Applying Financial Expertiseto Design the Future

Annual Report & CSR Report

2011Profile (As of September 1, 2011)

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. Act (Act No. 85 of 2007)

President:

Toru Hashimoto

Number of employees:

1,102 (As of March 31, 2011)

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, 16; non-consolidated subsidiaries, 15; 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:¥14,830.9 billion (As of March 31, 2011)

Loans:¥13,067.9 billion (As of March 31, 2011)

Capital adequacy ratio:

20.39% (As of March 31, 2011)

Issuer ratings:

Aa3 (Moody’s Investors Service, Inc.), A+ (Standard & Poor’s Corp.),
AA (Rating and Investment Information, Inc.),
AAA (Japan Credit Rating Agency, Ltd.)
Note: Information above is 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

Toward the Future Prosperity of Japan . . . . . . . . . . . . . . . . . . . . . . . . . . .

4Corporate Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Logo and Corporate Color . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
DBJ’s Target Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
DBJ's Roles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Overview of DBJ’s Second Medium-term Management Plan . . . . . . . . . . 27
History of DBJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Privatizing DBJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Overview of Operations in Fiscal 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Operating Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Overview of Consolidated Operating Performance . . . . . . . . . . . . . . . . . 34
Overseas Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Group Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
DBJ’s Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Integrated Investment and Loan Services . . . . . . . . . . . . . . . . . . . . . . . . . 40
Investments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Consulting/Advisory Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Crisis Response Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Initiatives Related to the Great East Japan Earthquake . . . . . . . . . . . . . 58

1

Making Use of Information Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
CSR Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Implementing CSR Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
CSR through Investment, Loan and Other Businesses . . . . . . . . . . . . . . . 74
Environmental Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Fostering Human Resources and Creating a Comfortable Work
Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Intellectual Asset Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Intellectual Asset Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Financial Platform That Enables DBJ to Meet the Needs of the Times . . 106
Management Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Client Protection Management System/Declaration on Personal
Information Protection/Policy for Managing Conflicts of Interest . . . . . 118
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Corporate Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

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 2011

Message from the President

Under a corporate philosophy that emphasizes neutrality, publicmindedness and partnership with other financial institutions, we,the Development Bank of Japan Inc. (DBJ), will devote ourselves tofinancially supporting the recovery measures and the future growthof Japan through our diverse and specialized financial services.

Message from the President
2

We would like to offer our deepest condolences tothe people who were affected by the Great East Japan
Earthquake. DBJ will make every effort to assist thosestricken by the disaster. We pray for your safety andhope for the earliest possible recovery.

Annual Report & CSR Report 2011

Our Four Roles, and Operating
Autonomously

development projects accumulated through our unique

DBJ has continued to offer distinctive financial services

equity capital.

financial capabilities in providing long-term debt andthrough its integrated investments and loans, and will
fulfill four key roles in financial and capital markets as it

Medium-Term Management Planaddresses the changes that are expected to take place in

To clarify the roles and objectives outlined above, during

the socioeconomic environment.

fiscal 2011 we formulated a second medium-term management plan, “Endeavor 2013,” which spells out our

financial market. We will work toward this objective

actions for the next three years. In addition to disasterthrough the adequate provision of necessary risk capital

response, this plan defines our goals as (1) taking advan-

to the market by leveraging the uniqueness of ourtage of our strengths to truly achieve medium returns forfinancing—long terms, large in scale, an approach thatmedium risks, (2) reinforcing our conventional strengths

combines debt and equity financing, and neutrality.

in areas of client concentration: energy, transportation,

The second and third roles focus on specific fields:

and urban development, (3) supporting industries withthe reconstruction of the Japanese industrial

growth potential : environment and healthcare, (4)structure and supporting growth industries. We will

determining pan-industry needs for restructuring andextend our distinctive financial support to these tworevitalization over the medium to long term and (5)areas to prevent the hollowing out of Japanese industry

continuing to provide infrastructure-related and regional

and to work to expand Japan’s economic frontiers.

economic solutions. We intend to increase the diversity

Our fourth role is to function as a safety net forof the financial services that support these objectives

the Japanese financial market. We will move swiftly

and will concentrate on reinforcing our human resources

and proactively in times of crisis, such as financial crises

and strengthening our business infrastructure to supportand in the face of disasters such as the recent massivethese endeavors.

earthquake.
ny we manage DBJ as an autonomous entity, introducing

Meeting Our Corporate Social
Responsibilities

initiatives that are designed to boost our profits.

We believe that a company’s corporate social responsi-

While offering these services, as a joint stock compa-

bilities center on a commitment to creating social value

Responses to the Great East Japan
Earthquake

through its operations. We meet this responsibility

The Great East Japan Earthquake resulted in an unprec-

societal needs and issues, and via our financial services.

edented level of complex catastrophe. It is essential that

Accordingly, our business endeavors themselves form

the disaster recovery measures be: (1) implemented on

the base of our CSR activities. We plan to continue

a step-by-step basis according to each stage towards

increasing our CSR efforts by increasing our sensitivity torecovery, and (2) tailored to meet specific needs of vary-societal needs and raising the level of the solutions thating regions and different disaster categories.

we provide.

through business activities that address a host of

As referred to earlier, one of DBJ’s primary objectives
is to provide a safety net for financial markets in times

Message from the President

The first function is the enhancement of Japan’s

July 2011of crisis. As we position crisis response as one of ourmajor roles, we are committed to expending every effort
to support restoration and reconstruction from the devastating damage caused to our economy and society. To

Toru Hashimoto

this end, we will leverage our wealth of financial experi-

President & CEOence in regional, industrial, energy and infrastructure

Development Bank of Japan Inc.

Annual Report & CSR Report 20113

Toward the Future Prosperity of Japan

Initiatives Targeting Crisis
Response Operations
DBJ began crisis response operations as a designated financial institution on October 1, 2008.
Since March 2011, when the Great East Japan
Earthquake struck, we have poured all our energy into initiatives to support the restoration andreconstruction of the disaster-stricken region. In
addition to implementing crisis responses targeting clients affected directly and indirectly by
the disaster, DBJ is making a proactive effort tosupport increases in the production of materials
needed for restoration and reconstruction.

4

See pages

Annual Report & CSR Report 201155–61

Reconstruction
SupportConsolidating usefulknowledge and financial
expertise

Maintaining Our Long-Term Perspective Even inTimes of Large-Scale Natural Disasters and Other
Emergencies That Have Far-Reaching Impacts,
Fulfilling Our Role as a Provider of Safety Nets
That Are Dynamic and ProactivepAnnual Report & CSR Report 20115

Toward the Future Prosperity of Japan

Initiatives in the
Energy Sector
DBJ supports the growth of Japanese industry
through its investments and loans for resource
development, oil storage and other initiatives.
Against the backdrop of global warming, we
also support clients’ efforts to encourage andpromote renewable energy from solar power,
wind, biomass and other sources.
As of March 31, 2011, our balance of loans in
the electric power, gas, heat and water sector
totaled ¥1,775.2 billion, accounting for 13.6% of
total loans, by industry.

6

See pages

Annual Report & CSR Report 2011

75–76

¥1.7

trillion

Balance of loans in the electric
power, gas, heat and water sector(As of March 31, 2011)

Providing Investments and Loans to Ensure a
Stable, Long-Term Supply of Energy to Core
Industries
7gy
Annual Report & CSR Report 2011

Toward the Future Prosperity of Japan

Initiatives in theTransportation Sector
DBJ is involved in a wide range of initiatives inthe development and improvement of transportation infrastructure (including railroads,
airports, airlines, buses and roads). We also
take part in the formation of a wide range of
projects from a long-term perspective, to support collaboration among multiple companies
from a position of neutrality.
As of March 31, 2011, our balance of loans
in the transportation infrastructure sector (totransportation providers) totaled ¥3,238.1 billion, accounting for 24.8% of total loans, byindustry.

8

See page

Annual Report & CSR Report 2011

77

¥3.2

trillion

Balance of loans in thetransportation infrastructure sector(As of March 31, 2011)

9

Providing Investments and Loans to Increase
Transportation Capabilities and Efficiency, Build
and Upgrade Transportation Infrastructure That
Has Deteriorated Over Time and Addressing
the Aging Population and Responding toEnvironmental IssuespAnnual Report & CSR Report 2011

Toward the Future Prosperity of Japan

Initiatives in the Urban
Development ((Real Estate)) Sector
DBJ’s long-term financing of real estate projects
began in the 1960s. We have participated inJapan’s real estate securitization market from its
early beginnings and continue striving to invigorate this market by leveraging our accumulated
expertise and networks.
In fiscal 2011, we introduced the DBJ Green
Building Certification program, which isdesigned to provide financial support for environmental and socially considerate initiatives.
As of March 31, 2011, our balance of loans in
the real estate sector totaled ¥1,637.4 billion,
accounting for 12.5% of total loans, by industry.

10

See pages

Annual Report & CSR Report 2011

78–79

¥1.6

trillion

Balance of loans to
the real estate sector(As of March 31, 2011)11

Supporting Real Estate Development, Utilizationand Liquidization through Various Financing
Schemes, Including Securitization

Annual Report & CSR Report 2011

Toward the Future Prosperity of Japan

Initiatives in theEnvironmental Business Sector
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 projects overthe past 40 years.
In fiscal 2004, DBJ began employing environmental ratings in its financing based on knowledge we have cultivated for over four decades.
As of March 31, 2011, we had provided suchfinancing to more than 240 companies, with the
cumulative total amounting to ¥361.4 billion.

12

80–82,
See pages

94–97

Annual Report & CSR Report 2011

More than240

companies

Number of companies provided
Financing Employing DBJ
Environmental Ratings(As of March 31, 2011)13

Promoting Investment and Loans That Address
Global Environmental Issues from a Long-Term,
Neutral and Public-Minded Perspective

Annual Report & CSR Report 2011

Toward the Future Prosperity of Japan

Initiatives in the Healthcare
and Welfare Sectors
DBJ is engaged in maintaining and improving
the quality including access, cost and technological standards of each area of healthcare in
Japan through finance, consulting and the dissemination of information. As well as providing
consulting services that include the developmentof business plans to support improvements in
hospital management, DBJ studies and conducts
research into a variety of medical issues.
As of March 31, 2011, our balance of loans in
the healthcare sector stood at ¥44.9 billion, up
22.4% from the preceding fiscal year.

14

See pages

Annual Report & CSR Report 2011

83–84

Up

22.4

%

Year-on-year increase in loans
in the healthcare sector(As of March 31, 2011)15

Supporting Initiatives That Maintain or Improve theQuality of Healthcare and Welfare in Japan throughFinance, Consulting and Provision of Information

Annual Report & CSR Report 2011

Toward the Future Prosperity of Japan

Restructuring andRevitalization Initiatives

16

In an environment marked by sluggish domestic demand and shifts in the demand structure,
increasingly stringent competition and accelerating change in the corporate business climate,needs are growing for business and industry
restructuring and corporate revitalization thatenhances corporate value by bolstering competitiveness.
Through debtor-in-possession financing, DBJ
helps supply the short-term cash flow that isessential to revitalization. We also provide buyout financing and mezzanine financing to assist
corporate acquisitions and capital restructuring.
Through total solutions such as these, DBJ supports business restructuring and revitalization.

