1997
Contract value
Term over Option
Total
one year premium*1998

Asset Liability Management

Facilities and Premises/Personnel

Composition of Time Deposits by Type and Maturity

Number of Branches
Billions of yen

Less thanthreemonthsThreemonths toless thansixmonthsSixmonths toless than
one year

5,736.7¥ 00,000.0

1,919.4¥ 0,000.0

0.5
11,325.7¥ 0,000,00

0.5
2,703.4¥ 0,000.0

March 31, 1998

Time Deposits with DeregulatedInterest Rates (fixed) ..................
Time Deposits with DeregulatedInterest Rates (floating) ..............
Total ..................................

March 31,

One yearto less
than twoyears

Twoyears toless than
three
years

Three
years and
over

Total

2,447.9¥ 0,000.0¥1,043.9
1 000.0

1,496.5¥000,00.

291.0¥ 000.0

12,935.6¥0,000,00

2.1
2,599.4¥ 0,000.0

1.4¥1,045.8
1 000.0

0.9
1,497.5¥000,00.

0.0
295.8¥ 000.0

5.6
19,467.7¥0,000,00

Domestic:
Branches ...............................................................................................................................
Sub-branches .........................................................................................................................
Overseas:
Branches ...............................................................................................................................
Sub-branches .........................................................................................................................
(Representative offices) .........................................................................................................
Total ................................................................................................................................

1998

1997

1996

000
290
42

000
290
49

000
289
55

25
1
(21)
(21
358

24
1
(22)
364

21
1
(23)
366

Investment in Facilities

Note: Time deposits outstanding do not include installment time deposits.

Billions of yen

Billions of yen

March 31, 1998

One yearor lessMore than
one year to
three years

Floating Interest Rate....................
Fixed Interest Rate ......................
Total ..................................

....
¥00,000.0....
11,158.8¥00,000.0

1,683.9¥0,000.0
881.5
2,565.4¥0,000.0

More than
three years
to five
years

More than
five years
to seven
years

Over sevenyears

Unspecified
term

Total

1,888.3¥0,000.0
1,146.6
3,035.0¥0,000.0

951.3¥0,000.0
350.2
1,301.5¥0,000.0¥ 5,867.4
0,000.0
2,742.2¥ 8,609.6
0,000.0¥ 5,359.9
0,000.0—
5,359.9¥ 0,000.0....
¥ 0,000.00....
32,030.5¥ 0,000.00

Composition of Securities Holdings by Type and Maturity
Billions of yen

March 31, 1998

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 10 years

Over
10 years

Unspecified
Term

Total

Japanese Government Bonds ...............
Japanese Local Government Bonds .......
Corporate Bonds .................................
Corporate Stocks .................................
Other ..................................................
Foreign Corporate Bonds ................
Foreign Corporate Stocks ................
Securities Lent......................................

0.1¥ 00.0
10.8
57.4
....
96.1
94.2
....
—

12.8
¥ 0 000.0
26.8
122.0
....
32.5
27.4
....
2.2

¥ 84.6
00.0
15.3
61.6
....
45.5
32.8
....
—

¥ 337.6
000.0
7.7
19.9
....
31.1
11.9
....
—

¥ 652.5
000.0
305.5
220.0
....
33.1
9.9
....
—

—
¥ 00.0
2.6
—
....
25.0
25.0
....
—

—
¥ 0,000.0——
3,474.6
572.3
—
438.5
—

¥ 1,087.9
0,000.0368.9
481.0
3,474.6
835.8
201.4
438.5
2.2

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.

92

March 31, 1998

BudgetPaid

Expected
expenditure

Head Office ................................................................................................................................
Branches .....................................................................................................................................
Others ........................................................................................................................................
Office Appliances ........................................................................................................................
Other Office Equipment .............................................................................................................
Total ......................................................................................................................................

¥00.0
0.7
19.0
9.6
19.9
3.1
¥ 00.0
52.3

¥0.00
0.4
8.0
4.0
0.0
0.0
¥ 0.00
12.4

¥00.0
0.3
11.0
5.5
19.9
3.1
¥ 00.039.8

March 31,

1998

1997

1996

Cash Dispensers ...........................................................................................................................
Automatic Tellers .......................................................................................................................
Automatic Passbook Entry Machines ..........................................................................................
Total .....................................................................................................................................

