Applying Financial Expertiseto Design the Future

Annual Report & CSR Report2010Profile (As of March 31, 2010)

Established:

October 1, 2008
(The Japan Development Bank (1951) and the Hokkaido-Tohoku Development FinancePublic Corporation (1956) were merged to form the Development Bank of Japan in 1999)

Legal basis:

The Development Bank of Japan Inc. Law (Law No. 85 of 2007)
Law for Partial Amendment of the Development Bank of Japan Inc. Law (Law No. 67 of 2009)

President:

Minoru Murofushi

Number of employees:

1,079

Capital:¥1,181,194 million (100% owned by the Japanese government)

Address:

9-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-0004, Japan

URL:

http://www.dbj.jp/en

Number of offices:

Branch offices, 10; representative offices, 8; overseas representative office, 1; andoverseas subsidiaries, 2Subsidiaries andaffiliated companies: Consolidated subsidiaries, 13; non-consolidated subsidiaries, 14; and affiliated companies, 14
Main business:

The provision of long-term funding (investment and loans)

Purpose:To conduct business activities utilizing the methods of combining investments and financing andother sophisticated financial methodologies, thereby contributing to the smooth supply of funds
to those who need long-term business funds, as well as to the sophistication of financial functions.

Scope of business operations: As well as such basic businesses as investment, lending and guarantee of obligations, DBJ carriesout businesses in which it develops new financial techniques.
DBJ raises funds in a stable manner by borrowing from the government’s Fiscal Investment and
Loan Program (FILP) and by issuing government-guaranteed bonds, as well as corporate bonds(without government guarantees), and by taking out long-term loans from the private sector.
Q

Q

Total assets:¥15,567.2 billion

Loans:¥13,538.0 billion

Capital adequacy ratio:

18.79%

Issuer ratings:

Aa2 (Moody’s Investors Service, Inc.), AA– (Standard & Poor’s Corp.),
AA (Rating and Investment Information, Inc.),
AAA (Japan Credit Rating Agency, Ltd.)

Note: Total assets, loans and the capital adequacy ratio are calculated on a non-consolidated basis.

Forward-Looking Statements
This Annual Report & CSR Report contains statements concerning management policies and future operating
results. Such statements are not guarantees. Please be aware that future performance is subject to various
changes in conditions in the operating environment.

Contents

Message from the President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Services to Contribute to the Future Prosperity of Japan . . . . .

2
4

Corporate Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Logo and Corporate Color . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
DBJ’s Target Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Overview of DBJ’s First Medium-Term Management Plan . . . . . . . . . . . . 21
History of DBJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Privatizing DBJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Overview of Operations in the Year Ended March 31, 2010 . . . . . . . . . . . 26
Operating Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Overview of Consolidated Operating Performance . . . . . . . . . . . . . . . . . 28
Overseas Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Group Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
DBJ’s Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Integrated Investment and Loan Services . . . . . . . . . . . . . . . . . . . . . . . . . 34
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Consulting/Advisory Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Crisis Response Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Providing a Safety Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Making Use of Information Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
CSR Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Implementing CSR Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
CSR through Investment, Loan and Other Businesses . . . . . . . . . . . . . . . 60
Environmental Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Fostering Human Resources and Creating a Comfortable Work
Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Intellectual Asset Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Intellectual Asset Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Financial Platform That Enables DBJ to Meet the Needs of the Times . . 98
Management Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Client Protection Management System/Declaration on Personal
Information Protection/Policy for Managing Conflicts of Interest . . . . . 110
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Corporate Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

Note:Figures contained herein are rounded
down. Accordingly, the total of eachcolumn of figures may not equal the
total of the individual figures.
In this report, a “0“ indicates figuresof less than the indicated unit.
A “—“ indicates the absence of anamount.

Annual Report & CSR Report 20101

Message from the President

To enhance clients’ corporate value, the Development
Bank of Japan Inc. (DBJ) endeavors to provide
integrated investment and loan services that strike abalance between profitability and public welfare.

2

Annual Report & CSR Report 2010

Enhancing Clients’ Corporate Value

Fundamental Stance on CSR

On October 1, 2008, DBJ opened the door to a whole

We believe that the realization of our corporate

new era of its history by becoming a joint-stock

philosophy through the implementation of our financial

company. Based on a corporate philosophy of “applying

services—including financial crisis response operations—financial expertise to design the future,” DBJ strives tois key to fulfilling our corporate social responsibility

provide mutually beneficial integrated investment and(CSR).

loan services that enhance clients’ corporate value andhelp them achieve their objectives.
Operating according to a corporate governance

As all of our corporate activities directly influencesociety, the environment and the economy, we are
devoted to conducting all our activities appropriately,scheme that befits a joint-stock company, we conduct

thereby contributing to the corporate value of our clients

our operations in a manner unique among financial

and DBJ. By acting as a responsible member of society,institutions, striking a balance between profitability and

we are determined to make every effort to contribute to

public welfare.

the realization of a sustainable society.

We are proud to have delivered our first dividend
as a consequence of such efforts in our second year of

Our Future Role

operations and our first full year as a joint stock com-

The Japanese economy faces a number of complex

pany. We thank all our stakeholders sincerely for theirstructural problems, including a declining population, aunderstanding and support.

falling birthrate, a graying population, low growth andpublic finance difficulties.

Responding to the Financial Crisis

By providing the funds to enable stable growth andIn response to the financial crisis that commenced in thedeveloping according to a business model that provides

autumn of 2008, we initiated financial crisis response

integrated investment and loan services, we will maintain

operations in December in our capacity as a designatedstrong partnerships with other financial institutions asfinancial institution. As of March 31, 2010, cumulative

we create platforms to support social and economic

financing provided in this manner amounted to ¥3.1

activities. At the same time, we will leverage our client

trillion.

base, expertise and networks as we endeavor to contrib-

In the future, we will retain our characteristic spirit

ute to the success of a new Japanese growth strategy.

of public-mindedness and neutrality. While maintaining

I ask for your ongoing support of our endeavors.

alliances with other financial institutions, we will respondpromptly to clients’ needs.

July 2010

To facilitate the smooth implementation offinancial crisis response operations, the Law for Partial
Amendment of the Development Bank of Japan Inc. Law

Minoru Murofushi

was passed in the Japanese government’s 2009 regular

President & CEO

Diet plenary session. The law enabled the government toDevelopment Bank of Japan Inc.

utilize its financing to strengthen DBJ’s financial soundness, and the law resolved to have further discussions on
the government’s future share ownership in DBJ, as wellas its organizational structure.

Annual Report & CSR Report 20103

Financial Services to Contribute to the Future Prosperity of Japan
Financial support for new growth areas

Manufacturing Industry and Technology Initiatives

Since the era of reconstruction following World War
economy has been driven by the manufacturing
these clients’ businesses over the medium to long

Unizone Co., Ltd.

See pages

4

Annual Report & CSR Report 2010

83–84

II, the development of the Japaneseindustry. We support the expansion ofterm through investment and loans.

¥3.2

trillion

Manufacturingindustry loan balance(As of March 31, 2010)

We meet the continued demand for capital from the driving force behind Japan’s economic development, the manufacturing industry, supporting new and additional plant and equipment and the
expansion of R&D facilities.
Through investment and loans, DBJ helps Japan’s manufacturing industry to meet the needs ofthe times, enabling manufacturers to grow their businesses and expand their operational bases.
As of March 31, 2010, DBJ’s loan balance stood at ¥3,265.3 billion, with the manufacturing industry
accounting for 24.1%.

Annual Report & CSR Report 20105

Financial Services to Contribute to the Future Prosperity of Japan
Rebuilding the social platform

Social Infrastructure Initiatives

For the development and further sophisticationand improvements to quality of life, DBJ applies
support the efforts of its clients to maintain and¥3.6

trillionTransportation infrastructureloan balance(As of March 31, 2010)

DBJ provides extensive initiatives to support the maintenance and improvement of social infrastructure, such as transport infrastructure (e.g., airports, airlines, railways, buses and roads) from a longterm perspective and a position of neutrality. From this perspective, beginning with initial project
formulation, we provide coordinated support for multiple firms across a project.
As of March 31, 2010, DBJ’s balance of loans for transport infrastructure (transportation industry)was ¥3,687.6 billion, up 6.8% year on year.

6

Annual Report & CSR Report 2010

of Japan’s economy and society,its experience and expertise toimprove the social infrastructure.

See pages

61–64

Annual Report & CSR Report 20107

Financial Services to Contribute to the Future Prosperity of Japan
Rebuilding the social platform and providing financial support for new growth areas

Environmental Initiatives

Promoting investment and loans to address global
issues from a long-term, neutral and public-minded

World-first
Financing Employing DBJ
Environmental Ratings
Since fiscal 2004

Beginning with antipollution measures implemented in the late 1960s and early 1970s, DBJ has
provided more than ¥3 trillion in investments and loans for environmental measures over the past
40 years.
In fiscal 2004, DBJ began employing environmental ratings in its financing based on knowledge
cultivated for over four decades. DBJ developed the world’s first program of financing incorporating environmental ratings. As of March 31, 2010, the cumulative result of Financing Employing
Environmental Ratings amounted to ¥283.2 billion.

8

Annual Report & CSR Report 2010

environmental
perspective

See pages

37, 68–74

Annual Report & CSR Report 20109

Financial Services to Contribute to the Future Prosperity of Japan
Rebuilding the social platform and providing financial support for new growth areas

Healthcare and Welfare Initiatives

Support of initiatives that maintain or improve thewelfare in Japan through finance and consulting
information

Up

17.2%

Year-on-year increase inhealthcare industry loanbalance(As of March 31, 2010)

DBJ is engaged in maintaining and improving the quality (including access, cost and technologicalstandards) of each area of healthcare in Japan through finance and consulting and the dissemination of information. As well as conducting advisory services related to the private finance initiative(PFI) business and management consulting activities, including management improvement and making business plans, DBJ also conducts investigations and research into a variety of medical issues.
As of March 31, 2010, the loan balance for business in the healthcare industry stood at ¥36.7 billion, up 17.2% year on year.

10

Annual Report & CSR Report 2010

quality of healthcare andand the dissemination of

See pages

75–77

Annual Report & CSR Report 201011

Financial Services to Contribute to the Future Prosperity of Japan
Rebuilding the social platform and providing financial support for new growth areas

Community Revitalization Initiatives

Provide appropriate solutions by leveraging networks
located in regional areas, such as local governments,
and chambers of commerce and industry

See pages

12

Annual Report & CSR Report 2010

44, 78–81

built between clients
economic organizations

102

institutions

Total number of alliedfinancial institutions(As of March 31, 2010)

DBJ provides optimal solutions from a long-term perspective to realize a prosperous lifestyle. To thisend, we stimulate regional economies, build local infrastructure and build wide-ranging networks aspart of our efforts to tackle a variety of issues facing the regions. Furthermore, DBJ maintains close
relationships with regional financial institutions, which have excellent insight into the companies
that operate in their regions. We have created a regional banking M&A network that links regional
financial institutions with information on corporate M&A activities.
As of March 31, 2010, a cumulative total of 102 financial institutions had entered into businessalliances with DBJ.

Annual Report & CSR Report 201013

Financial Services to Contribute to the Future Prosperity of Japan
Financial support for new growth areas

Overseas Business Initiatives

In addition to support for domestic investment by
DBJ is providing support for Japanese companies
where we can expect high growth.

See pages

14

Annual Report & CSR Report 2010

30, 82foreign companies,
expanding overseas,

More than25

countries

Number of countries targeted
for investment and loans(As of March 31, 2010)

Since its conversion to a joint-stock company in October 2008, DBJ has enthusiastically commenced
international business, which is one of the growth strategies in its first medium-term management
plan.
We are creating an overseas risk management structure, preparing operating bases, training personnel and moving forward with core infrastructure. At the same time, we are working to expand
our network with trustworthy partners and domestic and overseas financial institutions.
As of March 31, 2010, more than 25 countries were targeted for investment and loans.

Annual Report & CSR Report 201015

Financial Services to Contribute to the Future Prosperity of Japan
Serving as a safety net for financial markets

Financial Crisis Response Operational Initiatives

In an emergency situation having wide-ranging
proprietary role is to act as a safety net, executing
based on a stabilizing and normalizing long-term¥3.1

trillion

Cumulative total amountof loans for financial crisis
response(As of March 31, 2010)

DBJ was designated a crisis response financial institution on October 1, 2008, and on December 11 of
the same year, as the competent ministers (Minister of Finance; Minister of Agriculture, Forestry and
Fisheries; and Minister of Land, Infrastructure and Transport) recognized the international financial
confusion as a ”crisis,” DBJ began providing financing for financial crisis response.
On January 30, 2009, commercial paper acquisition was included in crisis response operations andDBJ began to purchase commercial paper as a part of these operations.
As of March 31, 2010, loans for financial crisis response totaled ¥3,111.0 billion.

16

Annual Report & CSR Report 2010

effects on the financial system, oursocially beneficial projects
perspective.

=Loans as Financial Crisis Countermeasures(Cumulative, at Month-End)(Billions of yen)
3,200

(Number of cases)
3,111.0 1,000
2,854.6
2,625.4

2,400

817
712

1,827.1620

1,600
1,060.3
800

500

448

See page

46

250

301

0
Mar. 31,2009

750

Jun. 30,
2009

Sep. 30,
2009

Dec. 31,2009

Mar. 31,2010

0Annual Report & CSR Report 201017

Corporate Philosophy

Corporate Philosophy, Logo and Corporate Color

Corporate Philosophy

Applying financial expertise
to design the future
We apply creative financing to resolve client issues, as we workto earn the trust of our clients and achieve their future prosperity.

Commitment to Stakeholders

Action GuidelinestCommitment to Clients, Society,
Investors and EmployeestCustomers FirsttProfessionaltGlobal & LocaltSpeed & Teamwork

Intention
Intellectual
ual
al
ts
AssetsThe Core Competencies
at the Center of DBJ-SpecificFinancial Expertise

Networks
Netw

Logo and Corporate Color

Our ”Earth” logo consists of four colors that represent four themes and embodies our
corporate philosophy of working with clients to realize their goals.
Each Color Represents Two Aspects of DBJ

18

Corporate Values:

Action Guidelines:• Long-Term Perspective• Customers First• Neutrality• Professional• Public-Mindedness• Global & Local• Reliability• Speed & Teamwork

Annual Report & CSR Report 2010

Corporate Philosophy, Logo and Corporate Color

Commitment to Stakeholders, Action Guidelines and Core Competencies
Action Guidelines

Commitment to Stakeholders

 Customers First Commitment to Clients
Using creative finance, DBJ will resolve its clients’challenges and help them enhance their economic andsocial value.

DBJ will operate from our clients’ viewpoints,
addressing their challenges and sharing pleasure in
their success.

 Professional Commitment to Society
All business will be based on harmony among the threefactors of society, the environment and the economy inorder to contribute to a sustainable, affluent society.

With discernment and creative skill, DBJ will be a onestop financial platform providing integrated investment
and loans both in Japan and abroad.

 Global & Local

 Commitment to Investors
DBJ will maintain transparency while raising corporate
value over the long term.

DBJ will maintain a long-term viewpoint, considering
the needs of the times, the world and the region.

 Speed & Teamwork

 Commitment to Employees
Seeking out and training employees who shareits corporate philosophy and possess high ethicalstandards, DBJ will strive to create an open and creative
work environment.

Relying on skilled teamwork, DBJ will act rapidly andin good faith, building strong foundations for clients’
trust.

Core Competencies
Intention

The fundamental stance at the core of ourcorporate values: long-term perspective,
neutrality, public-mindedness andreliability.

Intellectual
AssetsExpertise in fields including industry
research, credit analysis, financial
technology and R&D, based on skills
gathered over many years of experience.

Networks

Networks created with clients, local
governments and other financial
institutions.

The shade of blue in “DBJ” represents a prosperous future,
youthfulness and growth potential.

Annual Report & CSR Report 201019

DBJ’s Target Business Model

DBJ’s Target Business Model, Businesses

We work to resolve the issues clients face by providing specialized financial services involving integrated
investment and loans.
Loans

Investment

Provision of medium- and long-term
financing, as well as project financing
and other forms of structured andsubordinated financing

Provision of mezzanine and equity
financingIntegrated Investment
and Loan Services
Consulting/Advisory Services
Arrangement of structured financing,
provision of M&A advisory services,
applying DBJ’s industry researchfunction and expertise in environmental
and technology evaluations

Businesses

DBJ combines the functions mentioned below with the long-term financing it provides to present clients
through integrated investment and loan services.
Medium- and Long-Term Financing Needs

Strong in screening skills and capital, DBJ offers seamless financial services ranging fromsenior and mezzanine loans to equity. A full range of advisory services is also available.

Seamlessly integrated investment and loan services
CreditSenior loans(medium- or long-term)

Guarantees, credit trading
Capital investment loans,working capital loans,structured loans

Commercial banking

Loans

Syndicated loans

Mezzanine financing(corporate financing,asset financing)

20

Subordinated loans
Loans with warrants,
other
Redeemable shares,
preferred shares, other

EquityCommon stock

Advisory services

M&A, consulting

Annual Report & CSR Report 2010

Investment banking

Investment
PE funds,
venture capital

Consulting/
Advisory Services

M&A advisory services

Overview of DBJ’s First Medium-Term Management Plan
(Announced October 2, 2008)

The period of the First Medium-Term Management Plangrated investment and loan services that it provides. We

will be dedicated to establishing integrated investment andaim to take advantage of our position and earn the trust ofloan services and building a foundation of core strengths.

our clients. As part of this process, we have formulated ourAs specific long-term strategies, we have determinedFirst Medium-Term Management Plan, ”Challenge 2010:

engagement policies for establishing integrated investment

Establishing Integrated Financial Services for Investments

and loan services, measures for full-scale expansion intoand Loans,” through the fiscal year ending March 31, 2011.

overseas markets and plans for diversified funding.

Overview of DBJ’s First Medium-Term Management Plan

DBJ is a unique financial institution in terms of the inte-

Growth Strategies of ”Challenge 2010,” Our First Medium-Term Management
Plan (Through March 31, 2011)
Provide integrated investment and loan services to meet needs in a range ofindustries and regions• Expanded services will address a diversity of client needs.
• Integrated investment and loan services will be used to forge broad alliances with other financial
institutions.

Enhance financial services to take advantage of DBJ’s strengths in the fields ofenvironment, technology and social infrastructure• With its broad client base and wealth of industrial data, DBJ will offer sophisticated financial
services and take advantage of its strengths in the fields of environment, technology and social
infrastructure.

Go global• A network of reliable partners, including financial institutions in Japan and overseas, will support our
full-scale move into global markets.
• Preparations are under way for a planned exposure of approximately ¥500 billion in the year ending
March 31, 2011.

Build intellectual assets• Stronger skills in industrial research, credit analysis, financial expertise, R&D and network creation
will help to raise our clients’ value.
• Our growth strategy will be supported by careful employee training.

Diversify fund-raising• Initiatives will be taken to keep sound financial standing and diversify the sources of funds.

Annual Report & CSR Report 201021

History of DBJ
Here, we introduce DBJ’s history of supporting the reconstruction of post-war Japan
History of DBJ

Reconstruction andindependence of theeconomyIn 1951, the Japan Development
Bank was established andcommenced accommodationloans to facilitate thedevelopment of the power
supply, which forms the basisof the economy and industry,
and the rationalization,
modernization and cultivation ofcoal, steel, marine transportationand other major industries.

Economic recovery

1951–1955

High-growth infrastructuredevelopment
To expand and reinforce theenergy and transportation
activities that underpin theindustrial infrastructure, theJapan Development Bank served
as the driving force that powered
new economic expansion. In
addition, it provided loans for
local development to correct
regional disparities.
Established in 1956, the
Hokkaido Development
Finance Public Corporation wasrestructured in 1957 to form the
Hokkaido-Tohoku Development
Finance Public Corporation andbegan providing investment andloan to promote industry in these
two regions of northern Japan.

Aiming to hone international
competitiveness in accordancewith the transition to an open
economic system, the Japan
Development Bank focused on
support for industrial system
improvements and independent
technological development.
It also emphasized social
development throughregional development, urban
redevelopment, logistics
modernization, pollution
prevention and other measures ina bid to relieve the problems ofhigh-level growth.

Rapid growth

1956–1965

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

Developmentof international
competitiveness and social
development loans

Asahi Chemical Industry Co.,
Ltd. (currently Asahi Kasei
Corporation): Construction of
the Fuji Plant for production ofCashmilon acrylic staple fiber(Shizuoka Prefecture)

Improvements to qualityof life and stable supply ofenergyAs corrections to the imbalanceof economic growth andstandards of living, the Japan
Development Bank began
to focus on antipollution
measures, regional and urban
development and other social
elements in addition to industrial
development. Against the
backdrop of the first oil crisis,
it provided investment andloans for energy alternatives tofossil fuels, as well as efforts toconserve energy, to ensure stableenergy supplies. It also supported
efforts to develop land into largescale commercial sites.

Stable growth

1966–1971

Nippon Mining Co., Ltd.
(currently Japan Energy
Corporation): Mizushima
Refinery (Okayama Prefecture)
Cultivation of domestic oil
companies

1972–1984

Tokyo Electric Power Co., Inc.:
Tamahara and Imaichi Pumped
Storage Power Generating
Stations (Tochigi Prefecture)
Hydroelectric energy development

Promotion of the synthetic fiberindustrySony Corporation: Trinitroncolor television factoryiToyota Motor C
Corporation:
Modernization of facilities
through procurement ofimported machinery (Aichi
Prefecture)
Modernization of the domestic
automobile industry throughrefurbishment of production
facilities

22

Annual Report & CSR Report 2010

Promotion of home-growntechnologies through commercial
application of new technologies
Kawasaki Kisen Kaisha, Ltd.:The Tonegawa Maru tanker
Built tanker that was indispensablefor the import of energy and raw
materialshk new urban
b center:
Shinjuku
Shinjuku Mitsui Building andothers (Tokyo)
New urban center formation
through redevelopment of
purification plant sitePressing needs arose forincreased domestic demand
and an industrial structuralshift, against a backgroundof aggravating trade friction
with other countries. The
Japan Development Bank
focused on support for social
capital improvement, creativetechnological development,
an industrial transformationand other issues. In the 1990s,
it stressed environmental andenergy measures and regional
economic stimulation with theaim of making Japan a lifestylesuperpower.

Economic
bubble1985–1995

Yamagata JR Chokko Tokkyu
Holdings: Yamagata Shinkansen
Improvements to regional railway
infrastructure

Creation of a vibrant andaffluent society and stableeconomyThe Japan Development Bank
focused on such important areas
as ongoing improvements tosocial capital, environmental andother measures, and support
for venture businesses. In
addition, it swiftly implemented
reconstruction loans in the wakeof the Great Hanshin-Awaji
Earthquake and loans in responseto the financial environment tostabilize the financial system byfunctioning as a safety net.

Post-bubble

1996–2000

Nakayama Joint Power
Generation Co., Ltd.:
Independent power producer(IPP) power generation
operations (Osaka Prefecture)
In step with relaxation ofregulations, project finance support
for Japan’s first steelmaker to enter
the power generation business

Pacific Convention Plaza
Yokohama: Pacifico Yokohama(Kanagawa Prefecture)
Construction and maintenance of
hotels, international conference
facilities, etc., in the Minato Mirai
21 area of Yokohama

Financial solutions that
support community,
the environment andtechnology

History of DBJ

Development of lifestyleand social infrastructure
and a smooth industrial
transformation

In 1999, the Japan Development
Bank and the Hokkaido-Tohoku
Development Finance Public
Corporation were dissolved
and the Development Bank ofJapan (DBJ) was established. DBJ
focuses its operations in threeareas: community development,
environmental conservation andsustainable societies and thecreation of new technologies andindustries. In these ways, DBJ
contributes to the sustainable
development of Japan’s economy.

Structural reform
toward sustainable
development

From 2001

October 1, 2008: Privatization(conversion to a joint-stockcompany)
Development Bank of Japan
Inc. established

The Former Niigata Tekkosho Co., Ltd.
Through such methods as DIP
financing, mergers and acquisitions,and business revitalization funds,
DBJ supports local companies,
helping communities maintainexcellent supplies of technicalexpertise and employment
opportunities

Toyo Tires Turnpike(formerly the Hakone Turnpike)Hankyu Corporation:
Earthquake reconstruction work
(Hyogo Prefecture)
Recovery work on traffic
infrastructure destroyed byearthquakes

DBJ established Japan’s first
infrastructure fund in collaboration
with Australian investment bank
Macquarie Bank, involving equity
investment to facilitate business
transfer transactions for the former
Hakone Turnpike.

Source: DBJ website:
http://www.dbj.jp/en

Annual Report & CSR Report 201023

Privatizing DBJ

Development Bank of Japan Inc. was established as a joint-stock company (privatized) on October 1, 2008
Privatizing DBJ

Development Bank of Japan Inc. was established as aof the Development Bank of Japan (the “predecessor”)

joint-stock company (privatized) on October 1, 2008,

as investment in kind, with the exception of assets

under the terms of the Development Bank of Japan Inc.

transferred to the government under the provisions of

Law (Law No. 85, 2007; the ”New DBJ Law”) approved

Article 15, Paragraph 2, of the Appendix to the New

by the Japanese Diet on June 6, 2007, as part of the

DBJ Law. Under Article 15, Paragraph 1, of the same

Law on the Promotion of Administrative Reform tolaw, DBJ also assumed all rights and obligations of theBring About a Simple and Efficient Government (Lawpredecessor, with the exception of assets transferred to

No. 47, 2006; the ”Administrative Reform Promotion

the government under Article 15, Paragraph 2, of theLaw”) and the fundamental reform of policy-based

Appendix to the New DBJ Law.

finance. DBJ, upon its establishment, took over all assets

Highlights of the New DBJ Law
Provision of Credit
The object of the New DBJ Law is to maintain the foundations of the investment and financing functionsof long-term business funds as the Development Bank of Japan Inc. by conducting business activities
utilizing the methods of combining investments and financing and other sophisticated financial
methodologies with the goal of realizing full-scale privatization.

Fund-raising
In addition to borrowing and bond issuance, as a complementary measure, DBJ is now able to accept
negotiable deposits and issue bank debentures for institutional investors.

Transitional Measures
In terms of fund-raising, DBJ depends largely on borrowing from the government and governmentguaranteed bonds. To facilitate a smooth transition toward independent fund-raising following fullprivatization, measures have been enacted to allow DBJ to issue government-guaranteed bonds andborrow from the Fiscal Loan Fund. Upon the establishment of the new DBJ, the law provided for longterm borrowing from the private sector.
Predecessor

New DBJ

Loans

Yes

Yes

Equity investment

Yes

Yes

Debt guarantees

Yes

Yes

Foreign exchange;
money exchange

No

No

Bond issuanceYes(including bank debenture bonds)

Borrowings

Fiscal Loan Fund

Deposits

24

Annual Report & CSR Report 2010

No

Yes
Fiscal Loan Fund bonds +private-sector borrowings
Yes
Checkable deposits and small-lot
deposits that are covered by deposit
insurance for the safe custody ofdeposits are not accepted.

Revised New DBJ Law
establishment. With the law’s revision, the target dateglobal financial and economic crisis which began in thehas been extended to five to seven years after the end

autumn of 2008. On June 26, 2009, the Diet passed theof the investment period mentioned above. At the

Law for Partial Amendment of the Development Bank of

end of fiscal 2011, the government plans a review ofJapan Inc. Law (“Revised DBJ Law”), which, by extending

DBJ’s organization, which will include the future of

the government’s investment period to the end of Marchgovernment-held shares. The government will continue

2012, enables DBJ to strengthen its financial base in line

to hold its shares until then.

Privatizing DBJ

DBJ has instituted emergency measures to deal with thewith the economic crisis measures announced in April
Note: Please refer to pages 120-124 for details of the New DBJ Law
and Law for Partial Amendment of the Development Bank ofJapan Inc. Law.

2009.
Under the New DBJ Law, DBJ was to have achieved
full privatization within five to seven years after its

Law Passed for Partial Revision of the Development Bank of Japan Inc. Law
The Law for Partial Amendment of the Development Bank of Japan Inc. Law was passed at
an Upper House plenary session of the ongoing 171st ordinary session of the Diet.
The law introduced a number of amendments designed to help Japan’s medium-sized and large
corporations deal with funding problems arising from the global financial crisis that began in the UnitedStates in 2008.
• The law provides for the strengthening of DBJ’s finances by enabling the government to makeadditional investments in DBJ until the end of March 2012. Investments may now be made by means ofdelivery bonds.
• The law extends the disposal period for government-held shares in DBJ. Whereas existing provisions
stipulated a target of ”approximately five to seven years after October 1, 2008,” the revised law statesthat the government must dispose of all of its shares in DBJ by ”approximately five to seven years after
April 2012.”• In view of the certain level of government involvement in DBJ, such as the government holding
in excess of one-third of its outstanding shares at any given point of time, to ensure the proper
implementation of crisis response operations, its organizational structure, including crisis response
operations and the future of government-held-shares, are to be reviewed and necessary steps are to betaken at or around the end of fiscal 2011. Until these steps are taken, the government will not disposeof any of its shares in DBJ.

=The Privatization Process
FY2006

FY2007

FY2008FY2009FY2010FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

Preparation Period

Transition Period(Government-affiliatedfinancial institution)(Special stock company with shares
held by the government)~* DBJ was scheduled for fullprivatization within five to sevenyears from April 2012. However, atJune 2007
New DBJ Law
goes into effectJune 2009
October 2008
Establishment of the Law
Privatizationfor
PartialAmendment of(conversion to
the New DBJ Law
a joint-stock company)

Shareholder

100% government

100% government

Company form

Government-affiliated financial institution(special public corporation)

Joint-stock company (special stock company)

Business

Based on former DBJ Law

Based on New DBJ Law

Fund-raising

Government-guaranteed bonds, FILP agency bonds,
independent financing

Independent funding, government-guaranteedbonds and FILP agency bonds

End of FY2011 (Target)
Government review of
DBJ’s organization

the end of fiscal 2011, thegovernment plans a review of DBJ’sorganization that will include thefuture of government-held shares.
The government will continue tohold its shares until the necessary
measures are put in place.

Annual Report & CSR Report 201025

Overview of Operations in the Year Ended March 31, 2010

Operating Conditions
Overview of Operations in the Year Ended March 31, 2010

Financial-Economic Environmentof monetary easing, and major financial institutions received

During the fiscal year ended March 31, 2010, the Japanese

injections of public funds. Despite ongoing weakness ineconomy was affected by the September 2008 collapse of

the global financial system, the worst appears to be over.

Lehman Brothers, a U.S. investment bank, which sparked a

In Japan, small and medium-sized companies, as well as

financial crisis with effects that rippled outward rapidly into

companies with low credit ratings, continued to find fund-the real economy throughout the rest of the world. Thanksraising difficult. However, owing to corporate financial sup-to the effects of drastic fiscal and monetary initiatives

port measures by the Bank of Japan, the situation improved

from national governments and central banks, the global

substantially for companies with high credit ratings. The

economy bottomed out and gradual improvements have

Nikkei stock average, which was in the low ¥8,000 range

continued since.

as of March 31, 2009, had returned to the ¥11,000 level by

In Japan, exports, which had declined significantly,
bounced back strongly, and we began to see the impact ofMarch 31, 2010, owing to an improved economic climate
and a recovery in corporate business performance.

Operating Conditions

government economic measures and a gradual improve-

Long-term interest rates (yields on 10-year Japanesement in business conditions. However, as was evident ingovernment bonds, or JGBs) remained low, owing to expec-

corporate earnings and industrial production, althoughtations that the Bank of Japan’s policy of monetary easing

business activity trended upward, the overall level remained

would continue for some time, as well as to increased JGB

low. In addition, employment and income levels remained

investments by institutional investors. At the same time,severe, and, as of the end of the fiscal year, the economy

however, during the year there were concerns about thewas unable to dispel a sense of stagnation.

state of Japanese government finances. This combination of

In the corporate sector, growing exports to China andother Asian countries supported a recovery, as did govern-

factors caused interest rates to remain in the range of 1.2%
to 1.4%.

ment measures to stimulate purchasing activity, such as

A delayed U.S. economic recovery and the U.S. central

tax exemptions on environment-friendly cars and homebank’s low-interest-rate policy kept intra-national interest

electronics. Such measures supported a rebound in manu-

rate differentials low. Against this backdrop, the yen contin-

facturing activity, and quarterly corporate earnings results

ued to appreciate against the U.S. dollar, into the neighbor-indicated ongoing recovery. Capital investment levels fell off

hood of US$1.00 = ¥90. The yen also appreciated against

sharply during the economic downturn, as capacity utiliza-

the euro, affected by such factors as the national budget

tion rates were low and the outlook uncertain. However,deficit in Greece, pushing the exchange rate into the range

the decline in capital investment appears to have bottomedof €1.00 = ¥120 as of March 31, 2010.

out in the second half of the fiscal year. The employment

On reaction to the sharp rises in commodity prices atand income scenario remained difficult. At one stage,

the end of 2009, consumer price indices fell to new lows.

Japanese unemployment reached 5.7%, the highest level

Insufficient demand put downward pressure on commodi-

on record, and employees’ summer and winter bonuses

ties prices, causing deflationary trends to continue.

were down sharply. With regard to household consumption, government measures to stimulate purchases caused

Progress and Results of DBJ Group Operations

a temporary spike in consumption, centering on flat-screen

Review of the Year Ended March 31, 2010

televisions, automobiles and certain other durable consumer

Since its establishment on October 1, 2008, the core ofgoods. With that exception, however, the resurgence in

DBJ’s business has remained the same as that conducted byconsumption was weak, and housing investment was down

its predecessor. As a highly specialized financial institution,

sharply.

we sought to resolve clients’ issues by providing integrated

On the financial front, the central banks of countries andautonomous regions throughout the world adopted policies

26

Annual Report & CSR Report 2010

investment and loan services.

Below is an overview of these activities during the fiscal

based on a long-term perspective. During the year, ¥111.1
billion (including the investment amount based on theloans, investment and consulting/advisory services described

Law on Special Measures for Industrial Revitalization andbelow are on a non-consolidated basis.

Innovation) was allocated to investing activities.

Loans

Consulting/Advisory Services

We provided senior loans through traditional corporate

Consulting and advisory services utilize the networks cre-loans, nonrecourse loans and other types of structured

ated by DBJ’s predecessor. Through these services, we help

financing as well as a variety of other loans that employ

clients of all sizes grow more competitive in a host of indus-

advanced financial methods. During the year ended Marchtries. We perform consulting on projects that help invigo-

31, 2010, we provided ¥3,682.0 billion in loans, including

rate regional communities and provide advisors to support

loans for financial crisis response operations.

these activities. During the year, investment and loan com-

For details regarding business loans in response to the

Overview of Operations in the Year Ended March 31, 2010

year ended March 31, 2010. The figures provided for the

missions and fees from M&A and other advisory services

financial crisis, please refer to the section on page 46 enti-

amounted to ¥13.2 billion.

tled ”Financial Crisis Response Operations.”

Subsidiaries

Investment

In November 2009, DBJ Europe Limited was established in

We work to resolve client issues involving business expan-

the City of London as a wholly owned subsidiary.
Situated in that international financial hub, DBJ Europe

infrastructures. We achieve these activities by supporting

should serve as a springboard for the DBJ Group to provide

the creation of funds, as well as mezzanine, equity andloans and investment and conduct M&A advisory services toother financing methods, providing appropriate financing

meet the broad-ranging needs of clients in the area.

Operating Conditions

sion and support strategies and the formation of financial

Loans and Investments and Fund-Raising Conditions (Flow)(Billions of yen)

For the Six-Month Period
Ended March 31, 2009

For the Year Ended
March 31, 2010

Loan and investment balance

1,733.4

3,793.1

Loans *1

1,670.3

3,682.0

63.1

111.1

1,733.4

3,793.1

277.6

482.0

158.0

300.0

Of which, government-guaranteed bonds (domestic)

119.6

149.5

Of which, government-guaranteed bonds (overseas)

—

32.5

81.4

168.3

1,190.0

2,301.6

184.3

840.9

Investment*2

Funds raised
Fiscal Investment and Loans
Of which, FILP agency bonds*3

Corporate bonds (FILP bonds)
Long-term debt

*4

Recovery, etc.

Notes: 1. Figures, including those for corporate bonds, are on a management accounting basis.
2. Figures, including those for securities, money held in trust and other assets (funds), are on a management accounting basis.
3. Includes industrial investment and borrowings.
4. Long-term debt borrowed from Japan Finance Corporation in conjunction with crisis response operations during the fiscal year ended March 31, 2010, amounted
to ¥2,139.4 billion.

Annual Report & CSR Report 201027

Overview of Consolidated Operating Performance
Overview of Operations in the Year Ended March 31, 2010

Consolidated Financial Highlights(Billions of yen)

For the Six-Month Period
Ended March 31, 2009

For the Year Ended
March 31, 2010

Overview of Consolidated Operating Performance

Total income

154.8

353.7

Net income (loss)(128.3)

39.8

Total assets

14,028.0

15,595.7

Loans

12,008.8

13,514.6

Securities

1,246.5

1,289.4

Total liabilities

11,941.6

13,268.2

Borrowed money

8,067.8

9,082.4

Debentures and corporate bonds

3,513.0

3,746.3

Total equity

2,086.4

2,327.5

Common stock

1,000.0

1,181.1

Capital adequacy ratio (BIS standard)

18.88%

19.13%

Ratio of risk-monitored loans (Banking Law base)

1.60%

5.07%

Return on equity(6.06)%

1.82%

Return on assets(0.92)%

0.27%

1,096

1,181

Number of employees

Consolidated operating performance during the year under

addition, as in the preceding term, ongoing economic mal-review is described below. As DBJ was established onaise resulted in losses on disposal of non-performing loans,

October 1, 2008, the previous fiscal period, from October 1,

as well as losses on disposal of shares of large-scale clients,

2008, to March 31, 2009, was a six-month period.

which prompted net other operating losses of ¥34.8 billion. As a result, income before income taxes and minority

Consolidated Income and Expenses

interests, excluding operating expenses of ¥35.0 billion, wasDuring the period, DBJ posted total income of ¥353.7 bil-

¥51.1 billion, swinging to profitability after recording a loss

lion. Of this amount, interest income generated ¥301.4

before income taxes and minority interests of ¥118.1 billion

billion, and fees and commissions ¥15.6 billion. Other oper-

in the preceding term.

ating income came to ¥19.8 million, and other income was¥16.6 billion.
Total expenses were ¥302.6 billion. This amount includ-on head office relocation and income on recovery of bad

ed interest expenses of ¥180.1 billion, expenses on fees

debts. Consequently, income before income taxes andand commissions of ¥1.0 billion, other operating expenses

minority interests came to ¥51.1 billion.

of ¥34.0 billion and general and administrative expenses of¥35.0 billion, as well as other expenses of ¥52.3 billion.

After posting current income taxes of ¥25.3 billion,
deferred income taxes of ¥14.5 billion and minority inter-

Net interest income was ¥121.3 billion, and net fees andests in net income of ¥0.3 billion, consolidated net income

commissions amounted to ¥14.6 billion. However, as mar-came to ¥39.8 billion, swinging to profitability after having

ket conditions worsened, mainly due to the incurred valua-posted a consolidated net loss of ¥128.3 billion in the pre-tion losses on real estate related private-placement bonds,

ceding fiscal term.

net other operating losses amounted to ¥14.1 billion. In

28

DBJ posted extraordinary losses of ¥0.8 billion for theyear stemming from the addition to its reserve for losses

Annual Report & CSR Report 2010

Consolidated Assets, Liabilities and Equity

Total equity at the end of the period was ¥2,327.5 bil-billion, up ¥1,567.6 billion from the previous fiscal year. Of

reason for this rise, in addition to net income, was a ¥103.2

that amount, loans were ¥13,514.6 billion, up ¥1,505.8

billion increase in capital on September 2009, followed bybillion, and securities came to ¥1,289.4 billion, up ¥42.9

a ¥77.9 billion capital infusion on March 2010. DBJ’s unre-billion. These amounts include new investment and loans inalized gain on available-for-sale securities came to ¥11.0

response to the financial crisis.

billion, up ¥12.7 billion compared with the loss in this cat-

Call loans and bills bought amounted to ¥125.0 billion

Overview of Operations in the Year Ended March 31, 2010

As of March 31, 2010, total assets amounted to ¥15,595.7

lion, up ¥241.0 billion from one year earlier. The primaryegory in the preceding term. This amount includes valuation

at the end of the term, a decrease of ¥20.0 billion, andlosses on securities that DBJ holds independently, as well as

reverse repurchase agreements came to ¥179.9 billion,

shares in listed companies that DBJ owns through funds.

down ¥195.9 billion. These assets represent the investmentof excess cash on hand, which was down from the level as

Status of Risk-Monitored Loansof March 31, 2009.

DBJ is not subject to the provisions of the Banking Act

Total liabilities as of March 31, 2010, stood at ¥13,268.2

or The Law concerning Emergency Measures for the
Revitalization of the Financial Functions (Law No. 132 of

porate bonds amounted to ¥3,746.3 billion, an increase of2008), but it carries out independent assessments of liability¥233.3 billion, and borrowed money of ¥9,082.4 billion,

classes and asset categories based on the Financial Services

an increase of ¥1,014.5 billion. The principal reason forAgency’s Financial Inspection Manual. According to thesethis increase was DBJ’s flotation of corporate bond issues

results, on a consolidated basis, DBJ’s holdings of risk-mon-in April and October 2009 (totaling ¥130.0 billion, issued

itored loans as prescribed by the Banking Act total ¥685.1

using the shelf registration method for securities). In addi-

billion, accounting for 5.07% of total loans.

Overview of Consolidated Operating Performancebillion, up ¥1,326.6 billion, of which debentures and cor-tion, borrowings increased, mainly from the Japan FinanceCorporation for use in the crisis response operations. Also,
acceptances and guarantees came to ¥192.1 billion, up¥34.8 billion.

Annual Report & CSR Report 201029

Overseas Business
Overview of Operations in the Year Ended March 31, 2010
Overseas Business

Since its conversion to a joint-stock company in October
2008, DBJ has made a full-fledged entry into international
business. This business is positioned as one of DBJ’s growthstrategies in its first medium-term management plan. (Seepage 21.)
To achieve the targets set in the first medium-term
management plan, we are creating an overseas risk
management structure, preparing operating bases, training
personnel and moving forward with core infrastructure. At
the same time, we are working to expand our network withtrustworthy partners and domestic and overseas financial
institutions.
DBJ Europe Limited, a wholly owned DBJ subsidiary,commenced operations in November 2009. This company
primarily provides support for clients in Europe and the Nearand Middle East, as well as investment and loans and M&A
services.
By maintaining close relationships with its overseas offices,
DBJ is able to provide global financial services that meetbroad-ranging client needs, as well as support for clients’
overseas operations.

Operations at Overseas Locations
New York Representative Office
The New York Representative Office is responsible for North
America, Central America and South America. This officemonitors financial, industrial and economic trends and economic policies. The office provides information to Japanesecompanies and other entities that are planning to commence operations in North America and South America, as
well as client companies that are considering entry into theJapanese market.

Business Tie-Ups with Overseas Institutions
In January 2010, DBJ entered a master cooperation agreement with the International Finance Corporation (IFC) in
the interest of facilitating cooperation related to overseas
investment and loan activities. A member of the WorldBank Group, the IFC is the biggest international financial
institution conducting investment and loan operations primarily in developing counties. Under this accord, DBJ and
IFC agree to conduct joint investment and loan activities,
and DBJ is aggressively targeting environmental and social
infrastructure as it strives to support the realization of a sustainable society.
In addition to the institutions mentioned above, DBJ
leverages its business alliances with the following overseas
institutions.
• China International Investment Company(the CITIC Group)
Corporate group with a wide-ranging financial service
network throughout Asia, including China• IE Singapore
Government institution that supports internationalizationand provides overseas investment for Singaporean companies

DBJ Singapore Limited
Established:

December 16, 2008

Capital:

S$1,000,000

Business:

Loans, investment and M&A advisory
services

Address:

9 Raffles Place, #30-03 Republic Plaza,
Singapore 048619

CEO & Managing Director: Masamitsu Kawasumi

DBJ Europe Limited
Established:

November 10, 2009

Capital:€7,500,000

Business:

Loans, investment and M&A advisory
services

Address:

Level 20, 125 Old Broad Street, London
EC2N 1AR, U.K.

CEO & Managing Director: Takeshi Kiriyama

30

Annual Report & CSR Report 2010

DBJ Europe Limited opening ceremony

Group Companies
DBJ Capital Co., Ltd.

ates, provides a variety of services to meet its clients’ needs.

In June 2010, DBJ integrated the businesses of its two ven-

Overview of Operations in the Year Ended March 31, 2010

The DBJ Group, comprising DBJ and its subsidiaries and affili-

ture capital subsidiaries, New Business Investment Co., Ltd.,

Japan Economic Research Institute Inc.

and Intellectual Properties Development & Investment, Inc.,

Japan Economic Research Institute, which is wholly capital-

into a new investment capital company, DBJ Capital Co.,

ized by DBJ, is a research institution that primarily conductsLtd.

surveys and provides consulting services. In April 2009, theThis new company aims to contribute to the growth andinstitute reorganized, taking over the research and related

development of firms requiring capital by leveraging theactivities conducted by its predecessor.

two former subsidiaries’ expertise in evaluating technology

Operating with a long-term perspective and from astandpoint of fairness and neutrality, the institute generates

and businesses, and their experience investing in venturebusinesses.

synergies from its three fields of research—the public, soluOutline of DBJ Capital Co., Ltd.

private sectors. The company meets clients’ research andEstablished: October 2005

consulting needs from a comprehensive viewpoint.

Capital:¥99 million

Business:

Investment In venture companies

Address:

Nippon Building 12F, 2-6-2, Otemachi, Chiyoda-ku,
Tokyo 100-0004, Japan

President:

Akira Ogasawara

Group Companies

tions and international arenas—and targets the public andPublic arena

DBJ Investment Advisory Co., Ltd. (DBJ IA)
DBJ IA was established in December 2009 to promote
Solutions arena

International arena

growth strategies from a medium- to long-term standpointemphasizing relationships of mutual trust with entities
receiving investment funds and based on the concept ofassisting companies through value-added equity investment.
DBJ IA aims to contribute to such entities’ growth anddevelopment by helping them achieve their growth targets

Outline of Japan Economic Research Institute Inc.
Established: December 1989

in terms of M&A, capital and domestic and overseas strate-

Capital:¥480 million

domestic networks and providing human resources.

Business:

Research, consulting and advisory services

Address:

3-4, Kanda-surugadai 3-chome, Chiyoda-ku, Tokyo
101-0062, Japan

President:

Kazuyuki Mori

gies by providing funds and utilizing DBJ’s international andOutline of DBJ Investment Advisory Co., Ltd.
Established: December 2009
Capital:¥68 million

Business:

Address: 1-9-1, Otemachi, Chiyoda-ku, Tokyo 100-0004,
Japan

President:

Hiroshi Murakami

Annual Report & CSR Report 201031

Topics

2009
TopicsApril

 Won the Environmental Development Award at the ADFIAP annual
meeting for Financing Employing DBJ Environmental RatingsJune Implementing organizational changes toward the establishment ofintegrated investment and loan services
To enhance its intellectual assets and human resources and strengthen
its organizational capabilities, DBJ introduced structural changes.
 Partial Amendment of the Development Bank of Japan Inc. Law enacted

April: ADFIAP Awards CeremonyJuly Selected as a core financial institution for the second consecutive year under the Tokyo metropolitan
government’s Loan Assistance Program for Environmental Initiatives of SMEs
 Opened temporary consultation desks for companies affected by severe rainfall in Yamaguchi and Fukuoka
prefectures at our Kyushu and Chugoku branches

August Opened temporary consultation desks for companies affected by Typhoon Etau at our Kansai and Chugoku
branches

September Concluded business cooperation agreement related to environmental investment and loans with the
Hokuriku Bank, Ltd.
 Increased capital to ¥1,103,232 million (September 24)

October

 Submitted investment and loan budget request of ¥1.7 trillion for the
fiscal year ending March 31, 2011
The ¥1.7 trillion investment and loan budget request comprised ¥650
billion in fiscal investment and financing and ¥1.05 trillion to be funded
independently by DBJ.

November Established DBJ Europe Limited as a wholly owned subsidiary – see page 30
November: DBJ Europe established

December Exhibited and conducted presentation at Japan’s largest environmental exhibition, Eco-Products 2009– see page 58
 Opened temporary consultation desks at sales offices in line with the Act on the Facilitation of Financing to
Small and Medium-Sized Businesses
 Settling of investment and loan plans for the fiscal year ending March 31, 2011
The result of the draft budget compiled for the fiscal year ending March 31, 2011 (Cabinet decision on
December 25, 2009) was for aggregate investment and financing of ¥1.5 trillion, comprising ¥650 billion in
fiscal investment and loans and ¥850 billion to be funded independently by DBJ.

2010
January Concluded the first basic cooperative agreement as an Asian financial institution with the International
Finance Corporation – see page 30

March Increased capital to ¥1,181,194 million (March 23)

April

 DBJ’s Head of the Research Institute of Capital Formation, Masaharu Hanazaki, won the 50th Economist
Prize for his latest publication, Corporate Governance and Corporate Finance: An Informational andInstitutional Approach – see page 49
 Concluded business cooperation agreement to promote environmental measures with Tokio Marine &Nichido Fire Insurance Co., Ltd. – see page 68

May

32

 Established the Regional Areas’ Genki Program to support regional growth strategies – see page 78
 Won the infrastructure development category at the ADFIAP annual meeting for DBJ’s investment inrebuilding JR Sapporo Hospital – see page 75
 Opened temporary consultation desk at DBJ’s Minami-Kyushu Branch in response to the outbreak of footand-mouth disease in Miyazaki Prefecture

Annual Report & CSR Report 2010

DBJ’s Businesses
To resolve the various issues that society faces
and become clients’ most supportive financial
institution, DBJ supplies long-term funds,
supports the formation of business and takes ahost of other approaches to ensure that usefulprojects operate smoothly. We are committed
to creating financial markets that allow funds
to be raised more efficiently, and, in recent
years, we have developed and introduced new
financing methods to expand the functions offinancial markets.

Integrated Investment and Loan Services . . . . . .

34

Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36

Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41

Consulting/Advisory Services . . . . . . . . . . . . . . . . .

43

Crisis Response Operations . . . . . . . . . . . . . . . . .

45

Providing a Safety Net . . . . . . . . . . . . . . . . . . . . .

47

Making Use of Information Functions . . . . . . . .

48

Annual Report & CSR
R Report
R
2010

33

Integrated Investment and Loan Services

DBJ provides seamlessly integrated investment and loan services. We assist clients with their financing
DBJ’s Businesses

needs by taking a position of neutrality and a long-term perspective that extends over all their activities,
and by employing leading-edge financial methods.
 We offer integrated investment and loan solutions that range from senior loans to mezzanine and equity financing.

Integrated Investment and Loan Services

 DBJ also provides a host of services (e.g., M&A advisory and CSR support services) that help raise corporate value.
 In collaboration with its Group companies, DBJ provides finely tuned services to meet individual clients’ needs.

Syndicated
Loans
Medium- to
Long-Term
Loans

Financing
Debtor-inEmploying
Possession
DBJ
Environmental Financing
Ratings
Structured
Financing

Loans

Financing
Provision of medium- andEmploying
long-term financing, as well
DBJ Disasteras structured financing andPreparedness
other forms of structured
Ratings

EquityMezzanine Financing

subordinated financing

Investment
Hybrid Financing

Private Bond
Placement
Asset-Based
Lending

Provision of mezzanineand equity financing

Asset Financing(Real Estate)
LBOs/MBOs

Integrated Investment and Loan Services
M&A Advisory
Services

Consulting/Advisory
Services
Arrangement of structured financing,
provision of M&A advisory services,
applying DBJ’s industry research
Regional Healthfunction and expertise in
Checksenvironmental and technology
evaluations

Practical Application
Support Center
for Technology

Note: DBJ-designated analysis is required for investment and loan services.