See pages

Annual Report & CSR Report 201185–86

Provided

Japan’s first
DIP financing in 2001

17

Supporting Increases in Clients’ Corporate Value
Through Financial Methods That Contribute toBusiness Restructuring and Industry Revitalization,
Thereby Increasing Competitivenessg
Annual Report & CSR Report 2011

Toward the Future Prosperity of Japan

Social Infrastructure
Initiatives
Since the era of reconstruction following WorldWar II, DBJ has supported the development andadvancement of Japanese economy and society.
For the development and further sophisticationof Japan’s economy and improvements to quality of life, DBJ applies its experience and expertise to support the efforts of its clients to build
and improve the social infrastructure.
As of March 31, 2011, DBJ’s balance of loans
for social infrastructure (electric power, gas,
heating, water, telecommunications, transportand real estate) totaled ¥7,288.8 billion.

18

See pages

Annual Report & CSR Report 2011

87–88

¥7.2

trillion

Balance of loans for social
infrastructure(As of March 31, 2011)19

Leveraging Experience and Expertise Gained during
Our Time as a Policy-Based Financial Institution to
Provide Appropriate Solutions and Investments andLoans to Help Build and Enhance Social Infrastructure

Annual Report & CSR Report 2011

Toward the Future Prosperity of Japan

Community Revitalization
Initiatives

20

DBJ provides optimal solutions from a longterm perspective that are designed to realize aprosperous lifestyle. To this end, we stimulate
regional economies, build local infrastructuresand construct wide-ranging networks as we
strive to tackle the variety of issues facing theregions. Furthermore, DBJ maintains close relationships with regional financial institutions,which have excellent insights into the companies
that operate in their regions. We have createda regional banking M&A network that links
regional financial institutions with informationon corporate M&A activities, thereby enhancing
trust-based relationships and helping to achievecommunity revitalization.
As of March 31, 2011, a cumulative total of 101
financial institutions had entered into businessalliances with DBJ.

See pages

Annual Report & CSR Report 2011

89–92

101

institutions

Cumulative number of alliedfinancial institutions(As of March 31, 2011)

Providing Optimal Solutions by Forming Networks
That Connect Local Companies and Government
Bodies, Economic Organizations, Chambers ofCommerce and Other Institutions

21kAnnual Report & CSR Report 2011

Toward the Future Prosperity of Japan

Overseas BusinessInitiatives
Since its conversion to a joint-stock company in
October 2008, DBJ has enthusiastically embraced
international business.
We are building 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, 2011, more than 30 countries
were targeted for investments and loans.

22

See pages

Annual Report & CSR Report 201136 and 93

More than30

countries

Number of countries targeted
for investments and loans(As of March 31, 2011)

Supporting Domestic Investment by Foreign
Companies, Providing Support for JapaneseCompanies Expanding Overseas, Where We Can
Expect High Growth23

Annual Report & CSR Report 2011

Corporate Philosophy

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.
Corporate Philosophy, Logo and Corporate Color

Commitment to Stakeholders

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

Intention
IntellecctualIntellectualualalAssetts
ts
AssetsThe Core Competencies
at the Center of DBJ-SpecificFinancial Expertise

Networks
Netw
Net
s

24

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
Corporate Values:

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

Annual Report & CSR Report 2011

Commitment to Stakeholders, Action Guidelines and Core Competencies
Action Guidelines

Commitment to Stakeholders

 Customers First Commitment to Clients

 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.

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

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

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

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

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

 Speed & Teamwork
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 and reliability.

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.

Corporate Philosophy, Logo and Corporate Color

Using creative finance, DBJ will resolve its clients’challenges and help them enhance their economic andsocial value.

25

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

Annual Report & CSR Report 2011

DBJ’s Target Business Model

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 andequity financing

DBJ’s Target Business Model, DBJ’s Roles

Integrated 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

DBJ’s Roles26

DBJ has continued to offer distinctive financial services through its integrated investments and loans, andwill fulfill four key roles in financial and capital markets as it addresses the changes that are expected totake place in the socioeconomic environment.
Financial institutions (banks, securities companies, etc.), and other investment companies
Collaboration in providing investments and loans

DBJ
Provision of risk capital, partnerships: (1) Reinforcing the functions of financial and capital markets(long-term perspective, large amounts, integrated investments and loans, neutrality)(4) Providing a safety net
for financial markets
Asset Managementt$SJTJTSFTQPOTFGJOBODJOHt1VSDIBTFPG$1
t*OWFTUNFOUQVSTVBOUUP
Act on Special Measure
for Industrial
Revitalization

Business domains managed byautonomous corporate decisions
Clients,
Expertise,
Human Resources,
Information(2) Supporting industrial
restructuringtIndustry restructuring andrevitalization, other activitiestRegional restructuringtCommunity infrastructureenhancement, other(3) Providing financial support in growth fieldstSupport for growth industries (environment-related, healthcare, others)tSupport for overseas development, promotion of financing for
inbound business to JapantTechnical sophistication, other

FundRaising

Times of crisis

Fund-raising backed by government
credit (Two-step loans)

CapitalAnnual Report & CSR Report 2011

Normal times

Expansion of autonomous fund-raising infrastructure

Integrated capital management

Overview of DBJ’s Second Medium-term Management Plan (Announced May 25, 2011)

Based on the achievements made and the challenges

of Japan Inc. on October 1, 2008, throughout our First

confronted under our First Medium-term Management

Medium-term Management Plan, “Challenge 2010,” whichPlan, and in light of the unprecedented economical andcovered two and a half years to the fiscal year ended Marchsocial restoration and reconstruction challenges caused by

31, 2011, we focused on establishing integrated invest-

the Great East Japan Earthquake, we have launched ourment and loan services and building a foundation of core

Second Medium-term Management Plan “Endeavor 2013”

strengths with the aim to further solidify our business base.

to cover the next three fiscal years through March 31, 2014.

Basic Policies of Endeavor 2013, the Second Medium-term Management Plan
(Fiscal Years from April 1, 2011, to March 31, 2014)
1. The Great East Japan Earthquake resulted in an unprecedented level of complex catastrophe. It is essentialthat disaster recovery measures be: (1) implemented on a step-by-step basis according to each stage towards
recovery, and (2) tailored to meet specific needs of varying regions and different disaster categories.
As we position crisis response as one of our major roles, we are committed to expending every effort tosupport restoration and reconstruction from the devastating damage caused to our economy and society.
To this end, we will leverage our rich financial experience in regional, industrial, energy and infrastructuredevelopment projects accumulated through our unique financial capabilities in providing long-term debt
and equity capital.
2. In addition to responding to the disaster, we are committed to building a solid foundation on which to
grow by steadily implementing the growth strategy set forth in “Endeavor 2013”: namely, (1) to focus on
strategic priorities among existing business, (2) to further diversify our financial service, and (3) to enhanceinvestment in human capital.

Key Measures under Endeavor 2013, the Second
Medium-term Management Plan

Human Resources andBusiness ProcessImplementing integrated investment and loan services• Provide optimal financing products and services that best suit customer needs• Primary focus on medium risk investments and loans
Focusing on strategic priority industries and segments• Concentrate on restoration and reconstruction efforts in response to
the Great East Japan Earthquake in the near term
• Focus on following areas to promote Japan’s long-term growth
Strengthening existing business: energy, logistics and transportation, urban development
Supporting industries with growth potential: environment, healthcareIndustry reorganization and revival
Infrastructure, regional development
Accelerating expansion in global markets• Facilitate our customers’ growth strategies in overseas markets• Focus primarily on Asia, strengthen structured financeDiversifying sources of funds• Strengthen capabilities to raise funds relying on its own credit standing• Utilize securitization etc.
Strengthening non-asset business• Diversify fee-based revenue streams

Strengthening investment in
human resources• Strategic allocation of humanresources (strategic priorities
and new business development)• Training professionals
equipped with skills requiredin strategic business• Fostering young professionals

Business process
management and risk
management• Enhancing business process
and risk management systemthat properly helps drive
strategic business decisions

Annual Report & CSR Report 2011

Overview of DBJ’s Second Medium-term Management Plan

After embarking on a new stage as Development Bank

27

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

High-growth infrastructuredevelopment

In 1951, the Japan Development
Bank was established and commenced accommodation loans
to facilitate the development of
the power supply, which forms
the basis of the economy andindustry, and the rationalization,
modernization and cultivation ofcoal, steel, marine transportationand other major industries.

To expand and reinforce theenergy and transportation
activities that underpin the industrial infrastructure, the Japan
Development Bank served as thedriving force that powered new
economic expansion. In addition, it provided loans for local
development to correct regional
disparities.
Established in 1956, the
Hokkaido Development FinancePublic Corporation was restructured in 1957 to form the
Hokkaido-Tohoku Development
Finance Public Corporation andbegan providing investments andloans to promote industry in these
two regions of northern Japan.

History of DBJ

Economic recovery

1951–1955

Development of international competitiveness andsocial development loans

Improvements to qualityof life and stable supply ofenergyAiming 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 through regional development, urban redevelopment,
logistics modernization, pollution
prevention and other measures ina bid to relieve the problems ofhigh-level growth.

As corrections to the imbalance of economic growth andstandards of living, the Japan
Development Bank began tofocus on antipollution measures,
regional and urban development
and other social elements in addition to industrial development.
Against the backdrop of the firstoil crisis, it provided investment
and loans for energy alternatives
to fossil fuels, as well as efforts toconserve energy, to ensure stableenergy supplies. It also supported
efforts to develop land into largescale commercial sites.

Rapid growth

1956–1965

Stable growth

1966–1971

1972–1984

28

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

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

Toyota Motor Corporation:
Modernization of facilities
through procurement of imported machinery (Aichi Prefecture)
Modernization of the domestic
automobile industry through refurbishment of production facilities

Annual Report & CSR Report 2011

Sony Corporation: Trinitron color
television factory
Promotion of home-grown technologies through commercial application of new technologies

Shinjuku new urban center:
Shinjuku Mitsui Building andothers (Tokyo)
Kawasaki Kisen Kaisha, Ltd.:The Tonegawa Maru tanker
Built tanker that was indispensablefor the import of energy and raw
materials

New urban center formation
through redevelopment of purification plant site

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

Development of lifestyleand social infrastructure
and a smooth industrial
transformation
Pressing needs arose forincreased domestic demand
and an industrial structuralshift, against a background of
aggravating trade friction withother countries. The Japan
Development Bank focusedon support for social capital
improvement, creative technological development, an industrial
transformation and other issues.
In the 1990s, it stressed environmental and energy measures andregional economic stimulation
with the aim of making Japan alifestyle superpower.