519
0,000
3,399
369
4,287
0,000

547
0,000
3,325
369
4,241
0,000

547
0,000
3,240
369
4,156
0,000

Averageage

Average lengthof employment

Averagemonthly salary (yen)years - months

years - months

NON-CONSOLIDATEDNON-CONSOLIDATED

Composition of Loans by Type and Maturity

Number of ATMs

Personnel
March 31, 1998

Administrative Staff:
Male ...................................................................................................
Female ...............................................................................................
Sub-total or Average ......................................................................
General Operating Staff:
Male ...................................................................................................
Female ...............................................................................................
Sub-total or Average ......................................................................
Total or Average ...........................................................................

Number of
employees

9,429
0,000,000
4,716
14,14539-1
0,000,000
29-11
36-1

17-5
0,000,000
9-9
14-10

¥ 594,495
000,000
264,550
484,490470—
470
14,6150,000,000

53-7
—
53-7
36-7
0,000,000

17-0
—
17-0
14-11
0,000,000

367,003—
367,003¥ 480,712
000,00093

Principal Ratios
Ratio of Loans to Deposits

Capital Ratio
March 31,

Tier I Capital...............................................................................................................................
Tier II Capital:
Unrealized Gains on Securities, after 55% Discount ...............................................................
Revaluted Gains on Securities, after 55% Discount ................................................................
Reserve for Possible Loan Losses ...........................................................................................
Subordinated Term Debt and Other ......................................................................................
Total.................................................................................................................................
Tier II Capital Includible as Qualifying Capital ......................................................................
Total Qualifying Capital .............................................................................................................

Tier I Capital Ratio .....................................................................................................................
Total Capital Ratio......................................................................................................................

Billions of yen
1997

1996

1,809.8¥ 00,000.0

1,950.6¥00,000.0

1,641.3¥00,000.0

—
146.9
120.7
1,476.9
1,744.6
1,744.6
3,554.5¥ 00,000.0

174.2
—
141.9
1,485.2
1,801.5
1,801.5
3,752.1¥00,000.0

441.2
—
135.8
1,142.7
1,719.8
1,641.3
3,282.7¥00,000.0

33,802.9
3,614.6
341.9¥ 37,759.5
00,000.0

36,251.0
4,412.8—
40,663.8¥00,000.0

35,199.7
4,025.3—
39,225.1¥00,000.0

4.79 %
9.41

4.79 %
9.22

1998

—%
—%
¥ 8.507.50

1997

0.11 %
3.59 %¥ 8.503.75

1996

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

22,898.7¥ 0k,000.0
9,131.8
32,030.5

21,970.0¥ 00,000.0
12,067.2
34,037.3

22,247.3¥ 00,000.0
10,128.8
32,376.1

Deposits:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

24,358.4
10,084.2
34,442.7

24,136.1
14,143.0
38,279.1

23,974.1
12,990.9
36,965.0

Ratio of Loans to Deposits:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

94.00
00.00%
90.55
92.99
00.00%

91.02
00.00%
85.32
88.91
00.00%

92.79
00.00%
77.96
87.58
00.00%

Average Balance Outstanding During Year:
Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

96.00
00.00%
82.85
90.96
00.00%

93.80
00.00%
79.15
88.13
00.00%

99.19
00.00%
66.13
86.11
00.00%

Deposit / Loan Balance per Office

Return on Equity and Assets
Net Income as a Percentage of:
Average Total Assets, excluding Customers’ Liabilities for Acceptances andGuarantees (ROA) ...............................................................................................................
Average Shareholders’ Equity .................................................................................................
Declared Cash Dividends per Share (in yen):
Common Stock......................................................................................................................
Preferred Stock.......................................................................................................................

Billions of yen
1997

4.18 %
8.36

Notes: 1. Figures in this table were calculated on a consolidated basis and in accordance with guidelines established by the Ministry of Finance.
2. The reserve for possible loan losses excluded the specific reserve for fiscal 1991 and fiscal 1992. Beginning in fiscal 1993, the reserve forpossible loan losses excludes both the specific reserve for possible loan losses and the reserve for loans to developing countries.

Years ended March 31,

1998

March 31,

1996

—%
—%
¥ 6.50—March 31,

1998

Billions of yen
1997

1996

Deposits per Office:Domestic ...............................................................................................................................
Overseas ................................................................................................................................
Total ................................................................................................................................