34

Annual Report & CSR Report 2010

Loans=Loan Amounts Provided (Non-consolidated)

DBJ provides financing to meet the diverse
needs of its clients.

DBJ’s Businesses(Billions of yen)
4,000

Reference
3,682.0

3,000

z Provides medium- and long-term loans
2,000

1,670.3
1,278.0

ronmentally and socially responsible investment, disaster countermeasures and safety measures and rating-Integrated Investment and Loan Services

z Offers unique high-value-added financial services (envi-

1,000

639.3

linked financing for technology commercialization)z Responds to diverse needs by offering nonrecourse loans

0Year ended
March 31, 2008

and develops and provides financing offering collateraland structural flexibility (debtor-in-possession financing,
inventory collateral, intellectual property rights as collateral, etc.)

Investment
DBJ provides investment funding, based ona long-term perspective, to meet specific needs
and address a host of issues that clients face.
z We provide investment to assist businesses in termsof their revitalization, restructuring, growth strategies,
international competitiveness and infrastructure opera-

Six-month period
ended September
30, 2008

Six-month period
ended
March 31, 2009

Year ended
March 31, 2010

Notes: 1. Figures for the year ended March 31, 2008, and the six-month period
ended September 30, 2008, are for DBJ’s predecessor.
2. Figures, including those for corporate bonds, are on a management
accounting basis.

=Investment Amount Provided (Non-consolidated)(Billions of yen)160

Reference
138.0
111.1

120

80
63.1
40
22.3

tions. We provide such funding through mezzanine
financing, as well as through equity and other funding.

0Year ended
March 31, 2008

Six-month period
ended September
30, 2008

Six-month period
ended
March 31, 2009

Year ended
March 31, 2010

Notes: 1. Figures for the year ended March 31, 2008, and the six-month period
ended September 30, 2008, are for DBJ’s predecessor.
2. Figures, including those for securities, money held in trust and otherassets (funds), are on a management accounting basis.

Consulting/Advisory Services=M&A Advisory and Consulting Agreements (Cumulative)(Agreements)

Reference

240

Through its advisory support services,
DBJ helps clients become more competitive andinvigorate regional economies.

215
186
180

159
129

120

z Provides M&A advisory services
z Makes proposals that apply its expertise in industry

60

research and ability to develop new financial technologies
z Arranges structured and other types of financing

0
As of March 31, As of March 31,
2007
2008

As of March 31,
2009

As of March 31,
2010

Notes: 1. Figures as of March 31, 2007, and March 31, 2008, are for DBJ’s
predecessor.
2. Figures as of March 31, 2009, include those of DBJ’s predecessor(from April 1, 2008, through September 30, 2008).

Annual Report & CSR Report 201035

Loans

DBJ’s Businesses

DBJ provides medium- and long-term loans, answering a range of funding requirements. In addition to seniorfinancing through traditional corporate loans, we offer project financing, nonrecourse loans and other types ofstructured financing, as well as a variety of other loans that employ advanced financial methods.
The DBJ loan case study section on pages 60 through 85 introduces DBJ’s “CSR through Investment, Loan
and Other Businesses.”

Loans

Medium- to Long-Term Loans
DBJ primarily provides funding via medium- to long-term

When extending loans, we consider taking advantage

loans. When providing funds, DBJ first looks at the profit-

of other interest subsidy systems offered by national andability of the business that requires funding, and then pro-regional government bodies.

poses a medium- to long-term repayment plan. As part ofour effort to meet varied needs, a deferment period may be
implemented.

We provide a broad range of information to our clients.
Through our long history of operations, we have accumulated substantial expertise and experience that
we apply when offering advice toaddress the issues our clients face.

DBJ puts its wide-ranging networks to use to help clients
expand their operations.

We provide information generated through our various studies
and research activities, as well asreports, publications and otherinformation from overseas.

Syndicated Loans
This type of loan involves multiple arrangers that are com-tutions involved in the transaction to be increased, and clar-

bined into a syndicate. The agreement with the client is

ity of borrowing terms is ensured.

based on a single contractual document, and financing is

As part of its services, DBJ actively structures loans, cen-

provided cooperatively according to a single set of terms.

tering on term loans. DBJ invites a wide range of financial

Having a single arranger in the point negotiating posi-

institutions to participate, making use of its neutral stand-tion reduces the administrative burden. Conducting settle-

point. Structuring loans to include some items from its own

ment operations through an agent reduces the administra-

lending menu, such as financing employing DBJ environ-tive burden. Large amounts can be raised expeditiously.

mental ratings, helps raise the value-added level of services

Appointing an arranger allows the number of financial insti-

it provides.

Annual Report & CSR Report 2010

Arrangers

Financial
Institutions

Financial
Institutions

Financial
Institutions

Financial
Institutions

Financial
Institutions

Market36

Arrangement

Appointment

Clients

Financial
Institutions

Beginning with the antipollution measures implemented inyear ended March 31, 2009, we launched an interest rate

the late 1960s and early 1970s, DBJ has provided more thansubsidy system based on environmental ratings to advance¥3 trillion in investments and loans for environmental mea-

global warming countermeasures.

sures over the past 40 years.

DBJ’s Businesses

Financing Employing DBJ Environmental Ratings

For three consecutive years beginning in 2008, banking

In fiscal 2004, DBJ began employing environmental rat-

institutions also selected the Financing for Tokyo Small andMedium-Sized Enterprises That Support Environmental

four decades. DBJ developed a screening (rating) system that

Initiatives system. This system aims to accelerate environmen-scores companies on the level of their environmental man-tal initiatives by providing low-interest financing to small andagement and then applies one of three different interest

medium-sized enterprises with business offices in Tokyo. DBJ

rates reflecting that effort. This was the world’s first incorpo-

employed its proprietary screening system for small andration of environmental ratings in financing menus. In themedium-sized enterprises to determine the environmental

Loans

ings in its financing based on knowledge cultivated for overratings of companies.

=Overview of Financing Employing
DBJ Environmental Ratings

Financing

Application

Environmental screening

Evaluation of corporate credit risk,
collateral, etc.
Set interest rate level basedon client’s contribution toenvironmental initiatives(Ineligible)

Features• Varying interest rate levels based on environmental ratings• Screening sheet contains approximately 120 questions
derived from the United Nations Environment Programme
Finance Initiative (UNEP FI) evaluation of fair and neutral
global environmental trends and an exchange of
information with the Ministry of the Environment• Ratings determined through interviews with clients• Corresponds to a wide range of clients, from manufacturers
to such nonmanufacturers as retailers, railway operatorsand leasing companies

Financing Employing DBJ Disaster Preparedness Ratings
In addition to helping businesses create countermeasures to

In the year ended March 31, 2007, DBJ inaugurated ahedge against disaster and provide contingency financing tofinancing method employing a comprehensive method ofhelp recover their operations in the event that they are

rating disaster preparedness. DBJ Disaster Preparedness

affected by disaster, DBJ assists companies from a continuing

Ratings is a unique evaluation system based on the Corporate

business standpoint. We help with a full range of disaster

Initiatives for Disaster Preparedness Self-Evaluation Inventory

preparedness, from the formulation of business continuity

created by the Central Disaster Prevention Committee

plans to the earthquake-proofing of facilities and preparation(Cabinet Office, Government of Japan), which evaluates andof IT backup systems. At the same time, DBJ provides new

selects companies engaged in high-level initiatives and pro-financing methods to assist the recovery of disaster-struck

vides them with low interest rate financing as a reward forbusinesses.

their excellent disaster preparedness measures, introducing theworld’s first disaster preparedness-based financing method.

Overview of Financing Employing DBJ Disaster Preparedness Ratings
Conduct separate screening toevaluate corporate credit risk andevaluate collateral

Loan

ClientNew Initiatives

DBJ

Set interest rates that differ
depending on the client’s risk
preparedness

Excellent Initiatives

Superior Initiatives

Satisfactory

Disaster Response
Initiatives in Place

Field of involvement including
Cabinet Office required or core items

Field of involvement including Cabinet
Office core or recommended items(1) Formulate disaster management plans asemergency measures(2) Put in place measures to ensure life safety(3) Understand equipment safety measures andcondition of facilities(4) Encourage education and training(5) Introduce backup disaster prevention plans forsurrounding areas(6) Create check and review structure(7) Formulate business continuity plans(8) Reduce susceptibility to earthquake damage byreinforcing structures(9) Create backup plans for important businesses(10) Build regional alliances(11) Ensure disaster preparedness of supply chain(12) Introduce disclosure and social contribution
initiatives

Satisfactory

Proprietary assessment system that complies with Japanese government guidelines
Unsatisfactory

Ineligible for Loan

Central Disaster Planning Committee, Japanese Cabinet Office
Corporate Disaster Preparedness Self-Assessment Checklist
Annual Report & CSR Report 201037

DBJ’s Businesses

Asset-Based Lending
Asset-based lending (ABL) is a method of financing thatAs a front-runner in corporate revitalization financing,uses as collateral a company’s liquid assets, such as aggre-

DBJ has gained abundant experience in the area of devel-

gate movable property, inventory collateral and receivables.

oping ABL schemes to support companies, while at theAs financing methods become more diverse, expeditious

same time securing their debt. Going forward, we plan toLoansfund-raising, debt restructuring and the sale of surplus

apply this expertise to develop ABL schemes that provide

inventories also enhance the robustness of internal control

companies with growth capital.

systems.

ABL

ClientDBJ

Collateral Transfer

Inventory(Buyer)Third-Party
Borrower

Sale

Liquidate Inventory
Sell inventories, primarily throughexisting wholesale routes

Accounts Receivable
Collateral Transfer
PledgeCash and Equivalents

Valuation
Provisional valuation of inventory,
taking into account such factors as thegross margin calculated according topast sales performance(Accounts Receivable)
Valuation based on the diversity andreliability of individual receivables
Management
Monthly valuation of inventories andaccounts receivable

Debtor-in-Possession Financing
Nonperforming loans emerged as a major problem belea-

Later-stage DIP financing provides the funding that isguering the Japanese financial system in the late 1990s.

needed to implement restructuring plans. By providing medi-

Against this backdrop, DBJ has developed a host of tools to

um- to long-term financing to fund capital investment underhelp underperforming companies sustain or develop profit-

different conditions than those for revitalization plans thatable areas of operation.

are being implemented, an organization that is under reha-

One method of which DBJ is a proponent is early debtor-

bilitation can refinance its debt, providing exit financing

in-possession (DIP) financing. This temporary financing meth-more quickly than is possible via the legal liquidation process.

od provides working capital that allows a company in bank-

In 2001, DBJ provided the first DIP financing in Japan.

ruptcy to continue operations during the period between a

Since that time, DBJ has worked to broaden the range ofrequest for the application of the Civil Rehabilitation Law

entities eligible for this financing and the methods ofand the approval of rehabilitation plans, thereby sustaining

employing it in response to varied needs.

the valuable parts of its operations.

Capital requirements

Bankruptcy( priority obligation)
Common debts

Working
capitalRestructured
assetsBankruptcy( priority obligation)

Funding forequipment andother items

Exitfinancing

DIP financing
Proceduralapplication

Decision to start

Early-stage

38

Annual Report & CSR Report 2010

Approval of plan

Conclusion of plan

Later-stage

z Securitization
Securitization allows companies to convert their rights tocentering on energy and infrastructure projects, has pro-monetary interests into salable form. Securitized mone-pelled us to our current position as one of Japan’s leaders intary claims, which are backed by the revenues and cash

project financing, including private finance initiatives (PFIs).

flows that are generated by the underlying claims, canApplying our accumulated expertise, now in addition to

be used to generate funding through financial liquiditi-

project financing, DBJ provides investment and financing tozation. A method known as whole business securitiza-

cover a variety of client needs. These include object financ-tion enables certain businesses to securitize their entire

ing and securitiziation in a wide range of fields, in which we

operations, backed by future cash flows. This method

act as a financial advisor, providing clients with support. DBJ

can be employed to restructure a client’s balance sheet

acts as a lead arranger in putting together project financing

and procure financing under favorable conditions. DBJ

packages, offers senior and mezzanine loans and partici-

uses various methods, including nonrecourse loans, topates in projects through equity investment, meeting cli-

help clients raise funds.

Loans

these beginnings, our accumulated expertise in this area,

In 1998, DBJ pioneered project financing in Japan. From

DBJ’s Businesses

Structured Financing

ents’ needs and addressing the various issues they face.
z Project Financing
We have a wealth of expertise in helping companies inz PFIsSince the facilitation of PFIs through legislation* in 1999,
DBJ has accumulated PFI expertise to the point where it

the energy and infrastructure sectors find project financ-

is now an industry leader in PFI. Taking advantage of thising that they can repay through operating revenues andstore of knowledge, as well as strong relations with pub-working cash flow, without relying on specific corporate

lic-sector entities, DBJ supports the efforts of clients who

creditworthiness or collateral value.

are considering PFIs.

z Object Financing
DBJ helps clients raise funds that take advantage of the* Law concerning Facilitation of the Improvement, Etc., of Public
Facilities, Etc., by Private Fund, Etc.

revenue-generating characteristics of assets with special
features, such as ships and airplanes.

Project Financing Example: Electric Power Generation ProjectSponsor A

FundingSponsor B
Banking Syndicate

Electric Power
Generation Company
Special-Purpose
Company (SPC)

FinancingConstruction contract

Electric power supply
contract (15 years)

Power Plant G
Trading Company F
Fuel (coal, gas)
supply contract

Operational repair and maintenance contract

Factory E

Plant C

Plant D
Plant delivery contract

Technical guidance contract

Annual Report & CSR Report 201039

DBJ’s Businesses

Private Bond Placement
Private bond placements involve selling bonds directly to a

DBJ provides ways for clients to diversify their funding

small number of qualified investors instead of to a large

sources and methods. By underwriting and guaranteeing

group of general investors through a public offering involv-

private bond placements, DBJ helps clients raise funds

ing a securities company.

directly (direct financing) and indirectly in the marketplace.

Loans

Underwriting

DBJ

Corporate Bond
Issue

Clients

Institutional Investors

Guarantee

DBJ

Asset Financing (Real Estate)
DBJ’s involvement in the long-term financing of real estate

Our track record, expertise and networks in this arena

operations began in the 1960s. We have participated inenable us to provide nonrecourse loans and a host of otherJapan’s real estate securitization market from its early

solutions.

beginnings and continue striving to invigorate this market.

Liquidization Financing
Example 1: Sell rental real estate that a client owns toa special-purpose company, raising capitalefficiency
Example 2: After selling owned real estate that a client isusing to a special-purpose company, conclude
new rental agreements and continue using theproperty in this manner
1. Allows diversification of financing methods• Enables funds to be raised based on the property’s capacity
to generate revenue and cash flow
• Preserves the credit availability of the originator (the original
owner of the asset)
2. Moves property off the balance sheet for better financial
efficiency• Improves ROA• Allows planned recognition of unrealized gains or losses• Improves financial picture by reducing interest-bearing debt
• Eliminates risk of variations in real estate values

Development Financing
Example: Use investor financing to develop idle owned
real estate into income property
1. Realizes profits from development• Enables funds to be raised for real estate development,
which might be difficult for the company to do on its own• By securing required additional funding, helps in terms ofdiversity and the control of the risk of construction delays
and cost overruns
2. Controls risk by moving property off the balance sheet• Maintains the company’s financial soundness• Eliminates risk of fluctuations in real estate values

DBJ’s Distinguishing Features in Asset Financing• Has extensive arrangement expertise on numerous projects, as well as a strong performance record in investment and loans• Retains a network of leading investors and financial institutions in Japan and overseas to help realize projects and arrange

financing• Creates project-tailored solutions to meet clients’ needs, such as providing senior, mezzanine and equity financing• Maintains a neutral standpoint, enabling projects to progress smoothly by appropriately diversifying risk and helping involved

parties realize profits

40

Annual Report & CSR Report 2010

Investment

DBJ’s Businesses

We provide investment funding to meet specific needs, based on a long-term perspective, to resolve the myriad
issues that clients face. For example, DBJ provides investment to help clients expand their operational bases,
meet long-term growth strategies and shore up their financial bases. We offer funding support, mezzanine
financing and financing that employs equity and other methods.
The investment case studies on pages 60 to 85 introduce DBJ’s “CSR through Investment, Loan and Other
Businesses” approach.

Investment

EquityIn an environment characterized by growing needs for the

maximize their long-term corporate value. In the fiscal year

operational selection and focus of group businesses, theending March 31, 2011, DBJ will enhance it ”added-value

formulation of growth strategies and the heightening ofcreative equity financing to support corporate growthcorporate governance, equity has become more important

strategies.” In addition to funding, this approach aims tothan ever before.

achieve corporate growth strategies, combining M&A strat-

Through equity investment, DBJ helps clients address

egies, capital strategies and overseas strategies. This initia-

the issues they face and promotes their long-term develop-

tive aims to support corporate value enhancement over thement. After making equity investments, DBJ provides total

medium to long term.

solutions involving its networks and strengths in information, research and financing technologies, helping clients

Client Needs• Growing needs for
operational selection andfocus• Formulation of growthstrategies for globalization• Growth strategies making
use of the capital markets(mergers and acquisitions,
initial public offerings, etc.)

DBJ shares the benefits of clients’ growth, while at thesame time helping them achieve future prosperity.

DBJ’s Solutions

Results• Inject growth capital
Capital injections into individual companies,
SPCs, various funds, etc.
• Globalization measures
Encourage companies from overseas to takepart in the Japanese market, support Japanesecompanies’ efforts to expand overseas• Provide solutions after making investment
Provide total solutions involving DBJ’s networks
and strengths in information, research andfinancing technologies• Resolve clients’ issues• Help clients grow over thelong term and maximize
corporate value

LBOs/MBOs
Leveraged buyouts (LBOs) are acquisitions of companies orthis reason, an MBO may take the form of an LBO. In thebusinesses using borrowed money. If the company or busi-

event that borrowed funds alone are insufficient, the man-ness that is being acquired generates fixed cash flows, theagement team may offer equity to a collaborative sponsor,

acquirer (typically, the sponsor providing equity) can pur-such as a buyout fund or partner.

chase the business or company for relatively little cash. For

In recent years, MBOs have been used more frequently

this reason, the borrowed funds are considered the “lever”

by listed companies that are delisting and by owner-operat-that multiplies the return on the purchaser’s funds, which

ed companies.

are constrained.

As a financial advisor, DBJ ties together all MBO-related

Management buyouts (MBOs) involve the acquisition bydetails, arranges investment and mezzanine financing, andthe existing corporate management of a company’s shares

works out joint equity financing with sponsors. The ability

or operations. As the existing management team typicallyto handle this range of activities allows DBJ to offer LBO/

has a limited amount of cash available, MBOs generally

MBO solutions.

require that funds be raised to acquire an operation. For

Annual Report & CSR Report 201041

DBJ’s Businesses

Mezzanine Financing
Mezzanine financing is a method that typically involvesof subsidiaries and business units, business succession anda greater degree of investment risk than the senior loans

listed companies that are delisting.

employed by financial institutions.

Mezzanine financing has the benefit of providing funding

Investment

Mezzanine financing is lower in the repayment hierarchy,

that may be difficult to obtain through senior loans. Suchso risk is higher than for senior loans. In markets such as thefinancing also prevents dilution of the voting rights of exist-

United States, which have a broad range of investors, mez-ing shareholders. Redemption schedules can be set to bezanine financing plays an important role in diversifying therigid or flexible.

types of funding that are provided. As mezzanine financing

From a long-term perspective, DBJ helps clients resolve

is riskier than senior financing, it bears a correspondingly

problems with their balance sheets through total solutions

higher interest premium, making it an economically rationalthat range from the arrangement of financing to the provi-

choice of investment funds.

sion of funding.

Depending on financing plans and capital policies,
flexible mezzanine financing can be introduced and set toTypes of mezzanine financing

have diverse characteristics corresponding to both equity• Subordinated loans, subordinate corporate bonds

and debt. In recent years, demand for this type of financing• Preferred shares, classified shares

has grown in association with business acquisitions, spinoffs• Hybrid securities, hybrid loans, etc.

=Case Study: Mezzanine Financing
Case 1: Resolving an Undercapitalization Issue
Before capital expansion

After capital expansion

Objective
Debt

Debt
AssetsAssetsPreferred shares

CapitalCapitalConventional restructuring methods involve
posting extraordinary losses, which is problematicfor companies that are undercapitalized. Thisissue was resolved by raising capital through theissuance of preferred stock.

Case 2: Supplementary Method of Financing a Business Acquisition
Parent company
AssetsNon-corebusiness

Recipient company

Debt

CapitalTargetbusiness

Acquisition of
non-core business
(MBO)

Debt
(LBO loan)
Mezzanine
CapitalObjective
Provide supplementary financing toovercome a shortfall between thepurchase price and the amount available
through equity funding and loans

Case 3: Avoiding Dilution of Voting Rights during Business Succession
Former company (current company)

New company (recipient)Objective
Debt

Note: Successor acquiresNcommon stock

AssetsCapitalDebt

Business succession

AssetsPreferred shares

Capital42

Annual Report & CSR Report 2010

Prevent the dilution of successor’s voting
rights when financing is provided forbusiness succession

Consulting/Advisory Services

DBJ’s Businesses

We offer consulting and advisory services and make use of networks with allied financial institutions. Throughour consulting and advisory support services, we help clients become more competitive and contribute to thevigor of regional economies.
Our consulting and advisory services are backed by the know-how we have built up through our structured
and other types of financing, our M&A advisory services and our provision of expertise on industry researchand environmental and technical evaluations. We apply this accumulated expertise to help clients resolve theissues they face.
The advisory case studies on pages 60 to 85 introduce DBJ’s “CSR through Investment, Loan and Other
Businesses” approach.

Consulting/Advisory Services

M&A Advisory Services
Even as corporate development options diversify, M&A

competitive position. Amid growing interest in M&A activi-

activity is growing more prevalent, both for businesses

ties in Japan and overseas, DBJ provides advisory services

restructuring operationally and for industry restructur-through its own networks. We offer comprehensive M&A

ing overall. Mergers and acquisitions can be a method forsolutions that match clients’ varied needs and management

achieving better employment stability and a stronger

strategies.

Strategic Consulting• Cohesive Domestic and Overseas Information Network• Comprehensive Business Strategies

DBJ maintains close relationships with regional financial

We create operating and management strategies that draw

institutions, which have excellent insight into the compa-

on the knowledge we have cultivated through many years

nies that operate in their regions, as well as with Japaneseof providing investment, loan and project support from aand overseas financial institutions and accounting andmedium- to long-term perspective.

legal firms. Such relationships enable us to build informa-• Information on a Wide Range of Business Partners

tion networks to accumulate accurate information. We

DBJ is involved in business entities in a broad range of

have created a banking M&A network that links informa-industries, and its business partners in Japan number

tion on financial institutions throughout Japan (regional

more than 3,500. Since 1984, we have provided loansbanks and trust banks) with information on corporate

for more than 700 foreign-capitalized companies,
enabling us to also provide a wide variety of information on overseas companies as well.

M&A activities.
• M&A Activities
DBJ provides fundamental advisory services at every
stage of a merger or acquisition, from planning
through to implementation.

=M&A Advisory Services
Consulting
Formulation of
acquisition andselling strategies

Data gathering

Buy Side

Buy Side

Select and analyze
acquisition
candidateConnect withpotential acquirer

Execution

Analyze finances andcompute investment yield
Calculate purchase/sale priceSell Side

Sell Side

Select and analyze
potential acquirer

Connect withacquisition
candidateMove toward specific contract
Due diligence

Negotiatepurchase
contract andpreparedocumentation

CLOSING

Performance
analysis

Match-Making

Consultation on finances
and accounting

Annual Report & CSR Report 201043

DBJ’s Businesses

Regional Health Checks=Health Checks Conducted

When diagnosing the health of local community-building(As of July 1, 2010)activities, DBJ begins by analyzing communities based on
publicly available data. We augment this trove of informa-

Nakaumi-Shinjiko Economic
Zone (Tottori Prefecture,
Shimane Prefecture)
Maniwa(Okayama Prefecture)tion by conducting on-site surveys and local interviews, andConsulting/Advisory Services

then we make an independent diagnosis of the region’s
health. We discuss our findings (issues and possibilities) with

community.
Mutual awareness of regional issues and possibilities

Kashiwazaki(Niigata
Prefecture)
ToyamaSoja(Okayama Prefecture)

the region’s constituents, including the issues that we haveuncovered through our interaction with members of their

Goshogawara(Aomori Prefecture)
Mizuho(Gifu Prefecture)

Tottori
Central Tottori(Tottori Prefecture)

Sanjo(Niigata Prefecture)
Suwa Region(Nagano Prefecture)

Choshi (Chiba Prefecture)
Seto (Aichi Prefecture)
Toyohashi (Aichi Prefecture)
Wakayama
Shirahama (Wakayama Prefecture)

Tosu (Saga Prefecture)
Oita
Kagoshima

lating a project.

Hirosaki(Aomori Prefecture)

Tajimi (Gifu Prefecture)

Fuchu(Hiroshima Prefecture)
Chuyo Area
(Ehime Prefecture)provides an opportunity for taking action, such as by formu-

Hakodate(Hokkaido)

Komatsushima(Tokushima Prefecture)
Tamano(Okayama Prefecture)

Uwajima(Ehime Prefecture)
Kurashiki(Okayama Prefecture)

Practical Application Support Center for Technology
DBJ established the Practical Application Support Center for

In addition to evaluating companies’ abilities to manage

Technology in February 2004 to help medium-sized compa-

technologies and products, we support the developmentnies realize their potential for the commercialization of suc-of appropriate long-term strategies based on objective

cessfully developed technologies. The role of this center is toinformation obtained via our extensive networks.

diagnose whether companies have the management

We provide additional evaluations based on our exper-

strength (technology management expertise) to turn theirtise in operational screening and, through consultation ontechnologies into products. We also provide mentoring,financial strategies, help clients consider optimal long-termbusiness planning and other advice and technology manage-

strategies.

ment training, and we support medium-sized manufacturing

From the perspective of providing neutral and special-companies in the development of new value. DBJ works

ized business plans, we aim to be a partner that clientwith regional financial institutions, local government bodies,

management can consult on any topic related to manu-

universities, economic organizations and industrial support

facturing management. By providing integrated expertisebodies to aggressively promote the expertise offered by thein this way, we help clients raise their corporate value andPractical Application Support Center for Technology, helping

contribute to the development of the Japanese manufac-

to raise regional industrial competitiveness.

turing industry.

Changes in the Operating Environment for Manufacturers
Past

Present
Increasingly diverse client needs
Global competition
Multiproduct,
small-lot manufacturing

The backgroundof the times

Period of rapid
economic growth
Mass production

Manufacturers’ main
points of emphasis

How can we
make products?

What should we make?

Technology,
production,equipment

Technology,
production, equipment+
MarketingResearch and development
Human resource training

Importantmanagement
elements

DBJ’s Strengths
DBJ’s networkstIndependent network with technology advisorstNetwork with business partners throughout JapantNational, regional and university networks
DBJ’s expertiset4DSFFOJOHt*OEVTUSJBMSFTFBSDI
tFinance, M&A, MBOs, business revitalization, equity,
other areas

Manufacturing Companies

DBJ Practical Application Support Center for Technology

Need to enhance technology management skills

Formulate business strategies and help train anddevelop managerial level human resources

Achieve increases in corporate value

44

Annual Report & CSR Report 2010

Crisis Response Operations

Crisis Response Operations
indeminity or interest subsidies), institutions designated togovernment sets aside specific funds that are earmarked

provide such funds do so quickly and flexibly.

for use in the event of such crises, as disruptions in the

DBJ’s Businesses

Through the Japan Finance Corporation (JFC), the JapaneseAt the time of its establishment, DBJ was designatedas such a financial institution, as was Shoko Chukin Bank

terrorism and epidemics of communicable diseases. Upon

Limited.

Crisis Response Operations

domestic or overseas financial markets, large-scale disasters,

the receipt of such credit (e.g., for two-step loans, financial=Crisis Response Business Scheme$PNQFUFOUNJOJTUFSTUIF.JOJTUFSPG'JOBODF UIF.JOJTUFSPG&DPOPNZ 5SBEFBOE

(PWFSONFOU *OEVTUSZBOEUIF.JOJTUFSPG"HSJDVMUVSF 'PSFTUSZBOE'JTIFSJFTt'JOBODJBMDPOUSJCVUJPOTt-FOEJOHPGGVOETt*OUFSFTUTVCTJEJFT

t%FTJHOBUFE%FTJHOBUFEGJOBODJBMJOTUJUVUJPOT+BQBO'JOBODF$PSQPSBUJPO1SJWBUFGJOBODJBMJOTUJUVUJPO$SJTJT3FTQPOTF'BDJMJUBUJPO"DDPVOU1SJWBUFGJOBODJBMJOTUJUVUJPOttt

1SFQBSFTBOEBOOPVODFTiDSJTJTSFTQPOTFGBDJMJUBUJPOHVJEFMJOFTw*NQMFNFOUTSJTLTVQQPSUBOE
PUIFSNFBTVSFTPOUIFCBTJTPG
BHSFFNFOUTXJUIEFTJHOBUFEGJOBODJBMJOTUJUVUJPOT5XPTUFQMPBO
'JOBODJBMJOEFNJOJUZ*OUFSFTUTVCTJEZ

4IPLP$IVLJO#BOL

DBJ#VTJOFTTDPOEVDUFECBTFEPO
UIFBQQSPWBMPGUIFDPNQFUFOUNJOJTUFST-FOEJOHPGTQFDJGJDGVOET PUIFSTFSWJDFT$MJFOUT

Annual Report & CSR Report 201045

Financial Crisis Response Operations
DBJ’s Businesses

Additional economic crisis countermeasures were

DBJ began conducting crisis response operations on

Crisis Response Operations

October 1, 2008. This business consists of the provision ofannounced on April 10, 2009, outlining specific measuresnecessary funds during such crises as disruptions in domes-

for large-scale crisis response operations and earmarking a

tic or overseas financial markets or large-scale disasters.

total of ¥15 trillion for crisis response for medium-sized and

The funds are provided by the Japanese government via

large companies. In line with these measures, authorization

designated financial institutions under the Japan Financeof a supplementary budget for fiscal 2009 was announced

Corporation Law (Law 57 of 2007, later updated). Funds

on May 29, 2009. This budget received Diet authorization

provided under this law receive a risk subsidy from JFC.

on June 26, and the revised New DBJ Law went into force

On October 30, Shoko Chukin and DBJ establishedand was promulgated on July 3, 2009. These measures“lifestyle measures” in response to the worsening corporate

paved the way to reinforce DBJ’s financial structure andcashflow conditions resulting from the global financial andexecute crisis response operations smoothly.

economic crisis that commenced in the autumn of 2008.

As part of the risk of loss related to the introduction

On December 11, these measures were granted crisis des-of loans for medium-sized and large companies, as well as

ignation under the category of “incidents related to confu-

commercial paper acquisition, DBJ has drawn up with JFC

sion in the international financial order.” On December 19,

a guaranteed reimbursement framework for losses on crisis

these measures were augmented by economic measures, or

response operations.

“emergency lifestyle defense measures,” funded throughAs of March 31, 2010, DBJ’s loan performance andan expanded budget and the commencement of the com-commercial paper acquisition of financial crisis countermea-

mercial paper acquisition business, and labeled Cashflow

sure loans in response to the financial crisis were as follows.

Countermeasures for Medium-Sized and Large Companies• Cumulative loans: ¥3,111.0 billion (817 cases)

Employing the Crisis Response Operations of the Japan• Cumulative loans executed with loss guarantee agree-

Finance Corporation. On January 27, 2009, government

ments: ¥233.5 billion (33 cases, including those slated forregulations were amended, incorporating these items into

application to JFC)
• Cumulative commercial paper acquisition: ¥361.0 billion

the second supplementary budget for fiscal 2008, supple-(68 cases)

mented with funds generated by DBJ’s commercial paper
acquisition business on January 30.

=Loans as Financial Crisis Countermeasures(Cumulative, at Month-End)=Commercial Paper Acquisition as Financial Crisis
Countermeasures (Cumulative, at Month-End)(Number of cases) (Billions of yen)400
3,111.0 1,000(Billions of yen)
3,200
2,854.6

351.0

361.0

(Number of cases)
80
361.0
361.0

68

68

2,625.4
2,400

817

Jun. 30,
2009

68

60

40
36

0

46

200

448

301

Mar. 31,
2009

500

66
215.0

620

1,600

800

300

712

1,827.1

1,060.3

750

Sep. 30,
2009

Annual Report & CSR Report 2010

Dec. 31,2009

Mar. 31,
2010

250

100

0

0

20

0
Mar. 31,2009

Jun. 30,
2009

Sep. 31,2009

Dec. 31,2009

Mar. 31,2010

Providing a Safety Net

DBJ’s Businesses

DBJ acts as a social safety net by providing investments and loans to support the rehabilitation and rebuildingof areas affected by earthquakes, typhoons or other large-scale natural disasters, the outbreak of severe acuterespiratory syndrome (SARS), bovine spongiform encephalopathy (BSE) and other illnesses, as well as terrorist
attacks and other emergency situations that cause widespread anxiety about the financial system. In this way,
we act as an emergency response unit to fill the gap that emerges when peacetime financial platforms fail tofunction.

Providing a Safety Net

Disaster Recovery
Societal Concerns

DBJ Initiatives

Required responses to natural disaster are to (1) ensure that

DBJ has provided assistance in response to such disasters

people who provide information to local communities beset

as the Great Hanshin-Awaji Earthquake in January 1995

by a natural disaster have sufficient knowledge about thoseand the Chuetsu Offshore Earthquake in October 2004. In

communities and take that knowledge into consideration

addition to the electricity, gas, rail, communications, broad-and (2) provide rapid responses to help rebuild importantcasting, urban development and other infrastructure indus-

infrastructure that was destroyed. What is required is antries, DBJ assisted providers of everyday necessities such

entity that through its everyday business relationships has

as foodstuffs and other retail items. These efforts played

accumulated know-how on the industries and businesses

a major role in revitalizing the employment and economic

that provide this core infrastructure. This entity also must

situations of local communities, prompting a revival in many

have a wealth of expertise in supplying long-term funds.

fields.
Note: DBJ’s cumulative financing for recovery fromtwo earthquakes
Great Hanshin-Awaji Earthquake: ¥184.8 billion(Year ended March 31, 1995, to year ended March 31,
2003)
Chuetsu Offshore Earthquake: ¥20.3 billion(Year ended March 31, 2005, to year ended March 31,
2007)

Emergency Financing
Societal Concerns

DBJ Initiatives

Society requires institutions whose day-to-day operations

In the year ended March 31, 2002, DBJ established anprovide a solid foundation for financing in response to

emergency response support system that provided financ-terrorist attacks, natural disasters and other emergency

ing to the Japanese airline industry, which was immedi-

situations. These institutions must also have the working

ately affected by a downturn in business following thecapital and funding expertise to respond quickly to theseSeptember 11, 2001, terrorist attacks on the United Statessituations.

and the SARS outbreak.
Note: DBJ’s cumulative emergency financing provided
following the terrorist attacks and the SARS outbreak: ¥437.0 billion(Year ended March 31, 2002, to year ended March 31,
2005)

Annual Report & CSR Report 201047

Making Use of Information Functions

DBJ’s Businesses

Through its varied activities, DBJ comes into contact with many aspects of society. In addition to companies,
DBJ’s information channels and human networks include domestic and overseas governments, international
institutions, regional government bodies and universities. Through these contacts, DBJ extracts a variety
of information on economic and societal issues, boosting its ability to supply quality information from aneutral standpoint.

Making Use of Information Functions

Economic and Industrial Research
In a broad range of industrial circles, DBJ researches conditions in various sectors and among different types of businesses, conducting surveys and performing research on such
topics as international competitiveness. DBJ also prepares
reports on conditions in individual industries, technical development trends and new industries and innovation. We provide feedback on these reports to our clients, as well as otherparties.
Survey Examples
DBJ Monthly Overview
This report provides a brief commentary on domestic andoverseas economic and industrial trends and monthly business indicators.
This report explains domestic and overseas economic
trends through an analysis of economic and financial indicespublished each month. Recent years havewitnessed increased cooperation on the
global economic and financial fronts andintegrated market perspectives. This reportaims to further that integration by introducing overseas fiscal and monetary policy
and commenting on current topics.
Major Changes in the Solar Power Market: Focusing on
Trends in Europe(DBJ Monthly Overview, No. 146, April 2010)
We are seeing major changes in trends in the global solar
power market, where, despite the growth of strong government backing in many countries, the financial crisis and changes in policy are impacting the introduction of
the technology and thus manufacturers. We
summarized in a compact report our outlook
for solar-power market prospects, including status reports and business trends from
Europe, which is driving market expansion.
Strategies for Expanding Service Industry Demand in
Developing Asia
(DBJ Monthly Overview, No. 143, February 2010)
According to the Ministry of Economy, Trade and Industry(METI), in the wake of Japan’s domestic-market slowdown,

48

Annual Report & CSR Report 2010

there are high expectations for demand driven by Asia’s
900-million-strong middle class ”volume zone.” We lookfor even greater consumption owing to the expansion of
the middle class and the likely corresponding growth in thewealthy stratum.
In this report, we present such issues as trends in income
groups and case studies of Japanese firms’
advances in the Asian services field, andtheir strategies in seeking to tap the growing middle class in emerging markets, bothin transferring services from Japan to overseas markets and in attracting the market
to Japan in areas such as tourism.
DBJ Long-Term Interest Rate Weekly Outlook
DBJ provides its clients with weekly long-term interest rate
movement information on the first business day of eachweek. Focused on Japan and the United States, we offer abrief summary of market trends during the previous week
and introduce key economic indicators,
treasury auctions and other events scheduled in the current week. DBJ economists
comment on the effects of importanteconomic indicators and monetary policy
announced during the week, providing an
outlook for market trends based on theanalysis of economic fundamentals.
Stock Options and Corporate Performance(Economic Management Research, Vol. 30, No. 4, March 2010)
In recent years, an increasing number of Japanese companies
have introduced incentive schemes, including stock options
and performance-based compensation, to managers andother employees. In this report, in addition to looking at thetheoretical structure of stock options andthe system of use in Japan, we conduct a
fundamental analysis using corporate data
to examine what kind of companies adopt
stock options and whether they really affectthe bottom line.

Corporate Governance and Corporate Finance:
An Informational and Institutional Approach(DBJ’s Head of the Research Institute of Capital
Formation, Masaharu Hanazaki, University of Tokyo
Press, November 2008)
The Mainichi Newspapers Co., Ltd.’s Economist
Magazine Award Selection Committee selection was thewinner of the 50th (Fiscal 2009) Economist Prize.
This book, based on practical and academic economics, gives a unique perspective and shines light on
the future of the inextricable links
between corporate finance andcorporate governance, elucidates
application theory and the reality
thereof verified by informational andsystemic aspects, and explores ”theessence of a corporation.”

DBJ’s Businesses
Making Use of Information Functions

Global Warming and Economic Development. In
Consideration of Sustainable Growth(Economic Affairs, Vol. 9, University of Tokyo Press, March
2009)
This collection of 12 essays focuses on the results ofresearch conducted by the Global Warming ResearchCenter of DBJ’s Research Institute of Capital Formation. The
essays were written by prominent researchers in the fieldof environmental economics, including
Hirofumi Uzawa, Professor Emeritus
at the University of Tokyo and Senior
Advisor to the institute. Addressing current trends in global warming, theseessays propose policy and social systems
for sustainable economic development
considered from the perspective ofshared social capital.

Capital Investment Planning Survey
One of DBJ’s main businesses is the provision of funds forlong-term capital investment. With a history of more than
50 years (from 1956), the questionnaire-based Capital
Investment Planning Survey looks at community-specificinvesting trends and provides analyses of raw corporate
information. This information is tapped for many purposes,
including investigation of, and policy formation for, theJapanese economy, planning by corporate management
and research and training activities at institutions anduniversities.

Survey Example“Report on June 2009 Survey ofCapital Investment Plans for Years
to March 31, 2009, 2010 and 2011,”
Surveys, No. 100, September 2009
After completing our questionnairebased survey on corporate capital
investment activity, the Survey ofCapital Investment Plans, we publicized
the results, as well as our analysis.

Combining Surveys, Research and Investment and Loan Activities
In addition to publishing the results of its surveys, researchand other activities, DBJ introduces its information at speaking
engagements and seminars. In addition, after reflecting on the
results of its investment and loan functions, DBJ provides new
financial solutions for corporate CSR activities and commercial
technologies.

Environmental
DBJ conducts survey reports on various environmental activities in Japan and overseas, under such themes as global
warming prevention measures, promotion of a recyclingoriented society and sustainable corporate management.
DBJ also conducts and contributes to specialty journals,
newspapers and magazines. In the year ended March 31,
2005, these activities culminated in the introduction of DBJ
Environmental Ratings, which are used to determine preferential financing for environment-friendly projects and areused by many companies.

Disaster Response
Being prepared to respond to an earthquake or other natural disaster and continue operations is an issue for every
company. DBJ conducts surveys covering corporate business
continuity plans companies have established. In the year
ended March 31, 2008, we incorporated survey results toform the basis for DBJ Disaster Preparedness Ratings, which
we use in our financing considerations.

Technology
DBJ’s activities in technology-related fields include conducting trend surveys (for example, on bioethanol). DBJ’s Practical
Application Support Center for Technology provides technicalevaluations and conducts other activities to help companies
realize their potential for technological commercialization.

Annual Report & CSR Report 201049

Providing Information to Local Communities
DBJ’s Businesses
Making Use of Information Functions

Supplying Information to Help Local Communitythat community before preparing an independent diagno-

Development

sis that interprets its results. We then discuss the diagnosis

Local communities are

results with people in the local community, which helps themexperiencing increasingly

to understand what issues they may be able to address on

difficult environmental

their own and provides them an opportunity to consider

circumstances, such as

future directions. (See page 44.)a declining birthrate, anaging population, theamalgamation of towns, cities and villages, and financial
crises. Addressing these issues requires a greater degree ofexpertise and more ingenuity than ever. DBJ assists by analyzing the information it accumulates through its networkof offices (19 domestic locations—headquarters, branches
and representative offices—and three overseas locations—subsidiaries and a representative office), economic agenciesof regional governments and local communities, and companies in Japan and abroad. DBJ disseminates this information through reports, publications, lectures and otherFiscal 2010 Regional Handbook: Regional Data and Policy
Information
This handbook is a collection of data that include fundamental
economic, industrial, lifestyle and policy indicators for regional
blocks, administrative regions and principal cities, as well as acompilation of individual regional policies and projects to facilitate an overall understanding of regional
policies, economies and societies and thecurrent status of regional projects. In the
Topics section, Yoshitsugu Hayashi, Professor,
School of Economics, Kwansei Gakuin
University, contributed a special section entitled ”Decentralization and Local Community
Reinvigoration.”formats to encourage public/private partnerships, promote
tourism, build up local communities, and contribute to local
government financing.

Building Local Communities
One way DBJ puts its expertise to work in building up local
communities is by conducting ”local community-building
diagnostics.” In this process, a DBJ local-community diagnosis
team analyzes publicly available data to determine the current
state of a local community and then conducts interviews inMemorandum on the Issue of the Invigoration ofRegional Economies—Concepts,
Negotiations and Main Initiatives for
Invigorating Regional Economies Case
Study (Regional Survey Research, Vol. 4,
January 2009)This publication organizes material for
debating how best to invigorate regional
economies and provides examples of
specific initiatives.

Practice! Management Strategy for Regional Revitalization(revised edition): 36 National Management Case Studies(Published by Kinzai Institute for Financial Affairs, Inc.)
The greatest feature of this book is that it
points the way toward the development ofself-reliant regions, and, based on a thoroughanalysis of 36 successful regional development
projects across Japan, it probes the reasons fortheir success and offers a deeper analysis of
the elements common to a variety of flourishing projects.

Regional Economic Highlights, According to the Data
Using figures, mainly graphs, this work describes community
conditions, characteristics and issues andprovides data on regions and prefectures, aiming to assist in community planning, creation,
research and analysis. Its content is useful
primarily for people who have roles in community planning and creation or who are involvedin community research.

Branch Report50

Hokkaido Branchcountries, such as (1) attracting Russian“Promoting Exports of Delicious Hokkaido Sweets to
Russia” (Mini Report, April 2010)

demand by appealing to the excellent

Various Japanese regions are mounting initiatives to export

have in terms of quality and health andfood products to Russia, which they view as a future growth(2) creating Russian-language websites

market. This mini report explores current issues and providesof Hokkaido food products and adopt-

constructive suggestions on how to differentiate Japanese

ing other means of word-of-mouth

exports from products from China, South Korea and otherpopularization.

Annual Report & CSR Report 2010

image that Japanese food products

Tokai Branch“Impact on Tohoku Tourism of
Declining Birth Rates and Increasein Elderly Population” (Mini Report,
December 2009)“Developing Nagoya
into a City of Health:Collaboration with
Nagoya City University”

The tourism industry is being affected(public symposium,by the structural changes taking place

January 2010)

in Japanese society, characterized by

Feeling the full weight of the demographic changes that area declining population, a lower birth rate and an increase intransforming Japan—fewer children, an older population,

the average age.

decreasing populations and a falling number of households—
in 2007, the city of Nagoya began fashioning itself as a

has close links to agriculture, food product manufacturing

healthy urban environment for healthy people. The ”Healthy

and other businesses, these societal changes are having a

Nagoya Plan 21” outlines the movement’s initiatives in thesignificant effect on the region’s economy. Focusing on theareas of health, medical care and welfare.

upcoming decade, this Mini Report forecasts the impact ofMaking Use of Information Functions

As tourism is a major industry for the Tohoku region and

DBJ’s Businesses

Tohoku Branch

Seeking to contribute to the health and welfare ofthese demographic changes on tourism in Tohoku and con-

Nagoya’s people, in collaboration with Nagoya City

siders initiatives based on these projections.

University, DBJ held a public symposium themed ”Developing
Nagoya into a City of Health” to encourage input from a

Niigata Branchbroad cross section of urban residents.

“Approaching a Century of Skiing:
Food and Senior Baby Boomers
May Be Key” (Mini Report, May 2010)

Kansai Branchcity of Joetsu. But the heyday of skiing“Developing Battery Superclusters:
Bolstering International
Competitiveness in Batteries andthe Industries That Use Them”(Region Report, May 2010)

in Niigata Prefecture—indeed, throughout Japan—seems toWorldwide, forecasts anticipate major

have passed. Given these circumstances and in commemora-

expansion in the storage batteries mar-tion of the 100th year of skiing in Japan, this report considers

ket and the photovoltaic cell industry, and, around the globe,

ways to revitalize the ski business from the ground up. Thiscountries are introducing strategic measures to support thisreport examines the situation and offers suggestions fromdevelopment. Meanwhile, private-sector competition is heat-numerous angles, such as contemplating challenges, recon-ing up as companies vie to benefit from this new market’ssidering expectations and adding value in other ways thanpotential.

This year marks one century since anAustrian major, Theodor von Lerch,
introduced skiing to Japan near theskiing.

This report summarizes a survey of companies involvedin this emerging industry. Using its own unique question-

Hokuriku Branch“Overview of the Toyama
Economy” (Irregular Update)In this report, the Toyama
Representative Office describes
its survey of the economy

naire, in this report, DBJ looks at some of the advantages theKansai region enjoys in this industry, as well as specific issues
that it faces. The report also examines potential initiatives forboosting companies’, universities’ and government institutions’ competitiveness in this industry, in Kansai as well as
throughout Japan.

in Toyama and introduces
its research findings. After presenting the basics of Toyama

Okayama Representative

Prefecture’s history, topography and climate, the report looks

Officeat major economic indicators and the current status of thetion in the region, development stemming from the Hokuriku“The Regional Economic andSocietal Impact of the Fagiano
Okayama Football Club: ‘Come to
the Stadium and Broaden Your
Impact’” (Mini Report, February 2010)

Shinkansen and the economic effects of a popular year-long

The city of Okayama hosts a regional

historical fiction TV series.

professional soccer team, the Fagiano

amalgamation of towns, cities and villages in the prefecture.
The report incorporates unique viewpoints surrounding theprefecture: its slightly unusual companies, topics of conversa-

Annual Report & CSR Report 201051

DBJ’s Businesses

Okayama Football Club, which in 2009 was promoted to J.

Kyushu Branch

League Division 2. The media coverage accompanying this“Impact of the New Hakata Station
Building: A Study of Effect on Local
Retailers and Urban Expansion”(Survey Report, November 2009)

promotion helped boost match attendance and had a positive impact on the region in a number of other ways, as well.
This report, which DBJ compiled with collaboration from

Making Use of Information Functions

Tomato Bank, Ltd., looks at the effects Fagiano Okayama

In the spring of 2011 the New Hakata

has had on the region on both a qualitative and a quantita-

Station Building will open, servicing

tive basis and estimates its economic impact. The report also

pass-through of Kyushu Shinkansen

looks at the effects of having a team that is deeply rooted

traffic. The new building’s large-scale commercial facilities

in the Okayama region and the important role it plays inwill house businesses that are coming to Kyushu for the firstencouraging a sense of belonging in the community, foster-time, helping to invigorate the surrounding community. At

ing a sense of togetherness, creating a sense of bustling

the same time, however, there are concerns that the newprosperity and leveraging sports to promote local industry.

shopping area may be detrimental to local retailers.
This report explores the potential impact of the new build-

Shikoku Branch“Komatsushima City: Regional Health Checks”(Mini Report, December 2009)

ing on retailers in the surrounding community, looks at casestudies on similar projects in other regions and examines
ways of leveraging the new facility to expand the market.

DBJ’s Shikoku Branch conducted a regional health check on
the city of Komatsushima, considering regional issues andMinami-Kyushu Branch

exploring the community’s potential. This report analyzes
by industry and makes suggestions on three points: measures“Losing the Edge in ‘True Shochu:’
How to Counter Blended Beverages”(Industry Mini Report, October 2009)

to address the aging population, ways to stem the youth

The Minami-Kyushu region is rightfully

exodus, and strategies to encourage a sense of pride.

proud of its reputation as the home ofdata including the city’s population trends and employment

At a meeting held on December 22, 2009, to report the”true shochu” (shochu being a clear

results of the health check, we noted that the newly con-distilled liquor, and ”true shochu” refer-

structed and relocated Tokushima Red Cross Hospital was aring to a pure distillation rather than astrength for the com-blended liquor).

munity. We also com-

As shochu’s popularity has spread into the northern parts ofmented that developing

Japan, shipping volumes and prices have also risen. However,

the hospital into a local

recent deregulation on alcohol retailing in Japan has caused

bus and taxi hub would

price competition to intensify. This report delves into the rea-positively impact com-sons for the rapid decline in the consumption of sake, beer andmunity development.

”true shochu”—once Japan’s staple alcoholic beverages—bylooking at prices, consumption volumes and retail deregulation.
The report also explores the downtrend in alcohol consumption
by young people and ways for the industry to cope.

The Japan Economic Research Institute52

The Japan Economic Research Institute (JERI) is a foundation

department, universities, research institutions and otherestablished for the purpose of contributing to the improve-experts, as well as

ment of welfare and further development of the Japanesenational and regional

economy through investigative research into important eco-government bodies

nomic problems in Japan as well as overseas and funding

and the patronage

the promotion of scholarship. JERI’s investigation into issues

of approximately 500

that impact the Japanese economic structure in the areas

companies. DBJ worksof urban and regional development, social capital infra-

in conjunction withstructure, energy, economy and industry are supported by

JERI to disseminate thea broad network that includes DBJ’s investigative research

results of its research.

Annual Report & CSR Report 2010

CSR Report
DBJ provides integrated investment and loan
services to resolve the issues its clients face andcontinues to support the ongoing growth ofsociety from a financial perspective.
At DBJ, corporate social responsibility
involves not only contributing to society
through investment, loan and other business,but also seriously taking into account societal
needs and living up to responsibilities asa member of society. This requires all DBJ
executives and regular employees to conduct
their daily activities with constant considerationof society, the environment and the economy.
We believe our efforts will build DBJ into afinancial institution trusted, favored and chosen
by the public.