1985–1995

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

Financial solutions that support communities, the environment and technology

The 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 wake of theGreat Hanshin-Awaji Earthquake
and loans in response to thefinancial environment to stabilize
the financial system by functioning as a safety net.

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.

Post-bubble

1996–2000

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

Providing integrated investment and loan services andconducting crisis response
operations
Development Bank of Japan Inc.
was established on October 1,
2008, as a special stock company
through conversion to a joint-stockcompany. By applying its distinctive
financial services through integrated investments and loans, DBJ
addresses the various issues thatclients face. At the same time, we
fulfill our unique role by serving asa designated financial institution forcrisis response operations, responding to financial crises and helping
to meet the restoration and reconstruction challenges presented by
the Great East Japan Earthquake.

Structural reform

From 2001

October 1, 2008:
Development Bank ofJapan 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 maintain excellent
supplies of technical expertise andemployment opportunities.

V-Lease Corporation
By applying the expertise it has
cultivated to date, DBJ entered thebusiness of operating leases foraircraft engines, of which core parts
are produced by Japanese companies involved in heavy
industry. Through this business, we aim to promote
the further developmentof the Japanese airline
industry.

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

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.

Annual Report & CSR Report 2011

History of DBJ

Economic
bubbleCreation of a vibrant andaffluent society and stableeconomy29

Privatizing DBJ

Development Bank of Japan Inc. Established as a Joint-stock Company (Privatized) on
October 1, 2008
Development Bank of Japan Inc. was established on

establishment, took over all assets of the Development

October 1, 2008, under the terms of the Development

Bank of Japan (the “predecessor”) as investment in kind,Bank of Japan Inc. Act (Act No. 85, 2007; the ”New DBJ

with the exception of assets transferred to the governmentAct”) approved by the Japanese Diet on June 6, 2007, as

under the provisions of Article 15, Paragraph 2, of thepart of the Act on Promotion of Administrative ReformAppendix to the New DBJ Act. Under Article 15, Paragraphfor Realization of Small and Efficient Government (Act No.

1, of the same act, DBJ also assumed all rights and obliga-

47, 2006; the ”Administrative Reform Promotion Act”)

tions of the predecessor, with the exception of assets trans-

approved by the Japanese Diet in May 2006, and the fun-ferred to the government under Article 15, Paragraph 2, ofdamental reform of policy-based finance. DBJ, upon its

the Appendix to the New DBJ Act.

Highlights of the New DBJ Act
Provision of Credit
Privatizing DBJ
30

Predecessor

New DBJ

Loans

Yes

Yes

Equityinvestments

Yes

Yes

Debt guarantees

Yes

Yes

Foreign exchange;
money exchange

No

No

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.

Bond issuanceYes(including bankdebenture bonds)

Transitional Measures

Borrowings

Fiscal Loan FundThe object of the New DBJ Act is to maintain the foundations of the investment and financing functions of longterm 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 terms of fund-raising, DBJ depends largely on borrowing from the government and government-guaranteedbonds. To facilitate a smooth transition toward independent fund-raising following full privatization, measures
have been enacted to allow DBJ to issue governmentguaranteed bonds and borrow from the Fiscal Loan Fund.
Upon the establishment of the new DBJ, the act provided
for long-term borrowing from the private sector.

Yes

Fiscal Loan Fund bonds +private-sector
borrowings

Yes

Deposits

No

Checkable deposits
and small-lot deposits
that are covered bydeposit insurance
for the safe custodyof deposits are notaccepted.

Revision to the New DBJ Act (June 2009)
Since its establishment, DBJ has been engaged in crisis

Under the New DBJ Act, DBJ was to have achieved full

response operations as a designated financial institution.

privatization within five to seven years after its establish-

However, to reinforce DBJ’s financial structure through gov-

ment. With the act’s revision, the target date has beenernment capital contribution and enable DBJ to introduce

extended to five to seven years after March 31, 2012. DBJ

more broad-ranging initiatives in response to the global finan-

is to become fully privatized within approximately five tocial and economic crisis that commenced in autumn of 2008,

seven years of April 1, 2012. At the end of fiscal 2011, thethe Act for Partial Amendment of the Development Bank ofgovernment plans a review of DBJ’s organization which will

Japan Inc. Act (“revision to the New DBJ Act”) was passed

include the future of government-held shares. The govern-

into law by the Japanese Diet on June 26, 2009, and thement will continue to hold its shares until then.

act was promulgated and went into effect on July 3, 2009.
Note: Please refer to pages 128–134 for details off the New DBJ Act, the revision to the New DBJ Act and the Act for Extraordinary Expenditure
and Assistance to Cope with the Great East Japan Earthquake.
Annual Report & CSR Report 2011

Act for Extraordinary Expenditure and Assistance to Cope with the Great East Japan
Earthquake (May 2011)
On May 2, 2011, in response to the damage caused by the(to March 31, 2015) the period for government capital con-Great East Japan Earthquake, the Act for Extraordinary

tribution in order to facilitate DBJ’s implementation of crisis

Expenditure and Assistance to Cope with Great East Japan

response operations. Furthermore, the target date has been

Earthquake (Act No. 40 of 2011; the Act for Extraordinary

extended to five to seven years from April 1, 2015. At the

Expenditure), which included the partial revision to the New

end of fiscal 2014, the government plans a review of DBJ’s

DBJ Act, was passed into law by the Japanese Diet.

organization, which will include the future of government-

The revision to the New DBJ Act in Accordance with the
Act for Extraordinary Expenditure extended by three years

held shares. The government will continue to hold its shares
until then.

Revision to the New DBJ Act in Accordance with the Act for Extraordinary Expenditure
The Amendment of the Development Bank of Japan Inc. Act (based on establishment of Act for
Extraordinary Expenditure and Assistance to Cope with the Great East Japan Earthquake was passed at anUpper House plenary session of the ongoing 177th ordinary session of the Diet.
resulting from the Great East Japan Earthquake. The main thrust of the revisions is as follows.
To strengthen DBJ’s financial base in order to facilitate a smooth response to crisis response operations, theperiod during which the government may make additional capital contributions to DBJ has been extended
by three years, until March 31, 2015. Furthermore, the period for requiring the redemption of delivery bonds
has similarly been extended by three years, to June 30, 2015.

31

In addition to extending the period for repayment of capital contribution and redemption of delivery bonds,
the act extends the disposition period for government-held shares in DBJ. Whereas existing provisions stipulated a target of “approximately five to seven years after April 1, 2012,” the revised act states that the government must dispose of all of its shares in DBJ by ”approximately five to seven years after April 2015.”
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, to ensure the proper implementation of crisis response
operations, its organizational structure, including crisis response operations and the future of governmentowned shares, are to be reviewed and necessary measures are to be taken. The target deadline for such activities is revised to the end of fiscal 2014.

=The Privatization Process
FY2006

FY2007

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019~

Preparation Period

Transition Period(Government-affiliatedfinancial institution)

June 2007
New DBJ Act
goes into effect(Special stock company with shares
held by the government)

October 2008
Privatization(conversion toa joint-stockcompany)

June 2009
May 2011
Establishment of Revision to thethe Act for
New DBJ Act inPartialAccordance with
Amendment of
the Act for
the New DBJ Act Extraordinary
Expenditure

Privatizing DBJ

The act was revised to facilitate implementation of DBJ’s crisis response operations with regard to the damage

End of FY2014(Target)Government
review of DBJ’sorganization

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 Act

Based on New DBJ Act

Fund-raising

Government-guaranteed bonds, FILP agency bonds,
independent financing

Independent funding, government-guaranteedbonds and FILP agency bonds* DBJ was scheduled for fullprivatization within five toseven years from April 2015.
However, at the end of fiscal
2014, the government plans areview of DBJ’s organizationthat will include the future ofgovernment-held shares. The
government will continue tohold its shares until thenecessary measures are put inplace.

Annual Report & CSR Report 2011

Overview of Operations in Fiscal 2010

Operating Results
Financial-Economic Environment

raising environment improved as the Bank of Japan pursued

During the fiscal year ended March 31, 2011, the Greek

accommodative monetary policies. However, this situation

debt crisis sparked concerns about sovereign debt in aworsened sharply in the aftermath of the Great East Japan

number of European nations, accelerating financial auster-

Earthquake, centered on disaster-stricken companies.

ity trends in a number of countries. Furthermore, political

Overview of Operations in Fiscal 201032

Long-term interest rates (yields on 10-year Japanese

instability mounted, centering on the Middle East andgovernment bonds) rose, with investors fleeing to the rela-

Northern Africa, as antigovernment protests that broketive safety of Japanese government bonds as European

out in Tunisia and Egypt spread, arousing conflict in Libya.

sovereign risks mounted. This demand rise pushed up inter-

The U.S. economy decelerated temporarily, owing to a

est rates below 1% for the first time in seven years, but

contraction in support for monetary and fiscal policies, but

by March 31, 2011, long-term interest rates had risen toa second round of quantitative easing in November 2010

around 1.2%.

encouraged a gradual recovery, centered on personal con-

Sharp ongoing appreciation of the yen against other cur-sumption. Against this backdrop, the Japanese economy

rencies prompted intervention by the Bank of Japan, which

experienced a slight recovery overall, supported by policy

sold yen in September 2010 and March 2011. Nevertheless,effects and Asia-bound exports. However, the Great East

the yen continued to appreciate over the course of the fis-

Japan Earthquake, which struck on March 11, 2011, disrupt-

cal year, rising to around ¥83 to the U.S. dollar as of Marched production activities by interrupting supply chains and31, 2011. The yen also rose against the euro, climbing at

resulted in power outages. Intermittent aftershocks andone point into the neighborhood of ¥106, but anticipation

the accident at the Fukushima Daiichi Nuclear Power Plantof higher euro-zone interest rates prompted a downward

caused uncertainty to reign and consumer confidence toadjustment, to around ¥117 to the euro as of March 31,

wither, causing a massive stagnation in economic activity.

2011.

