Integrated Report2019Mission

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

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

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

2
4
8
10
18
20

The DBJ Group’s Corporate Philosophy
Our History

Message from the Chairman

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

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

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

22
32
38

60
62
67

Function Strategy

 essages from Outside Members ofM
the Board of Directors

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

71

Risk Management
Corporate Data

76
77
		

Sector Strategy
Area Strategy

Corporate Governance78

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

46
50
52

Financial Capital

56

Knowledge and Collaboration

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

Data Section80

 he Development Bank of Japan Inc.
T
Act

99

Financial Condition163

 orporate Information /CGroup Companies

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

Disclaimer

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

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

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

2

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

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

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

Business strategy
Sector strategy
Function strategy
Area strategy

Capital strategy
Sustainability
management

Financial capital
Human capitalIntellectual capital
Relationship andsocial capital

Values put into
practice define
our strengths

Execute strategy
based on values

Action Guideline

Values3

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

Our unwavering
purpose andour incessantdetermination toshape the future

Our vision for 2030,
embodied in
our mission andstrategies

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

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

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

Our guidelines fortaking specificactions that
express our values

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

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

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

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

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

values sharedby management
and employees(base component)

Initiative   Integrity

The DBJ Group’s Vision

Sharing Our Corporate Philosophy

4

Our History

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

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

Osamu Shimomura(1910–1989)

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

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

Hirofumi Uzawa

(1928–2014)

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

5

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

Economic recovery

Rapid growth

Stable growth

Developing
high-growth
infrastructure

Strengthening
international
competitivenessEconomic bubble

1951
The Japan Development Bank Law enacted

1951–1955

1966 –1971

1985 –1995

Reconstruction and self-reliance ofthe economy

Strengthening of international competitiveness and creation of social
development loans

Development of lifestyle and social
infrastructure and a smooth industrial
transformation

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

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

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

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

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

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

1956 –1965

1972 –1984

1996 – 2000

Improvements to quality of life andstable energy supply

Creation of a vibrant and affluent
society and stable economy

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

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

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

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

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

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

6

Smoothening
industrial
transformation

Creating
an affluent
society

Post-bubble
economyRegional
revitalization

Structural reform

Regenerating
business

Financialcrisis response,
post-earthquake
reconstruction

The 2008 global financial crisis

2007
Enactment of the Development Bank of Japan Inc. Act

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

2008 onward
Development Bank of Japan Inc.
established

Global financial crisis precipitated by
the 2008 financial crisis

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

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

Great East Japan Earthquake disasterand crisis response

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

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

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

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

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

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

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

7

Supplyingrisk capital

The Great East Japan Earthquake

Creation,
Conversion,and Growth
in Industry

Rebuilding andReinforcement ofInfrastructure

Self-Reliance andRevitalizationof LocalEconomies

Realizing a sustainable society

2015
Amendments to the Development
Bank of Japan Inc. Act

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

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

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

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

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

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

Climate change,
naturalresources, andenergyGlobalizationAI, fintech,and othertechnologicalinnovations

Government
budgets,
finances, andregulations

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

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

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

New technologies and businesses (promote innovation)

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

Solve issues specific toeach region

Reorganization
Overseas expansion

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

8

Sustainability Management
Value Creation Process

MissionVision 2030

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

Creation, Conversion, and
Growth in Industry

Self-Reliance and Revitalizationof Local Economies

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

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

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

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

Financial Capital

Human Capital

Economic
Value
Creation

Creation of Diverse Financial
Deal Opportunities

Business
activities in tune
with risk
appetite

Increase andconversion ofcapital value

Provision of Our Knowledge

Crisis Response Operations

Sustainability
Management for Both
Economic andSocial Value

Intellectual Capital

Relationship andSocial Capital

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

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

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

Advisory Board
Monitoring Board

Communication with Stakeholders

Customers

Communities

Employees

Financial institutions

Investors

Shareholders

etc.

9

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

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

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

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

The DBJ Group’s Vision

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

10

Message from the President

Hajime Watanabe
President and CEO
Development Bank of Japan Inc.

11

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

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

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

significantly. Political instability is increasing against a global

lation, and growing environmental and disaster awareness.

backdrop of emerging protectionism and growing geopolitical

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

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

fintech, and negative interest rates in Japan.

with an eye on the future.

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

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

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

social value by grasping the latest social issues and offering

environmental, social, and governance (ESG) investment.

ideas for solving them from a financial perspective, all while

Companies have quickly got on board with the final recom-

collaborating with other financial institutions. Our unwavering

mendations of the Task Force on Climate-related Financial

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

flexible approach to solving problems. It would be a disservice

Stability Board (FSB) to facilitate the disclosure of information

to not mention two of our predecessors who had a major

related to risks and opportunities presented by climate

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

former senior executive director of Japan Development Bank

the United Nations Sustainable Development Goals (SDGs)

and the first executive officer of the Research Institute of Capital

have been a powerful motivating force. Along with the ESG

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

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

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

industrial and financial dialogue on sustainability. A movement

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

is gaining momentum for companies to develop solutions to

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

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

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

The Role of the DBJ Group and Our Achievements

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

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

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

The DBJ Group’s Vision

In tune with the changing needs of society and our12

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

significantly over these 10 years, with the collapse of Lehman    

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

Vision 2030 and Priority Areas

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

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

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

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

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

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

a significant impact on our stakeholders: Japan’s declining

edented events such as earthquakes and global financial

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

for subsequent growth.

global competition; and innovations in digital technology such

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

lenges. In keeping with our unwavering mission, the DBJ

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

Group will take a flexible approach to issues faced by regions

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

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

competitiveness building we are working on today. Based on

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

Our Action Guidelines:

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

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

• The customer’s perspective

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

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

sets infrastructure, industry, and regional economies as the

Our Values: Initiative and Integrity

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

13

Business Strategy

Management Foundation
Strategy
P22–45

P46–59Financial capital

Fields (Sectors)
Three infrastructure fields
Transportation

Industrial fields
Urban
development

Functions

EnergyFinancing(including Crisis
Response
Operations)

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

Investments(includingSpecialInvestment
Operations)

Promote long-term investments ininfrastructure and growth investments
in companies

Fees andcommissions

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

New functions

New fields

Invest management
resources
Integrated
management

Develop fields
where innovation
is progressing

Non-financial
capital

Aerospace
Communications
Healthcare
Global logistics

Human capitalIntellectual
capitalOther businessdevelopment

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

Results of businessactivities

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

Regions andoverseas

Role connecting regions to the world

Corporate Governance and Risk Management
P60–75

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

Actual(Average for fiscal
2017–fiscal 2018)

Gross ordinary income*1¥187.7 billion¥181.0 billion

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

35%

34%

About 35%

(Consolidated)

Profitability

Soundness

Expense ratio*

2

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

ROA*2

1.1%

1.1%

About 1%

ROE*2

2.9%

3.0%

About 3%

Capital adequacy ratio*3

16.6%

—

At least 14%

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

The DBJ Group’s Vision

Fourth Medium-Term Management Plan

14

    

    

Sustainability Management at the DBJ Group

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

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

The Fourth Medium-Term Management Plan: Initiate Change,

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

create economic and social value by providing the solutions

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

Medium-Term Management Plan features a business strategy,

during times of crisis, and by making other contributions

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

towards the building of a sustainable society, all while being

the long-term vision as well as a management foundation

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

strategy encompassing financial capital and non-financial capital.

To this end, we must accurately understand the current

Under the current plan, our business strategy is to expand

issues affecting industries and our customers, in addition to

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

infrastructure fields (energy, transportation, and urban develop-

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

our knowledge to produce future visions through trial and error,

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

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

mote long-term investments in the three infrastructure fields

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

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

infrastructure and private equity. The DBJ Group will also play

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

developing these activities both regionally and overseas.

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

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

capital, intellectual capital, and relationship and social capital.

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

We will promote the growth and transformation of these forms

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

values. We believe in the importance of constantly improving

and improving our business activities to realize better results.

our sustainability management processes through dialogue with

Specifically, we aim to diversify funding methods, including

external stakeholders, centering on the Advisory Board and the

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

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

15

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

Business Profit and Loss (Consolidated)(¥ billion)

Fiscal 2017

Fiscal 2018

YoY change

174.3

187.7

13.3

Loans

84.8

80.9

(3.8)

Investment

65.8

81.5

15.6

Fee and commission income

23.6

25.2

1.5

Operating expenses(59.1)(64.8)(5.7)

Net ordinary income

115.1

122.8

7.6

Other extraordinary items

2.2

(1.3)

(3.6)

Gains on reversal of reserves and collectionof written-off claims

11.9

5.3

(6.6)

Loans

12.4

6.8

(5.5)

Investment

(0.4)

(1.5)

(1.1)

Income before income taxes and minority interests

129.4

126.7

(2.6)

Total income taxes(35.0)(33.5)

1.5

Current net income

94.3

93.2

(1.1)

Net income attributable to non-controlling interests

2.4

1.2

(1.1)

Net income attributable to owners of the parent

91.9

91.9

(0)

Gross ordinary income

Note: Business categories are those used in business management.

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

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

Management Plan, saw progress in our initiatives to supply risk

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

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

portfolio in the infrastructure field and the creation of distinctive

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

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

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

renewable energy field. We established the Regional

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

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

support after heavy rainfall damaged Western Japan in July

projects such as structured financing and mezzanine financing.

2018 and the Eastern Iburi Earthquake struck Hokkaido two

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

booking of gains on the divesture of investment projects thanks

while strengthening regional vitality.

to favorable macroeconomic conditions, in addition to earnings

The DBJ Group’s Vision

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

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

from investment portfolios producing relatively stable returns,    

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

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

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

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

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

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

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

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

debating our response to those changes. In executing mea-

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

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

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

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

our customers and society at large.

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

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

Development of Human Resources for Better

has an extensive track record in regional revitalization projects,

Sustainability Management

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

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

ties. These initiatives are objectively evaluated by the Special

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

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

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

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

17

The DBJ Group’s Vision

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

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

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

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

The employees embodying the Group’s values should be able

number of megatrends gain momentum. These include an

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

promoting workstyle reform for this purpose. To bring more

all aspects of industry, and intensifying global competition. In

flexibility to working patterns, we have introduced telecommuting

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

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

paid leave programs for child-rearing and caregiving.

gence of new ecosystems. The DBJ Group will continue to

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

employees is a vital issue as our business becomes more

services for new initiatives being undertaken by our customers,

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

society.

initiated a program to develop global human resources with

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

the cooperation of the University of Oxford—the Global

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

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

contribute toward the SDG global agenda for 2030. In financial

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

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

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

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

Oxford and develop into leaders capable of guiding the DBJ

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

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

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

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

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

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

President and CEO

18

Financial and Non-Financial Highlights

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

Capital Adequacy Ratio* (Consolidated)(¥ billion)

(%)
20

1,800

17.54
751.8

809.0

854.6

952.1

1,129.3

14,083.6

13,724.3

13,772.3

13,467.7

13,584.6

1,200

16.22

17.22

16.81

16.65

2016

2017

2018 (Fiscal year)

15

Target of 4th MTMP: about 14%

10

600
5

0

2014

2015

Loan balance

2016

2017

2018 (Fiscal year)

0

2014

2015

* Common equity Tier 1 risk-weighted capital ratio

Investment balance

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

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

Gross Ordinary Income (Consolidated)(¥ billion)
250

200

10.9

20.3
86.6
28.3

45.8

150

111.6

100

57.3
101.2

23.6
65.8

25.2
81.5

85.4

84.8

80.9

2016

2017

2018

50

0

–50

Loans

2009

2010
Investment

2011

2012

2013

2014

2015

(Fiscal year)

Fee and commission income

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

19

Balance of Investments and Loans
in Renewable Energy

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

200

40

186.9

3,000

36

150

30

25

124.2
110.2

100

50

20

1,100

0

30

10

2016

2017

2018

(Fiscal year)

0

2016

2017

2018

(Fiscal year)

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

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

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

50

150

48
43

40

39
100

113

116

2016

2017

121

30

20
50
10

0

2016

2017

2018

(Fiscal year)

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

0

2018

(Fiscal year)

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

The DBJ Group’s Vision

Non-Financial Highlights

20

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

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

Infrastructure

Government
investments
and loans

DBJ

EnergyTransportation
Urban
development

Special Investment Operations

Government

Crisis Response Operations
SRI bonds
Financing

Industry
New technologies
and businesses
Restructuring
Overseas expansion

Risk capital andknowledge

Investments

Consulting andAdvisory Services
Bonds andloans

Regional financial
institutions

Asset Management
Asset
management

Group Companies
Regions
Industry promotion
Overseasdevelopment
Business succession

Creation offinancing
opportunities

Domestic andoverseas
institutional
investors

Collaboration

Leading financial
institutions

Cooperation

Collaborative
funds

Financial institutions andnon-financial companies

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

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

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

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

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

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

Investments¥1.1 trillion

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

21

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

Contents
Business Strategy
Sector Strategy

22

Energy Sector

24

Transportation Sector

26

Urban Development Sector

28

Industrial Sectors

Area Strategy

32

Regions

36

Overseas

Function Strategy

38

 pecial Investment Operations andS
Crisis Response Operations

42

Syndication, Advisory, and Consulting Services

44

Asset Management

Management Foundation Strategy

46

Financial Capital

50

Human Resource Development

52

56

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

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

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

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

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

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

22

Sector Strategy
Priority Areas

Rebuilding and Reinforcement of Infrastructure

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

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

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

¥

3.6 trillion

Longer-Term External Environment and Social Issues

Strategy

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

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

Accomplishments and Initiatives to Date
Aoyama-Kogen Wind Farm
Corporation

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

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

SDT Solar Power Co., Ltd.

Fukushima Gas Power Co., Ltd.

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

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

23

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

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

MESSAGE FROMEMPLOYEES

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

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

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

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

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

24

Sector Strategy
Priority Areas

Rebuilding and Reinforcement of Infrastructure

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

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

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

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

¥

2.3 trillion

Longer-Term External Environment and Social Issues

Strategy

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

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

Accomplishments and Initiatives to Date
Solaseed Air Inc.

Kawasaki Kisen Kaisha, Ltd.

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

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

Kanto Railway Co., Ltd.

Tokyo International Air Terminal
Corporation

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

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

25

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

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

MESSAGE FROMEMPLOYEES

Provided by Fukuoka International Airport Co., Ltd.

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

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

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

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

26

Sector Strategy
Priority Areas

Rebuilding and Reinforcement of Infrastructure

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

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

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

¥

1.9 trillion

Longer-Term External Environment and Social Issues

Strategy

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

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

Accomplishments and Initiatives to Date
TOKYO SKYTREE®

Shin-Daibiru Building

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

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

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

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

27

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

MESSAGE FROMEMPLOYEES

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

Ongoing Support for Urban Redevelopment

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

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

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

28

Sector Strategy
Priority Areas

Creation, Conversion, and Growth In Industry

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

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

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

Longer-Term External Environment and Social Issues

Strategy

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

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

Accomplishments and Initiatives to Date
Dexerials Corporation

Mitsubishi Heavy Industries AeroEngines Ltd.

Nippon Charge Service LLC

DMG MORI CO., LTD.

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

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

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

29

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

Yanmar Co., Ltd.

Cellnex Telecom, S.A.

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

Space One Co., Ltd.

Japan H2 Mobility, LLC

Photo provided by JXTG Nippon Oil & Energy Corporation

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

The DBJ Group’s Strategy

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

30

Priority Areas

Creation, Conversion, and Growth In Industry

PROJECT SPOTLIGHT

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

New production line for injectable drugs

MESSAGE FROMEMPLOYEESSupport for Strengthening Global Competitiveness of Domestic Healthcare Industry

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

31

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

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

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

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

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

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

32

Area Strategy
Priority Areas

Self-Reliance and Revitalization of Local Economies

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

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

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

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

Total number of business alliances with financial institutions

106

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

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

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

Accomplishments and Initiatives to Date

Special Investment
Operations

Supply of risk
capital throughcollaboration andcooperation with
regional financial
institutions

OthersFiscal 2017

Fiscal 2018

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

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

33

Kushiro Representative Office

Hokkaido Branch

Hakodate Representative OfficeNiigata Branch

Aomori Representative OfficeToyama Representative Office
Hokuriku Branch

Tohoku Branch

Okayama Representative Office
Matsue Representative Office

Head Office

Chugoku Branch
Kyushu Branch
Oita Representative Office
Minami-Kyushu Branch

Tokai Branch
Kansai Branch
Shikoku Branch
Matsuyama Representative Office

Collaboration and Cooperation with Regional Financial
Institutions

Collaboration for M&A of Local Companies andOverseas Information Dissemination

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

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

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

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

The DBJ Group’s Strategy

Head office
10 branches	Eight representative offices

34

Priority Areas

Self-Reliance and Revitalization of Local Economies

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

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

Exterior of Sasayama Castle Town Hotel NIPPONIA

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

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

People practicing traditional manufacturing methods

35

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

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

MESSAGE FROMEMPLOYEES

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

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

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

36

Area Strategy
Priority Areas

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

Self-Reliance and Revitalization of Local Economies

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

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

Longer-Term External Environment and Social Issues

Strategy

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

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

Accomplishments and Initiatives to Date
Fiscal 2017

Collaboration withother financial
institutions

Fiscal 2018

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

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

Other

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

Investment
operations

37

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

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

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

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

38

Function Strategy

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

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

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

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

DBJ

Other financial
institutions

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

Addition(Budget for fiscal
2019: ¥130 billion)

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

Evaluation /verification

Special Investment
Operations
Monitoring Board

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

Target company initiatives
Loans,
etc.

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

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

Enhance risk capital supporting growth

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

39

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

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

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

PROJECT SPOTLIGHT

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

51%

24.5%

DBJ

24.5%

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

Offshore wind power
generation assets

SMBC

The Fund (first fund)

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

Sumitomo
Corporation

Other domestic investors

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

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

40Function Strategy

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

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

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

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

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

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

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

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

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

Provision of funds,
etc.

Clients

41

2008/10

2008/12

Commenced Crisis
Response Operations
as a designatedfinancial institution

2011/3

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

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

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

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

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

PROJECT SPOTLIGHT

Great East Japan Earthquake of 2011

Kumamoto Earthquakes in 2016

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

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

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

The DBJ Group’s Strategy

Accomplishments and Initiatives to Date

42

Function Strategy

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

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

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

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

43

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

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

MESSAGE FROMEMPLOYEES

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

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

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

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

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

44

Function Strategy

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

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

• Real estate• Private equity• Infrastructure

Longer-Term External Environment and Social Issues

Accomplishments and Initiatives to Date

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

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

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

45

The DBJ Group’s Strategy

PROJECT SPOTLIGHT

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

MESSAGE FROMEMPLOYEES

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

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

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

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

46

Management Foundation Strategy

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

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

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

BusinessstrategyStress test

Business plan

Execution

Monitoring

Strategy for
financial capital

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

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

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

47

The DBJ Group’s Strategy

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

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

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

Capital Procurement (Non-Consolidated)

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

(¥ billion)

Fiscal 2015

Fiscal 2016

Fiscal 2017

Fiscal 2018

3,027.7
634.4
300.0

4,012.6
1,127.7
800.0

3,153.4
922.7
580.0

3,790.8
643.3
300.0

200.0

150.4

150.2

150.2

134.3

177.3

192.5

193.0

—

—

100.2

100.3

395.3
358.2
1,639.7

497.1
861.5
1,526.1

535.8
589.5
1,005.0

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

MESSAGE FROMEMPLOYEES

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

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

48

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

2008–2010

Became a jointstock company

First Medium-Term Management Plan:
CHALLENGE 2010

Fiscal 2008

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

Fiscal 2009

Fiscal 2010

Fiscal 2011

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

Total income

151.2

347.9

345.1

318.7

Income before income taxes(121.6)

51.9

95.0

99.2

N/A

(26.7)

(2.9)

(1.3)

3.5

(0.8)

9.3

10.9

Income before income taxes and minority interests(118.1)

51.1

104.3

110.2

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

39.8

101.5

77.3

—

10.0

50.0

37.3

Total assets

14,028.0

15,595.7

14,845.2

15,579.8

Loans

12,008.8

13,514.6

13,031.4

13,645.4

Securities

1,246.5

1,289.4

1,165.5

1,176.6

Total liabilities

11,941.6

13,268.2

12,435.2

13,118.8

Borrowed money

8,067.8

9,082.4

8,576.4

9,170.5

Debentures and corporate bonds

3,513.0

3,746.3

3,629.3

3,671.8

Total equity

2,086.4

2,327.5

2,409.9

2,461.0

Common stock

1,000.0

1,181.1

1,181.1

1,187.7

Total capital ratio (Basel II, BIS standard)

18.87%

19.13%

20.50%

18.56%

Total capital ratio (Basel III, BIS standard)

—

—

—

—

Ratio of risk-monitored loans (Banking Act basis)

1.60%

5.07%

1.28%

1.47%

Return on assets (ROA)(0.92)%

0.27%

0.67%

0.51%

Return on equity (ROE)(6.06)%

1.82%

4.31%

3.18%

Number of employees

1,096

1,181

1,203

1,270

1,733.4

3,793.1

2,116.6

2,927.0

1,670.3

3,682.0

2,034.4

2,849.0

63.1

111.1

82.2

78.0

1,733.4

3,793.1

2,116.6

2,927.0

184.3

840.9

1,212.8

691.7

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

Total dividend amount

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

49

2014–20162017–2019

Second Medium-Term Management Plan:
Endeavor 2013

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

Fourth Medium-Term
Management Plan

Fiscal 2012

Fiscal 2013

Fiscal 2014

Fiscal 2015

Fiscal 2016

Fiscal 2017

Fiscal 2018

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

340.0

361.6

339.0

358.6

285.4

291.7

301.2

115.6

165.7

153.0

185.1

122.5

127.1

128.1

30.0

30.3

32.1

70.8

41.1

39.7

40.5

0.6

0.2

0.6

1.5

(0.0)

2.2

(1.3)

116.2

166.0

153.6

186.7

122.4

129.4

126.7

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

71.3

124.3

92.7

128.9

87.6

91.9

91.9

35.2

30.8

22.5

29.2

19.7

22.1

21.0

16,248.7

16,310.7

16,360.6

15,907.1

16,570.4

16,952.2

17,079.5

13,918.2

13,838.4

13,261.3

12,952.5

13,039.5

12,725.2

12,923.9

1,357.0

1,637.5

1,887.9

1,803.0

1,750.3

1,866.4

1,961.0

13,710.1

13,682.9

13,613.3

13,022.9

13,584.2

13,842.1

13,783.2

9,448.3

9,182.6

8,598.2

7,892.1

8,472.3

8,574.1

7,987.8

3,924.5

4,237.4

4,569.3

4,727.9

4,711.8

4,932.9

5,296.9

2,538.5

2,627.7

2,747.2

2,884.2

2,986.2

3,110.1

3,296.3

1,206.9

1,206.9

1,206.9

1,000.4

1,000.4

1,000.4

1,000.4

—

—

—

—

—

—

—

15.52%

15.83%

16.80%

17.87%

17.47%

16.94%

16.74%

1.23%

0.99%

0.77%

0.64%

0.54%

0.47%

0.40%

0.45%

0.76%

0.57%

0.80%

0.54%

0.55%

0.54%

2.86%

4.83%

3.47%

4.60%

2.99%

3.03%

2.88%

1,315

1,391

1,407

1,435

1,546

1,631

1,650

2,652.4

2,943.3

2,544.2

3,027.7

4,012.6

3,153.4

3,790.8

2,524.5

2,805.1

2,262.7

2,861.3

3,805.8

2,973.6

3,490.4

127.8

138.2

281.4

166.3

206.7

179.7

300.4

2,652.4

2,943.3

2,544.2

3,027.7

4,012.6

3,153.4

3,790.8

502.2

1,307.5

1,129.9

1,639.7

1,526.1

1,005.0

2,051.4

The DBJ Group’s Strategy(¥ billion)

2011–2013

50

Management Foundation Strategy

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

Number of employees(consolidated)

As of March 31, 2019



1,650

Number of employees(non-consolidated)

As of March 31, 2019

1,186


Average length of service(non-consolidated)

As of March 31, 201913.9 years
Basic Policy

Human Resource Development Vision

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

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

Career Development
Training for new employees
Rank-based

Career development / management /leadershipManagement / leadership
Career development program

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

Proposal ability

Front officeFinance

In-house
training

Work skills

Screening ability

Functional department
Management department

Financialaccounting

Legal

Corporate finance, etc.

Middle / Back office
Shared skills

Domestic
Dispatchoutside DBJ

Strategic global human resource development
Overseas

Self-study

Knowledge
and skills

Logical thinking / facilitation / presentation, etc.

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

51

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

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

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

Internal training

22/24 (92%)

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

Reduced work hours and flex time for
employees raising children

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

About 200

Seminars for finding childcare facilities(cumulative total)

About 150

The DBJ Group’s Strategy

Specific Initiatives to Increase the Value of
Human Capital

52

SPECIAL FEATURE

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

Katsushi Kitajo
Executive Officer
Head of Human Resources Management
Department

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

53

The DBJ Group’s Strategy

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

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

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

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

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

54

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

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

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

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

Current Job

Current Job

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

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

Impressions and Benefits of GSALP Participation

Impressions and Benefits of GSALP Participation

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

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

55

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

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

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

Current Job

Current Job

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

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

Impressions and Benefits of GSALP Participation

Impressions and Benefits of GSALP Participation

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

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

The DBJ Group’s Strategy

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

56

Management Foundation Strategy

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

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

Example of initiatives(1) Naturalenvironment

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

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

Stabilization andstimulation of thefinancial system,
development andinvigoration offinancial markets

Crisis Response
Operations
Supply of risk capitalSocially responsible
investing bondissuance

Social capital

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

57

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

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

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

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

Financial
institutions
Government

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

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

Participation
and assessmentof outside initiatives

DISCLOSURE INSIGHT ACTIONADFIAPfinancing sustainable development

The DBJ Group’s Strategy

Specific Initiatives to Improve the Valueof Intellectual Capital

58

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

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

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

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

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

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

59

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

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

Environmental Rating(Business continuation risk)(Environmental risk)

Health Management
Rating(Human productivity risk)

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

Assessment Flow of DBJ Certification Programs

1

2

3

4

5

6

Preliminary
screening

Interviews

Judgment meeting

Evaluation decision

Financing
implementation

Feedback

DBJ Rated Loans(Number)

(¥ billion)

1,250

2,500

(Left axis)

Environmental rating(Right axis)

Cumulative amount

BCM rating

Health management rating

183
137

1,000

346

107
315

Total number of
rated loans:

750

75
45

1,184
¥2,057.7billion

17
4(As of March 31, 2019)

500

1
28
250

33
0

2004

67

2005

11

13

100

126

2006

2007

2,000

19

162

2008

23

198

2009

55

190

1,500

621

655

574

145

103

278

234

1,000

523
470

415
369
500

308
244

2010

2011

2012

2013

2014

2015

2016

2017

2018

0
(Fiscal year)

The DBJ Group’s Strategy

DBJ Certification Programs

60

Corporate Governance

Message from the Chairman

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

Creation of a Unique Business Model

Governance Suited to Our Business Model and
Dialogue with Stakeholders

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

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

sustainable society. Under the current Fourth Medium-Term

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

Management Plan, we supply risk capital to forward-looking

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

Compensation Committee, and the Personnel Evaluation

Collaboration and cooperation with private financial institutions

Committee as advisory bodies to the Board of Directors.

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

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

strengthening this framework.

competitiveness. We also address local issues through risk

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

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

cial institutions.

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

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

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

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

there to provide relief.

encourage private-sector enterprises and complement their

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

operations while maintaining appropriate competitive relations.

and the Hokkaido Eastern Iburi Earthquake in September of

The opinions we obtain through social events with private

the same year, we established our own Regional Reconstruction

financial institutions and the outcomes of deliberations by the

Headquarters and Regional Emergency Response Program.

Special Investment Operations Monitoring Board are debated

We are working to strengthen our system for responding flexibly

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

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

61

Corporate Governanceoutside experts and directors in fields including manufacturing,

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

Board provides valuable ideas on matters concerning the safe-

To realize a sustainable society while balancing economic

guarding of proper competition with private financial institutions

and social value, the DBJ Group offers solutions to issues

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

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

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

tinuous reassessment of its unique value creation process while

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

engaging in dialogue with stakeholders.

management and maintain a balanced value creation process.

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

Moreover, we will continue making every effort to ensure

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

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

notion that nothing is more important than embodying best

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

Basic Policy for Internal Control, which positions legal compli-

ers and society.

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

August 2019

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

Yasushi Kinoshita
Chairman

62

Corporate Governance

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

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

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

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

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

10
2
13
5
3
16

Adoption of executive officer system

Yes
Deloitte Touche Tohmatsu
LLC

Accounting auditor

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

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

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

Board of Directors• Amendments to Articles of Incorporation

ReportingAccounting auditor

Compensation
Committee

Cooperation
Reporting

Personnel Evaluation
Committee• Disposition of surplus funds

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

AuditsSpecial Investment Operations
Monitoring Board

Decision-making bodies
Deliberative bodies

ALM & Risk
Management
Committee

Departments
Subsidiaries

General Risk
Management
Committee

Committee on
Investment and Loan
Decisions

New Operation
Screening
Committee

Advisory Panelon Investments
and Loans

Sustainability
Committee

Audits63

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

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

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

Outside Experts
Reiko Akiike

Senior Partner and Managing Director,
The Boston Consulting Group

Masayuki Oku

Honorary Advisor of
Sumitomo Mitsui Financial Group, Inc.

Kazuaki Kama

Executive Corporate Advisor, IHI Corporation

Katsunori Nakanishi

Chairman and CEO, The Shizuoka Bank, Ltd.

Yoshizumi Nezu

President, Tobu Railway Co., Ltd.

Outside Members of the Board of Directors
Akio Mimura

Honorary Chairman of Nippon Steel Corporation

Kazuo Ueda

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

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

Outside Experts
Hideharu Iwamoto

Vice Chairman & Senior Executive Director ofJapanese Bankers Association

Masayuki Oku

Honorary Advisor of
Sumitomo Mitsui Financial Group, Inc.

Katsunori Nakanishi

Chairman and CEO, The Shizuoka Bank, Ltd.

Takashi Yamanouchi

Advisor, Mazda Motor Corporation

Keisuke Yokoo

Director, IDI Infrastructures Inc.

Fumiaki Watari

Honorary Executive Consultant of
JXTG Holdings, Inc.

Corporate Governance

Audit & Supervisory Board Members,
Audit & Supervisory Board

64

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

Committees under the Executive Committee
Name

Role

ALM & Risk Management Committee

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

General Risk Management Committee

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

Committee on Investment
and Loan Decisions

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

New Operation Screening Committee

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

Advisory Panel on Investments
and Loans

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

Sustainability Committee

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

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

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

Internal Control System Basic Policy

Internal Audits

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

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

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

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

65

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

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

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

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

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

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

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

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

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

Corporate GovernanceThree-Pronged Auditing Approach

66

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

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

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

2

Members of the Compensation Committee
Chairman

Yasushi Kinoshita(head of the committee)

President

Hajime Watanabe

Outside member of the Board of Directors

Akio Mimura

Outside member of the Board of Directors

Kazuo Ueda

Outside Audit & Supervisory Board member

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

Category

Number of people

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

Members of the Boardof Directors

12

Audit & Supervisory
Board members

6

78

Total

18

342

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

67

Messages from Outside Members of the Board of Directors

Akio Mimura
Outside Member of the Board of Directors

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

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

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

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

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

Corporate Governance

Leveraging Corporate Governance to Help Solve
Social Issues

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

E

C

G

I

D

A

H

F

B

J

A

Yasushi Kinoshita

B

Hajime WatanabeC

Shin Kikuchi

D

Satoshi TomiiE

Kenkichi Fukuda

F

Makoto AnayamaG

Seiji Jige

H

Eiichiro Yamane

I

Akio MimuraJ

Kazuo Ueda

69

ChairmanMember of the Board of Directors, Managing Executive Officer

Yasushi Kinoshita

Makoto Anayama

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

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

President and CEO

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

Deputy President

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

Member of the Board of Directors, Managing Executive Officer

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

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

Member of the Board of Directors, Managing Executive Officer

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

Member of the Board of Directors, Managing Executive Officer

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

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

Member of the Board of Directors, Managing Executive Officer

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

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

Outside Member of the Board of Directors

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

2008: Outside Member of the Board of Directors at DBJ

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

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

Outside Member of the Board of Directors

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

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

Corporate GovernanceMembers of the Board of Directors

70

A

E

D

Audit & Supervisory Board Members

C

B

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

Audit & Supervisory Board Member

Managing Executive Officer

Managing Executive Officer

A Atsushi Kurashige

Takao Kaizu

Tsutomu Murakami

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

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

Managing Executive Officer

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

Yoshinao Ikeda

Audit & Supervisory Board Member

In charge of Corporate Finance
Department, Division 1 and 2

Executive Officer

B Mitsue Kurihara

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

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

Managing Executive Officer

Outside Audit & Supervisory Board Member

Managing Executive Officer(Head of Kansai Branch)

Head of Business Planning &Coordination Department

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

Hiroshi Shimizu

Executive Officer

Managing Executive Officer

Head of Corporate Planning &Coordination Department

Outside Audit & Supervisory Board Member

Yasushi Babasaki

D Makoto Ito

In charge of Corporate Finance
Department, Division 4

Executive Officer

C Toshio Yamasaki

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

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

Shinji Hatta

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

In charge of Kansai Branch,
Chugoku Branch, Shikoku Branch

Executive Officer

Shigeru Tamagoshi

Toshiyasu Takazawa

Shoichiro Kubota

Managing Executive Officer

Head of Growth & Cross Border
Investment Department

Michihiro Kishimoto

Executive Officer

In charge of Corporate Finance
Department, Division 5

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

Managing Executive Officer

2008: Audit & Supervisory Board Member at DBJ

In charge of Hokkaido Branch,
Niigata Branch, Tokai Branch

Ryusei Segawa

Kazufusa Matsushima
In charge of Internal Audit

Executive Officer

Katsushi Kitajo
Head of Human Resources
Management Department

71

Risk Management

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

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

Asset–Liability and Risk Management System Overview

Credit Analysis
Department

President
Executive
Committee

Investment andLoan
Departments /Offices

Risk
Management
Department
ALM &Risk Management
Committee

Treasury
Department

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

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

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

Risk Management

Risk Management System

72

Borrower Rating System
DBJ’s borrower rating system measures creditworthiness by combining an evaluation point rating and a borrower category rating,with the results quantifying a potential client’s credit
circumstances.
The evaluation point rating selects indicator and evaluation
categories that are common across all industries, scoring thecreditworthiness of the potential borrower quantitatively and qualitatively. On the other hand, the borrower category rating measures
specific items related to the borrower, looking at the borrower’s
realistic financial condition, cash flows, and debt repayment history, generating a comprehensive assessment of a borrower’s
repayment capacity.

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

Borrower Rating Classifications
Borrower
category

Borrower
ratingDefinition

Claims classified under the
Financial Revitalization Act

Normalborrowers

1–8

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

Borrowers
requiring
caution

9–11

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

Substandard
borrowers

12

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

Substandard claims

Borrowers indanger ofbankruptcy

13

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

Doubtful claims

Effectively
bankrupt
borrowers

14

Bankrupt
borrowers

15

Normal claims

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

Portfolio Management

Investment Risk

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

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

73

Liquidity Risk

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

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

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

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

Risk Management

Market Risk

74

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

Administrative Risk Management
Administrative risk refers to the risk of sustaining losses resulting
from employees neglecting to perform their duties correctly or from
accidents, fraud, and the like. To reduce or prevent administrativerisk, DBJ prepares manuals, performs checks on administrative
procedures, provides education and training, and uses systems to
reduce the burden of administrative duties.

System Risk Management
System risk refers to the risk of loss due to a computer system
breakdown or malfunction, system defects, or improper computeruse. DBJ has implemented the following internal processes tooptimize system risk management and properly manage risk withregard to system risk. The System Risk Management Division is
responsible for managing DBJ’s system risk centrally, based on its
system risk management regulations. By determining security
standards from a variety of viewpoints—from information system
planning and development to operation and use—the department
extends the risk management system bank-wide and addresses
appropriate system risk management operations.