96.1¥000.0
262.2
109.3

91.7
¥000.0
485.7
121.9

92.1
¥000.0491.6
119.2

Loans per Office:Domestic ...............................................................................................................................
Overseas ................................................................................................................................
Total ................................................................................................................................

80.8
343.2
101.6

77.9
476.3
108.3

79.0
454.0
104.4

Number of Offices:
Domestic ...............................................................................................................................
Overseas ................................................................................................................................
Total ................................................................................................................................

290
25
315

290
24
314

289
21
310

Note: Sub-branches are not included in the number of offices.

Margin on Funds
Years ended March 31,

1998

1997

1996

Deposit / Loan Balance per Employee

Yield on Funds (Yield on Interest Earning Assets) – A :Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

0.00%
2.24
8.02
4.44

0.00%
2.39
8.50
4.71

0.00%
2.89
10.07
5.48

March 31,

1998

Billions of yen
1997

1996

Cost of Funds (Yield on Interest Bearing Liabilities) – B :Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

2.18
7.50
4.27

2.20
7.63
4.30

2.50
9.09
4.94

Deposits per Employee:
Domestic ...............................................................................................................................
Overseas.................................................................................................................................
Total ................................................................................................................................

2.1
¥ 0.0
3.2
2.2

1.9
¥ 0.0
6.3
2.4

1.8
¥ 0.0
6.0
2.3

Overall Margin on Funds ( A – B ):Domestic ...............................................................................................................................
International ..........................................................................................................................
Total ................................................................................................................................

0.06
0.52
0.00%
0.17

0.19
0.86
0.00%
0.40

0.39
0.98
0.00%
0.53

Loans per Employee:
Domestic ...............................................................................................................................
Overseas.................................................................................................................................
Total ................................................................................................................................

1.7
4.2
2.1

1.6
6.2
2.1

1.5
5.5
2.0

Note: Number of employees denotes average number of employees for the year. The number of employees for domestic offices includes head office employees.

94

95

NON-CONSOLIDATEDNON-CONSOLIDATED

Risk-Adjusted Assets:
On-Balance Sheet Items ........................................................................................................
Off-Balance Sheet Items ........................................................................................................
Amount related to Market Risk Equivalent ...........................................................................
Total.................................................................................................................................

1998

Stock Information
Stockholder Information (Common stock)
March 31, 1998

Central/Local Government .........................................................................................................
Financial Institutions ...................................................................................................................
Securities Companies ..................................................................................................................
Other Corporate Entities ............................................................................................................
Foreign Corporations, etc. ..........................................................................................................
Individuals and Other .................................................................................................................
Total ................................................................................................................................

Number ofstockholders

Number of stocks held
(thousands)

00,0004
251
101
6,382
487
39,85447,0795,830 (000.20%)
0,000,000(000.00%)
877,330 (030.40%)
27,248 (000.95%)
1,653,501 (057.30%)
137,069 (004.75%)
184,722 (006.40%)
2,885,700 (100.00%)

Number ofstockholders

Number of stocks held
(thousands)

Breakdown of Stockholders’ Interests (Common stock)

NON-CONSOLIDATEDMarch 31, 1998

349 (000.74%)
1,000 share units and above ......................................................................................................... 00,000(000.00%)
188 (000.40%)
500 share units and above ............................................................................................................
749 (001.59%)
100 share units and above ............................................................................................................
615 (001.31%)
50 share units and above ..............................................................................................................
10 share units and above .............................................................................................................. 5,998 (012.74%)
5 share units and above ................................................................................................................ 6,694 (014.22%)
1 share unit and above ................................................................................................................. 32,486 (069.00%)
Total ................................................................................................................................ 47,079 (100.00%)

2,336,434 (080.97%)
000,000,000(000.00%)
134,485 (004.66%)
170,267 (005.90%)
41,985 (001.45%)
103,870 (003.60%)
42,635 (001.48%)
56,024 (001.94%)
00,0002,885,700(000.00%(100.00%)(000.00%)

CORPORATE INFORMATION

Fuji Bank Stock Price (Common stock)

Contents

Yen
Years ended March 31,

Highest .......................................................................................................................................
Lowest ........................................................................................................................................
Note: Fuji Bank stocks are listed on the first section of the Tokyo Stock Exchange.

