Developing Human Resources for Value Creation

Cultivating a Healthy Corporate Culture with Participation of Diverse Human Resources
Roundtable Discussion with the Outside Directors

Cultivating “Unconventional” human resources
Three of Nanto Bank’s outside directors, Hidetaka Matsuzaka, Kozue Nakayama, and Shuhei Aoki, joined
Executive Vice President and Director Satoshi Ishida and Director and Senior Managing Executive Officer Kazuya
Yokoya in an exchange of opinions concerning their impressions and evaluations of the Group’s personnel, with aspecial focus on the actions the Group is considering taking to cultivate unconventional human resources.

Vice President

Outside Director

Outside Director

Satoshi Ishida

Hidetaka Matsuzaka

Kozue Nakayama

Outside Director
Member, Audit and Supervisory Board

Director and Senior
Managing Executive Officer

Shuhei Aoki

Kazuya Yokotani

Nanto Bank’s human resources development from the outside directors’ perspective
Ishida: Four years have passed since I came to Nanto Bank. During early courtesy visits to local customers, I received adistinct impression that the Bank’s executives and employees had earned these customers’ genuine trust. I soon cameto view this trust as the single most important asset differentiating the Group from others, and as convincing proof thatits executives and employees have consistently exhibited a sincere commitment to the community and its customers
throughout its long history.
When I turned my attention to the Bank’s internal organization, on the other hand, it struck me that the officers andemployees had formed a homogeneous group, with a resulting rigidity in their organization. Considering today’s rapidlychanging business environment, I was concerned that it would be difficult for a bank with a homogenous staff and a rigidorganization of this kind to continue addressing the various issues confronting customers successfully in the future. We
have responded by making cultivation of unconventional human resources the core issue of our business strategy andimplementing a range of other measures.
Human resources development does not take place overnight. Today, I would like to hear how you, as outside
directors, evaluate the Bank’s human resources.

22 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared VisionDeveloping HumanValue Creation by theGovernance Supporting Our Consolidated FinancialResources for Value Creation Group’s Human Resources Proactive Human ResourcesStatements

GovernanceBusinessmodelStrategiesand resources
allocationOutlook

Nakayama: I have been an outside director of Nanto Bankfor one year now, and I have found that most of the Board
members are serious, sensible people. I honestly find it
difficult to say whether creative, innovative personnel arelikely to emerge from within the Group immediately. On
the other hand, the love the executives and employees soclearly feel for their local region is one of the Bank’s mostcompelling features.
Yokotani: Many of our Group employees were born inthis region and grew up with the Bank as part of theirenvironment. This makes them particularly eager tocontribute to the community and regional development through their work.
It is clear that employees such as these have created the Bank’s image as a safe, secure regional bank through theirsteady, conscientious work. At the same time, however, they tend to overly value rules and avoid risk, and they exhibit apronounced hesitancy to take up new challenges.
Aoki: The Bank’s officers and employees are typical bankers. They are knowledgeable, rational, and imbued with astrong work ethic. On the otherhand, they lack the requisite assertiveness to take up new challenges proactively. Thanks
in large part to the Bank’s current management policy of nurturing “unconventional” staff, the younger employees seemto be working with considerable freedom of thought. Since these reforms have only just begun, however, both the newand the more experienced employees are wondering to what extent they can break out of their characteristic banker
shells. Or so it seems to me.
Matsuzaka: I should add without reservation, however, that I feel this reformation of human resources is moving too
slowly, although I do perceive clear signs of progress in the right direction from the perspectives of cost management
and IT introduction. Cultivation of unconventional human resources is the most pressing issue for management, and if
we fail to time it right, we stand to lose out in the competition with other banks. At the same time, I do not think that any
reform of human character will occur simply because management says it should. I believe that employees will changeand grow only when they acquire new awareness through a process in which management strategically allocates people
with unique personalities to positions requiring them to respond to various unfamiliar issues. The banner of reform may
have been raised, but I am not at all sure that every employee has fully embraced change yet.

What kind of human resources does the Bank require?
Yokotani: We believe that the Group will be further differentiated by cultivating personnel with the ability to realize
customers’ goals by consulting with them about the real concerns particular to their organization, cooperating with themin making decisions, and working with them toward a final resolution.
We also recognize a limitation in our management stemming from the fact that engaging in rule-based banking
alone will not broaden employees’ perspectives beyond the banking business. The process of cultivating more
executives and employees with broad perspectives must
begin by systematically assigning personnel to branches
outside the prefecture, conducting personnel exchanges
between branch offices and headquarters, and transferring
employees to Group companies.
Some employees may no doubt wonder exactly what
they should do to become unconventional, or to acquire therequisite skills for consulting sales.
I would like to ask you all one important question: Whatspecific skills do you think we should expect our humanresources to possess?