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

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

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

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

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

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

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

75

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

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

Discussions at the Sustainability Committee

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

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

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

Risk Management

Climate Change Initiatives

76Timeline

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

Month

Event

1951

April

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

1952
1956

June

The Hokkaido Development Finance Public Corporation established

1957

April

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

1960

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

1961
1962

April

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

1963
1964

July

1972

January

1985

June

1987

September

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

1989

JDB loans to assist disaster recovery commenced

1995

February

1997

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

1998

December

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

1999

June
October

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

2002

May

2005

December

2006

May

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

June

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

2007

June

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

Important Policy of Administrative Reform approved by the Cabinet

Development Bank of Japan Inc.
Year

Month

2008

October

Event

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

December
2009

June

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

September

Capital increased to ¥1,103,232 million

November

DBJ Europe Limited launched

2010

March

2011

May

2012

DBJ Singapore Limited launched

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

December

Capital increased to ¥1,187,364 million

March

Capital increased to ¥1,187,788 million

June

Capital increased to ¥1,198,316 million

December

Capital increased to ¥1,206,953 million

2014

June

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

2015

May

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

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

October

DBJ Americas Inc. launched

77

Shareholder Information

Address

Number of shares held (thousands of shares)

Percentage of total equity (%)

Finance Minister

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

43,632100.00Total—

43,632100.00

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

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

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

2. Measures ensuring appropriate implementation of Crisis Response Operations

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

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

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

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

Beforerevision

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

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

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

Corporate Data

As of March 31, 2019
Name

78

Organizational Structure (as of August 1, 2019)

Business Planning & Coordination Department

General Meeting of
Shareholders

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

International Strategy & Coordination Department
Corporate Finance Department,
Division 1

Audit & Supervisory
Board Office

Corporate Finance Department,
Division 2

Aerospace Office

Corporate Finance Department,
Division 3

Global Logistics Office

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

Corporate Finance Department,
Division 6

Executive Committee

Healthcare Industry Office

Hokkaido Branch
Tohoku Branch
Advisory Board

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

Kansai Branch
Chugoku Branch
Shikoku Branch
Kyushu Branch

Kumamoto Recovery Office

Minami-Kyushu Branch
Real Estate Finance Department
Chief
Investment
Officer

Strategic Finance Department

Regional Investment Promotion Office

Growth & Cross Border Investment Department
Structured Finance Department

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

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

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

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

Risk Management Department

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

Accounting Department

Operations Audit
Committee

Public Relations OfficeSustainability Management OfficeInformation Resources Department
General Affairs Department

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

Settlement & Accounting Operations Office

79

80 The Development Bank of Japan
		 Inc. Act
99 Financial Condition

Data Section

Data Section

80

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

Promulgated: June 13, 2007 by Act No. 85 of 2007
Enforced: April 1, 2018
Last Amended : May 24, 2017 by Act No. 37 of 2016

Chapter I
General Provisions (Article 1 and Article 2)
Chapter II Business Operations (Article 3 through Article 25)
Chapter III	Miscellaneous Provisions(Article 26 through Article 29)
Chapter IV	Penal Provisions (Article 30 through Article 35)
Supplementary Provisions

Chapter I General Provisions
Article 1 Purpose
Development Bank of Japan Inc. (hereinafter referred to as the“Corporation”) shall be a joint stock company (kabushiki-kaisha)
whose object is to maintain the foundations of investment andfinancing functions of long-term business funds as theDevelopment Bank of Japan by conducting business activities
utilizing the methods of combining investments and financing andother sophisticated financial methodologies, while maintaining theautonomy of management with the goal of realizing full-scale
privatization, thereby contributing to smooth supply of funds tothose who need long-term business funds, as well as to thesophistication of financial functions.
Article 2 Restriction on Use of Trade Name
1. Any entity other than the Corporation shall not use the charactersof Development Bank of Japan Inc. (Kabushiki Kaisha Nippon
Seisaku Toshi Ginko), in its trade name.
2. The provision of Article 6, Paragraph 2 of the Banking Act (Act No.
59 of 1981) shall not apply to the Corporation.

Chapter II Business Operations
Article 3 Scope of Business Operations
1. The Corporation shall engage in the following business operations
to attain its objectives:(1) To accept deposits (limited to certificates of deposit (CDs)and other deposits stipulated in the Cabinet Order);(2) To lend money;(3) To make capital contributions;(4) To guarantee the due performance of debts and obligations;(5) To sell and purchase Securities (other than those that fallwithin monetary claims represented by certificates set forth in
Item (7), Short-term Notes, Etc.; the same in Item (8)) (otherthan those that fall within securities-related derivatives transactions (the securities-related derivatives transactions set forthin Article 28, Paragraph 8, Item (6) of the Financial Instruments
and Exchange Act (Act No. 25 of 1948); hereinafter in this
Item and Item (11) the same), or enter into securities-related
derivatives transactions (limited to those made for investment
purposes), except in cases where these business operations
fall within those operations referred to in Item (3);(6) To lend Securities;(7) To acquire or transfer monetary claims (including claims represented by certificates stipulated in the Ministry of FinanceOrdinance such as negotiable bank deposit certificates);(8) To subscribe for Specified Bonds or Preferred Investment
Securities issued by a Specified Purpose Company (limited tothe cases where the Specified Purpose Company acquires
only designated monetary claims or beneficial interests intrusts with which designated monetary claims are entrustedwith cash proceeds derived from issue of those Specified
Bonds or Preferred Investment Securities as set forth in the
Asset Liquidation Plans, and except for, in case of Specified
Bonds, Specified Short-term Notes), and other similar securities stipulated in the Ministry of Finance Ordinance (hereinafterin this Item referred to as the “Specified Bonds”) (except incases where it is intended for secondary distribution (uridashi)), or to handle primary offering (boshu) of the Specified
Bonds so subscribed;(9) To acquire or transfer Short-term Notes, Etc.;(10) To act as an agent or intermediary for execution of agreements which provides for lending money on behalf of banks(the banks set forth in Article 2, Paragraph 1 of the Banking
Act (Act No. 59 of 1981); hereinafter the same) and otherentities engaged in the financial business stipulated in the
Cabinet Order;(11) To enter into derivatives transactions set forth in Article 2,
Paragraph 20 of the Financial Instruments and Exchange Act(other than those that fall within the securities-related derivatives transactions), except in cases where these business
operations fall within those operations referred to in Item (7);(12) To do the activities referred to in Article 2, Paragraph 8, Item(7) of the Financial Instruments and Exchange Act;
(13) To do the activities referred to in Article 2, Paragraph 8, Item(9) of the Financial Instruments and Exchange Act (limited, inthe case of the handling of primary offering or secondary distribution, to those to be conducted upon entrustment byfinancial instruments firms engaged in the type I financial
instruments trading business set forth in Article 28, Paragraph
1 of the Financial Instruments and Exchange Act (the financial
instruments firms set forth in Article 2, Paragraph 9 of the
Financial Instruments and Exchange Act; hereinafter thesame), and for such financial instruments firms);(14) To do the activities referred to in Article 2, Paragraph 8, Item
(11) of the Financial Instruments and Exchange Act;
(15) To do the activities referred to in Article 2, Paragraph 8, Item(13) of the Financial Instruments and Exchange Act;
(16)	To do the activities referred to in Article 2, Paragraph 8, Item(15) of the Financial Instruments and Exchange Act;
(17) With respect to securities (including, if such securities are notissued, rights to be represented by such securities) or transactions referred to in each Item of Paragraph 2 of Article 33 of
the Financial Instruments and Exchange Act, to do the activities set forth in each Item of the said Paragraph (other thanthose referred to in Items (3), (5), (7) through (9), (11) and (13));(18) To provide other entities with consulting services regarding
business transfer, merger, corporate split, share-for-shareexchange (kabushiki kokan) or share transfer (kabushiki iten),or to act as a broker for these transactions;(19) To provide other entities with consulting services regarding
management, and to conduct investigations or provide information as required for the business operations of other entities;(20) To conduct investigations, research or training regarding
financial and other economic issues; and(21) To do activities incidental to each of the foregoing Items.
2. In addition to the business operations of the preceding Paragraph,
the Corporation may engage in such business activities as necessary to attain its object, subject to authorization of the Ministerof Finance.

81

Article 4 A pplication by Changing the Provisions of the
Financial Instruments and Exchange Act to Read
1. For the purpose of application of the provisions of the Financial
Instruments and Exchange Act to the Corporation, the words andphrases indicated in the center columns of the table below in theprovisions of that Act in the left columns shall be changed to read
the words and phrases indicated in the right column, respectively:

Article 2, Paragraph 8(referred to as the“Cooperative
Financial
Institutions”)(referred to as the“Cooperative Financial
Institutions”),
Development Bank ofJapan Inc.

Article 2, Paragraph 11;
Article 27-28, Paragraph 3;
Article 28, Paragraph 4;
Article 33, Paragraph 1;
Article 33-5, Paragraph 2;
Article 33-7; Article 58;
Article 60-14, Paragraph 1;
Article 66, and Article 202,
Paragraph 2, Items (1) and (2)Cooperative
Financial
Institutions

Cooperative Financial
Institutions,
Development Bank ofJapan Inc.

Article 33-8, Paragraph 1

are the financial
institutions

are the financial institutions, or if Development
Bank of Japan Inc.
conducts the businessactivity referred to in
Article 3, Paragraph 1,
Item (16) of The
Development Bank ofJapan Inc. Act (Act No.
85 of 2007)

2. Any directors, accounting counsel (kaikei sanyo) (including, if an
accounting counsel is a firm, its members who should perform theduties as such; hereinafter in this Paragraph the same), statutory
auditors, executive officers (shikkoyaku) or employees shall notify
the Minister of Finance without delay as set forth in the Minister ofFinance Ordinance if they take up a position of director, accounting counsel, statutory auditor or executive officer of a Financial
Instruments Firm (limited to the firms that engages in the securitiesrelated business set forth in Article 28, Paragraph 8 of the Financial
Instruments and Exchange Act; hereinafter in this Paragraph thesame) (including the cases where a director, accounting counsel,
statutory auditor or executive officer of a Financial Instruments Firmcome to concurrently hold a position of director, accounting counsel, statutory auditor or executive officer of the Corporation), or
they resign a director, accounting counsel, statutory auditor or
executive officer of a Financial Instruments Firm.
Article 5 Issue of the Development Bank of Japan Bonds
1. The Corporation may issue the Development Bank of Japan Bonds.
2. The provision of Article 702 of the Companies Act (Act No. 86 of2005) shall not apply where the Corporation issues theDevelopment Bank of Japan Bonds.
3. Only with respect to the Development Bank of Japan Bonds
issued outside of Japan, the Corporation may issue certificates
representing the Development Bank of Japan Bonds (includinginterest coupons appertaining thereto; hereinafter in thisParagraph, and Article 13, Paragraphs 3 and 4, Item (1), thesame), as prescribed in the Cabinet Order, in the event that it isnecessary to deliver replacement certificates to anyone who has
lost those certificates.
Article 6 Method of Issue of the Development Bank ofJapan Bonds
1. If the Corporation issues certificates representing the Development
Bank of Japan Bonds, such certificates shall be in bearer form;
provided, however, that the Corporation may issue those certificates in registered form upon request of a subscriber or owner ofthe Bonds.
2. If the Corporation issues the Development Bank of Japan Bonds,
the Corporation shall not enter into a custody agreement with asubscriber of the Bonds in which matters set forth in the Ministryof Finance Ordinance and the Cabinet Office Ordinance arecontained.

Data Section

3. “Securities” in Items (5) and (6) of Paragraph 1 and Paragraph 5
mean the securities set forth in Article 2, Paragraph 1 of the
Financial Instruments and Exchange Act, and the rights which are
deemed as securities as set forth in Article 2, Paragraph 2 of the
Financial Instruments and Exchange Act.
4. “Short-term Notes, Etc.” in Items (5) and (9) of Paragraph 1, andthe next following Paragraph mean:(1) Short-term notes Etc. set forth in Article 66, Item (1) of the Act
Concerning the Central Depositary System of Corporate
Debentures, Shares, Etc. (Act No. 75 of 2001);(2) Short-term investment corporation notes set forth in Article
139-12, Paragraph 1 of the Act Concerning Investment Trusts
and Investment Corporations (Act No. 198 of 1951);(3) Specified short-term notes set forth in Article 2, Paragraph 8of the Act concerning Liquidation of Assets (Act No. 105
of 1998);(4) Rights to be indicated on debt securities (other than thosehaving the nature of corporate debentures with stock acquisition rights (shinkabu-yoyaku-ken-tsuki shasai)) to be issued byforeign corporations, the ownership rights of which shall be
determined based on the entries or recordings in the central
depositary account register as prescribed by the Act
Concerning the Central Depository System of Corporate
Debentures, Shares, Etc., which satisfy all of the following
requirements:		a. The amount of each right is not less than JPY100 million;		b.	It is stipulated that the principal amount of such debt securities shall be redeemed on a definitely specified date which
occurs a year after the date on which the aggregate
amount of such rights is paid, and further that no payment
shall be made in installments; and		
c.	It is stipulated that interest shall become due and payable
on the same date as the maturity date of the principal
amount in Sub-item b.
5. The business operations referred to in Paragraph 1, Item (7) (in thecase of monetary claims represented by the certificates set forth in
the said Item which fall within Securities) and the business operations referred to in Paragraph 1, Item (9) (in the case of Short-term
Notes, Etc.) shall include the business operations to do the activities referred to in Article 2, Paragraph 8, Items (1) through (6), and(8) through (10) of the Financial Instruments and Exchange Act.
6. The terms “Specified Purpose Company,” “Asset Liquidation Plan,”“Specified Bonds,” “Specified Short-term Notes” or “Preferred
Investment Securities” referred to in Paragraph 1, Item (8) mean
the specified purpose company, asset liquidation plan, specified
bonds, specified short-term debentures or preferred investment
securities set forth in Article 2, Paragraphs 3, 4 or 7 through 9 of
the Act concerning Liquidation of Assets, respectively.
7. If the Corporation engages in the business activity referred toParagraph 1, Item (10), the provision of Article 52-36, Paragraph 1of the Banking Act and other provisions equivalent to that provisionof the said Paragraph which apply to those who engage in thefinancial business stipulated in the Cabinet Order set forth inParagraph 1, Item (10) and are prescribed in the Cabinet Order,
shall not apply.

82

The Development Bank of Japan Inc. Act

3. The Corporation may issue certificates representing theDevelopment Bank of Japan Bonds by way of a secondary distribution (uridashi). In that case, the Corporation shall determine the
distribution period.
4. If the Corporation issues certificates representing the Development
Bank of Japan Bonds, the Corporation shall indicate the following
matters on the face of those certificates:(1) Trade name of the Corporation;(2) Amount of the Bonds represented by the certificate;(3) Interest rates on the Development Bank of Japan Bonds represented by the certificate;(4) Method of redemption and maturity date of the Development
Bank of Japan Bonds represented by the certificate; and(5) Numbers of the certificate.
5. If the Corporation intends to issue the Development Bank of Japan
Bonds by way of a secondary distribution, the Corporation shallgive public notice of the following matters:(1) Distribution period;(2) Aggregate amount of the Development Bank of Japan Bonds;(3) If payment for the Development Bank of Japan Bonds ismade in more than one installment, the amount of, and timeschedule for, such payments;(4) Issue price or minimum price of the Development Bank ofJapan Bonds;(5) If the Corporation intends to issue the Development Bank ofJapan Bonds, the ownership rights of which shall be determined based on the entries or recordings in the central
depositary account register as prescribed by the Act
Concerning the Central Depository System of Corporate
Debentures, Shares, Etc., description to the effect that theDevelopment Bank of Japan Bonds are subject to the said
Act; and(6) Matters referred to in Items (1) through (4) of the immediately­preceding Paragraph.
6. The Corporation may issue the Development Bank of Japan
Bonds at a discount.
Article 7 E
 xtinctive Prescription of the Development Bank ofJapan Bonds
The extinctive prescription periods of the principal of, and interest
on, the Development Bank of Japan Bonds to be issued by the
Corporation shall be fifteen (15) years and five (5) years,
respectively.
Article 8 Mutatis Mutandis Application of the Currency andSecurities Counterfeiting Control Act
The Currency and Securities Counterfeiting Control Act (Act No.
28 of 1895) shall be applied mutatis mutandis to the counterfeitingof certificates representing the Development Bank of Japan to beissued by the Corporation.
Article 9 S
 pecial Rules When Starting Acceptance of
Deposits, Etc.
1. If the Corporation intends to start acceptance of deposits set forthin Article 3, Paragraph 1, Item (1) or issue of the Development
Bank of Japan Bonds, the Corporation shall obtain the priorapproval of the Minister of Finance.
2. If the Minister of Finance intends to give the approval referred to in
the preceding Paragraph, the Minister of Finance shall, in advance,
have a discussion with the Prime Minister and obtain his/her
consent.
3. The Prime Minister may request the Minister of Finance to provide
the Prime Minister with the required materials and explanations,whenever the Prime Minister deems necessary after the discussion referred to in the immediately preceding Paragraph.
4. The Prime Minister may request the Corporation to cooperate with
the Prime Minister such as providing materials and explanations, tothe required extent, whenever the Prime Minister deems especiallynecessary after the discussion referred to in Paragraph 2.

5. The provisions of Article 4, Paragraph 1 of the Banking Act andArticle 4, Paragraph 1 of the Long-Term Credit Bank Act (Act No.
187 of 1952) shall not apply to the business operations to be conducted by the Corporation in the case that the Corporation obtains
the approval referred to in Paragraph 1.
Article 10 Mutatis Mutandis Application of the Banking Act
1. The provisions of Articles 12-2 (other than Paragraph 3), 13, 13-2,
13-4, 14, 14-2, 20, 21, 23 and 57-4 (limited to the portions relating to Item (1)) of the Banking Act shall apply mutatis mutandis to
the Corporation when the Corporation obtains the approvalreferred to in Paragraph 1 of the immediately preceding Article.
For this purpose, references to the “Prime Minister” and “Cabinet
Office Ordinance” in these provisions (other than the second sentence of Article 13-4 and Article 20, Paragraph 7 of the BankingAct) shall be changed to read the “Minister of Finance and thePrime Minister” and the “Ministry of Finance Ordinance and the
Cabinet Office Ordinance,” respectively, and reference to “Article
38, Items (1), (2), (7)” in Article 13-4 of the Banking Act shall bechanged to read “Article 38, Item (7),” and other necessary technical changes to read shall be prescribed in the Cabinet Order.
2. For the purpose of application of the provisions of the Financial
Instruments and Exchange Act which shall be applied mutatis
mutandis after changing to read in Article 13-4 of the Banking Act
which is applied mutatis mutandis after changing to read in thepreceding Paragraph, reference to the “Cabinet Office Ordinance”
in those provisions shall be changed to read the “Ministry of
Finance Ordinance and Cabinet Office Ordinance.”
3. If the Government stipulates an ordinance pursuant to the provisions of the Banking Act which shall be applied mutatis mutandis
after changing to read in Paragraph 1, the Government shall pay
attention so that interests of users of business operations of the
Corporation such as money lending, when it gives the approvalreferred to in Paragraph 1 of the immediately preceding Article may
not be unreasonably infringed.
Article 11 Fiscal YearThe fiscal year of the Corporation shall commence on April 1 ofeach year and end on March 31 of the following year.
Article 12 Shares
1. If the Corporation intends to solicit those who will subscribe forshares offered for sale set forth in Article 199, Paragraph 1 of theCompanies Act (Act No. 86 of 2005) (hereinafter in Article 34, Item(4) referred to as the “Shares Offered for Sale”) or stock acquisitionrights offered set forth in Article 238, Paragraph 1 of theCompanies Act (hereinafter in Article 34, Item (4) referred to the“Stock Acquisition Rights Offered”), or to deliver shares or stockacquisition rights in connection with a share-for-share exchange,
the Corporation shall obtain authorization of the Minister of Finance.
2. Without delay after the delivery of shares upon exercise of stockacquisition rights, the Corporation shall submit a report thereon to
the Minister of Finance.
Article 13 Corporate Debentures, Development Bank of Japan
Bonds and Borrowings
1. Prior to the beginning of each fiscal year, the Corporation shall prepare its basic policy regarding the issue of corporate debentures(shasai) (other than the Development Bank of Japan Bonds,“Corporate Debentures”; hereinafter the same) and theDevelopment Bank of Japan Bonds (excluding the short-term
notes set forth in Article 66, Item (1) of the Act Concerning theCentral Depositary System of Corporate Debentures, Shares, Etc.
(Act No. 75 of 2001) from both the Corporate Debentures and theDevelopment Bank of Japan Bonds, respectively; hereinafter inthis Article and Article 18 the same), as well as regarding the borrowings (limited to those with more than one year to maturity;
hereinafter in this Article and Article 18 the same), which provides
for matters relating to the issue of the Corporate Debentures and83

Article 14 L imits on Borrowing and Limitation on Extensionof Credit
1. The aggregate amount of the items identified below shall not
exceed the amount equal to fourteen (14) times the total amountof paid-in capital and reserves (capital reserve and earned surplus
reserve; hereinafter in this Article the same); provided, however,that if it is necessary, to refinance the issued old bank debentures(the bank debentures set forth in Article 43, Paragraph 1 of theDevelopment Bank of Japan Act (Act No. 73 of 1999; hereinafterreferred to as the “Old DBJ Act”) before abolishment as set forth in
Article 26 of the Supplementary Provisions which were issued pursuant to the provision of Article 43, Paragraph 1 or Paragraph 4 of
the Old DBJ Act, the “Old Bank Debentures”; hereinafter thesame), the Corporate Debentures or the Development of Bank ofJapan Bonds, the Corporation may issue the Corporate
Debentures and the Development Bank of Japan Bonds, inexcess of such amount only within the period of time required forsuch refinancing:(1) Outstanding amount of deposits;(2) Outstanding amount of borrowings;(3) Outstanding amount of funds deposited pursuant to the provision of Article 42, Paragraph 5 of the Old DBJ Act;
(4) Outstanding amount of the obligations representing the principals of the Old Bank Debentures;(5) Outstanding amount of the obligations representing the principals of the Corporate Debentures and the Development Bankof Japan Bonds issued; and(6) Outstanding amount of those items which have the same
economic nature as those referred to in each of the foregoing, howsoever described.
2. The aggregate amount of the items identified below shall not
exceed the sum of: (i) the amount of paid-in capital and reservesand (ii) the upper limit set forth in the main sentence of the preceding Paragraph:(1) Outstanding amount of the amounts of loans made andclaims acquired (other than those relating to Securities set
forth in Item (3));(2) Outstanding amount of obligations of guarantee;(3) Outstanding amount of Securities acquired (the Securities set
forth in Article 3, Paragraph 3 and exclude the Securities
referred to in Article 2, Paragraph 1, Items (1) and (2) of the
Financial Instruments and Exchange Act (including the rights
to be represented on such securities when such Securities
are not issued), and those relating to capital contributions
under the next following Item); and(4) Outstanding amount of capital contributions.
Article 15 Resolution for Election of Representative Directors
and Other Officers
Resolutions for appointment and dismissal of the representative
directors or representative executive officers of the Corporation,
appointment and dismissal of statutory auditors, or appointment
and dismissal of audit committee members (kansaiin) shall not
become effective without authorization of the Minister of Finance.
Article 16 Authorization of Concurrent Positions of Directors
1. Any director (or, if the Corporation is a company maintaining committees (iinkai secchi kaisha), any executive officer) who performs
the day-to-day business of the Corporation shall not perform the
day-to-day business of any other corporation without authorizationof the Minister of Finance.
2. The Minister of Finance shall, upon receipt of an application for theauthorization referred to in the preceding Paragraph, grant his/herauthorization, except in cases where it is determined that any
matter so applied may interfere with sound and proper management of the Corporation.
Article 17 Business Plan
Prior to the beginning of each fiscal year, the Corporation shalldraw out a business plan for the new fiscal year and obtain authorization of the Minister of Finance, as stipulated in the Ministry of
Finance Ordinance. If the Corporation intends to revise it, thesame shall apply.
Article 18 Redemption Plan
Prior to the beginning of each fiscal year, the Corporation shalldraw out redemption plans for the Corporate Debentures, theDevelopment Bank of Japan Bonds and the borrowings andobtain authorization of the Minister of Finance, as stipulated in the
Ministry of Finance Ordinance. If the Corporation intends to revise
it, the same shall apply.
Article 19 Subsidiaries Subject to Authorization
1. If the Corporation intends to make any of the following entities(other than individuals in the cases of those referred to in Items (3),(4) and (7); hereinafter referred to as the “Subsidiaries Subject toAuthorization”) its subsidiary (the subsidiary set forth in Article 2,
Item (3) of the Companies Act), the Corporation shall obtain authorization of the Minister of Finance in advance:(1) Banks;(2) Long-term credit banks (the long-term credit banks set forthin Article 2 of the Long-Term Credit Bank Act (Act No. 187
of 1952));(3) Financial Instruments Firms (limited to those who engage in typeI financial instruments trading business set forth in Article 28,
Paragraph 1 of the Financial Instruments and Exchange Act);(4) Money lenders (the money lenders set forth in Article 2,
Paragraph 2 of the Money Lending Business Act (Act No. 32
of 1983), and exclude those who concurrently conduct thebusiness referred to in the preceding Items or fall within otherrequirements stipulated in the Ministry of Finance Ordinance);(5) Trust companies (the trust companies set forth in Article 2,
Paragraph 2 of the Trust Business Act (Act No. 154 of 2004));(6) Insurance companies (the insurance companies set forth in
Article 2, Paragraph 2 of the Insurance Business Act (Act No.
105 of 1995)); andData Section

the Development Bank of Japan Bonds, and the borrowing ofmoney, such as the amounts of issue and borrowings, denominated currency of the Corporate Debentures, the Development
Bank of Japan Bonds and the borrowings, as stipulated in the
Ministry of Finance Ordinance, and obtain authorization of the
Minister of Finance. If the Corporation intends to revise it, thesame shall apply.
2. If the Corporation issues the Corporate Debentures or theDevelopment Bank of Japan Bonds, or borrows money, theCorporation shall submit a report thereon to the Minister of Financewithout delay, as stipulated in the Minister of Finance Ordinance.
3. Only with respect to the Corporate Debentures issued outside ofJapan, the Corporation may issue certificates representing the
Corporate Debentures, as prescribed in the Cabinet Order, in theevent that it is necessary to deliver replacement certificates toanyone who has lost those certificates.
4. The provisions of the second sentence of Paragraph 1, andParagraph 2 shall not apply to the following cases:(1) When the Corporation issues certificates representing the
Corporate Debentures or the Development Bank of Japan
Bonds (hereinafter in the following Item and Article 25,
Paragraph 2 referred to as the “Bond Certificates, Etc.”) uponrequest for reissue which will be made after a decision of nullification set forth in Article 699, Paragraph 2 of theCompanies Act; and(2) When the Corporation issues the Bond Certificates Etc. as
set forth in Article 5, Paragraph 3 or the immediately preceding Paragraph.

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The Development Bank of Japan Inc. Act(7) Those stipulated by the Ministry of Finance Ordinance as
those who are similar to each of the foregoing.
Article 20 Amendment to the Articles of Incorporation, Etc.
1. Resolutions for amendment to the Articles of Incorporation of the
Corporation, disposition of surplus funds (other than disposition oflosses) such as distribution, merger, corporate split, and dissolution shall not become effective without authorization of the Ministerof Finance.
2. If the Minister of Finance intends to grant the authorization referred
to in the preceding Paragraph (limited to resolutions for merger,
corporate split and dissolution), the Minister of Finance shall havea discussion with the Minister of Land, Infrastructure and Transport.
Article 21 S
 ubmission of Balance Sheet and Other Financial
Statements
For each fiscal year, the Corporation shall submit to the Minister ofFinance, as stipulated in the Ministry of Finance Ordinance, its balance sheet, profit and loss statement and business report for theinterim fiscal year (the period from April 1 to September 30 of thecurrent fiscal year) of the current fiscal year, and its balance sheet,profit and loss statement and business report for the current fiscal
year.
Article 22 S
 pecial Exemptions from Management of Fiscal
Loan Funds
Notwithstanding the provision of Article 10, Paragraph 1 of the
Fiscal Loan Funds Act (Act No. 100 of 1951), the fiscal loan
funds (the fiscal loan funds set forth in Article 2 of the Fiscal Loan
Funds Act; hereinafter the same) may be appropriated for loans(hereinafter in Article 24 referred to simply as the “Loans”) to the
Corporation when the Corporation borrows money for appropriation for expenses required for its operations set forth in Article 3,
Paragraphs 1 and 2.
Article 23
1. Notwithstanding the provision of Article 10, Paragraph 1 of the
Fiscal Loan Funds Act, the fiscal loan funds may be appropriatedfor the Corporate Debentures and the Development Bank ofJapan Bonds (hereinafter in the following Paragraph, immediately
following Article and Article 25, Paragraph 1 referred to as the“Debentures, Etc.”) to be issued by the Corporation to appropriate

the resulting proceeds for expenses required for its operations set
forth in Article 3, Paragraphs 1 and 2.
2. If the fiscal loan fund is invested in the Debentures, Etc. or the Old
Bank Debentures, the fiscal loan fund shall not be used to underwrite, subscribe for or purchase (limited, in the case of the Old
Bank Debentures, to purchase; hereinafter in this Paragraphreferred to as the “Subscribe”) the Debentures, Etc. or the Old
Bank Debentures in excess of five-tenths (5/10) of the outstanding
amount of the Debentures, Etc. and the Old Bank Debentures or
six-tenths (6/10) of the total amount of the Debentures, Etc. to beissued by the Corporation at a time. In this case, the Debentures,
Etc. or the Old Bank Debentures to be Subscribed with the fiscal
loan funds shall be the same as those otherwise Subscribed forwith respect to the terms such as interest rate, collateral, methodof redemption and maturity.
Article 24
For the purpose of application of the provisions of the Act
Concerning Special Measures for Long-term Management of
Fiscal Loan Funds (Act No. 7 of 1973) to the fiscal loan funds to
be invested in making loans as set forth in Article 22 or the fiscal
loan funds to be invested in the Debentures, Etc. as set forth inParagraph 1 of the immediately preceding Article, the Corporation
shall be deemed as the corporation set forth in Article 10,
Paragraph 1, Item (7) of the Fiscal Loan Funds Act.
Article 25 Guarantee of Obligations
1. Notwithstanding the provision of Article 3 of the Act Concerning
Restrictions on Fiscal Assistance by the Government to
Corporations (Act No. 24 of 1946), the Government may enter
into a guarantee agreement for the obligations relating to theDebentures, Etc., to the extent of the amount approved by the
resolutions of the Diet.
2. In addition to the provision of the preceding Paragraph, theGovernment may enter into a guarantee agreement for the­obligations relating to the Bond Certificates, Etc. to be issued
by the Corporation upon request for reissue to be made after adecision of nullification set forth in Article 699, Paragraph 2 of
the Companies Act, for delivery to those who have lost theBond Certificates, Etc., or for the obligations relating to the Bond
Certificates, Etc. to be issued by the Corporation as set forth in
Article 5, Paragraph 3 or Article 13, Paragraph 3.

Chapter III Miscellaneous Provisions
Article 26 Supervisory Measures
1. The competent minister shall oversee and supervise the
Corporation in accordance with the provisions of this Act.
2. Whenever the competent minister deems necessary to securesound and proper management of the Corporation in light of thecondition of the business operations or properties of the
Corporation, or the properties of the Corporation and its subsidiaries (which are limited to those subsidiaries set forth in Article 2,
Item (3) of the Companies Act, which fall within the Subsidiaries
Subject to Authorization; hereinafter in Paragraphs 2 and 5 of theimmediately following Article, and Article 33, Paragraph 2, thesame) or to otherwise effectuate this Act, the competent ministermay request the Corporation to submit an improvement plan tosecure its sound management by indicating those matters forwhich the Corporation should take measures and the deadline forsubmission or direct the Corporation to revise the improvement
plan once submitted, or direct, to the extent necessary, theCorporation to suspend its business operations in whole or in part
during the designated period of time or to deposit its properties tothe competent deposit office, or give other orders concerningbusiness necessary for supervision.

Article 27 Reports and Inspections
1. If the competent minister deems necessary to secure sound andproper management of the Corporation and otherwise deems
necessary to effectuate this Act, the competent minister may
cause the Corporation to make a report, or have any of officials of
the competent ministry enter into premises of the Corporationsuch as its office to inspect the condition of business or books,
documents and other properties required.
2. If the competent minister deems especially necessary to securesound and proper management of the Corporation and otherwise
deems especially necessary to effectuate this Act, the competent
minister may, to the extent necessary, cause any of the subsidiaries or entities engaged by the Corporation for any services of the
Corporation (hereinafter in this Paragraph, Paragraph 5 and Article
33, Paragraph 2 referred to as the “Contractors”) to make reports
relevant to the condition of business of the Corporation or haveany officials of the competent ministry enter into offices or otherpremises of the subsidiaries or the Contractors of the Corporation
to inspect the condition of business or books, documents andother properties required which may serve as reference relating to
the condition of business of the Corporation.

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Article 28 Delegation of Authority
1. The Minister of Finance may delegate a part of the authority to
conduct on-site inspections pursuant to the provision of
Paragraphs 1 or 2 of the immediately preceding Article to thePrime Minister, as stipulated in the Cabinet Order.
2. If the Prime Minister has had the on-site inspections conductedpursuant to the provision of Paragraphs 1 or 2 of the immediately
preceding Article based on the delegation of the authority under
the preceding Paragraph, the Prime Minister shall promptly report
the Minister of Finance on results of such inspections.
3. The Prime Minister shall delegate the authority delegated pursuant
to the provision of Paragraph 1 and the authority pursuant to theprovision of the immediately preceding Paragraph to theCommissioner of the Financial Services Agency.
4. The Commissioner of the Financial Services Agency may delegate
all or a part of the authority delegated pursuant to the provision of
the immediately preceding Paragraph to the director of the competent local financial bureau or local finance branch bureau, as
stipulated in the Cabinet Order.
5. If the Corporation obtains the approval referred to in Article 9,
Paragraph 1, each provision of the preceding Paragraphs shallnot apply.
Article 29 Competent Ministers
1. The competent minister under this Act shall be the Minister ofFinance provided, however, that in the case that the Corporation
obtains the approval referred to in Article 9, Paragraph 1, the competent ministers for the following matters shall be the Minister ofFinance and the Prime Minister:(1) Matters regarding the provisions of the Banking Act which areapplied mutatis mutandis after changing to read in Article 10;(2) Matters regarding the directions and orders under Article 26,
Paragraph 2 (limited to those to be given when it is deemednecessary to secure sound and proper management of the
Corporation set forth in the said Paragraph);(3) Matters regarding the direction for report and on-site inspections under Article 27, Paragraph 1 (limited to those to bemade and conducted when it is deemed necessary to securesound and proper management of the Corporation set forth in
the said Paragraph); and(4) Matters regarding the direction for report and on-site inspections under Article 27, Paragraph 2 (limited to those to bemade and conducted when it is deemed especiallynecessary to secure sound and proper management of the
Corporation set forth in the said Paragraph).
2. The Minister of Finance or the Prime Minister shall not be precluded from individually exercising the authority relating to thematters referred to in Item (3) or (4) of the preceding Paragraph as
set forth in the proviso of the preceding Paragraph.
3. If each minister referred to in each of the following Items exercises
his/her authority pursuant to the provision of the immediately
preceding Paragraph, he/she shall promptly inform the results
thereof to the minister set forth opposite to him/her in each of thefollowing Items:(1) Minister of Finance: Prime Minister(2) Prime Minister: Minister of Finance
4. In the cases stipulated in the proviso of Paragraph 1, reference tothe “Minister of Finance” in Article 3, Paragraph 2 shall be changed
to read the “Minister of Finance and the Prime Minister”; reference
to the “Minister of Finance” in Article 13, Paragraph 2 shall bechanged to read the “Minister of Finance (or, in relation to issue of
the Development Bank of Japan Bonds, the Minister of Financeand the Prime Minister)”; reference to the “Minister of Land,
Infrastructure and Transport” in Article 20, Paragraph 2 shall bechanged to read the “Minister of Land, Infrastructure and Transport
and the Prime Minister”; reference to the “, as stipulated in the
Ministry of Finance Ordinance, its balance sheet, profit and loss
statement and business report for interim fiscal year (the period
from April 1 to September 30 of the current fiscal year) of the current fiscal year” in Article 21 shall be changed to read the “, asstipulated in the Ministry of Finance Ordinance (or, in relation to thefiscal year and interim fiscal year (the period from April 1 to
September 30 of the current fiscal year; hereinafter in this Article
the same) in and after the fiscal year in which the date on which
the approval referred to in Article 9, Paragraph 1 is obtained isincluded, the Minister of Finance Ordinance and the Cabinet
Officer Ordinance), its balance sheet, profit and loss statement andbusiness report for interim fiscal year of the current fiscal year”, andreference to the “Minister of Finance” in Article 21 shall be changed
to read the “Minister of Finance (or, in relation to the fiscal year andinterim fiscal year in after the fiscal year in which the date on which
the approval referred to in the said Paragraph is obtained isincluded, the Minister of Finance and the Prime Minister).”
5. In the case of the proviso of Paragraph 1, if the Minister of Financeintends to amend the Minister of Finance Ordinance referred to in
Article 3, Paragraph 1, Item (7) or (8) he/she shall obtain the priorconsent of the Prime Minister.
6. The Prime Minister shall delegate the authorities under this Act(other than those authorities pursuant to the provisions ofParagraphs 1 through 3 of the immediately preceding Article,
and other authorities set forth in the Cabinet Order) to theCommissioner of the Financial Services Agency.
7. The Commissioner of the Financial Services Agency may delegate
a part of the authorities delegated to him/her pursuant to the provision of the immediately preceding Paragraph to the director of
local finance bureau or local finance branch bureau.

Chapter IV Penal Provisions
Article 30
1. If any directors, executive officers (shikkoyaku), accounting counsel (kaikei sanyo) (if an accounting counsel is a firm, its members
who should perform the duties as such), statutory auditors, or
employees accept, solicit or promise to accept a bribe in connection with their duties, they shall be punished by imprisonment withwork for not exceeding three (3) years. If they conduct improper
activities or fail to conduct proper activities with the bribe, theyshall be punished by imprisonment with work for not exceeding
five (5) years.

2. In the case of the immediately preceding Paragraph, the bribe
accepted by the criminal person shall be confiscated. If the bribein whole or in part cannot be confiscated, such amount shall becollected.
Article 31
1. Any person who gives, offers or promises to give a bribe referred
to in Paragraph 1 of the immediately preceding Article shall bepunished with imprisonment for not exceeding three (3) years or afine not exceeding 1,000,000 yen.

Data Section

3. When the officials conduct on-site inspection pursuant to the provisions of the preceding two Paragraphs, those officials shall carrya certificate showing their identities and present it to the parties
concerned.
4. The authority of the officials to conduct on-site inspections pursuant to the provisions of Paragraphs 1 and 2 shall not beinterpreted as that for a criminal investigation.
5. The subsidiaries and the Contractors of the Corporation may reject
the report or on-site inspection pursuant to the provision of
Paragraph 2, if there is any reasonable cause.