1998

1997

1996

1,840
¥ 0,000440¥ 2,440
0,000
1,140

¥ 2,450
0,000
1,650

BOARD OF DIRECTORS AND SENIOR OVERSEERS

98

STOCK INFORMATION99

ORGANIZATION CHART

100

OVERSEAS OFFICES

102

The Americas
Asia and Oceania

102
104

Europe and The Middle East

96

106

DOMESTIC OFFICES AND AFFILIATED COMPANIES108CORPORATE DATA

109

97

BOARD OF DIRECTORS ANDSENIOR OVERSEERS

Chairman of the Board

Toru HASHIMOTO
President & Chief Executive Officer

Yoshiro YAMAMOTO
Deputy Presidents

Tosaku HARADA
Hiroaki ETOH
Toshiyuki OGURA
Senior Managing Director

Mitsuru ANNENManaging Directors

Masaaki SATO
Osamu KITA
Isao HIRAIDE
Soichi HIRABAYASHI
Takeshi KOBAYASHIAtsushi TAKANO
Terunobu MAEDA
Hiroaki SHINODA
Teruhiko IKEDA
Takeshi TAKAHASHI

Directors

Yasutaka HISHIYAMAYukio OBARA
Shiro YANAGIHARA
Hideshi IWAI
Seiji SATOMURA
Kenji WATANABE
Yoshinori MURAKAMI
Michio UENO
Tsutomu HAYANO
Kazumi YANAGIHARA
Satoshi KIMURA
Toru ISHIHARA
Fumito ISHIZAKA
Kunioki ISHIBASHI
Takashi SHIRAI
Yoshiaki SUGITA
Minoru ITOSAKA
Hajime SAKUMA
Saburo NISHIURASTOCKINFORMATION

Senior Overseers

Minoru TANAKA
Masayuki AMARI
Takeie UKITA
Yoriaki SAKATA
Yuji OSHIMA
Daiyu AOKI(as of June 26, 1998)

Paid-in Capital¥ 529,087 million

Preferred Stock
Number of Percentage inStocks Held Total Stocks(in thousands) Issued (%)

Number of Authorized Stocks
Common Stock 4,000,000,000 shares
Preferred Stock
100,000,000 shares

FIFB Holding Services (BVI) Ltd.* ....

Number of Outstanding Stocks
Common Stock 2,897,614,578 shares
Preferred Stock
70,000,000 shares
Number of Stockholders
Common Stock
Preferred Stock
Listings
Tokyo Stock Exchange
Osaka Securities Exchange
Kyoto Stock Exchange

100.00* FIFB Holding Services (BVI) Ltd. is the trustee for Fuji
International Finance (Burmuda) Trust.
Board of Directors & Senior Overseers (as of June 26, 1998)
Number of
Stocks Held(in thousands)*

56,314
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, 1998:
Number of Percentage inStocks Held Total Stocks(in thousands) Issued (%)

The Yasuda Mutual Life Insurance
Company........................................... 141,957
The Dai-ichi Mutual Life Insurance
Company........................................... 84,639
Nippon Life Insurance Company ........ 79,510
The Yasuda Trust & Banking
Co., Ltd.*.......................................... 72,994
The Yasuda Fire & Marine InsuranceCo., Ltd. ........................................... 62,115
Nippon Steel Corporation .................. 50,838
Nihon Cement Co., Ltd. .................... 45,599
The Mitsui Trust & Banking
Co., Ltd. ........................................... 43,104
The Nichido Fire & Marine InsuranceCo., Ltd............................................. 43,057
Kubota, Ltd. ....................................... 42,539
Total ................................................... 666,356

70,000

4.89
2.92
2.74
2.51
2.14
1.75
1.57
1.48
1.48
1.46
22.99

Chairman of the Board
Toru Hashimoto ........... 47
President & CEO
Yoshiro Yamamoto ....... 29
Deputy Presidents
Tosaku Harada .............. 20
Hiroaki Etoh ................ 23
Toshiyuki Ogura ........... 17
Senior Managing
Director
Mitsuru Annen ............. 15
Managing Directors
Masaaki Sato ................. 11
Osamu Kita .................. 15
Isao Hiraide .................. 12
Soichi Hirabayashi ........ 19
Takeshi Kobayashi ......... 9
Atsushi Takano.............. 14
Terunobu Maeda........... 17
Hiroaki Shinoda............ 11
Teruhiko Ikeda.............. 12
Takeshi Takahashi .......... 4
Directors
Yasutaka Hishiyama ...... 6
Yukio Obara ................. 4