Implementing CSR Management . . . . . . . . . . . .

55

CSR through Investment, Loan and Other Businesses

60

Environmental Management . . . . . . . . . . . . . . .

86

Fostering Human Resources and Creating a
Comfortable Work Environment . . . . . . . . . . . .

90

Annual Report & CSR Report 201053

CSR Report
Editorial Policy
Editorial Policy
To expand communication with all stakeholders, in 2003, DBJ first issued Environmental Report 2003 for a Sustainable
Society. This was followed by annual sustainability reports in 2004 and 2005. In 2006, DBJ published the CSR Report. Since
the fiscal year ended March 31, 2007, DBJ has combined its annual report and CSR report under the concept of ”disclosure
from a CSR perspective.” DBJ will continue publishing CSR information introducing its initiatives to help realize a sustainable
society.
As in previous years, this report explains how DBJ came into being, as well as the services DBJ provides. The report aims
to show that DBJ fulfills its corporate social responsibility through the careful attention it accords to each of its activities,
incorporating this discussion of the status of its recent activities. Furthermore, we have employed the following guidelines inour effort to enhance the report’s readability.
Q

Q

We explain DBJ’s stance on CSR as a way of addressing the problems society faces.
To give the reader a clear sense of how DBJ’s services relate to society, the report provides case studies of DBJ’s
ongoing emphasis on CSR through investment, loan and other businesses it conducts.

DBJ considers this report an important tool for communicating with all manner of stakeholders and hopes tocontinue improving it. Accordingly, we welcome your comments and suggestions.
Scope of Report
Organizations covered: All DBJ branches, including overseas representative offices and subsidiaries, except where noted.
Japan:

Head office, 10 branch offices and eight representative offices

Overseas: One overseas representative office
Period covered:

The fiscal year from April 1, 2009, to March 31, 2010
As this report is designed to illustrate ongoing initiatives, some of the case studies for investment,
loan and other business contained herein are the same as in past issues. Furthermore, some of
the information indicated herein will have been updated by the time this report is published.

Publishing Details
Published:

July 2010

Next publication:

July 2011 (previous publication: July 2009; frequency: annual)

Reference Guidelines
Sustainability Reporting Guidelines 2006, issued by the Global Reporting Initiative (GRI), and the Financial Services Sector
Supplement were used as reference guidelines.

54

Annual Report & CSR Report 2010

Implementing CSR Management

With corporate governance as its cornerstone, DBJ separates into two fields the scope of the CSR activities
CSR Reportthrough which it addresses the problems society faces: (1) CSR through investment, loan and otherbusinesses and (2) the environmental and social contribution activities it undertakes. The combination of
the two fields enhances corporate value.

Implementing CSR Management

Fields of CSR Implementation at DBJ

DBJ’s Two Fields of CSR

CSR through Investment, Loan and Other Businesses

Environmental and Social
Contribution Activities

Investments, Loans and Other Services
in Response to Client Issues

Environment andTechnology

Social Organization, Voluntary
Contributions by Employees tothe Environment, Society andthe Community

Social Infrastructure

Environment
Rebuilding
the Social Platform

Financial Support for
New Growth Areas

Community
Revitalization

Safety Net for
Financial Markets

Communication inInternational Cooperation

DBJ’s Financial Expertise(Integrated Investment and Loan Services, Others)

Environmental
Management

Corporate Governance and Other Activities (Sincere Pursuit)
Measures Essential for Forming Sustainable Corporate Foundations

t Corporate Governancet Risk Managementt Compliancet Information Disclosuret Client Protection, Protectionof Personal Informationt Fostering Human Resources

Annual Report & CSR Report 201055

Fields of CSR Implementation at DBJ
CSR Report

DBJ comes into contact with a wide variety of organiza-

DBJ strives to increase its dialogue with stakeholders in its

tions, companies and people in the course of its operations.

effort to realize a sustainable society.

Implementing CSR Management

DBJ secures financing through the issuance of Fiscal

DBJ’ s investment and loan services involve clients in

Investment and Loan Program (FILP) agency bonds

numerous regions and across a variety of industries.

and government-guaranteed bonds, through direct

Furthermore, we provide information and expertisefinancing from the financial markets by issuingthrough overseas networks.

corporate bonds and through loans
from private-sectorbanks.

Clients

nt

Investors

rnme

As of March 31,
2010, DBJ’ snumbered 1,079.
DBJ employee trainingg

Employees

Society

is designed to enable its
employees to act
autonomously and makeake fulluse of their abilities.

Gove

employees

s/
NPO s
NGO

DBJ seeks to contributeto the realization of anincreasingly prosperous
and sustainable society.
a
Government:
Go
Currently,les 100% of DBJ’s shares are heldca nitioL uby the Japanese government.
m
m
o
Local
Communities:Com
DBJ supportsCthe autonomo
autonomous development of local
communities throug
through its affiliations with

regionalil governmentt bodies
b di and regional financial
institutions that are deeply rooted in the local communities.
NPOs/NGOs: DBJ maintains alliances with these organizations
as a part of its environmental preservation efforts, to realize
a sustainable society.

Triple Bottom Line
”Triple bottom line” refers to evaluating corporate activity

Societyfrom the three vital perspectives of the environment, society
and the economy. It is not simply evaluating a company’s
financial performance, but rather assessing sustainable

Social Infrastructuredevelopment by incorporating environmental, social andeconomic aspects. Tied to DBJ’s investments and loans are
economic issues involving the environment, technology andsocial infrastructure. DBJ’s considerations include regionspecific and environmentally time-specific concerns, in addition to the economic issues that a company faces, thus spanning the three elements that make up triple bottom line evaluation. Accordingly, in ”CSR through Investment, Loan andOther Businesses” DBJ carries out activities based on triple
bottom line evaluations to help build a sustainable society.
56

Annual Report & CSR Report 2010

Creation ofSocial Sustainability

Environment

EconomyEnvironment and Technology

Social Effectivenessinstitution, evaluations of DBJ’s annual operations raiseduting to building an affluent future by solving problems

DBJ’s business effectiveness and results, thereby improving

through creative financial activities. We determine fromits responses to socioeconomic changes facing Japan. These

our own perspective those businesses that are truly useful

responses were a way to evaluate CSR through Investment,

to society and work to promote the realization of a sustain-

Loan and Other Businesses.

able society.

Implementing CSR Management

Even after privatization, DBJ aims to continue contrib-

CSR Report

During its time as a comprehensive policy-based financial

CSR through Investment, Loan and Other Businesses
Due consideration of compliance issues is a prerequisite foreties and the creation of employee-friendly workplaces.

the sustainable development of enterprises. Accordingly, it is

Accordingly, DBJ considers the application of its intellectual

important that a corporation’s mainstay business brings new

assets and financial platforms for investments and loans tovalue to, contributes to problem-solving in, and gains thebe of vital importance.

trust of society.

We are working to provide additional sophisticatedFinancial institutions can play a specific role in building afinancial services by leveraging our strengths related toharmonious society over the long term by identifying trulysocial infrastructure and the environment and technology

meaningful projects for the economy and society and provid-

and by taking advantage of our broad client base anding quality financing and other financial solutions.

accumulated industry knowledge. Through such services,

We believe that DBJ can gain the trust of society with

conducted in line with its corporate policy, DBJ plays a

CSR through investment, loan and other businesses, suchrole in rebuilding the social platform, providing financial

as the provision of services that lead to client satisfaction,

support in fields that offer future growth and serving as aincreases in corporate value, coexistence with regional soci-safety net for financial markets.

Corporate Philosophy

CSR through Investment, Loan
and Other Businesses

Environment and Technology

Social Infrastructure
See page 60.

Rebuilding
the Social Platform

Financial Support
for New Growth Areas

Safety Net for
Financial Markets

DBJ’s Financial Expertise (Integrated Investment and Loan Services, Others)
Intellectual Assets
Accumulated
Equity CapitalIndustrial research,
analysis,
network

Structured financing
and otherfinancial technologies,
R&D

Risk Management

Annual Report & CSR Report 201057

Environmental and Social Contribution Activities
CSR Report

DBJ recognizes that today’s social and environmental
problems can best be resolved by communication and theexchange of opinions. Accordingly, DBJ strives to commu-

Implementing CSR Management

nicate with as many people as possible through seminars,
symposiums, lectures and the Internet.

eco japan cup 2009 Business Award Winners
Q

Q

Communication Focused on the Environment
Environmental problems such as global warming must be
resolved, starting with individual awareness of the severityof the issues.
DBJ promotes understanding of the relationship between
the environment and financial and business activities byparticipating in the Eco-Products Exhibition, Japan’s largest
environmental event, and holding seminars and symposiums in conjunction with relevant organizations.
DBJ has had a booth at the Eco-Products Exhibition every

Environmental Business Awards[Environmental Business Award 2009]
KYUSHU ELECTRIC POWER CO., INC.
NGK INSULATORS, LTD.
Environmental Business Venture Awards[Grand Prize]
My Farm Co.
[Fighting Spirit Prize]
Japan Biomass Corporation[SMBC Award]
Seiwa Industry Co., Ltd.
[JP Region Coexistence Business Prize]
Nakada Syubyouen[Environmental Business Women Prize]
A DANSÉ Co.,Ltd.
[Jury of Technology (GE) Special Prize]
HYPER DRIVE Corporation

year since the fiscal year ended March 31, 2001. Throughcompendious display panels, we introduce various DBJ
activities, such as the Program for Promoting Environmentally Responsible Management, our tie-up with the UNEP
Finance Initiative and emissions credits trading. During
the year ended March 31, 2010, we delivered a lectureon the theme of ”the Current Status and Direction ofEnvironmental Finance in Indirect Financing,” attracting
numerous visitors to our booth.

Communication to Community Revitalization
DBJ considers working with local citizens to build communities that suit their unique environments an important partof supporting independent community development. To
this end, DBJ sponsors such events as seminars and symposiums in collaboration with local authorities and regional”Eco Presentation Stage” (Eco-Products 2009)branches of the Japan Chambers of Commerce and Industry
and other economic organizations.
In our Regional Health Checks, we discuss objective

Since fiscal 2009, DBJ has been a participating sponsor

indicators and original analytical methods with residentsof the eco japan cup*, Japan’s largest environment-related

and help them identify their community’s issues and poten-

contest. We are active on the organization’s executive andtial. DBJ employees interview community stakeholders in

judging committees.

advance, study the region’s resources and, on the final day,

*The ”eco japan cup” is sponsored by public and private entities, including Japan’s Ministry of the Environment, Ministry of Internal Affairs
and Communications, Sumitomo Mitsui Banking Corporation and DBJ.
The contest describes itself as a ”contest for unearthing and growing
seeds of green business.” This program is a continuation of the 2005
”Environmental Dynamite!” event. Renamed the ”eco japan cup” in
2006, this event is held on an annual basis.

hold a participatory workshop with residents. (See page 44.)

Announced in December 2009, winners of the ”ecojapan cup 2009” in the business division were as follows.
Interaction with community members

58

Annual Report & CSR Report 2010

Issuing CSR Reports

In cooperation with Japan Economic Research Institute Inc.,

To expand communication with all stakeholders, in 2003,

DBJ holds seminars for developing countries’ governmental

DBJ issued Environmental Report 2003 for a Sustainable

and developmental financial institutions, primarily in Asia,

Society. This was followed by similar reports in 2004 anddescribing the Bank’s experience in applying policy-based

2005. In 2006, DBJ published the CSR Report.
DBJ has combined its annual report and CSR reportJapan. We also offer the expertise we have accumulated

under the concept of ”disclosure from a CSR perspective.”in recent policy issues, such as energy conservation,

DBJ will continue publishing CSR information introducing

environmental measures and private infrastructure. The

DBJ’s initiatives to help realize a sustainable society.

Implementing CSR Management

financing to support the industrial economy of postwar

CSR Report

Communication in International Cooperation

Development Finance Course, for example, is a seminar thathas attracted 346 people from more than 30 countries since
it was inaugurated by DBJ in 1967.
For individual development banks, DBJ cooperated with

Participating in Activities That Contribute toSociety
TABLE FOR TWO

the World Bank and the Japan International Cooperation

DBJ began participating in the TABLE FOR TWO* program

Agency to provide comprehensive technical cooperation

on March 29, 2010. Under this program, one of the meals into the China Development Bank and the Infrastructure

our company cafeteria each day is designated as a ”healthy

Development Bank of Malaysia. We also concludedmenu” option. Through proactive employee participation ina business cooperation agreement with the Vietnam

this program, as of the end of May 2010, DBJ’s contributions

Development Bank in 2007. In addition, in fiscal 2009, we

totaled ¥88,060—enough to provide 4,403 meals.

cooperated in holding training sessions and workshops*TABLE FOR TWO is a program run by the nonprofit organization TABLE
FOR TWO International. Under this program, each time a specific food
item is purchased, a ¥20 donation (enough money to purchase one
school lunch in a developing country) is donated to purchase a school
lunch for one child.

in Tokyo and at overseas locations for participants fromthe China Development Bank, the Vietnam Development
Bank and the Small
Industries Development
Bank of India, as well
as Mongo
lian government decision-makers and midtier officials.

Training at Vietnam Development BankA healthy menu

Other Communication Efforts
Providing Information
Video Introduction to CSR Initiatives
To make DBJ’s CSR activities more easily understandable, on
our website we have included video content entitled ”DBJ’s
CSR: Strengthening Society through Financial Expertise.” Wealso showed this video at the Eco-Products 2009 exhibition.
http://www.dbj.jp/co/csr/index.html (Japanese only)

Campaign introduction

Participating in Local Community Activities
Support for the Operation of the Environmentally
Friendly Marunouchi Shuttle Bus
Since the year ended March 31, 2004, DBJ has co-sponsored the operation of environmentally friendly buses carrying passengers free of charge on a route in the Otemachi,
Marunouchi and Yurakucho area of Tokyo’s business district. These buses help raise awareness about environmental
issues. Not only do the buses reduce environmental impact
and noise but also they are barrier-free with a low-floor
design, ensuring easy access for disabled users.

Marunouchi shuttle bus

Annual Report & CSR Report 201059

CSR through Investment, Loan and Other Businesses

CSR Report

DBJ promotes CSR through investment, loan and other businesses to solve social problems. Specifically,
DBJ draws on its broad client base and knowledge of industry to develop sophisticated financial services in
two of its strongest areas: environment and technology, and social infrastructure.

CSR through Investment, Loan and Other Businesses

CSR through Investment, Loan and Other Businesses

Social Infrastructure

Environment and Technology

Rebuilding
the Social Platform

Financial Support for
New Growth Areas

DBJ provides support from a financial
perspective that helps to rebuild social
platforms in such fields as healthcare andwelfare; urban development, traffic andtransportation; and the environment.

DBJ leverages its client base, expertiseand networks to contribute to new
growth strategies from a financial
perspective.

Safety Net for
Financial Markets
DBJ supports economic growth by its
swift action, functioning actively as asafety net in times of crisis.

DBJ’s Financial Expertise (Integrated Investment and Loan Services, Others)
Case Studies
Q

Urban Development . . . . . . . . . . . . . . . . . 61

Q

Emissions Credits . . . . . . . . . . . . . . . . . . . . 71

Q

Transportation Infrastructure . . . . . . . . . 63

Q

Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

Q

Corporate and Business Revitalization . . . . 65

Q

Environmental Technology . . . . . . . . . . . 74

Q

Private Finance Initiatives . . . . . . . . . . . . . 66

Q

Healthcare and Welfare . . . . . . . . . . . . . . 75

Q

Community Revitalization . . . . . . . . . . . . 78

Q

Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

Q

Technology . . . . . . . . . . . . . . . . . . . . . . . . 83

Q

M&A and Business Alliances . . . . . . . . . . . 85

Q

Q

60

Financing Employing DBJ Disaster
Preparedness Ratings . . . . . . . . . . . . . . . . 67
Financing Employing DBJ Environmental
Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Annual Report & CSR Report 2010

CSR Report

Urban Development

CSR through Investment, Loan and Other Businesses

Efforts to develop and upgrade urban infrastructure and functions and the creation of urban culture
and a comfortable environment for the lifestyles of working people through urban development
are the driving forces behind the revitalization of economies and communities at the regional andnational levels.
In recent years, there has been increasing demand for urban development and renewal that takeenvironmental conservation and disaster prevention into consideration in an attempt to realize asustainable society.
Investment and Loan Case Study: Real Estate Market Stabilization FundThe global financial crisis that commenced in the autumn

Accordingly, MLIT is working with such institutions as DBJ

of 2008 and the resultant credit crunch gave rise to seri-

to provide financing to J-REITs and is putting together pub-ous concern over corporate cash flow, including financing

lic–private funds to make credit lines available for corporate

for urban development and real estate. Even certain listedbond repayments. DBJ has taken an active role, not only

Japanese real estate investment trusts (J-REITs), which typi-in designing the structure, but also in raising funds in thecally are very low risk, entered civil rehabilitation proceed-

market—the toughest part—supplying subordinated debt

ings. Furthermore, the fund-raising environment has been

financing to establish the Real Estate Market Stabilization

markedly unstable. In particular, there is significant concern

Fund.

in the market about the redemption of investment cor-

These measures helped J-REITs to avoid collapse, andporation bonds (corporate bonds) held by J-REITs. Should

their investment unit prices (share prices) have recovered

J-REITs, Japan’s ultimate buyers of real estate, cease tosignificantly since the market crash. The fund has greatly

function, this would have a significant impact on the realrelieved pressure on J-REITs and earned high regard in theestate market. This situation has spurred calls for remedial

market.

measures.
The Ministry of Land, Infrastructure, Transport
and Tourism, for one, considers this a weighty issue.

=Overview of the Real Estate Market Stabilization Fund
Real Estate Market Stabilization Fund
Specified moneyin trust(The Sumitomo Trust &Banking Co., Ltd.)

Investment
corporation
Debt
Real
estate,etc.

Investment
corporation
bonds
Investment
units

Preferred Loanss
debt

Financial
institutions

Loans
Loans

Investmentcommittee

DBJ

Subordinated Loanss
debt
Trust
beneficiaryrightsManagement
committee

Equityinvestment

Direction of operation

Investment limited
partnership
Equity investment
Trust
beneficiaryrightsLimitedpartnership(LP)

Industry participants
y investment
EquityGeneralpartnership(GP)

Asset manager (GP)(DBJ Nomura Investment Co., Ltd.)

Negotiate loan conditions, etc.

Annual Report & CSR Report 2010

61

CSR Report

Urban Development
Investment and Loan Case Study: Tobu Railway Co., Ltd.

CSR through Investment, Loan and Other Businesses

To maintain a robust capital structure, in October 2008,

Preferred contribution securities are hybrid securities

Tobu Railway, with its headquarters in Sumida-ku, Tokyo,

comprising capital and debt. These securities possess special

participated directly in a large redevelopment projectdebt provision measures and are recognized by major rat-

focused on the Narihirabashi and Oshiage areas. Projecting agencies Rating and Investment Information, Inc., andhighlights include construction of the Tokyo Sky Tree, aJapan Credit Rating Agency, Ltd., as being 70% or more

broadcasting tower for terrestrial digital television content.

capital. Issuing such securities is a fund-raising method that

Tobu Railway’s wholly owned special purpose company

substantially improves the financial distribution ratio while(SPC), TR Preferred Capital Limited (TR), issued ¥80 billion inincreasing financial stability.

euro-denominated convertible bonds with preemptive rights

Assuming that this large-scale project would affect Tobu

(subordinated), procuring funds through euro-denominated

Railway’s financial structure, DBJ suggested mezzanine

convertible bonds with preferred contribution securities.

financing and undertook TR’s issuance of the preferred contribution securities in conjunction with Mizuho=Overview of Fund Procurement Scheme
Consolidate

Trust and Banking Corporation, Limited.

Tobu Railway
Issue ofeuro-denominatedconvertible bonds withpreemptive rights(subordinated)

Corporate Bank, Ltd., and The Chuo Mitsui¥80 billion

Subordinatedcontract ofguarantee

TR Preferred Capital Limited
Issue of euro-denominatedconvertible bonds withpreferred contribution
securities¥80 billion

DBJ
Mizuho Corporate Bank, Ltd.
The Chuo Mitsui Trust andBanking Company, Limited

Conceptual illustration of Tokyo Sky Tree, scheduled
for completion by December 2011

Investment and Loan Case Study: Prime Stage Co., Ltd.
Under Tokyo Prime Stage, an SPC established by Tokyo

With DBJ as the lead arranger, 26 financial institutions

Tatemono Co., Ltd., and Taisei Corporation, a prime site

are participating in the ¥270 billion syndicated loan—one oflocated in Chiyoda-ku, Tokyo, that is currently occupied

the largest ever arranged in Japan.

by Mizuho Bank’s Otemachi head office building and the
Otemachi Financial Center building is to be developed into

=Structure of the Syndicated Loana large-scale multipurpose building.
The current plan is for standard floor area of approxi-

Loan 1: ¥120 billion

mately 2,970 square meters. The high-rise building willhouse state-of-the-art office space and a luxury hotel, with

Loan 2: ¥120 billion

the premises providing around 3,600 square meters of

Loan 3: ¥30 billion

green space. Construction is slated for completion in spring
2014.

EquityDecember 200962

Annual Report & CSR Report 20102015

CSR Report

Transportation Infrastructure

CSR through Investment, Loan and Other Businesses

Transportation infrastructure supports economic activity and is the foundation of a rich andabundant lifestyle. The promotion of investment is necessary for the maintenance and renovationof transportation infrastructure in accordance with degradation due to aging and the requirements
of increased transport capacity and efficiency, as well as in response to an aging population andenvironmental issues. As transportation infrastructure involves large investment amounts and long
investment periods, the procurement of long-term funding is increasingly important.
On January 19, 2010, Japan Airlines, one of DBJ’s largest clients, secured backing from theEnterprise Turnaround Initiative Corporation of Japan and, on the same day, applied to the Tokyo
District Court for the commencement of corporate rehabilitation procedures. Together with theEnterprise Turnaround Initiative Corporation of Japan, DBJ is providing debtor-in-possession (DIP)
financing to Japan Airlines.

Investment and Loan Case Study: Hokkaido Railway Development Corporation
The Hokkaido Railway Development Corporation, head-

while simultaneously reducing the environmental impact ofquartered in Sapporo, was established with capital invest-

the service.

ment from the Hokkaido regional government and JR

In this way, DBJ is providing long-term funding to raise

Hokkaido as a so-called ”third-sector” (public–private)

the standard of ser-corporation.

vices for the local

Hokkaido Railway Development Corporation is electrify-

population by sup-ing the section of the Sasshou Line between Souen Station

porting the develop-

and Health Sciences University of Hokkaido Station to better

ment of a high-speed

serve the increasing population along it. With this develop-

rail network in thement, the company aims to shorten train travel time, ease

Sapporo area.

overcrowding and improve railway carriage air-conditioning,
Sasshou Line

Investment and Loan Case Study: Narita Rapid Railway Access Co., Ltd.
Narita Rapid Railway Access Co., Ltd., is a class-three rail-

Corporation, the parent company of Narita Rapid Railway

way operator established to create a new high-speed access

Access, with partial means to complement creditworthinessroute connecting central Tokyo and Narita Airport.

while constructing a creative financing scheme that ensures

In August 2001, construction of the Narita New Rapid

profitability through the establishment of rational covenants,

Railway was approved as a national urban renewal projectproviding the financing necessary to proceed toward theby the Urban Renewal Headquarters, whose secretariat

completion of the project.

is in the Cabinet Office. This project will reduce the timerequired to travel from Narita Airport to central Tokyo from51 minutes to 36 minutes, increasing convenience andbringing Narita Airport access to a level on par with othermajor airports around the world. In addition to increasing*A collaborative campaign involving the development and the introduction of attractive travel products that communicate overseas the attractive qualities of sightseeing in Japan with the objective of attracting 10
million foreign visitors to Japan by 2010transport capacity, this project will have the added effectof supporting the increase in international airport facilities
demand expected from the government-sponsored Visit
Japan Campaign,* anticipated to greatly increase the number of overseas visitors to Japan.
DBJ, in collaboration with Mizuho Corporate Bank,New Skyliner

Ltd., co-arranged a syndicated loan for Narita Rapid Rail
Access. The two banks provided Narita International Airport

A new high-speed access route connecting
central Tokyo and Narita Airport
Annual Report & CSR Report 2010

63

CSR Report

Transportation Infrastructure
Investment and Loan Case Study: Tokyo International Air Terminal Corporation
As the largest shareholder in Tokyo International Air

CSR through Investment, Loan and Other Businesses

Terminal Corporation, with headquarters in Ota-ku, Tokyo,
Japan Airport Terminal Co., Ltd., was established totake charge of an SPC to maintain and manage Tokyo
International Airport’s international terminal buildings. Thisis the first case of a national core transportation infrastructure being handled as a PFI.
DBJ, Mizuho Corporate Bank, Ltd., and The Bank ofTokyo-Mitsubishi UFJ, Ltd., co-arranged and extended loans
in the form of project finance. By constructing a financescheme that is flexible to changes in aviation and commercial market demand and other trends, DBJ is supporting theimplementation of the project up to a period of 30 years
from its operational start-up.

©Tokyo International Air Terminal Corporation

Tokyo International Air Terminal

Investment and Loan Case Study: Royu Driveway Co., Ltd.
West Nippon Expressway Company Limited (”NEXCOWest”), based in Osaka’s Kita-ku, together with DBJ, madea joint equity investment in Royu Developer Co., Ltd., with
headquarters in the city of Ashiya in Hyogo Prefecture, tomanage a toll road connecting the towns of Ashiya andArima, dubbed the Royu Driveway. Under joint financing,the companies received transfer of the shares, signing anagreement with Royu Development.
Through a company split, Royu Development succeeded
as a newly established expressway operator, receiving
all the shares through transfer following funding fromNEXCO-West and DBJ. The new company is bringing tobear NEXCO-West’s long-cultivated know-how and technological prowess in expressway maintenance operations
together with DBJ’s accumulated experience in financing
infrastructure businesses, including road infrastructure, andits support in ameliorating management and cost-cutting
measures, which will help to realize improved efficiency inthe newly established company.

64

Annual Report & CSR Report 2010

Royu Driveway

CSR Report

Corporate and Business Revitalization

CSR through Investment, Loan and Other Businesses

Since the emergence of nonperforming loans as a major problem in Japan in the late 1990s,
corporate and business revitalization has become an important issue. In recent years, international
financial disorder and the tide of economic globalization have fomented swift change in thecorporate business environment. Smooth rehabilitation is an important issue for not only the
distressed companies that are viable businesses themselves but also the financial and other entities
supporting their revitalization.

Investment and Loan Case Study: The Hokuto Solutions, Ltd.
The Hokuto Solutions, Ltd., a wholly owned subsidiary of

Hokuto Solutions inherited ¥16.2 billion in nonperform-

Hokuto Bank, both headquartered in Akita Prefecture, wasing loans from Hokuto Bank and is engaged in debt man-established in an attempt to improve its parent’s financial

agement and the support of business revitalization activities

health by reducing nonperforming loans and providingfor Hokuto Bank.

management support to trading partners. DBJ commenced

DBJ provides temporary staff to Hokuto Solutions anda business alliance with Hokuto Bank and The Shonai

invested approximately ¥1 billion in the form of nonvoting

Bank, Ltd., which has headquarters in Tsuruoka, Yamagata

preferred stock.

Prefecture.
Holding Company(Established October 1, 2009)The Shonai Bank

Hokuto Bank
Division of disclosed debt (Divided subsidiaries
possess 100% voting rights), temporary staff

Temporary staff

Divided subsidiaries
Hokuto Solutions
Preferred stock

Preferred stock acquisition, temporary staff

DBJ

Investment and Loan Case Study: Iknow Machinery Co., Ltd.
Iknow Machinery Co., Ltd., headquartered in the city

Oshima Shipbuilding and other shipbuilders, for which con-of Sasebo in Nagasaki Prefecture, was formed with thetinued production and smooth supply was indispensible.

support of the maritime industry, including Oshima

DBJ’s long-term loan facilitated the transfer of business

Shipbuilding Co., Ltd., based in the city of Saikai infrom Tsuji Sangyo to Iknow Machinery, thereby helping

Nagasaki Prefecture and incorporating the marine equip-

to ensure that shipbuilding companies have a continuing

ment division of Tsuji Sangyo Co., Ltd., which is in bank-stable supply of goods.

ruptcy proceedings, also with headquarters in Sasebo.
Tsuji Sangyo, a major producer of marine equipment,
was also involved in the shipbuilding business in China.
The company filed for bankruptcy under the Corporate
Rehabilitation Law in December 2008 following deterioration in business conditions. Tsuji Sangyo was the supplier ofmarine cranes and hatch covers and other essential parts to

A cargo vessel with hatch covers

Deck craneAnnual Report & CSR Report 2010

65

CSR Report

Private Finance Initiatives

CSR through Investment, Loan and Other Businesses

Private finance initiatives (PFIs) draw on private-sector capital and managerial competence, as wellas technology, to build, operate and maintain social infrastructure that has traditionally been theprovince of national and regional public-sector administrative bodies. Advantages include reduced
operating costs on the part of national and local governments, while taking advantage of privatesector knowledge to receive high-quality public services, and business opportunities created for
private-sector enterprises. Problems confronting PFIs include such practical operating concerns asallocating responsibility and accountability across multiple vendors. Numerous financing problems
can arise as well, making the ability to negotiate with, and manage, the various participants very
important.

Investment and Loan Case Study: Tsukuba Next Partners Co., Ltd.
Tsukuba Next Partners Co., Ltd., based in Tsukuba, Ibaraki

As the lead arranger, DBJ assembled the syndicated loan

Prefecture, is an SPC set up for the facility maintenancein the form of project finance in collaboration with otheroperations of Tsukuba University Hospital by Hitachi

financial institutions.

Building Systems Co., Ltd., Kajima Corporation, Mitsubishi
Corporation and Tokyo Electric Power Company.
This PFI will enable the University of Tsukuba to promoteresearch to support advances in clinical medicine usingstate-of-the-art medical technology and leading medical
education.
The PFI is Japan’s first such effort to implement this kindof project at a national university hospital. It covers therefurbishment of existing wards as well as the building of
new wards and takes on such tasks as facilities maintenanceand supporting hospital operations.

Conceptual illustration of the completed hospital facilities

Investment and Loan Case Study: Water Next Yokohama Co., Ltd.
Water Next Yokohama Co., Ltd., headquartered in

the drop in elevation from the water sources to the treat-

Yokohama, Kanagawa Prefecture, is an SPC set up to

ment plant helps conserve energy.

renovate the Kawai Water Purification Plant in the city of

In concluding a financing agreement with other finan-

Yokohama. The SPC is backed by Metawater Co., Ltd.;

cial institutions as arranger, DBJ has helped supply project

Metawater Service Co., Ltd.; Mitsubishi UFJ Lease & Financefinance totaling around ¥14 billion.

Co., Ltd.; Tsukishima Kikai Co., Ltd.; Toden Kogyo Co., Ltd.;Tokyo Electric Power Environmental Engineering Co., Inc.;

Dehydration wing

and Tokyo Electric Power Company.

Membrane
filtration wingDistribution reservoir

This is Japan’s first example of a PFI project responsible
for the overall renewal and management of a water treat-

Membrane filters

ment plant, and the facility will be the country’s largest

Solar panels

membrane filtration water treatment facility. The adoptionof a high-capacity membrane filtration system enables efficient operation and maintenance, and taking advantage of66

Annual Report & CSR Report 2010

Overview of the planned facilities

CSR Report

Financing Employing DBJ Disaster Preparedness Ratings

CSR through Investment, Loan and Other Businesses

Such recent disasters as the Great Hanshin-Awaji Earthquake, the Chuetsu Offshore Earthquake
and the Iwate-Miyagi Inland Earthquake caused tremendous damage to the economy, with manyorganizations forced to suspend operations for extended periods. In addition to plans for protecting
personnel and property, companies face the need to draft business continuity plans (BCPs) to hedge
themselves against lost revenue and protect their clients in the event of disaster.

Investment and Loan Case Study: Shinko Yuki Kagaku Kogyo K.K.
Shinko Yuki Kagaku Kogyo K.K., founded in 1969, is based

countermeasures to storm and flood damage to office build-in Kobe in Hyogo Prefecture and produces a wide range

ings, (3) taking all possible precautions against leakage ofof industrial chemicals. Its main business is manufacturing

hazardous materials and (4) contributing to improvement invarious ester and organic chemical products. The company

regional disaster prevention measures established in collabo-

also capitalizes on its technological strength in such areas

ration with surrounding companies and local authorities.

as paint, electronic materials, and pharmaceutical and agrochemical intermediates.
DBJ evaluated Shinko Yuki Kagaku Kogyo’s disaster
response program based on the DBJ Disaster Preparedness
Ratings system and provided financing at preferred rates
based on that evaluation.
DBJ credited the company’s tangible precautionary steps,
such as (1) establishing rules to deal with all types of largescale disasters and maintaining a companywide disasterdirective system, (2) taking concrete measures, including
earthquake-proofing chemical tank facilities and developing
Factory building at the company’s headquarters

Investment and Loan Case Study: Wellthy Corporation
Wellthy Corporation, which has its headquarters in
Chiyoda-ku, Tokyo, is engaged in the development andsales of drinkable groundwater used at a wide range offacilities, including hospitals, supermarkets, department
stores, hotels, train stations, food processing plants andschools.

=Groundwater Purification System Flowchart

DBJ assigned Wellthy its highest disaster preparedness
rating and provided financing that reflected it. This financ-Primary filter

Membrane filter

Water tanking provided capital to Wellthy’s groundwater purification
plant, which has a collateral function of providing drinking
water and is expected to enhance disaster preparedness by
ensuring the stable supply of water in times of emergency.

Unprocessed water tank

Treatment tank

Water quality
monitoring system

In addition to providing loans, DBJ conducts businessmatching to promote the spread of groundwater purifica-

Deep well
深井戸

tion plants.

Annual Report & CSR Report 201067

CSR Report

Financing Employing DBJ Environmental Ratings

CSR through Investment, Loan and Other Businesses

The environment is a matter of global concern, and corporations are responsible for conducting
business in an environmentally responsible manner. Financial institutions are no exception, being
tasked with the mission of contributing to a sustainable economy in an environmentally responsible
manner.
The graph below shows the amount of Financing Employing

measures to address global warming through its ”special

DBJ Environmental Ratings for the past six years. Financing

support to achieve the Kyoto target through business grantin the year ended March 31, 2010, amounted to ¥65.5

subsidies and interest free loans” and ”acceleration of mea-

billion, an increase of approximately 9% year on year. The

sures to address global warming through interest subsidies

total for the six years to March 31, 2010, stands at ¥283.2

and interest-free loans.” DBJ was certified by each of thebillion.

participating financial institutions.

=Track Record of Financing Employing
DBJ Environmental Ratingsof the Environment’s policies, DBJ approached regional

Also in fiscal 2009, in accordance with the Ministry(Billions of yen)banks across the country to offer its services for financ-

Referenceing employing its environmental ratings methods.

80
65.5
60.3

60

40

40.3

Specifically, contracts were made with 10 banks, including
The Hokuriku Bank Ltd.; The Hiroshima Bank, Ltd.; The
Shizuoka Bank, Ltd.; The Hyakugo Bank, Ltd.; and The

44.7
36.5

North Pacific Bank, Ltd., with each bank creating its own

35.8

environmental assessment sheet and DBJ providing advice
on their implementation and management. These efforts

20

to leverage environmental ratings aim to serve the specific financial needs of local companies, and the service is0Year ended
March 31,2005

Year ended
March 31,2006

Year ended
March 31,2007

Year ended Year ended
March 31, March 31,
2008
2009

Year ended
March 31,2010

Notes: 1. Figures for years ended March 31, 2005 to 2008, are for DBJ’s
predecessor.
2. Figures for the year ended March 31, 2009, include those for DBJ’s
predecessor (from April 1 to September 30, 2008).

expected to spread to other regional banks.
In addition, in April 2010, to support efforts to promote
environmental projects, DBJ concluded a contract with
Tokio Marine & Nichido Fire Insurance Co., Ltd., agreeing
to cooperate in the promotion of environmental projects.
This agreement aims to provide stronger backup for companies working on environmental projects and harnesses

The DBJ Environmental Ratings Advisory Committee

DBJ’s strength in environmental business financing andmeets to receive outside expert advice and make adjust-Tokio Marine & Nichido Fire Insurance’s extensive network

ments to the DBJ Environmental Ratings system in line with

providing various insurance services. Specifically, Tokio

past scoring and results as well as with trends in environ-Marine & Nichido Fire Insurance seeks to continue to pro-mental policy. The 10th Conference of the Parties to themote efforts to reduce companies’ environmental impact

Convention on Biological Diversity, also known as COP 10,

through offering financing employing DBJ environmental

will be held in Aichi-Nagoya, in October 2010 and will put

ratings, and in a tie-up with BELFOR (Japan) Co., Ltd., has

an increased focus on biological diversity (biodiversity) issues.

developed an early disaster recovery support service forSpecifically, the conference will attempt to evaluate a widecompanies.

range of issues, from conservation efforts in areas such as
forestry to the consideration of biodiversity in the procurement of raw materials and*The monetary equivalent of restoring the inevitable loss of habitat
caused by development

biodiversity offsets.*
In fiscal 2009,
the Japan Environment
Association made a public appeal to financial
institutions promoting its
Environmental Ratings Advisory
Committee

68

Annual Report & CSR Report 2010

DBJ environmental logo

CSR Report

Financing Employing DBJ Environmental Ratings
Investment and Loan Case Study: SG Holdings Co., Ltd.
SG Holdings Co., Ltd., headquartered in Kyoto, is a pure

DBJ, in collaboration with The Bank of Tokyo-Mitsubishi
UFJ, Ltd., co-arranged a syndicated loan totaling ¥14.0 bil-ing courier Sagawa Express Co., Ltd., which is also based

lion, and SG Holdings became the first company in Japan toin Kyoto. Sagawa Express was an early participant in the

adopt the 3% subsidized interest payment system*2 owing

Climate Savers Program*1 and has set high goals for reduc-to its acquisition of the environmental rating.

ing its CO2 emissions, with management practices reflecting

CSR through Investment, Loan and Other Businesses

holding company with core business groups, including lead-

This syndicated loan provided ¥7.0 billion in effectively

the strong awareness of the fact that its core business—interest-free lending for capital investment in a distribution

logistics—has a high impact

center and other facilities to reduce CO2 emissions.

on the environment. The
Participation in a program by the world’s largest public conservation organization, the World Wildlife Fund (WWF), that joins companies around the globe in innovative measures to reduce greenhouse gas emissions*2 The official name is the Special Support for Interest-Free Loansto Achieve the Kyoto Target (interest subsidy) System. Under thissystem, firms that have pledged to reduce companywide CO2 emissions by 6% over three years can obtain an environmental ratingfrom DBJ and other designated financial institutions, and they canapply the Japan Environment Association’s Global Warming Fundlending rate for three years for an interest-rate subsidy of up to
3%.
*1

rating evaluation takes into
consideration the company’s
ambitious targets to increase
the number of trucks fueledby natural gas and its biodiversity preservation project,
Takao 100-Year Forest.

Preserving undeveloped woodland on Mount Takao

Investment and Loan Case Study: Daio Paper Corporation
Daio Paper Corporation, headquartered in Tokyo’s Chuo-

technology that contribute to the conservation of the Seto

ku and Shikokuchuo in Ehime Prefecture, is Japan’s third-

Inland Sea environment, facilitating higher recycling of tra-largest paper manufacturer. Via its Daio Earth Charter, theditionally difficult to recycle magazine paper and utilizing

company is putting into practice environmental manage-

waste paper at a rate above the industry average. Throughment policies including paper recycling, forest conservation

its proprietary eco-friendly initiatives, Daio Paper fully meetsand measures to address global warming.

society’s expectations for environmental contributions by

In particular, Daio Paper actively promotes sustainable

the paper industry.

forest management that is in harmony with the environ-

DBJ awarded Daio Paper its highest environmental rat-

ment as it procures lumber, making effective and efficienting, and it was the first company in the paper industry touse of forest resources. The company’s industry-leading

qualify for the 3% subsidized interest payment system (seeafforestation project in southern Chile is achieving world-

the preceding note*2).

best levels of efficiency in terms of forestry growth andresultant carbon dioxide sequestration owing to the selection of high-quality tree varieties and the application ofadvanced forestry technology. In Chile, Daio Paper is also
working to maintain biodiversity: protecting native andendangered species by keeping 42% of the area as natural forest. Including its forestry plantation in Tasmania,

Daio Paper’s forestry plantation

Australia, the overseas afforestation area has reached34,300 hectares (as of end-2009).
As for its evaluation ratings, in addition to its biodiversity
conservation efforts in overseas plantations, the company
scores highly for managing to significantly reduce its environmental impact through such activities as introducing
a biomass boiler and industry-leading water treatment

Uijin, an endangered otter species

Annual Report & CSR Report 201069

CSR Report

Financing Employing DBJ Environmental Ratings
Investment and Loan Case Study: Asahi Carbon Co., Ltd.
Asahi Carbon Co., Ltd., based in Niigata city, Niigata

Much can also be expected for regional economic devel-

CSR through Investment, Loan and Other Businesses

Prefecture, produces carbon black*1 at its facilities in theopment thanks to Asahi Carbon’s efforts to effectively inte-

prefecture. As a Bridgestone group company, Asahi Carbon

grate environmental measures into its core business.

is building an advanced environmental management system
in accordance with Bridgestone Corporation’s environmental policy. Asahi Carbon provides Bridgestone with inventory
data*2 for carbon black used in environmentally friendly
products to enable close cooperation with the end-userfrom the product development stage to allow for the widespread adoption of environmentally friendly products.
In its ratings evaluation, the company received high

Used for reinforcement of rubber products and automobile tires
Environmental impact data for each stage of the life cycle*3 Under the Ministry of the Environment’s subsidy system, firms thathave pledged to reduce their CO2 specific emission units by 5% ormore within five years can obtain an ”environmental rating” fromdesignated financial institutions and can then take advantage ofthe maximum 1% interest rate offered by the Japan Environment
Association’s Global Warming Fund.
*1*2

marks for such unique initiatives as using the gas byproducts from carbon black manufacturing to generate all
the power for the plant—allowing the company to steadily
reduce its total energy input—and the company’s modal
shift to rail container transportation.
Also, with its pledge to reduce CO2 specific emission
units by 5% or more within five years the company became
the first in Niigata Prefecture to benefit from the environmental ratings interest-rate subsidy system.*3

Automobile tires

Rubber soles

Dry-cell batteries

Ink

Uses of carbon black

Investment and Loan Case Study: NEC Capital Solutions Limited
NEC Capital Solutions Limited, headquartered in Tokyo’s* The ”3Rs” are reduce, reuse, and recycle.

Minato-ku, is a financial services firm providing solutions tovarious issues relating to management resources. The company utilizes the characteristics of leasing, one of the pillars
of its business, to promote environmental management andNEC Capital Solutions’ 3R Systemprovide various services that contribute to the realization ofa low-carbon, sustainable society.

NEC Group
CustomerIn the ratings evaluation, plaudits go to practices such as
the steady track record of successful bids for eco-finance,
which undergo a two-step evaluation and authorization

ReduceInformation feedback
Easy disassembly,
space saving,easy-to-recycle materials

Reuse

Reuse of parts

RecycleDisabling functionality,
such as for HDDs

Expired
lease
goods

Supplier

process by the sales department and the environmental promotion department, substantial achievements in reducing
domestic industrial waste emissions to zero, and affiliatedNEC
CapitalSolutionscompany Reboot Technology Services Co., Ltd.’s securingof its international network to achieve cross-border 3Rs*
for used information and communication technology (ICT)
equipment.
NEC Capital Solutions has received DBJ’s highest environmental award, ”especially advanced efforts in consideration
for the environment,” for the six consecutive years since2004, in recognition of how it applies certain aspects of theleasing business to the recycling and resource industries.

70

Annual Report & CSR Report 2010

NEC Capital Solutions
Reuse ofgoods

RebootTechnology
Services
Second-handgoods dealer

Materials
manufacturer

Recycling of materials(precious metals, non-ferrous metals,
ferrous metals, plastic, glass, etc.)
Thermal recycling(incineration
heat recovery energy)

Material
recycling(melting
treatment
Landfill approximately 2% melted slag
(some shredder dust)
construction
materials)

CSR Report

Emissions Credits

CSR through Investment, Loan and Other Businesses

Climate change caused by global warming is expected to significantly impact the environment insuch areas as ecology, agriculture, human health and social order. International initiatives are thus
under way to devise international frameworks to reduce greenhouse gases. The Kyoto Protocol,
adopted in December 1997, set a target for Japan to reduce its greenhouse gases by an average of
6% compared with 1990 levels by 2012. Japan’s greenhouse gas emissions in the year ended March
31, 2009, however, actually exceeded the 1990 baseline by some 1.6%. Excluding the effects of theJapanese government’s purchase of emissions credits and the measures to offset emissions throughafforestation, Japan must reduce greenhouse gas emissions by an annual average of approximately
2.2%.
Industry accounts for one-third of Japan’s total carbon dioxide emissions. Tireless efforts during
the year managed to move this level down around 13.2% against the baseline for the year ended
March 31, 2009. However, as Japanese industry is already among the world’s most energy-efficient,
there is little room to reduce emissions further.

Investment and Loan Case Study: Japan GHG Reduction Fund and Japan Carbon Finance, Ltd.
DBJ established Japan GHG Reduction Fund (JGRF) andassembled an extensive portfolio in China, India and else-

Japan Carbon Finance, Ltd. (JCF), in 2004 to acquire large

where in Asia, Latin America and Africa, where they con-quantities of emissions credits in a stable manner.

tinue to regularly purchase emissions credits, manage proj-

In the more than five years as a collaboration between

ects and conduct monitoring. JGRF has acquired emissions

the public and private sectors, JGRF and JCF have leveraged

credits every year since August 2007, when it acquired its

to the fullest DBJ’s knowledge and experience in terms offirst 100,000 tons in emissions credits through the Antonio

both fund operations and private-sector business in reduc-Moran wind power generation project in Argentina.

ing greenhouse gases. To date, these organizations haveEmissions Credit Transfer Scheme
Developing
Nations
Implement Project for
Dealing with Global
Warming

Estimated
Emissionsif Project
Is NotCarriedOut

Japan
Transferred to
Developing
Nations in Form ofEmissions Credits

Amountof Reductions

Emissions

Total
Emissions
Frameworkfor Investor
Project Assistance:
Nations

JGRF/JCF

Amount ofEmissionsCredits
Purchased+
Emissions
Reductions
within Japan
ProperEmissionsTargets
Achieved

Antonio Moran wind power generation
project in Argentina

Annual Report & CSR Report 201071

CSR Report

EnergyCSR through Investment, Loan and Other Businesses

International interest in solar power, wind power and biomass as sustainable energy alternatives
to carbon-based power generation is mounting amid ongoing concerns about global warming.
Utilization of renewable energy sources is essential for curbing greenhouse gas emissions andrealizing a low-carbon society.
In Japan, where reliance predominantly on imported energy sources has made the securing of astable long-term energy supply an important policy challenge, the creation of a nuclear fuel cycle isbeing looked to as a way to recycle plutonium and other elements obtained through reprocessing ofspent nuclear fuel.

Investment and Loan Case Study: Showa Shell Sekiyu K.K.
Showa Shell Sekiyu K.K., headquartered in Minato-ku,

renewable energy fields compatible with a low-carbon soci-Tokyo, is a major Japanese oil refiner and distributor. Whileety are crucial to the long-term growth of oil firms, which

maintaining a strong foundation in the oil business, Showa

play an integral role in the energy industry. Showa Shell

Shell Sekiyu is aggressively pursuing a next-generation CIS

Sekiyu’s initiative is a prime example of such advances.

photovoltaic cell* business as a path toward realizing a

Based on knowledge grounded in long-standing rela-low-carbon society. The company is currently building its

tionships with the oil industry and its policy of supporting

No. 3 photovoltaic cell plant in Miyazaki Prefecture with theprogressive initiatives in environmental fields, DBJ arranged

aim of expanding annual output from its No. 1 and No. 2

a syndicated loan with local banks*2 that have strong envi-

plants already in operation to approximately one gigawatt

ronmental awareness, combining funding for the new pho-

to rival its largest global competitors and acquire 10% of

tovoltaic cell plant construction in Miyazaki being advanced

the global market.

by Showa Shell Sekiyu, in order to promote environmentally1

Two major issues facing Japan’s oil industry are how tofriendly clean energy and local economic development.

restructure the short-term mainstay businesses of oil refining and sales and how to devise new medium- to long-term
growth strategies, in light of the structural factor of shrinking domestic demand for petroleum products due to theeconomic downturn and the promotion of energy conservation. Under these operating conditions, advancements into

Thin-film photovoltaic cell made primarily from copper, indium andselenium (CIS)*2 The Miyazaki Bank, Ltd.; The Higo Bank, Ltd.; The Kagoshima Bank,
Ltd.; The Shinwa Bank, Ltd.; The Bank of Fukuoka, Ltd.; The Saga
Bank, Ltd.
*1

Conceptual rendering of Showa Shell Sekiyu’s No. 3 plant in Miyazaki

72

Annual Report & CSR Report 2010

CSR Report

EnergyInvestment and Loan Case Study: Kaneka Corporation
production support as areas for intensive investment to pro-Osaka Prefecture, is a general chemical manufacturer

mote growth.

advancing businesses in a wide array of fields, including

CSR through Investment, Loan and Other Businesses

Kaneka Corporation, with its head office in Osaka City,

DBJ provided financing based on Kaneka’s environmen-

chemical products, functional resins, foamed resin prod-

tal ratings for R&D investment into hybrid photovoltaic

ucts, foods and synthetic fibers. Striving to be a company

cells that enable conservation of resources by dramaticallythat assists with global environmental issues and is able toimproving power conversion efficiency from solar energy

contribute to society, Kaneka has designated the four fields

to electricity through a layered combination of amorphousof environment/energy, health, communications and foodsilicon and thin-film polycrystalline silicon.

Hybrid photovoltaic cell (thin-film photovoltaic cell) usedon home rooftop

Investment and Loan Case Study: Japan Nuclear Fuel Limited
Founded with the objective of creating a commerciallyadvance the project by providing a reliable stream of long-

viable nuclear fuel cycle, Japan Nuclear Fuel Limited (JNFL),

term capital, thus contributing to implementing effective

which is headquartered in Rokkasho, Aomori Prefecture, isuse of uranium resources, as well as disposing of radioactive

engaged in such activities as enriching uranium, reprocess-waste in an appropriate manner, and by creating a nuclear

ing spent nuclear fuel and processing radioactive waste.

fuel cycle, supporting the establishment of an energy source

Building a nuclear fuel cycle demands a tremendousthat will be reliable over the long term.

amount of money and construction time. DBJ is helping to

Nuclear fuel reprocessing facility

Annual Report & CSR Report 201073

CSR Report

Environmental Technology

CSR through Investment, Loan and Other Businesses

To solve global warming, energy problems and a whole range of environmental issues, and topromote the creation of a recycling-oriented society, it is important to support businesses financiallyso that they can undertake the development of the required technologies. To achieve these objectives,companies must obtain and accumulate technical expertise, and a steady stream of funding isnecessary to accommodate projects of different scales at varying stages of development.

Investment and Loan Case Study: DB Masdar Clean Tech Fund, L. P.
DB Masdar Clean Tech Fund, L. P., is a clean technology*1

broad-based network and a large technology team of more

fund managed by Abu Dhabi Future Energy Company

than 150 people, with the view that support is required for(Masdar; head office: Emirate of Abu Dhabi), which is ainvestment funds that have global networks and technicalconglomerate owned by the Emirate of Abu Dhabi* that

evaluation capabilities.