86

The Development Bank of Japan Inc. Act

2. If the person who committed the crime referred to in the immediately preceding Paragraph surrendered to justice, his/her penalty
may be reduced or he/she may be exempted from the punishment.
Article 32
1. The crime referred to in Article 30, Paragraph 1 shall comply with
Article 4 of the Criminal Code (Act No. 45 of 1907).
2. The crime referred to in Paragraph 1 of the immediately preceding
Article shall comply with Article 2 of the Criminal Code.
Article 33
1. Any directors, executive officers (shikkoyaku), accounting counsel(kaikei sanyo) (if an accounting counsel is a firm, its members whoshould perform the duties as such), statutory auditors, or employees of the Corporation who fail to make reports, or make false
reports on matters to be reported in accordance with the provisionof Article 27, Paragraph 1, or refuse, interrupt or avoid inspectionin accordance with the same paragraph, shall be punished with afine not exceeding 300,000 yen.
2. Any directors, executive officers (shikkoyaku), accounting counsel(kaikei sanyo) (if an accounting counsel is a firm, its members whoshould perform the duties as such), statutory auditors, or employees of the subsidiaries of the Corporation or the Contractors who
fail to make reports, or make false reports on matters to bereported in accordance with the provision of Article 27, Paragraph2, or refuse, interrupt or avoid inspection in accordance with thesame paragraph, shall be punished with a fine not exceeding
300,000 yen.
Article 34
In any of the following cases, any directors, executive officers (shikkoyaku), accounting counsel (kaikei sanyo) or its members whoshould perform the duties as such, or statutory auditors of the
Corporation shall be punished with a non-penal fine not exceeding
1,000,000 yen:
(1) When he/she has conducted business activities in violation of
the provision of Article 3, Paragraph 2;(2) When he/she has not notified of his/her concurrent position in
violation of the provision of Article 4, Paragraph 2;(3) When he/she has started acceptance of deposits or issue of
the Development Bank of Japan Bonds in violation of the provision of Article 9, Paragraph 1;(4) When he/she has solicited those who will subscribe for
Shares Offered for Sale or Stock Acquisition Rights Offered,or delivered shares or stock acquisition rights in connection
with a share-for-share exchange in violation of the provision of
Article 12, Paragraph 1;(5) When he/she has not submitted a report on the delivery ofshares in violation of the provision of Article 12, Paragraph 2;(6) When he/she has not obtained authorization for its basic
policy in violation of the provision of Article 13, Paragraph 1;(7) When he/she has not submitted a report on issue of the
Corporate Debentures or the Development Bank of Japan
Bonds, or borrowing money in violation of the provision of
Article 13, Paragraph 2;(8) When he/she has exceeded the limit or the total referred to in
Article 14, Paragraph 1 or Paragraph 2 in violation of the provision thereof;(9) When he/she has not obtained authorization for his/her concurrent position in violation of the provision of Article 16,
Paragraph 1;(10) When he/she has not obtained authorization for its businessplan in violation of the provision of Article 17;(11) When he/she has not obtained authorization for its redemption plans in violation of the provision of Article 18;(12) When he/she has made Subsidiaries Subject to Authorization
its subsidiary in violation of the provision of Article 19;(13) When he/she has not submitted its balance sheet, profit andloss statement or business report, or has submitted the one
which includes false statements or records in violation of theprovision of Article 21;(14) When he/she has violated the orders referred to in Article 26,
Paragraph 2.
Article 35
Any person who violates the provision of Article 2, Paragraph 1 shallbe punished with a non-penal fine not exceeding 100,000 yen.

Supplementary Provisions (Extract)
Article 1 Enforcement Date
This Act shall come into force from the date of promulgation; provided, however, that the provisions set forth in the following Items
shall take effect from the date set forth in each Item:(1) The provisions of Paragraph 1, Items (5), and (11) through(17), Paragraph 3, Paragraph 4, Item (2), Paragraph 5 of
Article 3, Article 4, Article 10, Article 14, Paragraph 2, Item (3),Article 19, Item (3), and Article 21 of the Supplementary
Provisions: Date on which the Act Concerning Amendment toParts of the Securities and Exchange Act (Act No. 65 of
2006) comes into force or the date on which this Act comes
into force, whichever is later.
(2) Provision of Article 19, Item (4): Date on which the Act
Concerning Amendment to Parts of the Act Concerning theRegulations on the Money Lending Business (Act No. 115 of2006) comes into force or the date on which this Act comes
into force, whichever is later.
(3) Provisions of Articles 26 through 60 and 62 through 65 of the
Supplementary Provisions: October 1, 2008.
Article 2 Disposition of Government-Owned Shares
1. Pursuant to the provision of Article 6, Paragraph 2 of the Act
Concerning Promotion of Administrative Reform for Realizing the
Simple and Effective Government (Act No. 47 of 2006), theGovernment shall make efforts to reduce the number of shares
held by it in the Corporation (hereinafter in the following Paragraphand the Article 3 of the Supplementary Provisions referred to as“Government-Owned Shares”), taking into account the effect on
the attainment of the objectives of the Corporation, as well as themarket situation, and shall dispose all of them as soon aspracticable.
2. For a period from the effectuation of this Act until the Government
disposes of all of the Government-Owned Shares, theGovernment shall from time to time review matters, such as matters regarding the method in which the Government-Owned
Shares should be disposed of and take the required measures
based on the result of such review, so that the foundation of the
Corporation’s investment and financing functions for long-termbusiness funds will be maintained.
Article 2-2 Capital Contribution by the Government
The Government may make capital contributions to the Corporation,
to the extent of the amount approved by the budget, whenever theGovernment deems necessary, until March 31, 2012.
Article 2-3 Issue of the Government Bonds
1. The Government may issue the government bonds to use forsecurement of capital that become necessary to secure soundness of financial conditions of the Corporation in performing crisis
response business set forth in Article 2, Item (5) of the Japan
Finance Corporation Act (Act No. 57 of 2007) (hereinafter referred
to as the “crisis response business”), until March 31, 2012.

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Article 2-4 Redemption of the Government Bonds
1. The Corporation may request the redemption of the government
bonds delivered as set forth in Paragraph 2 of the immediately
preceding Article, only within the amount calculated as stipulatedby the Ministry of Finance Ordinance that become necessary as
the amount of the capital in response to the increase of assets
related to its crisis response business (limited to those conductedby March 31, 2012).
2. If the Government is requested by the Corporation to redeem all ora part of the government bonds delivered pursuant to the provisionof Paragraph 2 of the immediately preceding Article, theGovernment shall promptly redeem them.
3. When the redemption has been made pursuant to the provision of
the immediately preceding Paragraph, the amount of the capital of
the Corporation shall be the aggregate sum of the amount of thecapital immediately preceding such redemption and the amount ofsuch redemption.
4. As for application of the provision of Article 445, Paragraph 1 of
the Companies Act in the case where the provision of the immediately preceding Paragraph applies, “Unless it is otherwise provided
for in this Act” therein shall be deemed to be changed to read“Unless it is otherwise provided for in this Act and in cases where
the provision of Article 2-4, Paragraph 3 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act (Act No. 85
of 2007) applies.”
5. In addition to those set forth in each of the preceding Paragraphs,
other matters required for the redemption of the government
bonds delivered by the Government as set forth in Paragraph 2 of
the immediately preceding Article, shall be stipulated in the Ministryof Finance Ordinance.
Article 2-5 Return of the Government Bonds
1. If there are any government bonds delivered as set forth in Article
2-3, Paragraph 2 of the Supplementary Provisions, those which
are not redeemed as of July 1, 2012, the Corporation shall returnthe unredeemed government bonds to the Government.
2. The Government shall immediately cancel the government bonds
when the government bonds are returned as set forth in the immediately preceding Paragraph.
3. In addition to those set forth in the preceding two Paragraphs,
other matters required for the return and the cancellation of thegovernment bonds delivered by the Government as set forth in
Article 2-3, Paragraph 2 of the Supplementary Provisions, shall be
stipulated in the Ministry of Finance Ordinance.
Article 2-6 Special Rules for Taxation of the Registration
License Tax
In case of the investment as set forth in Article 2-2 of the
Supplementary Provisions, or the redemption as set forth in Article
2-4, Paragraph 2 of the Supplementary Provisions, no registration
license tax shall be assessed on registration of the increase in theamount of the capital of the Corporation, limited to only those registered as set forth in the Minister of Finance Ordinance.

Article 2-7 Corporation’s Obligation to Conduct Crisis
Response Business
The Corporation shall, in order to attain its objectives, in accordance with the provisions set forth in Articles 2-10, 2-11, 2-22
and Articles 2-24 to 2-30 of the Supplementary Provisions, beobligated to conduct crisis response business, for an indefinite
period, to secure a smooth supply of funds to those who needfunds to address the damages set forth in Article 2, Item (4) of theJapan Finance Corporation Act.
Article 2-8 Government’s Holding of Shares with Regard to
Crisis Response BusinessWith a view to ensure proper conduct of crisis response businessby the Corporation, the Government shall, for an indefinite period,
hold more than one-third of the total number of issued shares of
the Corporation (excluding shares in respect of which voting rights
may not be exercised for all matters that may be resolved at a
general meeting of shareholders; the same shall apply in Article
2-13 of the Supplementary Provisions).
Article 2-9 Capital Contribution by the Government with
Regard to Crisis Response Business
The Government may, for an indefinite period, make capital contributions to the Corporation, to the extent of the amount approved by
the budget, whenever the Government deems necessary for proper
implementation of crisis response business by the Corporation.
Article 2-10 Implementation of Crisis Response Business1. The Corporation shall conduct crisis response business at thehead office or any other office designated by the Minister ofFinance (hereinafter in the following Paragraph and Article 2-31,
Paragraph 1, Item (1) of the Supplementary Provisions referred toas the “designated office”).
2. The Corporation shall neither suspend nor cease to conduct crisis
response business at the designated office, except in cases wherecrisis response business is temporarily suspended, in whole or inpart, at the designated office due to Acts of God or other reasons
beyond control, as stipulated in the Ministry of Finance Ordinance.
Article 2-11 Special Provisions, Etc. on Business Plan with
Regard to Crisis Response Business1. The Corporation shall include an implementation policy for its crisis
response business in its business plan provided for in Article 17,
as stipulated in the Ministry of Finance Ordinance.
2. The Corporation shall include the implementation status of its crisis
response business, based on the implementation policy set forthin the immediately preceding Paragraph, in its business report provided for in Article 21, as stipulated in the Ministry of FinanceOrdinance.
3. In addition to matters set forth in each of the Items of Article 27 of
the Companies Act, matters regarding proper implementation ofcrisis response business shall be included or recorded in the
Articles of Incorporation of the Corporation.
Article 2-12 Special Investment Operations
1. The Corporation shall, in order to attain its objectives, conduct
special investment operations, in accordance with the provisions
set forth in this Article, Articles 2-15 to 2-20, and Articles 2-23 to
2-30 of the Supplementary Provisions.
2. In this Article and up to Article 2-20 of the Supplementary
Provisions, as well as in Articles 2-23, 2-25, 2-27 and 2-31 of the
Supplementary Provisions, “special investment operations” means,among the investment businesses in special business activities,
those that are deemed to particularly contribute to the facilitation of
supply of funds by financial institutions and others, for the revitalization of business activities taking advantage of regional
characteristics that contribute to autonomous development of local
economies, or for the enhancement of competitiveness ofJapanese companies that contribute to the improvement of

Data Section

2. The Government, as set forth in the immediately preceding
Paragraph, shall issue the government bonds and deliver themto the Corporation, to the extent of the amount approved by
the budget.
3. The government bonds to be issued as set forth in Paragraph 1
shall be non interest-bearing.
4. The government bonds to be issued as set forth in Paragraph 1
may not be transferred, pledged as security, or otherwise disposed.
5. In addition to those set forth in the preceding three Paragraphs,
other matters necessary for the government bonds to be issued
as set forth in Paragraph 1 shall be stipulated by the Ministry of
Finance Ordinance.

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The Development Bank of Japan Inc. Act

socioeconomic vitality and sustainable development of Japan, as
well as for special business activities, and those of which the business entities that will receive funds from the said investment
business and the particulars of such supply are decided during theperiod from the date on which the authorization specified in Article
2-17, Paragraph 1 of the Supplementary Provisions is obtained
through March 31, 2021, and any other businesses incidental
thereto (including those conducted on and after April 1, 2021).
3. “Special business activities” set forth in the immediately preceding
Paragraph means the following business activities:(1) Business activities conducted by Japanese business entities
with the aim of improving productivity and profitability by cultivating new business through effective use of insufficiently its
management resources not sufficiently used, or by promoting
management innovation mainly through co-ordinated alignment with business entities in different fields and effective
combination of management resources; and(2) Business activities that provide funds to the business activities set forth in the preceding Item.
4. “Investment business” set forth in Paragraph 2 means the following
businesses concerning supply of funds:(1) To lend money through subordinated loans (which means
loans made under loan agreements with special clause of subordinated contents with regard to the payment of principal andinterest, and stipulated in the Ministry of Finance Ordinance);(2) To make capital contributions;(3) To acquire subordinated corporate debentures (which means
corporate debentures with special clause of subordinatedcontents with regard to the payment of principal and interest,and stipulated in the Ministry of Finance Ordinance); and(4) In addition to those set forth in the preceding three Items, toprovide funds in the manner approved in advance by the
Minister of Finance.
Article 2-13 G overnment’s Holding of Shares with Regard toSpecial Investment Operations
With a view to ensure proper implementation of special investment
operations by the Corporation, the Government shall hold one-halfor more of the total number of issued shares of the Corporation,
until the Corporation completes the special investment operations.
Article 2-14 C apital Contribution, Etc. by the Government with
Regard to Special Investment Operations
1. The Government may make capital contributions to the
Corporation, to the extent of the amount approved by the budget,whenever the Government deems necessary for proper implementation of special investment operations by the Corporation,
until March 31, 2021.
2. The Corporation shall not appropriate money provided throughcapital contributions provided for in the preceding Paragraph toany funds other than funds for special investment operations.
Article 2-15 S upplement or Encouragement of Financing
Conducted by Financial Institutions, Etc. inSpecial Investment Operations
The purpose of the Corporation in conducting special investment
operations shall be to supplement or encourage financing conducted by financial institutions and investment conducted byprivate sector.
Article 2-16 Special Investment Guidelines
1. Guidelines to be followed by the Corporation in conducting special
investment operations (in the following Paragraph and Paragraph 1of the immediately following Article referred to as the “special
investment guidelines”) shall be established and issued by the
Minister of Finance.
2. The special investment guidelines shall provide for the following
matters:(1) Standards to be followed in deciding the business entities
that will receive funds from the special investment operations
and the particulars of such supply of funds;(2) Matters regarding appropriate financial management of thespecial investment operations;(3) Matters regarding securing of appropriate competitive relationships between the Corporation and other business entities;(4) Matters regarding the system to be established to evaluate
and supervise the implementation status of special investment operations;(5) Matters regarding reporting to the Minister of Finance on theimplementation status of special investment operations; and(6) Any other matters necessary to ensure proper implementationof special investment operations.
Article 2-17 Special Investment Operations Rules
1. The Corporation shall set rules regarding special investment operations (in the following Paragraph referred to as the “special
investment operations rules”) in line with the special investment
guidelines, with respect to matters concerning implementation of
special investment operations stipulated in the Ministry of FinanceOrdinance, and shall obtain authorization therefor from the Ministerof Finance. If the Corporation intends to revise such rules, thesame shall apply.
2. The Minister of Finance may order the Corporation to revise thespecial investment operations rules authorized pursuant to theprovision of the preceding Paragraph, if he/she deems that suchrules have become inappropriate for the proper implementation of
special investment operations by the Corporation.
Article 2-18 Special Provisions, Etc. on Business Plan with
Regard to Special Investment Operations
1. The Corporation shall include the implementation policy for the
special investment operations in its business plans provided forunder Article 17, as stipulated in the Ministry of Finance Ordinance,
until the completion of the special investment operations.
2. The Corporation shall include the implementation status of the special investment operations based on the implementation policy
provided for under the immediately preceding Paragraph, in its business reports provided for under Article 21 for each fiscal year up to
the fiscal year including the date of completion of the special investment operations, as stipulated in the Ministry of Finance Ordinance.
3. In addition to matters set forth in each of the Items of Article 27 of
the Companies Act, matters regarding proper implementation of
special investment operations shall be included or recorded in the
Articles of Incorporation of the Corporation, until the completion of
the special investment operations.
Article 2-19 Status of Income and Expenditure with Regard toSpecial Investment Operations, Etc.
For each fiscal year, the Corporation shall, as stipulated in the
Ministry of Finance Ordinance, submit to the Minister of Financeand publish documents stating the status of income and expenditure of the following businesses by category for each fiscal year up
to the fiscal year including the date of completion of the special
investment operations:(1) Special investment operations; and(2) Businesses other than those listed in the preceding Item.
Article 2-20 Completion of Special Investment Operations
1. The Corporation shall, taking into account economic conditions,the state of business of the business entities that will receive funds
from special investment operations, and other circumstances,transfer or otherwise dispose of all of the securities (which means
the securities listed in Article 2, Paragraph 1 of the Financial
Instruments and Exchange Act, and the rights which are deemedas securities pursuant to the provision of Article 2, Paragraph 2 of
the Financial Instruments and Exchange Act) and receivables heldby it in the special investment operations, and seek to complete

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Article 2-21 Securing of Appropriate Competitive Relationships
1. The Corporation shall, for an indefinite period, pay special attention
in conducting its business so that it will not upset its appropriatecompetitive relationships with other business entities.
2. The Corporation shall, for an indefinite period, include, in its business plans provided for under Article 17, a policy concerning
securing of appropriate competitive relationships with other business entities as stipulated in the Ministry of Finance Ordinance.
3. The Corporation shall, for an indefinite period, describe, in its business reports provided for under Article 21, the state of
implementation of its business based on the policy mentioned in
the immediately preceding Paragraph as stipulated in the Ministryof Finance Ordinance.
Article 2-22 Crisis Response Reserve
1. The Corporation shall establish a crisis response reserve andappropriate to such reserve the amount contributed by theGovernment pursuant to the provision of Article 2-9 of the
Supplementary Provisions.
2. When the capital contributions have been made by theGovernment pursuant to the provision of Article 2-9 of the
Supplementary Provisions, the Corporation shall, notwithstanding
the provisions of Article 445, Paragraph 2 of the Companies Act,
record the whole of the amount contributed pursuant to the provision of Article 2-9 of the Supplementary Provisions as the amountof the crisis response reserve. For this purpose, reference to “thisAct” in Article 445, Paragraph 1 of the said Act shall be changed
to read “this Act or the Development Bank of Japan Inc. Act (ActNo. 85 of 2007).”
Article 2-23 S pecial Investment Reserve and Special
Investment Surplus Funds
1. The Corporation shall establish a special investment reserve andappropriate to such reserve an amount equal to the total of theamount contributed by the Government pursuant to the provisionof Article 2-14, Paragraph 1 of the Supplementary Provisions, theamount by which the amount of paid-in capital or reserves isreduced pursuant to the provision of Paragraph 3 of this Article
and the amount reduced from the amount of surplus funds pursuant to the provision of Paragraph 4 of this Article.
2. When the capital contributions have been made pursuant to theprovision of Article 2-14, Paragraph 1 of the Supplementary
Provisions, the Corporation shall, notwithstanding the provision of
Article 445, Paragraph 2 of the Companies Act, record the wholeof the amount contributed pursuant to the provision of Article
2-14, Paragraph 1 of the Supplementary Provisions as the amountof the special investment reserve. For this purpose, reference to“this Act” in Article 445, Paragraph 1 of the said Act shall bechanged to read “this Act or the Development Bank of Japan Inc.
Act (Act No. 85 of 2007).”
3. The Corporation may reduce the amount of its paid-in capital orreserves and increase the amount of its special investment
reserve, whenever the Corporation deems necessary in order toimplement the special investment operations properly. For the purpose of application of the provisions of Article 447 through Article
449 of the Companies Act in this case, reference to “is to beappropriated to reserves” in Article 447, Paragraph 1, Item (2) of
the said Act shall be changed to read “is to be appropriated toreserves or to special investment reserve under Article 2-23,
Paragraph 1 of the Supplementary Provisions of the Development
Bank of Japan Inc. Act (Act No. 85 of 2007) (hereinafter referred toas the “special investment reserve” in this Item, Paragraph 1, Item(2) of the following Article and Article 449, Paragraph 1),” reference
to “the amount to be appropriated to reserves” in the same Item
shall be changed to read “the amount to be appropriated toreserves or special investment reserve,” reference to “the paid-in
capital” in Article 448, Paragraph 1, Item (2) of the said Act shallbe changed to read “the paid-in capital or special investment
reserve,” and reference to “is appropriated to paid-in capital” inArticle 449, Paragraph 1 of the said Act shall be changed to read“is appropriated to paid-in capital or special investment reserve.”
4. The Corporation may reduce the amount of surplus funds andincrease the amount of its special investment reserve, whenever
the Corporation deems this necessary in order to implement the
special investment operations properly. For this purpose, the following matters shall be determined:(1) The amount by which the amount of surplus funds will be
reduced; and(2) The date on which the increase in the amount of the special
investment reserve will become effective.
5. The determination of the matters referred to in each Item of theimmediately preceding Paragraph shall be made by resolution of ashareholders’ meeting.
6. The amount provided for under Paragraph 4, Item (1) of this Article
may not exceed the amount of surplus funds as of the date provided for under Item (2) of the said Paragraph.
7. The Corporation shall establish the special investment surplus
funds and record the amount of profit or loss resulting from thecalculation of profits and losses pertaining to the special investment operations for each fiscal year as stipulated in the Ministry of
Finance Ordinance.
Article 2-24 Special Provisions on Limits on Borrowing and
Limitation on Extension of Credit
For the purpose of application of the provision of Article 14, when
the amount of the crisis response reserve, the amount of the special investment reserve or the amount of the special investment
surplus funds is recorded, the total of the amounts so recorded
shall be included in the amount of paid-in capital and reserves.
Article 2-25 Amount of Surplus Funds, Etc.
1. For the purpose of calculation of surplus funds, the Corporation
shall include the aggregate amount of the crisis response reserve,
the special investment reserve and the special investment surplus
funds as of the last day of the most recent fiscal year (the mostrecent fiscal year set forth in Article 2, Item (24) of the Companies
Act; the same in the following Paragraph) in the total amount ofpaid-in capital and reserves.
2. For the purpose of calculation of surplus funds, the Corporation
shall include the aggregate amount of the amounts set forth inItems (1) though (3) and the aggregate amount of the amounts set
forth in Items (4) through (6), in the aggregate amount of theamounts set forth in Article 446, Items (1) through (4) of theCompanies Act and the aggregate amount of the amounts set
forth in Items (5) through (7) of the said Article, respectively:(1) The amount by which the amount of the crisis response
reserve has been reduced after the last day of the mostrecent fiscal year (excluding the amount of the crisis response
reserve provided for under Article 2-27, Paragraph 4, Item (1)of the Supplementary Provisions), if any;
(2) The amount by which the amount of the special investment
reserve has been reduced after the last day of the mostrecent fiscal year (excluding the amount of the special investment reserve provided for under Article 2-27, Paragraph 4,
Item (1) of the Supplementary Provisions which has been paid
to the national treasury), if any;
(3) The amount by which the amount of the special investment
surplus funds has been reduced after the last day of the mostrecent fiscal year (excluding the amount of the special investment surplus funds provided for under Article 2-27,

Data Section

the special investment operations, by March 31, 2026.
2. When the special investment operations are completed, theCorporation shall promptly notify the Minister of Finance tothat effect.
3. The Minister of Finance shall, when notified pursuant to the provision of the immediately preceding Paragraph, give public notice tothat effect.

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The Development Bank of Japan Inc. Act

Paragraph 4, Item (1) of the Supplementary Provisions thathave been paid to the national treasury), if any;(4) The amount by which the amount of paid-in capital orreserves has been reduced after the last day of the mostrecent fiscal year to increase the amount of the special investment reserve, if any;(5) The amount by which the amount of surplus funds has been
reduced after the last day of the most recent fiscal year toincrease the amount of the special investment reserve, if any;and(6) In addition to those listed in the preceding two Items, the total
amount of the amounts recorded to each account as prescribed in the Ministry of Finance Ordinance.
3. If the Corporation calculates the distributable amount under Article
461, Paragraph 2 of the Companies Act (which shall, in Article
2-27, Paragraph 6 of the Supplementary Provisions, be referred toas the “Distributable Amount”), the Corporation shall deduct, fromthe total of the amounts set forth in Article 461, Paragraph 2, Items(1) and (2) of the said Act, the total of the amounts recorded toeach account as the amount of profit pertaining to the special
investment operations for the period set forth in Article 441,
Paragraph 1, Item (2) of the Companies Act in the case where the
Corporation obtains the approval referred to in Paragraph 4 of thesaid Article (or, in cases set forth in the proviso to the saidParagraph, the approval under Paragraph 3 of the said Article) of
the temporary financial statements referred to in Paragraph 1 ofthe said Article and any other amounts recorded to each accountas prescribed in the Ministry of Finance Ordinance.
Article 2-26 R eduction in Amount of Crisis Response Reserve,
Etc. When Deficit is Covered
1. If the amount of capital reserve and the amount of earned surplus
reserve have become zero, the Corporation may reduce theamount of the crisis response reserve, the amount of the special
investment reserve or the amount of the special investment surplus funds (limited, as regards the amount of the special
investment surplus funds, to the case where such amountexceeds zero). For this purpose, the following matters shall be
determined by resolution of a shareholders’ meeting:(1) The amount by which the amount of the crisis response
reserve, the amount of the special investment reserve or theamount of the special investment surplus funds will be
reduced; and(2) The date on which the reduction of the amount of the crisis
response reserve, the amount of the special investment
reserve or the amount of the special investment surplus funds
will become effective.
2. The resolution provided for under the preceding Paragraph shall not
become effective without authorization of the Minister of Finance.
3. The amount of the crisis response reserve, the amount of the special investment reserve or the amount of the special investment
surplus funds under Paragraph 1, Item (1) of this Article may notexceed the amount of the crisis response reserve, the amount of
the special investment reserve or the amount of the special investment surplus funds, respectively, as of the date set forth in Item (2)of the said Paragraph.
4. The aggregate of the amount of the crisis response reserve, theamount of the special investment reserve and the amount of thespecial investment surplus funds as referred to in Paragraph 1,
Item (1) of this Article may not exceed the amount calculated by
the method prescribed by the Ministry of Finance Ordinance as
the amount of deficit as of the date of the shareholders’ meetingreferred to in the said Paragraph.
5. If the amount of the special investment surplus funds is notexceeding zero, the amount of the special investment reserve as
referred to in Paragraph 1, Item (1) of this Article may not exceed
the amount calculated by the method prescribed by the Ministry of
Finance Ordinance as the amount by which the amount of thespecial investment reserve may be reduced.

6. If the amount of surplus funds of the Corporation exceeds zeroafter a reduction of the amount of the crisis response reserve, theamount of the special investment reserve or the amount of thespecial investment surplus funds pursuant to the provision of
Paragraph 1 of this Article, the Corporation shall increase, in an
amount equivalent to such excess, the amount of the crisis
response reserve, the amount of the special investment reserve or
the amount of the special investment surplus funds until the time
when the cumulative amount of the amounts of the increases in
the amount of the crisis response reserve, the amount of the special investment reserve or the amount of the special investment
surplus funds pursuant to the provision of this Paragraph equals
the cumulative amount of amounts of reductions, as prescribed by
the Minister of Finance Ordinance.
Article 2-27 Payment to National Treasury
1. If it is deemed that the financial basis necessary for proper implementation of the crisis response business has been sufficiently
secured, the Corporation shall pay to the national treasury anamount equivalent to all or a part of the amount of the crisis
response reserve. In that case, the Corporation shall reduce thecrisis response reserve by the amount equivalent to such amountto be paid to the national treasury.
2. If it is deemed unnecessary to maintain the current level of thespecial investment reserve for the proper implementation of thespecial investment operations taking into account the state of
implementation and the financial condition of the special investment operations, the Corporation may reduce the amount of thespecial investment reserve in whole or in part. In that case, theCorporation shall pay to the national treasury an amount calculated
as prescribed by the Ministry of Finance Ordinance as the amount,out of the amount of such reduction, that should belong to thenational treasury on the basis of the proportion of the amount of
the capital contributions made by the Government pursuant to theprovision of Article 2-14, Paragraph 1 of the Supplementary
Provisions to the amount of the special investment reserve.
3. If, in cases where the amount of the special investment surplus
funds exceeds zero, it is deemed unnecessary to maintain thecurrent level of the special investment surplus funds for the proper
implementation of the special investment operations taking into
account the state of implementation and the financial condition of
the special investment operations, the Corporation may reduce
the amount of the special investment surplus funds in whole or inpart. In that case, the Corporation shall pay to the national treasury
an amount calculated as prescribed by the Ministry of FinanceOrdinance as the amount, out of the amount of such reduction,that should belong to the national treasury on the basis of the proportion of the amount of the capital contributions made by theGovernment pursuant to the provision of Article 2-14, Paragraph 1of the Supplementary Provisions to the amount of the special
investment reserve.
4. In the case of the preceding three Paragraphs, the following matters shall be determined by resolution of a shareholders’ meeting:(1) The amount by which the amount of the crisis response
reserve, the amount of the special investment reserve or theamount of the special investment surplus funds is reduced;and(2) The date on which the reduction of the amount of the crisis
response reserve, the amount of the special investment
reserve or the amount of the special investment surplus funds
becomes effective.
5. The resolution provided for under the preceding Paragraph shallnot become effective without authorization of the Minister ofFinance.
6. The aggregate of the amounts to be paid pursuant to the provisionof Paragraphs 1 through 3 of this Article may not exceed theDistributable Amount as of the date provided for under Paragraph
4, Item (2) of this Article.

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Article 2-29 Special Rules of the Act Concerning Restrictions
on Fiscal Assistance by the Government to
Corporations
Notwithstanding the provision of Article 1 of the Act Concerning
Restrictions on Fiscal Assistance by the Government to
Corporations, the Corporation shall comply with the preceding two
Articles with respect to the dividend or distribution of profit or surplus funds to the capital contributions under Article 2-9 of the
Supplementary Provisions or the capital contributions under Article
2-14, Paragraph 1 of the Supplementary Provisions.
Article 2-30 M utatis Mutandis Application of theCompanies Act
1. The provisions of Article 449, Paragraph 6 (limited to the portions
relating to Item (1)) and Paragraph 7, and Article 828 (limited to the
portions relating to Paragraph 1, Item (5) and Paragraph 2, Item(5)) of the Companies Act shall apply mutatis mutandis to cases
where the amount of crisis response reserve, the amount of special investment reserve or the amount of special investment
surplus funds is reduced as set forth in Article 2-26, Paragraph 1of the Supplementary Provisions. For this purpose, references to“paid-in capital” in Article 449, Paragraph 6, Item (1) of the said Act
shall be changed to read the amount of crisis response reserve
set forth in Article 2-26, Paragraph 1 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act (Act No. 85
of 2007) (crisis response reserve set forth in Article 2-22,
Paragraph 1 of the Supplementary Provisions of the said Act;

hereinafter in Article 828, Paragraph 1, Item (5) the same), theamount of special investment reserve (special investment reserve
set forth in Article 2-23, Paragraph 1 of the Supplementary
Provisions of the said Act; hereinafter in this Item the same), or
special investment surplus funds (special investment surplus funds
set forth in Article 2-23, Paragraph 7 of the Supplementary
Provisions of the said Act; hereinafter in this Item the same);“Article 447, Paragraph 1, Item (3)” shall be changed to read
“Article 2-26, Paragraph 1, Item (2) of the Supplementary
Provisions of the said Act”; references to “paid-in capital of” inArticle 828, Paragraph 1, Item (5) of the said Act shall be changed
to read “the amount of crisis response reserve, the amount ofspecial investment reserve, or special investment surplus funds
set forth in Article 2-26, Paragraph 1 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act concerning”; “on which the reduction in the amount of paid-in capital” shallbe changed to read “on which the reduction in the amount of thesaid crisis response reserve, the amount of special investment
reserve, or the amount of special investment surplus funds”; andreferences to “, the trustee in bankruptcy or a creditor, who did notgive approval to the reduction in the amount of paid-in capital” inParagraph 2, Item (5) of the said Article shall be changed to read“or the trustee in bankruptcy.”
2. The provisions of Article 449 (other than the proviso of Paragraph 1
and Paragraph 6, Item (2)) and Article 828 (limited to the portions
relating to Paragraph 1, Item (5) and Paragraph 2, Item (5)) of theCompanies Act shall apply mutatis mutandis to cases where theamount of crisis response reserve is reduced as set forth in Article
2-27, Paragraph 1 of the Supplementary Provisions. For this purpose, references to “paid-in capital or reserves (hereinafter in this
Article referred to as “Paid-In Capital, Etc.”)” in the main clause of
Article 449, Paragraph 1 of the said Act shall be changed to read“crisis response reserve as set forth in Article 2-27, Paragraph 1 of
the Supplementary Provisions of the Development Bank of Japan
Inc. Act (Act No. 85 of 2007) (crisis response reserve set forth in
Article 2-22, Paragraph 1 of the Supplementary Provisions of thesaid Act; hereinafter in this Article and Article 828, Paragraph 1,
Item (5) and Paragraph 2, Item (5) the same)”; “In cases where...
(excluding cases where the whole of the amount by which thereserves are reduced is appropriated to the paid-in capital)” shallbe changed to read “In cases where…”; “of Paid-In Capital, Etc.”
shall be changed to read “of crisis response reserve”; references
to “Paid-In Capital, Etc.” in Paragraph 2, Item (1) of the said Article
shall be changed to read “crisis response reserve”; references to“Ordinance of the Ministry of Justice” in Item (2) of the saidParagraph shall be changed to read the “Ministry of FinanceOrdinance”; references to “Paid-In Capital, Etc.” in Paragraph 4
and the proviso of Paragraph 5 of the said Article shall be changed
to read “crisis response reserve”; references to “paid-in capital” inParagraph 6, Item (1) of the said Article shall be changed to read“crisis response reserve set forth in Article 2-27, Paragraph 1 of
the Supplementary Provisions of the Development Bank of Japan
Inc. Act”; “Article 447, Paragraph 1, Item (3)” shall be changed toread “Paragraph 4, Item (2) of the said Article”; references to “paidin capital of” in Article 828, Paragraph 1, Item (5) of the said Act
shall be changed to read “crisis response reserve set forth in
Article 2-27, Paragraph 1 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act concerning”; “on which the
reduction in the amount of paid-in capital” shall be changed to read“on which the reduction in the amount of the said crisis response
reserve”; and references to “paid-in capital” in Paragraph 2, Item(5) of the said Article shall be changed to read “crisis response
reserve set forth in Article 2-27, Paragraph 1 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act.”
3. The provisions of Article 449 (other than the proviso of Paragraph
1 and Paragraph 6, Item (2)) and Article 828 (limited to the portions
relating to Paragraph 1, Item (5) and Paragraph 2, Item (5)) of theCompanies Act shall apply mutatis mutandis to cases where theamount of special investment reserve is reduced as set forth inData Section

Article 2-28
1. If the Corporation goes into liquidation and there still remains any
residual property after performance of its obligations, theCorporation shall pay to the national treasury an amount equivalent
to the total amount (if the amount of such residual property is lessthan the aggregate of the amount of the crisis response reserveand the amount calculated as described below, an amount ofsuch residual property) calculated as prescribed by the Ministry of
Finance Ordinance as the amount, out of the aggregate of theamount of the crisis response reserve as of the date of such liquidation (if, after reductions of the amount of the crisis response
reserve pursuant to the provision of Article 2-26, Paragraph 1 of
the Supplementary Provisions, the cumulative amount of theamounts of increases in the amount of the crisis response reserve
pursuant to the provision of Paragraph 6 of the said Article is lessthan the cumulative amount of the amounts of such reductions, anamount after adding the shortfall) and the amount of the special
investment reserve and the special investment surplus funds as ofthe same date (if, after reductions of the amount of the special
investment reserve pursuant to the provision of Paragraph 1 of thesaid Article, the cumulative amount of the amounts of increases in
the amount of the special investment reserve pursuant to the provision of Paragraph 6 of the said Article is less than the cumulative
amount of such amounts of reductions, or if, after reductions of
the amount of the special investment surplus funds pursuant to
the provision of Paragraph 1 of the said Article, the cumulative
amount of the amounts of increases in the amount of the special
investment surplus funds pursuant to the provision of Paragraph 6of the said Article is less than the cumulative amount of suchamounts of reductions, an amount after adding the respective
shortfalls), that should belong to the national treasury on the basisof the proportion of the amount of the capital contributions madeby the Government pursuant to the provision of Article 2-14,
Paragraph 1 of the Supplementary Provisions to the amount of thespecial investment reserve.
2. The payment under the preceding Paragraph shall be made inadvance of the distribution of the residual property to shareholders.
3. The payment procedures or any other matters necessary in connection with the payments to be made pursuant to the provisionsof Paragraphs 1 through 3 of the immediately preceding Article andParagraph 1 of this Article shall be prescribed in the Cabinet Order.