Shiro Yanagihara........... 5
Hideshi Iwai ................. 7
Seiji Satomura............... 9Kenji Watanabe............. 7
Yoshinori Murakami ..... 7
Michio Ueno................ 9
Tsutomu Hayano .......... 12
Kazumi Yanagihara ....... 8
Satoshi Kimura ............. 5
Toru Ishihara................. 6
Fumito Ishizaka............. 7
Kunioki Ishibashi .......... 3
Takashi Shirai................ 6
Yoshiaki Sugita ............. 8
Minoru Itosaka ............. 4
Hajime Sakuma ............ 8
Saburo Nishiura ............ 7
Senior Overseers
Minoru Tanaka ............. 22
Masayuki Amari............ 17
Takeie Ukita ................. 10
Yoriaki Sakata ............... 3
Yuji Oshima.................. 0
Daiyu Aoki................... 40*as of March 31, 1998

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 &Banking Co., Ltd., such holdings as designated fund trust
for separate account investment are included.

98

99

ORGANIZATIONORGANIZATION
CHART
CHART

Corporate Banking
Group
Product Development & Marketing Division
Specific Corporate Marketing and Credit Division

GeneralMeeting ofStockholders

Board ofDirectors

Executive
Committee

Credit for New BusinessBusiness Information Division
Credit Division I
Credit Division II
Credit for Kansai

Regional Administration Division

SeniorOverseers

Corporate CenterTransaction & Information
Delivery Services Group

Personal Banking
Group

Executive Secretariat

Planning Division

Regional Headquarters for Kansai

Multimedia Business DivisionCorporate Planning Division

Trade Services Division

Product Development & Marketing Division

Settlement & Clearing Services Division

Sales Channel Management Division

Accounting
Research

Fuji Kabuto Custody & Proxy

Domestic
Branches

Private Banking Division

Investor Relations
Social & Cultural Relations

Subsidiaries & Affiliates Division
Public Relations Division
Human Resources Division

Investment Banking
Products & Trading Group

Public & Financial
Institutions Group

Planning Division

Institutions Marketing & Credit Division

Premises & General Affairs Division
Credit Planning Division
Credit Assessment & Auditing

Financial Engineering Division

Industries & Corporate Research

Asset Management Division

Credit Administration Division I

Corporate Advisory Division

Credit Administration Division II

Treasury Division

Credit Administration Division for Kansai

Capital Markets Trading DivisionCorporate Banking Planning and Credit Division III

International Treasury Division

Risk Assessment DivisionMarketing and Credit Division

Derivative Products Division

Global Corporate Credit DivisionInspection Division

Global Corporate Group

Overseas
Offices

Legal Division
Systems & Operations Administration Division
Systems Planning Division

Overseas Business Group

Systems Development Division I
Systems Development Division II
Customers Services Division

Overseas Business Division
Americas Division
Europe, Africa, & The Middle East Division
Asia & Oceania Division
China

Project Finance Division
Credit Division for Overseas Business
Credit Division for The Americas
Credit Division for Europe, Africa, & The Middle East100

(as of April 1, 1998)

101

OVERSEAS OFFICES(★ = Consolidated Subsidiaries)

THE AMERICAS
Americas Division
Two World Trade Center,
82nd Floor, New York,New York 10048, U.S.A.
Phone: 1-212-898-2000
Fax: 1-212-321-9418/9419

Branches, Agencies andRepresentative Offices
Atlanta Agency

ChicagoTorontoSan Francisco
Los Angeles

Washington, D.C.