Operating Results

In the corporate sector, a rebound in manufacturing

The Nikkei stock average, in the ¥11,000 range on

activity was underpinned by exports to China and other

March 31, 2010, plummeted into the low ¥8,000 range at

Asian countries and supported by Japanese government

one point due to uncertainties stemming from the Greatefforts to stimulate purchasing activity, such as tax exemp-

East Japan Earthquake and the above-mentioned nuclear

tions on environment-friendly cars and home electronics.

accident. As of March 31, 2011, however, the Nikkei had

On the other hand, such factors as ongoing yen apprecia-

recovered to upwards of ¥9,500.

tion caused companies to remain cautious on capital invest-

Demand shortfalls put downward pressure on prices.

ment. As a result, such investment continued to fall below

This factor, plus the effect of special measures to waive

manufacturers’ depreciation and amortization levels. For

high school tuition fees caused consumer prices (excluding

households, although wages, bonuses and other compo-

perishable goods) to continue falling year on year.

nents of income improved somewhat, the employment
environment remained problematic, as employment levels

Progress and Results of DBJ Group Operations

failed to expand appreciably. Government efforts to stimu-

Review of the Year Ended March 31, 2011late household purchases did encourage a rise in the acqui-

Since its establishment on October 1, 2008, the core ofsition of certain durable goods, such as flat-screen televi-

DBJ’s business has remained the same as that conducted bysions and automobiles, but consumption recovered only

its predecessor. As a highly specialized financial institution,

weakly and the number of new housing starts was slug-

we sought to resolve clients’ issues by providing integrated

gish. Furthermore, initial calculations by the Cabinet Office

investment and loan services.

of Japan estimate that the Great East Japan Earthquake

Below is an overview of these activities during the fis-destroyed ¥9.16 trillion worth of private-sector corporate

cal year ended March 31, 2011. The figures provided forfacilities, sharply reining in corporate supply capacity.

the loans, investment and consulting/advisory services

On the financial front, the European Commission anddescribed below are on a non-consolidated basis.

the International Monetary Fund put in place support packages in response to financial deterioration among countries

Loans

in the euro zone. Although the worst of the European

We provided senior loans through traditional corporate

sovereign debt crisis appeared to be over following theloans, nonrecourse loans and other types of structured

Greek crisis, concerns about the contagion spreading tofinancing as well as a variety of other loans that employ

neighboring countries persist. In Japan, the corporate fund-advanced financial methods. During the year ended MarchAnnual Report & CSR Report 2011

31, 2011, we provided ¥2,034.4 billion in loans, including

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

loans for crisis response operations.

tries. We provide consulting on projects that help invigorate

For details regarding business loans in response to theregional communities and assign advisors to support thesefinancial crisis, please refer to the section on page 56 enti-

activities. During the year, investment and loan commissions

tled “Results of Crisis Response Operations.”

and fees from M&A and other advisory services amounted
to ¥7.2 billion.

Investment
Subsidiaries

sion and support strategies and the formation of financial

In June 2010, DBJ integrated New Business Investment Co.,

infrastructures. We achieve these activities by supportingLtd., a consolidated subsidiary that provides small-scale

the creation of funds, as well as mezzanine, equity andinvestment funding, including to venture companies, andother financing methods, providing appropriate financing

Intellectual Properties Development & Investment, Inc, abased on a long-term perspective. During the year, ¥82.2

non-consolidated subsidiary, into DBJ Capital Co., Ltd., asbillion was allocated to investing activities.

a fund management company specializing mainly in smallscale investment.

Consulting/Advisory Services

Through close collaboration with DBJ, DBJ Capital will

Consulting and advisory services utilize the networks cre-carry out investment activities by assessing the right timing

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

and carefully selecting appropriate deals.

Overview of Operations in Fiscal 2010

We work to resolve client issues involving business expan-

33(Billions of yen)

For the Year Ended
March 31, 2010

For the Year Ended
March 31, 2011

Loan and investment balance

3,793.1

2,116.6

Loans

3,682.0

2,034.4

Investment

111.1

82.2

Funds raised

3,793.1

2,116.6

482.0

503.6

Of which, FILP agency bonds

300.0

300.0

Of which, government-guaranteed bonds (domestic)

149.5

79.5

Of which, government-guaranteed bonds (overseas)

32.5

124.0

Corporate bonds (FILP bonds)

168.3

80.0

Long-term debt

2,301.6

320.1

Recovery, etc.

840.9

1,212.8*1*2

Fiscal Investment and Loans*3*4

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 and during the fiscal year ended March 31, 2011, amounted to ¥138.7 billion.

Annual Report & CSR Report 2011

Operating Results

Loans and Investments and Fund-Raising Conditions (Flow)

Overview of Consolidated Operating Performance
Consolidated Financial Highlights(Billions of yen)

For the Year Ended
March 31, 2010

For the Year Ended
March 31, 2011

353.7

363.8

Net income

39.8

101.5

Total assets

15,595.7

14,845.2

Loans

13,514.6

13,031.4

Securities

1,289.4

1,165.5

Total liabilities

13,268.2

12,435.2

Borrowed money

9,082.4

8,576.4

Debentures and corporate bonds

3,746.3

3,629.3

Total equity

2,327.5

2,409.9

Common stock

1,181.1

1,181.1

Capital adequacy ratio (BIS standard)

19.13%

20.50%

Ratio of risk-monitored loans (Banking Act base)

5.07%

1.28%

Return on equity

1.82%

4.31%

34

Return on assets

0.27%

0.67%

Overview of Consolidated Operating Performance

Number of employees

1,181

1,203

Overview of Operations in Fiscal 2010

Total income

Consolidated operating performance during the year underreview is described below.

The impact of the Great East Japan Earthquake has beenreflected appropriately in DBJ’s financial results.
Net interest income rose ¥5.3 billion, to ¥126.6 billion,

Consolidated Income and Expenses

whereas net fees and commissions dropped ¥5.2 billion, toDuring the period, DBJ posted total income of ¥363.8 bil-

¥9.3 billion, but net other operating income was positive,

lion, up ¥10.1 billion from the previous fiscal year. Of thisrising ¥14.8 billion, to ¥0.6 billion. However, DBJ recorded

amount, interest income generated ¥298.9 billion, down

net other losses of ¥4.3 billion, improving ¥31.3 billion,¥2.5 billion, and fees and commissions fell ¥5.6 billion, toowing mainly to net losses related to stocks.

¥9.9 billion. Other operating income dropped ¥7.2 billion,

DBJ posted extraordinary income of ¥9.3 billion, up

to ¥12.6 million, while other income expanded ¥25.6 bil-

¥10.1 billion, for the year stemming from the addition

lion, to ¥42.2 billion.

to reversal gains and income on recovery of bad debts.

Total expenses were ¥259.4 billion, falling ¥43.1 billion.

Consequently, income before income taxes and minority

This amount included interest expenses of ¥172.2 billion,interests came to ¥104.3 billion, up ¥53.2 billion from thedown ¥7.8 billion, expenses on fees and commissions ofprevious fiscal year.

¥0.6 billion, falling ¥0.4 billion, other operating expenses

After posting current income taxes of ¥0.3 billion, ¥25.0

of ¥12.0 billion, dropping ¥22.0 billion, and general andbillion less than in the preceding fiscal year, deferred income

administrative expenses of ¥36.7 billion, which rose ¥1.6

taxes amounted to ¥0.9 billion, up ¥15.5 billion, and minor-

billion, as well as other expenses of ¥37.9 billion, which

ity interests in net income rose ¥1.0 billion, to ¥1.4 billion.

decreased ¥14.4 billion.

As a result, consolidated net income came to ¥101.5 billion,¥61.6 billion higher than in the previous term.

Annual Report & CSR Report 2011

Consolidated Assets, Liabilities and Equity

Total equity at the end of the period was ¥2,409.9 bil-

As of March 31, 2011, total assets amounted to ¥14,845.2

lion, up ¥82.4 billion from one year earlier. The primary rea-billion, down ¥750.5 billion from one year earlier. Of thatson for this rise was higher net income. Also, in June 2011,

amount, loans were ¥13,031.4 billion, falling ¥483.1 billion,

at DBJ’s first General Shareholders’ Meeting since becoming

and securities fell ¥123.9 billion, to ¥1,165.5 billion. Thesea joint-stock company, a resolution was passed to award

amounts included new investment and loans in response todividends on common stock. This dividend had a record

the financial crisis, but these amounts were down year ondate of March 31, 2011, and a total amount of ¥10.0 billion,

year, as this business has essentially run its course.

for dividends per share of ¥230, resulting in a payout ratio

Call loans and bills bought amounted to ¥61.8 billion at
the end of the term, a decrease of ¥63.1 billion, and reverseof 23.73%.
DBJ’s unrealized gain on available-for-sale securities
came to ¥13.1 billion, up ¥2.0 billion compared with the

These assets represent a substantial decline in the invest-

preceding term. This amount includes valuation gains on

ment of excess cash on hand compared with the level as ofshares in listed companies.

The principal reason for this decline was lower debentures,asset categories based on the Financial Services Agency’s

corporate bonds and borrowed money, owing to a decrease

Financial Inspection Manual. According to these results,

in loans related to crisis response operations, which had

on a consolidated basis, DBJ’s holdings of risk-monitored

Overview of Operations in Fiscal 2010

repurchase agreements fell from ¥179.9 billion to zero.

largely run their course.

loans as prescribed by the Banking Act total ¥167.2 billion,

35

March 31, 2010.
Total liabilities as of March 31, 2011, stood at ¥12,435.2

Status of Risk-Monitored Loansbillion, ¥832.9 billion less than a year earlier. Of this

DBJ is not subject to the provisions of the Banking Act oramount, debentures and corporate bonds came to

the Act on Emergency Measures for the Revitalization of¥3,629.3 billion, a decrease of ¥117.0 billion, and borrowed

the Financial Functions (Act No. 132 of 1998), but it car-money was ¥8,576.4 billion, falling ¥505.9 billion.

ries out independent assessments of liability classes andAlso, acceptances and guarantees came to ¥145.0 billion,

accounting for 1.28% of total loans.
Overview of Consolidated Operating Performance

down ¥47.1 billion.

Annual Report & CSR Report 2011

Overseas Business

Overview of Operations in Fiscal 201036

Since its conversion to a joint-stock company in OctoberBusiness Tie-Ups with Overseas Institutions

2008, DBJ has made a full-fledged entry into international

To enhance its financial services, DBJ leverages its businessbusiness, creating an overseas risk management structure,

alliances with the following overseas institutions.

preparing operating bases, training personnel and moving

International Finance Corporation (IFC)

forward with core infrastructure. At the same time, we are

A member of the World Bank Group and the largest inter-working to expand our network with trustworthy partners.

national financial institution, conducting investments andThrough these efforts we are promoting domestic andloan operations primarily in developing countries

overseas financial institutions.

China Development Bank

With regard to subsidiaries, DBJ established DBJ

Policy-based financial institution (converted to joint-stock

Singapore Limited as a wholly owned subsidiary incompany in 2008) handling financing for infrastructure andDecember 2008 and another wholly owned subsidiary, DBJ

core industries in China

Europe Limited, commenced operations in November 2009.

China International Investment Company

By maintaining intensive collaboration with its overseas(the CITIC Group)

offices, DBJ is able to provide global financial services that

Corporate group with a wide-ranging financial service net-

meet broad-ranging client needs, as well as support for cli-

work throughout Asia, including Chinaents’ overseas operations.