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The Development Bank of Japan Inc. Act

Article 2-27, Paragraph 2 of the Supplementary Provisions. For
this purpose, references to “paid-in capital or reserves (hereinafterin this Article referred to as “Paid-In Capital, Etc.”)” in the mainclause of Article 449, Paragraph 1 of the said Act shall bechanged to read “special investment reserve as set forth in Article
2-27, Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007) (special
investment reserve set forth in Article 2-23, Paragraph 1 of the
Supplementary Provisions of the said Act; hereinafter in this Article
and Article 828, Paragraph 1, Item (5) and Paragraph 2, Item (5)the same)”; “In cases where... (excluding cases where the wholeof the amount by which the reserves are reduced is appropriatedto the paid-in capital)” shall be changed to read “In cases
where…”; “of Paid-In Capital, Etc.” shall be changed to read “ofspecial investment reserve”; references to “Paid-In Capital, Etc.” inParagraph 2, Item (1) of the said Article shall be changed to read
“special investment reserve”; references to “Ordinance of the
Ministry of Justice” in Item (2) of the said Paragraph shall bechanged to read the “Ministry of Finance Ordinance”; references
to “Paid-In Capital, Etc.” in Paragraph 4 and the proviso of
Paragraph 5 of the said Article shall be changed to read “special
investment reserve”; references to “paid-in capital” in Paragraph 6,
Item (1) of the said Article shall be changed to read “special investment reserve set forth in Article 2-27, Paragraph 2 of the
Supplementary Provisions of the Development Bank of Japan Inc.
Act”; “Article 447, Paragraph 1, Item (3)” shall be changed to read
“Paragraph 4, Item (2) of the said Article”; references to “paid-in
capital of” in Article 828, Paragraph 1, Item (5) of the said Act shallbe changed to read “special investment reserve set forth in Article
2-27, Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act concerning”; “on which the
reduction in the amount of paid-in capital” shall be changed toread “on which the reduction in the amount of the said special
investment reserve”; and references to “paid-in capital” inParagraph 2, Item (5) of the said Article shall be changed to read
“special investment reserve set forth in Article 2-27, Paragraph 2of the Supplementary Provisions of the Development Bank ofJapan Inc. Act.”
4. The provisions of Article 449 (other than the proviso of Paragraph 1
and Paragraph 6, Item (2)) and Article 828 (limited to the portions
relating to Paragraph 1, Item (5) and Paragraph 2, Item (5)) of theCompanies Act shall apply mutatis mutandis to cases where theamount of special investment surplus funds is reduced as set forthin Article 2-27, Paragraph 3 of the Supplementary Provisions. For
this purpose, references to “paid-in capital or reserves (hereinafterin this Article referred to as “Paid-In Capital, Etc.”)” in the mainclause of Article 449, Paragraph 1 of the said Act shall bechanged to read “special investment surplus funds as set forth in
Article 2-27, Paragraph 3 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007) (special
investment surplus funds set forth in Article 2-23, Paragraph 7 of
the Supplementary Provisions of the said Act; hereinafter in this
Article and Article 828, Paragraph 1, Item (5) and Paragraph 2,
Item (5) the same)”; “In cases where... (excluding cases where thewhole of the amount by which the reserves are reduced is appropriated to the paid-in capital)” shall be changed to read “In cases
where…”; “of Paid-In Capital, Etc.” shall be changed to read “ofspecial investment surplus funds”; references to “Paid-In Capital,
Etc.” in Paragraph 2, Item (1) of the said Article shall be changed toread “special investment surplus funds”; references to “Ordinanceof the Ministry of Justice” in Item (2) of the said Paragraph shall bechanged to read the “Ministry of Finance Ordinance”; references to“Paid-In Capital, Etc.” in Paragraph 4 and the proviso of Paragraph
5 of the said Article shall be changed to read “special investment
surplus funds”; references to “paid-in capital” in Paragraph 6, Item(1) of the said Article shall be changed to read “special investment
surplus funds set forth in Article 2-27, Paragraph 3 of the
Supplementary Provisions of the Development Bank of Japan Inc.
Act”; “Article 447, Paragraph 1, Item (3)” shall be changed to read

“Paragraph 4, Item (2) of the said Article”; references to “paid-in
capital of” in Article 828, Paragraph 1, Item (5) of the said Act shallbe changed to read “special investment surplus funds set forth in
Article 2-27, Paragraph 3 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act concerning”; “on which the
reduction in the amount of paid-in capital” shall be changed toread “on which the reduction in the amount of the said special
investment surplus funds”; and references to “paid-in capital” inParagraph 2, Item (5) of the said Article shall be changed to read
“special investment surplus funds set forth in Article 2-27,
Paragraph 3 of the Supplementary Provisions of the Development
Bank of Japan Inc. Act.”
Article 2-31 Penal Provisions
1. In any of the following cases, any directors, executive officers (shikkoyaku), accounting counsel (kaikei sanyo) or its members whoshould perform duties as such, or statutory auditors of the
Corporation shall be punished with a non-penal fine not exceeding
1,000,000 yen:
(1) When he/she has suspended or abolished crisis response
business at the designated office in violation of the provisionof Article 2-10, Paragraph 2 of the Supplementary Provisions;(2) When he/she has appropriated money provided through capital contributions as set forth in Article 2-14, Paragraph 1 toany fund other than the fund for special investment operations, in violation of the provision of Article 2-14, Paragraph 2of the Supplementary Provisions;(3) When he/she has violated the order referred to in Article 2-17,
Paragraph 2 of the Supplementary Provisions;(4) When he/she has not submitted or published documents
stating the status of income and expenditures for each category of business operations in each Item of Article 2-19 of the
Supplementary Provisions, or has submitted or publishedsuch documents containing false statements, in violation of
the provision of Article 2-19 of the Supplementary Provisions;(5) When he/she has not submitted a report on the completion of
special investment operations in violation of the provision of
Article 2-20, Paragraph 2 of the Supplementary Provisions.
2. With regard to the application of the provision of Article 34, Item (8)in the case where the provision of Article 2-24 of the
Supplementary Provisions applies, references to “limit” in the said
Item shall be changed to read “limit calculated by including theaggregate amount of crisis response reserve, special investment
reserve and special investment surplus funds in the amount ofpaid-in capital and reserves as set forth in the provisions of Article
2-24 of the Supplementary Provisions.”
3. With regard to the application of the provision of Article 34, Item(10) in the case where the provision of Article 2-11, Paragraph 1,
Article 2-18, Paragraph 1 or Article 2-21, Paragraph 2 of the
Supplementary Provisions applies, references to “Article 17” in thesaid Item shall be changed to read “Article 17, or Article 2-11,
Paragraph 1, Article 2-18, Paragraph 1 or Article 2-21, Paragraph
2 of the Supplementary Provisions.”
4. With regard to the application of the provision of Article 34, Item(13) in the case where the provision of Article 2-11, Paragraph 2,
Article 2-18, Paragraph 2 or Article 2-21, Paragraph 3 of the
Supplementary Provisions applies, references to “Article 21” in thesaid Item shall be changed to read “Article 21, or Article 2-11,
Paragraph 2, Article 2-18, Paragraph 2 or Article 2-21, Paragraph
3 of the Supplementary Provisions.”
Article 3 Abolition of This Act and Other Measures
If the Government disposes of all of the Government-Owned
Shares, the Government shall immediately take measures to abolish this Act, as well as measures necessary to smoothly assign
the business operations, functions, and rights and obligations of
the Corporation to any organization to be formed as a bearer ofthe functions commensurate with the investment and financing
functions held by the Corporation.

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Article 5 Founding Members
The Minister of Finance shall appoint the founding members toserve as promoters for incorporation of the Corporation.
Article 6 Articles of Incorporation
The founding members shall prepare the Articles of Incorporationand have them authorized by the Minister of Finance.
Article 7 S hares to Be Issued upon the Incorporation of
the Corporation
1. The following matters regarding the shares to be issued upon theincorporation of the Corporation, and total number of shares which

the Corporation can issue shall be determined in the Articles ofIncorporation:(1) Number of shares (or, if the Corporation is to be organized as
a company issuing class shares, classes of those shares andnumber of each class of shares);(2) Amount to be paid for shares (the amount of cash to be paidor amount of non-cash property to be contributed in
exchange for each share); and(3) Matters relating to the amounts of paid-in capital and capitalreserves.
2. Notwithstanding the provision of Article 445, Paragraph 2 of theCompanies Act, with respect to the shares to be issued by the
Corporation upon its incorporation, the Corporation may elect not
to account for the amount in excess of (, as well as the amountnot exceeding,) a half of the amounts of properties contributed by
DBJ upon the incorporation of the Corporation as paid-in capital.
For this purpose, reference to “this Act” in Article 445, Paragraph 1of the Companies Act shall be changed to read “this Act or theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007).”
Article 8 Subscription for Shares
1. DBJ shall subscribe for all shares to be issued by the Corporation
upon its incorporation, and the founding members shall allocate
them to DBJ.
2. The right as the subscriber for shares allocated pursuant to theprovision of the preceding Paragraph in connection with the incorporation of the Corporation shall be exercised by the Government.
Article 9 Capital Contribution
Upon the incorporation of the Corporation, DBJ shall contribute allof its properties, except assets to be assumed by Japan pursuant
to the provision of Article 15, Paragraph 2 of the Supplementary
Provisions, to the Corporation.
Article 10 Organizational Meeting
For the purpose of application of the provision of Article 65,
Paragraph 1 of the Companies Act concerning the incorporation of
the Corporation, reference to the “on and after either the dateunder Article 58, Paragraph 1, Item (3) or the last day of the period
under such item, whichever comes later,” shall be changed toread “after allotment of shares set forth in Article 8, Paragraph 1 of
the Supplementary Provisions of the Development Bank of Japan
Inc. Act (Act No. 85 of 2007).”
Article 11 Establishment of the Corporation
Contributions to be made by DBJ pursuant to the provision of
Article 9 of the Supplementary Provisions shall be made when theprovision of Article 26 of the Supplementary Provisions becomes
effective, and the Corporation shall be established, notwithstanding the provision of Article 49 of the Companies Act.
Article 12 Registration of Incorporation
Notwithstanding the provision of Article 911, Paragraph 1 of theCompanies Act, the Corporation shall register its incorporation
without delay after the establishment of the Corporation.
Article 13 Transfer to the Government without Consideration
The shares to be acquired by DBJ through its capital contribution
shall be transferred to the Government without consideration at thetime of establishment of the Corporation.
Article 14 Exception from Application of the Companies Act
The provisions of Article 30 and Part II, Chapter 1, Section 3 of theCompanies Act shall not apply to the incorporation of the
Corporation.
Article 15 Dissolution of DBJ, Etc.
1. DBJ shall be dissolved at the time of establishment of the
Corporation, whereupon any and all rights and obligations of DBJ

Data Section

Article 4 Special Rules for Business Operations during the
Preparatory Period
1. In order for the Corporation to smoothly start the business operations as soon as it is duly organized, The Development Bank ofJapan (hereinafter referred to as “DBJ”) may borrow Long-term
Loans, in addition to those set forth in Article 42, Paragraphs 1
and 2 of the Development Bank of Japan Act (Act No. 73 of 1999;
hereinafter, except for Article 26 of the Supplementary Provisions,referred to as the “DBJ Act”), during the Preparatory Period (theperiod from the date on which this Act comes into force up to
September 30, 2008; the same in Paragraph 5).
2. DBJ shall prepare its basic policy regarding the borrowing of Longterm Loans to be made pursuant to the provision of the preceding
Paragraph which provides for the matters relating to the borrowingof the Long-term Loans such as the amounts of borrowing andcurrency in which the Long-term Loans are denominated, andobtain authorization of the Minister of Finance, without delay after
the date on which this Act comes into force in the case of the
fiscal year during which such date is included, or prior to April 1,2008 in the case of the fiscal year beginning on April 1, 2008. If
the Corporation intends to revise it, the same shall apply.
3. If DBJ borrows a Long-term Loan as set forth in Paragraph 1, DBJ
shall notify the Minister of Finance thereof without delay as set
forth in the Minister of Finance Ordinance.
4. The Long-term Loans as set forth in Paragraph 1 shall be deemedas the borrowed money under Article 42, Paragraph 1 of the DBJ
Act and the provisions of Article 44 of the DBJ Act shall apply thesaid Long-term Loans.
5. If DBJ borrows a short-term borrowing during the Preparatory
Period as set forth in Article 42, Paragraph 2 of the DBJ Act, reference to “within the current fiscal year” in Paragraph 3 of the said
Article shall be changed to read “within one year.”
6. If DBJ borrows a Long-term Loans as set forth in Paragraph 1, reference to “this Act, in Article 13, Paragraph 2, Item (1) of the DBJ
Act shall be changed to read “this Act or the Development Bank ofJapan Inc. Act (Act No. 85 of 2007) or order under these Acts”,
and reference to “this Act and the Cabinet Order under this Act” inArticle 48 of the DBJ Act shall be changed to read “this Act andthe Development Bank of Japan Inc. Act, and the Cabinet Orders
under these Acts.” Reference to “this Act” in Article 49, Article 50,
Paragraph 1, and Article 52 of the DBJ Act shall be changed toread “this Act and the Development Bank of Japan Inc. Act,” andreference to “this Act” in Article 54, Items (1) and (2) of the DBJ
Act shall be changed to read “this Act or the Development Bank ofJapan Inc. Act.”
7. “Long-term Loans” set forth in Paragraphs 1 through 4 and theimmediately preceding Paragraph mean the loans from financial
institutions such as banks, other than the short-term borrowings
set forth in Article 42, Paragraph 3 of the DBJ Act which is applied
after changing to read as set forth in Paragraph 5.
8. For the purpose of application of the provision of Article 22,
Paragraph 1 of the DBJ Act to the mid-term government policy
principles set forth in the said Paragraph for the period commencing on April 1, 2008, reference to the “three-year mid-term
government policy principles” shall be changed to read the “government policy principles for the term beginning on April 1, 2005.”

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The Development Bank of Japan Inc. Act

shall be taken over by the Corporation, except for those assets tobe assumed by the Government as set forth in the following
Paragraph.
2. Of the rights actually held by DBJ at the time of establishment of
the Corporation, the assets which will be considered no longer
necessary for the Corporation to smoothly perform its future business operation shall be assumed by Japan at the time ofestablishment of the Corporation.
3. The scope of assets to be assumed by Japan pursuant to theprovision of the immediately preceding Paragraph, and other matters required for transfer of those assets to Japan shall beprescribed in the Cabinet Order.
4. The fiscal year of DBJ commencing on April 1, 2008 shall end on
the day immediately preceding the date of dissolution of DBJ.
5. Settlement of accounts, and preparations, Etc. of list of properties,balance sheets, and profits and loss statements of DBJ for the
fiscal year commencing on April 1, 2008 shall be conducted by
the Corporation as previously conducted, except for the portions
relating to Article 38, Paragraph 1 (limited to the portions relating to
the Auditor’s opinions) and Article 40, Paragraph 1 (limited to the
portions relating to the Auditor’s opinions) of the Old DBJ Act. For
this purpose, the reference to “for each half-year from April to
September and from October to March of the following year” and“for each half-year and for each fiscal year” in Article 38, Paragraph
1 of the Old DBJ Act shall be deleted, and references to “within
two months after the end of the relevant half-year or three months
after the end of the fiscal year” in the said Paragraph shall bechanged to read “on or prior to December 31, 2008.” Reference
to “the settlement of accounts for each fiscal year not later thanMay 31 of the following fiscal year” in Article 39 of the Old DBJ Act
shall be changed to read “the settlement of accounts for the fiscal
year commencing on April 1, 2008 not later than November 30,
2008.” Reference to “November 30 of the following fiscal year” inArticle 4, Paragraph 3 of the Old DBJ Act shall be changed toread “November 30, 2009.”
6. Disposition of profits and payment into the national treasury by
DBJ under Article 41 of the Old DBJ Act for the fiscal year commencing on April 1, 2008 shall be conducted by the Corporation
as previously conducted. For this purpose, references to “eachfiscal year” and “May 31 of the following fiscal year” in Article 41,
Paragraph 3 of the Old DBJ Act shall be changed to read “thefiscal year commencing on April 1, 2008” and “November 30,
2008,” respectively.
7. The matters regarding the registration of the dissolution in the casethat DBJ is dissolved pursuant to the provision of Paragraph 1,
shall be prescribed in the Cabinet Order.
Article 16 Values of Properties Assumed
1. The values of assets and liabilities assumed by the Corporationfrom DBJ (in the immediately following Paragraph referred to as the“Assumed Properties”) shall be as evaluated by evaluation officers(hyoka iin).
2. If evaluation officers intend to make evaluations as set forth in thepreceding Paragraph, their evaluations shall be made based on
the market prices of the Assumed Properties as of the date on
which the Corporation is established; provided, however, that if it
is deemed inappropriate to use the market prices taking into
account the matters of the Assumed Properties such as the kinds
and purpose of use, their evaluations may be made not based on
the market prices of the Assumed Properties.
3. In addition to those set forth in the preceding two Paragraphs,
evaluation officers and other matters necessary for evaluations
shall be prescribed in the Cabinet Order.
Article 17 T ransitional Measures in Connection with
Assumption of Rights and Obligations
1. With respect to the Old Bank Debentures and interest coupons
concerning the obligations to be assumed by the Corporation pursuant to the provision of Article 15, Paragraph 1 of the

Supplementary Provisions, the provisions of Article 43, Paragraphs
5 and 6 of the Old DBJ Act shall remain effective and in force
even after the provision of Article 26 of the Supplementary
Provisions becomes effective.
2. With respect to the old Hokuto bonds (the Hokkaido-Tohoku
Development Finance Corporation Bonds issued pursuant to theprovision of Article 27, Paragraph 1 of the Hokkaido-Tohoku
Development Finance Corporation Act (Act No. 97 of 1956; hereinafter in this Paragraph referred to as the “Old HTDFC Act”) before
abolishment under Article 17, Item (2) of the Supplementary
Provisions of the Old DBJ Act) and interest coupons to be
assumed by the Corporation pursuant to the provision of Article
15, Paragraph 1 of the Supplementary Provisions, the provisionsof Article 27, Paragraphs 3 and 4 of the Old HTDFC Act shallremain effective and in force even after the provision of Article 26of the Supplementary Provisions becomes effective.
3. The guarantee agreements executed by the Government pursuant
to the provision of Article 45, Paragraph 1 or 3 of the Old DBJ Act
with respect to the obligations concerning the Old Bank
Debentures to be assumed by the Corporation pursuant to theprovision of Article 15, Paragraph 1 of the Supplementary
Provisions shall continue to be effective upon the previous terms
and conditions with respect to such obligations concerning the
Old Bank Debentures even after the assumption thereof by the
Corporation.
4. The guarantee agreements executed by the Government pursuant
to the provision of Article 37-3, Paragraph 1 or 2 of the old Japan
Development Bank Act (Act No. 108 of 1951; hereinafter in thisParagraph referred to as the “Old JDB Act”) before abolishment
under Article 17, Item (1) of the Supplementary Provisions of the
Old DBJ Act with respect to the obligations concerning the foreign
currency-denominated bonds set forth in Article 37-2, Paragraph
1 of the Old JDB Act issued pursuant to the provision of Article
37-2, Paragraph 1 or 2 of the Old JDB Act to be assumed by the
Corporation pursuant to the provision of Article 15, Paragraph 1 of
the Supplementary Provisions shall continue to be effective upon
the previous terms and conditions with respect to such obligations
concerning the foreign currency-denominated bonds even after
the assumption thereof by the Corporation.
5. The guarantee agreements executed by the Government pursuant
to the provision of Article 2, Paragraph 2 or 3 of the Act
Concerning Special Measures for Acceptance of Foreign Capitals
from the International Bank for Reconstruction and Development
and Other Organizations (Act No. 51 of 1953) with respect to the
obligations concerning the Old Bank Debentures to be assumed
by the Corporation pursuant to the provision of Article 15,
Paragraph 1 of the Supplementary Provisions shall continue to beeffective upon the previous terms and conditions with respect tosuch obligations constituting the Old Bank Debentures even after
the assumption thereof by the Corporation, and the public imposts
such as taxes on interests on and profits from redemption of the
Old Bank Debentures concerning those guarantee agreements
shall be the same as in effect under the previous arrangements.
Article 18 Competent Ministers
The competent ministers under Article 26, Paragraph 2 and Article
27, Paragraph 1 for management of assets to be assumed by the
Corporation pursuant to the provision of Article 15, Paragraph 1 of
the Supplementary Provisions (hereinafter in this Article referred toas the “Assumed Assets”) shall, notwithstanding the provision of
Article 29, Paragraph 1, be as follows:(1) For management of the Assumed Assets set forth in the
Cabinet Order in the Hokkaido or the Tohoku Region (theareas of Aomori, Iwate, Miyagi, Akita, Yamagata, Fukushima
and Niigata prefectures): Minister of Finance and Minister ofLand, Infrastructure and Transport; and(2) For management of the Assumed Assets other than the
Assumed Assets set forth in the preceding Item: Minister ofFinance.

95

Article 20 Transitional Measures for the Basic Policy
1. For the purposes of the basic policy, business plans and redemption plans for the first fiscal year of the Corporation, reference to“prior to the beginning of each fiscal year” in Article 13, Paragraph
1, Article 17 and Article 18 shall be changed to read “without
delay after the incorporation of the Corporation.”
2. For the purposes of the balance sheet, profit and loss statement
and business report for the first fiscal year of the Corporation, references to “For each fiscal year” and “the interim business period(the period from April 1 to September 30 of the current year) of thecurrent fiscal year, and its balance sheet, profit and loss statement
and business report for the current fiscal year” in Article 21 shallbe changed to read “For the fiscal year in which the date on which
the Corporation is established is included” and “the current fiscal
year,” respectively.
3. For the purpose of application of the provision of the preceding
Paragraph when the Corporation obtains the approval under Article
9, Paragraph 1, the “Ministry of Finance Ordinance” and “Ministerof Finance” in Article 21 which are applied mutatis mutandis after
changing to read in the said Paragraph shall be changed to readthe “Ministry of Finance Ordinance and the Cabinet Office
Ordinance” and the “Minister of Finance and the Prime Minister,”respectively.
Article 21 S
 pecial Rules for Operations ofRegistered Financial Institution
1. Within three (3) months of the date set forth in Article 1, Item (3) of
the Supplementary Provisions (or, if the registration under Article
33-5, Paragraph 1 of the Financial Instruments and Exchange Act
is rejected during such period or if abolition of the operations of
the registered financial institution (the operations of registeredfinancial institution set forth in Article 33-5, Paragraph 1, Item (3) of
the Financial Instruments and Exchange Act, including the operations referred to in Article 3, Paragraph 1, Item (16) to be
conducted pursuant to the provision of Article 33-8, Paragraph 1of the same Act which is applied after changing to read as set
forth in Article 4, Paragraph 1; the same in this Article) is orderedpursuant to the provision of Article 52-2, Paragraph 1 of the
Financial Instruments and Exchange Act which is applied after thechanging to read as set forth in the immediately following
Paragraph, the period up to the date of such rejection or the dateof order of such abolition), the Corporation may, notwithstanding
the provision of Article 33-2 of the Financial Instruments andExchange Act which is applied after changing to read as set forthin Article 4, Paragraph 1, conduct the operations of the registeredfinancial institutions. If the Corporation applies for registration under
the said Article during such period, the same shall apply until thedate of receipt of notice of registration or the date of receipt ofnotice of no registration after the elapse of such period.
2. If the Corporation conducts the operations of registered financial
institution pursuant to the provision of the preceding Paragraph,the provisions of the Financial Instruments and Exchange Act(except for Article 33-6; Article 37, Paragraph 1, Item (2); Article
37-3, Paragraph 1, Item (2); Article 50-2, Paragraph 2; Article
52-2, Paragraph 1, Item (2) and Paragraph 3; Article 54; andArticle 64, Paragraph 2) shall apply by deeming the Corporation as
the registered financial institution (the Registered Financial
Institution set forth in Article 2, Paragraph 11 of the Financial
Instruments and Exchange Act). For this purpose, reference to“rescind the registration under Article 33-2” in Article 52-2,
Paragraph 1 (except for Item (2)) of the Financial Instruments andExchange Act shall be changed to read “order the abolition ofoperations of registered financial institution,” reference to “rescind
the registration under Article 29 or 33-2 or the authorization under

Article 30, Paragraph 1 pursuant to the provision of Article 52,
Paragraph 1 or Article 52-2, Paragraph 1” in Article 54-2, Item (1)of the same Act shall be changed to read “order the abolition ofoperations of the registered financial institution pursuant to theprovision of Article 52-2, Paragraph 1 which is applied after
changing to read as set forth in Article 21, Paragraph 2 of the
Supplementary Provisions of the Development Bank of Japan Inc.
Act (Act No. 85 of 2007),” reference to “registration under Article
29 or 33-2 is rescinded pursuant to the provision of Article 52,
Paragraph 1, Article 52-2, Paragraph 1, Article 53, Paragraph 3 or
Article 54” in Article 56, Paragraph 1 of the same Act shall bechanged to read the “abolition of operations of the registeredfinancial institution is ordered pursuant to the provision of Article
52-2, Paragraph 1 which is applied after changing to read as set
forth in Article 21, Paragraph 2 of the Supplementary Provisions of
the Development Bank of Japan Inc. Act,” and reference to“rescission of registration under Article 33-2 as set forth in Article
52-2, Paragraph 1” in Article 194-3, Item (3) of the same Act andreference to “rescission of registration under Article 33-2 as set
forth in Article 52-2, Paragraph 1 or 3 or Article 54” in Article
194-4, Paragraph 1, Item (5) of the same Act shall be changed toread “order of abolition of operations of the registered financial
institution pursuant to the provision of Article 52-2, Paragraph 1
which is applied after changing to read as set forth in Article 21,
Paragraph 2 of the Supplementary Provisions of the Development
Bank of Japan Inc. Act” and other required technical changes toread shall be prescribed in the Cabinet Order.
3. For the purpose of application of the provision of Article 33-5,
Paragraph 1, Item (1) of the Financial Instruments and Exchange
Act in the event that the Corporation is ordered to abolish theoperations of the registered financial institution pursuant to theprovision of Article 52-2, Paragraph 1 of the same Act which isapplied after changing to read as set forth in the immediately preceding Paragraph, the Corporation shall be deemed as the entity
whose registration under Article 33-2 of the same Act is rescindedpursuant to the provision of Article 52-2, Paragraph 1 of the same
Act, and the date on which such abolition is ordered shall bedeemed as the date of rescission of registration under the said
Article 33-2 pursuant to the provision of Article 52-2, Paragraph 1of the same Act.
4. For one year of the date set forth in Article 1, Item (3) of the
Supplementary Provisions, the Corporation may, notwithstanding
the provision of Article 64, Paragraph 2 of the Financial
Instruments and Exchange Act, cause any persons other thanthose who are registered pursuant to the provision of Paragraph 1of the said Article to conduct the duties of sales representatives(gaimu-in). If the Corporation applies for registration under the saidParagraph during such period, the same shall apply until the dateof receipt of notice of registration with respect to such applicationor the date of receipt of notice of no registration after the elapse ofsuch period with respect to such application.
Article 22 Special Rules for Taxation of the Registration
License Tax
1. No registration license tax shall be assessed on registration of theincorporation of the Corporation pursuant to the provision of Article
12 of the Supplementary Provisions, and registration or recordation of the Corporation in connection with provisions of properties
upon the capital contribution by DBJ pursuant to the provision of
Article 9 of the Supplementary Provisions.
2. With respect to the registration license tax for registration or recordation of origination (hozen), creation (settei) or transfer (iten) of lien(sakidori token), pledge (shichiken) or mortgage (teitoken) tosecure the claims concerning business operations set forth in
Article 20, Paragraph 1, Item (1) of the Old DBJ Act which shall beassumed by the Corporation from DBJ pursuant to the provision of
Article 15, Paragraph 1 of the Supplementary Provisions, or registration of transfer of movable properties or transfer of claims,
based on the agreements executed by DBJ before the provision

Data Section

Article 19 Transitional Measures for the Fiscal Year
Notwithstanding the provision of Article 11, the first fiscal year of
the Corporation shall commence on the date on which of the
Corporation is established and end on March 31, 2009.

96

The Development Bank of Japan Inc. Act

of Article 48 of the Supplementary Provisions comes into force,the provision of Schedule III-22 of the Registration Tax Act (Act No.
35 of 1967) before amendment under Article 48 of the
Supplementary Provisions shall still remain effective and in force.
Article 23 Special Rules for Taxation of the Corporation Tax
1. Capital investment in the Corporation to be made by DBJ pursuant
to the provision of Article 9 of the Supplementary Provisions (hereinafter in this Article referred to as the “Specified In-kind Contribution”)
shall be deemed as qualified in-kind contribution set forth in Article
2, Item (12-14) of the Corporation Tax Act (Act No. 34 of 1965),
and the Corporation Tax Act and other laws and ordinances relating
to the corporation tax shall be applied on such basis.
2. With respect to assets and liabilities of DBJ to be transferred by
the Specified In-kind Contribution which shall be subject to the
Corporation Tax Act and other laws and ordinances relating to thecorporation tax pursuant to the provision of the immediately preceding Paragraph, the value evaluated by evaluation officers
pursuant to the provision of Article 16, Paragraph 1 of the
Supplementary Provisions shall be deemed as the book value;
provided, however, that with respect to allowance for loan losses,
the amount purported to be assumed by the Corporation pursuant
to the provision of the immediately following Paragraph shall bedeemed as the book value, and the book values of the amountsof allowances prescribed by the Cabinet Order such as allowance
for retirement payments shall be nil.
3. If it is determined to apply the provisions of Article 52 of the
Corporation Tax Act in the fiscal year in which the day prior to thedate of the Specified In-kind Contribution of the DBJ is included (inthe immediately following Paragraph referred to the “Final Fiscal
Year”), the amount up to the upper limit of individual allowance forloan losses set forth in Article 52, Paragraph 1 as calculated in thesaid Paragraph or the amount up to the amount calculated as prescribed by the Cabinet Order as set forth in Paragraph 2 of thesaid Article shall, notwithstanding the provisions of Paragraph 7 ofthe said Article, be assumed by the Corporation. For this purpose
with respect to calculation of the amount of income for the fiscal
year in which the date of the Specified In-kind Contribution of the
Corporation is included, the amount assumed by the Corporation
shall be included in the amount of profits.
4. The Corporation shall submit the financial statements of DBJ for
the Final Fiscal Year set forth in Article 38, Paragraph 1 of the Old
DBJ Act to the director of competent district tax office within three(3) months of the date of the Specified In-kind Contribution.
Article 24 Special Rules for Taxation of Local Taxes
No real estate acquisition tax or vehicle acquisition tax can be
imposed on acquisition of real estate or vehicle in connection withcapital investment to be made by DBJ pursuant to the provision of
Article 9 of the Supplementary Provisions.
Article 25 Delegation to the Cabinet Order
In addition to those set forth in Articles 2 to 24 of the
Supplementary Provisions, matters necessary for incorporation of
the Corporation and dissolution of DBJ, as well as other mattersnecessary for effectuation of these provisions shall be stipulated in
the Cabinet Order.
Article 26 Abolition of the Development Bank of Japan Act
The Development Bank of Japan Act shall be abolished.
Article 27 T ransitional Measures for Abolition of theDevelopment Bank of Japan Act
1. Actions such as dispositions and procedures made, taken ordone pursuant to the provisions of the Old DBJ Act (except Article
10 thereof) before the provision of the immediately preceding
Article becomes effective shall be considered the actions suchdispositions and procedures made, taken, or done pursuant to thecorresponding provisions of this Act.

2. The provisions of Article 16, Paragraphs 5 and 6 of the
Supplementary Provisions of the Old DBJ Act shall still remain
effective even after the provisions of the immediately preceding
Article takes effect, with respect to the lending of funds by the
Corporation to the designated entities under Article 2, Paragraph 5of the Act Concerning Facilitation of the Improvement, Etc. of
Public Facilities, Etc. by Private Fund (Act No. 117 of 1999). For
this purpose, reference to the “Bank” and reference to “, in accordance with the provision of Item (1), Paragraph 1, Article 20
hereof, to provide funds required for businesses deemed under
Article 13 of the said Act” in Article 16, Paragraph 5 of the Old
DBJ Act shall be changed to read “Development Bank of Japan
Inc.” and “to provide funds required for business deemed under
Article 13 of the said Act”, respectively. References to “theinterest-free loans made by the Bank in accordance with the provisions of the preceding paragraph (excluding interest-free loans
using money deposited by the Private Urban Development
Promotion Organization provided in Article 3 of the Special
Measure Act concerning Promotion of Private Urban Development(Act No. 62 of 1987)” and “to the Bank” in Article 16, Paragraph 6of the Old DBJ Act shall be changed to read “the interest-freeloans made by Development Bank of Japan Inc. in accordancewith the provisions of the preceding paragraph” and “toDevelopment Bank of Japan Inc.,” respectively.
3. In addition to those set forth in the preceding two Paragraphs,
transitional measures necessary for the abolition of the DBJ Act
shall be prescribed by the Cabinet Order.
Article 28 Transitional Measures for Application of Penal
Provisions
Penal provisions which were applicable to acts conducted prior to
the implementation of the provision of Article 26 of the
Supplementary Provisions or acts conducted after the implementation of the provision of the said Article as to which the provisions
then in force remain applicable pursuant to the provisions of this Act
shall remain applicable even after the implementation of this Act.
Article 66 Examinations
On or prior to the date set forth in Article 1, Item (3) of the
Supplementary Provisions, the Government shall examine measures to secure the equal competitive conditions with otherbusiness entities, with respect to the systems for which the investment and financing functions of DBJ are utilized pursuant to theprovisions of relevant laws (including ordinances under those laws),
such as the Act Concerning Collaterals for Borrowings of Electricity
Companies from The Development Bank of Japan (Act No. 145 of
1950), the Act Concerning the Securement of Oil Reserves, Etc.
(Act No. 96 of 1975), the Act Concerning Promotion of
Development and Promotion of Introduction of Alternative Energy to
Oil (Act No. 71 of 1980), the Special Measures Act Concerning
Promotion of Private Urban Development (Act No. 62 of 1987), theExtraordinary Measures Act Concerning Promotion of Business
Activities for Rationalization of Usage of Energy and Effective Useof Resources (Act No. 18 of 1993) and the Act Concerning
Facilitation of the Improvement, Etc. of Public Facilities, Etc. by
Private Fund, Etc. (Act No. 117 of 1999), while considering theconvenience of users of those systems, and take the required
measures based on the results of such examination.
Article 67 Utilization of the Corporation’s Investment and
Financing Functions for Long-Term Business Funds
If the Government utilizes the Corporation’s investment and financing functions for long-term business funds on or after the date set
forth in Article 1, Item (3) of the Supplementary Provisions, theGovernment shall take measures necessary to secure the equal
competition conditions, as well as other measures necessary for
utilization of such investment and financing functions, paying attention to the Corporation’s appropriate competitive relationships withother business entities.

97

Act for Partial Amendment of the Development Bank of Japan Inc. Act(Act No. 23 of May 20, 2015)

Article 1 Enforcement Date
This Act shall come into force as from the date of promulgation.
Article 2 Transitional Measures for Crisis Response Reserve
1. Development Bank of Japan Inc. (hereinafter referred to as the“Corporation”) shall, without delay after this Act takes effect,
reduce the amount of paid-in capital by the aggregate amount of
the following amounts and record such reduced amount as theamount of a crisis response reserve (the crisis response reserve
set forth in Article 2-22, Paragraph 1 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act after
amendment under this Act (hereinafter referred to as the “NewAct”)); the same shall apply in Article 4, Paragraph 2 of these
Supplementary Provisions). For the purpose of application of theprovision of Article 2-22, Paragraph 1 of the Supplementary
Provisions of the New Act in this case, reference to “the amount”
in the said Paragraph shall be changed to read “the amount andthe amount by which the amount of paid-in capital has been
reduced pursuant to the provision of Article 2, Paragraph 1 of the
Act for Partial Amendment of the Development Bank of Japan Inc.
Act (Act No. 23 of 2015)”:(1)	the aggregate amount contributed to the Corporation by theGovernment with a view to ensuring a proper conduct ofCorporation’s crisis response operations (the crisis response
operations set forth in Article 2, Item (5) of the Japan FinanceCorporation Act (Act No. 57 of 2007); the same shall apply in
Article 4, Paragraph 1 and Article 9, Paragraphs 1 and 3 ofthese Supplementary Provisions) pursuant to the provision of
Article 2-2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act before amendment
under this Act (hereinafter referred to as the “Former Act”)(including the application thereof under Article 36 of the Act
for Extraordinary Expenditure and Assistance to Cope with theGreat East Japan Earthquake (Act No. 40 of 2011)); and(2)	the aggregate amount of the government bonds which had
been redeemed by the Government pursuant to the provisionof Article 2-4, Paragraph 2 of the Supplementary Provisions of
the Former Act up to the previous day of the implementation
date of this Act (hereinafter referred to as the “Implementation
Date”).
2. For the purpose of application of the provision of Article 447 of theCompanies Act (Act No. 86 of 2005) with regard to the reductionin the amount of paid-in capital pursuant to the provision of thepreceding Paragraph, reference to “is to be appropriated toreserves” in the said Article, Paragraph 1, Item (2) shall be changed
to read “is to be appropriated to reserves or to crisis response
reserve under Article 2-22, Paragraph 1 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act (Act No. 85
of 2007) (hereinafter referred to as the “crisis response reserve” inthis Item),” and reference to “the amount to be appropriated toreserves” in the same Item shall be changed to read “the amountto be appropriated to reserves or crisis response reserve,”.
Article 3 Transitional Measures for Return of Government Bonds
Notwithstanding the provision of Article 2-5, Paragraph 1 of the
Supplementary Provisions of the New Act applied under the provision of Article 36 of the Act for Extraordinary Expenditure andAssistance to Cope with the Great East Japan Earthquake, thereturn of government bonds delivered in accordance with the provision of Article 2-3, Paragraph 2 of the Supplementary Provisionsof the Former Act shall be set forth separately in another law.