2

advances environment-related business activities, and DB
Climate Change Advisors (DBCCA; head office: New YorkState, United States), which is a unit of Deutsche Bank’s
asset management business.
Numerous companies worldwide are engaged in R&D in
the clean technology field as they work to commercialize
promising environmental technologies.
To bring Japan’s environmental technologies to theworld and sharpen the country’s international competitiveedge through the environmental industry, DBJ provided

Refers to a range of technologies, products, services and processes
that utilize renewable resources to lessen the consumption of natural
resources, curtail the emission of greenhouse gasses into the atmosphere and reduces waste. The wide array of clean technologies, which
incorporate advanced energy efficiency and a lower environmental
impact than existing technologies, includes solar power, wind power,
fuel cell and other alternative energy technologies; water, air and soil
decontamination technologies; technologies related to new materials;
and automotive and other transportation-related technologies.
*2 One of the emirates constituting the United Arab Emirates (U.A.E.)*1

funding to the DB Masdar Clean Tech Fund, which has a

Conceptual rendering of Masdar City, which will run
entirely on renewable energy

74

Annual Report & CSR Report 2010

CSR Report

Healthcare and Welfare

CSR through Investment, Loan and Other Businesses

Society faces a wide range of issues on the healthcare front, including an increasingly elderly
population, advances in medical procedures, mergers and acquisitions by medical corporations anda need to rebuild aging facilities. Offering uninterrupted medical services involves solving fiscal andadministrative problems and improving the skills of medical and other personnel and the quality ofrelated facilities and medical equipment.

Investment and Loan Case Study: JR Sapporo Hospital
JR Sapporo Hospital, located in Chuo-ku, Sapporo, is afor the reconstruction of JR Sapporo Hospital in coordina-

312-bed medical institution that plays a central role in thetion with regional financial institutions is in accord with theregion and is owned and operated by the Hokkaido Railway

intent of this business cooperation agreement. DBJ expects

Company.

that this financing scheme, which supports the enhance-

In coordination with other organizations, DBJ supplied

ment of local healthcare and the assignment of regional

project financing for the reconstruction of JR Sapporo

healthcare functions to facilities with advanced medical

Hospital’s dilapidated medical facilities. An SPC was estab-

capabilities, can be applied to many hospitals.

lished to enable funding procurement that would take

In May 2010, DBJ won the ADFIAP’s Infrastructureadvantage of the earning power of the new facility and to

Development Award for this project at its annual general

successfully separate the ownership of the hospital from its

meeting held in Vancouver, Canada.

operations.
This project financing scheme was built on a stable foundation, with Lifetime Partners, Inc., of the Mitsubishi Group,as the arranger and DBJ as the coarranger, along withsenior loans provided by local banks and a mezzanine loan
extended by DBJ.
DBJ strengthened ties with regional financial institutionsin Hokkaido through a business cooperation agreement it
concluded in September 2005. As an initiative that contributes to regional and community revitalization, DBJ’s support

JR Sapporo Hospital after reconstruction

Overview of ADFIAP
Official name:
Association of Development Financing Institutionsin Asia and the PacificEstablished:
October 1976 (Headquarters: Manila, Philippines)
Objectives:
To promote cooperation, research into development funding and cultivation of human resourcesamong development financing institutions in the
Asia-Pacific region
Member institutions: 110 institutions in 42 countries and regions, with
the Asian Development Bank as a special member

Trophy for winning the Infrastructure
Development category of the ADFIAP Awards

Annual Report & CSR Report 201075

CSR Report

Healthcare and Welfare
Investment and Loan Case Study: Takeda General HospitalWith principal facilities in Aizu-Wakamatsu, Fukushima

CSR through Investment, Loan and Other Businesses

Prefecture, Takeda General Hospital is one of Japan’s largest private hospitals. As a medical center serving the Aizu
and southern Aizu areas of Fukushima Prefecture, Takeda
General Hospital plays a highly important role in regional
healthcare and is designated as a regional medical support
hospital, regional perinatal mother-and-child medical centerand regional affiliated base hospital for cancer diagnosis.
DBJ partnered with The Toho Bank, Ltd., to assemble
a syndicated loan, enlisting the full cooperation of major
regional financial institutions in the Tohoku region andarranging large-scale, long-term financing in line withthe business and construction plans for Takeda General
Conceptual rendering of the new hospital building

Hospital’s new building.

Investment and Loan Case Study: Trinity Healthcare
In cooperation with Mitsubishi Corporation, DBJ establishedfund then formulates management improvement plans andthe Trinity Healthcare Fund to provide equity to support

cooperates with the management of firms requiring support

business revitalization/restructuring for healthcare operators.

to strengthen their financial and management structures.

Health Management Partners, Inc., was established to

The fund also proposes fund procurement methods that

operate the fund created by the two companies throughemploy the securitization of real estate and provide financ-this joint investment. The fund buys loans issued by finan-

ing in response to regional medical needs.

cial institutions throughout Japan to medical institutions
and nursing facilities that require management support. The=Overview of the Trinity Healthcare Fund

Example:SPC Project A

Hospitals
Creditobligations
Regionalbanks,
others

DisposalBeneficiaryrights to Borrowings
enhancereal estateliquidity
Equityinvestment
Example:SPC Project B

Healthcare
corporations,others76

DisposalAnnual Report & CSR Report 2010

Beneficiaryrights to Borrowings
enhancereal estateliquidity
Equityinvestment

GP company(Healthcare
Management
Partners, Inc.)
Trinity
Healthcare Fund

Equityinvestment
in various
projects

Equityinvestment
in anonymous
associations

Equityinvestment

Equityinvestment

Mitsubishi
Corporation

DBJ

CSR Report

Healthcare and Welfare
Investment and Loan Case Study: Hospitality Residence Fundto evaluate the commercial viability of this project against

a nonrecourse loan to finance senior citizen housing, suchother opportunities led to the structuring of this fund.

as fee-based senior care homes with caregivers, through a

Furthermore, the fund appointed a backup operator to

private-placement real estate fund structured by the Mitsui

provide stable ongoing services to facility residents. DBJ

CSR through Investment, Loan and Other Businesses

DBJ collaborated with other financial institutions to provide

believes that the popularization of such funds, which oper-

Fudosan Group.
The senior care facility fund was structured differently

ate the facilities under lease contracts with the originator,

from typical Japanese real estate investments in terms ofwill make facility operation easier for operators who provide

commercial viability. The ability of participating institutions

high levels of service.

=Overview of the Hospitality Residence Fund
Lease contract

Company A(Operator)

Lease contract

Company C(Operator)

Lease contract

Transfer of position inlease contract
Company D(Originatorand operator)

Originator

Backup operator

Company B(Operator)

DBJ

Transfer of trust
beneficiary rights

Nonrecourse
loans

Hospitality
Residence (SPC)

Equityinvestment

Trustformation
Trust
dividends

Lease contract

Anonymous
investment

Trust bank

Other financial
institutions

Institutional
investors
Generalincorporated
associations

Asset management contracts

Trust formation
Transfer of trust beneficiary rights

Asset manager

Hospital Industry Conditions Handbook 2010
Published by DBJ in cooperation with Japan Economic Research Institute, Inc.,at the end of May 2010
Focused on supporting hospital management reform, the handbook provides a compact and comprehensive overview of essential information.

Q

Environment surrounding the healthcare sector (such as trends involving hospital facilities)

Q

Analyzing the status of hospital management (running costs, facility investment and trends involving physicians and nurses)

Q

Topics related to hospital management (community healthcare conditions,management status of municipal hospitals)

Annual Report & CSR Report 201077

CSR Report

Community Revitalization

CSR through Investment, Loan and Other Businesses

In recent years, the economic disparity between major urban areas and regional areas in Japan has
expanded as people and businesses continue to concentrate in cities. Moreover, disparities evenamong regions are becoming more stratified and complex, with increasing gaps between hub cities
and other areas.
For local economies to sustainably exist, development having a broad view (involving otherregions in Japan and overseas markets) is important.

Regional Areas’ Genki* Program
Q

Currently, facing the challenges of population constraints, financial limitations,environmental restrictions and global
competition, the regions must coordinate with one another and implement
diverse regional development schemesthat capitalize on their respective
strengths, competitive advantages andlatent potential.
DBJ has arranged a unique initiative,
the Regional Areas’ Genki Program, tosupport regional growth that capitalizes
on each region’s respective strengths
and information and funding potential.
Specifically, we have enhanced our information support service through advice
and suggestions to regions. 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, including the execution of loans with more attractive interest rates than usual.

Supporting Sectors and Businesses of Each Branch
Hokkaido Areann

Niigata Arean

Food industry
Tourism
Environmental infrastructure

Food industry: value-added
rice products and services
Hokuriku Area
Manufacturing industry:electronics, pharmaceuticals,
textiles, plastics
Tohoku Area
Chugoku Arean

Manufacturing industrynClean innovation
Green network

Kyushu Area

Kanto-Koshin Area

Enhancing the regional
competitiveness of the Kyushu
region as the door to Asia

n

n

n

Integration business ofhuman resources and goods
Manufacturing industry
globalization
Tourism
Tokai Area

Strategic next-generationindustry
Kansai Area
Leading-edge manufacturingindustries
Minami-Kyushu Area

Shikoku Area

Food, health and environment
industry

Material industry and industries
contributing to the fundamental
economic cycle of the Shikoku region*The Japanese word genki implies a positive spirit and good health.

Investment and Loan Case Study: Mt. Hakodate Ropeway Corporation
Mt. Hakodate Ropeway Corporation, headquartered in
Hakodate, Hokkaido, operates a ropeway business on Mt.
Hakodate, which is southern Hokkaido’s most popular tourist destination.
Hakodate formulated the Hakodate Job Creation Project,*The Regional Revitalization Center was established in the JapaneseCabinet in October 2003 to revitalize local communities by stimulating local economies and creating employment opportunities.
Pursuant to a Cabinet vote in October 2007, the Center became oneof the four departments that constitute the General Assembly ofCommunity Revitalization Departments.

which was approved by the Regional Revitalization Center,*
to boost employment and develop the local economy bystimulating local industry and promoting tourism.
DBJ partnered with North Pacific Bank, Ltd., in a businesscooperation agreement to provide a loan for the expansionof Mt. Hakodate Ropeway’s facilities to further improve its
safety and users’ convenience.

Large 125-person capacity gondola

78

Annual Report & CSR Report 2010

CSR Report

Community Revitalization
Investment and Loan Case Study: Dowa Holdings Co., Ltd.
and developing waste processing, soil decontamination andHoldings Co., Ltd., headquartered in Chiyoda-ku, Tokyo,

recycling businesses in Southeast Asia and China.

operates in five core businesses: nonferrous metal smelting

CSR through Investment, Loan and Other Businesses

As the holding company for the Dowa Group, Dowa

Dowa leverages the infrastructure remaining after mineand four businesses springing from that technology base—closures in the mining business and the relationships ofenvironmental and recycling businesses, metalworking, elec-

trust it cultivates with area residents to advance its environ-tronic materials and thermal processing. The Dowa Group’s

mental business in harmony with the community.

pioneering initiatives include collecting and recycling pre-DBJ has extended long-term loans to Dowa to fund its

cious and rare metals from ”urban mines”—landfills con-recycling-facility development and support the creation of ataining used mobile phones and small home appliances—

recycling-oriented society.

Waste processing facility

Investment and Loan Case Study: Nitto Medic Co., Ltd.
Within the pharmaceutical field, the main business of Nitto

talization plan, ”Genki Toyama Manufacturing Industry

Medic Co., Ltd., headquartered in Toyama Prefecture, isActivation Plan,” and is expected to increase employment ineye medicine. DBJ provided financing to Nitto Medic forthe region.

the construction of its No. 3 Preparation Building, which isused to produce eye medicine. This was the first project inJapan that took advantage of interest subsidies in supportof regional revitalization.*
This funding strengthened the operational foundationof manufacturers involved in the production of medical
supplies as defined by Toyama Prefecture’s regional revi-*Such interest subsidies are one type of support measure based onregional revitalization plans created by regional administrative bodies
and approved by the Japanese government. Under the system, whenan entity that intends to engage in a business that contributes toregional revitalization borrows the required funding from a financial
institution, a reduced-interest loan is supplied within budget limitations
from a financial institution designated by the national government.

Nitto Medic’s No. 3 Preparation Building

Annual Report & CSR Report 201079

CSR Report

Community Revitalization
Investment and Loan Case Study: Kimura Chuzosho Co., Ltd.

CSR through Investment, Loan and Other Businesses

Kimura Chuzosho Co., Ltd., headquartered in Shimizu-cho,ed the company from a long-term perspective in its support

Shizuoka Prefecture, manufactures press-molded castingsof Japan’s key industries through manufacturing activities

for automobiles, lathe beds and other machine tool cast-

based on the firm’s proprietary, cutting-edge technologies.

ings. Kimura Chuzosho was among the first to introduce
the full mold casting process and overcome the method’s
unique technical challenges. The company subsequently
expanded transactions with automakers, and it now maintains the top share in Japan for press-molded castings forautomobiles.
Since providing funding for the construction of Kimura
Chuzosho’s Omaezaki plant, DBJ has comprehensively assist-

Omaezaki plant

Investment and Loan Case Study: E-SEMS (Endo Service for Energy Management System) Corp.
E-SEMS Corp., with its headquarters in Osaka City, Osaka
Prefecture, is a strategic subsidiary of Endo Lighting Corp.,
which creates high value-added illuminated spaces.
Established in 2005 for Endo Lighting’s foray into new* The Kansai Regional Vitalization Study Group was formed to contributecooperatively to community economic advancement in the Kansaiarea. The group studies concrete activities that benefit local clients andprojects.

lines of business, E-SEMS operates a general consulting
services business based around the leasing of energy-saving
devices and storefront solutions equipment. DBJ executeda collaborative loan to E-SEMS in recognition of its business
operations focused on global warming and the reductionof CO2 emissions. This loan was taken up as an example
of collaborative funding at the first meeting of the Kansai
Regional Vitalization Study Group,* whose main members
are DBJ’s Kansai Branch and The Bank of Ikeda, Ltd. (cur-Showroom for proposing and displaying
energy-efficient lighting solutions

rently The Senshu Ikeda Bank, Ltd.).
Investment and Loan Case Study: Sanyo Biko K.K.
Sanyo Biko K.K., which has its head office in Soja City,

and Ningyo Kaikan K.K. as collateral, to cover the material

Okayama Prefecture, manufactures and sells dolls for sea-procurement costs and financing requirements for moving

sonal festivals. Backed by its product quality based on man-the Okayama branch of Ningyo Kaikan to a location withufacturing techniques cultivated over many years, Sanyo

more floor space in Hirata, Kita-ku, Okayama City.

Biko supplies dolls to major nationwide wholesalers andTraditionally, financial institutions have regarded productsells directly to customers at three Ningyo Kaikan stores ininventory as being extremely difficult to evaluate. Therefore,

Okayama Prefecture, which are operated by affiliate Ningyo

they have been reluctant to accept product inventories as

Kaikan K.K.

collateral. By assessing product inventory as collateral, DBJ is

In view of the critical acclaim enjoyed by the seasonal

helping to diversify funding options for local businesses.

dolls Sanyo Biko produces, DBJ provided a loan to the company, accepting the product inventory held by Sanyo Biko
=Product Inventory Collateral Loan Scheme
Loan execution

Sanyo Biko

Guarantee by transfer

Product inventory(movable assets)
Monitoring of inventory
conditions

80

Annual Report & CSR Report 2010

DBJ
Highly acclaimed hina dolls

CSR Report

Community Revitalization
Investment and Loan Case Study: Nichia Corporation
Nichia Corporation is a leading manufacturer of lumines-

DBJ has extended loans to Nichia to provide financial
support for its activities in the manufacturing field that

Prefecture. Recently, propelled by its successful develop-

leverage its robust technical capabilities.

CSR through Investment, Loan and Other Businesses

cent materials with headquarters in Anan, Tokushima
ment of the high-brightness blue light emitting diode (LED),
Nichia has garnered a major share of the global market forLEDs. The company is also a global leader in the manufacture and sale of cathode materials for lithium-ion batteries.
As a long-life, energy-efficient, mercury-free lighting
technology, LEDs are a promising environmentally friendly
light source. Advancements in brightness and color rendering performance are building momentum for the use ofLEDs in backlights for notebook PCs and LCD televisions,with utilization in general lighting and vehicle lighting wellLEDs

under way.

Investment and Loan Case Study: Fukuoka REIT Corporation
Fukuoka REIT Corporation, based in Fukuoka, is a real

The continued advancement of Fukuoka REIT Corporation

estate investment trust (REIT) managed by Fukuoka Realty

promises to nurture the region’s real estate market, stimulate

Co., Ltd. Local developer Fukuoka Jisho Co., Ltd., and otherreal estate transactions and facilitate urban development

leading firms in Fukuoka and other parts of Kyushu partici-

projects through improvements to quality development prop-

pate in Fukuoka Realty as sponsors.

erties by a stable set of owners.

DBJ provided a ¥12 billion loan to Fukuoka REIT
Corporation to acquire properties to be structured into
funds prior to its public listing. The loan was executed inrecognition of the REIT being Japan’s first that specializes
principally in investment in a particular geographic area—
namely Fukuoka and other parts of Kyushu, plus Yamaguchi
Prefecture—and was provided in the private offering stage,
when risk assessment is particularly difficult.
Canal City Hakata shopping complex

Investment and Loan Case Study: Unkai Shuzo Co., Ltd.
Unkai Shuzo Co., Ltd., headquartered in Miyazaki City,

sion of the Ayagura

Miyazaki Prefecture, is one of Japan’s leading producers of

distillery, which Unkai

authentic shochu (distilled spirits), and is the manufacturer

Shuzo undertook toof the Unkai brand of shochu, considered to have had aaugment its manu-

major influence on Japan’s shochu culture.

facturing capacity in

In addition to ongoing upgrades to its manufacturing

response to the recent

facilities to meet the rising demand for authentic shochu,

increase in demand.

Unkai Shuzo fulfills the expectations of authentic shochu
enthusiasts by maintaining high product quality and operating the industrial tourism facility Kuramoto Aya Shusen noMori.
DBJ is supporting the invigoration of a leading local
industry by providing a long-term loan to fund the expan-

The Ayagura distillery

Annual Report & CSR Report 201081

CSR Report

Overseas

CSR through Investment, Loan and Other Businesses

Efforts at expansion overseas have become an important factor in Japan’s continued growth.
The rapid economic development of Asia in particular, with its notable growth in middle income
groups, represents a major business opportunity for Japan, because the region is running up against
environmental issues, urbanization-related difficulties and other development constraints andgrowth challenges that Japan has already faced and overcome.
In order for Asia’s growth to translate into definite gains for Japan, the country must underpin
Asia’s rise by sharing with each country the wealth of experience it has gleaned from the process of
economic development up to now. Japan must also mobilize its unique profile of strengths in thefields of the environment and infrastructure to deploy business operations in the rest of Asia in acomprehensive and strategic fashion.

Investment and Loan Case Study: Senoko Power Ltd. (now Senoko Energy Pte. Ltd.)
Senoko Power Ltd.* (hereinafter, ”SP”; currently Senoko

The successful efforts on this financing project have been

Energy Pte Ltd.) is Singapore’s largest power company.

recognized overseas with the ”Power Deal of the Year in

Amid the promotion of deregulation of the electric

Asia Pacific” award from Project Finance International mag-power industry by Singapore’s Energy Market Authority

azine in its PFI Awards 2009 and the ”Project Finance of(EMA) and rising concerns about recent global warming

the Year in the Asia Pacific Region” award from Euromoney

issues, investment to raise efficiency within the approved

magazine.

energy output (repowering) is being recognized as animportant management challenge for SP. Given these circumstances, DBJ provided subordinated financing for SP in
November 2009, aiming to support the company’s projects
in light of credit market conditions.
This loan also funded the deployment of a new overseas
power business, including retail power sales, undertaken
by SP sponsors Kansai Electric Power Co., Inc. (KEPCO) andKyushu Electric Power Co., Inc., with their energy efficiency
technologies, and Marubeni Corporation, with its expertisein overseas power plant operations.

Senoko Energy power plant82

Annual Report & CSR Report 2010

*In 1995, power utility operations in Singapore were transferred fromthe Public Utilities Board (PUB) to the country’s sovereign wealth fund,Temasek, and Singapore Power Ltd. was established as Temasek’s
wholly owned holding company, under which the Senoko PowerGroup was born as an energy producer and retailer. After the company
was reorganized under the direct ownership of Temasek in 2001,
100% of Senoko Power’s shares were sold to an acquiring consortium(with capital contribution by Marubeni Corporation; GDF Suez S.A.;
Kansai Electric Power Co., Inc.; and Kyushu Electric Power Co., Inc.)
from Temasek via international bid in September 2008, which wasundertaken to promote the liberalization of Singapore’s energy market.
Power utility operations were transferred to Senoko Energy in January
2010.

CSR Report

Technology

CSR through Investment, Loan and Other Businesses

Japan’s manufacturing industry drives the country’s economy, with its automotive, electricalequipment and materials manufacturing sectors constituting the motive force for the country’s
economic expansion. In striving to be a manufacturing-oriented country, Japan recognizes that thetechnical capabilities of its manufacturing industry are the source of the country’s international
competitive edge in industry. For financial institutions, which exist in a symbiotic relationship withindustry, support for the manufacturing industry is a universal mission.
Investment and Loan Case Study: Nippon Sheet Glass Co., Ltd.
Nippon Sheet Glass Co., Ltd., headquartered in Minato-

The UDS Mezzanine Fund is a corporate mezzanine fundku, Tokyo, is one of the world’s largest manufacturers of

established jointly by DBJ and Sumitomo Mitsui Banking

glass for construction and automotive applications, pro-

Corporation. The fund, in conjunction with its successor

cessed glass products and functional glass products. To

fund,*2 accepted ¥30 billion of Nippon Sheet Glass’s pre-remain competitive in the increasingly concentrated global

ferred stock in this financing project.

glass market, in June 2006, Nippon Sheet Glass acquired
Pilkington Group Limited, of the United Kingdom. In its*1

Official name: UDS Corporate Mezzanine Limited Partnership

10-year strategy announced immediately after the acquisi-*2

Additional equity participation in the successor fund by Sumitomo
Mitsui Finance & Leasing Co., Ltd.

tion, Nippon Sheet Glass set a target for the strategy’s
first phase to boost productivity and quality and hone its
competitive edge through differentiation while regaininga healthy business structure by repaying its existing debt
and strengthening its financial foundation. Faced withdeteriorating financing conditions following the collapseof Lehman Brothers, and deeming it essential to create adynamic and robust capital base to reinforce its financial
constitution, Nippon Sheet Glass opted to issue preferredstock to the UDS Mezzanine Fund*1 operated by DBJ.

Glass antennas for radio frequency identification (RFID) tags

Investment and Loan Case Study: Mitsubishi Aircraft Corporation
Mitsubishi Aircraft Corporation, with its head office indevelopment funding over extended time periods. DBJ

Nagoya, Aichi Prefecture, was established to develop,

provides long-term funding to Mitsubishi Aircraft throughmanufacture, sell and provide customer support for theequity participation via preferred stock.

Mitsubishi Regional Jet (MRJ), a next-generation regional
aircraft. Incorporating cutting-edge technology, the MRJ
will realize both top-level operational efficiency and toplevel comfort in the cabin. The jet will also achieve dramatic
reductions in fuel consumption, noise and exhaust gasses through the application of the world’s most advanced
aerodynamic design and noise analysis technologies andthe adoption of a state-of-the-art engine. With such overwhelmingly superior operational efficiency and environmental characteristics, the MRJ is expected to greatly contributeto airlines’ competitiveness and profitability.
Aircraft have approximately 100 times as many parts
as automobiles and must adhere to extremely high safety
standards. These considerations require sophisticated and© Mitsubishi Aircraft Corporation
Conceptual rendering of the MRJ

complex technical engineering that necessitates massive

Annual Report & CSR Report 201083

CSR Report

Technology
Investment and Loan Case Study: Charmant, Inc.

CSR through Investment, Loan and Other Businesses

Charmant, Inc., headquartered in Sabae, Fukui Prefecture,

In addition to medium- to long-term loans for capital

has established itself as the largest corporate group in Japanfinancing, DBJ engages in equity participation in Charmant,that undertakes the full cycle of planning, development,

the proceeds of which are being used to fund expansion of

manufacture and sale of eyeglass frames. With its aggres-a plant in China. Furthermore, to support Charmant’s glob-

sively innovative approach to product development andal strategy, DBJ extended a loan to the company’s Hongproduct technologies, Charmant is the only company in its

Kong subsidiary denominated in foreign currency. Part ofindustry in Japan to operate a global business. Charmant

this loan is being used to construct a new production hub incontinues its growth as a global corporation based in Fukui

China.

Prefecture, with sales hubs in 17 major countries worldwide, extending to more than 100 countries with the inclu-

DBJ supports fund-raising from a long-term perspective
as it strives to enhance corporate value for its clients.

sion of sales through dealers.

Pressing process for frame components

Frames made of Excellence Titan

Investment and Loan Case Study: Mitsubishi Plastics, Inc.
Mitsubishi Plastics, Inc., with its head office in Chuo-ku,

Highly liquid syndicated loans are syndicated loans with

Tokyo, is a core company of the Mitsubishi Chemical

increased liquidity based on standardized contractual terms

Holdings Group. Mitsubishi Plastics supplies processed plas-and disclosure of the loan’s bid and ask price quotations

tics and other materials for home and industry use, backed

after arrangement, and they are extended especially toby its strong technology development capabilities.

well-run corporations. These loans are expected to stimulate

In an effort to diversify its funding sources while remain-transactions in the secondary loan market, aid in appropri-

ing conscious of market fund-raising, Mitsubishi Plastics

ate price formation in subsequent syndicated loan arrange-

designated DBJ and The Bank of Tokyo-Mitsubishi UFJ, Ltd.,ments, and lead to more active financial and capital markets.

as arrangers for its syndicated loans. The two banks put
together highly liquid syndicated loans totaling ¥20 billion.

A sampling of Mitsubishi Plastics products

84

Annual Report & CSR Report 2010

CSR Report

M&A and Business Alliances

CSR through Investment, Loan and Other Businesses

Mergers and acquisitions have entered the spotlight with the increasing prevalence of businessrestructuring and industry restructuring that involves operational selection and focus. Mergers
and acquisitions are considered effective and essential for aggressive business restructuring and tooverhaul and revitalize underperforming businesses.
Advisory Services Case Study: Toppan Printing Co., Ltd.
Toppan Printing, which has its headquarters in Chiyoda-ku,

After careful analysis of SNP’s corporate value andTokyo, is involved in developing business in a broad range

overseas business development, DBJ proposed theof areas that include information and communication andacquisition of SNP to Toppan, and as a result DBJ and

are focused on the printing industry.

PricewaterhouseCoopers Singapore* supported Toppan’s

Through its extensive information network, DBJ

purchase of SNP as joint M&A advisors. The combination oflearned that investment company Temasek, owned by

Toppan’s advanced technology and SNP’s production and

the Singapore government, intended to offer for sale thesales network promises to enhance Toppan’s business in

SNP Corporation (currently Toppan Leefung Pte. Ltd.),

overseas markets.

a Singapore-based printing company. Starting out asSingapore National Printers Pte Ltd., a government printing*PwC Singapore is a member of New York–based
PricewaterhouseCoopers, the world’s largest professional services firm.

office, SNP is now a major player in the printing industry,
operating domestically and in China, Hong Kong, Southeast
Asia and the U.S. and European markets.
=SNP Acquisition Scheme

DBJ

TemasekPwC Singapore

100%

Advisory service

Green Dot Capital

Toppan Printing

53.55%TOB (Singapore market)

SNP Corporation

Advisory Services Case Study: Toko Electric Corporation
Toko Electric Corporation, headquartered in Chiyoda-ku,
Tokyo, manufactures power distribution equipment andoperates a power meter repair business.
Toko Electric integrated its meter business with thatof Toshiba Corporation to establish Toshiba Toko Meters
Systems Co., Ltd., with the aims of (1) developing, manufacturing and selling the electronic power meters of the
future (smart meters*), (2) strengthening its gas, water andcommercial measuring gauge business, and (3) advancing*A smart meter is a new type of power meter that measures power
consumption at households and businesses, then uses an onboard
communication function to send the data to the power company
automatically at regularintervals. Smart meters also
aid in electricity supply planning by power companies
through constant monitoring of the amount of power
used.

into overseas markets where the smart grid approach is
gaining currency.
DBJ served as Toko Electric’s financial advisor during
this business integration and provided the long-term loans
required for the establishment of the combined entity.

Electronic power meter (with communication function)

Annual Report & CSR Report 201085

Environmental Management

DBJ aims to realize a more prosperous sustainable society

strive for harmony between economic development andCSR Reportby achieving harmony through the triple bottom line ofenvironmental conservation and to cooperate in resolving

society, the environment and the economy. We recognize

environmental problems. In addition, in November 2002,

the resolution of environmental problems as an issue that

we acquired ISO 14001 certification. Such efforts indicate

is common to all humankind. For this reason, DBJ has con-

our organizational commitment to environmental preserva-

Environmental Management

tributed to the formation of an environmentally friendly

tion and the realization of a sustainable society.

economic society.

At present, we are pursuing independent initiatives and

In June 2001, DBJ became the first Japanese bank tosign the UNEP Statement by Financial Institutions on the

promoting environmental efforts in the communities where
our branches and offices are located.

Environment and Sustainable Development, promising to

DBJ’s Basic Environmental Policy
Promulgated and Put into Effect October 1, 2008

Purpose
Article 1. DBJ aims to realize a more prosperous sustainable society
by achieving harmony through the triple bottom line of society,the environment and the economy. We recognize the resolutionof environmental problems as an issue that is common to all
humankind. For this reason, DBJ has established a policy thataims to contribute to the formation of an environmentally friendly
economic society.
Promotion of Environmental Measures through Loan and
Investment Activities
Article 2.
1. Through its investment and loan activities, DBJ supports global
warming prevention measures and the promotion of a recyclingoriented society. In addition, by supporting environmentally
sustainable corporate management by its clients, DBJ contributes
to their creation of environmental measures and to the realizationof a sustainable society.
2. DBJ contributes to clients’ environmental measures throughthe risk evaluations of investment and loan activities from anenvironmental perspective.
Promotion of Environmental Awareness through Environmental
Communication
Article 3.
1. Through continuing research and advisory activities relating toenvironmental issues, DBJ seeks to help resolve environmental

issues through enhanced awareness, thereby contributing to therealization of a sustainable society.
2. DBJ seeks to promote environmental awareness throughinternational cooperation, including the distribution of information
about environmental initiatives by Japan.
3. DBJ endeavors to improve its initiatives by sharing information
on its environmental activities and through communication withsociety.
Promotion of Environmental Awareness Activities in Offices
Article 4. DBJ complies with environmental laws and regulations,and promotes activities to reduce the environmental impact of its
operations. To these ends, DBJ seeks to contribute to the creationof environmentally friendly office environments through theactivities indicated below.
(1) Promotion of resource and energy conservation and recycling
activities(2) Promotion of environmentally friendly sourcing of supplies(3) Prevention of environmental pollution
Promotion of Environmental Awareness Activities in
Communities
Article 5. By cooperating with community environmental
improvement initiatives, such as measures to prevent heat islands,
DBJ works to contribute to the creation of environmentally friendly
regional societies.

Putting into Practice DBJ’s Basic Environmental Policy
Promotion of Environmental Measures throughPromotion of Environmental Awareness

Our Investment and Loan Services

through Environmental Communication

DBJ’s investment and loan activities support projects

DBJ addresses environmental problems by conducting

designed to prevent global warming and create a recycling-

ongoing environmental studies and proposals. These efforts

based society. Furthermore, we promote clients’ efforts

help to enhance environmental awareness, support involve-

toward environmentally conscious management. By con-ment in environmental issues and contribute to the realiza-

tributing to clients’ environmental measures, we help totion of a sustainable society.

achieve a sustainable society.

Q

Q

Q

86

Financing Employing DBJ Environmental Ratings – See

Publication from the Research Institute of Capital
Formation’s Global Warming Research Center – See page 49.

pages 37, 68-70.

Q

Communication Focused on the Environment – See page 58.

Emissions Credits – See page 71.

Q

Communication in International Cooperation – See page 59.

Annual Report & CSR Report 2010

Activities in Offices

Activities in Communities

DBJ works to reduce the environmental impact of its opera-

By cooperating in community environmental improvement

tions beyond what is required by environmental regulations.

initiatives, such as measures to prevent heat islands, DBJ

As such, we promote the measures described below in anworks to contribute to the creation of environment-friendly

effort to make our offices environment-friendly.

regional societies.

Environmental Management

Promotion of Environmental Awareness
CSR Report

Promotion of Environmental Awareness• Promotion of recycling and resource and energy
conservation• Head OfficeResource- and Energy-Saving Efforts

Uchimizu Project 2009
DBJ participates in theYear Ended
March 31,2008

Year Ended
March 31,2009

Year Ended
March 31,2010

Copy and printing paper usage（kg）

89,555

101,269

95,992

campaign hosted by the

Waste emissions（kg）

93,56085,86076,030Otemachi, Marunouchi

4,943,104 4,822,094

and Yurakucho (OMY)

Energy consumption（kWh）

4,585,683

Water usage（m3）25,81425,257

24,856

Uchimizu Project 2009, aUchimizu Project District
Executive Committee (Otemachi-Marunouchi-Yurakucho

Note: Head office building only

District Redevelopment Project Council/Cooperative for the• Promotion of environment-friendly sourcing of
supplies
DBJ joined the Green Purchasing Network in December
2000, and following the Law concerning the Promotion

Promotion of the OMY Area Management Association),
Ministry of the Environment, Tokyo Metropolitan
Government and Chiyoda-ku. DBJ is continuing with its participation in the Uchimizu Project 2009.

of Procurement of Eco-Friendly Goods and Services by the

Chiyoda-ku cleanup projectState and Other Entities (Green Purchasing Law), which

Businesses, groups and residents inwent into effect in April 2001, DBJ made efforts to pur-

Chiyoda-ku work together in thechase products and services with a lower environmental”Chiyoda-ku cleanup project” to clean

impact. We have continued to practice green purchasing

up the green spaces in front of thefollowing our privatization.

Imperial Palace.
Volunteers planting seedlings

Achievements of the Green Procurement Program
for Typical Items
Year Ended March 31, 2010

and flower bulbs
We participated in
the organization of
the bulb and seedling

Paper

96.5%

Stationery

83.5%

ku Adaptation Park

Equipment

82.8%

Promotion System”

Office equipment

97.4%(CAPPS) in Tokiwabashi

Lighting

72.0%

Park.

Interior items

100.0%

Note: Excludes printing paper, media cases, labels, and other items that were purchasedon the market that do not comply with the prescriptions of the Law Concerning
the Promotion of Procurement of Eco-Friendly Goods and Services by the Stateand Other Entities but that were purchased nevertheless on the basis of certain
characteristics or functional requirements.

planting with ”Chiyoda-• Tokai Branch
Flower Hospitality
Exercise
The branch has participated• Prevention of environmental pollution

in the Flower Hospitality

DBJ complies with environmental laws and regulations.

Exercise, sponsored by the
Chubu Association of Corporate Executives, since its initiation in 2005. Through such activities as watering flower
beds in the Sakura-dori Otsu area of Nagoya, efforts continue toward building a beautiful town.

Annual Report & CSR Report 201087

• Kyushu Branch• Kansai Branch
CSR Report

Cleanup/beautification

Kansai Eco Office Declaration
Registered since 2008, the ”Eco Office Declaration” calls

activity—Tenjin Clean

for (1) a summer ”eco style,” (2) enforcing energy saving,Day

Environmental Management(3) promoting green purchasing, (4) curbing automobile use

We participated in theand (5) engaging in waste recycling.

Tenjin Clean Day activity
sponsored by the We Love

Uchimizu Project

Tenjin conference andParticipated in the ”Uchimizu

helped to clean up the area.

Project” sponsored by the
Osaka City Environment Bureau.

• Minami-Kyushu Branch
Sakurajima cleanup project• Shikoku Branch

We continue to participate inForest-thinning activities
We continue to participate in forest-thinning activities conducted in collaboration with the town of Inomachi, Kochi
Prefecture, and Mitsui & Co., Ltd.

the cleanup of the recreation
area on Sakurajima’s coastline.
Other efforts
We continue to participate inEarth-Friendly Office
In fiscal 2009, we registered with the ”Earth-Friendly
Office” program created by the city of Takamatsu’s environmental department and are making efforts to (1) curb
paper consumption, (2) promote the use of recycled products, (3) raise employee awareness”Candle-Night” (using candles rather than electric lights)
at the waterfront commercial facilities and uchimizu (sprinkling water to reduce heat) at environmental learning facilities.
• Other Branchesof resources and waste reduction,

We implement initiatives such as collecting used postage(4) save energy and water and (5)stamps and PET bottle caps for donation. We also haveregulate office air at an appropriate

employees bring their own chopsticks and cups to work totemperature.

reduce waste.

Environmental Management ConferenceEnvironmental Management Structure
Environmental
Management Officer(Director in charge of Public
Relations & Corporate Social
Responsibility Office,Corporate Planning &Coordination Department)
Vice-Environmental
Management Officer(Corporate Planning &Coordination Department
Manager)

Implementation
division
Heads of each department
and officeEnvironmentalGroupmembers

Environmental Group
Promotion Officer
Environmental
Group Promoter
Employees

88

Annual Report & CSR Report 2010

DBJ has set up the Public Relations & Corporate Social
Responsibility Office within the Corporate Planning &Environmental
Management Conference

Coordination Department. This office spearheads environmental management activities attended by all executives
and employees.

Public Relations &Corporate Social
Responsibility Office,Corporate Planning &Coordination
Department(Secretariat)

Environmental Management Officer
The Environmental Management Officer is assigned to the
Public Relations & Corporate Social Responsibility Office in
DBJ’s Corporate Planning & Coordination Department. The
officer confirms environmental education and training andauthorizes annual environmental targets.

Environmental Management Conference
The Environmental Management Conference deliberates
annual environmental targets and environmental management reviews.

Environmental Group Promotion Officer

In charge of DBJ’s environmental management activities is

Group Promotor designate a member in each branch and

the Public Relations & Corporate Social Responsibility Office,department to be in charge of environmental promotion

Corporate Planning & Coordination Department. In addi-

and manage the level of achievement of annual environ-tion to setting environmental targets for each fiscal year

mental targets.

CSR Report

Public Relations & Corporate Social
Responsibility Office, Corporate Planning &Coordination Department

To promote environmental management activities, theEnvironmental Group Promotion Officer and Environmental

Environmental Management

and confirming the degree to which established targets
have been achieved, this office manages compliance with

Employees

relevant laws and regulations.

Employees are responsible for putting environmental management activities into action.

DBJ’s Primary Achievements in the Environmental Sector since Its Establishment
1999 October
2001 April
June
October
2002 March
July
November
2003 October
October
2004 April
September
November
December2005 January
September
OctoberNovember
2006 May
August2007 July
2008 October
2008 October
2009 March2009 April
2009 September
2010 January2010 April

Designation of sustainable development as an objective by the Development Bank of Japan Law (Law No. 73 of
1999)
Start of green procurement and environmental training
First Japanese bank to sign the UNEP Statement by Financial Institutions on the Environment and Sustainable
Development
Establishment of Social Environment Committee and Social Environment Group; hosting of discussions between
UNEP and Wa no Kuni Financial Institutions on Environmental Considerations for Financial Institutions
UNEP FI 2002 Global Roundtable in Rio de Janeiro, Brazil
Launch of the Development Bank of Japan Environmental Policy
ISO 14001 certification
Publishing of Environmental Report 2003 for a Sustainable Society (first annual edition)
Joint sponsorship of UNEP FI 2003 Global Roundtable in Tokyo, an international conference on finance and theenvironment
Start of financing employing DBJ environmental ratings
Second annual Sustainability Report
Establishment of Japan Carbon Finance, Ltd. (JCF)
Establishment of Japan Greenhouse Gas Reduction Fund (JGRF)
Assumption of chair of the UNEP FI Asia Pacific Task Force
Third annual Sustainability Report
UNEP FI 2003 Global Roundtable
Renewal of ISO 14001 certification
Press conference to announce DBJ status as a signatory institution to the Principles for Responsible Investment
CSR Report 2006 (fourth annual Sustainability Report)
Annual Report & CSR Report (integrated annual report and CSR report)
First Board of Directors and Management Committee meetings of DBJ Inc.; formulation of Basic Environmental
Policy and Environmental Management Regulations
Selection as a core financial institution for the Loan Assistance for Tokyo Small Business Environmental Initiatives
programFirst Environmental Club Syndicated Loan Eco-no-Wa
Commendation for Financing Employing Environmental Ratings system: Environmental Development Award
Start of cooperation with regional financial institutions to prepare a system to implement Financing Employing
Environmental Ratings
Basic cooperative agreement with the International Finance Corporation (World Bank Group financial institution
conducting the world’s largest international investment and loan activities for developing countries)
Business cooperation agreement to promote environmental measures with a non-life insurance company

Annual Report & CSR Report 201089

Fostering Human Resources and Creating a Comfortable Work Environment

CSR Report

DBJ considers its human resources to be its most valu-

environment to bring out the best in every employee. DBJ’s

able assets and thus endeavors to develop its employees’

superior employee performance resulting from such efforts

capabilities. DBJ actively works to build a systematic humanis what drives DBJ ahead on a daily basis and keeps it an

resource development system and a comfortable work

innovator in the finance sector.

Fostering Human Resources and Creating a Comfortable Work Environment

Human Resource Development Vision
DBJ has continuously evolved and developed in line with theis certainly important, responding to the constantly chang-needs of the times in order to maintain its leadership posi-

ing demands of the times requires broad experience, deeption in the constantly advancing financial field.

knowledge and the ability to see the big picture. DBJ has

To develop its human resources, DBJ encourages autono-

therefore created a human resource development systemmous and pioneering behavior in its employees as financial

that incorporates job rotation, performance evaluation,

professionals through the vision of generalists who can beformal education and training, while also encouraging

specialists in many fields. Although gaining specialist skills

specializations.

Deploying the Target Management System
DBJ’s Target Management System encourages employees to(PDCA) cycle. Particularly through its encouragement ofwork autonomously and modify their actions and enables

goal-setting, DBJ emphasizes enhancing medium- and long-

management to accurately evaluate such efforts. DBJ isterm value both internally and externally. DBJ also motivatesworking to enrich this system by having subordinates meet

employees by offering bonuses and other benefits based on

individually with superiors to set goals and receive feedback,performance.

autonomously running through the Plan-Do-Check-Act

Creating a Comfortable Work Environment
DBJ actively strives to cultivate a comfortable work environ-

options. These systems include treatment by external spe-ment.

cialists and access to counselors.

To maintain an environment in which all employees

care leave programs to give motivated employees betterto prevent sexual and power harassment and has set up aopportunities for long-term employment, as well as a sys-

hotline to deal with such issues. Furthermore, to support

tem for continued employment options after retiring frommental and physical health, DBJ provides its employees andfull-time work.

their families with regular medical examinations and care90

DBJ has also instituted childbirth, childcare and nursing

can feel secure, DBJ has notified employees of its policy

Annual Report & CSR Report 2010

A Solid Human Resource Development Systemoped education and training system. DBJ’s combination

enables employees to not only gain broad-based practicalof mandatory training by level and elective self-training

experience that gives clarity to their medium-term career

according to skills and interests enables each employee togoals but also focus on quickly acquiring and improving

plan his or her career and support the DBJ’s initiatives intheir highly specialized skills.

innovative finance.

Fostering Human Resources and Creating a Comfortable Work Environment

Additionally, DBJ’s system of strategic job rotation

CSR Report

DBJ’s financial professionals are supported by a well devel-

In step with globalization, DBJ cultivates employees

In 2008, we established the DBJ Financial Academy,able to perform in domestic and international settings.

which is designed to help employees acquire and maintain

To achieve this, DBJ actively assigns employees to a wide

basic competencies and deepen their understanding ofvariety of external organizations, including overseas gradu-

finance, assuming they will become involved in advanced

ate schools (program currently being expanded), domestic

financial operations. We are expanding the academy, focus-

and overseas research institutes, international institutions,ing on courses such as Basics of Finance, Corporate Financerelated government agencies and corporations, thereby

and Valuation Case Studies.

supporting skill development and network extension.

DBJ’ s Human Resource Development System
Mandatory Training by Level

Business-Related(Self-Training)

Elective Training

Careerdevelopment
plan training

Secondarytraining after
joining DBJ•Compliancetraining•Practical
legal
training•Training in
corporateandfinanciallaw, etc.

Basicknowledge
areas•Accounting•Finance,
etc.

•Structured financetraining•Training in
syndicated loans•Seminars on
creation ofindustries•Environmental
and disasterprevention
seminars, etc.

•Finance theory
training•Finance casestudy training•Valuation training•Equity-related
training•Practical risk
management
training, etc.

Commonskill areas•Problemsolving andcommunication•Logicalthinking•Englishconversation•Businesscomportment,
etc.

DBJ Financial
AcademyIntroductory
training for
new employees
Autonomous
careerdevelopment

Cultivation ofmanagement andleadership skills

Planned and continuous HR development

Accounting
system andrelated training

Legal
training

Mastery of DBJ
procedures andbasic processes

Mastery offinance andlaw

Financialanalysis training
Acquisition offinancialaccounting
knowledge

Mastery of knowledge andskills needed for work

Domestic and overseas exchange
students, trainees, etc.

Management
training•Practicaltraining ininvestment
and loans•Rating
and asset
assessment
training•Basic loaninterest
training•Trainingin debt
management,
etc.

External seminars, lectures, etc.

PositionLife plan
training

Distance learning, night courses, acquiring public qualifications

Top management
training

External
Assignments, etc.

Basic financetraining for
new employees
Mastery ofbasic businessexecution skills

Strategic and focus areas,such as financial skills
Addressing strategic and focus areas

Financialknowledge,
etc.

Mastery of knowledge andskills needed for work

Cultivation ofwork-related
knowledge,
mastery of
specialized
knowledge, HR
development

Annual Report & CSR Report 201091

Seeking Higher Ethical Standards
CSR Report
Fostering Human Resources and Creating a Comfortable Work Environment

For half a century, DBJ has led Japan’s economy as a gen-

DBJ has long desired that its employee training addresseral policy-based financial institution. As DBJ transforms

issues of human rights in addition to ensuring legal compli-

into a private-sector financial institution that still values theance, promoting eco-friendly conduct (through environ-long-term perspective, neutrality, public-mindedness andmental management training) and maintaining information

reliability it has cultivated, each employee is being held to asecurity (through training to prevent fraudulent access andhigher ethical standard.

information leaks). DBJ will henceforth devote even moreresources toward such efforts.

DBJ Financial Academy
Since May 2008, the DBJ Financial Academy has held weekly courses with the objective of raising the level of financial
expertise of general employees by strengthening the knowledge and understanding that is essential to the advanced
corporate financial business that lies at the heart of DBJ’s
business model. During the year ended March 31, 2009,
courses covered statistics, an overview of technical financial
theory and financial legislation.
Through the DBJ Financial Academy, each employee canseek to elevate his or her abilities in finance, whether aim-Q

DBJ Financial Academy Curriculum2009 Courses (June 2009 through February 2010)
Core courses
Basic financial theory
Corporate finance
Valuation/case studies
International finance
Financial system theory
Financial policy
Elective courses
Financial Instruments and Exchange Law
Crystal ball practiceReal estate finance
Investments (investment theory)
M&A
Q

Q

Q

Q

Q

Q

Q

ing to acquire basic knowledge or to further deepen understanding. Students from outside DBJ, such as employees ofregional financial institutions, may also participate. We lookforward to expanding the fields in which DBJ’s financial

Q

Q

Q

Q

expertise is shared.
2010 Courses (Expected to run from May 2010 throughFebruary 2011)
Core courses
Basic financial theory
Overview of International Financial Reporting Standards
Corporate finance I
Investments (investment theory)
M&A
Special lecture ”Financial Policy”
Japan Economic Research Institute Inc. (JERI) andUniversity of Tokyo Joint Symposium
Financial system theory
International financeElective courses
Financial Instruments and Exchange Act
Basic statistics course
Real estate financeCorporate finance II

Q

Q

Q

Q

Q

Q

Q

Q

Q

Q

Q

Q

Q

92

Annual Report & CSR Report 2010

Intellectual Asset Report
DBJ’s executives and regular employees
continually take on new challenges, whileremaining firmly committed to DBJ’s four corevalues: a long-term perspective, neutrality,
public-mindedness and reliability. The
intellectual assets DBJ has built up over theyears help form the financial platform andenable DBJ to provide services that extend
beyond merely providing funds. Employing
these assets, we endeavor to address the needsof the times and fulfill our role in enhancing
socially responsible activities among companies.

Intellectual Asset Management . . . . . . . . . . . . . . 94
Financial Platform That Enables DBJ to Meet the
Needs of the Times . . . . . . . . . . . . . . . . . . . . . . . . 98

Annual Report & CSR Report 201093

Intellectual Asset Management

Corporate Value and Intellectual Asset Management
Intellectual Asset ReportIntellectual Assets

Intellectual Asset Management

Companies ensure ongoing prosperity and profit byIntellectual Asset Management Essential toEnhancing Corporate Valueconsistently differentiating themselves from competitors.

Although intellectual assets are intangible in the sense that

Differentiating the products and services they offer is athey are not recorded on a company’s financial statements,

large part of the process. To enhance their operations,they are a core component of corporate value. Managing

companies must identify their important management

intellectual assets effectively promotes clarity in terms of theresources and sources of competitiveness. Specific technolo-

corporation’s key competencies and creates opportunities togies, expertise, human resources and business models are

increase corporate value.

some factors that lead to differentiation but are invisible to

Listed companies are finding that aggressively disclos-the casual observer. Determining an entity’s true corporate

ing intellectual asset information helps markets value themvalue requires the evaluation of these company-specificmore appropriately. For this reason, the introduction ofstrengths. DBJ’s activities related to intellectual assets are

regulatory frameworks to encourage or require listed com-designed to foster the application of these intangible sourc-

panies to disclose nonfinancial information has grown into

es of corporate value that underpin a company’s future

a global trend, beginning in Europe.

economic performance.

DBJ’s View on Intellectual Assets
Dating back to the time of our predecessor, maintaining the

combined represent an extraordinary DBJ asset: our exper-

trust of our clients and society at large has been our mosttise in resolving issues through the application of new finan-

important objective. From this standpoint, we have createdcial methods, the widespread use of our financial platforma wide variety of networks spanning both the public andand our economic and social contributions. This asset has

private sectors.

led to our development of the financial methods described

Based on our core values, our executives and regularbelow. It enables us to respond quickly to changing policy

employees have continued working to enhance their abil-requirements and plays a major role in our ability to con-ity to evaluate companies and projects. We have accumu-

tinue adding economic and social value.
Since privatization, we have aimed to maintain our eco-

lated a wealth of expertise in the screening and evaluationof long-term projects and a keen ability to identify andnomic and social contributions. We believe that our ability

address issues that are unique in terms of the times or the

to clearly identify and make use of intellectual assets will be

local communities that face them. In the process, we havean increasingly important factor in achieving this goal.

become a repository of intellectual assets, which when

=Relationships among Intellectual Assets, Business Models and Corporate Value

Corporate ValueBusiness Model

Financial
AssetsTangible
Fixed Assets

Created by DBJ from Ministry of
Economy, Trade and Industry materials

94

Annual Report & CSR Report 2010

Related
Structural
AssetsHuman
Resources

Intellectual Assets

Organizational
Structural
Assets

DBJ’s Utilization of Intellectual Assets
fields—as they consider such issues. All DBJ executives andunderstanding of and reporting on an entity’s networks andregular employees work to maintain a long-term and neu-client bases (related structural assets), management teamtral perspective, approaching new business with a spirit ofand employees (human resources) and intellectual assets

innovation and challenge.

and business processes (organizational structural assets).