IE Singapore
Government institution that supports internationalization

Operations at Overseas Locations

Overseas Business

New York Representative Office
Covering the Americas, the New York Representative Officemonitors financial, industrial and economic trends as wellas economic policies and urban and infrastructure development and other trends. The office provides information to
Japanese companies and other entities that are planningto commence operations in North America and SouthAmerica, as well as overseas companies that are considering
entry into the Japanese market.
DBJ Singapore Limited
Established:

December 16, 2008

Capital:

S$1,000,000

Business:

Investments and loan support and M&A
advisory services

Address:

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

CEO & Managing Director: Taku Sugiyama

and provides overseas investment for Singaporean companies

DBJ Asia Financial Support Center Opens
In June 2011, DBJ opened the DBJ Asia Financial Support
Center to provide local information and offer consulting
services to regional banks supporting efforts by mediumsized companies and other entities in their regions to promote business in other parts of Asia.
The center’s roles are to liaise with regional banks
throughout Japan and help meet the various needs of local
medium-sized companies and other entities to develop theiroperations in Asia. We achieve this by leveraging the DBJ
Group’s information network, which includes public financial institutions in Asian countries.
With regard to its services, the center has entered into acomprehensive agreement on collaboration with Hitotsubashi
University. Based on this accord, the two entities will work
to strengthen the transmission of information related to
Asia through collaboration in a host of areas, including Asiarelated joint research and personnel exchanges.

DBJ Europe Limited
Established:

November 10, 2009

Capital:€7,500,000

Business:

Investments and loan support and M&A
advisory services

Address:

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

CEO & Managing Director: Takeshi Kiriyama

Monthly magazine DBJ Asia Business Information

Annual Report & CSR Report 2011

Group Companies
The DBJ Group, comprising DBJ and its subsidiaries and

DBJ Capital Co., Ltd.

affiliates, provides a variety of services to meet its clients’

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

ture capital subsidiaries, New Business Investment Co., Ltd.,and Intellectual Properties Development & Investment, Inc.,

Japan Economic Research Institute Inc.
Japan Economic Research Institute, which is wholly capital-

into a new investment capital company, DBJ Capital Co., Ltd.
This new company aims to contribute to the growth anddevelopment of firms requiring capital by leveraging thesurveys and provides consulting services. In April 2009, thetwo former subsidiaries’ expertise in evaluating technology andinstitute reorganized, taking over the research and related

businesses and their experience investing in venture businesses.

activities conducted by its predecessor.
Operating with a long-term perspective and from astandpoint of fairness and neutrality, the institute generates

Outline of DBJ Capital Co., Ltd.
Established:synergies from its three fields of research—the public, solu-

October 2005
(Commenced operations on June 30, 2010)

tions and international arenas—and targets the public andCapital:¥99 million

private sectors. The company meets clients’ research andBusiness:

Investment in venture companies

consulting needs from a comprehensive viewpoint.

Address:

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

President & CEO:
Public arena

Akira Ogasawara

DBJ Investment Advisory Co., Ltd. (DBJ IA)

Overview of Operations in Fiscal 2010

ized by DBJ, is a research institution that primarily conducts

DBJ IA was established in December 2009 to promote
International arena

37

emphasizing relationships of mutual trust with entities

Group Companies

Solutions arena

growth strategies from a medium- to long-term standpoint
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.

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

Established:

December 1989

gies by providing funds and utilizing DBJ’s international andCapital:¥480 million

domestic networks as well as assigning human resources.

Business:

Research, consulting and advisory services

Address:

3-4, Kanda-surugadai 3-chome,

Outline of DBJ Investment Advisory Co., Ltd.

Chiyoda-ku, Tokyo 101-0062, Japan

Established:

December 2009

President:

Takashi Ando

Capital:¥68 million

Business:

Operations related to DBJ’s value-added
equity investment

Address:

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

President & CEO:

Hiroshi Murakami

Annual Report & CSR Report 2011

Topics

2010

TopicsApril

 DBJ’s Head of the Research Institute of Capital Formation, Masaharu Hanazaki, won the50th Economist Prize for his latest publication, Corporate Governance and Corporate
Finance: An Informational and Institutional Approach – see page 63

May Establishment of a regional growth strategy support program, the Regional Area’s Genki
Program – see page 49

June Began collaboration with intellectual property commercialization project in Asia with Singapore’s 360ip Pte. Ltd.
 Wholly owned subsidiaries New Business Investment Co., Ltd., and Intellectual Properties Development &Investment, Inc., merged to form DBJ Capital Co., Ltd. – see page 37

July

 DBJ Development Support Program (Nihon Genki Program) established as one aspect of the Bank of Japan’s
efforts to support funding for the enhancement of growth infrastructure – see page 49

August Announcement of Capital Investment Planning Survey (Nationwide and by Region) survey results – see page 63

September Concluded memorandum of understanding with the China Development Bank regarding mutual businesscooperation between Japan and China

38

December Exhibited and conducted presentation at Japan’s largest environmental exhibition, Eco-Products 2010 (10thconsecutive year) – see page 72
 Settling of investment and loan plans for the fiscal year ending March 31, 2012
The result of the draft budget compiled for the fiscal year ending March 31, 2012 (Cabinet decision on December 24,2010) was for aggregate investment and financing of ¥1.6 trillion, comprising ¥650 billion in fiscal investments andloans and ¥950 billion to be funded independently by DBJ.

2011
January Contributed to an endowment lecture series by the University of Tokyo,“Sustainable Global Energy System Centered on Solar Power”

March Opened special desk for consultation related to theGreat East Japan Earthquake

April Established the DBJ Green Building Certification program targeting environmentally and societally friendly
real estate – see pages 50 and 79
 Established the Tohoku Revival Reinforcement Office as an initiative to support the restoration and reconstruction of the Tohoku region, which was devastated by the Great East Japan Earthquake – see page 58

May

Reports entitled Status of Damage from the Great East Japan
Earthquake and Reconstruction Issues – see page 61

 Amendment of the Development Bank of Japan Inc. Act (based on establishment of the Act for Extraordinary
Expenditure and Assistance to Cope with the Great East Japan Earthquake passed into law – see pages 31 and 133
 Passing of supplementary budget for fiscal 2011
In the fiscal 2011 supplementary budget (passed on May 2, 2011), ¥2.5 trillion was earmarked for Japan FinanceCorporation crisis response operations targeting medium-sized and large companies.
 Formulation of Endeavor 2013, the second medium-term management plan – see page 27
 Implemented organizational restructuring in line with the second medium-term management plan – seepage 124

June Opening of the DBJ Asia Financial Support Center – see pages 36 and 54
 Formation with the Japan Auto Parts Industries Association of the Supply Chain Support Limited Partnership– see page 60

Annual Report & CSR Report 2011

DBJ’s Businesses
To resolve the various issues that society faces andbecome its clients’ most supportive financial institution, DBJ supplies long-term funds, supports theformation of business and takes a host of otherapproaches to ensure that useful projects operatesmoothly. We are committed to creating financial
markets that allow funds to be raised more efficiently, and, in recent years, we have developedand introduced new financing methods to expand
the functions of financial markets.

Integrated Investment and Loan Services . . . . . . . . . . . 40
Investments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Consulting/Advisory Services . . . . . . . . . . . . . . . . . . . . . . 52
Crisis Response Operations . . . . . . . . . . . . . . . . . . . . . . 55
Initiatives Related to the Great East Japan Earthquake . . 58
Making Use of Information Functions . . . . . . . . . . . . . 62

Annual Report & CSR Report 201139

Integrated Investment and Loan Services

DBJ provides seamlessly integrated investment and loan services. We assist clients with their financing
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.
 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.

DBJ’s Businesses
40

Financing
Employing
DBJ
Environmental
Ratings

DBJ Green
Building
Certification
Program

Debtor-inPossession
Financing

Financing
Loans
Employing
DBJ Disaster Provision of medium- andPreparedness long-term financing, as wellRatings
as structured financing andother forms of structured
subordinated financing

Integrated Investment and Loan Services

Interest Rate
Subsidy
Programs

Structured
Financing

EquitySyndicated
Loans
Mezzanine Financing
Hybrid Financing

Investment
Provision of mezzanineand equity financing

Asset Financing(Real Estate)

Asset-Based
Lending

LBOs/MBOs

Integrated Investment and Loan Services
M&A Advisory
Services

Consulting/Advisory
Services

Arrangement of structured
financing, provision of M&A
Practical Application
Publicadvisory services, applying DBJ’s
Facility
Support Center
industry research function andManagement expertise in environmental andfor Technology
technology evaluations

DBJ Asia
Financial
SupportCenterRegional Health
ChecksNote: DBJ-designated analysis is required for investment and loan services.

Annual Report & CSR Report 2011

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

=Loan Amounts Provided (Non-consolidated)(Billions of yen)
4,000

3,682.0

3,000

z Provides medium- and long-term loansz Offers unique high-value-added financial services

2,034.4

2,000

1,670.3(environmentally and socially responsible investment,
disaster countermeasures and safety measures and

1,000

rating-linked financing for technology commercialization)z Responds to diverse needs by offering nonrecourse0
Six-month period
ended
March 31, 2009loans and develops and provides financing offeringcollateral and structural flexibility (debtor-in-possession
financing, inventory collateral, intellectual property

Year ended
March 31, 2010

Year ended
March 31, 2011

Note: Figures, including those for corporate bonds, are on a management
accounting basis.

rights as collateral, etc.)

z We provide investment to assist businesses in terms(Billions of yen)
160

41

80

of their revitalization, restructuring, growth strategies,
international competitiveness and infrastructure opera-

111.1

120

82.2
63.1

40

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

0
Six-month period
ended
March 31, 2009

Year ended
March 31, 2010

Year ended
March 31, 2011

Note: Figures, including those for securities, money held in trust and other assets(funds), are on a management accounting basis.

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

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

240

z Provides M&A advisory services

120

180

239
215
186

z Makes proposals that apply its expertise in industry
research and ability to develop new financial technologies

60

z Arranges structured and other types of financing
0
As of March 31,
2009

As of March 31,
2010

As of March 31,
2011

Annual Report & CSR Report 2011

Integrated Investment and Loan Services

DBJ provides investment funding, based ona long-term perspective, to meet specific needs
and address a host of issues that clients face.

=Investment Amount Provided (Non-consolidated)

DBJ’s Businesses

Investment

Investments and Loans

DBJ provides medium- and long-term loans, meeting 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.
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 structures. We offer funding support, mezzanine
financing and financing that employs equity and other methods.
The case study section on pages 74 through 93 introduces DBJ’s “CSR through Investment, Loan and Other
Businesses.”

Loan Procedures

DBJ’s Businesses
42

DBJ is ready at all times to discuss with its clients optimalcomprehensive due diligence of the businesses of its client

financial solutions, as well as the specific terms and conditions

companies, including assessment of their present business

DBJ can offer, including interest rates and loan maturities.

status, project plans and profitabilities.