Article 4 Transitional Measures for Redemption of Government
Bonds and Others
1.	Notwithstanding the provision of Article 2-4, Paragraph 1 of the
Supplementary Provisions of the New Act (including the application thereof under Article 36 of the Act for Extraordinary
Expenditure and Assistance to Cope with the Great East Japan
Earthquake), the Corporation may demand, for an indefinite period,
the redemption of government bonds delivered in accordance withthe provision of Article 2-3, Paragraph 2 of the Supplementary
Provisions of the Former Act up to the amount calculated pursuant
to the provisions prescribed by the Minister of Finance Ordinanceas the necessary capital according to the increase in the asset
pertaining to the crisis response operations (in case of business
whose implementation date is on or after April 1, 2015, including
the business implemented from April 1, 2015 up to the previous
day of such an implementation date).
2. Notwithstanding the provision of Article 2-4, Paragraph 3 of the
Supplementary Provisions of the New Act, the Corporation shallrecord the value redeemed in accordance with the provision of
Article 2-4, Paragraph 2 thereof on or after the above implementation date as the amount of the crisis response reserve. In thiscase, for the application of the provisions of Article 2-22,
Paragraph 1 and Article 2-29 of the Supplementary Provisions of
the New Act, “Article 2-9 of the Supplementary Provisions” in theabove Paragraph shall be interpreted as “the value redeemed inaccordance with the provisions of Article 2-4, Paragraph 2 of the
Supplementary Provisions, and Article 2-9 of the Supplementary
Provisions”, and “Article 2-9 of the Supplementary Provisions” inthe above Article as “the capital contribution by the redemption of
the government bonds in accordance with the provisions of Article
2-4, Paragraph 2 of the Supplementary Provisions, and Article 2-9of the Supplementary Provisions”.
3. For the application of the provision of Article 2-4, Paragraph 5 of
the Supplementary Provisions of the New Act when the provisionof the preceding paragraph is applied, “each preceding
Paragraph” in the Paragraph 5 shall be interpreted as “Paragraph 2
and Article 4, Paragraphs 1 and 2 of the Act for Partial Amendmentof the Development Bank of Japan Inc. Act (Act No. 23 of 2015)”.
Article 5 Transitional Measures for Rules Regarding Special
Investment Operations and others
1. The Corporation shall, without delay after this Act takes effect, setrules regarding special investment operations provided in Article
2-17, Paragraph 1 of the Supplementary Provisions of the New
Act, and obtain authorization from the Minister of Finance.
2. The Corporation shall, without delay after this Act takes effect,
revise the business plan provided in Article 17 of the New Act tocomply with the provisions of Article 2-11, Paragraph 1, Article
2-18, Paragraph 1 and Article 2-21, Paragraph 2 of the
Supplementary Provisions of the New Act, and obtain authorizationfrom the Minister of Finance.
3. The Corporation shall, without delay after this Act takes effect,
revise the Articles of Incorporation thereof to comply with the provisions of Article 2-11, Paragraph 3 and Article 2-18, Paragraph 3 of
the Supplementary Provisions of the New Act, and obtain authorization from the Minister of Finance.
Article 6 Delegation to Cabinet Order
In addition to the provisions of Article 2 through Article 5 of these
Supplementary Provisions, transitional measures necessary for the
implementation of this Act shall be set forth in the Cabinet Order.

Data Section

Supplementary Provisions

98

The Development Bank of Japan Inc. Act

Article 7 R evision of Part of the Act Concerning Promotion of
Administrative Reform for Realizing the Simplified
and Effective Government
The Act Concerning Promotion of Administrative Reform forRealizing the Simplified and Effective Government (Act No. 47 of2006) shall be partly amended as follows. In Article 6, Paragraph2, “the impact in achieving purposes of the agencies which willtake over the business of such institutions and” shall be added
after “With respect to capital contributions to The Shoko Chukin
Bank, Ltd. and Development Bank of Japan Inc. by theGovernment, taking into consideration”, and “for five (5) to seven(7) years commencing from April 1, 2015,” shall be changed toread “as promptly as possible”.
Article 8 Adjustment Provisions
1. If the Implementation Date is on or prior to the implementation dateof the Act for Partial Revision of the Shoko Chukin Bank Limited Act
and the Act for Partial Revision of the Small and Medium-sizedEnterprise Credit Insurance Act (Act No. 29 of 2015, referred to as
the “Partial Revision Act” in the following Paragraph), for the purpose of application of the provision of Article 6, Paragraph 2 of the
Act Concerning Promotion of Administrative Reform for Realizing
the Simplified and Effective Government after amendment under
the immediately preceding Article up to the previous day of the
Implementation Date, reference to “The Shoko Chukin Bank, Ltd.
and” in the said Paragraph shall be changed to read “With respect
to capital contributions to The Shoko Chukin Bank, Ltd. by theGovernment, the Government shall make efforts to reduce thenumber of shares held by it in The Shoko Chukin Bank, Ltd., taking
into consideration the market situation, and shall dispose all of themfor five (5) to seven (7) years commencing from April 1, 2015,” and“such institutions” shall be changed to read “such institution”.
2. If the Implementation Date is after the implementation date of thePartial Revision Act, the provision of the immediately preceding
Article shall not apply.
Article 9 Examination of Crisis Response Operations
1. The Government shall, at the appropriate time after this Act takes
effect, examine the Corporation’s crisis response operations andthe Government’s involvement in the Corporation based thereon,taking into consideration the implementation of systems pertaining
to the designated financial institution (designated financial institution as provided in Article 11, Paragraph 2 of the Japan FinanceCorporation Act), the Corporation’s implementation of crisis
response operations, the change of social and economic affairs
and others, and in the prospective of a smooth financial supply tothose who need capital to respond to such related damage stipulated in Article 2, Item (4) of the Japan Finance Corporation Act,and whenever the Government deems necessary, theGovernment shall take the required measures based on the resultsof such examination.
2. For the examination referenced in the preceding Paragraph, theGovernment shall listen to the opinions of representatives of ordinary financial institutions and other relevant persons.
3. When, as a result of the examination referenced in the above
Paragraph 1, the Government concludes that it does not need tocontinue measures related to the Government’s obligations to holdshares of the Corporation nor to take other measures necessary
to ensure appropriate implementation of crisis response operations of the Corporation, the Government shall promptly take therequired measures.

Article 10 Examination of Special Investment Operations
1. The Government shall, at the appropriate time after this Act takes
effect, examine the Corporation’s special investment operations
and the Government’s involvement in the Corporation based
thereon, taking into consideration the investment in financial andprivate sectors by ordinary financial institutions, the Corporation’s
implementation of special investment operations (special investment operations as provided in Article 2-12, Paragraph 2 of the
Supplementary Provisions of the New Act, hereinafter in thisParagraph the same), the change of social and economic affairs
and others, and in the perspective of further promoting the longterm and other financial supply for the sustainable growth of theJapanese economy, and whenever the Government deems necessary, the Government shall take required measures based on
the results of such examination.
2. For the examination referenced in the preceding Paragraph, theGovernment shall listen to the opinions of representatives of ordinary financial institutions and other relevant persons.

99

100 Consolidated Financial Statements
Non-Consolidated Financial 		145	Statements

149 Capital Adequacy Ratio

Data Section

Financial Condition

100

CONSOLIDATED BALANCE SHEET
Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

As of March 31,

2019

2018

2019

¥   966,903¥ 1,033,907$  8,711,629

260,000

463,179

2,342,553

AssetsCash and due from banks (Notes 2(c), 11, 14 and 28)
Call loans and bills bought (Note 28)
Money held in trust (Notes 28 and 30)

20,182

11,266

181,840

Securities (Notes 3, 14, 28 and 30)

1,961,054

1,866,401

17,668,751

Loans (Notes 4, 5, 14 and 28)

12,923,938

12,725,235

116,442,372

Other assets (Notes 6, 11 and 14)

191,317215,517

1,723,732

Tangible fixed assets (Notes 7, 11 and 14)

469,559432,344

4,230,644

Intangible fixed assets (Notes 11 and 14)

45,311

37,162408,248

Asset for retirement benefits (Note 23)

2,238

2,590

20,170

Deferred tax assets (Note 24)

1,217

7,751

10,971

Customers’ liabilities for acceptances and guarantees (Note 13)273,239

201,796

2,461,842

Allowance for loan losses (Notes 8 and 28)(35,336)(44,745)(318,378)

(46)

(176)

(419)

¥17,079,580¥16,952,230$153,883,955¥ 3,190,536¥ 3,086,650$ 28,746,163

Allowance for investment losses  Total assets
Liabilities and equity
Liabilities:
Debentures (Notes 9, 14 and 28)

93,761—

844,777

Borrowed money (Notes 10, 11, 14, 28 and 31)

Payables under repurchase agreements (Notes 14 and 28)

7,987,860

8,574,170

71,969,190

Corporate bonds (Notes 9, 11, 14 and 28)

2,106,463

1,846,332

18,978,854

Other liabilities (Notes 12 and 31)

101,869

97,951

917,829

Accrued bonuses to employees

5,066

4,931

45,649Accrued bonuses to directors

15

13

136

Liability for retirement benefits (Note 23)

7,969

8,057

71,806

Reserve for directors’ retirement benefits

122

100

1,108

Deferred tax liabilities (Note 24)

16,328

22,104

147,119

Acceptances and guarantees (Note 13)273,239

201,796

2,461,842

13,783,234

13,842,110

124,184,473  Total liabilities
Equity:Common stock authorized, 160,000 thousand shares in 2019 and2018; issued, 43,632 thousand shares in 2019 and 2018 (Note 15)

1,000,424

1,000,424

9,013,641

Crisis response reserve (Note 16)

206,529

206,529

1,860,789

Special investment reserve (Note 17)

588,000

330,000

5,297,775

Special investment surplus (Note 17)

5,412

3,099

48,765

Capital surplus (Note 15)

766,466

895,466

6,905,724

Retained earnings (Note 15)

651,887584,689

5,873,390

Unrealized gain on available-for-sale securities (Note 30)

44,65250,520402,314

Deferred gain on derivatives under hedge accounting

23,766

27,955

214,129

Foreign currency translation adjustments(1,202)(1,285)(10,834)

(272)

(29)

(2,459)3,285,663

3,097,369

29,603,235

10,682

12,75096,247

Accumulated other comprehensive income:Accumulated adjustments for retirement benefits (Note 23)  TotalNon-controlling interests  Total equity   Total liabilities and equity
See notes to consolidated financial statements.

3,296,345

3,110,120

29,699,482¥17,079,580¥16,952,230$153,883,955

101

CONSOLIDATED STATEMENT OF INCOME
Development Bank of Japan Inc. and Consolidated Subsidiaries

For the year ended March 31,

2019

2018

2019

IncomeInterest income:¥182,377¥185,653$1,643,189

Interest on loans

151,006

153,698

1,360,542

Interest and dividends on securities

23,994

23,223

216,186

Interest on call loans and bills bought

100

153

909

Interest on due from banks

28

29

255

Interest on swaps

7,263

8,553

65,444

Other interest income

(16)

(4)

(145)

Fees and commissions

16,28014,517

146,680

Other operating income (Note 19)

6,987

6,198

62,954

Other income (Note 20)

95,56187,757860,990  Total income

301,206

294,126

2,713,814

89,50490,248806,422

37,67633,198339,458

(52)

(27)

(469)

Expenses
Interest expense:
Interest on debentures
Interest on call money and bills soldInterest on payables under repurchase agreements

(62)

(46)

(559)

Interest on borrowed money (Note 31)

46,69351,894

420,697

Interest on short-term corporate bonds

317

755

2,863

4,822

4,482

43,446

109

(8)

987

Fees and commissions

1,354

1,304

12,205

Other operating expenses (Note 21)

3,532

3,273

31,823

Interest on corporate bonds
Other interest expense

General and administrative expenses

64,88959,175

584,646

Other expenses (Note 22)

15,187

10,700136,839  Total expenses

174,469

164,701

1,571,936   Income before income taxes

126,737

129,425

1,141,878

Current

34,95338,070314,924Deferred(1,443)(3,006)(13,005)

Income taxes (Note 24):

Total income taxes

33,50935,063301,919

Net income

93,227

94,361

839,959

Net income attributable to non-controlling interests
Net income attributable to owners of the parent

1,290

2,422

11,627¥ 91,936¥ 91,938$  828,332

Yen

U.S. Dollars (Note 1)

Per share of common stock (Note 18)
Basic net income
Cash dividend applicable to the year
See notes to consolidated financial statements.

¥2,080.56¥2,092.38$    18.75

482

507

4.34

Data Section

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

102

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

For the year ended March 31,

2019

2018

2019

Net income¥ 93,227¥94,361$839,959

Unrealized (loss) gain on available-for-sale securities(1,834)

2,600(16,530)

Deferred loss on derivatives under hedge accounting

Other comprehensive (loss) income (Note 26):
(4,359)(5,935)(39,281)

Foreign currency translation adjustments

113

(74)

1,026

Adjustments for retirement benefits

(249)

463

(2,251)(3,929)3,174(35,407) Share of other comprehensive (loss) income in affiliates
accounted for by the equity method
Total other comprehensive (loss) income(10,260)

228(92,443)¥ 82,966¥94,590$747,516

Owners of the parent¥ 81,718¥92,159$736,270

Non-controlling interests

1,248

2,430

11,247

Comprehensive income
Total comprehensive income attributable to:

See notes to consolidated financial statements.

103

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Development Bank of Japan Inc. and Consolidated Subsidiaries

For the year ended March 31, 2019

Balance at beginning of year

¥1,000,424

Crisis response
reserve¥206,529

Investment from government Transfer from capital surplus to special
investment reserve

Special investment Special investment
reserve
surplus¥330,000¥3,099

CapitalsurplusRetainedearnings¥895,466¥584,689

129,000
129,000(129,000)

Cash dividends(22,121)

Net income attributable to owners of the parent Transfer from retained earnings to special
investment surplus

91,9362,313(2,313)

Change in scope of consolidation(303)

Net change during the year
Balance at end of year

¥1,000,424¥206,529¥588,000¥5,412¥766,466¥651,887

Millions of Yen
Accumulated other comprehensive income

For the year ended March 31, 2019

Balance at beginning of year

Unrealized gain
on available-forsale securities

Deferred gain
on derivatives
under hedge
accounting

Foreigncurrencytranslation
adjustments¥50,520¥27,955¥(1,285)

Accumulated
adjustments
for retirement
benefits

Total¥ (29) ¥3,097,369

Noncontrollinginterests

Total equity¥12,750¥3,110,120

Investment from government Transfer from capital surplus to special
investment reserve

129,000

129,000

Cash dividends(22,121)(22,121)

Net income attributable to owners of the parent Transfer from retained earnings to special
investment surplus

91,936

91,936

(303)

(303)

—

—

Change in scope of consolidation
Net change during the year
Balance at end of year

(5,867)(4,189)82¥44,652¥23,766¥(1,202)(10,218)(2,067)(12,285)¥(272) ¥3,285,663(243)¥10,682¥3,296,345

Millions of Yen

For the year ended March 31, 2018

Balance at beginning of year

Commonstock¥1,000,424

Crisis response
reserve¥206,529

Investment from government Transfer from capital surplus to special
investment reserve

Special investment Special investment
reserve
surplus¥230,000¥1,813

CapitalsurplusRetainedearnings¥945,466¥513,758

50,00050,000(50,000)

Cash dividends(19,721)

Net income attributable to owners of the parent Transfer from retained earnings to special
investment surplus

91,9381,285(1,285)

Change in scope of consolidation0

Net change during the year
Balance at end of year

¥1,000,424¥206,529¥330,000¥3,099¥895,466¥584,689

Millions of Yen
Accumulated other comprehensive income

For the year ended March 31, 2018

Balance at beginning of year

Unrealized gain
on available-forsale securities

Deferred gain
on derivatives
under hedge
accounting

Foreigncurrencytranslation
adjustments¥45,017¥33,680¥(1,271)

Accumulated
adjustments
for retirement
benefits

Total¥(484) ¥2,974,932

Noncontrollinginterests

Total equity¥11,352¥2,986,284

Investment from government Transfer from capital surplus to special
investment reserve

50,00050,000Cash dividends(19,721)(19,721)

Net income attributable to owners of the parent Transfer from retained earnings to special
investment surplus

91,93891,938——Change in scope of consolidation
Net change during the year
Balance at end of year

0
5,503

(5,724)(13)¥50,520¥27,955¥(1,285)

455

0

220

1,398

1,618

¥ (29) ¥3,097,369¥12,750¥3,110,120

Data Section

Millions of Yen
Commonstock

104

Thousands of U.S. Dollars (Note 1)

For the year ended March 31, 2019

Balance at beginning of year

Commonstock

Crisis response
reserve$9,013,641$1,860,789

Investment from government Transfer from capital surplus to special
investment reserve

Special investment Special investment
reserve
surplus$2,973,241$27,924

CapitalsurplusRetainedearnings$8,067,991$5,267,948

1,162,267
1,162,267(1,162,267)

Cash dividends(199,312)

Net income attributable to owners of the parent Transfer from retained earnings to special
investment surplus

828,332
20,841(20,841)

Change in scope of consolidation(2,737)

Net change during the year
Balance at end of year

$9,013,641$1,860,789$5,297,775$48,765$6,905,724$5,873,390

Thousands of U.S. Dollars (Note 1)
Accumulated other comprehensive income

For the year ended March 31, 2019

Balance at beginning of year

Unrealized gain
on available-forsale securities

Deferred gain
on derivatives
under hedge
accounting

Foreigncurrencytranslation
adjustments$455,180$251,877$(11,578)

Accumulated
adjustments
for retirement
benefits

Total

Noncontrollinginterests

Total equity$   (267) $27,906,747 $114,878 $28,021,625

Investment from government Transfer from capital surplus to special
investment reserve

1,162,267

1,162,267

Cash dividends(199,312)(199,312)

Net income attributable to owners of the parent Transfer from retained earnings to special
investment surplus

828,332

828,332(2,737)(2,737)——

Change in scope of consolidation
Net change during the year
Balance at end of year
See notes to consolidated financial statements.

(52,866)(37,748)744$402,314$214,129$(10,834)(2,193)(92,063)(18,631)(110,694)$(2,459) $29,603,235 $ 96,247 $29,699,482

105

CONSOLIDATED STATEMENT OF CASH FLOWS
Development Bank of Japan Inc. and Consolidated Subsidiaries

For the year ended March 31,

Cash flows from operating activities:
Income before income taxes
Adjustments for:
Depreciation
Amortization of goodwill
Losses on impairment of long-lived assets
Equity in earnings of affiliates
Gain on change in equity
Interest income
Interest expense
Gain on securities – net
Gain on money held in trust – net
Foreign exchange (gains) losses
Loss (gain) on sales of fixed assets – net
Changes in operating assets and liabilities:   Allowance for loan losses   Allowance for investment losses   Accrued bonuses to employees   Accrued bonuses to directors   Asset for retirement benefits   Liability for retirement benefits   Reserve for contingent losses  Loans  Debentures  Borrowed money  Corporate bonds   Due from banks (excluding cash equivalents)   Call loans and bills bought   Call money and bills sold   Payables under repurchase agreements
Interest received
Interest paid
Other – net  Sub-total   Payments for income taxes
Net cash (used in) provided by operating activities
Cash flows from investing activities:
Payments for purchases of securities
Proceeds from sales of securities
Proceeds from redemption of securities
Payments for increase of money held in trust
Proceeds from decrease of money held in trust
Payments for purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Payments for purchases of intangible fixed assets Payments for purchases of stocks of subsidiaries resulting inchange in scope of consolidation Proceeds from sales of stocks of subsidiaries resulting in change inscope of consolidation
Payments for acquisition of businessNet cash used in investing activities
Cash flows from financing activities:
Proceeds from investment from government
Payments for cash dividends Proceeds from issuance of securities to non-controllingshareholders of subsidiaries
Dividends paid to non-controlling shareholders of subsidiaries
Net cash provided by financing activities
Foreign currency translation adjustments on cash andcash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 2(c))
See notes to consolidated financial statements.

2019

2018

2019

¥ 126,737¥ 129,425$ 1,141,878

12,6682,253—(9,758)—(182,377)
89,504(40,606)(805)(1,080)
1,396

10,023
1,666
31(4,193)(729)(185,653)
90,248(39,305)
(722)
1,244
(1,570)114,141
20,306—(87,923)—(1,643,189)
806,422(365,859)(7,260)(9,735)
12,580(9,408)
(129)
135
1
351
(87)
—
(198,703)
103,885(556,389)
260,130(24,206)
203,179—
93,761
180,167(91,044)
18,532(21,893)(36,784)(58,677)(11,468)
(238)
(146)
1
(600)
84
(40)
314,290
69,936
101,803
151,191
15,500(463,179)(13,000)(55,142)
180,705(91,092)(66,531)
132,536(21,696)
110,839(84,770)(1,167)
1,218
14
3,167
(793)
—
(1,790,285)
935,991(5,012,969)
2,343,725(218,093)
1,830,608—
844,777
1,623,278(820,291)
166,976(197,254)(331,423)(528,677)(488,408)
116,121324,288(9,090)814(9,739)322(3,122)(338,751)
49,427220,110(3,401)
8,651(45,445)
20,402(5,920)(4,400,475)
1,046,236
2,921,777(81,907)
7,342(87,752)
2,906(28,137)(69,758)—(628,512)

2,284—(136,289)—(39,346)(134,274)

20,581—(1,227,941)

129,000(22,121)50,000(19,721)

1,162,267(199,312)7(3,322)
103,56215(1,051)
29,242

63(29,939)
933,080

194(91,209)
995,027¥ 903,817

(505)
5,302
989,724¥ 995,027

1,757(821,782)
8,965,016$ 8,143,234

Data Section

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

106

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Development Bank of Japan Inc. and Consolidated Subsidiaries

1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its related accounting regulations and Ministerial Ordinance for
Accounting of the Development Bank of Japan Inc. (“DBJ Inc.”) and in conformity with accounting principles generally acceptedin Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International
Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside
Japan. In addition, certain reclassifications have been made in the 2018 consolidated financial statements to conform to theclassifications used in 2019.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million yen. Accordingly, thesum of each amount appearing in the accompanying financial statements and the notes thereto may not be equal to the sum of
the individual account balances. Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The
rate of ¥110.99=$1.00, the effective exchange rate prevailing as of March 31, 2019, has been used in the conversion. The
presentation of such amounts is not intended to imply that Japanese yen amounts have been or could have been readilytranslated, realized or settled in U.S. dollars at that rate or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Principles of Consolidation(1) Scope of Consolidation
Under the control concept, those companies in which DBJ Inc., directly or indirectly, is able to exercise control over
operations are fully consolidated. On September 8, 2006, the Accounting Standards Board of Japan (“ASBJ”) issued
Practical Issues Task Force No. 20, “Practical Solution on Application of Control Criteria and Influence Criteria to
Investment Associations” which was effective for the period and the fiscal years ending on or after September 8, 2006.
The practical solution clarifies how the control and influence concept should be practically applied to the consolidation
scope of collective investment vehicles, such as limited partnerships, Tokumei Kumiai (silent partnership) and otherentities with similar characteristics.
(i) Consolidated subsidiaries
The number of consolidated subsidiaries as of March 31, 2019 is 30. The major consolidated subsidiaries as of March
31, 2019 are as follows:
DBJ Singapore Limited
Japan Economic Research Institute Inc.
DBJ Europe Limited
DBJ Real Estate Co., Ltd.
DBJ Investment Advisory Co., Ltd.
DBJ Capital Co., Ltd.
DBJ Securities Co., Ltd.
DBJ Asset Management Co., Ltd.
Value Management Institute, Inc.
DBJ Investment Consulting (Beijing) Co., Ltd.
Consist Inc.
DBJ Americas Inc.
In the year ended March 31, 2019, DBJ Americas Inc. was newly consolidated due to new incorporation. Oita Mega
Solar was excluded from the scope of consolidation due to partial sales of investment in equity interest.

107(iii) Companies not classified as subsidiaries where DBJ Inc. holds the majority of voting rights
Kinugawa Rubber Industrial Co., Ltd.
ADVANIDE HOLDINGS PTE. LTD.
ABLIC Inc.
Value Planning co., ltd.
ORENO Corporation
These companies were not treated as subsidiaries because the capital contributions were made for the purpose of
incubating these companies, and not for the purpose of owning these investees under its control through operational,
personnel, capital or other form of transactions.
(2) Application of the Equity Method
Under the influence concept, unconsolidated subsidiaries and affiliates over which DBJ Inc. has the ability to exercise
significant influence are accounted for by the equity method.
(i) Unconsolidated subsidiaries not accounted for by the equity method
The number of unconsolidated subsidiaries not accounted for by the equity method as of March 31, 2019 was 53. The
major unconsolidated subsidiary not accounted for by the equity method was DBJ Regional Investment Co., Ltd.
(ii) Affiliates accounted for by the equity method
The number of affiliates accounted for by the equity method as of March 31, 2019 was 28. One of the major affiliates
accounted for by the equity method as of March 31, 2019 was AIRDO Co., Ltd.
Changes in the scope of affiliates accounted for by the equity method:
SPACE ONE CO., LTD., RS Global Capital Investment LLC and Perennial Lordstown, LLC were newly accounted for by
the equity method due to new investments, new incorporation and acquisition of equity interests, respectively, in the year
ended March 31, 2019.
En-CP Growth Investment L.P. was excluded from the scope of the equity method accounting due to liquidation in theyear ended March 31, 2019.
(iii) Affiliates not accounted for by the equity method
The number of affiliates not accounted for by the equity method as of March 31, 2019 was 117. One of the majoraffiliates as of March 31, 2019 was New Perspective One LLC.
Unconsolidated subsidiaries and affiliates that are not accounted for by the equity method have been excluded fromthe scope of the equity method because their aggregate effect in terms of net income, retained earnings andaccumulated other comprehensive income has no material impact on the consolidated financial statements of DBJ Inc.

Data Section(ii) Unconsolidated subsidiaries
The number of unconsolidated subsidiaries as of March 31, 2019 is 53. The major unconsolidated subsidiary as ofMarch 31, 2019 was DBJ Regional Investment Co., Ltd.
Unconsolidated subsidiaries are excluded from the scope of consolidation because such exclusion has no material
impact on the consolidated financial statements in terms of total assets, income, net income, retained earnings andaccumulated other comprehensive income.

108(iv) Entities not classified as affiliates where DBJ Inc. holds voting rights of between 20% and 50%
The following companies of which DBJ Inc. holding voting rights of between 20% and 50% are not affiliates accounted forby the equity method, because the capital contributions were made for the purpose of incubating these companies, andnot for the purpose of owning these investees under its control through operational, personnel, capital or other form oftransactions.
As of March 31, 2019
Socionext Inc.
KANTO-UNYU Co., Ltd.
Daisho-gun Co., Ltd.
PT. PETROTEKNOC&A Tool Engineering, Inc.
Medical Care Service Company Inc.
CMIC CMO Co., Ltd.
NATIONAL CAR PARKS LIMITED
Megabass inc.
IZUMI PRODUCTS COMPANY
TAKUMIYA HOLDINGS Co., Ltd.
FUJIBAMBI HOLDINGS Co., Ltd.
INVOICE INC.
NIHON CM HOLDINGS Co., Ltd.
Nippon Heater Kiki Co., LTD.
HIROFU CO., LTD.
(3) Balance Sheet Dates of Consolidated Subsidiaries
		 Balance sheet dates of consolidated subsidiaries are as follows:
Number of subsidiaries

2019

December 31

22

February 28 or 29

1

March 317

Consolidated subsidiaries are consolidated based on the financial statements that are prepared as of their year-end
balance sheet date.
The necessary adjustments are made in the consolidated financial statements to reflect material transactions that
occur between the year-end balance sheet date of the subsidiary and the consolidated balance sheet date.
(4) Elimination of Intercompany Balances and Transactions
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit
and loss resulting from transactions between DBJ Inc. and its consolidated subsidiaries are eliminated.
(5) Amortization of Goodwill
The difference between the fair value of net assets and the cost of the acquired subsidiary is amortized on a straight-line
basis over the estimated useful lives not exceeding 20 years. Minor differences are charged to expense in the year ofacquisition. The excess of the fair value over the cost of acquired subsidiaries (bargain purchase) is recognized asincome immediately as incurred.

109(c) Cash and Cash Equivalents“Cash and Cash Equivalents” in the consolidated statement of cash flows are included in cash and due from banks. The
reconciliation between “Cash and cash equivalents” and “Cash and due from banks” in the consolidated balance sheet is
as follows:
Thousands of
U.S. Dollars

Millions of Yen

Cash and due from banks

2019

2018

2019

¥966,903¥1,033,907$8,711,629

Time deposits with banks(63,086)(38,880)(568,394)

Cash and cash equivalents¥903,817¥   995,027$8,143,234(d) Securities
Held-to-maturity debt securities are stated at amortized cost with amortization computed on a straight-line basis, using theweighted average method. Available-for-sale securities are carried at fair value with the corresponding unrealized gains andlosses, net of applicable taxes, recorded directly in a separate component of equity, after deducting the amount charged to
profit or losses by applying fair value hedge accounting. The cost of these securities upon sale is calculated principally using
the weighted average method. Financial instruments whose fair value cannot be reliably determined are stated at cost using
the weighted average method.
Investments in limited partnerships and other similar partnerships are accounted for at their original cost plus DBJ Inc.’sinterest in earnings since acquisition and less any dividends received, based on the investees’ most recent financial
statements.
Securities which are held as trust assets in money held in trust accounts are valued in the same way as other securities.
(e) Valuation Method for Derivative Financial Instruments
All derivative financial instruments are carried at market value. Except for certain derivatives that are designated as hedging
instruments as discussed below, gains or losses on derivative transactions are recognized in the consolidated statementof income.
(f) Hedge Accounting(1) Hedge Accounting
DBJ Inc. applies the deferral method of hedge accounting or the accrual method (*1). The portfolio hedge is accounted
for by the method stipulated in “Accounting and Auditing Treatments on the Application of Accounting Standards for
Financial Instruments in the Banking Industry,” issued by the Japanese Institute of Certified Public Accountants (the“JICPA Industry Audit Committee Report No. 24” February 13, 2002). In addition, foreign currency swaps which are used
to hedge foreign currency fluctuations are not stated at market values but at contractual rates, as the foreign currency
swap contracts meet the hedging criteria under the Accounting Standards for Financial Instruments. The portfolio hedge
is accounted for by the deferral method provided in “Accounting and Auditing Treatments on Accounting for Foreign
Currency Transactions in the Banking Industry” (JICPA Industry Audit Committee Report No. 25, July 29, 2002).

Data Section(b) Business Combinations
Business combinations are accounted for using the purchase method. Acquisition-related costs, such as advisory fees orprofessional fees, are accounted for as expenses in the periods in which the costs are incurred. If the initial accounting for abusiness combination is incomplete by the end of the reporting period in which the business combination occurs, an acquirer
shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During themeasurement period, which shall not exceed one year from the acquisition, the acquirer shall retrospectively adjust theprovisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstancesthat existed as of the acquisition date and that would have affected the measurement of the amounts recognized as of that
date. Such adjustments shall be recognized as if the accounting for the business combination had been completed at theacquisition date. A parent’s ownership interest in a subsidiary might change if the parent purchases or sells ownershipinterests in its subsidiary. The carrying amount of non-controlling interests is adjusted to reflect the change in the parent’s
ownership interest in its subsidiary while the parent retains its controlling interest in its subsidiary. Any difference between thefair value of the consideration received or paid and the amount by which the non-controlling interests are adjusted isaccounted for as capital surplus as long as the parent retains control over its subsidiary.

110

In addition, DBJ Inc. applies portfolio hedges to hedge foreign currency fluctuations associated with equity
investments in overseas subsidiaries and affiliates and foreign currency denominated available-for-sale securities (otherthan bonds). The translation differences on hedging instruments are included in foreign currency translation adjustmentsin the case of equity investments in overseas subsidiaries and affiliates; fair value hedges are applied to foreign currency
denominated available-for-sale securities (other than bonds).
(2) Hedging Instruments and Hedged Items• Hedging Instruments: Interest rate swaps
Hedged Items:
Debentures, Borrowed money, Corporate bonds, Securities and Loans• Hedging Instruments: Foreign currency swaps
Hedged Items:	Foreign currency denominated Debentures, Borrowed money, Corporate bonds, Securities and
Loans• Hedging Instruments: Forward liability denominated in foreign currency
Hedged Items:	Foreign currency denominated equity investments in overseas subsidiaries and affiliates andforeign currency denominated available-for-sale securities (other than bonds)(3) Hedging Policy
DBJ Inc. utilizes hedging instruments to hedge interest rates and foreign currency fluctuations on its assets and liabilities.
Individual or certain group contracts are drawn for each hedged item.
(4) Evaluation of Hedge EffectivenessAccording to the risk management policy, DBJ Inc. evaluates the effectiveness of the hedges by testing whether thederivatives are effective in reducing the risks associated with the hedged items.
In addition, with respect to portfolio hedging activities, for interest rate swaps used to hedge market interest rate
fluctuations, hedge effectiveness is assessed on a specifically identifiable group of hedged items and a corresponding
group of hedging instruments, and for interest rate swaps used to hedge variability in cash flows, hedge effectiveness is
assessed based on the correlation between the base interest rate index of the hedged cash flows and the hedging
instrument. For currency swaps used to hedge foreign exchange risks of foreign currency denominated financial assets
and liabilities, the effectiveness is assessed by confirming that the total foreign currency denominated financial assets andliabilities of the hedged items are equal to or larger than that of hedging instruments.
With respect to hedging activities against foreign exchange risk of equity investments in overseas subsidiaries andaffiliates and foreign currency denominated available-for-sale securities (other than bonds), the effectiveness is
assessed by confirming that the total foreign currency position of the hedged items is equal to or larger than that ofhedging instruments.
With respect to an individual hedge, for both interest rate swap contracts which meet the hedging requirements of theaccrual method (*1) and foreign currency swap contracts which meet the hedging requirements of the assignment
method (*2), DBJ Inc. is not required to periodically evaluate hedge effectiveness.
*1.	If interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or
received under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities forwhich the swap contract was executed.
*2.	In cases where foreign currency swaps are used as hedges and meet certain hedging criteria, foreign exchange
forward contracts and hedged items are accounted for in the following manner:(i)	If a foreign currency swap is executed to hedge existing foreign currency assets or liabilities, a) the difference, ifany, between the Japanese yen amount of the hedged foreign currency asset or liability translated using the spot
rate at the inception date of the contract and the book value of the asset or liability is recognized in the statementof income in the period since inception, and b) the discount or premium on the contract (that is, the difference
between the Japanese yen amount of the contract translated using the contracted forward rate and that translatedusing the spot rate at the inception date of the contract) is recognized over the term of the contract.
(ii)	If a foreign currency swap is executed to hedge a future transaction denominated in a foreign currency, the futuretransaction is recorded using the contracted forward rate, and no gains or losses on the foreign exchange forward
contract are recognized.

111(2) Amortization of Intangible Fixed Assets
Intangible Fixed Assets are amortized using the straight-line method. Capitalized software for internal use is amortizedusing the straight-line method over the estimated useful lives (mainly 5 years).
(3) Lease Assets
Depreciation for lease assets is computed by the straight-line method with zero residual value over the lease term.
(h) Long-lived Assets
DBJ Inc. reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying
amount of an asset or asset group may not be recoverable. Impairment losses are recognized if the carrying amount of anasset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use andeventual disposition of the asset or asset group. The impairment losses would be measured as the amount by which thecarrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from thecontinued use and eventual disposition of the asset or the net selling price at disposition.
(i) Debentures and Corporate Bonds Issuance Costs“Debentures and Corporate Bonds Issuance Costs” are charged to expense as incurred.
(j) Foreign Currency Translation and Revaluation Method
Assets and liabilities denominated in foreign currencies held by DBJ Inc., except for shares of subsidiaries and affiliates
translated at historical rates, have been translated at the exchange rates prevailing as of the balance sheet date. Foreign
currency accounts held by consolidated foreign subsidiaries are translated into the currency of the subsidiaries at therespective year-end exchange rates. The foreign exchange gains and losses from transactions are recognized in thestatement of income to the extent that they are not hedged by forward exchange contracts. The balance sheet accounts ofthe consolidated foreign subsidiaries are translated into Japanese yen at the current exchange rate as of the balance sheet
date except for equity, which is translated at the historical rate. Differences arising from such translation are shown as“Foreign Currency Transaction Adjustments” in a separate component of equity. Income and expense accounts ofconsolidated foreign subsidiaries are translated into yen at the exchange rate prevailing as of the balance sheet date.
(k) Allowance for Loan Losses
DBJ Inc. provides for “Allowance for Loan Losses” as detailed below pursuant to the internal policies for self-assessment ofcredit quality and loan losses. The allowance for claims on debtors who are legally bankrupt, in special liquidation oreffectively bankrupt is provided for based on the amount of claims, after the write-off described below, net of amounts
expected to be recovered through disposal of collateral or execution of guarantees. The allowance for claims on debtors who
are not legally bankrupt, but are likely to become bankrupt, and for which future cash flows cannot reasonably be estimated(possibly bankrupt), is provided for at the amount considered to be necessary based on an overall solvency assessment
performed on the claims, net of amounts expected to be recovered through disposal of collateral or execution of guarantees.
With respect to the claims on debtors who are likely to become bankrupt or to be closely monitored, and for which future
cash flows can reasonably be estimated, the allowance is provided for as the difference between the present value of
expected future cash flows discounted at the contracted interest rate and the carrying value of the claims. The allowance forclaims on debtors other than those described above is provided based on the historical default rate, which is calculated
based on the actual defaults over a certain historical period. All claims are assessed initially by the investment and lending

Data Section(g) Fixed Assets(1) Depreciation of Tangible Fixed Assets
Tangible Fixed Assets are stated at cost less accumulated depreciation. Tangible Fixed Assets of DBJ Inc. aredepreciated using the declining-balance method, except for buildings (excluding installed facilities) and installed facilities
and structures acquired on or after April 1, 2016 that are depreciated on a straight-line basis, and depreciation of tangible
fixed assets of consolidated subsidiaries is computed principally using the straight-line method, based on the estimateduseful lives of the assets.
The estimated useful lives are principally as follows:
Buildings : 3 years to 50 years
Others: 4 years to 20 years

112

departments and then by the Credit Analysis Department, which is independent of the investment and lending departments
based on internal policies for self-assessment of credit quality. The allowance is provided for based on the results of theself-assessment.
With respect to the claims on debtors who are legally or substantially bankrupt with collateral or guarantees, the amountof claims exceeding the estimated market values of collateral or guarantees which are deemed uncollectible were written-off,and totaled ¥17,332 million ($156,167 thousand) and ¥15,600 million for the years ended March 31, 2019 and 2018,
respectively. The consolidated subsidiaries calculate the general reserve for “normal” categories based on the specific actual
historical loss ratio, and the specific reserve for the “possibly bankrupt,” “effectively bankrupt” and “legally bankrupt”
categories based on estimated losses, considering the recoverable value.
(l) Allowance for Investment Losses“Allowance for Investment Losses” is provided for based on the estimated losses on certain investments based on anassessment of the issuers’ financial condition.
(m) Accrued Bonuses to Employees and Directors“Accrued Bonuses to Employees and Directors” are provided for in the amount of the estimated bonuses which are
attributable to the years ended March 31, 2019 and 2018.
(n) Employees’ Retirement Benefits
DBJ Inc. has defined benefit pension plans, which consist of a defined benefit corporate pension plan and a lump-sum
severance indemnity plan, as well as a defined contribution pension plan. Some domestic consolidated subsidiaries have a
lump-sum severance indemnity plan and defined contribution plans, and some overseas consolidated subsidiaries haveretirement benefit plans which are typically defined contribution plans. The projected benefit obligations are attributed toperiods on a straight-line basis. Actuarial gains and losses and service costs that are yet to be recognized in profit or loss arerecognized with in equity (accumulated other comprehensive income), after adjusting for tax effects and are recognized in
profit or loss over ten years no longer than the expected average remaining service period of the employees.
(o) Reserve for Directors’ Retirement Benefits“Reserve for Directors’ Retirement Benefits” is accrued based on the amount that would be required if all directors retired at
the balance sheet date.
(p) Lease Transactions
Finance Lease transactions are capitalized by recognizing lease assets and lease obligations in the consolidated balance sheet.
(q) Consumption Taxes
Income and expenses subject to consumption taxes are presented net of related consumption taxes paid or received.
(r) Income Taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statement of income.
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferredtaxes are measured by applying currently enacted tax rates to the temporary differences.
(s) Capitalization of Interest Costs on Real Estate Development Business
Interest costs arising in the normal course of development related to the real estate development business of certain
domestic consolidated subsidiaries are capitalized and included in the acquisition cost of assets.