To impart various financial skills, DBJ maintains training

Below, we introduce DBJ’s intellectual assets and activities

menus that include a 2.5-month corporate finance train-according to this segmentation.

ing program. This program, for all new employees, helps

Intellectual Asset Report

One school of thought defines intellectual assets as theon-the-job training, raise the level of specialist expertise

As our mission prior to privatization was to support projects

among DBJ executives and regular employees. We maintainthat had policy significance, our system of planning anda number of personnel exchange and dispatch programs

making investments and extending loans involved coopera-with domestic and overseas universities and research institu-

tion with central government agencies and regional govern-tions, as well as with other international institutions, thatment bodies. Now we take advantage of these networks tohelp form our networks. These programs help DBJ develop

disseminate information about our interest rate subsidy sys-and introduce new financial methods, as well as strengthen

tem based on environmental ratings, as well as other inter-

network ties. DBJ has also established the Research Instituteest subsidy systems put in place by national and regionalof Capital Formation, which carries out financial research,government bodies. Also, we continue to assist with crisis

as well as research on global warming countermeasures andsupport.

other efforts to create a sustainable society. The research

DBJ also works to create and develop financial platforms.

Intellectual Asset Management

develop screening expertise. Our menus, combined withRelated Structural Assetsthat the center produces from a neutral and long-term

To construct these platforms, we collaborate with public-

perspective is highly regarded by the community and otherand private-sector financial institutions in Japan and over-experts.

seas and maximize our networks of university professors,
attorneys, certified public accountants and other profession-

Organizational Structural Assets

als. This multifaceted combination of networks consisting

Unlike manufacturing companies, DBJ has no explicit intel-

of professionals in a host of fields in industry, academia andlectual assets, such as patent rights. However, our intro-

the government constitutes DBJ-related structural assets.

duction of new financial methods to Japan, our work withother financial institutions to create financial platforms andHuman Resources

our many other contributions to the Japanese economy

Appropriately judging medium- to long-term investments

and society rely on our organizational adeptness, that is,and loans requires all of DBJ’s executives and regular

our ability to quickly ascertain emerging issues and deploy

employees to maintain a long-term perspective and makeappropriate personnel. This ability, combined with the long-

financial decisions from a neutral standpoint. In an era

term financial data we have accumulated over 50 years ofcharacterized by increasingly complex economic and social

investment and loan operations and a corporate culture

issues and more sophisticated business skills, this long-termof always considering projects in an economically rational

perspective has a major impact on DBJ’s ability to contribute

manner, as well as in terms of their broader economic andto business formation and the financial structure. Our abil-social significance, constitute DBJ’s organizational struc-ity to provide solutions that are appropriate for companies,

tural assets, as does the smooth and rapid communication

as well as for the economy and society in a broader sense,

process resulting from the common knowledge that has

depends on the ability of our human resources—executives

evolved through corporate financing training and otherand regular employees who are professionals in various

channels.

Annual Report & CSR Report 201095

Advanced Initiatives Involving New Financial Methods That Utilize Intellectual Assets
Intellectual Asset ReportIntellectual Asset Management

We are a leader in leveraging our intellectual assets tocapital during the period when the viability of their plans is

introduce new financial methods to Japan. Our pioneering

being reviewed. To meet this need, DBJ provides debtor-in-

efforts come from maximization of our intellectual assets,

possession (DIP) financing as temporary working capital tocooperation with local communities and extensive cultiva-

enable such companies to continue operating and maintaintion of in-house human resources and expertise. Operating

value in the best portions of their businesses. In addition,

within complex financial markets, DBJ will maintain these

DBJ creates business revitalization funds to help companies

activities while continuing to control and distribute risk asnormalize their operations, through a process of operational

effectively as possible.

selection and focus, and reduce their debt levels.

The United Kingdom introduced the private finance ini-

In recent years, we have become actively involved in

tiative (PFI) scheme in 1992 to encourage private companies

mezzanine financing. (”Mezzanine” literally refers to theto fund or manage projects that are typically operated bypartial story between two main stories of a building.) In thethe public sector. As a leader in absorbing and accumu-

repayment hierarchy, mezzanine financing is lower than thelating such expertise, DBJ has participated in numerous

senior financing* typically provided by financial institutions,

PFI projects in Japan. By shifting to the private sector theso it is a higher investment risk. In the United States andresponsibility for constructing, maintaining and operatingother markets with a broad range of investors, mezzanine

public facilities, the country benefits from private-sector

financing plays an important role in diversifying the types

management expertise and technical capabilities. By appro-of funding that are provided. Mezzanine financing can be

priately allocating risks among the private and public sec-

used in a number of situations, such as business or capitaltors, PFI is an efficient and effective way to provide public

restructuring. Taking a long-term perspective, DBJ provides

services. With PFI, project financing is the method generally

mezzanine financing as one of its tailor-made financing

used to raise funds, as project roles are allocated appropri-

solutions.

ately and long-term business is assured.
DBJ provides a full range of financing options in the areaof business revitalization. After filing applications according to Civil Rehabilitation Law or Corporate Rehabilitation
Law procedures, companies typically require working

96

Annual Report & CSR Report 2010

*Senior financing involves relatively low risk. In Japan, most corporatebond issues and funds provided by financial institutions are seniorfinancing.

Relationship between Intellectual Assets and CSR at DBJ
conformance with various laws and regulations, ensure safe

DBJ’s role as seen by society. Evaluated in this sense, intel-

and secure workplace and surrounding environments andlectual assets and CSR are two sides of the same coin.

provide quality products and services through fair competi-

For example, DBJ’s Environmental Rating System andDisaster Preparedness Program—fully mobilized throughtion. These activities reinforce a company’s client base andraise corporate value by fulfilling social responsibilities.
By employing our intellectual assets in these ways, wecies and regional government bodies, experts and clients;

go beyond merely providing financing. We also play a role

our human resources comprising executives and regularin promoting increasingly sophisticated corporate CSR man-

employees; and our accumulation of experience andagement.
As can be seen on pages 34 to 44 ”Integrated

systems provide a strong backup to the CSR activities of ourInvestment and Loan Services,” and on pages 60 to 85”

business partners.

Investment and Loan Case Study/Advisory Services Case

Companies that access our loans based on the DBJ
Environmental Rating System or the DBJ Disaster

Intellectual Asset Management

intellectual asset networks with central government agen-expertise—serve a vital CSR role. At the same time, our loanIntellectual Asset Report

The figure contrasts intellectual assets as viewed by DBJ andStudy,” DBJ is taking advantage of its various accumulated
intellectual assets.

Preparedness Ratings have cause to reconsider their=Relationship between Intellectual Assets and CSRIntellectual Asset
Elements
Related
Structural Assets
Networks andClient Base

Human
Resources
Management Teamand Employees

Organizational
Structural Assets
Intellectual Assets andBusiness Processes

CSR Elements
Client Satisfaction
Maintaining
Service Quality
Fair Competition

Human Resource Education
Labor Standards
Human Rights
Working Environment

Legal and Regulatory
Conformance
Corporate Ethics

Created by DBJ from Ministry of Economy, Trade and Industry materials

Annual Report & CSR Report 201097

Financial Platform That Enables DBJ to Meet the Needs of the Times

Defining “Financial Platform”
Intellectual Asset Report

In DBJ’s definition, ”financial platform” refers to thethe framework of systems and laws that support corporate

amount and quality of funds to which corporate and othereconomic activity involves the application of experienced

clients have access, the systematic formulation of bases thatand real-world expertise of financial institutions and busi-

affect the diversity of fund-raising methods, financial exper-

nesses, as well as an accumulated body of results that cantise and practices, market transparency and the degree ofbe used for future reference (transaction cases, precedents

market participation.

and the like). Furthermore, as financial platforms function

Financial Platform That Enables DBJ to Meet the Needs of the Times

The more complete the financial platforms, which are

inadequately if they are used by only a minority of partici-

indispensable to financial system soundness and macro

pants, a catalyst is needed to encourage participation from

economic vigor, the greater is their effectiveness at pro-a broad range of players. Owing to our neutral position andmoting the revitalization of businesses and urban and local

advanced-player status, we are perfectly suited to serve as

communities and the creation of new industries. However,the catalyst for developing and maintaining financial plat-

financial platforms, which are an institutional, general-

forms in cooperation with other financial institutions.

access capital good, are not formed overnight. Creating

Activities Involving Financial Platforms

98

DBJ promotes and helps develop financial platforms for

As can be seen on pages 34 to 44 ”Integrated

structured financing, venture company support, business

Investment and Loan Services,” and on pages 60 to 85

restructuring support, financing related to environmental”Investment and Loan Case Study/Advisory Services Caseand disaster policies, M&A advisory services, safety nets andStudy,” DBJ introduces its activities involving financial plat-other functions.

forms.

Annual Report & CSR Report 2010

Management Structure
DBJ’s most important public social responsibility
is to maintain the trust it enjoys as a financial
institution, while maintaining the highest
standards of management transparency. We
employ an operations management cyclethat reflects the voice of society, particularly
in terms of addressing the issues society
faces from a long-term perspective, at theappropriate time and in the appropriatemanner. We undertake projects that aremeaningful from both economic and social
perspectives and work to offer superior
investment and loan solutions.

Corporate Governance . . . . . . . . . . . . . . . . . . . . 100
Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Risk Management . . . . . . . . . . . . . . . . . . . . . . . 106
Client Protection Management System/Declaration
on Personal Information Protection/Policy forManaging Conflicts of Interest . . . . . . . . . . . . 110
Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

Annual Report & CSR Report 201099

Corporate Governance

Basic Position on Corporate GovernanceManagement Structure

DBJ has formulated a corporate philosophy to encapsulatetechnologies that we have built through our experience inmanagement’s position regarding DBJ’s integrated invest-

applying our industry, analytic and R&D expertise.

ment and loan services. We consider this philosophy the

Networks

core of our corporate activities.

DBJ enjoys trust-based networks with clients, as well as
partners among regional governments and financial institu-

Corporate Philosophy

Corporate Governance

Applying financial expertise
to design the future
We apply creative financing to resolve
client issues, as we work to earn
the trust of our clients andachieve their future prosperity.

tions.
We conduct our business in accordance with the action
guidelines described below as we strive to realize our corporate philosophy.
Customers First
DBJ will operate from our clients’ viewpoints, addressing
their challenges and sharing pleasure in their success.
ProfessionalCore Competencies

With discernment and creative skill, DBJ will be a one-stop

The core competencies described below support DBJ’s

financial platform providing integrated investment andefforts to realize its corporate philosophy.

loans both in Japan and abroad.

Intention

Global & Local

DBJ’s fundamental stance is based on sharing with its cli-

DBJ will maintain a long-term viewpoint, considering theents a long-term perspective, neutrality, public-mindedness

needs of the times, the world and the region.

and reliability.

Speed & Teamwork

Intellectual Assets

Relying on skilled teamwork, DBJ will act rapidly and inIntellectual assets refers to the abilities to think ahead,

good faith, building strong foundations for clients’ trust.

make discerning judgments and introduce new financial

Corporate Governance Measures and Their Implementation Status
Internal Organizations

Corporate Auditors, Auditing Committee

DBJ elects outside directors from the standpoint of

The Auditing Committee comprises five auditors. This

ensuring management transparency and enhancing corporate

committee convened 14 times during the fiscal year ended

governance.

March 31, 2010.

The Advisory Board has been established as a

As prescribed by the Companies Act, a majority of theManagement Committee advisory body. This board

five Auditing Committee members are outside corporate

provides advice on overall management issues, including

auditors. DBJ has three full-time corporate auditors, one

DBJ’s management strategies, from a neutral standpoint.

of whom is an outside corporate auditor. The Office of

The Compensation Committee, which includes outside

Corporate Auditors has been created to assist corporate

directors, has been created to deliberate on director

auditors (including outside auditors) in performing theircompensation and advise the Board of Directors in thisduties. Specialized staff members are assigned to the Officeregard.

of Corporate Auditors, which is directed by the Auditing
Committee.

Board of Directors

The three outside corporate auditors are as follows:

The Board of Directors comprises nine members. To ensure

Kazuyoshi Arakawa, former Managing Director, Sumishinmanagement transparency, two Board members are outside

Panasonic Financial Services Co., Ltd. (Full-Time

directors. During the fiscal year ended March 31, 2010, theCorporate Auditor (Outside));Board of Directors met 21 times.

Makoto Ito, Attorney and Visiting Legal Research

The following two members are outside directors:
Akio Mimura, Chairman, Nippon Steel Corporation andKazuo Ueda, Professor, Faculty of Economics, theUniversity of Tokyo.

100

Annual Report & CSR Report 2010

Professor, Graduate School of Waseda University;

protection management, operational risk management andAccountancy, Aoyama Gakuin University.

system risk management.
Committee on Investment and Loan Decisions

Operations Audit Committee

This committee handles, deliberates and makes decisions

The Board of Directors has established the Operations

related to investments and loans, as well as the investment

Audit Committee, delegating to this body the authority toand loan management.

deliberate important matters related to internal audits. ThisNew Operation Screening Committee

committee met three times during the fiscal year ended

This committee deliberates and makes decisions on the

March 31, 2010.

commencement of initiatives involving new businesses.

Compensation Committee

This panel handles the advance deliberation on and

The Compensation Committee, whose members include

monitoring of investments and loans.

outside directors, has been established as an advisory bodyCommittee on International Operations

to the Board of Directors from the standpoint of ensuring

This committee deliberates items related to the overseas

transparency and objectivity. The committee considers thebusiness strategies, operations and management

type of executive compensation structure that befits DBJ.

conditions.

Management Committee

Advisory Board (As of July 1, 2010)

The Board of Directors has vested in the Management

The Advisory Board has been created as a body to advise

Committee decision-making authority regarding thethe Management Committee, providing advice on DBJ’s

execution of business.

overall management.

Accordingly, the Management Committee makes

Corporate Governance

Advisory Panel on Investments and LoansManagement Structure

Shinji Hatta, Professor of Graduate School of Professional

The Advisory Board is composed of the following outside

important management decisions. The committee met 47

experts and outside directors.

times during the fiscal year ended March 31, 2010.

Outside Experts
Tadashi Ogawa, President of the Regional Banks

Committees under the Management Committee

Association of Japan and Head of the Bank of

Various committees have been established under the

Yokohama

Management Committee assigned specific decision-making

Kiyofumi Kamijo, Chairman, Tokyu Corporation

tasks, excluding decisions made by the Board of Directors

Sakie Fukushima-Tachibana, Chairman, Korn/Ferryor the Management Committee within each field ofInternational

specialization.

Fujio Cho, Chairman of Toyota Motor Corporation

ALM & Risk Management Committee

Toru Hashimoto, former Chairman of Deutsche Securities

This committee deliberates and makes decisions

Inc., and Honorary Advisor to Mizuho Financial Group

pertaining to portfolio risk management and asset/liability

Outside Directors

management.

Akio Mimura, Chairman, Nippon Steel Corporation

General Risk Management Committee

Kazuo Ueda, Professor, Faculty of Economics, theThis committee deliberates and makes decisions on

University of Tokyo

important items related to legal compliance, client

Annual Report & CSR Report 2010101

Matters Requiring Approval of Competent Minister
Management Structure

The New DBJ Law prescribes matters for which DBJ requires• Basic policy on business plans, redemption plans and fundprocurement

the permission of the Minister of Finance. Major items
The organization outlined below has been put in placerequiring such permission are as follows:• Appointment and dismissal of representative directors andto execute and supervise the abovementioned activities.

auditors• Concurrent positions as directors• Amendments to articles of incorporation• Disposition of surplus funds

Corporate Governance• Merger, corporate split and dissolution=Operating and Supervisory Structure
General Shareholders’Meeting
Matters requiring authorization ofcompetent ministert Appointment and dismissal of
representative directors and auditorst Concurrent positions as directors
t Amendments to Articles of Incorporationt Disposition of surplus fundst Merger, corporate split and dissolutiont Basic policy on business plans,
redemption plans and fund procurement

ReportingOperations Audit
Committee

Accounting
auditorCompensation
Committee

Internal Audit
Department

Board of Directors

Cooperation

ReportingManagement
Committee

Decision-making
bodiesGeneral Risk
Management
Committee

Corporate Auditors,
Auditing Committee

AuditsAdvisory Board
Deliberative
bodies

ALM & Risk
Management
Committee

Committee on
Investment and
Loan Decisions

New Operation
Screening
Committee

Advisory Panel on
Investments andLoansCommittee on
International
Operations

Departments
Subsidiaries

Executive Officer System

Status of Internal Control System

DBJ has an executive officer system to clarify responsi-bility

To ensure operational soundness and in accordance withfor the execution of duties and accelerate decision-making.

the Companies Act, the Board of Directors has established

The Board of Directors has designated 10 managing

an internal control system under the Internal Control

executive officers, excluding officers who are concurrently

System Basic Policy.

directors, and seven executive officers.

Specifically, this system is designed to determine thestatus of legal compliance, risk management and internal
audits, as well as other items of management importance.
The internal control system is designed to confirm theformulation of various regulations and the status of theirimplementation in various departments.

102

Annual Report & CSR Report 2010

AuditsInternal Control System Basic Policy

System for the Storage and Management of Information Related to the
Execution of Duties by Directors
Article 3. Information pertaining to the execution of duties by directors shall be
stored and managed appropriately, and this information shall be accessible, as
necessary.
Regulations and Other Systems Related to Managing the Risk of Loss
Article 4. To ensure the soundness of management and manage risk properly,
a risk management process that defines, evaluates, monitors and controls risks
with various characteristics encountered in the course of business shall be put
in place.
2. A comprehensive risk management process shall be created. Also, acommittee for risk management shall be created, and an executive and adepartment shall be assigned to take charge of risk management.
3. Risks shall be segmented into the following categories, and risk management
policies shall be established for each:1) credit risk, 2) investment risk, 3) country risk, 4) market credit risk, 5)market risk, 6) market liquidity risk, 7) financial liquidity risk, 8) settlement
risk, 9) operational risk.
4. To the extent possible, the abovementioned risks shall be measured using aconsistent system, risk guidelines shall be established and the risks shall be
managed.
5. The necessary systems shall be put in place to minimize the effects ofeconomic loss and credit collapse in the event of disaster, to ensure business
continuity in crisis situations and to ensure a prompt return to normal
functioning.
6. The Board of Directors shall establish an Internal Audit Basic Policy todetermine the status of internal control, including risk management. The
board shall receive prompt and appropriate reports of the results of internal
audits from internal audit departments.
Systems to Ensure the Efficient Execution of Duties by Directors
Article 5. The Board of Directors shall formulate management plans andperform appropriate management control.
2. The Board of Directors shall establish a Management Committee and delegate
decision-making on specific items to this council. In addition to making

System to Ensure the Adequacy of Operations of the Corporate Group,
Comprising DBJ and Its Subsidiaries and Affiliated Companies
Article 6. The Board of Directors shall ensure the adequacy of operations of the
DBJ Group in accordance with the corporate philosophy.
2. The Board of Directors shall manage operations appropriately, in accordancewith the scope and characteristics of operations of its subsidiaries andaffiliated companies. Furthermore, the Board shall introduce appropriate
measures from the perspective of legal compliance, client protection and risk
management.
3. The Board of Directors shall create reporting, guidance, management process
and other systems related to operations management between DBJ and its
subsidiaries and affiliated companies.
4. In accordance with the necessary scope of legal regulations, the Internal
Audit Department shall conduct internal audits of subsidiaries and affiliatedcompanies and report the results of these audits promptly and appropriately
to the Board of Directors.

Corporate Governance

System to Ensure Compliance with Laws and the Articles ofIncorporation in the Execution of Duties by Directors and Employees
Article 2. The directors and the Board of Directors recognize legal complianceas one of DBJ’s most important management issues. Accordingly, DBJ has
formulated a basic policy to ensure that the execution of duties by executives
complies with laws and the Articles of Incorporation and establishes thecorporate philosophy and a basic policy on legal compliance.
2. A Compliance Manual, compliance program and internal regulations shallbe created in preparation to ensure compliance by executives with laws andregulations.
3. A committee shall be formed to promote and manage legal compliance,
and an executive and a control division shall be placed in charge of legal
compliance.
4. A compliance hotline system shall be established to enable a response to actsthat contravene laws and regulations and acts of potential concern from theperspective of legal compliance.
5. Preparations shall be made to ensure that DBJ has absolutely no connection
with antisocial forces that threaten social order or safety.
6. The Board of Directors shall formulate an Internal Audit Basic Policy
pertaining to the status of internal control, including legal compliance. This
policy shall establish internal audit departments that are independent of
departments responsible for the execution of business and that report audit
results promptly and appropriately.

decisions on the items with which it has been entrusted, to contribute to
expeditious decision-making the Management Committee shall deliberate
in advance matters for resolution by the Board of Directors. Furthermore,
the Management Committee shall establish various committees as advisory
institutions or as bodies to which to delegate decision-making on specific items.
3. To ensure the efficient execution of business based on decisions madeby the Board of Directors, regulations shall be established regarding theorganizational structure and the execution of tasks shall be allocatedappropriately.
4. To enable swift decision-making, an executive officer system shall beestablished. Executive Officer Regulations shall be formulated to define
executive officers’ roles and responsibilities.

Management Structure

Purpose
Article 1. This basic policy has been established in accordance with Item
6, Paragraphs 4 and 5, Article 362, of the Companies Act (hereinafter, the”Act”), and Item 1 and 3, Article 100, of the Act’s Enforcement Regulations(hereinafter, ”Enforcement Regulations”) to create a system (internal control
system) to ensure Development Bank of Japan Inc. (hereinafter, ”DBJ”)
conducts operations in an appropriate manner.

System Related to Employees Assisting the Auditors in Their Duties
Article 7. As a specialized organization to assist auditors with their duties, if sorequested by the auditors, an Office of Corporate Auditors shall be establishedunder the direction of the Auditing Committee.
Matters Concerning Employees Supporting the Auditors in Their Duties
and the Independence of Such Personnel from Directors
Article 8. Personnel issues related to the employees supporting the duties ofauditors and matters related to the independence of such personnel shall beleft in the control of the Auditing Committee.
System for Reporting by Directors and Employees to Auditors andOther Systems for Reporting to Auditors
Article 9. Directors and employees shall report to auditors on the status ofexecution of DBJ’s business and other necessary information.
2. If directors or employees become aware of any major potential damage to
DBJ’s credibility or operating performance, they shall immediately report suchinformation to the auditors.
3. If auditors find that they require certain information to perform their duties,
they may request reports from directors and employees as needed, and theparty to whom the request is addressed shall report appropriately.
Other Systems to Ensure Effective Audits by the Auditors
Article 10. In addition to attending meetings of the Board of Directors, auditors
may attend meetings of the Management Committee and other important
meetings and offer their opinions as necessary.
2. The Representative Director shall exchange opinions with the auditors
regularly, or at the auditors’ request. The Representative Director shall also
cooperate in the preparation of a reporting environment.
3. The Internal Audit Department works with the auditor to establish internal
audit plans. The department reports the results of internal audits andexchanges opinions and liaises with the auditors when requested to do so.
4. Directors and employees shall cooperate with the auditors in their audit
activities and shall respect the Audit Committee Regulations, auditors’ audit
standards and other regulations.
5. To ensure the adequacy and reliability of accounting audits, directors andemployees shall cooperate in creating a system to ensure the independenceof the accounting auditors.

Annual Report & CSR Report 2010

103

Status of Internal Audits and Audits by Auditors
Management Structureother operating departments. The department conducts

Overview of Personal, Equity, Transactionalor Other Special-Interest Relationships with
Outside Directors and Outside Corporate
Auditors

inspections to ensure the appropriateness and effectivenessAkio Mimura, Chairman of Nippon Steel Corporation,of internal controls, including DBJ’s overall operational

is an outside director of DBJ. DBJ has no special-interest

compliance and risk management, and performs

relationship with Mr. Mimura, and its business with Nippon

evaluations and recommends improvements.

Steel Corporation is conducted normally.

DBJ has established the Audit Department under the directsupervision of the DBJ president and independent fromThe Operations Audit Committee deliberates and decides
Corporate Governanceaudit plans, audit reports and other important mattersrelated to internal audits, and this information is reported to
the Board of Directors.
As of June 30, 2010, 21 people belonged to the Audit

DBJ has no special-interest relationship with any other of
its outside directors or outside corporate auditors.
DBJ has signed liability limitation agreements with its
outside directors and outside corporate auditors, based on
Paragraph 1, Article 427, of the Companies Act.

Department.

The auditors attend Board of Directors and other

Overview of Agreements with Outside
Directors and Outside Corporate Auditors underParagraph 1, Article 427, of the Companies Act(Liability Limitation Agreements)

important meetings. When necessary, they query the

DBJ’s Articles of Incorporation allow it to establish liability

execution of business by directors, peruse documents andlimitation agreements with its outside directors and outside

conduct branch audits.

corporate auditors, limiting their responsibility for damages

The Auditing Committee and the auditors audit theexecution of duties by directors, based on their audit policy
and audit plans.

under Paragraph 1, Article 425, of the Companies Act,

Status of Accounting Audits

provided their duties are executed with good intent andDBJ has in place an agreement with Deloitte Touche

without gross negligence, to the total amounts specified in

Tohmatsu LLC to conduct accounting audits as its

each item in Paragraph 1, Article 425, of the Companies

accounting auditor. During the fiscal year ended MarchAct.

31, 2010, these operations were conducted by designatedcertified public accountants (Designated limited liability

Number of Directors

partners) Yukio Ono (continuous audit period* of two

DBJ’s Articles of Incorporation limit the number of directors

years), Tomomitsu Umezu (same, two years) and Hayato

to 13 or fewer.

Yoshida (same, two years).
* In accordance with the Companies Act, the number of years ofcontinuous audit must be stated. The number of continuing yearsof performing audits conducted in accordance with the Financial
Instruments and Exchange Act was two years for Yukio Ono, twoyears for Tomomitsu Umezu and two years for Hayato Yoshida. The
number of business periods during which an audit was performedis the standard used to indicate the number of years. Assisting inthis audit were 18 people, including a specialist in determining fairvalue, a systems specialist and a specialist in pension mathematics.

Requirements for Determination of Director
Appointments
DBJ’s Articles of Incorporation stipulate that shareholders
possessing at least one-third of the shareholder voting
rights exercisable at the General Meeting of Shareholders
shall attend the meeting and determine the appointment
of directors based on a majority vote. The Articles ofIncorporation further specify that the appointment of
directors shall not be resolved by cumulative voting.

DBJ’s auditors, Audit Department and accounting
auditor periodically and as necessary exchange opinions
and information, and communicate in an effort to ensure
effective and appropriate audits.

104

Annual Report & CSR Report 2010

Requirements for Special Resolutions at theGeneral Meeting of Shareholders

To enable them to perform their duties and fulfill the roles

To ensure a smooth General Meeting of Shareholders,that are expected of them, in accordance with Paragraph

DBJ’s Articles of Incorporation stipulate that shareholders

1, Article 426, of the Companies Act, DBJ has establishedpossessing at least one-third of the voting rights exercisable

in its Articles of Incorporation that the liability for damages

shall attend the meeting and determine by a two-thirds

incurred by directors (and former directors) and auditors

majority vote the ”requirements for special resolutions at(and former auditors) may be reduced to the legal limit bygeneral meetings of shareholders” provided in Paragraph 2,

resolution of the Board of Directors.

Article 309, of the Companies Act.

Management Structure

Limiting the Responsibility of Directors andAuditors

Corporate Governance, Compliance

Compliance

Specific compliance initiatives are as follows.

conduct activities appropriately and in compliance withthe law.

DBJ recognizes compliance as one of its most important2) DBJ’s executives and employees are well aware that DBJ

management issues. As basic policies to ensure that themust conduct its businesses legally and appropriately andexecution of duties by directors complies with laws andbe responsible for explaining its actions to the generalregulations and the Articles of Incorporation, we havepublic.

formulated a corporate philosophy, a Compliance Basic
Policy and other compliance-related regulations.
In addition to its fundamental regulations on

Compliance System
DBJ has established the Legal and Compliance Departmentcompliance, DBJ has created a Compliance Manual and a

to take overall responsibility for planning, preparing andcompliance program. Via activities in and around DBJ, we

adjusting compliance activities.

seek to thoroughly implement the compliance activities
outlined below.

In addition, DBJ has established the General Risk
Management Committee to reflect on legal compliancematters, determine the extent of compliance, and discuss

Compliance Principles

improvements to DBJ’s internal system.

DBJ has formulated the compliance principles indicated

DBJ also has installed a Compliance Hotline. The

below as part of its creation of compliance regulations.

objective of this internal reporting system is to swiftly

1) DBJ’s executives and employees are keenly aware ofidentify and resolve any represent legal violations.

DBJ’s social mission and responsibilities as a public-sector

DBJ, in matters relating to managing conflicts ofbank and recognize that illegal acts or improper businessinterest, formulated as a basic policy ”Conflicts of Interest

operations harm the reputation of DBJ and interfere

Management Regulations” against undue infringement ofsignificantly with DBJ’s ability to fulfill its objectives under

the interests of its clients, and it is preparing a system to

the New DBJ Law. We also realize DBJ’s need to always

manage conflicts of interest.

Annual Report & CSR Report 2010

105

Risk Management

Management Structure

To ensure management soundness and safety, as well as

From the standpoint of comprehensive risk manage-

raise corporate value, DBJ works to manage risk appropri-

ment, DBJ has established a Risk Management Department,

ately in line with specific business and risk characteristics.

which is overseen by a director in an official capacity. DBJ

Controlling risk is an issue of utmost importance, and there-

seeks to control its total risk within a specified target range.

fore we have established risk management processes andIn addition, we have set risk guidelines for each risk cat-methods.

egory to help manage total risk.

Risk Management System
DBJ conducts risk management from the perspectives ofAsset/Liability and Risk Management System Overview

Risk Management

maintaining financial soundness and improving operational
efficiency, which are the prerequisites to ongoing operational viability. To ensure appropriate management of
individual risk categories, DBJ has developed a risk management system that clarifies which department is responsible

President
Management
Committee
ALM and Risk Management Committee

for each type of risk. The Risk Management Department
oversees comprehensive asset/liability and risk management
activities. The ALM & Risk Management Committee, con-

Risk Management Department

sisting of DBJ’s executives, deliberates on important mattersconcerning risks and conducts regular monitoring, in line

Credit Analysis Department

Treasury Department

with the basic policy related to comprehensive risk management approved by the Board of Directors.
Investment and Loan Departments/Offices

Credit Risk Management
Credit risk refers to the risk of sustaining losses resulting

The sales and credit analysis departments hold separate

from a decline in the value of assets due to deterioration inroles in the screening and administering of credit for

the financial condition of the borrower. Credit risk manage-

individual loans and each department keeps the operations

ment requires credit management of individual loans as wellof the other in check. The Committee on Investment andas bankwide portfolio management.

Loan Decisions meets as needed to deliberate important
issues concerning the management and governance ofCredit Administration of Individual Loansindividual loans. These mutual checking functions serve toWhen making an investment or loan, DBJ examines theensure the appropriateness of the lending operation andentity’s project viability and the project’s profitability from amanagement environment.

fair and neutral standpoint, as well as its benefits. We also

Borrower Rating Systemhave an internal borrower rating system. DBJ is not subject

DBJ’s borrower rating system measures creditworthinessto the Banking Law or the Law concerning Emergency

by combining an evaluation point rating and a borrower

Measures for the Revitalization of the Functions of thecategory rating, with the result quantifying a potential

Financial System (Law No. 132 of 1998) but carries out

client’s credit circumstances. The evaluation point rating

independent asset assessments in line with internal policies

selects indicator/evaluation categories that are common

for self-assessment of credit quality based on the Financial

across all industries, scoring the creditworthiness of theServices Agency’s Financial Inspection Manual.

potential borrower quantitatively and qualitatively. On the

The results of self-assessments are subject to another hand, the borrower category rating measures specificaudit by an auditing corporation and are reported to theitems related to the borrower, looking at the borrower’s

management. Credit risk and amounts are monitored torealistic financial condition, cash flows and debt repayment

confirm they are within the limits established for individual

history. By putting the ratings together, the systemborrowers.

generates a comprehensive assessment of a borrower’s
repayment capacity.

106

Annual Report & CSR Report 2010Borrower Rating Classifications
Definition

Normalborrowers

1-8

Borrowers with favorable business conditions and 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 their finances. These borrowers are likely to require management
intervention in the future.

Substandard
borrowers

12

Either some or all of the debts of these borrowers requiring caution are
under management.

Borrowers indanger ofbankruptcy

13

Borrowers in this category are having financial difficulties but are notbankrupt. Management improvement loans and the like are progressing
poorly, and these borrowers are highly likely to fall into bankruptcy.

Effectively
bankrupt
borrowers

14

Although not legally or formally in bankruptcy, these borrowers areexperiencing severe financial difficulties and are realistically falling into
bankruptcy, as their lack of potential for restructuring has been confirmed.

Bankrupt
borrowers

15

These borrowers are in bankruptcy, legally and formally. Specifically, theseborrowers are in bankruptcy or liquidation, under corporate reorganization,
bankruptcy proceedings or civil rehabilitation, or have had transactions
suspended by a bill clearinghouse.

NormalclaimsSubstandard claims

Doubtful claims

Risk Management

Borrower
RatingManagement Structure

Claims Classified
under the Financial
Revitalization Law

Borrower Category

Claims in bankruptcy,
reorganization claims
and similar claims

Asset Self-Assessment System

Portfolio Management

Asset self-assessments are used to define asset

DBJ performs a comprehensive analysis of data basedclassifications that will offset recoverability risk or theon borrower ratings, and calculates the loan portfolio’s

degree of risk of value loss, based on the borrower rating,overall exposure to credit risk. Credit risk exposure can be

the corresponding borrower category and the collateralclassified as 1) expected loss (EL), the average loss expected

or guarantee status. Such assessments help DBJ establish

during a specific loan period; and 2) unexpected loss (UL),

timely and appropriate amortization schedules and reserve

the maximum loss that could incur at a certain rate oflevels.

probability. The EL and UL calculations are reported to
the ALM & Risk Management Committee. Monitoring thesituation and considering countermeasures allow DBJ tocontrol risk and devise effective measures to improve risk
return.

Market and Liquidity Risk Management
Market Risk

assets or interest income. DBJ calculates and analyzes risk

Market risk can be broadly classified into interest rate risk,

exposure with cash flow ladder analyses (gap analysis),exchange risk and stock market risk.

value at risk (VaR), interest rate sensitivity analyses (basis

Market risk describes the risk of loss from fluctuations inpoint value), and other methods. A portion of the interest

the value of assets or liabilities (including off-balance sheet

rate risk associated with lending operations is covered

items), owing to changes in interest rates, exchange rates,

through interest rate swaps, which are used solely forstock markets and various other markets. DBJ divides these

hedging purposes. DBJ does not have any trading-relatedrisks broadly into interest rate risk and exchange risk.

risk because it does not engage in trading (specified

Interest Rate Risk

transactions).

Interest rate fluctuations can create mismatches on rates

Exchange Riskof interest on assets and liabilities or on interest periods,

Exchange risk is the risk of loss due to unexpected shifts

creating the risk of reduced profits or the risk of losses.

in exchange prices, and this risk affects entities holding aInterest rate risk can reduce the economic value of DBJ’s

net excess of assets or liabilities denominated in foreign

Annual Report & CSR Report 2010107

Management Structure

currencies. Exchange risk entails the possibility of a declinetransactions, compelling them to conduct transactionsin the economic value of DBJ’s assets due to the impact ofunder substantially less favorable terms than otherwisechanges in currency exchange rates. DBJ’s exchange risk

would be the case. The risk of losses for these reasons isderives from foreign currency investment and financing

known as market liquidity risk.

and issuing foreign currency bonds. DBJ uses currency

As its main methods of acquiring funds, in addition to

Risk Management

swaps and other instruments to hedge this risk. DBJ

issuing corporate bonds and taking out long-term loans,manages counterparty risk in swap transactions, theDBJ relies on the stable procurement of long-term funds

risk that the counterpart in the swap transaction will befrom the government’s Fiscal Investment and Loan Program

unable to fulfill its obligations, by continually monitoring(FILP) and government-guaranteed bonds rather than on

the creditworthiness of all parties, and by diversifying

short-term funds such as deposits. To meet unexpectedtransactions among several institutions.

short-term funding requirements, funds on hand are used,taking security and liquidity into consideration. Overdraft

Liquidity Risk

lines of credit have been established with multiple otherLiquidity risk is the risk of a mismatch occurring in

financial institutions. Additionally, DBJ maintains daytime

the periods when funds are used and raised, causing

liquidity by using the Bank of Japan’s Real Time Gross

unexpected differences in the flow of funds (cash liquidity

Settlement (RTGS), whereby settlements are made instantlyrisk). This situation makes securing funds difficult andfor each transaction. Every effort is made to ensure thatcreates situations in which interest rates on borrowed

settlement conditions are managed appropriately.

funds are substantially higher than usual rates. At such

In addition to credit risk, the ALM & Risk Management

times, because of market complexities, entities in theseCommittee deliberates DBJ’s market risk and liquidity risk.

circumstances may become unable to participate in market

Operational Risk Management
DBJ defines operational risk as the risk of loss arising from

System Risk Management

internal processes, people or systems that are inappropriate

System risk refers to the risk of loss due to a computeror nonfunctioning, or from external events. DBJ works tosystem breakdown or malfunction, system defects, or

establish a risk management system to minimize risk andimproper computer usage. To properly manage systems

prevent potential risks from materializing. The General Risk

risk, DBJ has implemented the following internal processes

Management Committee has been established to deliberate

to optimize system risk management.

topics concerning operational risk management. Within

The Information Resources Department is responsible for

operational risk management, DBJ conducts operational risk

managing DBJ’s system risk centrally, based on its systemmanagement and systems risk management as describedrisk management regulations. By determining security

below.

standards from a variety of viewpoints, from information
system planning and development to operation and use,

Operational Risk Management

the department extends the system risk management

Operational risk refers to the risk of sustaining losses

system bankwide, and addresses appropriate system risk

resulting from employees neglecting to perform their duties

management operations.

correctly or from accidents, fraud, and the like. To reduceor prevent operational risk, DBJ prepares manuals, performs
checks on administrative procedures, provides educationand training and uses systems to reduce the burden of
administrative duties.

108

Annual Report & CSR Report 2010

Building a PDCA Cycle
We also strive to manage effectively the wide range ofboost accountability for the appropriateness of its opera-

risks we face as a financial institution, and to earn the trust

tions and their results. This cycle encourages ongoingof our clients and society as a whole.

improvement.

Risk Management=DBJ’ s PDCA Cycle
Formulation ofmanagement plan

Competent minister

Budgetary plan

Plan

Management Structure

DBJ follows the Plan, Do, Check, Act management cycle toMatters requiring authorization of competent
ministerAppointment and dismissal of representative directors andauditorsn Concurrent positions as directors
n Amendments to Articles of Incorporationn Disposition of surplus funds
n Merger, corporate split and dissolutionn Basic policy on business plans, redemption plans and fundprocurementnConclusions
reflected inplanning andbudgetReview of resource
allocation

Board of Directors

Act

Do

Management
Committee

Advisory Board

Advice(Outside experts andoutside directors)

Execution of
investments andloans
Fund-raising
Other activities

Check
Evaluation ofbusiness
performance
Status & results
reportAnnual Report & CSR Report 2010109

Client Protection Management System/Declaration on Personal
Information Protection/Policy for Managing Conflicts of Interest

Management Structure
Client Protection Management System/Declaration on Personal Information Protection/Policy for Managing Conflicts of Interest
110

The establishment and maintenance of a client protection

their level of convenience. DBJ recognizes the extreme

management system is vital because it protects the people

importance of such a system from the standpoint of

who use the financial institution’s systems and raises

operational soundness and appropriateness.

Client Protection Management Policy and Declaration on Personal Information Protection
DBJ has formulated a Client Protection Management Policy3) We acquire information about clients through legal

to ensure strict compliance with laws and regulations,and appropriate means and manage such information

protect the interests of its clients and raise the level of client

safely. In transactions with clients, in the event that DBJ

convenience. We have also created internal regulations

outsources operations, it ensures appropriate information

based on this policy, which we employ in briefings to raisemanagement and client response.

in-house awareness.
Our Client Protection Management Policy is outlined

We have incorporated a declaration on our policies

below:

related to personal information into our Declaration on

1) When transacting with clients, we endeavor to provide

Personal Information Protection.

and explain information that is accurate and appropriate
in line with laws and regulations.
2) When we receive requests for consultation, other

DBJ is a registered financial institution under the
Financial Instruments and Exchange Act. DBJ has drawn

requests or complaints, we strive to see the issue fromup policies introduced for the management of conflicts

the client’s point of view, listen sincerely and respond in

of interest under this act and provides an overview of thean operationally appropriate manner.

publicly announced policy.

Declaration on Personal Information Protection
1. Policy
DBJ considers the appropriate protection of personal information
an important social responsibility. DBJ endeavors to use personal
information appropriately in all its activities by conformingwith the requirements of the Law on the Protection of Personal
Information, as well as other related laws and regulations, aswell as its own Declaration.
2. Appropriate Obtainment of Personal Information
DBJ acquires clients’ personal information only within thescope that is required to perform its operations, and employs
appropriate procedures for obtaining such information.
3. Purpose of Using Personal Information
DBJ obtains clients’ personal information only for specificpurposes and uses such information only within the scopenecessary to satisfy such purpose of use. In the event that otherpurposes of use are limited by legal regulations concerning
specified purposes of use, such information is not used for
purposes other than so specified. DBJ discloses on its website
the purposes of use of clients’ personal information. If
information is obtained for other purposes of use, such purposes
are clearly indicated at the time such information is obtained.
4. Providing Personal Information to Third Parties
In principle, DBJ does not provide clients’ personal information
to third parties unless it has received from the client permission
to provide such information or unless it is legally required toprovide such information. However, DBJ may, without obtaining
client approval, provide clients’ personal information to parties
it has commissioned to conduct activities within the scope for

Annual Report & CSR Report 2010

which the information was obtained or provide such informationin the event of a corporate merger.
5. Provisions for Safe Management of Personal
Information
DBJ seeks to appropriately manage clients’ updated personal
information and prevent the leakage of such information, andaccordingly maintains rationally sound management measures.
Furthermore, DBJ appropriately supervises its directors andregular employees and subcontractors who handle clients’personal information.
6. Continuous Improvements in Handling Personal
Information
DBJ strives to ensure ongoing improvements in its handling ofclients’ personal information and to update the Declaration as
appropriate in accordance with developments in information
technology or changes in social requirements.
7. Procedures for Requesting Personal Information
DBJ endeavors to respond appropriately by notifying clientsof the purpose of use of the personal information it retains;
responding to requests to disclose such information; and in
the event that the content of such information is incorrect,
responding to clients’ requests for revisions, additions
or deletions, discontinuing use, deleting information, ordiscontinuing the provision of such information to third parties.
8. Inquiries
DBJ endeavors to respond in good faith to all opinions orrequests regarding the use of personal information.

Q

Q

Q

Q

infringing on the interests of clients owing to Situations of Opposing
Interests.
Furthermore, Subject Transactions do not include acts that areprohibited under the Financial Instruments and Exchange Act or otherlaws and regulations.
3. Scope of Companies Subject to Management of Conflicts ofInterest
As stated in 2 (1) above, Subject Transactions are transactions
conducted by DBJ or by DBJ’s subsidiary financial institutions, etc.
”Subsidiary financial institutions, etc.” are those DBJ subsidiaries
or affiliated companies prescribed in Article 36-5 of the Financial
Instruments and Exchange Act.
As of April 1, 2010, DBJ’s subsidiary institutions, etc., were as
follows.
DBJ Nomura Investment Co., Ltd.
Sun Arrows Investment Co., Ltd.
Healthcare Management Partners, Inc.
Milestone Turnaround Management Co., Ltd.
General Enterprise Management Services Limited
DBJ Europe Limited
4. Policy for Managing Transactions That Are Likely to Involve
Conflicts of Interest
In the case of transactions prescribed as Subject Transactions, to theextent that the DBJ Group is not in violation of its legal or contractual
duties (including but not limited to the duty of confidentiality), the DBJ
Group is determined to act properly in the interest of its clients throughthe following or other measures.
(The following are only specific examples of methods. Subject
Transactions are not limited to those indicated below. )Separation of the department conducting Subject Transactions fromthe department conducting transactions for said client
Amernding the conditions or instruments of Subject Transactions or
said client transactions
Cessation of Subject Transactions or said client transactions
Disclosing to said client the risk of Subject Transactions unduly
infringing on the interests of said client
5. Management of Conflicts of Interest—Organization
To ensure the appropriate management of conflicts of interest, theduties of a Conflicts of Interest Management Control Department
are handled within its Legal Affairs & Compliance Department.
In accordance with the Policy, the Conflicts of Interest Management
Control Department appropriately manages prescribed Subject
Transactions and conflicts of interest. Furthermore, as the DBJ Groupis required to manage conflicts of interest in accordance with its status
as a registered financial institution under the Financial Instruments andExchange Act, provided that the DBJ Group does not violate its legal
duty of confidentiality or its duty of confidentiality in relation to its
clients, information pertaining to Subject Transactions, including thoseof transactions handled by DBJ’s subsidiary financial institutions, etc.,
may be managed in a centralized manner.
Records shall be prepared of measures undertaken by the Conflictsof Interest Management Control Department with regard to prescribed
Subject Transactions and their management, and such records shall be
retained for a period of five years following the creation date.
To ensure appropriate management, the Conflicts of Interest
Management Control Department shall periodically verify the content
of activities by DBJ Group executives and regular employees and thecontent of business activities at each branch to ensure the operations
are being conducted in accordance with the Policy and the operational
procedures for the policy, and shall periodically verify the managementof conflicts of interest.
Q

Q

Q

Q

Annual Report & CSR Report 2010

Client Protection Management System/Declaration on Personal Information Protection/Policy for Managing Conflicts of Interest

1. Purpose
As the services provided by financial institutions grow increasingly
diverse, the potential for multiple competing or opposing interests
within financial institutions or financial groups increases, and thelikelihood increases that conflicts of interest will arise.
Under these conditions, DBJ manages transactions that are likely to
involve conflicts of interest to ensure against undue infringement of theinterests of its clients.
DBJ is a registered financial institution under the Financial
Instruments and Exchange Act. DBJ has drawn up these ”Rules forManagement of Conflicts of Interest” (hereinafter, ”the Policy”) in
accordance with policies introduced for the management of conflicts ofinterest under this act and as prescribed by Cabinet Office Ordinances
pertaining to the financial instruments business. This document
provides an overview of the Policy.
2. Types of Transaction That Are Likely to Involve Conflicts ofInterest(1) Subject Transaction
Targets of this Policy, or ”transactions that are likely to involve conflictsof interest,” are those transactions conducted by DBJ or DBJ’s subsidiaryfinancial institutions or others (defined in 3 below; hereinafter, ”theDBJ Group”) that have a likelihood of unduly infringing on the interestsof clients as a result of conflicts of interest (hereinafter, ”Subject
Transactions”).
”Conflicts of interest” are (a) situations of opposing interests
between the DBJ Group and its clients, or (b) situations of opposinginterests between the DBJ Group’s clients and other clients (hereinafter,
together, ”Situations of Opposing Interests”) that unduly infringe on
the interests of clients.
”Clients” are, in the case of ”business operations related to financial
instruments” conducted by the DBJ Group, (a) counterparties inexisting transactional relationships, (b) parties in negotiation with
the DBJ Group with regard to transactions or otherwise having thepotential to become counterparties in transactional relationships, or (c)parties that have been transactional counterparties in the past and thatcurrently are also legally competent with respect to past transactional
relationships.
”Business operations related to financial instruments” are thosebusinesses provided for in Article 70 (2) of the Cabinet Office
Ordinance pertaining to financial instruments business, etc., that are
performed by DBJ or DBJ’s subsidiary financial institutions, etc.
(2) Types of Subject Transaction
Specific individual circumstances determine whether transactions are
judged as Subject Transactions, but below are examples of transactions
that are likely to be considered said Subject Transactions.
Based on a contract of mandate that exists between the DBJ Groupand its clients, notwithstanding that the DBJ Group has a duty of
due care of prudent manager or duty of loyalty to said client, the DBJ
Group is in danger of being unable to fulfill such duties owing to
Situations of Opposing Interests.
Based on a deep trust-based relationship formed between the DBJ
Group and its clients, notwithstanding the client’s expectation that
the Group would act in the client’s interests, the DBJ Group is indanger of being unable to act according to such expectation owing to
Situations of Opposing Interests.
By utilizing undisclosed client information that the DBJ Group has
the duty to protect, the DBJ Group could rationally act in its own selfinterest or the interest of other clients in transactions that exceed thescope of that duty.
Cases in addition to the above in which the danger exists of unduly

Management Structure

Overview of Policy for Managing Conflicts of Interest

111

DisclosureManagement Structure

DBJ believes that public relations and investor relations

essential part of being trusted in a wide range of

have the important function of bringing management

markets and societies. Accordingly, we seek to discloseand stakeholders together. In addition, these activities

information through our public relations and investor

help stakeholders gain an accurate understanding

relations activities.

of DBJ’s status and operating policies, which are an

Basic PR/IR Philosophy
In its PR and IR activities, DBJ aims to comply with

DBJ maintains personal and client information,

Disclosure

relevant laws and regulations, operate in good faith andwithout disclosing such information in a manner thatin a dignified manner with its stakeholders, and disclose

would encroach upon the rights of individuals or related

information clearly and accurately in a timely andparties. We do not disclose information that would

appropriate manner.

counter the doctrine of good faith.

PR/IR Structure
The Corporate Planning & Coordination Department

DBJ. Through printed materials and over the Internet,

takes overall charge of PR and IR activities and plays athe department uses numerous communication tools tocentral role in the flow of information within and outside

disclose information.