Financing terms are discussed after DBJ has conducted

Financing Conditions• Loan Amounts• Interest Rates

Loan amounts are determined through consultation

DBJ sets interest rates in line with loan periods andbased on client financing plans.

risk. Fixed- and floating-rate loans are both available.

• Loan Terms

DBJ also considers the application of various interest

Investments and Loans

Appropriate loan maturities are set in consultation

rate subsidy programs.

with our client companies according to factors such

• Collateral/Guarantees

as repayment plans, business profitability and theLoans may require collateral and guarantees, depend-

expected life of equipment or facilities.

ing on due diligence results.

Note: Please be aware that, based on due diligence results, DBJ may not be able to provide the loans that prospective
borrowers anticipate.

Medium- to Long-Term Loans
By leveraging the long-term financing expertise it cultivatedof the business that requires funding, and then proposes a

as a policy-based financial institution, DBJ provides loans to

medium- to long-term repayment plan. As part of our effort

clients to match their medium- to long-term financing needs.

to meet varied needs, a grace period may be implemented.

When providing funds, clients first look at the profitability

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.

Annual Report & CSR Report 2011

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.

Mezzanine Financing
Mezzanine financing is an intermediate financing method

Mezzanine financing has the benefit of providing riskthat is between typical senior bank loans and equity financecapital that may be difficult to obtain through senior loans.

in terms of risk.

Such financing also prevents dilution of the voting rights of

Although mezzanine financing is riskier because its payment is subordinated to senior loans, it plays an importantrole in markets such as the United States, which have aexisting shareholders. Redemption and exit methods can be
set to be flexible.
From a long-term perspective, DBJ helps clients resolve

broad range of investors with diverse investment appetites.

their balance sheets issues through total financing solutions

Mezzanine financing helps to secure the economics of thethat range from structuring and arrangement to providing

investment by setting adequate interest rate and dividend

risk capital.

levels to correspond to the intermediate risk. Depending on
clients’ financing plans and capital policies, flexible mez-

Types of mezzanine financing

zanine financing can be set. In recent years, demand for• Subordinated loans, subordinate bonds

mezzanine financing has grown in association with business• Preferred shares, classified sharesacquisitions, spinoffs of subsidiaries and business units,• Hybrid securities, hybrid loans, etc.
DBJ’s Businesses

business succession and listed companies that are delisting.

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

Debt

Debt

AssetsPreferred shares

CapitalCapital43

Objective
Conventional 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)
Debt

New company (recipient)

Business succession

Note: Successor acquiresNcommon stock

AssetsCapitalDebt
AssetsPreferred shares

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

CapitalAnnual Report & CSR Report 2011

Investments and Loans

AssetsAfter capital expansion

Equity
In an environment characterized by growing needs for thetion, industry research and financing technologies, help-

operational selection and focus of group businesses, theing clients maximize their long-term corporate value. In

formulation of growth strategies and the heightening offiscal 2010, DBJ enhanced its “added-value creative equity

corporate governance, equity has become more importantfinancing to support corporate growth strategies.” In addi-

than ever before.

tion to funding, this approach aims to achieve corporate

Through equity investment, DBJ helps clients address

growth strategies, (1) combining M&A strategies, (2) capitalthe issues they face and supports their long-term develop-

strategies and (3) overseas strategies. This initiative aims toment. After making equity investments, DBJ provides total

support corporate value enhancement over the medium tosolutions involving its networks and strengths in informa-long term.

DBJ’s Businesses

Client Needs

DBJ’s Solutions

Results• Growing needs for operational selection and focus• Formulation of growth strategies for globalization• Growth strategies making
use of the capital markets(M&A, initial public offerings,
etc.)• 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, industry research
and financing technologies• Resolve clients’ issues• Help clients grow over thelong term and maximize
corporate value

44
Investments and Loans

XX Structured Financing, Financial Technologies
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

tive burden. Large amounts can be raised expeditiously.

Environmental Ratings, helps raise the value-added level of

Appointing an arranger allows the number of financial insti-

services it provides.

Annual Report & CSR Report 2011

Arrangers

Financial
Institutions

Financial
Institutions

Financial
Institutions

Financial
Institutions

Financial
Institutions

MarketArrangement

Appointment

Clients

Financial
Institutions

Structured Financing
these beginnings, our accumulated expertise in this area,z Securitization
Through finance methods such as liquidation and securi-

centering on energy and infrastructure projects, has pro-tization of receivables focusing on their future cash

pelled us to our current position as one of Japan’s leaders inflows, and through whole business securitization inproject financing, including private finance initiatives (PFIs).

which debts are repaid through future cash flows gener-

In 1998, DBJ pioneered project financing in Japan. From

Since its privatization (conversion to a joint-stock compa-

ated by a particular business, DBJ supports its clients’ny) in 2008, DBJ has maximized its unique characteristics tofinance strategies and helps optimize their funding. A

meet Japanese companies’ increasingly diverse and global

method known as whole business securitization enables

needs. We provide all-around support by offering clients incertain businesses to securitize their entire operations,Japan and overseas with project finance, PFIs, object

backed by future cash flows. We help clients raise funds

finance, securitization and various other financial products

in optimal ways that match their financing strategies.

and optimal financing methods (senior loans, mezzaninez PFIs and PPPs
Since the facilitation of the PFI Act* in 1999, DBJ has

loans, equity, etc.).
z Project Financing
We have a wealth of expertise in helping companies inaccumulated expertise by taking advantage of its strong

the energy and infrastructure sectors—primarily with

provided to numerous clients in this category has turned

regard to large-scale projects—find project financing thatus into an industry leader in PFIs. Taking advantage ofthey can repay through project cash flow, without relying

this store of knowledge, we provide numerous types ofon specific corporate creditworthiness or collateral value.

support to help clients who are considering PFI/PPP

DBJ’s Businesses

Such finance solutions we provide help them raise funds

initiatives in Japan and overseas to resolve the issues

45

and support their efforts to control risks.

they face.
* Act on Promotion of Private Finance Initiativethat take advantage of the cashflow-generating characteristics of assets with special features, such as ships, airplanes and railcars, as well as supporting their efforts tocontrol risks.
Project Financing Example: Electric Power Generation ProjectSponsor A

FundingSponsor B
Banking Syndicate

Electric Power
Generation Company
Special-Purpose
Company (SPC)

FinancingConstruction contract

Plant CElectric power supply
contract (15 years)

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

Operational repair and maintenance contract

Factory E

Plant D
Plant delivery contract

Technical guidance contract

Annual Report & CSR Report 2011

Investments and Loansz Object Financing
DBJ helps clients determine optimal financing methods

relations with public-sector entities. The support we have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.

DBJ’s Businesses
46

Liquidization Financing

Development 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
the property in this manner

Example: Use investor financing to develop idle owned
real estate into income property

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

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

Investments and Loans

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

LBOs/MBOs
Leveraged buyouts (LBOs) are acquisitions of companies or

require that funds be raised to acquire an operation. For

businesses using borrowed money. If the company or busi-

this reason, an MBO may take the form of an LBO. In theness that is being acquired generates fixed cash flows, theevent that borrowed funds alone are insufficient, the man-acquirer (typically, the sponsor providing equity) can pur-agement team may offer equity to a collaborative sponsor,

chase the business or company for relatively little cash. For

such as a buyout fund or partner. In recent years, MBOs

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

have been used more frequently by listed companies thatthat multiplies the return on the purchaser’s funds, which

are delisting and by owner-operated 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

has a limited amount of cash available, MBOs generally

LBO/MBO solutions.

Annual Report & CSR Report 2011

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 tofund-raising, debt restructuring and the sale of surplus inven-apply this expertise to develop ABL schemes that provide

tories also enhance the robustness of internal control systems.

companies with growth capital.

ABL

ClientDBJ

Collateral Transfer

Inventory(Buyer)Third-Party
Borrower

Sale

Accounts Receivable

Liquidate Inventory
Sell inventories, primarily throughexisting wholesale routes

Collateral Transfer

Debtor-in-Possession Financing
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. One method of which DBJ is a pro-are being implemented, an organization that is under reha-ponent is early debtor-in-possession (DIP) financing. Thisbilitation can refinance its debt, providing exit financing

temporary financing method provides working capital that

more quickly than is possible via the legal liquidation process.

allows a company in bankruptcy to continue operations dur-

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

ing the period between a request for the application of theSince that time, DBJ has worked to broaden the range ofCivil Rehabilitation Act and the approval of rehabilitation

entities eligible for this financing and the methods ofplans, thereby sustaining the valuable parts of its operations.

employing it in response to varied needs.

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

Approval of plan

Conclusion of plan

Later-stage

Annual Report & CSR Report 201147
Investments and Loans

Nonperforming loans emerged as a major problem belea-

DBJ’s Businesses

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

XX Certification and Unique Programs
Financing Employing DBJ Environmental Ratings
Beginning with the antipollution measures implemented inof environmental ratings in financing menus. In fiscal 2007, we

the late 1960s and early 1970s, DBJ has provided more thanlaunched an interest rate subsidy program based on environ-¥3 trillion in investments and loans for environmental mea-

mental ratings to advance global warming countermeasures.

sures over the past 40 years.

Based on the experience gained from the Financing

In fiscal 2004, DBJ began Financing Employing DBJ

Employing DBJ Environmental Ratings that we introduced in

Environmental Ratings based on knowledge cultivated for overfiscal 2010, we began offering a support service to develop

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

evaluation tools for regional banks to use in performing

scores companies on the level of their environmental manage-

their own environmental ratings. Through such initiatives,

ment and then applies one of three different interest rates

we aim to encourage the proliferation of and augment

reflecting that effort. This was the world’s first incorporation

environmental financing in Japan.

=Overview of Financing Employing
DBJ Environmental Ratings

Financing

Investments and Loans

Environmental screening

Application

DBJ’s Businesses
48

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 operators andleasing companies

Financing Employing DBJ Disaster Preparedness Ratings
In addition to helping businesses create countermeasures toDisaster Preparedness Ratings, which evaluate and selecthedge against disasters and provide contingency financing tocompanies engaged in high-level initiatives and provides

help recover their operations in the event that they are affect-

them with preferential interest rate financing as a reward

ed by disaster, DBJ assists companies from a continuing busi-

for their excellent disaster preparedness measures. In thisness standpoint. We help with a full range of disaster pre-manner, we introduced the world’s first disaster prepared-

paredness, from the formulation of business continuity plansness-based financing method.

to the earthquake-proofing of facilities and preparation of IT

We revised our financing menus substantially in 2011 as a

backup systems. At the same time, DBJ provides new financing

result of the Great East Japan Earthquake. We will promotemethods to assist the recovery of disaster-struck businesses.

corporate earthquake-proofing initiatives through Financing

In fiscal 2006, we introduced Financing Employing DBJ

Employing DBJ Preparedness Ratings.