113

3. SECURITIESSecurities as of March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

¥   125,132¥   145,512$ 1,127,418

Corporate bonds*2

713,426

734,391

6,427,849

Equities*1

423,008406,229

3,811,234

Japanese government bonds*3

Other securities*1
Total

699,486

580,268

6,302,250¥1,961,054¥1,866,401$17,668,751*1.	Investments in unconsolidated subsidiaries and affiliates included in “Equities” as of March 31, 2019 and 2018, are ¥60,473 million ($544,854 thousand) and ¥41,691 million, respectively.
Investments in unconsolidated subsidiaries and affiliates included in “Other securities” as of March 31, 2019 and 2018, are ¥189,520 million ($1,707,546 thousand) and ¥163,194 million,
respectively.
*2.	DBJ Inc. has contingent liabilities for guarantees of corporate bonds among securities which were issued by private placement (Article 2, Paragraph 3 of Financial Instruments and ExchangeAct), which amount to ¥5,700 million ($51,361 thousand) and ¥6,438 million as of March 31, 2019 and 2018, respectively.
*3.	Japanese government bonds include securities lent in accordance with the unsecured securities lending agreement in the amount of ¥37,400 million($336,974 thousand) and ¥28,480 million as of March 31, 2019 and 2018, respectively.
*4.	Securities available-for-sale (excluding those securities those fair value cannot be reliably determined), whose fair value significantly declined compared with the acquisition cost, and isconsidered to be other than recoverable decline, were written down to the respective fair value which is recorded as the carrying amount on the consolidated balance sheets.
The criterion for determining whether the fair value is “significantly declined” are as follows:
Fair value declined by 50% or more of the acquisition cost.
Fair value declined by 30% or more of the acquisition cost, and such decline is not considered as recoverable.

No impairment losses on securities were recognized for the year ended March 31, 2019.
Impairment losses were recognized on bonds in an amount of ¥135 million for the year ended March 31, 2018.

4. NON-PERFORMING LOANS
The amounts of non-performing loans included in “Loans” as of March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

Loans to bankrupt debtors*2¥     0¥     —

$      2Delinquent loans*3

30,18443,750271,952———

Restructured loans*5

21,315

16,634

192,048

Total¥51,499¥60,385$464,003

Loans past due three months or more*4*1.	The amounts of loans indicated above are stated at gross amounts, before reduction of the allowance for loan losses.
*2.	“Loans to bankrupt debtors” represent non-accrual loans to debtors who are legally bankrupt as defined in Article 96-1-3 and 4 of the Japanese Tax Law Enforcement Regulation.
*3.	“Delinquent loans” represent non-accrual loans other than (i) Loans to bankrupt debtors and (ii) Loans whose interest payments are deferred in order to assist or facilitate the restructuring
efforts of borrowers in financial difficulty.
*4.	“Loans past due three months or more” are loans whose principal or interest payment is three months or more past due and do not fall under the category of “Loans to bankrupt debtors” or“Delinquent loans.”*5.	“Restructured loans” are loans whose repayment terms have been modified to the advantage of debtors through means such as a reduction or exemption of interest rates, postponement ofprincipal and interest payments, and forgiveness of loans to support or restructure the debtors’ businesses, and do not fall under the category of “Loans to bankrupt debtors,” “Delinquentloans,” or “Loans past due three months or more.”

Data Section(t) Per Share Information
Basic net income per share is computed by dividing net income available to owners of the parent related to common stockby the weighted-average number of shares of common stock outstanding for the period, retroactively adjusted for stock
splits. Diluted net income per share for the years ended March 31, 2019 and 2018 is not disclosed because there are no
dilutive securities.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable tothe year including dividends to be paid after the end of the year.

114

5. COMMITMENTS
Loan commitment limits are contracts under which DBJ Inc. lends to customers up to the prescribed limits in response tocustomers’ applications for loans as long as there is no violation of any terms and conditions in the contracts. As of March 31,
2019 and 2018, the amounts of unused commitments are ¥1,107,549 million ($9,978,823 thousand) and ¥755,609 million,
respectively. As of March 31, 2019 and 2018, the amounts of unused commitments with remaining contract term within one year
are ¥774,442 million ($6,977,591 thousand) and ¥416,683 million, respectively.
Since many of these commitments expire without being drawn down, the unused amount does not necessarily represent a
future cash requirement. Most of these contracts have terms and conditions whereby DBJ Inc. and its subsidiaries can rejectcustomers’ applications for loans or decrease the contract limits with proper reason (e.g., changes in financial situation,
deterioration in customers’ credit worthiness). At the inception of contracts, DBJ Inc. and its consolidated subsidiaries obtain liens
on customers’ real estate, securities or other assets as collateral as deemed necessary. Subsequently, DBJ Inc. and its
consolidated subsidiaries perform periodic reviews of the customers’ business results based on internal rules, and takenecessary measures to reconsider the terms and conditions of contracts and/or require additional collateral and guarantees.

6. OTHER ASSETS
Other assets as of March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

Prepaid expenses¥  4,041¥  3,846$   36,417

Accrued income

28,166

26,548

253,773

Derivatives

57,47554,337

517,847

Cash collateral paid for financial instruments

23,11859,262

208,293

Margin deposits with the central clearing house

34,284

31,140308,899

Other

44,22940,380398,504

Total¥191,317¥215,517$1,723,732

7. TANGIBLE FIXED ASSETS
Tangible fixed assets as of March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

¥ 18,306¥ 18,682$   164,936

91,214

91,214

821,829

Leased assets

284

325

2,566

Construction in progress

20

250

181

Buildings
Land

Other

359,733

321,871

3,241,133

Total¥469,559¥432,344$4,230,644

Note: Accumulated depreciation of tangible fixed assets as of March 31, 2019 and 2018, is ¥31,741 million ($285,984 thousand) and ¥24,495 million, respectively.

8. ALLOWANCE FOR LOAN LOSSES
Allowance for loan losses as of March 31, 2019 and 2018 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

General allowance for loan losses

2019

2018

2019

¥13,759¥21,782$123,967

Specific allowance for loan losses

21,57722,963

194,411

Total¥35,336¥44,745$318,378

115

Debentures and corporate bonds as of March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Issue date

Interest rate(%)

Maturity date

2019

2018

2019

(Issuer: DBJ Inc.)
Debentures
Japanese governmentguaranteed bonds
12,14,15,17,19,20,22,23*1,7Jun. 2006– 1.6–
Aug. 2008 2.2

Aug. 2018–
Jun. 2023¥   210,008¥   260,005$ 1,892,136

Japanese governmentguaranteed bonds
1-7,9,11,14-55

Nov. 2008– 0.001–
Mar. 2019 2.1

Jun. 2018–
Mar. 2029

1,580,828[199,978]1,490,269

14,242,982[1,801,769]

Japanese governmentguaranteed foreign bond 67*2,7Sep. 1998

1.81

Sep. 2028

25,03825,042

225,591

Japanese governmentguaranteed foreign bonds
5-7,10,11,14*1,7Dec. 2002– 1.05–
Nov. 2007 4.75

Sep. 2022–
Nov. 2027

369,018

369,019

3,324,788

Japanese governmentguaranteed Euro MTN bonds
6,8-18*3

Sep. 2012– 1.625–
Sep. 2018 3.25

Oct. 2018–
Sep. 2028

908,675[108,956]

795,349

8,187,005[981,676]

FILP agency domestic bonds
Dec. 2003– 1.7–
11,20,30,31,34-36,42,49,51*4,7 Jul. 2008 2.74

Jun. 2018–
Mar. 2047

94,967

144,964

855,642Euro MTN FILP agency bond
2*4,5,7

2.032

Sep. 2023

2,000

2,000

18,020

Corporate bonds through public
placement
5,17,23,26,31,35,37,39,40,42,
44,46,47,49,50,52-104

Apr. 2009– 0–
Jan. 2019 1.745

Jun. 2018–
Mar. 2058

1,213,200[225,600]

1,148,800

10,930,720[2,032,616]

Corporate bonds through private
placement 3-25,27-37,39-94

Feb. 2015– 0–
Feb. 2019 1.16

May 2019–
Mar. 2058

402,000[27,000]

304,000

3,621,949[243,265]

Corporate bonds Euro MTN
29-32,34,36,42,43,45-49,51,
52,54-57,60-76*6

Jul. 2011– 0–
Dec. 2018 3.749

May 2018–
Dec. 2048

491,012[54,408]

388,782

4,423,933[490,208]

Dec. 2012

5.53

May 2018

—

4,500

—

Sep. 2014

0.13909

Sep. 2019

250
[250]

250

2,252
[2,252]¥5,296,999¥4,932,983$47,725,017

Sep. 2008

Corporate bonds(Issuer: Green Asset Investment TMK)
Specified corporate bond 1*8(Issuer: Hiratsuka Holding TMK)
Specified corporate bond 4*8
Total*1.	These bonds are government-guaranteed bonds issued by the Development Bank of Japan.
*2.	This bond is a government-guaranteed bond issued by the Japan Development Bank.
*3.	These bonds are unsecured guaranteed bonds issued based on Medium Term Note program (“MTN program”).
*4.	Fiscal Investment and Loan Program (FILP) agency bonds (“FILP bonds”) are not government-guaranteed. These bonds are issued by the Development Bank of Japan.
*5.	This bond is a FILP bond issued based on MTN program.
*6.	These bonds are unsecured corporate bonds issued based on MTN program.
*7.	General mortgage under the DBJ Inc. Act (17 of the Supplementary Provisions) and the DBJ Act (Article 43).
*8.	These bonds are non-recourse debts.
*9.	Figures indicated in brackets [ ] indicate the amounts to be redeemed within one year.

Data Section

9. DEBENTURES AND CORPORATE BONDS

116

Scheduled redemptions of above debentures and corporate bonds for the following 5 years subsequent to March 31, 2019 are
as follows:
Millions of Yen

Thousands of U.S. Dollars

Debentures/
corporate bonds

Non-recourse
corporate bonds

Debentures/
corporate bonds

Non-recourse
corporate bonds

The fiscal year ending March 31,2020¥615,942¥250$5,549,534$2,252

2021

557,695—

5,024,737

—

2022

739,767—

6,665,168

—

2023

750,655—

6,763,271

—

2024

639,717—

5,763,736—

10. BORROWED MONEY
Borrowed money as of March 31, 2019 and 2018 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Average interest rate (%)

Due date of repayment

2019

2018

2019

Borrowings

0.54

May 2019–Feb. 2039

¥7,808,016¥8,432,199$70,348,832

Non-recourse borrowings

0.76

Sep. 2019–Dec. 2036

179,843

141,971

1,620,358

Total

0.55

¥7,987,860¥8,574,170$71,969,190

Scheduled repayments of above borrowings and non-recourse borrowings for the following 5 years subsequent to March 31,
2019 are as follows:
Millions of Yen
Borrowings

The fiscal year ending March 31,2020¥1,155,656

Thousands of U.S. Dollars

Non-recourse borrowings

Borrowings¥17,915

Non-recourse borrowings$10,412,256$161,414

2021

952,554

6,729

8,582,348

60,6302022

1,278,704

6,781

11,520,903

61,102

2023

846,5626,838

7,627,373

61,611

2024

699,608

6,918

6,303,346

62,338

11. NON-RECOURSE DEBTS
Non-recourse debts in consolidated special purpose companies as of March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

Borrowed money¥179,843¥141,971$1,620,358

Corporate bonds

250

4,750

2,252

Non-recourse debts:

Assets corresponding to non-recourse debts:
Cash and due from banks

12,871

9,016

115,973

Other assets

4,400

1,859

39,645

Tangible fixed assets

188,151

151,021

1,695,211

Intangible fixed assets

5,414

88

48,781

117

Other liabilities as of March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

2019

Accrued expenses¥ 18,1432019¥20,734$163,472

Unearned income

1,055

1,249

9,508

Accrued income taxes

13,62018,707

122,720

Derivatives

30,46920,728274,529

161

196

1,456

Lease obligations
Asset retirement obligations

5,700

3,567

51,360Other

32,71832,767294,784

Total¥101,869¥97,951$917,829

13. ACCEPTANCES AND GUARANTEES
Acceptances and guarantees as of March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Guarantees

2019

2018

2019

¥273,239¥201,796$2,461,842

14. ASSETS PLEDGED AS COLLATERALCash and due from banks of ¥12,871 million ($115,973 thousand), securities of ¥87,731 million ($790,444 thousand), otherassets of ¥4,400 million ($39,645 thousand), tangible fixed assets of ¥188,151 million ($1,695,211 thousand) and intangible
fixed assets of ¥5,414 million ($48,781 thousand) are pledged as collateral for payables under repurchase agreements of¥93,761 million ($844,777 thousand), borrowed money of ¥179,843 million ($1,620,358 thousand) and corporate bonds of¥250 million ($2,252 thousand) as of March 31, 2019.
Cash and due from banks of ¥9,016 million, other assets of ¥1,859 million, tangible fixed assets of ¥151,021 million andintangible fixed assets of ¥88 million are pledged as collateral for borrowed money of ¥141,971 million and corporate bonds of¥4,750 million as of March 31, 2018.
Securities and loans pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥129,452 million ($1,166,341 thousand) and ¥1,147,624 million ($10,339,893 thousand), respectively, as of March 31, 2019,
which are deposited as collateral for transactions, including exchange settlements as of March 31, 2019. On behalf of theinvestees who borrow from third parties, ¥27,030 million ($243,536 thousand) of securities are deposited as security as ofMarch 31, 2019. Additionally, ¥23,118 million ($208,293 thousand) of cash collateral paid for financial instruments, etc. and¥34,284 million ($308,899 thousand) of margin deposits with the central clearing house are included in other assets as of March
31, 2019. Under the DBJ Inc. Act (Article 17 of the Supplementary Provisions) and the DBJ Act (Article 43), obligations createdby the bonds issued by DBJ are secured by a statutory preferential right over the property of DBJ Inc. The face value of thesedebentures amounts to ¥701,289 million ($6,318,488 thousand) as of March 31, 2019.
Securities and loans pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥200,470 million and ¥969,934 million, respectively, as of March 31, 2018, which are deposited as collateral for transactions,
including exchange settlements as of March 31, 2018. On behalf of the investees who borrow from third parties, ¥27,030 millionof securities are deposited as security as of March 31, 2018. Additionally, ¥59,262 million of cash collateral paid for financial
instruments, etc. and ¥31,140 million of margin deposits with the central clearing house are included in other assets as of March
31, 2018. Under the DBJ Inc. Act (Article 17 of the Supplementary Provisions) and the DBJ Act (Article 43), obligations createdby the bonds issued by DBJ Inc. are secured by a statutory preferential right over the property of DBJ Inc. The face value ofthese debentures amounts to ¥801,289 million as of March 31, 2018.

Data Section

12. OTHER LIABILITIES

118

15. EQUITY
Japanese companies including DBJ Inc. are regulated by the Companies Act. In addition, DBJ Inc. is regulated by the DBJ Inc.
Act. The significant provisions in the Companies Act and the DBJ Inc. Act that affect financial and accounting matters are
summarized as follows:(a) Dividends
Under the Companies Act, companies can distribute dividends at any time during the fiscal year, in addition to the year-end
dividend, upon resolution at the shareholders meeting. Additionally, for companies that meet certain criteria such as (1) having
a Board of Directors, (2) having independent auditors, (3) having a Board of Corporate Auditors, and (4) the term of service ofthe directors is prescribed as one year rather than two years of normal term in its articles of incorporation. With respect to thethird condition above, the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal
year, if the Board of Directors can declare dividends as prescribed in the company’s articles of incorporation. DBJ Inc.,
however, shall not distribute such dividends based on resolution of the Board of Directors, since its articles of incorporation
do not prescribe that the Board of Directors can take such action. The Companies Act provides certain limitations on theamounts available for dividends or the purchase of treasury stock. Article 20 of the DBJ Inc. Act provides that the timing andamounts for dividends shall be authorized by the Finance Minister.
(b) Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be set aside as a legal reserve (a component ofretained earnings) or as additional paid-in capital (a component of capital surplus), depending on the equity account charged
for dividends, until the total aggregate amount of legal reserve and additional paid-in capital equal 25% of Common stock.
Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation.
The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus andretained earnings can be reclassified among the accounts under certain conditions and upon resolution by the shareholders.
(c) Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of the treasury stock based on
resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the distributable amount to theshareholders which is determined by specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of equity.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock.
The treasury stock acquisition rights are presented as a separate component of equity or deduction of stock acquisition rights.
(d) Solicitation and Delivery of Shares or Stock Acquisition Rights
Article 12 of the DBJ Inc. Act regulates that, if DBJ Inc. intends to solicit those who will subscribe for shares or stockacquisition rights offered, or to deliver shares or stock acquisition rights in connection with a share-for-share exchange,
DBJ Inc. shall obtain an authorization from the Finance Minister.

16. CRISIS RESPONSE RESERVEDBJ Inc. recorded the accumulated amounts of the government’s contribution to implement the crisis response operations inaccordance with the provision of Article 2-22 of the supplementary provision of the DBJ Inc. Act (hereinafter the “Act”) as “Crisis
response reserve.”
The reserve is characterized as follows:(a)	For the purpose of calculating the amount of surplus, the amount of crisis response reserve is included in the total amount ofcommon stock and capital surplus based on the provision of Article 2-25 of the supplementary provision of the Act.
(b)	In case of compensation for deficit, the amount of crisis response reserve may be decreased when the capital surplus andlegal retained earnings become nil based on the provision of Article 2-26 of the supplementary provision of the Act. When thesurplus becomes positive after the decrease in the amount of crisis response reserve, the amount of crisis response reserve
shall be increased based on the provision of Article 2-26 of the supplementary provision of the Act.
(c)	In case DBJ Inc. determined that a sufficient financial base required for the proper implementation of crisis response
operations has been secured, DBJ Inc. shall pay the full or partial amount of crisis response reserve to the National Treasury

119

17. SPECIAL INVESTMENT RESERVE AND SPECIAL INVESTMENT SURPLUS
DBJ Inc. recorded the amounts transferred from the government’s investment and capital surplus to implement the special
investment operations in accordance with the provision of Article 2-23 of the supplementary provision of the Act as “Special
investment reserve”. In addition, profit or loss arising from special investment operations is transferred from retained earnings to“Special investment surplus.”
Special Investment Reserve and Special Investment Surplus are characterized as follows:(a)	For the purpose of calculating the amount of surplus, the amounts of special investment reserve and special investment
surplus are included in the total amount of common stock and capital surplus based on the provision of Article 2-25 of the
supplementary provision of the Act.
(b)	In case of compensation for deficit, the amounts of special investment reserve or special investment surplus may bedecreased when the capital surplus and legal retained earnings become nil based on the provision of Article 2-26 of the
supplementary provision of the Act. When the surplus becomes positive after the decrease in the amounts of special
investment reserve or special investment surplus, the amounts of special investment reserve or special investment surplus
shall be increased based on the provision of Article 2-26 of the supplementary provision of the Act.
(c)	In case that DBJ Inc. determined that these amounts became unnecessary to implement special investment operations
properly, DBJ Inc. may pay the full or partial amount of special investment reserve or special investment surplus to the
National Treasury according to the resolution of the shareholders meeting and authorization of the Minister of Finance, in
accordance with the provision of Article 2-27 of the supplementary provision of the Act.
(d)	If DBJ Inc. were to be liquidated, DBJ Inc. shall pay the amounts of special investment reserve and special investment
surplus corresponding to the amount attributable to the National Treasury to the National Treasury based on the provision of
Article 2-28 of the supplementary provision of the Act when residual assets exist after discharging debts.

18. PER SHARE INFORMATION
Basic net income per common share (“EPS”) for the years ended March 31, 2019 and 2018 is as follows:Year ended March 31, 2019

Basic EPS
 Net income attributable to ownersof the parent

Millions of Yen

Thousands of Shares

Yen

U.S. Dollars

Net income attributable toowners of the parent

Weighted average shares

EPS

EPS

¥91,936 Net income not attributable to common shareholders (Amount attributable to
the National Treasury related to special
investment operations)

1,156 Net income attributable to owners of
the parent relating to common stock¥90,780

43,632¥2,080.56

43,632¥2,092.38

Year ended March 31, 2018

Basic EPS
 Net income attributable to ownersof the parent Net income not attributable to common shareholders (Amount attributable to
the National Treasury related to special
investment operations) Net income attributable to owners of
the parent relating to common stock¥91,938642¥91,295

Note: Diluted net income per share for the years ended March 31, 2019 and 2018 is not disclosed because there are no dilutive securities.

$18.75

Data Section

according to the resolution of the shareholders meeting and authorization of the Minister of Finance, in accordance with theprovision of Article 2-27 of the supplementary provision of the Act.
(d)	If DBJ Inc. were to be liquidated, DBJ Inc. shall pay the amount of crisis response reserve to the National Treasury based on
the provision of Article 2-28 of the supplementary provision of the Act when residual assets exist after discharging debts.

120

19. OTHER OPERATING INCOME
Other operating income for the years ended March 31, 2019 and 2018 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

Foreign exchange gains¥6,094¥  —$54,914

Gains on sales of bonds

283

286

2,552

Gains on derivatives

—

4,980

—

Other

609

931

5,488

Total

¥6,987¥6,198$62,954

20. OTHER INCOME
Other income for the years ended March 31, 2019 and 2018 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

Reversal of allowance for loan losses¥ 4,915¥ 8,897$ 44,286

Gains on sales of equities and other securities

17,3247,136

156,095

Reversal of reserve for contingent losses

—

40

—

9,758

4,193

87,923

Gains on sales of fixed assets

1

1,604

16

Collection of written-off claims

1,994

3,670

17,971

Gains on investments in limited partnerships andother similar partnerships

27,07036,185

243,904

Rental income on land and buildings

13,224

9,953

119,154

Sales of electric power

12,2408,508

110,281—729—

Equity in earnings of affiliates

Gain on change in equity
Other

9,030

6,836

81,359Total¥95,561¥87,757$860,990

21. OTHER OPERATING EXPENSES
Other operating expenses for the years ended March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

Losses on sales of bonds¥   16¥    1$   150

Foreign exchange losses

—

1,180

—

Write-off of bonds

—

135

—

Debenture issuance costs

861

870

7,759

Corporate bonds issuance costs

1,271

1,079

11,452Losses on derivatives

1,381

—

12,451

Other

1

6

11

Total

¥3,532¥3,273$31,823

121

Other expenses for the years ended March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

¥ 1,397¥    34$ 12,595—

31—

Losses on investments in limited partnerships andother similar partnerships

2,979

3,786

26,849Depreciation

8,539

6,005

76,943Losses on sales of fixed assets
Impairment losses

Provision of allowance for investment losses

6

8

57

Other

2,263

833

20,396

Total¥15,187¥10,700$136,839

23. EMPLOYEES’ RETIREMENT BENEFITS
Employees whose service with DBJ Inc. is terminated are, under most circumstances, entitled to retirement and pension benefits
determined by reference to basic rates of pay at the time of termination, length of service and conditions under which thetermination occurs. If the termination is involuntary, caused by retirement at the mandatory retirement age or caused by death,the employee is entitled to greater payment than in the case of voluntary termination.
(a) Defined Benefit Pension Plan
(1) The changes in retirement benefit obligation for the years ended March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

¥34,476¥34,111$310,631

Service cost

1,560

1,555

14,061

Interest cost

376

372

3,390

Balance at beginning of year

Actuarial losses

892

57

8,040

Benefits paid

(1,933)(1,620)(17,424)¥35,372¥34,476$318,699

Balance at end of year

(2) The changes in plan assets for the years ended March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Balance at beginning of year

2019

2018

2019

¥29,009¥28,128$261,368

Expected return on plan assets

145

140

1,307

Actuarial gains

384

532

3,461

Contributions from the employer

1,018

1,019

9,181

Benefits paid

(916)

(810)

(8,254)¥29,641¥29,009$267,062

Balance at end of year

Data Section

22. OTHER EXPENSES

122(3)	Reconciliation between the liability for retirement benefits recorded in the consolidated balance sheet and the balances ofretirement benefit obligations and plan assets for the years ended March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

Funded retirement benefit obligations¥ 27,402¥ 26,419$ 246,893

Plan assets(29,641)(29,009)(267,062)(2,238)(2,590)(20,170)

7,969

8,057

71,806Net liability for retirement benefits recorded in
the consolidated balance sheet¥   5,731¥   5,467$   51,637

Liability for retirement benefits¥   7,969¥   8,057$   71,806

Asset for retirement benefits(2,238)(2,590)(20,170)¥   5,731¥   5,467$   51,637

Unfunded retirement benefit obligations

Net liability for retirement benefits recorded in the consolidatedbalance sheet

2019(4) The components of net periodic retirement benefit costs for the years ended March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

Service cost

¥1,560¥1,555$14,061Interest cost

376

372

3,390

Expected return on plan assets

(145)

(140)

(1,307)

Amortization of net actuarial losses

136

180

1,225

Amortization of prior service cost

12

12

110

¥1,940¥1,980$17,480

Net periodic retirement benefit costs(5)	Amounts recognized in other comprehensive income (before income tax effect) in respect of adjustments for retirement
benefit for the years ended March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

Prior service cost¥   12¥ 12$   110

Actuarial (losses) gains

(372)

655

(3,354)

Total¥(360)¥668$(3,244)(6)	Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of adjustment for
accumulated retirement benefit as of March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

Unrecognized prior service cost

¥ (19)¥(31)$   (176)

Unrecognized actuarial (losses) gains

(363)

9

(3,272)

Total¥(382)¥(22)$(3,449)

123

Data Section(7) Plan assets
		 (i) Components of plan assets
		 Plan assets as of March 31, 2019 and 2018 consisted of the following:
2019

2018

Debentures

89%

89%

Equity10%

10%

Others

1%

1%

Total

100%

100%

		

(ii) Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return which are expectedcurrently and in the future from the various components of the plan assets.

(8) Assumptions used for the years ended March 31, 2019 and 2018 were set forth as follows:
2019

Discount rate
Expected salary increase rate
Expected rate of return on plan assets

2018

1.1%

1.1%

1.7%–5.3%

1.7%–5.3%

0.5%

0.5%

(b) Defined Contribution Plans
The amounts of the required contribution to the defined contribution plans of DBJ Inc. and its consolidated subsidiaries for theyears ended March 31, 2019 and 2018 are ¥237 million ($2,136 thousand) and ¥231 million, respectively.

24. INCOME TAXESDBJ Inc. and its domestic consolidated subsidiaries are subject to Japanese national and local income taxes which, in theaggregate, resulted in a normal effective statutory tax rate of approximately 30.62% and 30.86% for the years ended March 31,
2019 and 2018, respectively.
A reconciliation of the normal effective statutory tax rate with the actual effective tax rate for the years ended March 31, 2019 and2018 is as follows:
2019

2018

30.62%

30.86%

Change in valuation allowance(1.83)%(3.11)%

Equity in earnings of affiliates(2.36)%(1.00)%

Other

0.01%

0.34%

26.44%

27.09%

Normal effective statutory tax rate
Increase (decrease) in taxes resulting from:

Actual effective tax rate

124

The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities asof March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

¥ 14,478¥ 17,137$ 130,453

Deferred tax assets:
Allowance for loan losses
Losses from revaluation of securities

11,955

11,516

107,719

Excess of fair value over assets of consolidated subsidiaries

3,426

4,538

30,876

Liability for retirement benefits

1,986

2,010

17,896

Tax goodwill

1,416

8,160

12,761

Tax loss carryforwards

6,289

5,121

56,670Other

16,583

13,558

149,413Sub-total

56,13762,044

505,787(38,765)—(349,269)(38,765)(40,763)(349,269)

17,371

21,280156,518

Unrealized gain on available-for-sale securities(17,085)(19,767)(153,934)

Deferred gain on derivatives under hedge accounting(10,696)(12,500)(96,372) Less-valuation allowance on total of temporary differences deductible
in future periods
Sub-total
Total
Deferred tax liabilities:(4,701)(3,366)(42,362)

Total

Other

(32,483)(35,634)(292,668)

Net deferred tax assets (liabilities)¥(15,111)¥(14,353)$(136,149)(Change in presentation method)
DBJ Inc. has adopted the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28,
February 16, 2018, hereinafter the “Partial Amendments”) from the year ended March 31, 2019, and accordingly, changed thepresentation of these notes on INCOME TAXES.
The disclosure requirements described in the interpretation (Note 8) (1) (excluding total of valuation allowance) of the“Accounting Standard for Tax Effect Accounting” as provided in paragraph 4 of the Partial Amendments were added to thesenotes on INCOME TAXES. However, information for the previous fiscal year is omitted pursuant to the transitional treatment
provided in paragraph 7 of the Partial Amendments.

25. LEASE TRANSACTIONS(a) Finance leases
Information about finance leases is omitted since there is no materiality.
(b) Operating leases(As lessee)
The minimum lease commitments under non-cancelable operating leases as of March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

Due within 1 year

¥1,700¥1,521$15,323

Due after 1 year

3,824

4,615

34,459Total¥5,525¥6,137$49,782

125

Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

Due within 1 year

¥ 5,941¥ 5,972$ 53,533

Due after 1 year

22,717

27,050204,683

Total¥28,659¥33,022$258,216

26. OTHER COMPREHENSIVE (LOSS) INCOME
The components of other comprehensive (loss) income for the years ended March 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

Gain arising during the year

¥ 14,139¥13,053$ 127,390

Reclassification adjustments to profit or loss

(15,836)(9,248)(142,681)(1,697)3,804(15,291)

Unrealized (loss) gain on available-for-sale securities:   Amount before income tax effect   Income tax effect(137)(1,204)(1,239)(1,834)

2,600(16,530)

Gain arising during the year

1,233

236

11,117

Reclassification adjustments to profit or loss  TotalDeferred loss on derivatives under hedge accounting:(7,520)(8,871)(67,761)   Amount before income tax effect(6,286)(8,634)(56,644)   Income tax effect

1,927

2,699

17,364  Total(4,359)(5,935)(39,281)

Adjustments arising during the year

113

(74)

1,026

Reclassification adjustments to profit or loss

—

—

—

   Amount before income tax effect

113

(74)

1,026

   Income tax effect

—

—

—

  Total

113

(74)

1,026

Adjustments arising during the year

(508)

474

(4,580)Reclassification adjustments to profit or loss

148

193

1,336

(360)

668

(3,244)   Income tax effect

110

(204)

993

  Total

(249)

463

(2,251)

Foreign currency translation adjustments:

Adjustments for retirement benefits:   Amount before income tax effect

Share of other comprehensive (loss) income in affiliates accounted
for by the equity method:(Loss) gain arising during the year
Reclassification adjustments to profit or loss   Amount before income tax effect   Income tax effect  Total
Total other comprehensive (loss) income

(30)

3,261

(274)

(3,899)(87)(35,133)(3,929)3,174(35,407)———(3,929)3,174(35,407)¥(10,260)¥   228$ (92,443)

Data Section(As lessor)
The minimum lease commitments under non-cancelable operating leases as of March 31, 2019 and 2018 are as follows:

126

27. SEGMENT INFORMATIONDBJ Inc. consists of only one business segment of long-term financing and accordingly, the disclosure of the reportable segment
information is omitted.
Related information:
Segment information by service for the years ended March 31, 2019 and 2018 is following:
Millions of Yen

Year ended March 31, 2019

Ordinary income from external customers

Loan business¥157,916

Securities investment¥69,255

Other¥74,032

Total¥301,204

Millions of Yen

Year ended March 31, 2018

Ordinary income from external customers

Loan business¥166,266

Securities investment¥66,919

Other¥58,606

Total¥291,792

Thousands of U.S. Dollars

Year ended March 31, 2019

Loan business

Ordinary income from external customers$1,422,798

Securities investment$623,979

Other$667,021

Total$2,713,798

28. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(a) Financial Instruments(1) Policy for Financial Instruments
DBJ Inc. provides investment and loan services that are aimed to provide long-term stable funding. As the main methodsof acquiring funds, in addition to issuing corporate bonds and long-term borrowings, DBJ Inc. relies on the stableprocurement of long-term funds from the government’s Fiscal Investment and Loan Program (FILP). Since the majority of
its assets are long-term with a fixed rate, DBJ Inc. raises its funds mainly with long-term, fixed rate liabilities.
From both funding and investment aspects, DBJ Inc. implements comprehensive asset/liability management in orderto mitigate the risk of capital shortfall and losses from fluctuations of interest rate and exchange rate. DBJ Inc. utilizes
derivative financial instruments in order to hedge or manage the risks related to interest and currency.
(2) Nature and Extent of Risks Arising from Financial Instruments
The financial assets of DBJ Inc. are mainly investments and loans in domestic customers, which are exposed to credit
risk that stems from customers’ default of contracts or decline of their creditworthiness. Main categories of industries ofdebtors are electricity, gas, thermal supply, water supply, real estate, rental and leasing, manufacturing and others as ofMarch 31, 2019. The changes of economic circumstances surrounding these industries may influence the fulfillment of
their obligations. DBJ Inc. holds securities such as bonds, equities and investments in limited partnerships and othersimilar partnerships, which are exposed to issuer’s credit risk, interest rate risk, price volatility risk and other risks. DBJ Inc.
does not have any trading-related risk because it does not engage in trading (specified transactions).
Although corporate bonds and borrowings are exposed to cash liquidity risk and interest rate risk, these risks arehedged or controlled by matching of financing and investing activities, interest-rate swap agreements and othertransactions.
Foreign currency denominated investments, loans and others are exposed to exchange rate risk. DBJ Inc. mitigatesthis risk by matching foreign currency investments, loans and others with foreign currency corporate bonds ascorresponding foreign currency denominated liabilities and by using exchange swaps and currency swaps.
DBJ Inc. utilizes derivative financial transactions such as interest-rate swap agreements and currency swap
agreements in order to hedge or manage the risks related to interest and currency. DBJ Inc. applies hedge accounting asnecessary. Details for hedging instruments, hedged items, hedging policy and assessment of effectiveness of the hedges
are described in Note 2 (f) “Hedge Accounting.”(3) Risk Management for Financial Instruments(i) Credit Risk Management
In accordance with the internal guidelines, DBJ Inc. utilizes credit exposure management and portfolio management
for investments and loans. When making an investment or loan, DBJ Inc. examines the entity’s viability and the entity’s

127(ii) Market Risk Management
1) Interest Rate Risk Management
DBJ Inc. manages interest rate risk by asset/liability management. Details of risk management methods andprocedures are determined on internal rules, and Management Committee and ALM & Risk Management
Committee determine policies related to asset/liability management, monitoring of implementation and futureplans. In addition, the risk management department monitors the interest rate and term of financial assets/liabilities
overall. ALM & Risk Management Committee conducts regular monitoring with interest rate sensitivity analyses(duration, basis point value (BPV)), value at risk (VaR), and other methods. As part of asset/liability management,interest-rate swaps are used to avoid or hedge interest rate risk.
2) Foreign Exchange Risk Management
Foreign currency investments, loans and others are exposed to exchange rate risk, therefore those risks arehedged or managed not only by offsetting some foreign currency denominated investments, loans and otherswith foreign currency denominated corporate bonds and debentures but also by using exchange swaps andcurrency swaps.
3) Price Volatility Risk Management
When DBJ Inc. acquires financial assets entailing price volatility risk such as securities with readily available market
quotations, it follows in-house regulations and policies which have been developed taking into account market
fluctuation risks, and the risk management department is involved in decision-making, as necessary. Throughregular monitoring, price volatility risks are reviewed on a timely basis and reported to ALM & Risk Management
Committee periodically.
4) Derivative Transactions
In conducting derivative transactions, segregation of duties is maintained in the front office, the back office and therisk management department based on in-house regulations.
5) Quantitative Information about Market Risk
DBJ Inc. has not been engaged in trading activities, and all the assets and liabilities are financial instruments forthe purposes other than trading.
Market risk exposure (estimated loss) is based on VaR methods through interest rate sensitivity analyses(100 BPV) and variance-covariance method (holding period of 1 year, observation period of 5 years or more,and confidence interval of 99.9%). The amount of market risk (risks pertaining to the changes in interest rates,
foreign exchanges and market prices) as of March 31, 2019 and 2018 was ¥63,410 million ($571,315
thousand) and ¥43,107 million, respectively. Such measurements are conducted by the risk management
department on a regular basis and reported to the ALM & Risk Management Committee to utilize for establishing
ALM operating policies.