New York

Marquis One Tower, Suite 2100,
245 Peachtree Center Avenue, N.E.
Atlanta, Georgia 30303, U.S.A.
Phone: 1-404-653-2100
Fax: 1-404-653-2119
Telex: (910) 250-7122

Chicago Branch

Atlanta
HoustonMiami

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

Mexico City

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

Grand Cayman

Houston Agency
BogotaOne 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,
Los Angeles, California 90071, U.S.A.
Phone: 1-213-680-9855
Fax: 1-213-253-4198
Telex: 673336

New York BranchSão Paulo102

Two World Trade Center,
79th—81st Floors,
New York, New York 10048, U.S.A.
Phone: 1-212-898-2000
Fax: 1-212-321-9407
Telex: 420626, 232440, 23125801

San Francisco Agency
International Building, Suite 500,
601 California Street, San Francisco,California 94108, U.S.A.
Phone: 1-415-362-4740
Fax: 1-415-362-4613
Telex: 176087

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

Mexico Representative OfficeArquimedes #130, Plaza Arquimedes
Piso 9, Col. Polanco, C.P. 11560
Mexico, D.F. Mexico
Phone: 52-5-282-6601
Fax: 52-5-282-6656
Telex: 1763020

Miami Representative OfficeFirst Union Financial Center, Suite 3440,
200 South Biscayne Boulevard,
Miami, Florida 33131, U.S.A.
Phone: 1-305-374-2226
Fax: 1-305-381-8338
Telex: 441267

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

Washington, D.C. Representative Office1155 Connecticut Avenue, N.W.
Suite 601,
Washington, D.C. 20036, U.S.A.
Phone: 1-202-467-6660
Fax: 1-202-467-5045
Telex: 496-13628

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)Main Office
BCE Place, Suite 2800, Canada Trust
Tower, 161 Bay Street,
P.O. Box 609, 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 Bank (Mexico), S.A.★
(Commercial banking)Arquimedes #130, Plaza Arquimedes
Piso 9, Col. Polanco, C.P. 11560
Mexico, D.F. Mexico
Phone: 52-5-282-6643
Fax: 52-5-282-6656/6657
Telex: 1763020

Fuji Capital Holdings Inc.★
(Holding company)
Two World Trade Center, 82nd Floor,
New York, New York 10048, U.S.A.

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 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

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)
New York Office
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
Chicago Office
311 South Wacker Drive, Suite 2000,
Chicago, Illinois 60606-6620, U.S.A.
Phone: 1-312-294-8725
Fax: 1-312-294-8721

FWI Holdings Inc.★

Affiliates
America do Sul “Leasing” S.A.
Arrendamento Mercantil(Leasing)
Avenida Paulista, 688-7° andar,São Paulo, Brazil
Phone: 55-11-283-3288
Telex: 1136790

Banco America do Sul S.A.
(Commercial and investment banking)Avenida Brigadeiro Luiz Antonio, 2020,
São Paulo, Brazil
Phone: 55-11-288-4933
Fax: 55-11-285-4564
Telex: 1121892

Cia. de Seguros America do Sul Yasuda(Insurance)
Avenida Brigadeiro Luiz Antonio,
2020-5° andar, São Paulo, Brazil
Phone: 55-11-285-1411
Fax: 55-11-289-8442
Telex: 11239061411

Fuji-Wolfensohn International(Corporate advisory)
One Bankers Trust Plaza, 130 Liberty
Street, New York, New York 10006,
U.S.A.
Phone: 1-212-250-3400
Fax: 1-212-669-0701

Heller-Sud Servicios Financieros S.A.

(Holding company)
1209 Orange Street, Wilmington,
New Castle, Delaware, U.S.A.

Maipu 311 Piso 1°, 1006 Buenos Aires,
Argentina
Phone: 54-1-394-0036
Fax: 54-1-394-0064

Heller Financial, Inc.★

HellerNet-Sud(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.

Augustinas 640, Piso 14 Santiago, Chile
Phone: 56-2-661-4700
Fax: 56-2-661-4794

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

103

ASIA AND OCEANIA

DalianBeijing
TianjinNanjingShanghai
New Delhi

Guangzhou

MumbaiMumbai Branch

Guangzhou Representative Office

Yangon Representative Office

Kwong On Bank, Limited★

1-5-5, Otemachi, Chiyoda-ku
Tokyo, Japan 100-0004
Phone: 81-3-5252-8587
Fax: 81-3-3287-1174

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

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 FJBGZCNInternational Business Centre, Unit 305,
No. 88 Pyay Road, 6 1/2 Miles, Hlaing
Township, Yangon, Union of Myanmar
Phone: 95-1-666332
Fax: 95-1-666387(Commercial banking)Head Office59-65 Asia Standard Tower, Queen’s Road
Central, Hong Kong
Phone: 852-28153636
Fax: 852-25439272
Telex: 73359, 73901
Branches
33 offices in Hong Kong