Information Disclosure Materials
DBJ offers a wide range of information, using suchmedia as newsletters and its website:(1) Materials legally required for disclosure
Securities Report (Japanese)
Stock Exchange Report (Japanese)
Business Report (Japanese)(2) Voluntarily disclosed information
Annual Report & CSR Report
End-of-Period Financial Reports(3) Others
DBJournal (newsletter)
DBJ News Digest (mail magazine; Japanese)
Website:112

http://www.dbj.jp/en

Annual Report & CSR Report 2010

Corporate Data
Timeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114
Board of Directors, Corporate Auditors andExecutive Officers . . . . . . . . . . . . . . . . . . . . . . . . . .115
Organization Chart . . . . . . . . . . . . . . . . . . . . . . . . . .116
Locations and Directory . . . . . . . . . . . . . . . . . . . . . .117
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118
Stock Information . . . . . . . . . . . . . . . . . . . . . . . . . . .119
Excerpt from the New DBJ Law . . . . . . . . . . . . . . . .120
Law for Partial Amendment of theDevelopment Bank of Japan Inc. Law . . . . . . . . 123

Annual Report & CSR Report 2010113

Timeline

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

1951 April
1952
1956 June
1957 April

Timeline

1960
1961
1962 April
1963
1964 July
1972 January
1985 June

1987 September
1989
1995 February
1997 September

1997 December
1999 June
1999 October

2002 May
2005 December
2006 May
2006 June2007 June

Japan Development Bank (JDB) establishedJapan Development Bank; branches opened in Osaka (currently, the Kansai Branch), Sapporo (currently, the
Hokkaido Branch), Nagoya (currently, the Tokai Branch) and Fukuoka (currently, the Kyushu Branch)
Hokkaido Development Finance Public Corporation established
Hokkaido Development Finance Public Corporation reorganized as the Hokkaido-Tohoku Development
Finance Public Corporation (HTDFP); branches opened in Sapporo (currently, the Hokkaido Branch) andSendai (currently, the Tohoku Branch)
JDB branch opened in Takamatsu (now the Shikoku Branch)
JDB branches opened in Hiroshima (now the Chugoku Branch) and Kanazawa (now the Hokuriku Branch)
JDB representative office opened in New YorkJDB representative offices opened in Kagoshima (renamed Minami-Kyushu Branch in October 1999) andMatsueJDB representative office opened in London
HTDFP representative office opened in Niigata (renamed Niigata Branch in July 1989)
Japan Development Bank Law revised
1) Addition of investment function (pertaining to business in such areas as research and development, urban
development and energy use stipulated by government ordinance)2) Addition of R&D fund investment function
JDB and HTDFP creation of low interest rate loan system funded partially by sale of NTT shares
JDB representative offices opened in Oita, Matsuyama, Okayama and Toyama HTDFP representative offices
opened in Hakodate and Aomori
JDB commenced loans to assist disaster recovery
Cabinet approval of bill entitled ”Pertaining to Consolidation and Rationalization of Special-Purpose
Companies, etc.” (decision to dissolve Japan Development Bank and Hokkaido-Tohoku Development FinancePublic Corporation and consolidate them as a new bank)
JDB and HTDFP commenced loans in response to the financial environment (establishment of March 31,
2004, sunset clause)
The Development Bank of Japan Law (Law No. 73 of 1999) establishedTransfer of approval of all rights and responsibilities of JDB and HTDFP to DBJ
Transfer of financing operations from Japan Regional Development Corporation and Japan Environment
Corporation
Representative offices opened in Kushiro and Singapore
Partial revision of the Development Bank of Japan Law (introduction of spot inspections by the Financial
Services Agency)
Cabinet approval of The Important Policy of Administrative Reform
Establishment of the Law concerning Administrative Reform for Realizing the Simple and Effective
Government (Law No. 47 of 2006)
Policy-Based Financing Reform Plan decided upon by the Headquarters for the Implementation of Policy Finance
ReformEstablishment of the Development Bank of Japan Inc. Law (New DBJ Law) (Law No. 85 of 2007)

Development Bank of Japan Inc.
2008
2008
2009
2009
2009
2010

114

October
December
June
September
November
March

Establishment of Development Bank of Japan Inc. (Capital: ¥1 trillion)
DBJ Singapore Limited launched
Law for Partial Amendment of the Development Bank of Japan Inc. Law (New DBJ Law) (Law No. 67 of 2009)
Increase of capital to ¥1,103,232 million
DBJ Europe Limited launched
Increase of capital to ¥1,181,194 million

Annual Report & CSR Report 2010

Board of Directors, Corporate Auditors and Executive Officers (As of July 1, 2010)

Nozomu Kano

President & CEO

Managing Executive Officer
In charge of Special Missions

Hideto Fujii
Deputy President

Mikio Araki
Deputy President
Director and Managing Executive Officer
In charge of Corporate Planning & Coordination Department (Public
Relations & Corporate Social Responsibility Office), Treasury
Department, Financial Institution Department, International Strategy &Coordination Department

Masanori Yanagi
Director and Managing Executive Officer
In charge of Business Planning & Coordination Department, Research &Design Department, Investment Strategy Department

Managing Executive Officer
In charge of Risk Management Department, Legal Affairs &Compliance Department

Norihiro Fukunaga
Managing Executive Officer
In charge of Urban Development Department, Corporate Finance
Department [Division 3], Asset Finance Group

Naoto Yamamoto
Managing Executive Officer
In charge of Corporate Finance Department [Division 1 and 2], Kyushu
Branch, Minami-Kyushu Branch

Kenichiro Hirata
Managing Executive Officer
In charge of Corporate Finance Department [Division 4]

Hiroshi Takahashi

Hisato Nagao

Director and Managing Executive Officer

Managing Executive Officer

In charge of General Affairs Department, Accounting Department,
Credit Analysis Department

In charge of Corporate Finance Department [Division 5]

Mitsuhiro Usui

Managing Executive Officer

Director and Managing Executive Officer
In charge of Corporate Planning & Coordination Department(excluding the Public Relations & Corporate Social Responsibility
Office), Information Resources Department

Hisato Nagaoka
In charge of Corporate Finance Group, Mid-Size & Growth, Economic& Industrial Research Department, Hokuriku Branch, Tokai BranchTakeshi Kobayashi
Managing Executive Officer

Director (Outside)

In charge of Investment Planning Group, Fund Investment Group,
Strategic Finance Group, Growth & Cross Border Investment Group,
Structured Finance Group, Syndication Group

Kazuo Ueda

Ryo Ishimori

Director (Outside)

Managing Executive Officer

Akio Mimura

Tetsuhiko Shindo
Full-Time Corporate Auditor

Yasuhito Mitani
Full-Time Corporate Auditor

Board of Directors, Corporate Auditors and Executive Officers

Yo Takeuchi

Yoichiro Yokoyama

Corporate Data

Minoru Murofushi

In charge of Business Development Department, Regional Planning
Department (Public Sector Relationship Management Group, Regional
Development Group), Hokkaido Branch, Tohoku Branch, Niigata
BranchMasanao Maeda
Managing Executive Officer, Head of Kansai Branch
In charge of Kansai Branch, Chugoku Branch, Shikoku Branch

Kazuyoshi Arakawa
Full-Time Corporate Auditor (Outside)

Yoshinori Fukaya

Makoto Ito

Executive Officer, Head of Internal Audit

Corporate Auditor (Outside)

Masafumi Aizawa

Shinji Hatta
Corporate Auditor (Outside)

Executive Officer, Head of Financial Institution

Kazuhiro Takahashi
Executive Officer, Head of Human Resources
Management Department

Hajime Watanabe
Notes: 1. Akio Mimura and Kazuo Ueda are outside directors under Article
15 of Section 2 of the Companies Act.
2. Kazuyoshi Arakawa, Makoto Ito and Shinji Hatta are outside
corporate auditors under Article 16 of Section 2 of the Companies
Act.

Executive Officer, Head of Corporate Planning &Coordination Department

Masaaki Komiya
Executive Officer, Head of Business Planning &Coordination Department

Shin Kikuchi
Executive Officer, Head of Investment PlanningGroup, Growth & Cross Border Investment Group

Satoshi Tomii
Executive Officer, Head of Strategic Finance Group

Annual Report & CSR Report 2010115

Organization Chart (As of July 1, 2010)

Business Planning & Coordination Department

Corporate Data

Research & Design Department
Urban Development Department
International Strategy & Coordination Department
Corporate Finance Department, Division 1
Corporate Finance Department, Division 2
Corporate Finance Department, Division 3

Organization Chart

Corporate Finance Department, Division 4
Corporate Finance Department, Division 5

Corporate Auditors/
Board of Corporate Auditors

Corporate Finance Group, Mid-Size & Growth
Hokkaido Branch
Tohoku Branch
Niigata Branch

Office ofCorporate Auditor

Hokuriku Branch
Tokai Branch
Kansai Branch
Chugoku Branch
Shikoku Branch

GeneralMeeting of
Shareholders

Board ofDirectors

Executive
Committee

Kyushu Branch
Minami-Kyushu Branch
Investment Strategy Department
Asset Finance Group
Investment Planning Group
Fund Investment Group
Strategic Finance Group
Growth & Cross Border Investment Group
Structured Finance Group
Syndication Group
Business Development Department
Economic & Industrial Research Department
Regional Planning Department
Public Sector Relationship Management GroupRegional Development Group
Research Institute of Capital Formation
Credit Analysis Department
Legal Affairs & Compliance Department
Secretariat Office
Human Resources Management Department
Corporate Planning & Coordination Department
Risk Management Department
Information Resources Department
General Affairs Department
Accounting Department
Treasury Department
Financial Institution Department

Operations Audit Committee

Internal Audit Department

Representative Offices: Hakodate, Kushiro, Aomori, Toyama, Matsue, Okayama, Matsuyama, Oita
Overseas Representative Office: New York
Overseas Subsidiaries: DBJ Singapore Limited, DBJ Europe Limited

116

Annual Report & CSR Report 2010

Locations and Directory (As of July 1, 2010)

Shuto Expressway

Development Bank of Japan Inc.

KDDI
Chiyoda Line
Otemachi Sta.
(Exit C1)

Marunouchi Line
Otemachi Sta.
(Exit A1)
*Exit A1 and A3

are closed

Branch Offices:

Representative Offices:

Hokkaido

Hakodate

TohokuKushiroNiigata

Aomori

Hokuriku

ToyamaTokai

MatsueKansai

Okayama

Chugoku

Matsuyama

Shikoku

Oita

Locations and DirectoryNTT

To TokyoMItsui MutualLife Insurance

Area
ClosedJR LineKoko Bldg.

Hibiya Dori (St.)
Japan Business
Federation(Keidanren)

9-1, Otemachi 1-chome,
Chiyoda-ku,
Tokyo 100-0004, Japan
Tel: +81-3-3270-3211
http://www.dbj.jp/en

Domestic Branch Offices,
Representative Offices

Corporate Data

To Kanda

Head Office

KyushuMinami-Kyushu

Overseas Representative Office and Subsidiaries
DBJ Europe Limited

New York Representative Office

DBJ Singapore Limited

New York Representative Office

DBJ Singapore Limited

DBJ Europe Limited

1251 Avenue of the Americas, Suite 830,
New York, NY 10020, U.S.A.
Tel: +1-212-221-0708

9 Raffles Place, #30-03 Republic Plaza,
Singapore 048619
Tel: +65-6221-1779

Level 20, 125 Old Broad Street,
London EC2N 1AR, U.K.
Tel: +44-20-7507-6070

Bharat Bldg.
Ocean Bldg.

Equity Plaza

5th Ave.

6th Ave.

7th Ave.

Cecil St.

DBJ Singapore Limited

needleThreadBank

Royal
Exchange

t.
dS

roa

alk

Golden Shoe Park

Sixty
ThreadNeedleStreetdB.

OlBank ofEngland

Raffles Place

St

le W

ch

St.

Development Bank of Japan Inc.

49th St.

55 Market Street

ur

eed

Rockefeller Center

Ch

Lane

St.

50th St.

Prince’sth49Radio City Music Hall

Level 20,125
Old Broad
Street

dn

St.

lomew

51st St.
th50

Throgmorton St.

rea

52nd St.

Th

way

Sheraton New York Hotel and Towers

DBJ Europe Limited
LothburyUOB Plaza

BarthoMarket St.

Broad

Hilton New YorkSt.

Cornhill

Annual Report & CSR Report 2010

117

Subsidiaries (As of March 31, 2010)

Consolidated Subsidiaries
Corporate Data

Company

Subsidiaries

Principal Businesses

DBJ Business Investment Co., Ltd.

Chiyoda-ku,
Tokyo

Investment consulting

March 10,2003

40

100.00

New Business Investment Co., Ltd.

Chiyoda-ku,
Tokyo

Investment in new
businesses startups

June 1, 1990

6,000

100.00Investment associations

June 23, 2006

3,200

100.00(10.00)

New Business Investment No. 1
Chiyoda-ku,
Investment Limited Liability Partnership Tokyo

Established

CapitalPercentage of(Millions of Total Voting
Yen)
Rights (%)

Address

DBJ Credit Line, Ltd.

Chiyoda-ku,
Tokyo

Acquisition of beneficiaryrights, consigned trusts
operation and guidance

April 3, 200650

100.00Japan Economic Research Institute Inc.

Chiyoda-ku,
Tokyo

Research, consulting andadvisory services

December 13,
1989

479

100.00DBJ Singapore Limited

Republic ofSingapore

Investment and loan
support and advisory
services

December 16,
S$1 million
2008

100.00DBJ Europe Limited

London, United
Kingdom

Investment and loan
support and advisory
services

June 5, 2009

€7 million

100.00DBJ Real Estate Co., Ltd.

Chiyoda-ku,
TokyoReal estate leasing

February 1,
2010

80

100.00DBJ Investment Advisory Co., Ltd.

Chiyoda-ku,
Tokyo

Investment advisory andagency services

December 1,
2009

68

50.58

DBJ Corporate Mezzanine
Partners Co., Ltd.

Chiyoda-ku,
TokyoManagement ofinvestment associations

June 6, 2003

3

100.00UDS Corporate Mezzanine Limited
Partnership

Chiyoda-ku,
Tokyo

Investment associations

January 18,
2006

28,97450.00(0.00)UDS III Corporate Mezzanine Limited
Partnership

Chiyoda-ku,
Tokyo

Investment associations

February 15,
2008

28,62850.00(0.00)

Asuka DBJ Investment LPS

Minato-ku,
Tokyo

Investment associations

October 28,
2005

5,130

49.40

Notes:
1. Amounts of less than ¥1 million have been omitted in the figures stated above.
2. DBJ’s percentage of total voting rights in subsidiaries is shown to three decimal places. Percentages less than that amount have been omitted.
3. Figures indicated within parentheses ( ) in the column showing DBJ’s percentage of total voting rights in subsidiaries indicate indirect holdings. Further, for
the New Business Investment No.1 Investment Limited Liability Partnership, UDS Corporate Mezzanine Limited Partnership, UDS III Corporate Mezzanine
Limited Partnership and Asuka DBJ Investment LPS the percentage of financing is stated.
4. The date of establishment shown for DBJ Singapore Limited indicates the date the company was incorporated.
5. DBJ’s equity ownership in Asuka DBJ Investment LPS is less than 50%, but as DBJ effectively controls the company, it is treated as a subsidiary.
6. Regarding DBJ Europe Limited, DBJ Real Estate Co., Ltd. and DBJ Investment Advisory Co., Ltd., due to being newly established, and UDS III Corporate
Mezzanine Limited Partnership, will, owing to their increased significance, become consolidated subsidiaries this consolidated fiscal year.
7. There are 13 consolidated subsidiaries and 14 affiliated companies.

118

Annual Report & CSR Report 2010

Stock Information (As of March 31, 2010)

Number of Shares Issued and Paid-in Capital

October 1, 2008
June 26, 2009
September 24, 2009
March 23, 2010
Note 4

Capital surplus(Millions of yen)

Note 2

Note 240,00040,0001,000,000

1,000,000—

40,000—1,000,000

2,064

42,064103,232

1,103,232—

1,060,466

1,559

43,623

77,962

1,181,194—

1,060,466(97,248)
Note 3

1,060,466
Note 3

Notes:
1. All shares issued on October 1, 2008, were to raise capital corresponding to incorporation.
In accordance with Article 9 of the Supplementary Provisions to the New DBJ Law, on October 1, 2008, all assets of the predecessor were transferred to
the new DBJ as an in-kind contribution (except those prescribed for ongoing use by the Japanese government of under Paragraph 2, Article 15, of the
Supplementary Provisions to the Law), and these shares were transferred to the Japanese government, the capital investor in the predecessor, through a
gratuitous conveyance.
2. As of October 1, 2008, according to the provisions of Article 2 of the Supplementary Provisions to DBJ’s Articles of Incorporation, the value of the capitalreserve was calculated by evaluation officers as stipulated in Paragraph 1, Article 16, of the Supplementary Provisions to the New DBJ Law to be the value of
assets less the value of liabilities less the ¥1 trillion in capital.
At the third meeting of the Development Bank of Japan, Inc., Asset Evaluation Committee on January 28, 2009, the committee determined the value of
assets (as of October 1, 2008) for transfer authorization. The value of these assets less the value of liabilities less ¥1 trillion in capital amounted to¥1,157,715 million.
3. By resolution of the General Meeting of Shareholders on June 26, 2009, and provisions of the Companies Act (Article No. 448, Paragraph 1, and Article452), the deficit was covered by transfer from capital reserve to other capital surplus and transfer from other capital surplus to retained earnings.
4. By way of a rights offering, all shares of common stock were assigned to the Minister of Finance (for consideration). The issue price (amount paid) is ¥50,000
per share; paid-in capital is ¥50,000 per share.

Stock Information

Note 4

Capital surplus(Millions of yen)

Corporate Data

Changes in number of
Number of shares
Changes inPaid-in capitalshares issued
issuedpaid-in capital(Millions of yen)(Thousands of shares) (Thousands of shares) (Millions of yen)

Shareholder
Address

Number of shares held(Thousands of shares)

Percentage of
total equity (%)

Finance Minister

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

43,623100.00Total—

43,623100.00

Annual Report & CSR Report 2010119

Excerpt from the New DBJ Law (Law No. 85 of 2007)(Unofficial translation)

Corporate Data
Excerpt from the New DBJ Law (Law No. 85 of 2007)
120

Article 1
PurposeThe Development Bank of Japan Inc. (hereinafter referred to as
the ”Corporation”) shall be a joint stock company (kabushikikaisha) whose object is to maintain the foundations of investment
and financing 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
the autonomy 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 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 andobligations;(5) To sell and purchase Securities (other than those that fallwithin monetary claims represented by certificates set forthin Item (7), Short-term Notes, Etc.; the same in Item (8))(other than those that fall within securities-related
derivatives transactions (which mean the securities-related
derivatives transactions set forth in Article 28, Paragraph 8,
Item (6) of the Financial Instruments and Exchange Law(Law No. 25 of 1948, as amended); hereinafter in this Itemand Item 11 the same), or enter into securities-related
derivatives transactions (limited to those made forinvestment 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
Finance Ordinance such as negotiable bank deposit
certificates);(8) To subscribe for Specified Debentures or Preferred
Investment Securities issued by a Specified Purpose
Company (limited to the cases where the Specified Purpose
Company acquires only designated monetary claims or
beneficial interests in trusts with which designatedmonetary claims are entrusted with cash proceeds derived
from issue of those Specified Debentures or Preferred
Investment Securities as set forth in the Asset Liquidation
Plans, and except for, in case of Specified Debentures,
Specified Short-term Notes), and other similar securities
stipulated in the Ministry of Finance (hereinafter in this Item
referred to as the ”Specified Debentures”) (except in cases
where it is intended for secondary distribution (uridashi)), or
to handle primary offering (boshu) of the Specified
Debentures so subscribed;(9) To acquire or transfer Short-term Notes, Etc.;(10) To act as an agent or intermediary for execution ofagreements which provides for lending money on behalf ofbanks (the banks set forth in Article 2, Paragraph 1 of the
Banking Act (Law No. 59 of 1981, as amended); hereinafter
the same) and other entities 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
Law (other than those that fall within the securities-related
derivatives transactions), except in cases where these
Annual Report & CSR Report 2010

business operations fall within those operations referred toin Item (7);(12) To do the activities referred to in Article 2, Paragraph 8,
Item (7) of the Financial Instruments and Exchange Law;
(13) To do the activities referred to in Article 2, Paragraph 8,
Item (9) of the Financial Instruments and Exchange Law(limited, in the case of the handling of primary offering or
secondary distribution, to those to be conducted upon
entrustment by financial instruments dealers engaged in
the type I financial instruments trading business set forth in
Article 28, Paragraph 1 of the Financial Instruments andExchange Law (the financial instruments dealers set forth in
Article 2, Paragraph 9 of the Financial Instruments andExchange Law; hereinafter the same), and for such financial
instruments dealers);(14) To do the activities referred to in Article 2, Paragraph 8,
Item (11) of the Financial Instruments and Exchange Law;
(15) To do the activities referred to in Article 2, Paragraph 8,
Item (13) of the Financial Instruments and Exchange Law;
(16) To do the activities referred to in Article 2, Paragraph 8,
Item (15) of the Financial Instruments and Exchange Law;
(17) With respect to securities (including, if such securities are
not issued, rights to be represented by such securities) ortransactions referred to in each Item of Paragraph 2 ofArticle 33 of the Financial Instruments and Exchange Law,
to do the activities set forth in each Item of said Paragraph(other than those 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 (kabushikiiten), 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 otherentities;(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.
Article 5
Issue of the Development Bank of Japan Bonds
1. The Corporation may issue the Development Bank of Japan Bonds.
Article 9Special Rules When Starting Acceptance of Deposits, Etc.
1. If the Corporation intends to start acceptance of deposits set
forth in Article 3, Paragraph 1, Item (1) or issue of theDevelopment Bank of Japan Bonds, the Corporation shallobtain the prior approval 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.
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
the Companies Act (Law No.86 of 2005, as amended)(hereinafter in Article 34, Item (4) referred to as the ”Shares
Offered for Sale”) or stock acquisition rights offered set forth in
Article 238, Paragraph 1 of the Companies Act (hereinafter in
Article 34, Item (4) referred to the ”Stock Acquisition Rights
Offered”), or to deliver shares or stock acquisition rights inconnection with a share-for-share exchange, the Corporation
shall obtain authorization of the Minister of Finance.

Article 16
Authorization of Concurrent Positions of Directors
1. Except in cases where the provision of Article 4, Paragraph 2
applies, 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 authorization of the Minister ofFinance.
2. The Minister of Finance shall, upon receipt of an application for
the authorization referred to in the preceding Paragraph, grant
his/her authorization, except in cases where it is determinedthat any matter so applied may interfere with sound and proper
management of the Corporation.

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 thandisposition of losses) such as distribution, merger, corporate
split, and dissolution shall not become effective withoutauthorization of the Minister of Finance.

Excerpt from the New DBJ Law (Law No. 85 of 2007)

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.

Subject to Authorization”) its subsidiary (the subsidiary set forthin 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 Law (Law No.187
of 1952, as amended));(3) Financial Instruments Dealers (limited to those who engage
in type I financial instruments trading business set forth in
Article 28, Paragraph 1 of the Financial Instruments andExchange Law);(4) Money lenders (the money lenders set forth in Article 2,
Paragraph 2 of the Money Lending Business Law (Law No.
32 of 1983, as amended), and exclude those who
concurrently conduct the business referred to in thepreceding Items or fall within other requirements stipulated
in the Ministry of Finance Ordinance);(5) Trust companies (the trust companies set forth in Article 2,
Paragraph 2 of the Trust Business Law (Law No. 154 of
2004, as amended));(6) Insurance companies (the insurance companies set forthin Article 2, Paragraph 2 of the Insurance Business Law(Law No. 105 of 1995, as amended)); and(7) Those stipulated by the Ministry of Finance Ordinance as
those who are similar to each of the foregoing.

Corporate Data

Article 13
Corporate Debentures, Development Bank of Japan Bonds andBorrowings
1. Prior to the beginning of each fiscal year, the Corporation shallprepare 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 Law Concerning theCentral Depositary System of Corporate Debentures (Law No.
75 of 2001, as amended) from both the Corporate Debentures
and the Development Bank of Japan Bonds, respectively;
hereinafter in this 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 thesame), which provides for matters relating to the issue of the
Corporate Debentures and the Development Bank of Japan
Bonds, and the borrowing of money, such as the amounts ofissue and borrowings, denominated currency of the Corporate
Debentures, the Development Bank of Japan Bonds and theborrowings, as stipulated in the Ministry of Finance Ordinance,and obtain authorization of the Minister of Finance. If the
Corporation intends to revise it, the same shall apply.

Article 22Special Exemptions from Management of Fiscal Loan Funds
Notwithstanding the provisions of Article 10, Paragraph 1 of the
Fiscal Loan Funds Law (Law 100 of 1951, as amended), the fiscal
loan funds (which means the fiscal loan funds set forth in Article 2of the Fiscal Loan Funds Law; hereinafter the same) may beappropriated 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 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, the same shall apply.

Article 23
1. Notwithstanding the provision of Article 10, Paragraph 1 of the
Fiscal Loan Funds Law, the fiscal loan funds may beappropriated for the Corporate Debentures and theDevelopment Bank of Japan 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.

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 and obtain
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 25
Guarantee of Obligations
1. Notwithstanding the provision of Article 3 of the Law
Concerning Restrictions on Fiscal Assistance by the Government
to Corporations (Law No. 24 of 1946, as amended), theGovernment may enter into a guarantee agreement for the
obligations relating to the Debentures, Etc., to the extent of theamount approved by the resolutions of the Diet.

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

Article 29
Competent Ministers
1. The competent minister under this Law shall be the Minister ofFinance provided, however, that in the case that the
Corporation obtains the approval referred to in Article 9,

Annual Report & CSR Report 2010121

Paragraph 1, the competent ministers for the following mattersshall be the Minister of Finance and the Prime Minister.

Corporate Data

Supplementary Provisions

Excerpt from the New DBJ Law (Law No. 85 of 2007)

Article 2
Disposition of Government-Owned Shares
1. Pursuant to Article 6, Paragraph 2 of the Law Concerning
Promotion of Administrative Reform for Realizing the Simple
and Effective Government (Law No. 47 of 2006, as amended),the Government shall make efforts to reduce the number ofshares held by it in the Corporation (hereinafter in the following
Paragraph and the immediately following Article referred to as”Government-Owned Shares”), taking into account the market
situation, and shall dispose all of them in approximately five toseven years from the date set forth in Item (3) of the preceding
Article.
2. For a period from the effectuation of this law until theGovernment disposes of all of the Government-Owned Shares,
the Government shall from time to time review matters, such as
matters regarding the method in which the GovernmentOwned Shares should be disposed of and take the required
measures based on the result of such review, so that thefoundation of the Corporation’s investment and financing
functions for long-term business funds will be maintained.
Article 3
Abolition of This Law and Other Measures
If the Government disposes of all of the Government-Owned
Shares, the Government shall immediately take measures toabolish this law, 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.
Article 4Special 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 of Japan (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 Law(Law No. 73 of 1999, as amended; hereinafter, except for
Article 26 of the Supplementary Provisions, referred to as the”DBJ Law”), during the Preparatory Period (the period from thedate on which this law comes into force up to September 30,
2008; the same in Paragraph 5).
Article 9
Capital Contribution
Upon the incorporation of the Corporation, DBJ shall contributeall of its properties, except assets to be assumed by Japanpursuant to Article 15, Paragraph 2 of the Supplementary
Provisions, to 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 shall be taken over by the Corporation, except for thoseassets to be assumed by the Government as set forth in thefollowing Paragraph.
2. Of the rights actually held by DBJ at the time of establishmentof the Corporation, the assets which will be considered nolonger necessary for the Corporation to smoothly perform its
future business operation shall be assumed by Japan at the timeof establishment of the Corporation.

122

Annual Report & CSR Report 2010

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).
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 Article 15, Paragraph 1 of the
Supplementary Provisions (hereinafter in this Article referred to as
the ”Assumed Assets”) shall, notwithstanding the provisions ofArticle 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 (whichmeans the areas of Aomori, Iwate, Miyagi, Akita, Yamagata,
Fukushima and Niigata prefectures): Minister of Finance andMinister of Land, Infrastructure and Transport; and(2) For management of the Assumed Assets other than the
Assumed Assets set forth in the preceding Item: Minister ofFinance.
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 other business
entities, with respect to the systems for which the investment andfinancing functions of DBJ are utilized pursuant to the provisions of
relevant laws (including ordinances under those laws), such as the
Law Concerning Collaterals for Borrowings of Electricity
Companies from The Development Bank of Japan (Law No. 145 of1950, as amended), the Law Concerning the Securement of Oil
Reserves, Etc. (Law No. 96 of 1975, as amended), the Law
Concerning Promotion of Development and Promotion ofIntroduction of Alternative Energy to Oil (Law No. 71 of 1980, as
amended), the Special Measures Law Concerning Promotion ofPrivate Urban Development (Law No. 62 of 1987, as amended),the Extraordinary Measures Law Concerning Promotion of Business
Activities for Rationalization of Usage of Energy and Effective Useof Resources (Law No. 18 of 1993, as amended) and the Law
Concerning Facilitation of the Improvement, Etc. of Public Facilities,
Etc. by Private Fund, Etc. (Law No. 117 of 1999, as amended),
while considering the convenience of users of those systems, andtake the required measures based on the results of suchexamination.
Article 67
Utilization of the Corporation’s Investment and Financing
Functions for Long-term Business Funds
If the Government utilizes the Corporation’s investment andfinancing functions for long-term business funds on or after thedate set forth in Article 1, Item (3) of the Supplementary
Provisions, the Government shall take measures necessary tosecure the equal competition conditions, as well as othermeasures necessary for utilization of such investment andfinancing functions, paying attention to the Corporation’s
appropriate competitive relationships with other business entities.
This is an unofficial English translation. Only the original
Japanese texts of the law have legal effect and prevail over thistranslation. This translation has been prepared solely forreference purposes. The reader of this translation should
consult the original Japanese text for the purposes ofinterpreting and applying the law to any legal issues ordisputes.

Law for Partial Amendment of the Development Bank of Japan Inc. Law(Law No. 67 of 2009)(Unofficial translation)

Delivery of Government Bonds
Article 2-3
1 During the period ending March 31, 2012, the Government, in
implementing the crisis response business specified in Article 2,
item 5 of the Japan Finance Corporation Law (Law No. 57 of
2007; hereinafter ”Crisis Response Business”) may issue
government bonds in order to secure the capital required toensure the soundness of the Corporation’s finances.
2 The Government, under the provisions of the preceding
paragraph and within the limits set by its budget, shall issue
government bonds and deliver them to the Corporation.
3 Government bonds issued under the provisions of paragraph 1
shall be noninterest-bearing.
4 Government bonds issued under the provisions of paragraph 1
may not be transferred, attached as security rights, or otherwise
disposed of.
5 Necessary matters concerning government bonds issued under
the provisions of paragraph 1, other than that provided inparagraph 3, shall be determined by Finance Ministryordinance.
Redemption of Government Bonds
Article 2-4
1 The Corporation, to obtain necessary funds for the capitalincrease required for its Crisis Response Business (limited tothose conducted by March 31, 2012), may request theredemption of government bonds delivered under theprovisions of paragraph 2 of the preceding Article, only for
amounts calculated according to rules set down in Finance
Ministry ordinances.

Return of Government Bonds
Article 2-5
1 In the event that as of July 1, 2012, any government bondsdelivered under the provisions of Article 2-3, paragraph 2 of the
Supplementary Provisions remain unredeemed, the Corporationmust return such unredeemed bonds to the Government.
2 The Government must immediately retire any government
bonds returned to it under the provisions of the preceding
paragraph.
3 Other than the matters stipulated in the preceding two
paragraphs, necessary matters concerning the return andretirement of government bonds delivered by the Government
under the provisions of Article 2-3, paragraph 2 shall be
determined by Finance Ministry ordinance.
Exception to Imposition of Registration and License Tax
Article 2-6
When investments are made under the provisions of Article 2-2 ofthe Supplementary Provisions or redemptions made under theprovisions of Article 2-4, paragraph 2 of the Supplementary
Provisions, a Registration and License Tax shall not be imposed on
the increase in capital received by the Corporation, provided that
registration is obtained as specified by Finance Ministry ordinance.

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

Government Investment
Article 2-2During the period ending March 31, 2012, the Government may
invest in the Corporation as it deems necessary within the limits
set by its budget.

2 The Government, when requested by the Corporation toredeem all or a part of the government bonds delivered under
the provisions of paragraph 2 of the preceding Article, mustcomply without delay.
3 When redemption has been made under the provisions of thepreceding paragraph, the amount of the Corporation’s capitalshall be the sum of its capital immediately prior to theredemption and the amount of the money redeemed.
4 When the provisions of Article 445, paragraph 1 are applied inapplying the provisions of the preceding paragraph, the term”case” in the said paragraph shall be ”case, or in cases where
Article 2-4, paragraph 3 of the Supplementary Provisions to theDevelopment Bank of Japan Inc. Law (Law No. 85 of 2007) isapplied.”
5 Other than the matters stipulated in each of the preceding
paragraphs, necessary matters concerning the redemption of
government bonds delivered by the Government under theprovisions of paragraph 2 of the preceding Article shall be
determined by Finance Ministry ordinance.

Corporate Data

The Development Bank of Japan Law (Law No. 85 of 2007) shallbe partially amended as described below.
In Article 2, paragraph 1 of the Supplementary Provisions,”the following Article” shall be amended to read ”Article 3 of the
Supplementary Provisions” and ”the day stipulated in item 3 ofthe preceding Article” to read ”April 1, 2012”. The following fivearticles shall be added after Article 2.

Supplementary Provisions
Enforcement Date
Article 1
This law shall take effect on the date of its promulgation.
Deliberation
Article 2
1 By the end of fiscal year 2011, the Government shall review theorganization of the Corporation, taking into account the status
of investments in Development Bank of Japan Inc. (hereinafter”the Corporation”) under the provisions of Article 2-2 of the
Supplementary Provisions to the Development Bank of Japan
Inc. Law as amended by this Law; the redemption ofGovernment bonds under the provisions of Article 2-4,
paragraph 2 of the same Supplementary Provisions; theconduct of crisis response business by the Corporation (thisrefers to Crisis Response Business conducted under theprovisions of Article 2, item 5 of the Japan Finance Corporation
Law (Law No. 57 of 2007); same hereinafter); and changes insocioeconomic and other circumstances. This review, from apoint of view of the Government’s practice of maintaining acertain level of involvement in the Corporation, such as byconsistently holding more than one-third of the Corporation’s
issued shares, is meant to ensure that the Corporation’s Crisis
Response Business are properly implemented; it shall include aconsideration of the Corporation’s Crisis Response Business
and, based on that, of the Government’s holding of stock in the
Corporation. The Government shall take necessary measures
based on its findings.
2 Notwithstanding the provisions of Article 6, paragraph 2 of the
Law on Promotion of Administrative Reform for Realizing
Simple and Efficient Government (Law No. 47 of 2006) as
amended under the provisions of the following Article (theAnnual Report & CSR Report 2010123

Corporate Data

”Administrative Reform Promotion Law”) and of Article 2,paragraph 1 of the Supplementary Provisions to theDevelopment Bank of Japan Inc. Law as amended by this Law,
the Government shall not dispose of its shares in the
Corporation prior to taking the measures described in thepreceding paragraph.

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

Partial Amendment of the Law on Promotion of
Administrative Reform for Realizing Simple and Efficient
Government
Article 3
The Law on Promotion of Administrative Reform for Realizing
Simple and Efficient Government shall be partially amended asfollows.
”In the measures described in the preceding paragraph” in Article
6, paragraph 2 shall be amended to read ”from April 1, 2012.”
Adjusted Provisions
Article 4
1 If this Law come into effect prior to the date of enforcement of
the Law for Partial Amendment of the Shoko Chukin Bank Law
and Other Laws to Facilitate the Supply of Funds to Small andMedium-sized Enterprises (Law No. 54 of 2009; mentioned in

the following paragraph as the ”Shoko Chukin Amendment
Law”), in regard to the application of the provisions of Article 6,paragraph 2 of the Law on Promotion of Administrative Reformfor Realizing Simple and Efficient Government as amended
under the provisions of the preceding Article up to the day
before the said date, ”and” in the said paragraph shall bechanged to read, ”taking into account the market situation,and shall dispose all such investments in approximately five toseven years after implementation of the measures mentioned in
the preceding paragraph, and the Government shall invest in.”2 If this Law come into effect after the date of enforcement of
the Shoko Chukin Amendment Law, the provisions of thepreceding Article shall not apply. In this case, ”the following
Article” in Article 2, paragraph 2 of the Supplementary
Provisions shall be changed to read ”Article 4 of the
Supplementary Provisions to the Law for Partial Amendment of
the Shoko Chukin Bank Law and Other Laws to Facilitate theSupply of Funds to Small and Medium-sized Enterprises (Law
No. 54 of 2009).”
Delegation to Government Ordinance
Article 5
Transitional measures required for the enforcement of this Law
shall be determined by government ordinance.

(Unofficial translation)

Supplementary Resolutions on the Bill for Partial Amendment of the Development Bank of Japan Inc. Law
House of Councilors Committee on Financial Affairs
June 25, 2009

The following matters should receive the Government’s carefulconsideration.
• In implementing Crisis Response Business based on the recent
measures for additional investment, Development Bank of Japan
Inc. shall ensure the measures result in a smooth supply of funds
on the basis of appropriate analysis by drawing upon its
accumulated knowledge and skills.
• With the global monetary crisis having serious economic andfinancial impacts, and the balance of loans to small and medium
enterprises falling steadily, efforts must be made to further
facilitate loans by the Japan Finance Corporation to small andmedium-sized businesses. In implementing Crisis Response
Business for large and midscale enterprises, Development Bankof Japan Inc. must be certain to expedite loans to associatedsmall and medium enterprises as well.

based on its findings. Any such deliberations should take into
account the need to ensure that the Corporation acts for thegood of the community, that it has a stable source of the funds
required to fulfill its functions as a provider of long-term
investment and loans, and that it has systems in place to securecompetitive officers and employees. The Government shouldtake appropriate measures to prevent any damage to the
Corporation’s long-term value.
• The Government should reassess the future provision ofpolicy-based finance by Development Bank of Japan Inc. and
the Japan Finance Corporation, reaffirming the importance of
their roles and functions and paying attention to theirrelationships not only with private financial institutions but alsowith the Japanese financial sector as a whole, including
affiliated organizations and the Japan Post Bank.
Resolutions passed.

• The Government should review its holding of shares in
Development Bank of Japan Inc. and take necessary measures

124

Annual Report & CSR Report 2010

Financial Condition

Consolidated Financial Statements . . . . . . . . . . 126
Non-Consolidated Financial Statements . . . . . . 165
Capital Adequacy Status . . . . . . . . . . . . . . . . . . 168

Annual Report & CSR Report 2010125

Consolidated Balance Sheets
Development Bank of Japan Inc. and Consolidated Subsidiaries
As of March 31, 2010 and 2009

Financial Condition

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

2009

2010

AssetsCash and due from banks (Note 28)¥

168,696¥

67,521$

1,813,156

Call loans and bills bought

125,000

145,000

1,343,508

Reverse repurchase agreements (Note 3)

179,991

375,966

1,934,556

Money held in trust (Note 28)

30,74024,873

330,397

Consolidated Financial Statements

Securities (Notes 3, 13 and 28)

1,289,495

1,246,587

13,859,583

Loans (Notes 4 and 13)

13,514,661

12,008,856

145,256,467

Other assets (Note 6)

89,701

88,075964,118

Tangible fixed assets (Note 7)

162,227

162,375

1,743,627

5,098

4,576

54,797

Intangible fixed assets
Deferred tax assets (Note 23)

44,38327,930477,035

Customers’ liabilities for acceptances and guarantees (Note 12)

192,172

157,276

2,065,483

Allowance for loan losses (Note 8)(203,422)(276,689)(2,186,400)

Allowance for investment losses(3,004)(4,294)(32,291)¥15,595,740¥14,028,056$167,624,035

Total assets
Liabilities and equity
Liabilities:
Debentures (Note 9)¥ 3,504,212¥ 3,431,597$ 37,663,502

Call money and bills sold

153,000—

1,644,454

Borrowed money (Note 10)

9,082,479

8,067,892

97,619,086

Corporate bonds (Note 9)242,181

81,4232,602,979

Other liabilities (Notes 11 and 24)

49,780169,043535,042

Accrued bonuses to employees

2,238

2,224

24,065

Accrued bonuses to directors and corporate auditors

22

20

238

Reserve for employees’ retirement benefits (Note 22)

32,61332,050350,528

34

11

373

Reserve for contingent losses

2,815

—

30,259Reserve for losses on headquarter relocation

6,536

—

70,253

Reserve for directors’ and corporate auditors’ retirement benefits

Deferred tax liabilities (Note 23)
Acceptances and guarantees (Note 12)
Total liabilities
Equity:Common stock authorized, 160,000 thousand shares in 2010
and 2009; issued, 43,623 thousand shares in 2010 and
40,000 thousand shares in 2009 (Note 14)
Capital surplus (Note 14)
Retained earnings (deficit) (Note 14)

58

1,231

157,276

2,065,483

13,268,201

11,941,600

142,607,494

1,181,194
1,060,466

1,000,000
1,157,715

12,695,550
11,397,962

40,779(96,363)438,298

Unrealized gain (loss) on available-for-sale securities (Note 28)

11,091(1,667)

119,211

Deferred gain on derivatives under hedge accounting

11,154

17,182

119,887

Foreign currency translation adjustments
Total

(54)

3

(590)

2,304,630

2,076,870

24,770,318

Minority interests

22,9089,586

246,223

Total equity

2,327,538

2,086,456

25,016,541¥15,595,740¥14,028,056$167,624,035

Total liabilities and equity
See notes to consolidated financial statements.

126

114
192,172

Annual Report & CSR Report 2010

Consolidated Statements of Operations
Development Bank of Japan Inc. and Consolidated Subsidiaries
For the year ended March 31, 2010 and for the six-month period ended March 31, 20092010

2009 (6 months)

2010

IncomeInterest income:¥301,482¥135,793$3,240,354

Interest on loans

278,176

130,4902,989,858

Interest and dividends on securities

15,793

4,771

169,747

55

14

594

Interest on call loans and bills bought

322

387

3,462

Interest on due from banks

116

129

1,255

6,996

—

75,19622—

241

15,683

4,646

168,563Interest on swaps
Other interest income
Fees and commissions (Note 16)
Other operating income (Note 17)

19,880719

213,672

Other income (Note 18)

16,661

13,672

179,084

Total income

353,707

154,8313,801,673

180,111

84,1181,935,847

55,40925,991

595,543

Expenses
Interest expense:
Interest on debentures
Interest on call money and bills sold

64

0

693

Interest on borrowed money

122,527

56,0291,316,931

Interest on corporate bonds

2,105

216

22,631

4

1,880

50

Fees and commissions (Note 19)

1,043

142

11,220

Other operating expenses (Note 20)

34,072

11,090366,217

General and administrative expenses

35,037

17,803

376,586

Other interest expense

Other expenses (Note 21)

52,336

159,798

562,519

Total expenses

302,602272,952

3,252,389

Income (loss) before income taxes and minority interests

51,105(118,120)

549,284

Current

25,382

20,021

272,815

Deferred(14,558)(6,492)(156,476)

10,824

13,529116,339387(3,308)4,162¥39,893¥(128,342)$428,783

Consolidated Financial Statements

Interest on reverse repurchase agreements

Financial Condition

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

Income taxes (Note 23):

Total income taxes
Minority interests in net income (loss)
Net income (loss)

Yen

U.S. Dollars (Note 1)

Per share of common stock (Note 15)
Basic net income (loss)
Cash dividend applicable to the year

¥970.47¥(3,208.55)$10.43

230

—

2.47

See notes to consolidated financial statements.

Annual Report & CSR Report 2010127

Consolidated Statements of Changes in Equity
Development Bank of Japan Inc. and Consolidated Subsidiaries
For the year ended March 31, 2010 and for the six-month period ended March 31, 2009

Financial Condition

Thousands of U.S.
Dollars (Note 1)

Millions of Yen

Consolidated Financial Statements

2010

2009 (6 months)

2010

Common stock:
Balance at beginning of financial period¥1,000,000¥1,000,000$10,748,065

Issuance of new shares of common stock

181,194—

1,947,485

1,181,194

1,000,000

12,695,550

1,157,715

1,157,715

12,443,199

Balance at end of financial period
Capital surplus:
Balance at beginning of financial period
Transfer from capital surplus to retained earnings(97,248)—(1,045,237)

1,060,466

1,157,715

11,397,962(96,363)—(1,035,721)—

31,978—Transfer from capital surplus to retained earnings

97,248—1,045,237

Net income (loss)

39,893(128,342)

428,783

Balance at end of financial period

40,779(96,363)438,298

Balance at beginning of financial period(1,667)—(17,927)

Net change during the financial period

12,759(1,667)137,137

Balance at end of financial period

11,091(1,667)

119,211

Balance at end of financial period
Retained earnings (deficit):
Balance at beginning of financial period
The amount of tax effect adjustment due to change inlegal structure

Unrealized gain (loss) on available-for-sale securities:

Deferred gain on derivatives under hedge accounting:
Balance at beginning of financial period

17,182—

184,681

Net change during the financial period(6,028)17,182(64,793)

Balance at end of financial period

11,154

17,182

119,887

Balance at beginning of financial period

3

—

38

Net change during the financial period

(58)

3

(628)

Balance at end of financial period

(54)

3

(590)

Foreign currency translation adjustments:

Minority interests:
Balance at beginning of financial period

9,586

—

103,033

Net change during the financial period

13,322

9,586

143,190

Balance at end of financial period

22,9089,586

246,223¥2,327,538¥2,086,456$25,016,541

Total equity

Beginning of financial period, 2010 is April 1, 2009 and 2009 (6 months) is October 1, 2008, respectively. End of financial period, 2010 isMarch 31, 2010 and 2009 (6 months) is March 31, 2009, respectively.
See notes to consolidated financial statements.

128

Annual Report & CSR Report 2010

Consolidated Statements of Cash Flows
Development Bank of Japan Inc. and Consolidated Subsidiaries
For the year ended March 31, 2010 and for the six-month period ended March 31, 20092009 (6 months)

51,105¥ (118,120)

$

1,948
1,858
0
(958)
(73,267)(1,289)
14
1
562
2,815
6,536
(301,482)
180,11158,006(1,478)4,291
40(1,505,805)
72,615
1,014,586
160,758(5,181)
20,000195,975
153,000
282,534(181,437)(93,583)
42,279(42,293)
(14)

598
2,273
43
(988)
120,060(1,632)
210
20
89
—
—
(135,793)
84,11824,651
1,388
(321)
8
(747,836)
56,7481,459,394
81,423
165,469(145,000)(218,968)—
136,689(85,080)
3,055
682,500(562)
681,938

20,94819,977
5(10,304)(787,479)(13,863)
155
13
6,046
30,25970,253(3,240,354)
1,935,847
623,456(15,890)
46,127439(16,184,498)
780,472
10,904,845
1,727,840(55,694)
214,961
2,106,358
1,644,454
3,036,704(1,950,101)(1,005,838)
454,422(454,578)(156)(2,195,175)
15,8592,087,747(3,418)
1,608
(934)
23
(1,504)(4,339)(100,135)(1,037,782)
7,631
327,769(2,350)41,175
(144)
13
(591)
—
(664,277)(23,593,893)
170,464
22,439,246(36,747)
17,283(10,048)249(16,174)(46,645)(1,076,266)

181,194—

1,947,485

16,600750

178,424(1,313)
196,481(54)
696(14,113)
2,111,796

(346)

326

(3,725)95,984

18,683

1,031,650

7

—

85

30,08048,763524,117$ 1,555,852¥

48,763¥ 144,756¥

2010

549,284

Consolidated Financial Statements

Cash flows from operating activities:
Income (loss) before income taxes and minority interests
Adjustments for:
Depreciation
Amortization of goodwill
Losses on impairment of long-lived assets
Equity in gains of affiliates(Decrease) increase in allowance for loan losses
Decrease in allowance for investment losses
Increase in accrued bonuses to employees
Increase in accrued bonuses to directors and corporate auditors
Increase in reserve for employees’ retirement benefits
Increase in reserve for contingent losses
Increase in reserve for losses on headquarter relocation
Interest income
Interest expense
Loss on securities—net(Gain) loss on money held in trust—net
Foreign exchanges losses (gains)
Loss on sales of fixed assets—net
Net increase in loans
Net increase in debentures
Net increase in borrowed money
Net increase in corporate bonds
Net (increase) decrease in due from banks
Net decrease (increase) in call loans and bills bought
Net decrease (increase) in reverse repurchase agreements
Net increase in call money and bills soldInterest 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
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from issuance of stock
Proceeds from issuance of securities to minority shareholders ofsubsidiaries
Dividends paid to minority shareholders of subsidiaries
Net cash provided by financing activities
Foreign currency translation adjustments on cash andcash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents of newly consolidated subsidiaries
at beginning of financial period
Cash and cash equivalents at beginning of financial period
Cash and cash equivalents at end of financial period

2010

Financial Condition

Thousands of U.S.
Dollars (Note 1)

Millions of Yen

Beginning of financial period, 2010 is April 1, 2009 and 2009 (6 months) is October 1, 2008, respectively. End of financial period, 2010 isMarch 31, 2010 and 2009 (6 months) is March 31, 2009, respectively.
See notes to consolidated financial statements.
Annual Report & CSR Report 2010129

Notes to Consolidated Financial Statements
Development Bank of Japan Inc. and Consolidated Subsidiaries
For the year ended March 31, 2010 and for the six-month period ended March 31, 2009

Financial Condition

1. Basis of Presentation

Consolidated Financial Statements

The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in
the Japanese Financial Instruments and Exchange Act and its related accounting regulations and Ministerial Ordinance for
Accounting of the Development Bank of Japan Inc. (the “DBJ Inc.”) and in conformity with accounting principles generally
accepted in Japan, 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
the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million yen.
Accordingly, the sum 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 convenienceof readers outside Japan. The rate of ¥93.04=$1.00, the effective exchange rate prevailing as of March 31, 2010, has beenused in the conversion. The presentation of such amounts is not intended to imply that Japanese yen amounts have been or
could have been readily translated, realized or settled in U.S. dollars at that rate or any other rate.
The financial period, 2009 (6 months) of the accompanying financial statements is from October 1, 2008 throughMarch 31, 2009. DBJ Inc. was established on October 1, 2008, as a joint stock corporation under the Development Bank ofJapan Inc. Law (Law No. 85 of 2007, as amended) (the “DBJ Inc. Law”). Development Bank of Japan (the “predecessor”)
contributed all assets and liabilities to DBJ Inc. except for those assets to be assumed by the Japanese Government pursuant
to Article 15, Paragraph 2 of the Supplementary Provisions, in exchange for shares of DBJ Inc.’s common stock, and thereafter, upon transferring such shares to the Japanese Government, the predecessor was dissolved on October 1, 2008.
Except for those assets to be assumed by the Japanese Government pursuant to Article 15, Paragraph 2 of the
Supplementary Provisions, DBJ Inc. has succeeded to substantially all of the rights and obligations of the predecessor pursuant to the DBJ Inc. Law.

2. Summary of Significant Accounting Policies(a) Principles of Consolidation(1) Scope of Consolidation
Under the control concept, 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 theconsolidation scope of collective investment vehicles, such as limited partnerships, Tokumei Kumiai and other entities
with similar characteristics.
(i) Consolidated Subsidiaries
The number of consolidated subsidiaries as of March 31, 2010 is 13. The consolidated subsidiaries as of March 31,
2010 are as follows:
DBJ Business Investment Co., Ltd.
DBJ Corporate Mezzanine Partners Co., Ltd.
UDS Corporate Mezzanine Limited Partnership
UDS Corporate Mezzanine No. 3 Limited Partnership
DBJ Credit Line, Ltd.
New Business Investment Co., Ltd.
New Business Investment No. 1 Investment Limited Liability Partnership
DBJ Singapore Limited
Japan Economic Research Institute Inc.
Asuka DBJ Investment LPS
DBJ Europe Limited
DBJ Real Estate Co., Ltd.
DBJ Investment Advisory Co., Ltd.

130

Annual Report & CSR Report 2010

(iii) Entities not considered to be Subsidiaries where DBJ Inc. has more than a 50% Ownership Interest
The number of entities not considered to be subsidiaries where DBJ Inc. has more than a 50% ownership interest asof March 31, 2010 is two. Such entities as of March 31, 2010 are as follows:
Dyflex Holdings Co.
Hydro-Device Company, Limited
These entities are excluded from the scope of consolidation since DBJ Inc.’s intent is to nurture the venture business and not to exercise control over their operating and financing policies.

Consolidated Financial Statements(ii) Non-consolidated Subsidiaries
The number of non-consolidated subsidiaries as of March 31, 2010 is 14. Such subsidiaries as of March 31, 2010 are
mainly as follows:
UDS II Corporate Mezzanine Limited Partnership
Non-consolidated 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 earningsand deferred hedge gains and losses.

Financial Condition

In the year ended March 31, 2010, UDS Corporate Mezzanine No. 3 Limited Partnership was newly consolidated
due to growing importance, and DBJ Europe Limited, DBJ Real Estate Co., Ltd. and DBJ Investment Advisory Co.,
Ltd. were newly consolidated upon their formation.

(2) Application of the Equity Method
Under the influence concept, non-consolidated subsidiaries and affiliates over which DBJ Inc. has the ability to
exercise significant influence are accounted for by the equity method.
(i) Non-consolidated Subsidiaries not accounted for by the Equity Method
The number of non-consolidated subsidiaries not accounted for by the equity method as of March 31, 2010 is 14.
Such subsidiaries as of March 31, 2010 are mainly as follows:
UDS II Corporate Mezzanine Limited Partnership(ii) Affiliates accounted for by the Equity Method
The number of affiliates accounted for by the equity method as of March 31, 2010 is 14. The affiliates accounted
for by the equity method as of March 31, 2010 are mainly as follows:
Makuhari Messe, Inc.
Hokkaido International Airlines Co., Ltd.
Urban Redevelopment Private Fund
Urban Redevelopment Private Fund has been the affiliate accounted for by the equity method since the year
ended March 31, 2010 due to increased significance.
(iii) Affiliates not accounted for by the Equity Method
The number of affiliates not accounted for by the equity method as of March 31, 2010 is 91. Such affiliates as ofMarch 31, 2010 are mainly as follows:
New Perspective One LLC
Non-consolidated subsidiaries and affiliates that are not accounted for by the equity method have been excluded
from the scope of the equity method because their aggregate effect in terms of net income, retained earnings anddeferred gains and losses has no material impact on the consolidated financial statements of DBJ Inc.
(iv) Entities not considered to be affiliates where DBJ Inc. has greater than 20% but less than a majority of voting stock
The number of entities not considered to be affiliates where DBJ Inc. has greater than 20% but less than a majorityof voting stock as of March 31, 2010 is 12. Such entities as of March 31, 2010 are as follows:
Sunsay International Technology, Inc.
Gordon Brothers Japan Co., Ltd.
Narumi Corporation
Shinwa Seiko Corporation
Mediclude Co., Ltd.
Green Power Investment Corporation

Annual Report & CSR Report 2010131

Financial Condition

Advangen, Inc.
Vaxiva Biosciences
Asahi Fiber Glass Company, Limited
Takumi Technology Corp.
Nihon Shoryoku Kikai Co., Ltd.
PRISM BioLab Corporation
These entities are not accounted for by the equity method because DBJ Inc.’s intent is to nurture the venturebusiness and not to exercise significant influence on their operating and financing policies.