Major Revisions to Financing Employing DBJ Disaster Preparedness Ratings
Before revision

After revision

Evaluation
pointsDisaster prevision (human safety, asset protection)(Assuming countermeasures to hedge against disaster are
in place) Continue core businesses/achieve early restoration

Scope ofevaluation

Headquarters, factories and other facilities

The entire business flow, from upstream todownstream

Importantevaluation points• Countermeasures to hedge against disaster• Management system development• Content of BCP measures (extent, scope)

LevelsThree levels (including ineligible for rating)

Five levels (including special acknowledgement
and fail)

Annual Report & CSR Report 2011

Regional Areas’ Genki Program
Currently, facing the challenges of population constraints,

and funding potential. Specifically, we have enhanced ourfinancial limitations, environmental restrictions and global

information support service through advice and sugges-

competition, Japan’s regions must coordinate with one

tions to regions. In addition, each DBJ branch focuses on its

another and implement diverse regional development

region’s distinctive fields and businesses based on its indus-

schemes that capitalize on their respective strengths, com-

trial structure and partners with regional financial institu-

petitive advantages and latent potential.

tions to offer financial support, including the execution of

DBJ has arranged a unique initiative, the Regional Areas’loans with more attractive interest rates than usual.

Genki* Program, to support regional growth that capitalizes on each region’s respective strengths and information*The Japanese word genki implies a positive spirit and good health.

z Regional Areas’ Genki Program
Hokkaido Areannn

Food industry
Tourism
Environmental infrastructure

Tohoku Areann

Clean innovation
Green network
Kanto-Koshin Areann

Hokuriku Area
Manufacturing industry:electronics, pharmaceuticals,
textiles, plasticsnIntegration business ofhuman resources and goods
Manufacturing industry
globalization
Tourism
Tokai Area

Chugoku Area
Manufacturing industry

Kansai Area

Kyushu Area

Leading-edge manufacturingindustries

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

Shikoku Area
Material industry andindustries contributing to thefundamental economic cycleof the Shikoku region

Minami-Kyushu Area
Food, health and environment
industry

DBJ Development Support Program (Nihon Genki Program)To encourage the steady growth of the Japanese economy

infrastructure (social infrastructure), and overseas businessby providing stronger support from a funding standpoint,

and restructuring (M&A, etc.). We are working with region-

DBJ has secured total funding of ¥400 billion targeting fiveal financial institutions as we reinforce our support structure

sectors: region and lifestyle, environment, manufacturing,

to contribute to employment in these sectors.

Region and Lifestyle

Manufacturing

DBJ Regional Growth
Program

DBJ Technology Growth
Program

Overseas Businessand Restructuring

Nihon Genki Program
Infrastructure
DBJ Infrastructure
Growth Program

DBJ Global Growth
ProgramEnvironment
DBJ Green Growth
ProgramAnnual Report & CSR Report 2011

49
Investments and Loans

Strategic next-generationindustry

DBJ’s Businesses

Niigata Area
Food industry: value-added
rice products and services

DBJ Green Building Certification Program
Applying the expertise and networks accumulated overment, refurbishment and other activity to clients who own

many years of real estate financing, Financing Employing

or manage real estate that is environmentally and societally

DBJ Environmental Ratings and expertise in other environ-considerate (green buildings), through this certification

ment-related areas, DBJ inaugurated the DBJ Green Building

program, an advanced and unique initiative from a financial

Certification program in fiscal 2011.

institution. DBJ also supports environmentally and societally

In addition to providing support through investments
and loans to meet financial needs for real estate develop-

considerate real estate operation among its clients and provides support from such aspects as PR, IR and CSR.

Overview of the DBJ Green Building Certification Program
Evaluation
Items

For environmentally and societally considerate real estate, evaluation items include the three characteristics indicated below.

DBJ’s Businesses

Ecology

Amenity & Risk Management

Community & Partnership

Reducing the burden buildings place on
the environment• Building’s environmental
performance• Energy savings, conservation of
resources, renewable energy

Comfort, safety and security• Safety and security of people who
use buildings• Comfort and convenience for people
who use buildings

Consideration for and communication
with stakeholders• Relationships with the surrounding
environment and region• Communications between owners andstakeholders++

Certification
Clients scoring above a certain level are certified in one of four categories, depending on the status of their initiatives.
Results

50
Investments and Loans

DBJ Green Building

DBJ Green Building

DBJ Green Building

DBJ Green Building

PlatinumGold

SilverBronzeBuildings that are top classin Japan for theirconsideration for theenvironment and society

Buildings that are
extremely superior in theirconsideration for theenvironment and society

Buildings that are very
superior in theirconsideration for theenvironment and society

Buildings that are superior
in their consideration for
the environment andsociety

Annual Report & CSR Report 2011

XX Safety Nets and Public Programs
Interest Rate Subsidy Programs
Interest rate subsidy programs are schemes whereby finan-

Japanese government or other organizations provide sub-cial institutions provide financing for specific businesses tosidies corresponding to all or part of the interest payments,

promote specific industries. Alternatively, they may target

thereby reducing the interest burden on the borrower.

operators of specific businesses. Under these programs, theInterest Rate Subsidy Program Menu

Crisis Response Operations
Crisis response operations, on the basis of the JapanMay 2, 2011), ¥2.5 trillion was earmarked for JFC Great

Finance Corporation Act (Act No. 57 of 2007, later updat-

East Japan Earthquake crisis response operations targetinged) consist of the provision of necessary funds during

medium-sized and large companies.

such crises as disruptions in domestic or overseas financial

This supplementary budget having been passed, as amarkets or large-scale natural disasters. The Japan Financedesignated financial institution for the crisis response opera-

Corporation (JFC) provides risk and other support from thetions DBJ set up a full-fledged structure to facilitate imple-

Japanese government via designated financial institutions as

mentation of crisis response operations for clients affected

funds for responding to crisis-related damage.

both directly and indirectly by the disaster. In addition, DBJ

At the time of its establishment, DBJ was designatedis making a proactive effort to support increases in the pro-as such a financial institution, as was Shoko Chukin Bank

duction of materials needed for restoration and reconstruc-

Limited. In accordance with this designation, DBJ com-tion in the aftermath of the recent disaster.

menced its crisis response operations in October 2008.

See pages 55–61.

In the fiscal 2011 supplementary budget (passed on
Annual Report & CSR Report 2011

51
Investments and Loans• Interest rate subsidy programs for the promotion ofenvironmentally conscious fixed investment (interest rate 2% subsidy)
These interest rate subsidies are for the promotion of
fixed investment toward the prevention of global warming and target clients that are small and medium-sizedcompanies involved in business promoting the reductionof energy-derived CO2 emissions, that qualify for DBJ
environmental rating financing, and that have pledged to
improve unit CO2 emissions or reduce overall CO2 emissions by more than 6% within three years.
• Interest rate subsidy programs to fund domestic
oil and natural gas development (continental shelfinterest rate subsidy)
These interest rate subsidy programs can be used by clients
involved in oil or natural gas development businesses in Japan.
• Interest rate subsidy programs to fund fixed investment for using natural gas and other resources(natural gas and other resources interest rate subsidy)
These interest rate subsidy programs can be used by clients that are making fixed investment involving the useof natural gas and other resources.
• Interest rate subsidy programs to fund specific andother facilities related to the rationalization of energyuse (energy conservation interest rate subsidy)
These interest rate subsidy programs can be used by clients who are promoting the conservation of energy.
• Interest rate subsidy programs to fund effective
resource use and other activities
These interest rate subsidy programs can be used by clients who are using resources effectively.

DBJ’s Businesses• Interest rate subsidy programs that support therevitalization of regional communities
These interest rate subsidy programs can be used byclients whose businesses are in line with the regional revitalization plans of regional municipal bodies certified by
the government.
• Interest rate subsidy programs for the development of regional telecommunications and broadcasting businesses
These interest rate subsidy programs can be used by clients
pursuing regional telecommunications or broadcasting businesses in accordance with legally prescribed guidelines.
• Interest rate subsidy programs for crisis response
operations
These interest rate subsidy programs can be used by clients
who have sustained damage during a crisis certified assuch by the government and who meet program requirements. At present, such subsidies are being provided toclients affected by the Great East Japan Earthquake.
• Interest rate subsidy programs for the promotion ofenvironmentally conscious management (interest
rate 1% subsidy)
These interest rate subsidies are for fixed investment andthe promotion of research and development to prevent
global warming, and target clients involved in businesses working toward the reduction of energy-derived
CO2 emissions, that qualify for DBJ environmental rating
financing, and that have pledged to improve unit CO2
emissions or reduce overall CO2 emissions by more than
5% within five years.

Consulting/Advisory Services

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 services case studies on page 86 introduce DBJ’s “CSR through Investment, Loan and Other
Businesses” approach.

M&A Advisory Services

DBJ’s Businesses52

As corporate development options diversify, M&A activity iscompetitive position. Amid growing interest in M&A activi-

growing more prevalent amid the expansion business over-ties in Japan and overseas, DBJ provides advisory services

seas—centered on Asia, both for businesses restructuring

through its own networks. We offer comprehensive M&A

operationally and for industry restructuring overall. Mergers

solutions that match clients’ varied needs and management

and acquisitions can be a method for achieving higher busi-

strategies.

ness efficiency, better employment stability and a stronger
Strategic Consulting

Consulting/Advisory Services• Comprehensive Business Strategies
We create operating and management strategies thatdraw on the experience we have gained through many
years of providing loan and project support from aneutral, medium- to long-term perspective.
• Information on a Wide Range of Business Partners
DBJ is involved in business entities in a broad range ofindustries, and its business partners in Japan number
more than 3,500. Since 1984, we have provided loans
for more than 700 foreign-capitalized companies,
enabling us to also provide a wide variety of information on overseas companies as well.

• Cohesive Domestic and Overseas Information Network
DBJ maintains close relationships with regional financial institutions, which have excellent insights into thecompanies that operate in their regions, as well aswith Japanese and overseas financial institutions andaccounting and legal firms. Such relationships enable
us to build information networks to accumulate accurate information. We have created a banking M&A
network that links information on financial institutions
throughout Japan (regional banks and trust banks)with information on corporate 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

Analyze finances andcompute investment yield
Calculate purchase/sale priceSell Side

Sell Side

Select and analyze
potential acquirer

Connect withacquisition
candidate

Annual Report & CSR Report 2011

Execution

Consider optimal structure
Arrange for due
diligence

Advise duringcontract
negotiationand document
preparation

CLOSING

Performance
analysis

Matchmaking

Regional Health Checks
When diagnosing the health of local community-building
activities, DBJ begins by analyzing communities based on
publicly available data. We augment this trove of information by conducting on-site surveys and local interviews, andthen we make an independent diagnosis of the region’s
health. We discuss our findings (issues and possibilities)
with the region’s constituents, including the issues that wehave uncovered through our interaction with members of
their community.
Mutual awareness of regional issues and possibilities
provides an opportunity for taking action, such as by formulating a project. We have taken part in 32 such projects
to date.