Branches and Representative Offices
Seoul

Bangkok International Banking Facility

Tokyo(Head Office)TaipeiShenzhen
Hanoi
YangonBangkok

Asia and Oceania Division

Hong Kong

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

Labuan14F, 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

SingaporeHanoi Branch

ManilaHo Chi Minh City

Kuala Lumpur

Unit 04/05, 5th Floor, International Centre,
17 Ngo Quyen Street, Hanoi, Vietnam
Phone: 84-4-826-6553
Fax: 84-4-826-6665
Telex: 411368 FJBKHAN VT

JakartaHong Kong Branch
26th Floor, Gloucester Tower, The Landmark,11 Pedder Street, Central, Hong Kong
Phone: 852-2826-5710
Fax: 852-2810-0048
Telex: 74604 FUJBK HXLabuan Branch
Kuala Lumpur Marketing Office

SydneyMelbourne

30th 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

104

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: 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

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

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

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

Ho Chi Minh Representative Office
Suite D, 4th Floor, OSIC Building,No.8 Nguyen Hue Street, District 1,
Ho Chi Minh City, Vietnam
Phone: 84-8-8243195
Fax: 84-8-8243194
Telex: 813184 FUJIHM VT

Jakarta Representative Office
24th Floor, BII Plaza Tower II
Jalan M.H. Thamrin No. 51,
Jakarta 10350, Indonesia
Phone: 62-21-3927061
Fax: 62-21-3927064
Telex: 69172

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/FUJIKLMelbourne Representative OfficeSubsidiaries
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

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★

Level 18, 367 Collins Street,
Melbourne, Victoria 3000, Australia
Phone: 61-3-96292844
Fax: 61-3-96292737
Telex: 151291(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

Nanjing Representative OfficeFuji International Finance (HK) Limited★

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(Corporate and investment banking)3301, Gloucester Tower, The Landmark,11 Pedder Street, Central, Hong Kong
Phone: 852-25217233
Fax: 852-28459177
Telex: 76884

New Delhi Representative Office

Heller Asia Capital (Singapore) Limited★

World Trade Centre, 5th Floor,
Barakhamba Lane, New Delhi 110001, India
Phone: 91-11-371-1808
Fax: 91-11-371-1840
Telex: 031-63179(Factoring)
6 Shenton Way, #20-08, DBS Building,Tower 2, Singapore 068809
Phone: 65-226-3822
Fax: 65-222-3198
Telex: 23339

Sydney Representative Office
Level 28, Maritime Centre, 201 Kent Street,
Sydney, N.S.W. 2000, Australia
Phone: 61-2-9221-2211
Fax: 61-2-9251-5331
Telex: 27307

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

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

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

Affiliates
SIME Merchant Bankers Berhad(Investment banking)10th Floor, UMBC Annexe, Jalan Sulaiman,
50000 Kuala Lumpur, Malaysia
Phone: 60-3-2749011
Fax: 60-3-2740304
Telex: 30250

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

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

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

105

EUROPE AND THE MIDDLE EAST
Madrid Branch
Plaza Manuel Gómez Moreno, s/n°
Edificio Alfredo Mahou, Planta 22,
Centro Comercial AZCA,
28020 Madrid, Spain
Phone: 3491-581-9444
Fax: 3491-581-9443
Telex: 47593

Amsterdam
Manchester
LondonBerlinDüsseldorf
Brussels
Luxembourg
ParisFrankfurt
ZürichViennaMilan

Milan Branch
Via Filippo Turati 16/18, 20121 Milano, Italy
Phone: 39-02-6596527
Fax: 39-02-6596589
Telex: 353172

Paris Branch

MadridTehran26 Avenue des Champs-Elysées,
75008 Paris, France
Phone: 33-1-4413-6000
Fax: 33-1-4413-6060
Telex: 641779

Bahrain Representative OfficeManama Center, Part 4,
Government Road, P.O.Box 26899,
Manama, Bahrain
Phone: 973-224158
Fax: 973-224818
Telex: 9415
BahrainEurope, Africa & The Middle East Division
River Plate House, 7-11 Finsbury Circus,
London EC2M 7PX, U.K.
Phone: 44-171-826-3460
Fax: 44-171-638-0995
Telex: 886352