Consolidated Financial Statements(3) Balance Sheet Dates of Consolidated Subsidiaries
Balance sheet dates of consolidated subsidiaries are as follows:
December 31
6 subsidiaries
March 31
7 subsidiaries
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) Valuation of Consolidated Subsidiaries’ Assets and Liabilities
Assets and liabilities of newly consolidated subsidiaries are measured at fair value at the date of acquisition ofcontrol.
(5) Elimination of Intercompany Balances and Transactions
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized
profit resulting from transactions between DBJ Inc. and its consolidated subsidiaries is eliminated.
(6) Amortization of Goodwill
The difference between the fair value of net assets and the cost of the acquired subsidiary is being amortized ona straight-line basis over the estimated beneficial period not exceeding 20 years. Minor differences are charged toincome in the year of acquisition.
(b) Cash and Cash Equivalents“Cash and Cash Equivalents” in the consolidated statements of cash flows consist of cash on hand 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 (Note 1)

Millions of Yen

2010

Cash and due from banks¥168,696

2009¥67,5212010$1,813,156

Time deposits with banks(23,939)(18,757)(257,304)

Cash and cash equivalents¥144,756¥48,763

1,555,852(c) Securities
Held-to-maturity debt securities are stated at amortized cost with amortization computed on a straight-line basis, using
the weighted average method. Available-for-sale securities with readily available market quotations are stated at market
value (cost 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.’s interest in earnings since acquisition and less any dividends received, based on their most recent financial
statements.
Unrealized gain and loss on available-for-sale securities are included in equity, net of income taxes.
Securities which are held as trust assets in money held in trust accounts are valued in the same way as othersecurities.

132

Annual Report & CSR Report 2010

(2) Hedging Instruments and Hedged Items• Hedging Instruments: Interest rate swaps
Hedged Items:
Debentures, Corporate bonds, Borrowed money and Loans• Hedging Instruments: Foreign currency swaps
Hedged Items:
Foreign currency denominated loans, Debentures and Corporate bonds

Consolidated Financial Statements(e) Hedge Accounting(1) Hedge Accounting
DBJ Inc. applies the deferral method of hedge accounting or the accrual method (*1). The portfolio hedge isaccounted for by the method stipulated in “Accounting and Auditing Treatments on the Application of AccountingStandards for Financial Instruments in the Banking Industry,” issued by the Japanese Institute of Certified Public
Accountants (the “JICPA Industry Audit Committee Report No. 24”). In addition, foreign currency swaps which
are used to hedge foreign currency fluctuations are not translated at market values but at contractual rates, as theforeign currency swap contracts meet the hedging criteria under the Accounting Standards for Financial Instruments.

Financial Condition(d) 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 statement ofoperations.

(3) Hedging Policy
DBJ Inc. utilizes hedging instruments to hedge interest rates and foreign currency fluctuations on its assets andliabilities. Individual contracts or every constant group 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, as for portfolio hedging activities to fix the cash flows, the effectiveness is assessed based on thecorrelation between the base interest rate index of the hedged cash flow and the hedging instrument.
With respect to an individual hedge, in regards to both interest rate swap contracts which meet the hedging
requirements of the accrual method (*1) and foreign currency swap contracts which meet the hedging requirementsof the assignment method (*2), under the Accounting Standards for Financial Instruments at the inception date, 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 for which 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, if any, between
the Japanese yen amount of the hedged foreign currency asset or liability translated using the spot rate at the inception dateof the contract and the book value of the asset or liability is recognized in the statement of operations in the period which
includes the inception date, 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 translated using 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 will be recorded using the contracted forward rate, and no gains or losses on the foreign exchange forward
contract are recognized.

(f) Fixed Assets(1) Depreciation of Tangible Fixed Assets
Tangible Fixed Assets are stated at cost less accumulated depreciation. Tangible Fixed Assets of DBJ Inc. are depreciated using the declining-balance method, except for buildings (excluding installed facilities) that are depreciatedon a straight-line basis, and depreciation of consolidated subsidiaries is computed principally using the straight-line
method based on the estimate durability of assets.
Annual Report & CSR Report 2010133

Financial Condition

The estimated useful lives are principally as follows:
Buildings :3 years to 50 years
Others:4 years to 20 years(2) Amortization of Intangible Fixed Assets
Intangible Fixed Assets are amortized using the straight-line method. Capitalized software for internal use is amortized using the straight-line method based on the estimated useful lives (mainly from 3 to 5 years).

Consolidated Financial Statements(3) Lease Assets
Depreciation for lease assets is computed by the straight-line method with zero residual value over the lease term.
(g) 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 ofan asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued
use and eventual disposition of the asset or asset group. The impairment losses would be measured as the amount bywhich the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash
flows from the continued use and eventual disposition of the asset or the net selling price at disposition.
(h) Debentures and Corporate Bonds Issuance Costs“Debentures and Corporate Bonds Issuance Costs” are charged to income as incurred.
(i) Foreign Currency Translation and Revaluation Method
Assets and liabilities denominated in foreign currencies held by DBJ Inc. have been translated at the exchange rates
prevailing as of the balance sheet date. Foreign currency accounts held by consolidated foreign subsidiaries aretranslated into the currency of the subsidiaries at the respective year-end exchange rates. The foreign exchange gains
and losses from transactions are recognized in the income statement to the extent that they are not hedged by forward
exchange contracts. The balance sheet accounts of the 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 were shown as “Foreign Currency Transaction Adjustments” in a separate
component of equity. Revenue and expense accounts of consolidated foreign subsidiaries are translated into yen at theexchange rate prevailing as of the balance sheet date.
(j) Allowance for Loan Losses
DBJ Inc. provides for “Allowance for Loan Losses” as detailed below pursuant to the internal policies for self-assessmentof credit 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 at the moment, 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 ofcollateral or execution of guarantees. With respect to the claims on debtors who are likely to become bankrupt or to beclosely monitored, and for which future cash flows can reasonably be estimated, the allowance is provided for as thedifference between the present value of expected future cash flows discounted at the contracted interest rate and thecarrying value of the claims. The allowance for claims on debtors other than those described above is provided basedon 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 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 the self-assessment.
With respect to the claims on debtors who are legally or substantially bankrupt with collateral or guarantees, theamount of claims exceeding the estimated market values of collateral or guarantees which are deemed uncollectible
have been written-off, and totaled ¥115,954 million ($1,246,284 thousand) for the year ended March 31, 2010 and¥51,303 million for the six-month period ended March 31, 2009. The consolidated subsidiaries calculate the generalreserve for “normal” categories based on the specific actual historical loss ratio, and the specific reserve for the134

Annual Report & CSR Report 2010

(k) 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) Reserve for Employees’ Retirement Benefits
DBJ Inc. has defined benefit pension plans, which consist of a welfare pension fund plan and a lump-sum severance
indemnity plan. “Reserve for Employees’ Retirement Benefits” represents future payments for pension and retirement
benefits to employees. It is accrued based on the projected benefit obligations and estimated pension plan assets ateach fiscal year end. Prior service cost is amortized using the straight-line method over the period of ten years within
the employees’ average remaining service period at incurrence. Net actuarial gains and losses is amortized using thestraight-line method over the period of ten years within the employees’ average remaining service period commencing
from the next fiscal year after incurrence.

Consolidated Financial Statements(l) Accrued Bonuses to Employees, Directors and Corporate Auditors“Accrued Bonuses to Employees, Directors and Corporate Auditors” are provided for in the amount of the estimatedbonuses which are attributable to the year ended March 31, 2010 and the six-month period ended March 31, 2009.

Financial Condition“possibly bankrupt,” “effectively bankrupt” and “legally bankrupt” categories based on estimated losses, considering
the recoverable value.

(n) Reserve for Directors’ and Corporate Auditors’ Retirement Benefits“Reserve for Directors’ and Corporate Auditors’ Retirement Benefits” is accrued based on the amount that would be
required if all directors and corporate auditors retired at balance sheet date.
(o) Reserve for Contingent Losses“Reserve for Contingent Losses” is provided for possible contingent losses on loan commitment limits based on individually estimated expected losses.
(p) Reserve for losses on Headquarter Relocation“Reserve for losses on Headquarter Relocation” is provided for the reasonably estimated relocation costs at the head
office of DBJ Inc.
(q) Lease Transactions
In March 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for Lease Transactions,” which revised
the previous accounting standard for lease transactions issued in June 1993. The revised accounting standard for leasetransactions was effective for fiscal years beginning on or after April 1, 2008.
Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased
property to the lessee were capitalized. However, other finance leases were permitted to be accounted for as operatinglease transactions if certain “as if capitalized” information was disclosed in the note to the lessee’s financial statements.
The revised accounting standard requires that all finance lease transactions be capitalized to recognize lease assets andlease obligations in the balance sheet. In addition, the revised accounting standard permits leases which existed at thetransition date and do not transfer ownership of the leased property to the lessee to be accounted for as operatinglease transactions.
DBJ Inc. applied the revised accounting standard on October 1, 2008. In addition, DBJ Inc. continues to accountfor leases which existed at March 31, 2008 and were transferred to DBJ Inc. on October 1, 2008, and do not transfer
ownership of the leased property to the lessee as operating lease transactions.
(r) Consumption Taxes
Income and expenses subject to consumption taxes exclude related consumption taxes paid or received.
(s) Income Taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statements ofoperations. 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.

Annual Report & CSR Report 2010135

Deferred taxes are measured by applying currently enacted tax laws to the temporary differences.
Financial Condition
Consolidated Financial Statements(t) Per Share Information
Basic net income per share is computed by dividing net income available to common stockholders by the weightedaverage number of shares of common stock outstanding for the period, retroactively adjusted for stock splits. Diluted
net income per share for the year ended March 31, 2010 and for the six-month period ended March 31, 2009 is notdisclosed because there are no dilutive securities.
Cash dividends per share presented in the accompanying consolidated statements of operations are dividends
applicable to the year including dividends to be paid after the end of the year.
(u) Financial Instruments
ASBJ has issued a revised Accounting Standard “ASBJ Statement No. 10 (revised 2008) Accounting Standard for
Financial Instruments” and it’s Implementation Guidance “ASBJ Guidance No. 19 Guidance on Disclosures about Fair
Value of Financial Instruments,” and DBJ Inc. has adopted with current fiscal year.
Securities and allowance for loan losses have decreased by ¥30,887 million ($331,983 thousand) and ordinary
income and income before income taxes and minority interests have increased by ¥295 million ($3,177 thousand) as
compared with previous procedures respectively.

3. Securities
Securities as of March 31, 2010 and 2009 are as follows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

Japanese government bonds

2010

2009

2010

¥ 608,089¥ 251,413$ 6,535,781

Short-term corporate bonds—

461,514—

Corporate bonds

184,884

114,431

1,987,154

Equities

203,555

166,537

2,187,828

Other securities

292,966

252,691

3,148,819¥1,289,495¥1,246,587$13,859,583

Total*1. Investments in unconsolidated subsidiaries and affiliates included in “Equities” as of March 31, 2010 and 2009, are ¥15,428 million($165,823 thousand) and ¥14,391 million. Investments in unconsolidated subsidiaries and affiliates included in “Other securities” as ofMarch 31, 2010 and 2009, are ¥38,922 million ($418,345 thousand) and ¥38,817 million.
*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 Exchange Law) and amount to ¥3,070 million ($32,997 thousand) and ¥3,280 million, as ofMarch 31, 2010 and 2009.
*3. There are no securities repledged as of March 31, 2010 and 2009. Securities accepted under repurchase agreements can be sold or
repledged. Securities neither sold nor repledged are ¥179,991 million ($1,934,556 thousand) and ¥375,966 million.
*4. Marketable securities available-for-sale are considered impaired if there is a considerable decline in the market value below theacquisition cost and such decline is not believed to be recoverable. The difference between the acquisition cost and the market value isthe loss for the fiscal year.
The criterion for determining “Considerable decline in market value” is as follows:
Market value is 50% or more lower than acquisition cost.
Market value is 30% or more lower than acquisition cost, and such decline is not considered as recoverable.

Impairment losses on marketable securities available-for-sale for the year ended March 31, 2010 and for the six-month
period ended March 31, 2009 are as follows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

136

2009 (6 months)

¥

Bonds

28,897—

310,589

Other

259

507

2,791

Total

¥29,195¥15,066$313,793

Annual Report & CSR Report 2010

38

¥14,558

2010

Equities$413

4. Non-Performing Loans

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2009

2010

¥497,652¥ 18,967$5,348,802

Delinquent loans

143,789

116,843

1,545,463

23

23

252

Loans past due three months or more
Restructured loans
Total

43,726

56,795469,976¥685,192¥192,629$7,364,493*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 theJapanese Tax Law Enforcement Regulation.
*3. “Delinquent Loans” represent non-accrual loans other than (i) Loans to Bankrupt Debtors and (ii) Loans whose interest payments aredeferred 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 of principal 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,” “Delinquent Loans,” or “Loans
Past Due Three Months or More.”

Consolidated Financial Statements

2010

Loans to bankrupt debtors

Financial Condition

The amounts of non-performing loans included in “Loans” on the consolidated balance sheets as of March 31, 2010 and2009 are as follows:

5. Commitments
Loan commitment limits are contracts under which DBJ Inc. lends to customers up to the prescribed limits in response tocustomers’ application for loans as long as there is no violation of any condition in the contracts. As of March 31, 2010
and 2009, the amounts of unused commitments are ¥341,159 million ($3,666,806 thousand) and ¥266,886 million. As of
March 31, 2010 and 2009, the amounts of unused commitments whose remaining contract term are within one year are¥127,260 million ($1,367,808 thousand) and ¥79,128 million.
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 conditions whereby DBJ Inc. and its subsidiaries can refusecustomers’ applications for loans or decrease the contract limits for proper reason (e.g., changes in financial situation,
deterioration in customers’ credit worthiness). At the inception of contracts, DBJ Inc. and its subsidiaries obtain real estate,securities or other assets as collateral if considered necessary. Subsequently, DBJ Inc. and its subsidiaries perform periodic
reviews of the customers’ business results based on internal rules, and take necessary measures to reconsider conditions incontracts and/or require additional collateral and guarantees.

6. Other Assets
Other assets as of March 31, 2010 and 2009 are as follows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

2009

2010

Prepaid expenses¥15,239¥ 8,283$163,800

Accrued income

42,29339,549454,570

Derivatives

23,71539,052

254,896

Other

8,452

1,189

90,851

Total¥89,701¥88,075$964,118

Annual Report & CSR Report 2010137

7. Tangible Fixed Assets
Financial Condition

Tangible fixed assets as of March 31, 2010 and 2009 are as follows:

2010

2009

2010

Buildings¥ 13,976¥ 14,487$ 150,218

Land

147,396

147,396

1,584,223

Leased assets

121

160

1,309

Consolidated Financial Statements

Construction in progress

126

27

1,357

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

Other

606

303

6,519

Total

¥162,227¥162,375$1,743,627

Note: Accumulated depreciation of tangible fixed assets as of March 31, 2010 and 2009, is ¥1,423 million ($15,296 thousand) and ¥432
million.

8. Allowance For Loan Losses
Allowance for loan losses as of March 31, 2010 and 2009 is as follows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

2009

2010

General allowance for loan losses¥ 66,416¥215,245$ 713,853

Specific allowance for loan losses

137,005

61,443

1,472,547

Total¥203,422¥276,689$2,186,400

9. Debentures and Corporate Bonds
Debentures and corporate bonds as of March 31, 2010 and 2009 are as follows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

Issue date

Interest rate(%)

Maturity date

2010

2009

2010

¥ 882,176$ 9,483,427

Debentures
Japanese government-

Aug. 2000– 0.8–

Aug. 2010–¥ 882,338

guaranteed bonds 1-23*1, 5, 6

Aug. 2008

Jun. 2023[199,988]
269,233

119,672

2,893,739

2.2[2,149,490]

Japanese government-

Nov. 2008–

1.2–

Nov. 2018–

guaranteed bonds 1-7

Feb. 2010

2.1

Feb. 2024

Japanese government-

Sep. 1998

1.81

Sep. 2028

25,07525,079269,508

Japanese government-

Nov. 1999–

1.05–

Jun. 2010–

1,036,122

1,035,868

11,136,317

guaranteed foreign bonds

Nov. 2007

6.875

Nov. 2027[99,993]

Dec. 2009

0.48194

Dec. 2014

32,564—350,000

1,314,695

12,948,819

guaranteed foreign bond 67*2, 5[1,074,733]

1-14*1, 5
Japanese governmentguaranteed Euro MTN bonds 1*4
FILP agency domestic bonds

Oct. 2002–

0.57–

Aug. 2010–

1,204,758

5, 7, 9-11, 13, 16, 17, 19-22,

Aug. 2008

2.74

Mar. 2047[99,997]

FILP agency foreign bond 1*3,5 Jun. 2007

1.65

Jun. 2012

49,967

49,952537,056

2.032–

Sep. 2010–

4,153

4,153

44,637

3.142

Sep. 2023[2,153][1,074,777]24-52*3, 5, 6
Euro MTN bonds 1-2*3, 4, 5

138

Annual Report & CSR Report 2010

Sep. 2008[23,141]Issue date

Interest rate(%)

Maturity date

2010

2009

0.502–

Dec. 2011–

187,000

57,0002,009,888

2010

Corporate bonds
Corporate bonds throughDec. 2008–
Oct. 2009

1.745

Mar. 2019

Corporate bonds throughAug. 2009

0.847

Sep. 2014

10,000—107,481

Corporate bonds Euro MTN

Dec. 2008–

0.47875– Dec. 2010–

45,181

24,423

485,610

1, 2, 6-15, 17-22*4, 6

Feb. 2010

1.25425¥3,513,020$40,266,482

private placement 1
Feb. 2015

Total[1,500]¥3,746,393[16,122]*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. Fiscal Investment and Loan Program (FILP) agency bonds issued are not government-guaranteed. These bonds are issued by theDevelopment Bank of Japan.
*4. These bonds are non-guaranteed bonds established by EMTN programme.
*5. Under the DBJ Inc. Law (Law No. 17 and 26), the DBJ Law (Law No. 43), obligations created by the bonds issued by DBJ Inc. aresecured by a statutory preferential right over the property of DBJ Inc.
*6. Figures indicated in brackets [ ] indicate the amounts to be redeemed within one year.

Consolidated Financial Statements

public placement 1-7

Financial Condition

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

Scheduled redemptions of debentures and corporate bonds which have been assumed and repaid by DBJ Inc. for subsequent years as of March 31, 2010 are as follows:
The fiscal year ending March 31, 2011

¥403,134 million$4,332,919 thousand

2012

521,817

5,608,528

2013

464,850

4,996,248

2014

237,0102,547,406

2015

351,6813,779,896

10. Borrowed Money
Borrowed money as of March 31, 2010 and 2009 is as follows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

Borrowings

Average interest rate (%)

Due date of repayment

2010

2009

2010

1.36

May. 2010–Mar. 2030

¥9,082,479¥8,067,892$97,619,086

Scheduled redemptions of borrowings for subsequent years as of March 31, 2010 are as follows:
The fiscal year ending March 31, 2011

¥ 855,251 million$ 9,192,301 thousand

2012

1,130,294

12,148,481

2013

1,237,416

13,299,838

2014

1,107,511

11,903,609

2015

1,011,626

10,873,032

Annual Report & CSR Report 2010139

11. Other Liabilities
Financial Condition

Other liabilities as of March 31, 2010 and 2009 are as follows:

Accrued income taxes

3,368

20,10936,205

Consolidated Financial Statements

Derivatives

6,663

112,651

71,619Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

2009

2010

Accrued expenses¥32,808¥ 33,650$352,625

Unearned income

1,109

1,194

11,920

Lease obligation

213

287

2,293

Other

5,617

1,150

60,381

Total¥49,780¥169,043$535,042

12. Acceptances and Guarantees
Acceptances and guarantees as of March 31, 2010 and 2009 are as follows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

Guarantees

2010

2009

2010

¥192,172¥157,276$2,065,483

13. Assets Pledged as Collateral
Loans and securities pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥626,670 million ($6,735,493 thousand) and ¥411,869 million ($4,426,796 thousand) as of March 31, 2010. In addition,
they are deposited as replacement of margin money for future trading and collateral for transactions, including exchange
settlements as of March 31, 2010. ¥2,291 million ($24,626 thousand) of securities are pledged as collateral for loans ofcompanies which are investees of DBJ Inc. as of March 31, 2010. Also, in other assets, ¥1,000 million ($10,749 thousand)of margin deposits for futures transactions is included and ¥35 million ($379 thousand) of guarantee deposits are included
as of March 31, 2010. Under the DBJ Inc. Law (Law No. 17 and 26), the DBJ Law (Law No. 43), obligations created by thebonds issued by DBJ Inc. are secured by a statutory preferential right over the property of DBJ Inc. Denomination value ofthese debentures amounts to ¥3,204,596 million ($34,443,209 thousand) as of March 31, 2010.
Loans and securities pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥228,799 million and ¥633,024 million as of March 31, 2009. ¥2,291 million of securities are pledged as collateral for loansof companies which are investees of DBJ Inc. as of March 31, 2009. Also, ¥44 million of guarantee deposits are included
as of March 31, 2009. Under the DBJ Inc. Law (Law No. 17 and 26), the DBJ Law (Law No. 43), obligations created by thebonds issued by DBJ Inc. are secured by a statutory preferential right over the property of DBJ Inc. Denomination value ofthese debentures amounts to ¥3,314,596 million as of March 31, 2009.

14. Equity
Japanese companies including DBJ Inc. are regulated by the Companies Act. In addition, DBJ Inc. is regulated by DBJ Inc.
Law. The significant provisions in the Companies Act and DBJ Inc. Law 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 yearend dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having
the Board of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the termof service of the directors is prescribed as one year rather than two years of normal term in its articles of incorporation,
the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year, prescribedthat the Board of Directors can declare dividends in its articles of incorporation. DBJ Inc., however, shall not distributesuch dividends based on resolution of the Board of Directors, since its article of incorporation is not prescribed that the140

Annual Report & CSR Report 2010

(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 tothe shareholders 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 acquisitionrights.

Consolidated Financial Statements(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 of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity
account charged upon the dividends until the total aggregate amount of legal reserve and additional paid-in capitalequal 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 and retained earnings can be reclassified among the accounts under certain
conditions upon resolution by the shareholders.

Financial Condition

Board of Directors can do such an action. The Companies Act provides certain limitations on the amounts available fordividends or the purchase of treasury stock. The Article 20 of the DBJ Inc. Law provides that the timing and amounts for
dividends shall be authorized by the Finance Minister.

(d) Solicitation and Delivery of Shares or Stock Acquisition Rights
The Article 12 of the DBJ Inc. Law 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.
(e) Common Stock Issued during the year ended March 31, 2010
On September 24, 2009, DBJ Inc. issued 2,064,000 new shares of common stock by way of allocation of new stocks
to the Finance Minister at ¥50,000 per share for ¥103,232 million ($1,109,544 thousand). And on March 23, 2010,
DBJ Inc. issued 1,559,000 new shares of common stock by way of allocation of new stocks to the Finance Minister at¥50,000 per share for ¥77,962 million ($837,941 thousand). As a result, ¥181,194 million ($1,947,485 thousand) was
included in Capital stock.

15. Per Share Information
Basic net income (loss) per common share (“EPS”) for the year ended March 31, 2010 and for the six-month period ended
March 31, 2009 is as follows:Year ended March 31, 2010

Basic EPS
Net income available to commonshareholders

Millions of Yen

Thousands of Shares

Yen

U.S. Dollars

Net income (loss)

Weighted average shares

EPS

EPS

$10.43¥39,893

41,107¥970.47¥(128,342)

40,000¥(3,208.55)

Year ended March 31, 2009

Basic EPS
Net loss available to commonshareholders

Note: Diluted net income per share for the year ended March 31, 2010 and for the six-month period ended March 31, 2009 is notdisclosed because there are no dilutive securities.

Annual Report & CSR Report 2010141

16. Fees and Commissions (Income)Financial Condition

Fees and commissions (income) for the year ended March 31, 2010 and for the six-month period ended March 31, 2009
are as follows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

Commissions

2009 (6 months)¥15,683¥4,6462010$168,563

Consolidated Financial Statements

17. Other Operating Income
Other operating income for the year ended March 31, 2010 and for the six-month period ended March 31, 2009 is asfollows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

Foreign exchange gains

2010

—

¥718

151

—

Gains on redemption of bonds

350

—

3,769

Gains on derivative instruments

19,019—204,421

Gains on sales of bonds¥

2009 (6 months)

$

—
1,631

Other

358

0

3,851

Total

¥19,880¥719$213,672

18. Other Income
Other income for the year ended March 31, 2010 and for the six-month period ended March 31, 2009 is as follows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

2009 (6 months)

¥

2010

Reversal of allowance for investment losses¥ 1,183308$ 12,716

Gains on sales of equities and other securities

1,278

3,525

13,745

Gains on money held in trust

1,502

1,815

16,152Equity in net income of affiliates

958

988

10,304

Gains on sales of fixed assets

8

0

89

Collection of written-off claims

4,594

3,316

49,381

Other

7,135

3,718

76,697

Total¥16,661¥13,672$179,084

19. Fees and Commissions (Expenses)
Fees and commissions (expenses) for the year ended March 31, 2010 and for the six-month period ended March 31, 2009
are as follows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

Commissions

142

2009 (6 months)¥1,043¥142

2010$11,220

Other

—

0

—

Total

¥1,043¥142$11,220

Annual Report & CSR Report 201020. Other Operating Expenses

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

Foreign exchange losses

2009 (6 months)¥ 4,314

¥

2010

—

$ 46,370

537

368

5,779

Corporate bonds issuance costs

299

147

3,219

—

10,065—28,897—

310,589

Losses on derivative instruments
Write-off of bonds
Other

24

508

260

Total

¥34,072¥11,090$366,217

21. Other Expenses
Other expenses for the year ended March 31, 2010 and for the six-month period ended March 31, 2009 are as follows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

Provision for allowance for loan losses
Write-off of loans

2009 (6 months)

2010¥ 3,563¥125,431$ 38,305

2,413

2,583

25,938Losses on sales of equities and other securities

2,478

320

26,640

Write-off of equities

22,334

14,558240,055

Losses on money held in trust

24

3,203

262

Losses on sales of fixed assets

49

9

528

Impairment loss

Consolidated Financial Statements

Debentures issuance costs

Financial Condition

Other operating expenses for the year ended March 31, 2010 and for the six-month period ended March 31, 2009 are as
follows:

0

43

5Provision for reserve for losses on headquarter relocation

6,536

—

70,253

Other

14,936

13,647

160,534

Total¥52,336¥159,798$562,519

22. 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 underwhich the termination 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.
Reserve for employee retirement benefits as of March 31, 2010 and 2009 consisted of the following:(a) The Funded Status of the Pension Plans
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

Projected benefit obligation

2010

2009

¥(46,812)¥(45,541)

2010$(503,141)

Fair value of plan assets

12,634

11,448135,793

Unfunded pension obligation(34,178)(34,092)(367,347)

Unrecognized net actuarial losses

1,519

1,991

16,331

Unrecognized prior service cost

45

50

488

¥(32,613)¥(32,050)$(350,528)

Reserve for employees’ retirement benefits*1. The above projected benefit obligations include a portion in which the pension fund manages on behalf of the Japanese government
welfare program.
*2. Reserve for employees’ retirement benefits includes the benefits for executive directors and corporate auditors in the year ended March
31, 2010.
*3. Certain subsidiaries apply the simplified method for the calculation of liability for employees’ retirement benefits.

Annual Report & CSR Report 2010143

(b) Components of Pension Cost
Financial Condition

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

2009 (6 months)

2010

Service cost

¥1,397¥ 698$15,022

Interest cost

909

450

9,774

Expected return on plan assets

(57)

(32)

(615)

Consolidated Financial Statements

Amortization of prior service cost

5

0

55

Amortization of net actuarial losses

199

—

2,141

¥2,454¥1,116$26,376

Net pension cost

Note: All retirement benefit costs are classified as service cost for the subsidiaries applying the simplified method.

(c) Principal Assumptions Used
2010

2009

Discount rate

2.0%

2.0%

Expected rate of return on plan assets

0.5%

0.5%

Amortization period of prior service cost

10 Years

10 Years

Amortization period of actuarial gains/losses

10 Years

10 Years

23. Income Taxes
DBJ 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 40.69% for the year ended March 31, 2010
and for the six-month period ended March 31, 2009.
A reconciliation of the actual effective tax rate with the normal effective statutory tax rate for the year ended March 31,
2010 and for the six-month period ended March 31, 2009 is as follows:
2010

2009

40.69%

40.69%(17.89)(50.66)

Amortization of goodwill

1.48(0.78)

Minority interests in net income of subsidiaries(0.76)

0.34

Normal effective statutory tax rate
Increase (decrease) in taxes resulting from:
Change in valuation allowance

Other
Actual effective tax rate

144

Annual Report & CSR Report 2010

(2.34)(1.04)

21.18%(11.45%)

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

2009

2010

¥114,083¥128,030$1,226,178

Deferred tax assets:
Allowance for loan losses

37,47021,317402,733

Reserve for retirement benefits

13,237

13,041

142,274

Allowance for investment losses

1,085

3,715

11,663Tax loss carryforwards

5,117

3,227

55,004

—

1,690

—

Other

Unrealized loss on available-for-sale securities

6,581

5,500

70,733Sub total

177,574

176,521

1,908,585(124,532)(136,373)(1,338,479)

53,04240,148570,106(7,569)(12,246)(81,354)

Less—valuation allowance
Total
Deferred tax liabilities:
Deferred gains or losses on hedges
Other
Total
Net deferred tax assets(1,204)(30)(12,948)(8,773)(12,276)(94,302)¥ 44,268¥ 27,872$ 475,804

Consolidated Financial Statements

Losses from revaluation of securities

Financial Condition

The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities as of March 31, 2010 and 2009 are as follows:

24. Lease Transactions
DBJ Inc. and its domestic consolidated subsidiaries lease certain equipment and others. Lease payments under financeleases for the year ended March 31, 2010 and for the six-month period ended March 31, 2009, amounted to ¥247 million($2,660 thousand) and ¥146 million. For the six-month period ended March 31, 2009, DBJ Inc. recorded an impairment
loss of ¥5 million on certain leased property held under finance leases that do not transfer ownership and an allowance for
impairment loss on leased property, which is included in Other Liabilities.
Pro forma information of leased property such as acquisition cost, accumulated depreciation, obligations under financeleases, depreciation expense and interest expense for finance leases that do not transfer ownership of the leased property
to the lessee on an “as if capitalized” basis for the year ended March 31, 2010 and for the six-month period ended March
31, 2009 is as follows:
Millions of Yen

2010
Tangible fixed assets

Intangible fixed assets

Acquisition cost

¥470

¥251

¥721

Accumulated depreciation

(213)

(108)

(321)

(5)

—

(5)

¥251

¥143

¥394

Accumulated impairment losses
Net leased property

Total

Millions of Yen

2009

Acquisition cost
Accumulated depreciation
Accumulated impairment losses
Net leased property

Tangible fixed assets

Intangible fixed assets

Total

¥514

¥254

¥768

(94)

(37)

(131)

(5)

—

(5)

¥414

¥216

¥631

Annual Report & CSR Report 2010

145

Thousands of U.S. Dollars (Note 1)

Financial Condition

2010
Tangible fixed assets

Intangible fixed assets

Acquisition cost

$5,056$2,702$7,758

Accumulated depreciation(2,297)(1,162)(3,459)

(57)

—

(57)

$2,702$1,540$4,243

Accumulated impairment losses
Net leased property

Total

Consolidated Financial Statements

Pro forma amounts of obligations under finance leases as of March 31, 2010 and 2009 are as follows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

2009

2010

Due within one year

¥202

¥238

$2,180Due after one year

204

406

2,193

Total

¥406

¥645

$4,373

Pro forma amounts of depreciation expense, interest expense and impairment loss under finance leases for the year ended
March 31, 2010 and for the six-month period ended March 31, 2009 are as follows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

Depreciation expense

2009

¥236

Interest expense

2010

¥141

$2,542

9

6

105

Total

246

147

2,646

Impairment loss

¥ —

¥

$

5

—

*1. Depreciation expense is calculated using the straight-line method, assuming that useful life is equal to the lease term and that theresidual value at the end of the lease term is zero.
*2. The difference between total lease payments and the assumed acquisition cost of leased assets is charged to assumed interest expense
and is allocated to each fiscal year using the interest method.

The minimum rental commitments under non-cancelable operating leases as of March 31, 2010 and 2009 are as follows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

2009

2010

Due within one year

¥178

¥173

$1,921

Due after one year

215

109

2,317

Total

¥394

¥283

$4,23825. Segment Information(a) Segment Information by Type of Business
DBJ Inc. and its consolidated subsidiaries are engaged in business such as private equity investment and fund management and other activities as well as banking business. Such segment information, however, is not presented, as thepercentages of those activities are insignificant.
(b) Segment Information by Geographic Area
Segment information classified by geographic area is not presented, as there are no consolidated subsidiaries or offices
located in countries or areas other than Japan.
(c) Ordinary Income from Overseas Entities
Ordinary income from overseas entities is omitted because the amount is below ten percent of the consolidated ordinary
income.

146

Annual Report & CSR Report 2010

26. Financial Instruments and Related Disclosures(2) Nature and Extent of Risks Arising from Financial Instruments
The financial assets in DBJ Inc. are mainly investments and loans in domestic clients, which are exposed to credit riskthat stems from customers’ default of contracts and decline of their creditworthiness. Main categories of industriesof debtors are transport and postal activities, manufacturing and others as of March 31, 2010. The changes of
economic circumstances surrounding these industries may cause influence on fulfillment of their obligations. DBJ
Inc. holds securities such as bonds, equities and investments in limited partnerships and other similar 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, interest-rate swap agreements and other transactions.
Foreign currency denominated loans, debentures and corporate bonds are exposed to exchange rate risk. DBJ Inc.
mitigates this risk by matching foreign currency investments and loans with foreign currency corporate bonds andcurrency-related transactions.
DBJ Inc. utilizes derivative financial transactions such as interest-rate swap agreement and currency swap
agreement in order to hedge or control the risks related to interest and currency. As for hedge accounting, DBJ Inc.
applies the deferral hedge method or the accrual method to interest-rate swaps, and the assignment method to foreign currency swaps. Hedged items of interest-rate swaps are loans, borrowings, debentures and corporate bonds.
Hedged items of foreign currency swaps are foreign-currency denominated loans, debentures and corporate bonds.
According 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.

Consolidated Financial Statements(a) The Situation of Financial Instruments(1) Policy for Financial Instruments
DBJ Inc. provides investment and loan services that are aimed to provide long-term stable funding. As 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 long-term,
fixed-rate makes up the majority of its assets, 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 inorder to 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 control the risks related to interest and currency.

Financial Condition

On March 10, 2008, the ASBJ revised ASBJ Statement No. 10 “Accounting Standard for Financial Instruments” and issued
ASBJ Guidance No. 19 “Guidance on Accounting Standard for Financial Instruments and Related Disclosures.” This accounting standard and the guidance are applicable to financial instruments and related disclosures at the end of the fiscal years
ending on or after March 31, 2010 with early adoption permitted from the beginning of the fiscal years ending before
March 31, 2010. DBJ Inc. applied the revised accounting standard and the new guidance effective March 31, 2010.

(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 investment and loan. When making an investment or loan, DBJ Inc. examines the entity’s projectviability and the project’s profitability. After that, DBJ Inc. sets ratings along with internal borrower rating system,
grants credit amount, sets collateral and guarantee. The sales and credit analysis departments hold separate rolesin the screening and administering of credit for individual loans and each department keeps the operations of theother in check. The Committee on Investment and Loan Decisions meets as needed to deliberate important issue
concerning the management and governance of individual loans. DBJ Inc. performs a comprehensive analysisof data based on borrower ratings, and calculates the loan portfolio’s overall exposure to credit risk, which ismeasured regularly to ensure 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
examines total risk which takes into account the market value of the securities. As for counterparty risk arisingfrom derivative transactions, DBJ Inc. manages derivative transactions by continually monitoring the cost ofrestructuring its transactions and creditworthiness of each counterparty. Additionally, DBJ Inc. diversifies transactions among several counterparties to manage counterparty risk.

Annual Report & CSR Report 2010147

Financial Condition
Consolidated Financial Statements(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 regulations, and ALM & Risk Management Committee has discussion
about determination of policies on asset/liability management, monitoring of implementation and future plans.
In addition, risk management department monitors interest and term of financial assets/debts overall. ALM & Risk
Management Committee conducts regular monitoring with cash flow ladder analyses (gap analysis), value at risk
(VaR), interest rate sensitivity analyses (basis point value), and other methods. As a part of asset/liability management, interest-rate swaps are conducted hedging interest rate risk.
2) Foreign Exchange Risk Management
Foreign currency receivable and bonds are exposed to the exchange rate risk, therefore those risks are hedged orcontrolled not only by setting off some foreign currency denominated investment and loan as foreign currency
denominated corporate bond and debenture but also by making currency-related transactions.
3) Price Volatility Risk Management
When DBJ Inc. acquires financial assets entailing price volatility risk such as securities with market value, it follows
in-house regulations and policies which have been developed taking into account market fluctuation risks, andrisk management department involves in the decisions as necessary. Through regular monitoring, price volatility
risks are reviewed on a timely basis and reported to ALM & Risk Management Committee periodically.
4) Derivative Transactions
About derivative transactions, the front office, the back office and the risk management department are
separated from each other, and each department keeps the operations of the other in check based on in-house
regulations.
(iii) Liquidity Risk Management on Financing
Risk management department monitors possession level of cash liquidity and report 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 the liquidity risk by appropriate operations of financing andinvesting depending on the situations of risks.
(4) Supplementary Explanation on Fair Value of Financial Instruments
The fair value of financial instruments is measured at the quoted market price. If quoted price is not available, DBJ
Inc. measures reasonably assessed price. Because assessed price is computed under certain conditions, it could differ
in price according to the different conditions.

148

Annual Report & CSR Report 2010

Millions of Yen

2010
Carrying amount

Cash and due from banks¥

168,696

Fair value¥

Difference

168,696¥—

125,000

125,000—

Reverse repurchase agreements

179,991

179,991—

438,009453,073

15,063

516,442

516,442—

13,313,257

13,867,796

554,538

Total assets¥14,741,396¥15,310,998¥569,602

Debentures*2

3,504,212

3,590,746

86,534

Securities*1
Held-to-maturity debt securities
Available-for-sale securities
Loans

13,514,661(201,403)

Allowance for loan losses*1

Call money and bills sold

153,000

153,000—

Borrowed money

9,082,479

9,177,854

95,374

Corporate bonds

242,181245,181

3,000¥12,981,873¥13,166,782¥184,908

877

877

—

Total liabilities
Derivative transactions
Derivative transactions not qualifying
for hedge accounting
Derivative transactions qualifying forhedge accounting
Total derivative transactions¥

16,174
17,051¥

16,174
17,051

Consolidated Financial Statements

Call loans and bills bought

Financial Condition(b) Fair Values Information of Financial Instruments
The following are the carrying amount, fair value and differences between them as of March 31, 2010. Unlisted equities
and others, whose fair value cannot be reliably determined, are excluded from the table below (see (2)).

——¥

Thousands of U.S. Dollars (Note 1)

2010
Carrying amount

Cash and due from banks$

1,813,156$

Fair value

Difference

1,813,156$—

Call loans and bills bought

1,343,508

1,343,508—

Reverse repurchase agreements

1,934,556

1,934,556—

Held-to-maturity debt securities

4,707,758

4,869,664

161,906

Available-for-sale securities

5,550,753

5,550,753—

Securities*1

Loans

145,256,467(2,164,701)

Allowance for loan losses*1

143,091,766

149,051,980

5,960,214

Total assets$158,441,497$164,563,617$6,122,120

Debentures*2

37,663,502

38,593,579

930,077

Call money and bills sold

1,644,454

1,644,454—

Borrowed money

97,619,086

98,644,176

1,025,089

Corporate bonds

2,602,979

2,635,225

32,246$139,530,022$141,517,434$1,987,412

9,432

9,432

—

Total liabilities
Derivative transactions
Derivative transactions not qualifying
for hedge accounting
Derivative transactions qualifying forhedge accounting
Total derivative transactions$

173,842
183,275$

173,842
183,275$——*1. General and specific allowances for loan losses are deducted. Allowance for loan losses is set off against the carrying amount directly
due to immateriality.
*2. Assets and liabilities arising from derivative transactions are presented on a net basis.
Annual Report & CSR Report 2010149

Financial Condition(1) The following are the Methods used to calculate the Fair Values of Financial Instrument.
Assets(i) Cash and due from banks
For deposits without maturity, the carrying amount is presented as the fair value, as the fair value approximates suchcarrying amount. For deposits with maturity, the carrying amount is presented as the fair value, as the fair value
approximates such carrying amount because the remaining maturity period of the majority of such deposits is short(maturity within 1 year).

Consolidated Financial Statements(ii) Call loans and bills bought and Reverse repurchase agreements
For each of these items, the majority of transactions are short contract terms (1 year or less). Thus, the carrying
amount is presented as the fair value, as the fair value approximates such carrying amount.
(iii) Securities
The fair value of marketable equity securities is measured at market price. The fair value of bonds is measured
at market price or 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 that isbased on types of securities, internal ratings and maturity length.
(iv) 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 maturity length. Foreign
currency swap contracts which meet the hedging requirements of the assignment method is qualified to loans, thecontractual cash flows are based on the interest rate swap and foreign currency swap. For loans which are shortcontract terms (1 year or less), the carrying amount is presented as the fair value, as the fair value approximatessuch carrying amount. 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 fair values are determined by discounting expected cash flows that reflect expected loss at the risk free rate. For loans to obligors “legally bankrupt,”“effectively bankrupt” and “possibly bankrupt,” the reserve is provided based on the discounted cash flow method,or based on amounts expected to be collected through the disposal of collateral or execution of guarantees, carrying
value net of the reserve as of the consolidated balance sheet date is the reasonable estimate of the fair values of
those loans.
Liabilities(i) Debentures
For floating rate debentures issued by DBJ Inc., the carrying amount is presented as the fair value, as the fair value
approximates such carrying amount. This is on the basis that the market interest rate is reflected in the fair valueof such 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. Foreign currency swap contracts which meet the hedging requirementsof the assignment method is qualified to debentures, the contractual cash flows are based on the interest rate andforeign currency swap.
(ii) Call money and bills sold
The carrying amount is presented as the fair value, as the fair value approximates such carrying amount because themajority of them are short contract terms (1 year or less).
(iii) Borrowed money
For floating rate borrowed money, the carrying amount is presented as the fair value as the fair value approximatessuch carrying amount. This is on the basis that the market interest rate is reflected in the fair value of such borrowed
money because the terms of these were set within a short time period for such variable rate borrowings and that

150

Annual Report & CSR Report 2010

Derivatives
The information of the fair values for derivatives is included in Note 27.

Consolidated Financial Statements(iv) Corporate bonds
For floating rate corporate bonds issued by DBJ Inc., the carrying amount is presented as the fair value, as the fairvalue approximates such carrying amount. 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 us
before and after the issuance. For fixed rate corporate bonds with market prices, the fair value is determined basedon their market price. For fixed rate corporate bonds without market prices, the fair value is determined by discounting contractual cash flows based on types of maturity lengths (when interest rate swap contracts which meet thehedging requirements of the accrual method is qualified to corporate bonds, the contractual cash flows are basedon the interest rate swap) at the rates that consist of the risk free rate and the rate of certain costs applicable to DBJ
Inc.

Financial Condition

there has been no significant change in the creditworthiness of DBJ Inc. nor consolidated subsidiaries before andafter 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 thehedging requirements of the accrual method is qualified to borrowings, the contractual cash flows are based on theinterest 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.

(2) The following are the Financial Instruments whose Fair Value cannot be reliably determined as of March
31, 2010. These Securities are not included in the Amount in the Table summarizing Fair Values ofFinancial Instruments.
Carrying amount2010
Millions of Yen

Money held in trust*1
Unlisted corporate bonds*2¥ 30,740

Thousands of
U.S. Dollars (Note 1)$ 330,397

1,000

10,748Unlisted equities*2, 3
Investments in limited partnerships and other similar
partnerships*1
Unlisted other securities*2, 3

182,031

1,956,488

100,244
51,762

1,077,431
556,347

Total¥365,778$3,931,411*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 to disclosing of fair values.
*2. Financial instruments for which quoted price is not available and fair value cannot be reliably determined, are not subject todisclosing of fair values.
*3. Impairment loss on financial instruments whose fair value cannot be reliably determined for the year ended March 31, 2010 is¥22,036 million ($236,851 thousand). The breakdown is; unlisted equities ¥22,025 million ($236,733 thousand), unlisted
other securities ¥10 million ($117 thousand).

Annual Report & CSR Report 2010151

Financial Condition(3) The following are the Maturity Analysis for Financial Assets and Securities with contractual Maturities asof March 31, 2010.
Millions of Yen

2010
Due in one
year or lessDue after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears throughten years

¥

¥

¥

¥

Consolidated Financial Statements

Cash and due from banks¥ 168,693

Call loans and bills bought

125,000——

12,87752,417——

Securities
Held-to-maturity deptsecurities with market values
Japanese government bonds
Japanese local government
bonds
Short-term corporate bonds
Corporate bonds
Other
Available-for-sale securities with
contractual maturities*
Japanese government bonds
Japanese local government
bonds
Short-term corporate bonds
Corporate bonds

—

—

—

Due after
ten years

—

¥—

—

—

—

50,772

160,360

109,630

51,956——36,962

88,08450,956

—

—

—

—

—

—

—

—

—

—

—

12,87752,41732,16430,357

1,400

1,000

—

—

18,60893,04020,145—

270,123

132,651

51,7905,636

27,616

3,906

270,123

131,846

30,115

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

805

19,543

5,414

27,616

1,000

Loans*

1,588,852

3,272,241

3,012,066

2,217,335

1,937,528

845,194

Total¥2,165,546¥3,457,310¥3,114,629¥2,383,332¥2,074,775¥901,057

Due after
ten years

Thousands of U.S. Dollars (Note 1)

2010
Due in one
year or lessDue after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears throughten years

Cash and due from banks$1,813,126

$

$

$

$

Call loans and bills bought

1,343,508

—

—

—

—

—

138,408

563,385545,706

1,723,569

1,178,312

558,435———

397,279

946,737

547,687

—

—

—

—

—

—

—

—

—

—

—

—

138,408

563,385345,706

326,290

15,047

10,748——200,000

1,000,000

216,528—

2,903,305

1,425,744

556,650

60,578296,827

41,9862,903,305

1,417,089

323,683

—

—

—

—

—

—

—

—

—

Securities
Held-to-maturity deptsecurities with market values
Japanese government bonds
Japanese local government
bonds
Short-term corporate bonds
Corporate bonds
Other
Available-for-sale securities with
contractual maturities*
Japanese government bonds
Japanese local government
bonds
Short-term corporate bonds
Corporate bonds

—

—

—

—

$

—

—

—

—

—

—

—

—

8,654

210,053

58,192296,827

10,748Loans*

17,077,093

35,170,266

32,373,884

23,832,069

20,824,684

9,084,204

Total$23,275,440$37,159,395$33,476,240$25,616,216$22,299,823$9,684,626

Note: Obligations to “Legally Bankrupt,” “Effectively Bankrupt” and “Possibly Bankrupt” amount to ¥641,730 million ($6,897,361
thousand) are not included as of March 31, 2010. The breakdown is; available-for-sale securities with contractual maturities¥288 million ($3,096 thousand) and loans ¥641,442 million ($6,894,265 thousand).

152

Annual Report & CSR Report 2010

Millions of Yen

2010
Due in one
year or lessCall money and bills sold¥ 153,000

Due after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears throughten years

¥

¥

¥

¥

—

—

—

—

Due after
ten years¥—

855,251

2,367,711

2,119,138

1,315,011

1,174,964

1,250,401

Debentures and corporate bonds

403,134

986,668

588,692

507,071499,806

761,020¥1,411,386¥3,354,379¥2,707,830¥1,822,082¥1,674,770¥2,011,422

Due after
ten years

Total

Thousands of U.S. Dollars (Note 1)

2010
Due in one
year or lessCall money and bills soldBorrowed money
Debentures and corporate bonds
Total$ 1,644,454

Due after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears throughten years

$

$

$

$

—

—

—

9,192,301

25,448,319

22,776,641

14,133,832

4,332,919

10,604,776

6,327,303

5,450,034$15,169,674 $36,053,095 $29,103,944 $19,583,866

—

$

—

12,628,597

13,439,397

5,371,951

8,179,499$1,800,548 $21,618,896

Consolidated Financial Statements

Borrowed money

Financial Condition(4) Maturity analysis for Debentures, Borrowed money and Other Liability with Interest as of March 31, 2010
are as follows:

27. Derivative Transactions
As noted in Note 26, DBJ Inc. applied ASBJ Statement No. 10 “Accounting Standard for Financial Instruments” and ASBJ
Guidance No. 19 “Guidance on Accounting Standard for Financial Instruments and Related Disclosures effective March 31,
2010.” The accounting standard and the guidance are applicable to financial instruments and related disclosures at the endof the fiscal years ending on or after March 31, 2010.
(a) Derivative Transactions to which Hedge Accounting is not qualified(1) Interest Rate-related Transactions
Millions of Yen

2010
Contract amountTotal

Due after one year

Fair value

Unrealized gains(losses)

Receive fixed/ Pay float¥594,493¥591,975¥11,424¥11,424

Receive float/ Pay fixed

593,104

590,892(6,874)(6,874)——¥ 4,550¥ 4,550

Fair value

Unrealized gains(losses)Over-the-counter
Swaps

Millions of Yen

2009
Contract amountTotal

Due after one year

Receive fixed/ Pay float¥191,015¥191,015¥ 6,584¥ 6,584

Receive float/ Pay fixed

189,090

189,090(2,169)(2,169)——¥ 4,415¥ 4,415Over-the-counter
Swaps

Annual Report & CSR Report 2010

153

Thousands of U.S. Dollars (Note 1)

Financial Condition

2010
Contract amount

Consolidated Financial Statements

Total

Due after one year

Fair value

Unrealized gains(losses)

Receive fixed/ Pay float$6,389,660$6,362,595$122,796$122,796

Receive float/ Pay fixed

6,374,724

6,350,947(73,887)(73,887)——$ 48,909$ 48,909

Over-the-counter
Swaps*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statement of operations.
*2. Fair values for the over-the-counter transactions are based primarily on discounted present values.