Data Section

project’s profitability. After that, DBJ Inc. sets ratings along with an internal rating system, grants credit amount, setscollateral and guarantee. The sales and credit analysis departments hold separate roles in the screening andadministering of credit for individual loans and each department keeps the operations of the other in check. The
Committee on Investment and Loan Decisions meets as needed to deliberate important issues concerning themanagement and governance of individual loans. DBJ Inc. performs a comprehensive analysis of data based onborrower ratings, and calculates the loan portfolio’s overall exposure to credit risk, which is measured regularly toensure that such risk remains within specified range of capital.
The credit risk of securities is managed in the same way as that of loans. In addition, DBJ Inc. regularly monitors
changes in the market value of securities with market value. As for counterparty risk arising from derivativetransactions, DBJ Inc. manages derivative transactions by setting a limit after continually monitoring the cost ofrestructuring its transactions and the creditworthiness of each counterparty and also manages risk by utilizing central
clearance organization and through receipt/payment of margin money based on Credit Support Annex (CSA)
between counterparties.

128

VaR or 100 BPV measures the market risk volume under a definite probability of incidence calculated basedon the historical market movements and therefore, it may fail to capture risks which arise under exceptional market
conditions affected by drastic change.
DBJ Inc. recognizes that rigid risk management is being conducted as risks that cannot be captured by themodel alone are identified in detail by conducting backtesting to compare the risk volume calculated by the modelwith hypothetical performances calculated based on the actual market movements as well as performing
measurement using other risk indices and stress tests.
(iii) Liquidity Risk Management on Financing
The risk management department monitors the possession amount of cash liquidity and the cash flow ladder andreports it to the ALM & Risk Management Committee periodically in line with in-house regulations of liquidity risk
management on financing. The ALM & Risk Management Committee manages liquidity risk by appropriate
operations of financing and investing activities based on the risk situation.
(4) Supplementary Explanation on Fair Value of Financial Instruments
The fair value of financial instruments is measured at quoted market prices. If a quoted price is not available, DBJ Inc.
measures fair value based on a reasonably assessed price. Because an assessed price is computed using certain
assumptions, price could differ if different assumptions are used.
(b) Fair Values Information of Financial Instruments
The following are the carrying amount, fair value and differences between them as of March 31, 2019 and 2018.
Unlisted equities and others, whose fair value cannot be reliably determined, are excluded from the table below (see (2)).
Millions of Yen

2019
Carrying amount

Fair value

Difference

Cash and due from banks¥   966,903¥   966,903¥     —

Call loans and bills bought

260,000

260,000—

Money held in trust

18,30520,052

1,747

Held-to-maturity debt securities

534,041

544,776

10,734

Available-for-sale securities

559,404

559,404

—

2,334

2,822

488

Securities

Investments in affiliates
Loans
Allowance for loan losses*1

12,923,938(34,285)
12,889,653

13,452,296

562,642

Total assets¥15,230,642¥15,806,256¥575,613

Debentures

3,190,536

3,295,915

105,379

93,761

93,761—

Borrowed money

7,987,860

8,086,527

98,667

Corporate bonds

2,106,463

2,118,548

12,085¥13,378,621¥13,594,754¥216,132

Derivative transactions not qualifying for hedge accounting

30,16030,160—Derivative transactions qualifying for hedge accounting(3,162)(3,162)—¥    26,998¥    26,998¥     —

Payables under repurchase agreements

Total liabilities
Derivative transactions*2

Total derivative transactions

129

Data Section

Millions of Yen

2018
Carrying amount

Fair value

Difference

Cash and due from banks¥ 1,033,907¥ 1,033,907

Call loans and bills bought

463,179

463,179—

9,411

10,166755

Held-to-maturity debt securities

629,541

641,881

12,339Available-for-sale securities

525,697525,697—

Investments in affiliates

2,077

4,645

2,568

12,683,708

13,199,192

515,484

Total assets¥15,347,522¥15,878,669¥531,146

Debentures

3,086,650

3,196,425

109,774

Money held in trust¥     —

Securities

Loans
Allowance for loan losses*1

Payables under repurchase agreements
Borrowed money
Corporate bonds
Total liabilities

12,725,235(41,526)———

8,495,170

8,551,765

56,594

1,846,332

1,849,307

2,974¥13,428,154¥13,597,497¥169,343

31,54831,548—Derivative transactions*2
Derivative transactions not qualifying for hedge accounting
Derivative transactions qualifying for hedge accounting
Total derivative transactions

2,048

2,048

—

¥    33,596¥    33,596¥     —

Thousands of U.S. Dollars

2019
Carrying amount

Fair value

Cash and due from banks$  8,711,629$  8,711,629

Call loans and bills bought

2,342,553

2,342,553—

164,926

180,673

15,747

Held-to-maturity debt securities

4,811,616

4,908,336

96,720Available-for-sale securities

5,040,137

5,040,137—

21,03025,4294,399

116,133,470

121,202,778

5,069,309

Total assets$137,225,361$142,411,536$5,186,175

Debentures

28,746,163

29,695,610

949,447

Money held in trust

Difference$      —

Securities

Investments in affiliates
Loans
Allowance for loan losses*1

Payables under repurchase agreements
Borrowed money
Corporate bonds
Total liabilities

116,442,372(308,902)

844,777

844,777—

71,969,190

72,858,166

888,976

18,978,854

19,087,743

108,889$120,538,984$122,486,297$1,947,313

271,740

271,740—

Derivative transactions*2
Derivative transactions not qualifying for hedge accounting
Derivative transactions qualifying for hedge accounting
Total derivative transactions*1. General and specific allowances for loan losses are deducted.
*2. Assets and liabilities arising from derivative transactions are presented on a net basis.

(28,490)(28,490)—$    243,250$    243,250$      —

130(1) Following are the methods used to calculate the fair values of financial instruments:
Assets(i) Cash and due from banks
For deposits without maturity, the carrying amount is presented as the fair value, as such carrying amountapproximates the fair value. For deposits with maturity, the carrying amount is presented as the fair value, as suchcarrying amount approximates the fair value because the remaining maturity period of the majority of such deposits isshort (maturity within 1 year).
(ii) Call loans and bills bought
For each of these items, the majority of transactions have short contract terms (1 year or less). Thus, the carrying
amount is presented as the fair value, as such carrying amount approximates the fair value.
(iii) Money held in trust
The fair value of financial assets that are the components of money held in trust is measured in the same manner as(v) “Loans.”
Notes on money held in trust by holding purpose are described in Note 30.
(iv) Securities
The fair value of marketable equity securities is measured at the market price. The fair value of bonds is measured at
the market price or the quoted price from third party. For bonds without such price, the fair value is determined bydiscounting contractual cash flows at the rates that consist of the risk free rate and the credit risk premium based on
types of securities, internal ratings and tenor.
Notes on securities by holding purpose are described in Note 30.
(v) Loans
The fair value of loans is determined by discounting contractual cash flows at the rates that consist of the risk free rate
and the credit risk premium that is based on types of loans, internal ratings and tenor. Foreign currency swap
contracts which meet the hedging requirements of the assignment method is limited to loans for which the contractual
cash flows are matched with the interest rate swap and foreign currency swap. For loans which are short contract
terms (1 year or less), the carrying amount is presented as the fair value, as such carrying amount approximates thefair value. With respect to the claims on debtors who are likely to become bankrupt or to be closely monitored, andfor which future cash flows can reasonably be estimated, the fair values are determined by discounting expectedcash flows that reflect expected loss at the risk free rate. For loans to obligors who are “legally bankrupt,” “effectively
bankrupt” and “possibly bankrupt,” the reserve is provided based on the discounted cash flow method, or based onamounts expected to be collected through the disposal of collateral or execution of guarantees. Carrying value net ofthe reserve as of the consolidated balance sheet date is a reasonable estimate of the fair value of those loans.

131(ii) Payables under repurchase agreements
For payables under repurchase agreements, the majority of transactions have short contract terms (1 year or less).
Thus, the carrying amount is presented as the fair value, as such carrying amount approximates the fair value.
(iii) Borrowed money
For floating rate borrowed money, the carrying amount is presented as the fair value, as such carrying amountapproximates the fair value. This is on the basis that the market interest rate is reflected in the fair value of suchborrowed money because the terms of these were set within a short time period for such variable rate borrowings
and that there has been no significant change in the creditworthiness of DBJ Inc. nor consolidated subsidiaries before
and after such borrowings were made. For fixed rate borrowed money, the fair values are determined by discounting
contractual cash flows based on types of maturity lengths (when interest rate swap contracts which meet the hedging
requirements of the accrual method is qualified to borrowings, the contractual cash flows are based on the interest
rate swap) at the rates that consist of the risk free rate and the rate of certain costs applicable to DBJ Inc. or
consolidated subsidiaries. Certain foreign currency denominated borrowed money is translated using the forward
contract rates and the present value of the contractual cash flows is computed regarding them as Japanese yen
denominated borrowed money.
(iv) Corporate bonds
For floating rate corporate bonds issued by DBJ Inc. and its consolidated subsidiaries, the carrying amount ispresented as the fair value, as such carrying amount approximates the fair value. This is on the basis that the market
interest rate is reflected in the interest rate set within a short time period and that there has been no significant change
in the creditworthiness of DBJ Inc. or its consolidated subsidiaries before and after the issuance. For fixed rate
corporate bonds with market prices, the fair value is determined based on their market price. For fixed rate corporate
bonds without market prices, the fair value is determined by discounting contractual cash flows based on types ofmaturity lengths (when interest rate swap contracts which meet the hedging requirements of the accrual method isqualified to corporate bonds, the contractual cash flows are based on the interest rate swap) at the rates that consistof the risk free rate and the rate of certain costs applicable to DBJ Inc. or its consolidated subsidiaries. Certain foreign
currency denominated corporate bonds are translated using the forward contract rates and the present value of thecontractual cash flows is computed regarding them as Japanese yen denominated corporate bonds.
Derivatives
Derivatives consist of interest rate related derivatives (interest rate swaps), currency related derivatives (currency
swaps, forward foreign exchange contracts) and credit derivatives. Fair value of these derivatives is determined basedon the discounted present value, quoted prices presented by the financial institutions, etc.

Data Section

Liabilities(i) Debentures
For floating rate debentures issued by DBJ Inc., the carrying amount is presented as the fair value, as such carrying
amount approximates the fair value. This is on the basis that the market interest rate is reflected in the fair value ofsuch debentures because the terms of these were set within a short time period and that there has been no
significant change in the creditworthiness of DBJ Inc. before and after the issuance. For fixed rate debentures withmarket prices, the fair value is determined based on their market price. For fixed rate debentures without market
prices, the fair value is determined by discounting contractual cash flows based on types of maturity lengths (wheninterest rate swap contracts which meet the hedging requirements of the accrual method is qualified to debentures,the contractual cash flows are based on the interest rate swap) at the rates that consist of the risk free rate and therate of certain costs applicable to DBJ Inc. Certain foreign currency denominated debentures are translated using theforward contract rates and the present value of the contractual cash flows is computed regarding them as Japanese
yen denominated debentures.

132(2)	Following are the financial instruments whose fair value cannot be reliably determined as of March 31,
2019 and 2018:
		These securities are not included in the amount in the table summarizing fair values of financial instruments.
Carrying amountThousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

Money held in trust*1¥  1,877¥  1,855$   16,914

Unlisted equities*2,3

340,182

318,670

3,064,982

Investments in limited partnerships and othersimilar partnerships*1

303,185

247,593

2,731,651

Unlisted other securities*2,3

253,570

175,373

2,284,629

Industrial investment borrowed money(Special Account for FILP)*4
Total

—

79,000—¥898,816¥822,492$8,098,175*1.	Assets in trust and partnership assets which consist of financial instruments, whose fair value cannot be reliably determined, such as unlisted equities and other securities, are not subject tofair value disclosures.
*2.	Financial instruments for which the quoted price is not available and fair value cannot be reliably determined, are not subject to fair value disclosures.
*3.	Impairment loss on financial instruments whose fair value cannot be reliably determined for the years ended March 31, 2019 and 2018 was ¥1,577 million ($14,212 thousand) and ¥466
million, respectively, which consist of unlisted equities of ¥496 million ($4,474 thousand) and ¥236 million and unlisted other securities of ¥1,080 million ($9,739 thousand) and ¥230 million
for the years ended March 31, 2019 and 2018, respectively.
*4.	For the industrial investment borrowed money (Special Account for FILP), the interest rate is not determined at the time of borrowing, but total amount of interest expense will be determinedat the time of final repayment. Accordingly, since the future cash flows cannot be reasonably estimated and the fair value is extremely difficult to determine, it is not subject to the fair value
disclosure requirement.

(3) 	Maturity analysis for financial assets and securities with contractual maturities as of March 31, 2019 and2018 are as follows:
Millions of Yen

2019
Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Due after
10 years¥  966,897¥       —

¥       —

¥       —

¥       —

¥     —

260,000

—

—

—

—

—

 Held-to-maturity debt securities
with market values

128,787

170,576

114,088

61,84850,7178,022   Japanese government bonds

20,007

10,122

10,024

10,071

15,071

5,022

Due from banks
Call loans and bills bought
Securities   Japanese local government bonds

—

—

—

—

—

—

   Short-term corporate bonds

—

—

—

—

—

—

  Corporate bonds

54,688104,00773,53834,321

25,6803,000  Other

54,09256,44630,525

17,456

9,964— Available-for-sale securities with
contractual maturities

32,021

98,84861,45059,23586,403

138,479   Japanese government bonds—

30,943

5,201

18,666——   Japanese local government bonds

—

—

—

—

—

—

   Short-term corporate bonds

—

—

—

—

—

—

32,021

67,90456,24937,13386,403

138,479

—

—

—

3,436

—

—

  Corporate bonds  Other
Loans*1

2,893,034

3,274,683

2,355,054

1,778,849

1,911,117

681,015

Total¥4,280,741¥3,544,107¥2,530,592¥1,899,934¥2,048,237¥827,517

133

2018
Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Due after
10 years¥1,033,900¥       —

¥       —

¥       —

¥       —

¥     —

463,179

—

—

—

—

—

 Held-to-maturity debt securities
with market values

112,302

246,272

155,462

22,52981,54011,434   Japanese government bonds

20,031

20,035

15,162

10,08915,09910,034Due from banks
Call loans and bills bought
Securities   Japanese local government bonds

—

—

—

—

—

—

   Short-term corporate bonds

—

—

—

—

—

—

  Corporate bonds

61,475130,390

99,9785,914

56,0001,400  Other

30,794

95,84640,322

6,526

10,441— Available-for-sale securities with
contractual maturities

19,13091,01095,03555,887

68,199108,484—

5,211

26,057

18,626

5,165—

Japanese government bonds
Japanese local government bonds

—

—

—

—

—

—

Short-term corporate bonds

—

—

—

—

—

—

19,13085,79868,97833,80663,034

108,484

—

—

—

3,454

—

—

Corporate bonds
Other
Loans*2

2,369,399

3,360,099

2,655,908

1,719,584

1,901,780

674,712

Total¥3,997,911¥3,697,381¥2,906,407¥1,798,001¥2,051,520¥794,630

Thousands of U.S. Dollars

2019
Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Due after
10 years$ 8,711,576$       —

$       —

$       —

$       —

$       —2,342,553

—

—

—

—

—

 Held-to-maturity debt securities
with market values

1,160,355

1,536,863

1,027,913

557,248456,955

72,282   Japanese government bonds

Due from banks
Call loans and bills bought
Securities

180,265

91,20390,322

90,743

135,796

45,252   Japanese local government bonds

—

—

—

—

—

—

   Short-term corporate bonds

—

—

—

—

—

—

  Corporate bonds

492,731

937,088662,566

309,229

231,379

27,029  Other

487,359

508,572

275,026

157,275

89,781— Available-for-sale securities with
contractual maturities

288,504

890,604

553,656

533,705

778,478

1,247,678   Japanese government bonds—

278,795

46,860168,182——   Japanese local government bonds

—

—

—

—

—

—

   Short-term corporate bonds

—

—

—

—

—

—

288,504

611,809506,796334,563

778,478

1,247,678———

30,960——  Corporate bonds  Other
Loans*1

26,065,726

29,504,309

21,218,618

16,027,118

17,218,822

6,135,824

Total$38,568,715$31,931,776$22,800,186$17,118,071$18,454,255$7,455,784*1.	Obligations to “Legally Bankrupt,” “Effectively Bankrupt” and “Possibly Bankrupt” amounting to ¥30,184 million ($271,954 thousand) are not included as of March 31, 2019.
*2.	Obligations to “Legally Bankrupt,” “Effectively Bankrupt” and “Possibly Bankrupt” amounting to ¥43,750 million are not included as of March 31, 2018.

Data Section

Millions of Yen

134(4) 	Maturity analysis for debentures, borrowed money and other interest-bearing liability as of March 31,
2019 and 2018 are as follows:
Millions of Yen

2019

Borrowed money

Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Due after
10 years¥1,173,571¥2,244,770¥1,559,927¥  911,998¥  909,583¥1,188,007

616,192

1,297,462

1,390,372

783,657

1,004,043

205,270¥1,789,764¥3,542,233¥2,950,300¥1,695,655¥1,913,627¥1,393,278

Debentures and Corporate bonds
Total

Millions of Yen

2018

Borrowed money

Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Due after
10 years¥1,318,286¥1,946,837¥2,133,238¥   957,463¥   976,477¥1,241,868

Debentures and Corporate bonds
Total

654,915

1,171,168

1,281,409

585,776

1,077,900

161,813¥1,973,202¥3,118,005¥3,414,647¥1,543,240¥2,054,377¥1,403,681

Thousands of U.S. Dollars

2019

Borrowed money

Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Due after
10 years$10,573,670$20,224,983$14,054,668$ 8,216,943$ 8,195,186$10,703,739

Debentures and Corporate bonds
Total

5,551,786

11,689,905

12,527,007

7,060,610

9,046,254

1,849,454$16,125,457$31,914,888$26,581,676$15,277,554$17,241,440$12,553,193

29. DERIVATIVE TRANSACTIONS(a) Derivative Transactions to which Hedge Accounting is Not Applied(1) Interest rate-related transactions
Millions of Yen

2019
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)Over-the-counter
Swaps   Receive fixed/ Pay float¥992,660¥842,185   Receive float/ Pay fixed

987,611

839,729(26,188)(26,188)——¥ 29,807¥ 29,807

Total¥ 55,996¥ 55,996

Millions of Yen

2018
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)Over-the-counter
Swaps   Receive fixed/ Pay float¥951,878¥850,297¥ 47,842¥ 47,842   Receive float/ Pay fixed

938,817

841,032(16,894)(16,894)——¥ 30,948¥ 30,948

Total

135

Data Section

Thousands of U.S. Dollars

2019
Contract amountTotal

Due after 1 year

Unrealized gains(losses)

Fair value

Over-the-counter
Swaps   Receive fixed/ Pay float$8,943,689$7,587,939   Receive float/ Pay fixed

8,898,201

7,565,816(235,956)(235,956)——$ 268,561$ 268,561

Total$ 504,516$ 504,516*1.	The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated statement of income.
*2.	Fair values for the over-the-counter transactions are based primarily on discounted present values.

(2) Currency-related transactions
Millions of Yen

2019
Contract amountTotal

Due after 1 year

Unrealized gains(losses)

Fair value

Over-the-counter
Swaps¥  5,226¥5,226¥ 80¥ 80  Sold172,643—5

5  Bought

89,460

—

264

264

—

—

¥350

¥350

Forwards

Total

Millions of Yen

2018
Contract amountTotal

Due after 1 year

Unrealized gains(losses)

Fair value

Over-the-counter
Swaps¥  4,924¥4,924¥    73¥    73

Forwards  Sold121,307

—

2,120

2,120

  Bought

41,993—(1,639)(1,639)——¥   554¥   554

Total

Thousands of U.S. Dollars

2019
Contract amountTotal

Due after 1 year

Unrealized gains(losses)

Fair value

Over-the-counter
Swaps$   47,092$47,092$  722$  722  Sold

1,555,491

—

49

49

  Bought

806,025

—

2,387

2,387

—

—

$3,157$3,157

Forwards

Total*1.	The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated statement of income.
*2.	Fair values are based primarily on discounted present values.

136(3) Equity-related transactions
Not applicable.
(4) Bond-related transactions
Not applicable.
(5) Commodity-related transactions
Not applicable.
(6) Credit derivative transactions
Millions of Yen

2019
Contract amountTotal

Due after 1 year

Unrealized gains(losses)

Fair value

Over-the-counter
Credit default options  Sold¥7,500¥4,000¥96¥96  Bought

7,500

4,000

(94)

(94)

—

—

¥   2

¥   2

Total

Millions of Yen

2018
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)Over-the-counter
Credit default options  Sold¥7,500¥7,500

¥ 147

¥ 147

  Bought

7,500

4,500

(102)

(102)

—

—

¥   45¥   45

Total

Thousands of U.S. Dollars

2019
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)Over-the-counter
Credit default options  Sold$67,574$36,039  Bought

67,57436,039

(851)

(851)

—

—

$   22$   22

Total

$ 873

*1.	The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated statement of income.
*2.	Fair values are based on discounted present values or the counterparties’ tendered price.
*3.	‘Sold’ means the underwriting of credit risk and ‘Bought’ means the transferring of credit risk.

$ 873

137

Data Section(b) Derivative Transactions to which Hedge Accounting is applied(1) Interest rate-related transactions
Millions of Yen

2019
Contract amount
Hedged item

Deferral method
Swaps
		

Receive float/ Pay fixed

Accrual method
Swaps
		

Receive fixed/ Pay float

		

Receive float/ Pay fixed

Borrowed money and Loans

Debentures, Borrowed money,
Corporate bonds and Loans

Total

Due after 1 year¥   73,150¥   65,765¥(1,592)

1,849,613

1,725,556

*3

8,948

8,592

—

—

Total

Fair value¥(1,592)

Millions of Yen

2018
Contract amount
Hedged item

Deferral method
Swaps
		

Receive float/ Pay fixed

Accrual method
Swaps
		

Receive fixed/ Pay float

		

Receive float/ Pay fixed

Borrowed money and Loans

Debentures, Borrowed money,
Corporate bonds and Loans

Total

Due after 1 year¥   61,663¥   21,502¥(35)

1,582,096

1,464,188*3

40,86038,868

—

—

Total

Fair value¥(35)

Thousands of U.S. Dollars

2019
Contract amount
Hedged item

Deferral method
Swaps
		

Receive float/ Pay fixed

Accrual method
Swaps
		

Receive fixed/ Pay float

		

Receive float/ Pay fixed

Total

Borrowed money and Loans

Debentures, Borrowed money,
Corporate bonds and Loans

Total

Due after 1 year

Fair value$   659,073$   592,531$(14,344)

16,664,686

15,546,955*3

80,62077,418——$(14,344)*1.	DBJ Inc. applies the deferral method of hedge accounting primarily stipulated in “Accounting and Auditing Treatments on the Application of Accounting Standards for Financial Instruments in
Banking Industry”(JICPA Industry Audit Committee Report No. 24, February 13, 2002).
*2.	Fair values for the over-the-counter transactions are based primarily on discounted present values.
*3.	The above interest rate swap contracts which qualify for the hedging requirements of the accrual method are not remeasured at fair value but the differential paid or received under the swap
agreements are recognized and included in interest expense or income. In addition, the fair value of such interest rate swaps in Note 28 “Financial Instruments and Related Disclosures” isincluded in that of hedged items such as debentures, borrowed money, corporate bonds, securities and loans.

138(2) Currency-related transactions
Millions of Yen

2019
Contract amount
Hedged item

Deferral method

Total

Due after 1 year

Fair value

Foreign currency
denominated loans¥  5,503¥  5,503¥   (25)

Swaps

Foreign-currency debentures, Borrowed money, andCorporate bonds

320,813

267,332*3

Forwards

Foreign-currency
available-for-sale securities

86,494—(1,544)——¥(1,570)

Swaps
Translated at contractual rates

Total

Millions of Yen

2018
Contract amount
Hedged item

Total

Due after 1 year

Fair value

Swaps

Foreign-currency debentures, Borrowed money, andCorporate bonds¥296,126¥296,126*3

Forwards

Foreign-currency
available-for-sale securities

65,307—¥2,084——¥2,084

Translated at contractual rates

Total

Thousands of U.S. Dollars

2019
Contract amountTotal

Due after 1 year

Fair value

Foreign currency
denominated loans

Hedged item$   49,586$   49,586$   (231)

Swaps

Foreign-currency debentures, Borrowed money, andCorporate bonds

2,890,471

2,408,620*3

Forwards

Foreign-currency
available-for-sale securities

779,303—(13,915)——$(14,146)

Deferral method
Swaps
Translated at contractual rates

Total*1.	These derivatives are primarily accounted for by the deferral method of hedge accounting provided in “Accounting and Auditing Treatments on Accounting for Foreign Currency Transactionsin the Banking Industry” (JICPA Industry Audit Committee Report No. 25, July 29, 2002).
*2.	Fair values are based primarily on discounted present values.
*3.	The above currency swaps which qualify for the hedging requirements of assignment method are not subject to the disclosure of fair value information. In addition, the fair value ofsuch foreign currency swaps in Note 28 “Financial Instruments and Related Disclosures” is included in that of hedged items such as foreign-currency debentures, borrowed money andcorporate bonds.

(3) Equity-related transactions
Not applicable.
(4) Bond-related transactions
Not applicable.

139

Fair value of securities, money held in trust and negotiable certificate of deposit classified as “Cash and due from banks” as ofMarch 31, 2019 and 2018 is summarized below.
(a) Securities(1) Held-to-maturity debt securities as of March 31, 2019 and 2018 are as follows:
Millions of Yen

2019
Carrying amount

Fair value exceeds
carrying amountSub-total
Fair value does notexceed carrying amountJapanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Total¥ 70,321——
265,195
134,328
469,845———
30,04034,15664,196¥534,041

Fair value¥ 77,085——
269,052
135,691
481,829———
28,92634,01962,946¥544,776

Difference¥ 6,763
—
—
3,857
1,363
11,984———(1,113)(136)(1,249)¥10,734

Millions of Yen

2018
Carrying amount

Fair value exceeds
carrying amountSub-total
Fair value does notexceed carrying amountJapanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Total¥ 90,451——
251,591
152,230
494,274———
103,567
31,700135,267¥629,541

Fair value¥ 98,063——
254,494
154,454507,013———103,21431,653
134,867¥641,881

Difference¥ 7,611
—
—
2,903
2,224
12,738
—
—
—
(353)
(46)
(399)
¥12,339

Thousands of U.S. Dollars

2019

Fair value exceeds
carrying amountSub-total
Fair value does notexceed carrying amountJapanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Total
Note: Fair value is based on the closing price at the consolidated balance sheet date.

Carrying amount

Fair value$   633,581——
2,389,366
1,210,274
4,233,221———
270,655
307,739
578,394$4,811,616$   694,522——
2,424,119
1,222,559
4,341,200———
260,622306,513567,136$4,908,336

Difference$ 60,941——
34,753
12,285
107,979———(10,033)(1,226)(11,259)$ 96,720

Data Section

30. FAIR VALUE OF SECURITIES AND MONEY HELD IN TRUST

140(2) Available-for-sale securities as of March 31, 2019 and 2018 are as follows:
Millions of Yen

2019

Carrying amountexceeds cost

Carrying amount(Fair value)

Acquisition cost

Equities¥ 72,595¥ 25,172¥47,423

Bonds

433,969

428,458

5,511

54,81153,452

1,358

—

—

—

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

—

—

—

379,158

375,005

4,152

5,910

3,581

2,329

512,475

457,21155,263Equities

7,896

10,005(2,109)Bonds

39,032

39,165(133)

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Sub-total
Carrying amount does
not exceed cost

Difference

Short-term corporate bonds
Corporate bonds
Other

—

—

—

39,032

39,165(133)

60,00060,000—Sub-total

106,929

109,171(2,242)

Total¥619,404¥566,383¥53,021

Millions of Yen

2018

Carrying amountexceeds cost

Carrying amount(Fair value)

Acquisition cost

Equities¥ 76,839¥ 28,686¥48,153

Bonds

357,783

352,775

5,007

55,06053,658

1,402

—

—

—

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

—

—

—

302,722

299,116

3,605

5,923

3,611

2,311

440,546

385,073

55,472Equities

8,641

9,499

(857)

Bonds

Sub-total
Carrying amount does
not exceed cost

Difference

76,50976,761(251)

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

76,50976,761(251)

35,00035,000—

Corporate bonds
Other
Sub-total

120,151

121,260(1,109)

Total¥560,697¥506,334¥54,363

141

Data Section

Thousands of U.S. Dollars

2019

Carrying amountexceeds cost

Carrying amount(Fair value)

Acquisition cost

Difference

Equities$   654,075$   226,796$427,278

Bonds

3,909,989

3,860,334

49,655493,837

481,599

12,238Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

3,416,152

3,378,735

37,41653,25032,266

20,984

Japanese government bonds

Corporate bonds
Other
Sub-total
Carrying amount does
not exceed cost

4,617,313

4,119,396

497,918

Equities

71,147

90,152(19,004)

Bonds

351,676

352,876(1,199)Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

351,676

352,876(1,199)540,589

540,589—

963,413

983,616(20,204)$5,580,726$5,103,012$477,714

Corporate bonds
Other
Sub-total
Total

Note: Carrying amount above represents the fair values determined based on the closing price at the fiscal year-end.

(3) Available-for-sale securities sold during the years ended March 31, 2019 and 2018 are as follows:
Millions of Yen

2019
Proceeds from sales

Total amount ofgains on sales

Total amount oflosses on sales

Equities¥ 37,643¥16,514¥—

Bonds

78,390283

16Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds
Corporate bonds

—

—

—

78,390

283

16

Other

4,428

810

80

Total

¥120,462¥17,608¥96

Millions of Yen

2018
Proceeds from sales

Total amount ofgains on sales

Equities¥12,184¥6,962

Bonds

Total amount oflosses on sales¥—

32,169286

1Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

32,169286

1

Corporate bonds
Other

5,172

174

—

Total

¥49,527¥7,422¥  1

142

Thousands of U.S. Dollars

2019
Total amount oflosses on sales

Total amount ofgains on sales

Proceeds from sales

Equities$   339,163$148,797

$  —

Bonds

706,286

2,552

150

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds
Corporate bonds

—

—

—

706,286

2,552

150

Other

39,898

7,298

723

Total

$1,085,347$158,647$873(b) Money Held in Trust(1) Money held in trust for the purpose of investment and held to maturity
Not applicable.
(2) Other (other than for the purpose of investment and held to maturity)
Millions of Yen

2019
Unrealized gains (losses)
Carrying
amountOther money held in trust

Acquisition
cost¥20,182

Carrying amountexceeds costNet

¥19,554¥628(Carrying amount does
not exceed cost)

¥867

¥239

Millions of Yen

2018
Unrealized gains (losses)
Carrying
amountOther money held in trust

Acquisition
cost¥11,266

Carrying amountexceeds costNet

¥10,433¥833(Carrying amount does
not exceed cost)

¥878

¥44

Thousands of U.S. Dollars

2019
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost

Net

Carrying amountexceeds cost

$181,840$176,178$5,662(Carrying amount does
not exceed cost)$7,818$2,156(c) Unrealized Gain on Available-for-Sale Securities
The breakdown of unrealized gain on available-for-sale securities is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2019

2018

2019

¥ 56,686¥ 58,372

Unrealized gain on
Available-for-sale securities
Other money held in trust$ 510,733

867

878

7,818

Deferred tax liabilities(17,250)(17,113)(155,425)

Unrealized gain on available-for-sale securities before interest
adjustments

40,30342,138363,127

—

—

—

4,349

8,382

39,187¥ 44,652¥ 50,520$ 402,314

Amount corresponding to non-controlling interests
DBJ Inc.’s interest in net unrealized gain on available-for-sale securities
held by affiliates accounted for by the equity method
Unrealized gain on available-for-sale securities, net of taxes

143

31. RELATED PARTY TRANSACTIONS
Related party transactions for the years ended March 31, 2019 and 2018 are as follows:
2019
Transaction Amount
Related party

Finance
MinisterCategory

Description

Shareholder Receipt ofcontribution*1

Account item—

Balance at March 31, 2019

Millions of Yen

Thousands of
U.S. Dollars

Millions of Yen

Thousands of
U.S. Dollars¥   129,000$ 1,162,267——¥4,379,934$39,462,427

Borrowings*2 Borrowed
money
Repayments

300,000

2,702,946

444,524

4,005,090

Payment forinterest

Accruedexpenses

28,376

255,670

9,677

87,189

Guarantees*3—

3,102,852

27,956,141——

According to Article 2, item 5 of the Japan Finance Corporation Act, DBJ Inc. has borrowed ¥1,793,756 million ($16,161,420 thousand) from Japan Finance Corporation relating to the crisis
response operations.
*1. Receipt of contribution is related to the special investment operations.
*2.	DBJ Inc. has borrowed from the fiscal investment and loan program funds, and applied interest rates for fiscal investment and loan. The last redemption period is February 20, 2039 without
posting collateral.
*3. The guarantees are for debentures issued by DBJ Inc. free of guarantee charge.

2018
Related party

Finance
MinisterCategory

Description

Shareholder Receipt ofcontribution*1

Account item—

Transaction Amount

Balance at March 31, 2018

Millions of Yen

Millions of Yen¥   50,000—

Repayments

Borrowed
money

Payment forinterest

Accruedexpenses

31,77911,243

Guarantees*3—

2,949,210—

Borrowings*2

580,000¥4,524,459

380,492

According to Article 2, item 5 of the Japan Finance Corporation Act, DBJ Inc. has borrowed ¥2,303,344 million from Japan Finance Corporation relating to the crisis response operations.
*1. Receipt of contribution is related to the special investment operations.
*2.	DBJ Inc. has borrowed from the fiscal investment and loan program funds, and applied interest rates for fiscal investment and loan. The last redemption period is February 20, 2038 without
posting collateral.
*3. The guarantees are for debentures issued by DBJ Inc. free of guarantee charge.

32. SUBSEQUENT EVENTOn June 27, 2019, the shareholders approved the following appropriations of retained earnings. On the same day, the Finance
Minister authorized becoming effective of the timing and amounts for dividends as of June 28, 2019:
Appropriations of Retained earnings as of March 31, 2019
Millions of Yen

Year-end cash dividends-Common stock (¥482-$4.34 per share)¥21,030

Thousands of
U.S. Dollars$189,484

Data Section*1.	The profit of ¥684 million ($6,171 thousand) and the loss of ¥2,250 million recognized by applying the fair value hedge accounting, which were reflected in profit or loss, are deductedfrom the above unrealized gains and losses, net of taxes, as of March 31, 2019 and 2018, respectively.
*2.	Unrealized gain includes foreign currency translation adjustments on available-for-sale securities and other money held in trust denominated in foreign currency whose fair value cannot be
reliably determined as of March 31, 2019 and 2018.

144

Independent Auditor’s Report

145

NON-CONSOLIDATED BALANCE SHEET (UNAUDITED)Development Bank of Japan Inc.

As of March 31,

2019

2018

2019

¥   959,585¥   996,990$  8,645,692

260,000

463,179

2,342,553

AssetsCash and due from banks
Call loans

18,3059,411

164,928

Securities

Money held in trust

1,984,876

1,905,546

17,883,382

Loans

13,063,197

12,874,274

117,697,063

Other assets

177,711208,284

1,601,145

Tangible fixed assets

110,833

111,698

998,592

Intangible fixed assets

13,883

13,369125,085

Prepaid pension costs

1,215

1,210

10,955

Customers’ liabilities for acceptances and guarantees

273,239

201,796

2,461,842

Allowance for loan losses(35,412)(44,895)(319,065)

Allowance for investment losses

(46)

(176)

(419)

¥16,827,388¥16,740,690$151,611,753¥ 3,190,536¥ 3,086,650$ 28,746,163

93,761—

844,777

Borrowed money

7,807,941

8,429,149

70,348,156

Corporate bonds

2,106,213

1,841,582

18,976,601

Other liabilities

85,544

88,586

770,742

Accrued bonuses to employees

4,688

4,592

42,247

Total assets
Liabilities and equity
Liabilities:
Debentures
Payables under repurchase agreements

Accrued bonuses to directors
Reserve for employees’ retirement benefits
Reserve for directors’ retirement benefits
Deferred tax liabilities
Acceptances and guarantees
Total liabilities

15

13

136

6,355

6,470

57,262

115

87

1,038

15,882

22,077143,099273,239

201,796

2,461,842

13,584,295

13,681,008

122,392,063

1,000,424

1,000,424

9,013,641

Equity:Common stock authorized, 160,000 thousand shares in 2019 and2018; issued, 43,632 thousand shares in 2019 and 2018
Crisis response reserve

206,529

206,529

1,860,789

Special investment reserve

588,000

330,000

5,297,775

Special investment surplus

5,412

3,099

48,765

Capital surplus

766,466

895,466

6,905,724

Retained earnings

610,436548,3715,499,927

Unrealized gain on available-for-sale securities

42,07947,773379,125

Deferred gain on derivatives under hedge accounting

23,74528,018

213,943

Total equity
Total liabilities and equity

3,243,093

3,059,681

29,219,690¥16,827,388¥16,740,690$151,611,753

Note: A mounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥110.99=$1.00, the effective exchange rate prevailing as of March 31, 2019, hasbeen used in the conversion.