Branches and Representative Offices
Brussels Branch
Rue Guimard 6/8, B-1040, Brussels, Belgium
Phone: 32-2-234-0111
Fax: 32-2-230-9366
Telex: 20700

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

106

Berlin Representative Officec/o Düsseldorf Branch
Immermannstrasse 3, 40210 Düsseldorf,
F.R. Germany
Phone: 49-211-16930
Fax: 49-211-352407
Telex: 8587388 ~ 9Manchester Representative OfficePart 4th Floor, National House,
36 St. Ann Street,
Manchester H6O 8HF, U.K.
Phone: 44-161-835-2200
Fax: 44-161-834-6790
Telex: 886317

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

Vienna Representative Office
Türkenstrasse 25,1090 Wien, Republic of Austria
Phone: 43-1-3102181
Fax: 43-1-3102124
Telex: 116246

Subsidiaries

Affiliates

Fuji Bank (Deutschland) AG★

Belgo-Factors, N.V.

(Commercial and investment banking)Mainzer Landstrasse 46,60325 Frankfurt am Main, F.R. Germany
Phone: 49-69-170900
Fax: 49-69-7241034
Telex: 416535(Factoring)
Steenweg op Tielen 51,
B-2300, Turnhout, Belgium
Phone: 32-14-405411
Fax: 32-14-405600
Telex: 31045

Fuji Bank (Luxembourg) S.A.★

Factofrance Heller, S.A.

(Commercial and investment banking)Centre Financier, 29 Avenue
de la Porte-Neuve 2227,
Luxembourg
Phone: 352-474681
Fax: 352-474688
Telex: 3213

(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 Bank Nederland N.V.★
(Commercial and investment banking)Rivierstaete Amsterdam 166, 1079 LH,
Amsterdam, The Netherlands
Phone: 31-20-6610049
Fax: 31-20-6610201
Telex: 10395

Fuji Bank (Schweiz) AG★

Fuji Investment Management Company(Europe) 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

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.

(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

Heller Bank A.G.

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

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(Factoring)
Urgel, 240-8°D, 08036 Barcelona, Spain
Phone: 34-3-439-4806
Fax: 34-3-321-2506
Telex: 50093

Fuji Leasing (Deutschland) GmbH★
(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

107

DOMESTIC OFFICES AND
AFFILIATED COMPANIESCORPORATEDATAFuji Securities Co., Ltd.

Fujigin Software Service, Ltd.

Fujigin Operation Service, Ltd.

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

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

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

The Fuji Trust and Banking Co., Ltd.

Fuji Business Service, Ltd.

Fujigin Kousei Service, Ltd.

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

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

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

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

Fuji Investment Management Co., Ltd.

Fuji International Business Service Co., Ltd.

Fujigin Marketing Service, Ltd.

EstablishedEstablished: September 1993
Capitalization: ¥2,050 million
Percentage of Ownership: 5%

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

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

1880

Fuji Research Institute Corporation

Fuji Total Service, Ltd.

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

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

Head Office

Fiscal Year
April 1 to March 31

AuditorShowa Ota & Co.

Fujigin Factors, Ltd.

Employees

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

14,275 domestic
2,023 overseas(Figures are for those
employees of The Fuji
Bank, Limited.)

Fujigin Building, Ltd.
Established: November 1989
Capitalization: ¥470 million
Percentage of Ownership: 100%

DOMESTIC BRANCH NETWORK
Branches: 290
Sub-branches: 42
ATMs: 3,399

Office290 domestic, 47 overseas

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

The Fujigin Credit, Ltd.
Established: November 1974
Capitalization: ¥400 million
Percentage of Ownership: 5%

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

Fuji Career Bureau, Ltd.
Established: May 1983
Capitalization: ¥70 million
Percentage of Ownership: 100%

Tokyo

Osaka

Kobe

Fuji Business Agency, Ltd.
Established: November 1978
Capitalization: ¥50 million
Percentage of Ownership: 100%

Yokohama

For further information, please contact
the Overseas Business Division,
Planning, located at our head office.
This annual report is printed on recycled paper.
Printed in Japan108

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