(2) Currency-related Transactions
Millions of Yen

2010
Contract amountTotal

Due after one year

Unrealized gains(losses)

Fair value

Over-the-counter
Swaps¥97,497¥97,497

¥ 329

¥ 329

Sold

57,541

—

(890)

(890)

Bought

540

—

0

0

¥(560)¥(560)

Forwards——
Millions of Yen

2009
Contract amountTotal

Due after one year

Unrealized gains(losses)

Fair value

Over-the-counter
Swaps¥112,742¥97,497¥(3,877)¥(3,877)

Sold

43,118

—

(503)

(503)

Bought

6,555

—

86

86

¥(4,295)¥(4,295)

Forwards——

Thousands of U.S. Dollars (Note 1)

2010
Contract amount

Unrealized gains(losses)Total

Due after one year

Fair value$1,047,910$1,047,910$ 3,544$ 3,544Sold

618,462—(9,572)(9,572)

Bought

5,813

—

8

8

$(6,020)$(6,020)Over-the-counter
Swaps
Forwards——*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statement of operations.
*2. Fair values are based primarily on discounted present values.

(3) Equity-related Transactions
Not applicable.

154

Annual Report & CSR Report 2010

(4) Bond-related Transactions
2010
Contract amountTotal

Due after one year

Fair value

Unrealized gains(losses)

ListedFutures
Sold

¥100
—

¥ 0

—

—

—

¥ 0

—

—

¥ 0

¥ 0

Thousands of U.S. Dollars (Note 1)

2010
Contract amountTotal

Due after one year

Fair value

Unrealized gains(losses)

ListedFuturesSold$1,075

$—

$ 0

$ 0

—

—

—

—

$ 0

$ 0

Bought——Consolidated Financial Statements

Bought¥—Financial Condition

Millions of Yen*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statement of operations.
*2. Fair values of listed transactions represent the closing price on the Tokyo Stock Exchange and other exchanges at theconsolidated balance sheet date.

(5) Commodity-related Transactions
Not applicable.
(6) Credit Derivatives Transactions
Millions of Yen

2010
Contract amount
Fair value

Unrealized gains(losses)Total

Due after one year

Sold¥390,449¥190,449¥(2,434)¥(2,434)

Bought56,00036,000

(677)

(677)

—

—

¥(3,112)¥(3,112)Over-the-counter
Credit default options

Millions of Yen

2009
Contract amountTotal

Due after one year

Sold¥861,210¥446,610

Bought451,100

56,000——Fair value

Unrealized gains(losses)Over-the-counter
Credit default options¥(17,874)¥(17,874)

680

680

¥(17,193)¥(17,193)

Annual Report & CSR Report 2010

155

Thousands of U.S. Dollars (Note 1)

Financial Condition

2010
Contract Value

Consolidated Financial Statements

Total

Over one year

Market Value

Unrealized Gains(Losses)Sold$4,196,577$2,046,964$(26,170)$(26,170)

Bought601,892

386,930(7,287)(7,287)——$(33,457)$(33,457)

Over-the-counter
Credit default options*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statement of operations.
*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.

(b) Derivative Transactions to which Hedge Accounting is qualified(1) Interest Rate-related Transactions
Millions of Yen
2010
Contract amount
Hedged item

Deferral method
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed
Accrual method
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed

Debentures, Borrowed
money, Corporate bonds
and Loans
Debentures, Borrowed
money, Corporate bonds
and Loans

Due after one year

Fair value¥588,542¥585,389¥18,516

52,903

48,231(2,342)

278,808

271,199

*3

Total

681

563

—

—

¥16,174

Thousands of U.S. Dollars (Note 1)
2010
Contract amount
Hedged item

Deferral method
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed
Accrual method
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed

Debentures, Borrowed
money, Corporate bonds
and Loans
Debentures, Borrowed
money, Corporate bonds
and Loans

Total

Due after one year

Fair value$6,325,688$6,291,799$199,017

568,612518,397(25,175)

2,996,647

2,914,867

*3

7,325

6,051

—

—

$173,842*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).
*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 26 “FINANCIAL INSTRUMENTS AND RELATEDDISCLOSURES“ is included in that of hedged items such as debentures, borrowed money, corporate bonds and loans.

156

Annual Report & CSR Report 2010

(2) Currency-related Transactions
2010
Contract amount
Hedged item

Translated at contractual rates

Total

Due after one year

¥164,998¥164,228——

Fair value

Foreign-currency debenturesand loans

Swaps

*

2010
Contract amountTranslated at contractual rates

Total

Due after one year

$1,773,415$1,765,141——

Fair value

Foreign-currency debenturesand loans

Swaps

*
—

Note: The above foreign currency swap contracts which qualify the hedging requirements of assignment method are not subject tothe disclosure of fair value information. In addition, the fair value of such foreign currency rate swaps in Note 26“FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES” is included in that of hedged items such as foreign-currency
debentures and loans.

Consolidated Financial Statements—

Thousands of U.S. Dollars (Note 1)

Hedged item

Financial Condition

Millions of Yen(3) Equity-related Transactions
Not applicable.
(4) Bond-related Transactions
Not applicable.

28. Market Value of Securities and Money Held In Trust
Market value of securities, money held in trust and negotiable certificate of deposit classified as “Cash and due frombanks” as of March 31, 2010 and 2009 are summarized below.
(a) Securities(1) Held-to-maturity Debt Securities as of March 31, 2010
Millions of Yen

2010

Fair value exceeds
carrying amount

Carrying amount

Fair value¥ 77,187¥ 77,530

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

Japanese government bonds

Difference¥342

Corporate bonds

73,571

79,075

5,504

Other

113,185

124,508

11,322Sub-total

263,944

281,114

17,169Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds

98,816

98,555

(260)

—

—

—

—

—

—

Corporate bonds

56,64554,914(1,731)

Other

18,60818,489(118)

Sub-total

174,070

171,959(2,110)Total¥438,015¥453,073¥15,058

Short-term corporate bonds

Annual Report & CSR Report 2010157

Financial Condition

Thousands of U.S. Dollars (Note 1)

2010

Fair value exceeds
carrying amountJapanese government bonds

Carrying amount

Fair value$ 829,618$ 833,298——

Japanese local government bonds
Short-term corporate bonds
Corporate bonds

Consolidated Financial Statements

Other

Difference

$

3,680
—

—

—

—

790,750

849,90759,158

1,216,528

1,338,227

121,699

Sub-total

2,836,896

3,021,432

184,536

Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds

1,062,085

1,059,281(2,804)———

Short-term corporate bonds
Corporate bonds
Other

—

—

—

608,834

590,227(18,607)200,000

198,723(1,277)

Sub-total

1,870,920

1,848,231(22,689)

Total$4,707,816$4,869,664$161,848(2) Held-to-maturity Debt Securities with Fair Values as of March 31, 2009
Millions of Yen

2009
Unrealized gains (losses)
Carrying amountJapanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Total

¥

—
—
—
54,05998,230¥152,289

Fair value

¥

—
—
—
51,09597,857¥148,953

Net

Gains

¥

—
—
—
(2,963)(372)¥(3,336)

¥ —
—
—
197
—
¥197

(Losses)¥———(3,161)(372)¥(3,533)

Note: Fair value is based on the closing price at the period end.

(3) Available-for-sale Securities as of March 31, 2010
Millions of Yen

2010

Carrying amountexceeds cost

Carrying amount(Fair value)

Acquisition cost

Difference

Equities¥ 14,588¥

9,072¥ 5,516

Bonds

198,919

197,116

1,803

152,001

151,118

882

—

—

—

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Sub-total
Carrying amount does
not exceed cost——

45,997

920

7,459

3,339

4,119

220,967

209,527

11,439Equities

6,935

7,644

(709)

Bonds

286,833

286,932(99)

280,083

280,144(60)

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

6,749

6,788

(38)

21,706

21,756(50)

Japanese government bonds

Corporate bonds
Other

158

—
46,918Sub-total

315,474

316,333

(858)

Total

¥536,442¥525,861¥10,580

Annual Report & CSR Report 2010

2010

Carrying amountexceeds cost

Acquisition cost

Difference

Equities$ 156,801$

97,508$ 59,292

Bonds

2,138,000

2,118,618

19,382

1,633,722

1,624,237

9,485Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

504,278494,382

9,897

Japanese government bonds

Corporate bonds
Other
Sub-total
Carrying amount does
not exceed cost

80,17235,89244,2802,374,973

2,252,019

122,955

Equities

74,53982,166(7,626)

Bonds

3,082,890

3,083,966(1,067)3,010,356

3,011,008

(652)

—

—

—

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

—

—

—

72,544

72,958(414)

233,302

233,840(537)

Sub-total

3,390,741

3,399,972(9,230)Total$5,765,715$5,651,990$113,724

Consolidated Financial Statements

Carrying amount(Fair value)

Financial Condition

Thousands of U.S. Dollars (Note 1)(4) Available-for-sale Securities with Fair Values as of March 31, 2009
Millions of Yen

2009
Unrealized gains (losses)

Cost

Carrying amount(Fair value)Net

Equities¥ 28,159¥ 24,628¥(3,530)¥139¥(3,669)

Bonds

713,681714,410

728

774

(46)

250,670

251,413

743

772

(29)

—

—

—

—

—

461,514461,514

—

—

—

1,496

1,482

(14)

2

(16)

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds

Gains(Losses)

Other

5,407

4,492

(914)

—

(914)

Total

¥747,247¥743,531¥(3,716)¥914¥(4,630)

Note: Carrying amount above represents the fair values determined based on the closing price at the six-month period.

(5) Available-for-sale Securities sold as of March 31, 2010 and 2009
Millions of Yen

2010
Proceeds from sales

Total amount ofgains on sales

Total amount oflosses on sales

Equities¥ 16,143¥1,116¥2,369Bonds

250,453151

19249,971

151

—

—

—

—

Short-term corporate bonds

—

—

—

Corporate bonds

481

—

19

Japanese government bonds
Japanese local government bonds

Other

343

111

126

Total

¥266,940¥1,380¥2,515

Annual Report & CSR Report 2010159

Thousands of U.S. Dollars (Note 1)

Financial Condition

2010
Proceeds from sales

Total amount ofgains on sales

Total amount oflosses on sales

Equities$ 173,509$12,004$25,466

Bonds

2,691,891

1,631

206

2,686,714

1,631

—

Japanese government bonds

Consolidated Financial Statements

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

5,177

—

206

Other

Corporate bonds

3,694

1,198

1,364

Total

$2,869,094$14,834$27,036

Millions of Yen

2009
Proceeds from sales

Total amount ofgains on sales

Total amount oflosses on sales¥6,170¥3,415¥327

Available-for-sale securities(6) Held-to-maturity Debt Securities and Available-for-sale Securities whose Fair Values are not readily determinable as of March 31, 2009
Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

Held-to-maturity debt securities
Unlisted corporate bonds¥ 54,424$ 554,053

127,478

1,297,758

Available-for-sale securities
Unlisted equities
Unlisted corporate bonds

4,464

45,449Unlisted foreign securities

46,721

475,629

Negotiable certificate of deposit

10,158103,410

Other

64,468656,298¥307,715$3,132,597

Total(7) Change in Classification of Securities
Reclassification from held-to-maturity debt securities to available-for-sale securities due to deterioration of issuers’
creditworthiness amounted to ¥28,926 million ($310,901 thousand) for the year ended March 31, 2010.
(8) Redemption Schedule of Available-for-sale Securities with maturities and Held-to-maturity Debt Securities asof March 31, 2009
Millions of Yen

2009
Maturity
Within 1 year

1 to 5 years

5 to 10 years

More than 10 years

Japanese government bonds¥174,956¥ 76,457¥

Short-term corporate bonds

461,514———

Corporate bonds

14,07975,386

21,965

1,000

Other

10,000

7

98,245—

Total¥660,550¥151,850¥120,211¥1,000

Bonds

160

Annual Report & CSR Report 2010

—

¥

—

Millions of Yen

2010
Net unrealized loss on
the consolidated statementof operations

Carrying amountMoney held in trust for the purpose of investment

¥25

¥(2)
2009
Net unrealized loss on
the consolidated statementof operations

Carrying amountMoney held in trust for the purpose of investment

¥12

¥(1)

Thousands of U.S. Dollars (Note 1)

2010
Net unrealized loss on
the consolidated statementof operations

Carrying amountMoney held in trust for the purpose of investment

$270

$(27)

Consolidated Financial Statements

Millions of Yen

Financial Condition(b) Money Held in Trust(1) Money Held in Trust for the Purpose of Investment(2) Other (other than for the purpose of investment and held to maturity)
Millions of Yen

2010
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost¥30,715¥28,115

Net

Carrying amountexceeds cost

(Carrying amount
does not exceed
cost)¥2,599¥2,618¥(18)

Millions of Yen

2009

Other money held in trust

Unrealized gains (losses)

Acquisition
cost

Carrying
amountNet

Gains(Losses)¥28,074¥24,860¥(3,213)¥5¥(3,219)

Thousands of U.S. Dollars (Note 1)

2010
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost$330,127$302,187

Net

Carrying amountexceeds cost

(Carrying amount
does not exceed
cost)$27,940$28,141$(201)

Annual Report & CSR Report 2010161

Financial Condition(c) Unrealized Loss on Available-for-sale Securities
The breakdown of unrealized loss on available-for-sale securities is as follows:
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

2009

2010

Unrealized loss onavailable-for-sale securities¥ 9,819

Other money held in trust

2,599

Consolidated Financial Statements

Deferred tax assets¥(3,254)$105,538

5

27,940

1,631

Deferred tax liabilities(1,204)

Amount corresponding to minority interests(1,617)

120,529

(117)

(46)

(1,264)

DBJ Inc.’s interest in net unrealized gains on available-for-salesecurities held by affiliates accounted for by the equity method
Unrealized loss on available-for-sale securities, net of taxes(12,948)

11,214

(5)

(3)

(55)

¥11,091¥(1,667)$119,211

Note: Unrealized loss includes foreign currency translation adjustments on non-marketable securities denominated in foreign currency.

29. Related Party Transactions
Related party transactions for the year ended March 31, 2010 and for the six-month period ended March 31, 2009 are as
follows:
Amounts of the transactions
Related party

Finance
MinisterCategory

Account item

Millions of Yen

Thousands of U.S.
Dollars (Note 1)—¥ 181,194$ 1,947,485

Borrowings *2 Borrowedmoney

300,000

3,224,420

Repayments

Description

Shareholder Underwritten
additional
share *1

Finance
MinisterThousands of U.S.
Dollars (Note 1)

¥

$

—

—

5,402,900

58,070,729

934,240

10,041,273

Accruedamountpayable93,596

1,005,976

19,909213,986

Guarantees *3—

2,255,851

24,246,040——

Description

Account item

Millions of Yen

Thousands of U.S.
Dollars (Note 1)

Shareholder Borrowings

Borrowed
money *5

¥ 247,700$ 2,521,633

Category

Millions of Yen

Payment forinterest

Amounts of the transactions
Related party

Balance at March 31, 2010

Repayments

Balance at March 31, 2009
Millions of Yen

Thousands of U.S.
Dollars (Note 1)¥6,037,140$61,459,235

601,214

6,120,475

Payment forinterest

Accruedamountpayable54,550555,333

22,429228,332

Guarantees *3—

2,072,206

21,095,455——*1. DBJ Inc. has allocated new shares issued at ¥50,000 ($537) per share to a third party.
*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 November 20, 2029 without putting up collateral.
*3. The Guarantees are for debentures issued by DBJ Inc. free of guarantee charge.
*4. According to Article 2, item 5 of the Japan Finance Corporation Law, DBJ Inc. has borrowed ¥3,199,746 million ($34,391,079
thousand) from the Japan finance corporation relating to the crisis response business.
*5. The interest rate of borrowed money is from 0.00% to 4.75%, and the last redemption period is March 20, 2029.

162

Annual Report & CSR Report 2010

30. Subsequent Event

Year-end cash dividends—Common stock (¥230-$2.47 per share)

Millions of Yen

Thousands of
U.S. Dollars (Note 1)¥10,033$107,841

Financial Condition

On June 29, 2010, the shareholders meeting resolved the following appropriations of retained earnings. After that, thetiming and amounts for dividends were authorized by the Finance Minister on the same day:Appropriations of Retained earnings as of March 31, 2010

Consolidated Financial Statements

Annual Report & CSR Report 2010163

Independent Auditors’ Report

Financial Condition
Consolidated Financial Statements
164

Annual Report & CSR Report 2010

Non-Consolidated Balance Sheets (Unaudited)
Development Bank of Japan Inc.
As of March 31, 2010 and 2009

2010

2009

2010

AssetsCash and due from banks¥

128,309¥58,386$

1,379,074

Call loans

125,000

145,000

1,343,508

Reverse repurchase agreements

179,991

375,966

1,934,556

Money held in trust

27,19323,981

292,279

1,281,454

1,226,683

13,773,156

Loans

13,538,070

12,026,675

145,508,064

Other assets

89,05788,436957,195

Tangible fixed assets

162,105

162,367

1,742,316

Intangible fixed assets

5,072

4,573

54,523

Deferred tax assets

44,326

27,915476,425

Customers’ liabilities for acceptances and guarantees

195,172

160,276

2,097,727

Allowance for loan losses(200,587)(273,813)(2,155,933)(7,919)(9,015)(85,117)¥15,567,245¥14,017,435$167,317,772

Debentures¥ 3,504,212¥ 3,431,597$ 37,663,502

Call money

153,000—

1,644,454

Borrowed money

9,079,459

8,064,872

97,586,627

Corporate bonds

242,181

81,4232,602,979

Other liabilities

49,594

169,143

533,048

Accrued bonuses to employees

2,150

2,217

23,108

22

20

238

32,49532,023

349,263

34

11

373

Reserve for contingent losses

2,815

—

30,259Reserve for losses on headquarter relocation

6,536

—

70,253

Allowance for investment losses
Total assets

Non-Consolidated Financial Statements

Securities

Financial Condition

Thousands of
U.S. Dollars (Note)

Millions of Yen

Liabilities and equity
Liabilities:

Accrued bonuses to directors and corporate auditors
Reserve for employees’ retirement benefits
Reserve for directors’ and corporate auditors’ retirement benefits

Acceptances and guarantees

195,172

160,276

2,097,727

13,267,674

11,941,586

142,601,832

Common stock authorized, 160,000 thousand shares in 2010
and 2009; issued, 43,623 thousand shares in 2010 and
40,000 thousand shares in 2009

1,181,194

1,000,000

12,695,550

Capital surplus

1,060,466

1,157,715

11,397,962

39,834(97,248)

428,148

Total liabilities
Equity:Retained earnings (deficit)
Unrealized gain (loss) on available-for-sale securities

7,092(2,425)76,235

Deferred gain on derivatives under hedge accounting

10,982

17,808118,045

Total equity
Total liabilities and equity

2,299,571

2,075,849

24,715,941¥15,567,245¥14,017,435$167,317,772

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥93.04=$1.00, the effective
exchange rate prevailing as of March 31, 2010, has been used in the conversion.

Annual Report & CSR Report 2010165

Non-Consolidated Statements of Operations (Unaudited)
Development Bank of Japan Inc.
For the year ended March 31, 2010 and for the six-month period ended March 31, 2009

Financial Condition

Thousands of
U.S. Dollars (Note)

Millions of Yen

2010

2009 (6 months)

2010

IncomeInterest income:¥299,429¥ 135,733$3,218,284

Interest on loans

278,493

131,160

2,993,269

Interest and dividends on securities

13,438

4,064

144,437

55

14

594

Interest on call loans

Non-Consolidated Financial Statements

Interest on reverse repurchase agreements

322

387

3,462

Interest on due from banks

100

106

1,085

Interest on swaps (net)

6,996

—

75,196

Other interest income

22

—

241

15,7684,626

169,482

Fees and commissions
Other operating income

19,880632

213,672

Other income

14,073

10,873

151,260

349,151

151,865

3,752,698

180,058

83,995

1,935,279

55,40925,991

595,543

Total income
Expenses
Interest expense:
Interest on debentures
Interest on call money and bills sold

64

0

693

Interest on borrowed money

122,474

55,906

1,316,364

Interest on corporate bonds

2,105

216

22,631

Interest on swaps (net)

—

1,880

—

Other interest expense

4

0

49

Fees and commissions

1,028

140

11,057

Other operating expenses

34,05910,730366,072

General and administrative expenses

31,722

15,225340,953

Other expenses

51,655

157,476

555,195

Total expenses

298,524

267,567

3,208,556

Income (loss) before income taxes

50,626(115,701)

544,142

Current

25,30820,016

272,021

DeferredIncome taxes:(14,516)(6,490)(156,027)

Total income taxes

10,792

13,525

115,994

Net income (loss)¥ 39,834¥(129,227)$ 428,148

Yen

U.S. Dollars (Note)

Per share of common stock
Basic net income (loss)¥969.04¥(3,230.68)$10.42

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥93.04=$1.00, the effective
exchange rate prevailing as of March 31, 2010, has been used in the conversion.

166

Annual Report & CSR Report 2010

Non-Consolidated Statements of Changes in Equity (Unaudited)
Development Bank of Japan Inc.
For the year ended March 31, 2010 and for the six-month period ended March 31, 20092010

2009 (6 months)

2010

Balance at beginning of financial period¥1,000,000¥1,000,000$10,748,065

Issuance of new shares of common stock

181,194—

1,947,485

1,181,194

1,000,000

12,695,550

1,157,715

1,157,715

12,443,199(97,248)—(1,045,237)

1,060,466

1,157,715

11,397,962

Balance at beginning of financial period(97,248)—(1,045,237)

Transfer from capital surplus to retained earnings
The amount of tax effect adjustment due to change
in legal structure
Net income (loss)

97,248—1,045,237—
39,834

31,978(129,227)—
428,148

Balance at end of financial period

39,834(97,248)

428,148

Balance at beginning of financial period(2,425)—(26,074)

Net change during the financial period

9,518(2,425)102,309

Balance at end of financial period

7,092(2,425)76,235

Common stock:

Balance at end of financial period

Financial Condition

Thousands of
U.S. Dollars (Note 2)

Millions of Yen

Capital surplus:
Transfer from capital surplus to retained earnings
Balance at end of financial period
Retained earnings (deficit):

Unrealized gain (loss) on available-for-sale securities:

Non-Consolidated Financial Statements

Balance at beginning of financial period

Deferred gain on derivatives under hedge accounting:
Balance at beginning of financial period

17,808—

191,410

Net change during the financial period(6,825)17,808(73,365)

Balance at end of financial period
Total equity

10,982

17,808118,045¥2,299,571¥2,075,849$24,715,941

Notes: 1. Beginning of financial period, 2010 is April 1, 2009 and 2009 (6 months) is October 1, 2008, respectively. End of financial period,
2010 is March 31, 2010 and 2009 (6 months) is March 31, 2009, respectively.
2. Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥93.04=$1.00, theeffective exchange rate prevailing as of March 31, 2010, has been used in the conversion.

Annual Report & CSR Report 2010167

Capital Adequacy Status

Financial Condition
Capital Adequacy Status
168

Capital adequacy ratios were calculated in accordance with the guidelines stipulated by Article 14-2 of the Banking Law ofJapan (March 27, 2006, Financial Services Agency Notification No. 19, hereinafter, the ”Capital Adequacy Ratio
Notification”). Capital adequacy ratios have been calculated on both a consolidated and non-consolidated basis, and bothto uniform international standards.
As of this disclosure (July 2010), DBJ has not yet applied Article 14-2 of the Banking Law of Japan, but for reference thecapital adequacy ratio has been disclosed in accordance with the Capital Adequacy Ratio Notification.
With regard to the measuring the capital adequacy ratio, credit risk was calculated using the standardized approach,and operational risk was calculated using the basic indicator approach. Also, as DBJ does not conduct trading (specifictransactions) operations, and as Article 4 and Article 16 of the Capital Adequacy Ratio Notification apply, the market risk
equivalent amount was not calculated.

[1] Capital Adequacy Ratio Status (Consolidated)
Qualitative Disclosure
1. Scope ofConsolidation

The DBJ’s consolidated capital adequacy ratio is calculated for the corporate group, as stipulated in
Article 3 of the Capital Adequacy Ratio Notification (hereinafter, the ”Consolidated Group”). For
companies that belong to the Consolidated Group, no differences exist in the wording of theconsolidated financial statements or regulations pertaining to shares and preparation methods(Ministry of Finance Directive No. 28 of 1976 (hereinafter, the ”Consolidated Financial Statement
Regulations”) of companies included in the scope of consolidation. The Consolidated Group has 13
consolidated subsidiaries, including New Business Investment Co., Ltd., (provides funding, etc. tooperators of new businesses) and DBJ Credit Line Ltd. (acquires beneficial interests in trust,
operates and directs trusts on a commissioned basis, etc.).
No affiliated companies conduct financial business to which Article 9 of the Capital Adequacy
Ratio Notification applies; no companies are subject to exclusion items under Item 2 (a) to (c),Paragraph 1, Article 8, of this Notification; and no companies conduct business in accordance with
Item 11, Paragraph 1, Article 16-2 of the Banking Law of Japan (Law No. 59 of 1981, hereinafter,the ”Law”) or in accordance with Item 12 of this Paragraph that do not belong to the Consolidated
Group.
In the Consolidated Group no particular restrictions are in place to limit the movement of funds
or capital.

2. Overview of FundRaising Methods

All capital is funded by the government of Japan.

3. Overview of Methods
for Evaluating the
Degree of Capital
Adequacy of theConsolidated GroupRegarding the degree of capital adequacy, the Consolidate Group quantifies credit risk, interest
rate risk and operational risk, compares the total risk amount with total capital and measures thecapital surplus. This surplus enables the Consolidated Group to respond to unquantifiable risks andunforeseen events, decide whether to take new financing risks and establish the operating directions.

4. Credit Risk(a) Overview of Risk Management Policies and Procedures
Credit risk refers to the risk of loss to DBJ resulting from the decline in or disappearance of thevalue of credit assets, owing to the worsening credit standing of clients for loans or debt
guarantees. These risks include expected losses (EL), or losses that on average can be expected
to occur within a certain measurement period; and unexpected losses (UL), which go extend
beyond the boundaries of losses that, on average, are expected within a period of time. DBJ
periodically compares UL and capital to measure the amount of capital in surplus.
(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. Rating agency eligibility is not selected depending on
the 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
the amount that could be reasonably expected to resolve the situation through liquidation or thecreditworthiness of the guarantor, respectively.
In principal, collateral valuation is performed by the Credit Analysis Department, based on therequest of investment and loan departments/offices. Investment and loan departments/offices andthe Credit Analysis Department manage credit risk based on valuation results. In principle, thevaluation of all collateral property is reviewed once or twice each year to ensure DBJ is aware of thecurrent status of its collateral property.

Annual Report & CSR Report 2010

7. Securitization
Exposure(a) Overview of Risk Management Policies and Procedures
Excluding credit derivatives, the majority of DBJ’s securitization exposure falls into the categoryof 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 transactions is typically that of an investor, and in principle
the exposure acquired through such transactions continues until the instrument’s maturity.
(b) Methods Used to Calculate Credit Risk Asset Amount of Securitization Exposure
DBJ employs the standardized approach for these calculations.
(c) Method of Accounting for Securitized Transactions
DBJ’s involvement in securitized transactions is that of an investor. DBJ accounts for thesetransactions in accordance with the ”Accounting Standard for Financial Instruments.”(d) Rating Agencies Eligible to Weight Risks by Type of Securitization
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 toinvestment type.
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

Based on Article 4 of the Capital Adequacy Ratio Notification, DBJ includes in its calculation
method no market risk equivalent amount.

9. Operational risk(a) Overview of Risk Management Policies and Procedures
DBJ defines operational risk as the risk of loss arising from internal processes, the activities ofofficers and employees or systems that are inappropriate or non-functioning, or from extrinsic
events.
DBJ establishes its management structure and basic risk management policy pertaining tomanagement methods after considering the wide range of operational risks that it potentiallyfaces, such as operational risk, systems risk, legal risk, human risk, tangible asset risk andreputational risk.
DBJ designates operational risk officers at each of its offices. These personnel are charged
with establishing data collection procedures, remaining aware of risks and creating risk
databases.
In line with the increasing level of sophistication and complexity of the financial business,
DBJ addresses various operational risks by establishing or reinforcing management methods andpreparations to appropriately identify, evaluate, measure, monitor and control these risks.
(b) Method Used to Calculate Operational Risk Equivalent AmountDBJ uses the basic indicator approach to calculate these risks.

10. Overview of Risk
Management Policies
and Procedures
Regarding Exposure
to Shares and Other
Equity Investments
and Capital
Injections into the
Banking Book

DBJ defines investment risk as its risk of sustaining a partial or total loss on the economic value of
assets (including off-balance-sheet assets), owing to such factors as the worsening of an investee’s
financial conditions or to fluctuations in the market environment. For newly acquired exposure, DBJ
considers the balance between investment risk and potential return in each field of investment.
Thereafter, DBJ regularly conducts performance evaluations on its exposure.

Annual Report & CSR Report 2010

Capital Adequacy Status

DBJ regularly refers to the ratings and credit amounts of transaction counterparties to determine
the advisability of entering a transaction or to understand the risks of existing transactions.

Financial Condition

6. Overview of Risk
Management Policies
and Procedures
Related to Risk
Involving Counter–parties in Derivative
Product Transactions
and Transactions withLong Settlement
Periods169

Financial Condition

11. Interest Rate Risk on
the Banking Book(a) Overview of Risk Management Policies and Procedures
Long-term, fixed-rate loans make up the majority of the DBJ’s lending, and DBJ seeks to reduce
its interest rate risk by raising funds featuring similarly long-term, fixed rates. We also employ
the value at risk (VaR) and the Basel II standardized interest rate shock* method to compute
various risks from the standpoint of their economic value.
We regularly compare VaR and 200bpValue against capital to ensure that interest rate risk
remains within a specified range of capital.
* Measurement methods are described in (ii) and (iii) of (b).

Capital Adequacy Status(b) Overview of Methods for Calculating Interest Rate Risk Used by the Bank for Internal
Control of the Banking Book
DBJ calculates interest rate risk based on the following method.
(i) VaR: Use a historical method of measurement with a one-year holding period, a five-yeartime horizon and a 99.9% confidence level(ii) Measure interest rate fluctuations in the 1st percentile and 99th percentile, using a one-year
holding period and a five-year time horizon(iii) 200bpValue: Use a 2% parallel shift in a standardized interest rate shock to measure thechange in economic value((ii) and (iii) are methods for measuring the standardized interest rate shock under Basel II.)

Quantitative Disclosure
1. Of companies covered under the deductions from capital provided by Article 8, Paragraph 1, Item 2 (a) to (c) or by
Article 31, Paragraph 1, Item 2 (a) to (c) of the Capital Adequacy Ratio Notification, names of companies that fall
below legislatively required capital adequacy and the total amount by which they fail to meet the required capital
adequacy.
Not applicable.
2. Items Related to Capital Adequacy Level(Millions of yen)(a) Capital requirement to total credit risk
(1) Exposure by portfolio to which standardized approach applied(i) Japanese government and regional municipal entities

March 31, 2009

753,183

702,205

708,121650,833

0

0

6,443

5,111

(iii) Exposure to corporations

665,586

613,433(iv) Equity exposure

18,123

16,536(v) Other exposure

17,96815,75245,062

51,372(ii) Exposure to financial institutions(2) Securitization risk exposure(b) Capital requirement to market risk(c) Capital requirement to operational risk(d) Consolidated total capital requirement ((a) + (b) + (c))(e) Consolidated capital ratio and consolidated Tier I ratio

170

March 31, 2010

Annual Report & CSR Report 2010——

17,064

14,234

770,248

716,440

Capital ratio

19.13%

18.88%

Tier I ratio

23.83%

23.10%

3. Items Related to Credit Risk (Excluding Securitization Exposure)

Loans(Millions of yen)March 31, 2010

March 31, 2009

12,970,521

11,562,800

255,014

216,535

Commitments and customers’ liabilities for acceptances and guarantees

396,136

379,029

Bonds (JGBs and corporate bonds, etc.)

916,690

888,443

Repurchase agreement/call loan

304,998

520,972

Other

496,229

375,860

Total

15,339,590

13,943,641(b) Fiscal year-end credit risk exposure, broken down as follows:(1) By region(Millions of yen)March 31, 2010

March 31, 2009

Domestic total

15,338,656

13,943,566

Overseas total

934

75

Capital Adequacy Status

Equities, funds

Financial Condition(a) Fiscal year-end credit risk exposure and breakdown by principal categories

Note: ”Overseas” refers to overseas consolidated subsidiaries. DBJ has no overseas branches.

(2) Breakdown by industry and transaction counterparty

Manufacturing(Millions of yen)March 31, 2010

March 31, 2009

3,514,512

2,832,973

Forestry and fisheries

1,063

1,221

Mining36,243

26,965Construction
Wholesale and retail25,62258,9951,130,017

875,540

Finance and insurance

1,134,074

1,149,726

Real estate

1,439,661

1,276,177

Transportation and communications

4,275,122

4,064,028

Electrical, gas and water

1,879,565

2,028,789

Services

965,183

1,137,269

Other

938,522491,953

March 31, 2010

March 31, 2009

Five years or less

5,884,768

5,043,231

More than five years, up to 10

5,715,819

4,818,836

More than 10 years, up to 15

2,336,480

2,646,779

More than 15 years

913,910

1,040,599

No maturity date

488,611394,194(3) Breakdown by period to maturity(Millions of yen)

Annual Report & CSR Report 2010171

(c) Breakdown of exposure by risk weight (after accounting for credit risk mitigations)(Millions of yen)

Financial Condition
Capital Adequacy Status

March 31, 2010

March 31, 2009

Risk weight 0%895,996

753,431

Risk weight 10%

175,621294

Risk weight 20%

4,074,386

4,624,103

Risk weight 50%

3,932,772

2,743,958

Risk weight 100%

6,021,593

5,444,070

Risk weight 150%

20,732

263,0144. Items Related to the Effect of Credit Risk Mitigations
Exposure to Items to Which Effect of Credit Risk Mitigations Applied(Millions of yen)March 31, 2010

March 31, 2009

179,985

375,963

1,619,222

1,852,601

Eligible financial collaterals
Guarantees or credit derivatives

5. Transaction Counterparties’ Risk on Derivative Product Transactions and Transactions with Long Settlement Periods(Millions of yen)March 31, 2010

March 31, 2009

Current exposure
methodCurrent exposure
methodGross restructuring cost

116,247

117,323

Gross add-on, by transaction type

110,838

103,801

Interest rate transactions

68,72460,822Foreign exchange transactions

39,31440,079Equivalent credit calculation method

Credit derivative transactions

2,800

2,900

124,489

110,391

102,596

110,732

43,59053,719

Notional amounts of credit derivatives forcalculated credit equivalent amount by type ofCredit default swaps provisioncredit derivative, by protection purchase or provision390,449

861,210Credit default swaps purchase

56,000451,100—

393,100

Reducing credit equivalent amounts through netting
Net equivalent credit
Net restructuring cost

Notional amounts of credit derivatives taking
into account credit risk mitigations

Notes: 1. Collateral is not used to reduce credit risk on derivative product transactions.
2. Credit derivatives used to compute the credit equivalent amount are included in securitization exposure; there is some data overlap withsecuritization exposure indicated elsewhere and what are known as single-name CDS offerings include the measurement of acceptances andguarantees as consisting of the legal and other exposure of the company in question.

6. Securitization Exposure(a) Securitization exposure in which the Consolidated Group is the originator
Not applicable.
(b) Securitization exposure in which the Consolidated Group is an investor(1) Retained securitization exposure amount and breakdown by major underlying asset type

March 31, 2009

Structured finance723,423

613,337

Credit derivatives

290,299739,574

Funds*

189,701

192,854* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

172(Millions of yen)March 31, 2010

Annual Report & CSR Report 2010

(2) Balance of retained securitization exposure by risk weight and required capital amounts

20%
50%

Risk weight

100%

Risk weight350%

Risk weight

Capital deductions

Risk weight

Other*

380,274

594,454

Capital requirement

6,084

9,511

Balance

31,334

201,778

Capital requirement

1,253

8,071

Balance

311,581261,237

Capital requirement

24,926

20,899Balance

36,44035,000Capital requirement

10,203

9,800

Balance

429,016

437,337

Capital requirement——

Balance

14,776

15,958

Capital requirement

2,594

3,090

Capital Adequacy Status

Risk weight

Balance

March 31, 2009

Financial Condition

Risk weight(Millions of yen)March 31, 2010

* Applying to exposure the transitional measures indicated in Article 15 of the Supplementary Provision to the Capital Adequacy Ratio Notification.

(3) Breakdown of securitization exposure amounts and underlying asset categories deducted from capital in accordance with
Article 247 of the Capital Adequacy Ratio Notification(Millions of yen)March 31, 2010

March 31, 2009

Structured finance

239,982

244,482

Funds*

189,701

192,854* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

(4) Amount of credit risk assets calculated with application of Article 15 of the Supplementary Measure to the Capital
Adequacy Ratio Notification(Millions of yen)March 31, 2010

Credit risk assets

32,361March 31, 2009

38,6357. Items Related to Market Risk
DBJ falls into the category indicated in Article 4 of the Capital Adequacy Ratio Notification. Consequently, calculation of themarket risk equivalent amount was not performed.
8. Items Related to Shares and Other Equity Investments and Capital Injections into the Banking Book
March 31, 2010

(Millions of yen)March 31, 2009(a) Market value of below-listed items as included within categories in
the consolidated balance sheets
Exposure to listed shares

25,23628,961

Exposure to other equity investments and capital injections

225,851

180,170(1,199)3,204(b) Gains or losses on the sale of equity investments or shares

22,334

14,558(c) Gains or losses from valuation recognized on the consolidated balance sheets
but not recognized on the consolidated statements of income

11,091(1,667)(d) Included amount stipulated in Article 6, Paragraph 1, Item 1 of the Capital
Adequacy Ratio Notification

5,590

—

Gain or loss on write-off of equity exposure

Notes: 1. The Group has no gains or losses from valuation recognized on the consolidated balance sheets or the consolidated statements of income.
2. The Group has no exposure to shares to which Article 13 of the Supplementary Provisions to the Capital Adequacy Ratio Notification applies.

Annual Report & CSR Report 2010173

9. Amount of Exposure Applied for the Deemed Calculation of Credit Risk Assets

Financial Condition

As DBJ employs the standardised approach for calculating credit risk, this item does not apply.
10. Interest Rate Risk in the Banking Book
Decrease in economic value resulting from interest rate shock

Capital Adequacy Status
174

Annual Report & CSR Report 2010

March 31, 2010

March 31, 2009

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a oneyear holding period anda five-year time horizon:¥8.3 billion

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a oneyear holding period anda five-year time horizon:¥19.4 billion

[2] Capital Adequacy Ratio Status (Non-Consolidated)
All capital is funded by the government of Japan.

2. Overview of Methods
for Evaluating the
Degree of Capital
Adequacy of the Bank

Regarding the degree of capital adequacy, DBJ quantifies credit risk, interest rate risk andoperational risk, compares the total risk amount with total capital and measures the capital surplus.
This surplus enables DBJ to respond to unquantifiable risks and unforeseen events, decide whether
to take new financing risks and establish the operating directions.

3. Credit Risk(a) Overview of Risk Management Policies and Procedures
Credit risk refers to the risk of loss to DBJ resulting from the decline in or disappearance of thevalue of credit assets, owing to the worsening credit standing of clients for loans or debt
guarantees. These risks include expected losses (EL), or losses that on average can be expected
to occur within a certain measurement period; and unexpected losses (UL), which go extend
beyond the boundaries of losses that, on average, are expected within a period of time. DBJ
periodically compares UL and capital to measure the amount of capital in surplus.
(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. Rating agency eligibility is not selected depending on
the 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).

4. 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
the amount that could be reasonably expected to resolve the situation through liquidation or thecreditworthiness of the guarantor, respectively.
In principal, collateral valuation is performed by the Credit Analysis Department, based on therequest of investment and loan departments/offices. Investment and loan departments/offices andthe Credit Analysis Department manage credit risk based on valuation results. In principle, thevaluation of all collateral property is reviewed once or twice each year to ensure DBJ is aware of thecurrent status of its collateral property.

5. Overview of Risk
Management Policies
and Procedures
Related to Risk
Involving Counterparties in Derivative
Product Transactions
and Transactions withLong Settlement
Periods

DBJ regularly refers to the ratings and credit amounts of transaction counterparties to determine
the advisability of entering a transaction or to understand the risks of existing transactions.

6. Securitization
Exposure(a) Overview of Risk Management Policies and Procedures
Excluding credit derivatives, the majority of DBJ’s securitization exposure falls into the categoryof specialised 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 specialised 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 transactions is typically that of an investor, and in principle
the exposure acquired through such transactions continues until the instrument’s maturity.
(b) Methods Used to Calculate Credit Risk Asset Amount of Securitization Exposure
DBJ employs the standardized approach for these calculations.
(c) Method of Accounting for Securitized Transactions
DBJ’s involvement in securitized transactions is that of an investor. DBJ accounts for thesetransactions in accordance with the ”Accounting Standard for Financial Instruments.
(d) Rating Agencies Eligible to Weight Risks by Type of Securitization
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 toinvestment type.
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).

Annual Report & CSR Report 2010

Capital Adequacy Status

1. Overview of FundRaising Methods

Financial Condition

Qualitative Disclosure

175

Financial Condition

Based on Article 16 of the Capital Adequacy Ratio Notification, DBJ includes in its calculation
method no market risk equivalent amount.

8. Operational risk(a) Overview of Risk Management Policies and Procedures
DBJ defines operational risk as the risk of loss arising from internal processes, the activities ofofficers and employees or systems that are inappropriate or non-functioning, or from extrinsic
events.
DBJ establishes its management structure and basic risk management policy pertaining tomanagement methods after considering the wide range of operational risks that it potentiallyfaces, such as operational risk, systems risk, legal risk, human risk, tangible asset risk andreputational risk.
DBJ designates operational risk officers at each of its offices. These personnel are charged
with establishing data collection procedures, remaining aware of risks and creating risk
databases.
In line with the increasing level of sophistication and complexity of the financial business,
DBJ addresses various operational risks by establishing or reinforcing management methods andpreparations to appropriately identify, evaluate, measure, monitor and control these risks.
(b) Method Used to Calculate Operational Risk Equivalent AmountDBJ uses the basic indicator approach to calculate these risks.

9. Overview of Risk
Management Policies
and Procedures
Regarding Exposure
to Shares and Other
Equity Investments
and Capital Injections
into the Banking Book

DBJ defines investment risk as its risk of sustaining a partial or total loss on the economic value of
assets (including off-balance-sheet assets), owing to such factors as the worsening of an investee’s
financial conditions or to fluctuations in the market environment. For newly acquired exposure, DBJ
considers the balance between investment risk and potential return in each field of investment.
Thereafter, DBJ regularly conducts performance evaluations on its exposure.

10. Interest Rate Risk on
the Banking Book(a) Overview of Risk Management Policies and Procedures
Long-term, fixed-rate loans make up the majority of the DBJ’s lending, and DBJ seeks to reduce
its interest rate risk by raising funds featuring similarly long-term, fixed rates. We also employ
the value at risk (VaR) and the Basel II standardized interest rate shock* method to compute
various risks from the standpoint of their economic value.
We regularly compare VaR and 200bpValue against capital to ensure that interest rate risk
remains within a specified range of capital.

Capital Adequacy Status

7. Market Risk

* Measurement methods are described in (ii) and (iii) of (b).

(b) Overview of Methods for Calculating Interest Rate Risk Used by the Bank for Internal
Control of the Banking Book
DBJ calculates interest rate risk based on the following method.
(i) VaR: Use a historical method of measurement with a one-year holding period, a five-yeartime horizon and a 99.9% confidence level(ii) Measure interest rate fluctuations in the 1st percentile and 99th percentile, using a one-year
holding period and a five-year time horizon(iii) 200bpValue: Use a 2% parallel shift in a standardized interest rate shock to measure thechange in economic value((ii) and (iii) are methods for measuring the standardized interest rate shock under Basel II.)

176

Annual Report & CSR Report 2010

Quantitative Disclosure(Millions of yen)(a) Capital requirement to total credit risk
(1) Exposure by portfolio to which standardized method applied(i) Japanese government and regional municipal bodies(ii) Exposure to financial institutions

March 31, 2010

March 31, 2009

753,259

701,671

708,297

650,299

0

0
5,020

667,640

612,793(iv) Equity exposure

17,03816,805(v) Other exposure

17,75915,68044,961

51,372——(c) Capital requirement to operational risk

16,971

14,222(d) Non-consolidated total capital requirement ((a) + (b) + (c))

770,231715,893(e) Non-consolidated capital ratio and non-consolidated Tier I ratio Capital ratio

18.79%

18.70%

23.59%

22.99%March 31, 2010

March 31, 2009

12,967,415

11,552,191

Equities, funds

277,622

228,976

Commitments and customers’ liabilities for acceptances and guarantees

396,136

378,629(2) Securitization risk exposure(b) Capital requirement to market risk

Tier I ratio

Capital Adequacy Status

5,858(iii) Exposure to corporations

Financial Condition

1. Items Related to Capital Adequacy Level

2. Items Related to Credit Risk (Excluding Securitization Exposure)(a) Fiscal year-end credit risk exposure and breakdown by principal categories

Loans(Millions of yen)

Bonds (JGBs and corporate bonds, etc.)

916,690

888,443

Repurchase agreement/call loan

304,998

520,972

Other

452,133

364,641

Total

15,314,996

13,933,855(b) Fiscal year-end credit risk exposure, broken down as follows:(1) By region(Millions of yen)March 31, 2010

March 31, 2009

Domestic total

15,314,996

13,933,855

Overseas total——

Note: DBJ has no overseas sales locations.

Annual Report & CSR Report 2010177

(2) Breakdown by industry and transaction counterparty

Financial Condition

Manufacturing(Millions of yen)March 31, 2010

March 31, 2009

3,514,512

2,832,973

Forestry and fisheries

1,063

1,221

Mining36,243

26,965Construction
Wholesale and retail25,62258,9951,130,017

875,540

Capital Adequacy Status

Finance and insurance

1,181,018

1,164,797

Real estate

1,467,664

1,276,177

Transportation and communications

4,275,122

4,064,028

Electrical, gas and water

1,879,565

2,028,789

Services

966,249

1,138,241

Other

837,916

466,123

March 31, 2010

March 31, 2009

Five years or less

5,884,768

5,042,831

More than five years, up to 10

5,715,819

4,818,836

More than 10 years, up to 15

2,336,480

2,646,779

More than 15 years

913,910

1,040,599

No maturity date

464,017384,808(3) Breakdown by period to maturity(Millions of yen)(c) Breakdown of exposure by risk weight (after accounting for credit risk mitigations)(Millions of yen)March 31, 2010

March 31, 2009

Risk weight 0%895,996

753,431

Risk weight 10%

175,621294

Risk weight 20%

4,037,850

4,618,368

Risk weight 50%

3,932,772

2,743,836

Risk weight 100%

6,031,105

5,438,599

Risk weight 150%

20,732

263,0143. Items Related to the Effect of Credit Risk Mitigations
Exposure to Items to Which Effect of Credit Risk Mitigations Applied

Eligible financial collaterals
Guarantees or credit derivatives

178

Annual Report & CSR Report 2010

(Millions of yen)March 31, 2010

March 31, 2009

179,985

375,963

1,619,222

1,852,601

4. Transaction Counterparties’ Risk on Derivative Product Transactions and Transactions with Long Settlement Periods
March 31, 2009

Current exposure
methodCurrent exposure
methodGross restructuring cost

116,247

117,323

Gross add-on, by transaction type

110,838

103,801

Interest rate transactions

68,72460,822Foreign exchange transactions

39,31440,079Credit derivative transactions

2,800

2,900

Reducing credit equivalent amounts through netting

124,489

110,391

Net equivalent credit

102,596

110,732

Equivalent credit calculation method

43,59053,719

Notional amounts of credit derivatives forcalculated credit equivalent amount by type ofCredit default swaps provisioncredit derivative, by protection purchase or provision390,449

861,210Credit default swaps purchase

56,000451,100—

393,100

Net restructuring cost

Notional amounts of credit derivatives taking
into account credit risk mitigations

Capital Adequacy Status

March 31, 2010

Financial Condition(Millions of yen)

Notes: 1. Collateral is not used to reduce credit risk on derivative product transactions.
2. Credit derivatives used to compute the credit equivalent amount are included in securitization exposure; there is some data overlap withsecuritization exposure indicated elsewhere and what are known as single-name CDS offerings include the measurement of acceptances andguarantees as consisting of the legal and other exposure of the company in question.

5. Securitization Exposure(a) Securitization exposure in which DBJ is the originator
Not applicable.
(b) Securitization exposure in which DBJ is an investor(1) Retained securitization exposure amount and breakdown by major underlying asset type(Millions of yen)March 31, 2010

March 31, 2009

Structured finance692,668

586,961

Credit derivatives

290,299739,574

Funds*

227,244

225,527

March 31, 2010

March 31, 2009

* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

(2) Balance of retained securitization exposure by risk weight and required capital amounts

Risk weight

20%

Balance(Millions of yen)

380,274

594,454

Capital requirement

6,084

9,511

Balance

31,334

201,777

Risk weight

50%

Risk weight

100%

Risk weight

350%

Capital requirement

10,103

9,800

Risk weight

Capital deductions

Balance

436,162443,636——

Risk weight

Other*

Balance

14,776

15,958

Capital requirement

2,594

3,090

Capital requirement

1,253

8,071

Balance

311,581261,237

Capital requirement

24,926

20,898

Balance

36,08335,000Capital requirement* Applying to exposure the transitional measures indicated in Article 15 of the Supplementary Provision to the Capital Adequacy Ratio Notification.

Annual Report & CSR Report 2010179

Financial Condition(3) Breakdown of securitization exposure amounts and underlying asset categories deducted from capital in accordance with
Article 247 of the Capital Adequacy Ratio Notification(Millions of yen)March 31, 2010

March 31, 2009

Structured finance

210,668

218,414

Funds*

226,160

225,527* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

(4) Amount of credit risk assets calculated with application of Article 15 of the Supplementary Measure (Interim Measure for
Securitization Exposure) to the Capital Adequacy Ratio Notification(Millions of yen)

Capital Adequacy Status

March 31, 2010

Credit risk assets

32,361March 31, 2009

38,635

6. Items Related to Market Risk
DBJ falls into the category indicated in Article 16 of the Capital Adequacy Ratio Notification. Consequently, calculation of themarket risk equivalent amount was not performed.
7. Items Related to Shares and Other Equity Investments and Capital Injections into the Banking Book
March 31, 2010

(Millions of yen)March 31, 2009(a) Market value of below-listed items as included within categories in
the non-consolidated balance sheets
Exposure to listed shares

24,80628,492

Exposure to other equity investments and capital injections

218,228

186,518(1,804)3,236(b) Gains or losses on the sale of equity investments or shares

21,358

10,959(c) Gains or losses from valuation recognized on the non-consolidated balance sheets
but not recognized on the non-consolidated statements of income

Gain or loss on write-off of equity exposure

7,092(2,425)(d) Included amount stipulated in Article 18, Paragraph 1, Item 1 of the Capital
Adequacy Ratio Notification

3,697

—

Notes: 1. The Group has no gains or losses from valuation recognized on the non-consolidated balance sheets or the non-consolidated statements ofincome.
2. The Group has no exposure to shares to which Article 13 of the Supplementary Provisions to the Capital Adequacy Ratio Notification applies.

8. Exposure Applied for the Deemed Calculation of Credit Risk Assets
As DBJ employs the standardised approach for calculating credit risk, this item does not apply.
9. Interest Rate Risk in the Banking Book

Decrease in economic value resulting from interest rate shock

180

Annual Report & CSR Report 2010

March 31, 2010

March 31, 2009

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a
one-year holding period
and a five-year time
horizon:¥8.3 billion

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a
one-year holding period
and a five-year time
horizon:¥19.4 billion

Development Bank of Japan Inc.
Published in September 2010 by the Public Relations & Corporate Social Responsibility Office,Corporate Planning & Coodination Department
URL: http://www.dbj.jp/enhttp://www.dbj.jp/en
Development Bank of Japan Inc.
9-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-0004, Japan

Printed in Japan

This report is printed on paper certified by the Forest Stewardship Council (FSC) as being made fromsustainably managed forests. The report is printed with soy ink using a waterless printing method. All theelectricity used in printing and binding this report (600 kWh) was supplied by green resources.