Nanto Report 2023, the integrated report of Nanto Bank23

Developing Human Resources for Value Creation

Cultivating a Healthy Corporate Culture with Participation of Diverse Human Resources
Roundtable Discussion with the Outside Directors

Aoki: Nanto Bank is embarking on a path of diversifying its
business beyond traditional core banking operations. Since
this will require various unknown and varied services, it might
appear at first glance that it would be sufficient to secure adiverse workforce. But this may not be enough. Of course,
we will in any case be required by society to diversify our
personnel in terms of gender, educational background, andage from the perspectives of fairness and justice. But I believethat the personnel who will be active in the Bank in the future
will be those with the courage to tackle unfamiliar tasks andthe intelligence to conceptualize solutions for which there is noprecedent.
Matsuzaka: I consider it important for both executives and employees to possess what I call a variety of “drawers.”
These can be constructed through such experiences as building a network of contacts with many people andparticipating in a variety of projects. Specifically, the quality of the solutions we propose to customers can be substantially
improved by knowledge of such things as “another banker who succeeded in organizing his staff in a certain way fora specific project,” “a person or company with particular strengths in one field or another,” or “a system that might beappropriate for a purpose under consideration.” In addition to interactions among personnel at the Bank’s branch offices
and headquarters, secondments to regional companies and local governments and traineeships at other companies
would have a decidedly positive effect on building an internal and external network of this kind.
Nakayama: I agree. My perspective may be a little different, but I believe, first of all, that the Bank’s departments andbranches should not have to suffer from the “not invented here syndrome” (self-sufficiency syndrome).
Only a few companies are equipped to solve today’s increasingly complex customer, community, and social issues
by depending on their own resources. Similarly, I consider it difficult for the individual departments and branches of theBank to find solutions on their own.
Although the roles of each department and branch may be considered necessary to conform to the Bank’s rules, I
feel that breaking down barriers between organizations, thus freeing employees to ask each other for advice and listen
to each other's opinions, is among possible changes that can help to diversify executives’ and employees’ values. Thiswill, in turn, strengthen the organization. This is why I believe the Bank’s new main building, which is currently underconstruction, will play a symbolic role, not only in DX and work-style reform, but also in eliminating the physical andpsychological barriers separating the Bank’s internal organizations.
Ishida: We need to recognize that the way we interact with customers is changing dramatically, and to rethink the kindsof added value we provide them.
People who can think through the processes required to solve customers’ problems and conduct regional
development are the ones who will shape the future of theGroup. Determining optimal solutions will require every
individual employee to improve their own professional skills
and accumulate a diverse fund of personal experience,accompanied by cooperation and collaboration among
employees throughout the organization.
As one means of cultivating these human resources, forexample, we will relocate and consolidate our Headquarters
Sales Department, various headquarters functions, and Group
companies in the new main building to the extent possible, tocreate an environment that encourages free, lively discussion,
thus deepening cooperation among our organizations.

24 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Resources for Value Creation Group’s Human Resources Proactive Human ResourcesStatements

GovernanceBusiness
model

Strategiesand resources
allocation

Outlook

Cultivating “unconventional” human resources
Yokotani: In our efforts to foster unconventional human resources, we have been working to diversify our employment
rolls by expanding our career recruitment program and introducing a side job system as well as offering such employee
growth opportunities as secondment to outside companies and dispatch of trainees.
We also believe that proper management leadership will be essential to creating unconventional human resources
naturally.
I am convinced that particular attention should be given to engaging the young employees who will be responsible
for the future of the Group. Communication from management will naturally be important here, but it is these young
people’s direct supervisors who will exert the greatest influence on their motivation. The degree to which supervisors canengage their subordinates will make all the difference.
Aoki: It is management’s responsibility to nurture unconventional human resources. Personnel gain character when
they are given the challenge of exciting work. To clarify, this means providing jobs that enable employees to respondaccurately to customers’ emerging needs by mobilizing all their strengths and knowledge, which leads in turn togratifying experiences. I believe that the number of unconventional human resources will increase if management andworkplace supervisors create more engaging jobs and make it easier for employees to obtain suitable assignments
through the Bank’s hiring, transfer, and performance evaluation practices.
Nakayama: Looking back on my own life, I believe that I
became the person I am today because someone always
forgave me when I went astray. I believe it is important for
management to encourage relationships of trust between
supervisors and subordinates in which the objectives are statedbut the process is determined by the subordinates. This will
promote dialogue between supervisors and subordinates andfacilitate a sharing of diverse ideas and values transcending
age, experience, and gender.
Matsuzaka: I think the solution is simple: Executives andemployees should approach each project with the attitude that
“this initiative will produce this benefit when viewed from theperspective of the Bank as a whole.” In other words, simply changing the beneficiary of the action from an organization
or department to Nanto Bank can alter employees’ awareness. I should also note that not every staff member needs
to possess fully balanced capabilities. It is important for supervisors to identify each individual employee’s particularstrengths. No one needs to be capable of handling everything, as long as we can solve customers’ issues with the
combined efforts of all our staff members.
As we continue to foster unconventional human resources, it is essential for every manager and employee to pay
greater attention to their surroundings, and for superiors and subordinates to continuously discuss such questions asthese: “What is going on in this organization?” “What is the structure of this business?” “Why is this customer telling us
these things?” and “What is the situation behind this news?”
Ishida: As I listened to everyone’s opinions, I realized once again that cultivation of unconventional human resources
begins with allowing others to think differently from us.
When explaining the objectives of a project, moreover, it is advisable to give personnel free rein to consider theoptimal approach and then discuss it with them. I believe that repeating these procedures will provide the key to inspiring
innovation. Human resources are our Group’s most valuable management capital. With everything you have said today inmind, I want to ensure that the Group remains an organization in which every employee can find fulfillment in their work.
Thank you all for sharing your time with us today.

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