Data Section

Thousands of
U.S. Dollars (Note)

Millions of Yen

146

NON-CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)Development Bank of Japan Inc.

Thousands of
U.S. Dollars (Note)

Millions of Yen

For the year ended March 31,

2019

2018

2019

IncomeInterest income:¥188,051¥189,537$1,694,309

Interest on loans

152,860

156,192

1,377,245

Interest and dividends on securities

27,814

24,620250,606

Interest on call loans

100

153

909

Interest on due from banks

27

22

252

Interest on swaps

7,263

8,553

65,444

Other interest income

(16)

(4)

(145)

Fees and commissions

12,854

11,684

115,816

Other operating income

7,274

6,259

65,539Other income
Total income

60,81659,577547,947

268,996

267,058

2,423,611

87,89689,303791,934

Expenses
Interest expense:
Interest on debentures

37,67633,198339,458

Interest on call money

(52)

(27)

(469)

Interest on payables under repurchase agreements

(62)

(46)

(559)

45,25751,097

407,762

317

755

2,863

4,766

4,335

42,945

(7)

(10)

(66)

Interest on borrowed money
Interest on short-term corporate bonds
Interest on corporate bonds
Other interest expense
Fees and commissions

105

245

954

Other operating expenses

3,523

3,515

31,749General and administrative expenses

50,91248,007458,710

Other expenses

9,708

5,699

87,473

Total expenses

152,147

146,771

1,370,821

Income before income taxes

116,849

120,287

1,052,790

Current

32,06833,596288,929

Deferred(1,719)(3,244)(15,491)

Income taxes:

Total income taxes
Net income

30,34830,352

273,439¥ 86,500¥ 89,935$   779,351

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥110.99=$1.00, the effective exchange rate prevailing as of March 31, 2019,has been used in the conversion.

147

NON-CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)Development Bank of Japan Inc.

For the year ended March 31, 2019

Balance at beginning of year

Crisis response
reserve¥1,000,424¥206,529

Special investment Special investment
reserve
surplus¥330,000

Investment from government

129,000

Transfer from capital surplus to special investment reserve

129,000¥3,099

Capitalsurplus¥895,466(129,000)

Cash dividends
Net income
Transfer from retained earnings to special investment surplus

2,313

Net change during the year
Balance at end of year

¥1,000,424¥206,529¥588,000¥5,412¥766,466

Millions of Yen

For the year ended March 31, 2019

Balance at beginning of year

Retained earnings

Unrealized gain on
available-for-salesecurities¥548,371¥47,773

Deferred gain onderivatives underhedge accounting¥28,018

Investment from government

Total equity¥3,059,681
129,000

Transfer from capital surplus to special investment reserve—

Cash dividends(22,121)(22,121)

Net income

86,50086,500Transfer from retained earnings to special investment surplus(2,313)—

Net change during the year
Balance at end of year

¥610,436(5,693)(4,273)(9,967)¥42,079¥23,745¥3,243,093

Millions of Yen

For the year ended March 31, 2018

Balance at beginning of year

Commonstock

Crisis response
reserve¥1,000,424¥206,529

Special investment Special investment
reserve
surplus¥230,000

Investment from government

50,000Transfer from capital surplus to special investment reserve

50,000¥1,813

Capitalsurplus¥945,466(50,000)

Cash dividends
Net income
Transfer from retained earnings to special investment surplus

1,285

Net change during the year
Balance at end of year

¥1,000,424¥206,529¥330,000¥3,099¥895,466

Millions of Yen

For the year ended March 31, 2018

Balance at beginning of year

Retained earnings

Unrealized gain on
available-for-salesecurities¥479,443¥42,233

Deferred gain onderivatives underhedge accounting¥33,430

Investment from government

Total equity¥2,939,340
50,000Transfer from capital surplus to special investment reserve—

Cash dividends(19,721)(19,721)

Net income

89,93589,935

Transfer from retained earnings to special investment surplus(1,285)—

Net change during the year
Balance at end of year

¥548,371

5,539(5,411)

127¥47,773¥28,018¥3,059,681

Data Section

Millions of Yen
Commonstock

148

Thousands of U.S. Dollars (Note)

For the year ended March 31, 2019

Balance at beginning of year

Commonstock

Crisis response
reserve$9,013,641$1,860,789

Special investment Special investment
reserve
surplus$2,973,241

Investment from government

1,162,267

Transfer from capital surplus to special investment reserve

1,162,267$27,924

Capitalsurplus$8,067,991(1,162,267)

Cash dividends
Net income
Transfer from retained earnings to special investment surplus

20,841

Net change during the year
Balance at end of year

$9,013,641$1,860,789$5,297,775$48,765$6,905,724

Thousands of U.S. Dollars (Note)

For the year ended March 31, 2019

Balance at beginning of year

Retained earnings

Unrealized gain on
available-for-salesecurities$4,940,729$430,426

Deferred gain onderivatives underhedge accounting$252,443

Investment from government

Total equity$27,567,185
1,162,267

Transfer from capital surplus to special investment reserve—

Cash dividends(199,312)(199,312)

Net income

779,351

779,351

Transfer from retained earnings to special investment surplus(20,841)

Net change during the year
Balance at end of year

$5,499,927—(51,301)(38,500)(89,801)$379,125$213,943$29,219,690

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥110.99=$1.00, the effective exchange rate prevailing as of March 31, 2019,has been used in the conversion.

149

Capital Adequacy Ratio[1] Capital Structure Information
Capital Structure Information (Consolidated)
Common Equity Tier 1 capital: instruments and reserves (1)Directly issued qualifying common share capital plus related capital surplus
and retained earningsof which: common stock and capital surplusof which: retained earnings

2,397,747

1a+2–1c–26

1,895,890

1,766,890

1a584,689of which: treasury stockof which: planned distribution of incomeof which: other than the above
Rights to acquire new common shares
Accumulated other comprehensive income and other disclosed reserves
Adjusted non-controlling interests, etc. (amount allowed to be included in group Common Equity Tier 1)
Common Equity Tier 1 capital: instruments and reserves

2,458,458

651,887 2

—

—

1c

22,121

21,03026———
616,789—1b

866,884 3——

53,075,247

3,264,631

6

Total intangible assets (excluding those relating to mortgage servicing rights)

32,97740,0148+9

of which: goodwill (including those equivalent) of which: other intangible assets other than goodwill and mortgage servicing rights
Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of related tax liability)
Deferred gains or losses on derivatives under hedge accounting

23,611

25,6688

9,366

14,346

9(A)

Common Equity Tier 1 capital: regulatory adjustments (2)

—

67

10

27,95523,766

11

Shortfall of eligible reserves to expected losses

—

—

12

Capital increase due to securitization transactions

—

72

13

Gains and losses due to changes in own credit risk on fair valued liabilities

—

—

14

Assets for retirement benefits

1,797

1,553

15

Investments in own shares (excluding those reported in the Equity section)

—

—

16

Reciprocal cross-holdings in common equity
Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation (“Other Financial Institutions”),
net of eligible short positions, where the bank does not own more than 10%of the issued share capital (amount above the 10% threshold)Amount exceeding the 10% threshold on specified items of which: significant investments in the common stock of Other Financial Institutions, net of eligible short positionsof which: mortgage servicing rights of which: deferred tax assets arising from temporary differences (net of related tax liability)
Amount exceeding the 15% threshold on specified items

—

—

17

—

—

18

—

—

19+20+21

—

—

19

—

—

20

—

—

21

—

—

22

Data Section

Although DBJ is not subject to Article 14-2 of the Banking Act, the capital adequacy ratio has been calculated in accordancewith “Standards for Bank to Examine the Adequacy of Its Capital Based on Assets, etc., under the Provision of Article 14-2 of the
Banking Act” (2006, Financial Services Agency Notification No. 19, hereinafter, the “Capital Adequacy Ratio Notification”), andtherefore effectively conforms to this act.
(Reference)
In addition to the application of uniform international standards, credit risk assets were calculated using the standardized
approach, and the operational risk equivalent amount was calculated using the basic indicator approach. DBJ Group has not
introduced procedures in line with market risk regulations.
As a complementary indicator to the capital adequacy ratio, the leverage ratio is calculated on a consolidated basis inaccordance with “Standards for Determining the Soundness of Leverage, Defined as a Complementary Indicator for the Standard
to Determine the Capital Adequacy of a Bank in Light of the Assets Owned by the Bank and Other Factors, Based on Article
14-2 of the Banking Act.”

150



(Units: Millions of yen, %)Items

March 31, 2018

 of which: significant investments in the common stock of Other Financial Institutions, net of eligible short positionsof which: mortgage servicing rights of which: deferred tax assets arising from temporary differences (net of related tax liability)
Regulatory adjustments applied to Common Equity Tier 1 due to insufficient Additional Tier 1 and Tier 2 to cover deductions
Common Equity Tier 1 capital: regulatory adjustments
(B)

Basel III
Template No.

March 31, 2019

—

—

23

—

—

24

—

—

25

—

—

27

62,73065,47428

3,012,516

3,199,157

29

—

—

—

—

—

—

—

—

1,552

1,534

34–35

—

—

33+35

—

—

33

Common Equity Tier 1 capital (CET1)
Common Equity Tier 1 capital (CET1) ((A)-(B))

(C)

Additional Tier 1 capital: instruments (3)Directly issued qualifying Additional Tier 1 instruments plus related capital surplus of which: classified as equity under applicable accounting standards
and the breakdown
Rights to acquire new shares in relation to Additional Tier 1 instruments
Directly issued qualifying Additional Tier 1 instruments plus related capital surplus of which: classified as liabilities under applicable accounting standards
Qualifying Additional Tier 1 instruments plus related capital surplus issued by special purpose vehicles and other equivalent entities
Adjusted non-controlling interests, etc. (amount allowed to be included in group Additional Tier 1)
Eligible Tier 1 capital instruments subject to transitional arrangements included in Additional Tier 1 capital: instrumentsof which: instruments issued by banks and their special purpose vehicles of which: instruments issued by subsidiaries (excluding banks’ special purpose vehicles)
Additional Tier 1 capital: instruments
(D)

31a
30

32

—

—

35

1,552

1,534

36

Investments in own Additional Tier 1 instruments

—

—

37

Reciprocal cross-holdings in Additional Tier 1instruments
Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible short positions,where the bank does not own more than 10% of the issued common sharecapital of the entity (amount above the 10% threshold)
Significant investments in the Additional Tier 1 capital of Other Financial Institutions (net of eligible short positions)
Regulatory adjustments applied to Common Equity Tier 1 due to insufficient Additional Tier 2 to cover deductions
Additional Tier 1 capital: regulatory adjustments
(E)

—

—

38

—

—

39

63

9

40

—

—

42

63

9 43

Additional Tier 1 capital: regulatory adjustments

Additional Tier 1 capital (AT1)
Additional Tier 1 capital ((D)-(E))

(F)

1,489

1,525

44

(G)

3,014,005

3,200,682

45

Tier 1 capital (T1 = CET1 + AT1)
Tier 1 capital (T1 = CET1 + AT1) ((C)+(F))

Tier 2 capital: instruments and reserves (4)Directly issued qualifying Tier 2 instruments plus related capital surplus of which:classified as equity under applicable accounting standards and its breakdown
Rights to acquire new shares in relation to Tier 2 instruments
Directly issued qualifying Tier 2 instruments plus related capital surplus of which: classified as liabilities under applicable accounting standards
Tier 2 instruments plus related capital surplus issued by special purpose vehicles and other equivalent entities
Adjusted non-controlling interests, etc. (amount allowed to be included in group Tier 2)
Eligible Tier 2 capital instruments subject to transitional arrangements included in Tier 2: instruments and reserves

31b

—

—

—

—

—

—

—

—

365

361

48–49

—

—

47+49

46

151

(Units: Millions of yen, %)Items

March 31, 2018of which: instruments issued by banks and their special purpose vehicles of which: instruments issued by subsidiaries (excluding banks’ special
purpose vehicles)
Total of general allowance for loan losses and eligible reserves included in Tier 2—

March 31, 2019—Basel III
Template No.

47

—

—

49

21,782

13,75950

21,782

13,759

50a

—

—

50b

22,147

14,12051

Investments in own Tier 2 instruments

—

—

52

Reciprocal cross-holdings in Tier 2 instruments and other TLAC liabilities
Non-significant investments in the Tier 2 capital and other TLAC liabilities of Other Financial Institutions, net of eligible short positions (amount above the
10% threshold)
Significant investments in the Tier 2 capital and other TLAC liabilities of Other Financial Institutions, net of eligible short positions
Tier 2 capital: regulatory adjustments
(I)

—

—

53

—

—

54

of which: general allowance for loan lossesof which: eligible reserves
Tier 2 capital: instruments and reserves

(H)

Tier 2 capital: regulatory adjustments (5)

—

—

55

—

—

57

(J)

22,147

14,12058(K)3,036,152

3,214,802

59

17,916,072

19,203,324 60

Tier 2 capital (T2)
Tier 2 capital (T2) ((H)-(I))
Total capital (TC = T1 + T2)
Total capital (TC = T1 + T2) ((G) + (J))
Risk weighted assets (6)Risk weighted assets
Capital ratio (consolidated) (7)Common Equity Tier 1 risk-weighted capital ratio (consolidated) ((C)/(L))

16.81%

16.65%

61

Tier 1 risk-weighted capital ratio (consolidated) ((G)/(L))

16.82%

16.66%

62

Total risk-weighted capital ratio (consolidated) ((K)/(L))

16.94%

16.74%

63

109,974

108,587

72

2,943

3,382

73

—

—

74

11,935

6,447

75

Regulatory adjustments (8)Non-significant Investments in the capital of Other Financial Institutions that are below the thresholds for deduction (before risk weighting)Significant investments in the common stock of Other Financial Institutions that are below the thresholds for deduction (before risk weighting)Mortgage servicing rights that are below the thresholds for deduction (before risk weighting)Deferred tax assets arising from temporary differences that are below the thresholds for deduction (before risk weighting)Reserves included in Tier 2 capital: instruments and reserves (9)General allowance for loan losses

21,782

13,75976

Cap on inclusion of general allowance for loan losses
Eligible reserves for inclusion in Tier 2 in respect of exposures subject to internal ratings-based approach (prior to application of cap)
Cap for inclusion of reserves in Tier 2 under internal ratings-based approach

221,279

237,437

77

—

—

78

—

—

79

—

—

82

—

—

83

—

—

84

—

—

85

Capital instruments subject to transitional arrangements (10)Current cap on Additional Tier 1 instruments subject to transitional arrangements
Amount excluded from Additional Tier 1 due to cap (excess over cap after redemptions and maturities)
Current cap on Tier 2 instruments subject to transitional arrangements
Amount excluded from Tier 2 due to cap (excess over cap after redemptions and maturities)

Data Section



152

[2] Qualitative Disclosure
1. Scope of Consolidation(1)	Differences and the reasons for those differences at companies included in the scope of
consolidation based on the regulation (Ministry of Finance Regulation No. 28, 1976) related to thecompanies belonging to the group of companies included in the scope of calculation of theconsolidated capital adequacy ratio as provided in Article 3 of the Notification (hereinafter, the“Consolidated Group”), and the language, format and preparation method of their consolidated
financial statements (hereinafter, the “Scope of Accounting Consolidation”)
No differences.
(2)	Within the Consolidated Group, the number of consolidated subsidiaries and the names and main
businesses of principal consolidated subsidiaries
The number of consolidated subsidiaries as of March 31, 2019 is 30.
	Please refer to page 163, “Group Companies” in “Corporate Information” for major consolidated
subsidiaries.
(3)	Number of affiliated companies that conduct financial business to which Article 9 of the Notification
applies, the names of affiliated companies conducting such related financial business and theirprimary businesses
Not applicable.
(4)	Companies that belong to the Consolidated Group but are not included in the Scope of
Accounting Consolidation and companies that do not belong to the Consolidated Group but areincluded in the Scope of Accounting Consolidation, as well as the amount of total assets and net
assets on their balance sheets, and their primary businesses
Not applicable.
(5) Overview of limitations related to the transfer of funds or capital within the Consolidated GroupNot applicable.

2. Overview of Methods
for Evaluating the
Degree of Capital
Adequacy

Please refer to page 71 to 74, “Comprehensive Risk Management” in Section Four: “RiskManagement”.

3. Overview of Risk
Characteristics andRisk Management
Policies, Procedures
and Structure of theConsolidated Group

Please refer to page 71 to 74, Section Four: “Risk Management”.

4. Credit Risk(a) Overview of Risk Management Policies and Procedure	Please refer to page 71 to 72, “Credit Risk Management in Comprehensive Risk Management” inSection Four: “Risk Management”.
(b) Rating Agencies Eligible to Weight Risks
	The rating agencies that DBJ uses for weighting risk are among the four that the FSA has named
eligible to perform such weighting. Eligible rating agencies are not selected according to type of
exposure.
	  The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating
Agency, Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

5. Overview of Risk
Management Policies
and Procedures for
Reducing Credit Risk

DBJ obtains collateral or guarantees as necessary based on changes in the borrower’s
creditworthiness. If required, the effectiveness of collateral is determined from the perspective of theamount certain to be recovered based on a reasonable evaluation of the collateral.
In principle, collateral valuation is performed by the Credit Analysis Department, based on therequest of investment and loan departments/offices. Investment and loan departments/offices and theCredit Analysis Department manage credit risk based on valuation results. In principle, the valuation of
all collateral property is reviewed once or twice each year to ensure DBJ is aware of the current statusof its collateral property.

153

DBJ regularly refers to the ratings and credit amounts of transaction counterparties to determine theadvisability of entering a transaction or to understand the risks of existing transactions.

7. Securitization Exposure(a) Overview of Risk Management Policies and Risk Characteristics
	Excluding credit derivatives, the majority of DBJ’s securitization exposure falls into the category of
specialized lending (Item 47, Article 1, of the Capital Adequacy Ratio Notification) employing
internal rating methods. Different from the internal ratings that are applied to standard corporate
credit, this exposure is given a rating by using a grading system applied to match thecharacteristics of specialized lending. DBJ conducts risk management in line with changes inrating level. In addition to rating its exposure when making new acquisitions, DBJ reviews theseratings periodically.
	  DBJ’s involvement in securitized and resecuritized transactions is typically that of an investor,and in principle the exposure acquired through such transactions continues until the
instrument’s maturity.
(b)	Overview of status of implementation and operation of systems stipulated in Article 248,
Paragraph 1, Items 1–4, of the Capital Adequacy Ratio Notification
	DBJ has created the systems necessary for operating within its credit risk management framework.
Specifically, as one aspect of our credit risk management, our sales department endeavors toappropriately collect information related to comprehensive risk characteristics and performance,
and DBJ monitors conditions to determine any changes in the borrower’s creditworthiness. Related
information is also provided to the credit analysis department, which may revise borrower ratings or
make other adjustments on the basis of this related information as necessary.
(c)	Name of Special Purpose Entity and its securitization exposure status in case DBJ
securitizes third party’s assets through Special Purpose Entity and, of subsidiaries andaffiliated companies of the Consolidated Group, name of those which hold securitization
exposure implemented by the Consolidated Group and whose management are involved oradvised by the Consolidated GroupNot applicable.
(d)	Name of Special Purpose Entity providing credit enhancement other than an agreement,
and effect of the credit enhancement other than the agreement on Capital Adequacy bySpecial Purpose Entity
Not applicable.
(e) Method of Accounting for Securitized Transactions
	DBJ’s involvement in securitized transactions is that of an investor. DBJ adequately accounts forthese transactions in accordance with the “Accounting Standard for Financial Instruments.”(f) Rating Agencies Eligible to Weight Risks by Type of Securitization Exposure	The rating agencies that DBJ uses for weighting risk are among the four that the FSA has named
eligible to perform such weighting. Eligible rating agencies are not selected according to type of
securitization exposure.
	  The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating
Agency, Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

8. Market Risk

DBJ includes in its calculation method no market risk equivalent amount.

9. Operational Risk(a) Overview of Risk Management Policies and Procedures
	Please refer to page 74, “Operational Risk Management” in Comprehensive Risk Management in
Section Four: “Risk Management”.
(b) Method Used to Calculate Operational Risk Equivalent AmountDBJ uses the basic indicator approach to calculate this risk.

Data Section

6. Overview of Risk
Management Policies
and Procedures
Related to Risk
InvolvingCounterparties in
Derivative ProductTransactions andTransactions with Long
Settlement Periods

154

10. Overview of Risk
Management Policies
and Procedures
Regarding Exposure
to Shares and Other
Equity Investments
and Capital Injections

Please refer to page 72 “Comprehensive Risk: Investment Risk Management” in “Risk Management.”

11. Interest Rate Risk(a) Overview of Risk Management Policies and Procedures
	Please refer to page 73, “Comprehensive Risk Management: Market Risk, Interest Rate	Risk” in “Risk Management.”(b) Overview of Methods for Calculating Interest Rate Risk
	The quantitative disclosure items, ΔEVE (changes in Economic Value of Equity) and ΔNII
(changes in Net Interest Income), are calculated as stated below.
	  First, as stipulated in the FSA Notification No. 7 in 2014, the changes in economic value ofequity and annual net interest income caused by interest rate shocks are measured for eachcurrency. Then, ΔEVE is calculated by adding up the amounts of such changes only if the changes
for the currency result in loss, and ΔNII is calculated by adding up the amounts of such changes.
	  In addition, DBJ measures interest rate risks using the following methods.
(1) VaR: Holding period of one year, Observation period of 10 years, Confidence interval of 99.9%,
using Delta method,(2) 100BPV: changes in economic value when interest rates are shifted by 1% (parallel up)

155

Data Section[3] Quantitative Disclosure
Quantitative Disclosure (Consolidated)
1. Overview of Risk Weighted Assets
(Unit: Millions of yen)

Credit Risk

10,654,594

10,819,578

852,367

865,566 Of which, exposure to which standardized approach applied

10,147,427

10,307,602

811,794

824,608

507,167

511,976

40,573

40,958Counterparty Credit Risk

Other90,542

119,675

7,242

9,573

 Of which, exposure to which current exposure method applied

22,19025,805

1,775

2,064

68,174

93,576

5,453

7,486

178

294

14

23

Of which, CVA risk
 Of which, exposure for central counterparty clearing house

—

—

—

—

Equity investments in funds (look-through approach)

Other

/

1,379,774/

110,381

Equity investments in funds (mandate-based approach)/

2,270,585/

181,646

Equity investments in funds (simple approach (subject to 250% risk weight))

/

—

/

—

Equity investments in funds (simple approach (subject to 400% risk weight))

/

—

/

—

Equity investments in funds (fall-back approach; 1.250% risk weight)/

987,777/

79,022

3,828,275/

306,262/

Exposure of assets with underlying multiple assets and transactions
Unsettled transactions

—

—

—

—

Securitization exposure subject to calculation of credit risk assets

3,091,764

3,393,053

247,340

271,443 Of which: securitisation external ratings-based
approach (SEC-ERBA)/

118,433/

9,474 Of which: securitisation standardised approach(SEC-SA)/

1,100,618/

88,049971,578/

77,726/2,120,186

2,174,002

169,614173,920

Operational risk

213,700

208,302

17,096

16,664 Of which, exposure to which basic indicator approach applied

213,700

208,302

17,096

16,664

Exposure with related to specified items not included in adjustments

37,197

24,573

2,975

1,965

—

—

—

—

17,916,072

19,203,324

1,433,282

1,536,261 Of which, exposure to which standardized approach applied
Of which, exposure with a risk weight of 1,250%

Amount of items included in risk weighted assets subject to transitional arrangements
Total

156

2. Items Related to Credit Risk(a) Fiscal year-end credit risk exposure, broken down as follows:		 (1) By region

(Unit: Millions of yen)March 31, 2019

Domestic

15,995,094

Overseas

46,483

Total

16,041,577

Note: “Overseas” refers to overseas consolidated subsidiaries. DBJ has no overseas branches.

		(2) By industry and transaction counterparty

(Unit: Millions of yen)March 31, 2019

Manufacturing

2,937,375

Agriculture and forestry

205

Fisheries

50

Mining, quarrying and gravel extraction

58,898Construction

55,730Electrical, gas, heat supply and water

3,602,390

Information and communications

377,232

Transportation and postal

2,366,724

Wholesale and retail849,302

Finance and insurance

2,082,259

Real estate and leasing of goods

2,600,621

Services		

315,026

Municipal government

14,801

Other

780,959

Total

16,041,577(3) By period to maturity

(Unit: Millions of yen)March 31, 2019

Five years or less

8,082,052

More than five years, up to 10

4,707,835

More than 10 years, up to 15

1,169,952

More than 15 years

957,891

No maturity date

1,123,846

Total

16,041,577(b) Credit Risk Mitigation Techniques(Unit: Millions of yen)March 31, 2019
Exposure notsecured

Loans

Exposure
secured

Exposure secured
by collateral

Exposure secured
by guarantee

Exposure secured
by credit derivatives

11,186,446

906,321—782,648—

Securities (debt securities)

853,060

11,981—

11,981—Other on-balance sheet assets(debt instruments)

260,001

—

—

—

—

12,299,507

918,302—794,629

—

817

—

—

—

—

Total
Of which, default items

157(Unit: Millions of yen)March 31, 2019
Amounts of credit risk exposure (after applying CCF and credit risk mitigation techniques)

Asset Class / Risk Weight
Cash

0%

10%

20%

50%

100%

150%

250%

1250%

Total

4

—

—

—

—

—

—

—

4

Japanese government and Bank of Japan

684,377

—

—

—

—

—

—

—

684,377

Foreign central governments and central banks

—

—

—

—

—

—

—

—

—

Bank for International Settlements and other

—

—

—

—

—

—

—

—

—

Municipal governments in Japan

14,801

—

—

—

—

—

—

—

14,801

Foreign public bodies other than central banks

—

—

500

—

—

—

—

—

500

Multilateral Development Bank

—

—

—

—

—

—

—

—

—

Japan Finance Organization for Municipalities

—

—

—

—

—

—

—

—

—

Japanese government agencies

—

—

—

—

—

—

—

—

—

Three local public corporations

—

—

—

—

—

—

—

—

—

810,995

Financial institutions and Type I Financial Instruments Business
Operators——

754,220

36,58620,189———55,056

3,511

749,617

6,311,938

5,417,726

13,719—— 12,551,567

Small and medium-sized enterprises and individuals

—

—

—

—

—

—

—

—

Mortgage loans (loans secured by residential properties)

—

—

—

—

—

—

—

—

—

Real estate investment business

—

—

—

—

801,855———

801,855

Delinquent for 3 months or more (excluding mortgage loans)

—

—

—

817

—

—

—

—

817

Mortgage loans that are delinquent for 3 months or
more

—

—

—

—

—

—

—

—

—

Bills and checks in process of collection

—

—

—

—

—

—

—

—

—

Guaranteed by Credit Guarantee Association and
other

—

—

—

—

—

—

—

—

—

Guaranteed by Regional Economy Vitalization
Corporation of Japan and other

—

—

—

—

—

—

—

—

—
571,363

Corporations

Investments (excluding significant investments)
Total

—

—

—

—

—

571,363———754,238

3,511

1,504,337

6,349,341

6,811,133

13,719—— 15,436,279

Data Section(c) Standardized Approach - Credit risk exposure by asset class and risk weight158

3. Transaction Counterparties’ Risk on Derivative Product Transactions and Transactions with Long Settlement Periods(a) Counterparty credit risk		 (1) Counterparty credit risk exposure by technique(Unit: Millions of yen)March 31, 2019
Exposure after applying acredit risk mitigation
technique

Current exposure method
		Amount ofrisk weighted assets

72,85125,805(2) Counterparty credit risk exposure by industry and risk weight

(Unit: Millions of yen)March 31, 2019
Credit equivalent amount (after taking credit risk mitigations into account)
0%

10%

20%

50%

75%

100%

150%

Other

Total

Japanese government and Bank of Japan

—

—

—

—

—

—

—

—

—

Foreign central governments and central banks

—

—

—

—

—

—

—

—

—

Bank for International Settlements and others

—

—

—

—

—

—

—

—

—

Municipal governments in Japan

41

—

—

—

—

—

—

—

41

Foreign public bodies other than central banks

—

—

—

—

—

—

—

—

—

Multilateral Development Bank

—

—

—

—

—

—

—

—

—

Japan Finance Organization for Municipalities

—

—

—

—

—

—

—

—

—

Japanese government agencies

—

—

—

—

—

—

—

—

—

Three local public corporations

—

—

—

—

—

—

—

—

—

Financial institutions and Type I Financial Instruments Business
Operators——

56,483

—

—

—

—

—

56,48393,760

—

1,179

1,747

—

13,300——109,986

Small and medium-sized enterprises and individuals

—

—

—

—

—

—

—

—

—

Other

—

—

—

—

—

99

—

—

99

Total

93,801—

57,662

1,747—

13,399——166,609

Corporations(b) Capital requirement for CVA risk

(Unit: Millions of yen)March 31, 2019
Exposure after applying acredit risk mitigation
technique

Total portfolio subject to the standardized risk measurement approach

78,135

Amount of risk weighted
assets (Amount calculatedby dividing CVA risk
equivalent by 8%)

93,576

159(Unit: Millions of yen)March 31, 2019
Collateral used in derivative transactions

Collateral used in repo transactions

Fair value of collateral received

Fair value of posted collateral

SegregatedUnsegregatedSegregatedUnsegregatedCash (domestic currency)

—

—

—

—

93,761—

Cash (foreign currency)

—

—

—

—

—

—

Domestic sovereign bonds

—

—

—

—

—

—

Other sovereign bonds

—

—

—

—

—

—

Government-related agency bonds

—

—

—

—

—

—

Corporate bonds

—

—

—

—

—

—

Equity

—

—

—

—

—

—

Other collateral

—

—

—

—

—

—

Total

—

—

—

—

93,761—

Fair value ofFair value ofcollateral received posted collateral(d) Exposure for central counterparty clearing house(Unit: Millions of yen)March 31, 2019
Protection purchased

Protection provided

Notional amountSingle-name credit default swaps

7,500

6,000

Index credit default swaps

—

1,500

Total return swaps——

Credit options——

Other credit derivatives—

48,8507,500

56,350

Positive fair value (Assets)—

96

Negative fair value (Liabilities)

94—

Total notional amount
Fair value(e) Exposure for central counterparty clearing house(Unit: Millions of yen)March 31, 2019
Exposure for central
clearing house(after applying a credit risk
mitigation technique)

Exposure for Qualified Central Counterparty Clearing House (Total)

Amount ofrisk weighted assets/294 Trade exposure for Qualified Central Counterparty Clearing House(excluding initial margin)

14,722294   (i) Derivative product transactions (other than listed transactions)

14,722294——   (iii) Repurchase / reverse repurchase transactions——   (iv) Netting set in case where cross-product netting is approved——   (ii) Derivative product transactions (listed transactions)

Initial margin maintained in segregated accounts

40,000/Initial margin not maintained in segregated accounts——

Pre-contributed Clearing Fund——

Uncontributed Clearing Fund——

Data Section(c) Composition of collateral for counterparty credit risk exposure160

4. Securitization Exposure(1)	Securitization exposure by underlying asset type (limited to the securitization exposure subject to calculation of credit risk assets)
(Unit: Millions of yen)March 31, 2019
DBJ as an investor
DBJ as theoriginator

DBJ as thesponsor

Traditional
securitization

Synthetic
securitization

Subtotal

Retail (Total)

—

—

—

—

—

Wholesale (Total)

0—

1,412,201—

1,412,201

Structured Finance0—1,412,201—

1,412,201

Other

—

—

—

—

—

Resecuritization

—

—

—

—

—

(2) Securitization exposure subject to calculation of credit risk assets and required capital amounts

(Unit: Millions of yen)March 31, 2019

Amount of exposure (by risk weight)
Securitization exposure by risk weight of 20% or less

86,997

Securitization exposure by risk weight of over 20% and 50% or less

4,996

Securitization exposure by risk weight of over 50% and 100% or less

1,060,778

Securitization exposure by risk weight of over 100% and below 1.250%

85,508

Securitization exposure by risk weight of 1.250%

173,920

Required capital amounts (by calculation method)
Required capital amounts for securitization exposure to which SEC-ERBA is applied

9,474

Required capital amounts for securitization exposure to which SEC-SA is applied

88,049Required capital amounts for securitization exposure to which 1.250% risk weight is applied

173,920

5. Interest Rate Risk (Non-consolidated)(Unit: Hundred Millions of yen)March 31, 2018
ΔEVE

March 31, 2019
ΔNII

ΔEVE

ΔNII

Parallel up

477

6

569

39

Parallel down

9

(79)

11

(97)

Steepener

311

/

303

/

Flattener

1

/

1

/

Short rate up

91

/

154

/

Short rate down

16

/

21

/

Maximum

477

6

569

39

Tier 1 capital

March 31, 2018

March 31, 2019

29,99331,877

161(Unit: Millions of yen)March 31, 2018

March 31, 2019

Corresponding Line No.
on Basel III Disclosure Template
Table 2

Table 1On-balance sheet exposures (1)On-balance sheet exposures before deducting adjustments items

16,636,833

16,725,746

Total assets reported in the consolidated balance sheet

1

16,952,230

17,079,580

1a1 The amount of assets of subsidiaries that are not included in the scope of the leverage ratio on a consolidated basis (–)

—

—

1b

2

 The amount of assets of subsidiaries that are included in the scope of the leverage ratio on a consolidated basis (except those includedin the total assets reported in the consolidated balance sheet)

—

—

1c

7

 The amount of assets that are deducted from the total assets reported in the consolidated balance sheet (except adjustment
items) (–)

315,396353,834

1d

The amount of adjustment items pertaining to Tier1 capital (–)

34,83841,644 2

Total on-balance sheet exposures(a)16,601,994

16,684,101

3

/

—

4

Add-on amount associated with derivatives transactions, etc.

41,58053,794

PFE associated with derivatives transactions, multiplied by 1.4—— The amount of receivables arising from providing cash margin in relation to derivatives transactions, etc.

46,98957,256 The amount of receivables arising from providing cash margin in relation to with derivatives transactions

59,262

23,118 The amount of collateral paid for derivative transactions deducted from the consolidated balance sheet/— The amount of receivables arising from providing cash margin, provided where deducted from the consolidated balance sheet
pursuant to the operative accounting framework—— The amount of deductions of receivables (out of those arising from providing cash variation margin) (–)

—

—

7

—

8

3
7

Exposures related to derivatives transactions (2) Replacement cost associated with derivatives transactions, multiplied by 1.4 The amount of client-cleared trade exposures for which a bank or bank holding company acting as clearing member is not obliged tomake any indemnification (–)
Adjusted effective notional amount of written credit derivatives The amount of deductions from effective notional amount of written credit derivatives (–)
Total exposures related to derivative transactions

—
7,500

(b)

—
155,3325

67,500 9—10

141,669 11

4

Exposures related to repo transactions (3)The amount of assets related to repo transactions, etc.

—

—

12

The amount of deductions from the assets above (line 12) (–)

—

—

13

The exposures for counterparty credit risk for repo transactions, etc.

—

—

14

The exposures for agent repo transactions
Total exposures related to repo transactions, etc.

(c)

—

—

15

—

—

16

1,441,872

1,876,615

17

5

Exposures related to off-balance sheet transactions (4)Notional amount of off-balance sheet transactions The amount of adjustments for conversion in relation to off-balance sheet transactions (–)
Total exposures related to off-balance sheet transactions(d)399,916
1,041,956

692,441 18
1,184,173

19

6

Leverage ratio on a consolidated basis (5)The amount of capital (Tier1 capital)

(e)

3,014,005

3,200,682

20

Total exposures ((a)+(b)+(c)+(d))

(f)

17,799,283

18,009,944

21

16.93%

17.77%

22

Leverage ratio on a consolidated basis ((e)/(f))

8Data Section

Composition of Leverage Ratio Disclosure (Consolidated)

162

Key Indicators (Consolidated)

(Unit: Millions of yen, %)March 31, 2018

September 30, 2018

March 31, 2019

Common Equity Tier 1 capital

3,012,516

3,058,551

3,199,157

Tier 1 capital

3,014,005

3,059,989

3,200,682

Total capital

3,036,152

3,075,461

3,214,802

17,916,072

18,404,707

19,203,324 Common Equity Tier 1 risk-weighted capital ratio(consolidated)

16.81%

16.61%

16.65%

Tier 1 risk-weighted capital ratio (consolidated)

16.82%

16.62%

16.66%

Total risk-weighted capital ratio (consolidated)

16.94%

16.71%

16.74%

17,799,283

17,875,904

18,009,944

16.93%

17.11%

17.77%

CapitalRisk weighted assets
Risk weighted assets
Capital ratio

Leverage ratio (consolidated)
Total exposures
Leverage ratio (consolidated)

163

Corporate Information

Data Section

Name

Development Bank of Japan Inc.

Established

October 1, 2008

Head office

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

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

Number of employees

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

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

Overseas
locations

Investments
and loans,Assetmanagement

Research,
Consulting

Real estate
management /IT services

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

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

DBJ Europe Limited

DBJ Americas Inc.

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

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

DBJ Capital Co., Ltd.

DBJ Investment Advisory Co., Ltd.

DBJ Capital Co., Ltd. is the venture capital arm of the DBJ Group.
It mainly makes early-stage equity
investments in venture firms, and supports their growth throughhands-on management.

DBJ Investment Advisory Co., Ltd. provides advice related to DBJ’s
VG (Value for Growth) Investment Program*.

DBJ Securities Co., Ltd.

DBJ Asset Management Co., Ltd.

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

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

Japan Economic Research Institute, Inc.

Value Management Institute, Inc.

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

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

DBJ Real Estate Co., Ltd.

Consist, Inc.

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

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

* Value-added equity investment that supports growth strategies

https://www.dbj.jp/en

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