=Health Checks Conducted(As of July 1, 2011)

Goshogawara
Tottori (Aomori Prefecture)
Kurayoshi
Ayabe (Kyoto)(Tottori Prefecture)
Mizuho(Gifu Prefecture)
Nakaumi-Shinjiko Economic
Zone (Tottori Prefecture,
Kashiwazaki
Shimane Prefecture)(Niigata
ManiwaPrefecture)(Okayama Prefecture)
ToyamaSoja(Okayama Prefecture)
Fuchu(Hiroshima Prefecture)
Chuyo Area
(Ehime Prefecture)

Takigawa(Hokkaido)
Hakodate(Hokkaido)
Hirosaki(Aomori Prefecture)
Sanjo(Niigata Prefecture)
Suwa Region(Nagano Prefecture)
Tajimi (Gifu Prefecture)
Choshi (Chiba Prefecture)
Seto (Aichi Prefecture)

Toyohashi (Aichi Prefecture)
Wakayama
Shirahama (Wakayama Prefecture)

Tosu (Saga Prefecture)
Oita
Kagoshima

Komatsushima(Tokushima Prefecture)
Tamano(Okayama Prefecture)

Uwajima(Ehime Prefecture)
Kurashiki(Okayama Prefecture)

Okayamation shrinks and the average age rises, government bodies
will face major changes in the amount and types of public
facilities that are necessary.
However, long-term economic malaise and a decrease in
the percentage of the population in their productive years
means that tax revenues are down and welfare budgets are
increasing. Owing to factors such as these, it is difficult tosecure the budgets necessary to renovate or reallocate public facilities that have deteriorated.
For this reason, government bodies must quickly embark
on the management of public facilities and conduct sustainable urban management.
DBJ is working with the Japan Economic ResearchInstitute Inc. to determine the status of owned assets andcalculate their future cost, among other activities. Public
facility management advisory services are just one of theinitiatives we offer.

Issues Faced by Government Bodies

Determine owned assets[Buildings]t&MFNFOUBSZBOEKVOJPSIJHITDIPPMT%FDMJOJOHCJSUISBUF FMJNJOBUJPODPOTPMJEBUJPOt8FMGBSFGBDJMJUJFT "HJOHPGTPDJFUZ SJTJOHEFNBOEt)FBMUIDBSFGBDJMJUJFT .BOBHFNFOUJTTVFT SJTJOHEFNBOEt(PWFSONFOUPGåDFCVJMEJOHT
DPNNVOJUZDFOUFST %FDSFBTJOHQPQVMBUJPOT FYDFTTGBDJMJUJFT[Infrastructure]t8BUFSTVQQMZ 1SPåUBCMF CVUEFNBOEGBMMJOHt4FXFSBHF  .BTTJWFSFHJPOBMCPOETt3PBETBOECSJEHFT  .BTTJWFWPMVNF
t1VCMJDIPVTJOH  .BTTJWFWPMVNFtGas1SJWBUJ[BUJPOCFDPNJOHTUBOEBSE "MTPQPSUT XBUFSXBZT QBSLT FUD

t%FUFSNJOFUPUBMWPMVNFBOEEFUFSJPSBUJPO$BMDVMBUFDPTUPGVQHSBEJOHt.BLFBTTFUBMMPDBUJPOGVMMZWJTJCMF
t%FUFSNJOFFYUFOUPGBTTFUVTFBOEDPTUT
t%JTDMPTFJOGPSNBUJPOTVDIBTiGBDJMJUZXIJUFQBQFSTwBOE
PUIFSEPDVNFOUTUPSFTJEFOUT"MMEFUFSJPSBUJOHBUTBNFUJNF
.BTTJWFCVSEFOPGGVOEJOHUPSFOPWBUFt8IBUJTUIFPWFSBMMWPMVNFt)PXTFSJPVTJTUIFEFUFSJPSBUJPOt8IBUJTUIFBDUVBMDPTUPGSFOPWBUJPOt8IBUJTUIFBWBJMBCMFåOBODJBMDBQBDJUZt8IBUJTUIFVTBHFTUBUVTPG
JOEJWJEVBMGBDJMJUJFT.BOBHFNFOUPGQVCMJDGBDJMJUJFT

Determine population trendst'PSFDBTUQPQVMBUJPOTPGTFOJPSTBOEQFPQMFJOUIFJSQSPEVDUJWFZFBSTt.BLFGVMMZWJTJCMFQPQVMBUJPOTPGTFOJPSTBOEQFPQMFJOUIFJSQSPEVDUJWFZFBST%FUFSNJOFNJTNBUDIFTJOSFHJPOBMBMMPDBUJPOTPGGBDJMJUJFT

Determine financial conditions
t$POåSNQBDFPGEFUFSJPSBUJPOJOUBYSFWFOVFt$POåSNFTUJNBUFEDPTUTUPTVTUBJOBOEGPSTPDJFUBMQSPUFDUJPOt$POåSNDBQJUBMFYQFOEJUVSFTJOSFQBJSTBOESFOPWBUJPOT

%FUFSNJOFQPMJDZNFBTVSFTGSPNBNBOBHFNFOUQFSTQFDUJWF FRVBMJ[FBOEQSJPSJUJ[FUIFSFOPWBUJPOJOWFTUNFOU 
4IJGUUPTQFDJåDNBOBHFNFOUPGJOEJWJEVBMBTTFUT
'JSTU QFSGPSNNBJOUFOBODFUPFYUFOEMJGFPGBHJOHBTTFUT1'*BOE111BSFJNQPSUBOUUPUIJTQSPDFTT BTUIFZFODPVSBHFDPOTPMJEBUJPOBOEEJTQPTBMBOEEFQMPZVOEFSVUJMJ[FEBTTFUTAnnual Report & CSR Report 2011

53
Consulting/Advisory Services

Public facility management describes the method of looking
at the public facilities owned by government bodies from amanagement perspective for the purposes of overall planning, control, use and disposal.
The public facilities owned by government bodies arelarge and varied. They include buildings, such as schools,
public offices and community centers, as well as waterworks, sewerages, roads and other infrastructure. Two major
issues have come to the fore in this category in recent years.
The first is that facilities that were built in a concentrated
period during Japan’s era of high economic growth are
now deteriorating rapidly. Because many public facilities
were built at around the same time, their deterioration is
also simultaneous. The second issue is a mismatch between
the population—which is shrinking and changing in its
makeup—and the supply of facilities needed to serve theneeds of residents. Going forward, as the overall popula-

DBJ’s Businesses

Public Facility Management

DBJ Asia Financial Support Center

DBJ’s Businesses
54

DBJ opened the DBJ Asia Financial Support Center in June
2011 to provide local information and consulting services toregional banks supporting efforts by medium-sized companies and other entities in their regions to promote businessin other parts of Asia.
The center’s roles are to liaise with regional banks
throughout Japan and help meet the various needs of local
medium-sized companies and other entities to develop theiroperations in Asia. Specifically, when local medium-sizedcompanies seek to expand their operations in Asia, we provide their regional banks with necessary investment information and current information, including industry trends. In
addition, to meet the various information needs of companies
recommended to us by regional banks we provide individual
consulting services by leveraging the DBJ Group’s information
network, which includes development banks and other publicfinancial institutions in Asian countries. We provide this information to the companies via their regional banks.

With regard to its services, in June 2011 the center enteredinto a comprehensive agreement on collaboration withHitotsubashi University. Based on this accord, the two entities
will work to strengthen the transmission of information related to Asia through collaboration in a host of areas, including
Asia-related joint research and personnel exchanges.
By opening this center, DBJ intends to reinforce its
provision of information that will enable regional banks
to enhance their efforts to help their business partners
advance into Asia by procuring information from DBJ’s
propriety and other networks. For DBJ, meanwhile, thecenter will accelerate the support it provides local companies for their advances into Asia, thereby accelerating anddiversifying its international business overall. By supporting
regional banks and the Asian development activities of theirbusiness partners, DBJ will assist the internationalization ofregional economies.

Practical Application Support Center for Technology

Consulting/Advisory Services

DBJ established the Practical Application Support Center forTechnology in February 2004 to help manufacturers realize their potential for the commercialization of successfully
developed technologies. The role of this center is to diagnose whether companies have the management strength(technology management expertise) to turn their technologies into customer value. Through evaluation, analysis andthe proposal of business models from the perspective oftechnology management, recommendations and technology management training, we support companies in the
manufacturing sector in the development of new value. DBJ
works with regional financial institutions, local government
bodies, universities, economic organizations and industrial support bodies to aggressively promote the expertise
offered by the Practical Application Support Center for
Changes in the Operating Environment for Manufacturers
Past

The backgroundof the times
Manufacturers’ main
points of emphasis
Importantmanagement
elements

Present
Increasingly diverse client needs
Period of rapid
Global competition
economic growthMultiproduct,
Mass production
small-lot manufacturing
How can we make products?
What should we make?
(Manufacturing management) (Value creation management)
Technology,
production,equipment

Technology,
production, equipment+
Business model construction
Alliance management
Global human resource training

Technology, helping to raise regional industrial competitiveness.
For clients and other companies across a broad spectrum
in the manufacturing sector, we study their future businessmodels and consider technology management strategies
to achieve “management that creates value.” We provide
additional evaluations based on our expertise in operational
screening and, through consultation on financial strategies,
help clients consider optimal long-term strategies and business plans.
From a neutral and specialized standpoint, DBJ serves
as a consultation partner to management, leveraging its
overall base of knowledge related to manufacturing management to help clients enhance their corporate value andcontribute to the development of Japanese manufacturing.

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

Practical Application Support Center for Technology

Need to enhance technology management skills

Formulate technology management strategies and help
train and develop managerial level human resources

Achieve increases in corporate value
Annual Report & CSR Report 2011

Crisis Response Operations

Crisis Response Operations
Crisis response operations, on the basis of the Japan

markets, large-scale disasters, terrorism and epidemics ofFinance Corporation Act (Act No. 57 of 2007, later updat-

communicable diseases. Upon the receipt of such credited) consist of the provision of necessary funds during such

(e.g., for two-step loans, financial indemnity or interest sub-crises as disruptions in domestic or overseas financial mar-sidies), institutions designated to provide such funds do sokets or large-scale disasters. The Japan Finance Corporation

quickly and flexibly.

(JFC) provides risk and other support from the JapaneseAt the time of its establishment, DBJ was designatedgovernment via designated financial institutions as funds foras such a financial institution, as was Shoko Chukin Bank

responding to crisis-related damage.

Limited. In accordance with this designation, DBJ com-

These funds are earmarked for use in the event of suchmenced its crisis response operations in October 2008.

crises as disruptions in the domestic or overseas financial=Crisis Response Operations Scheme$PNQFUFOUNJOJTUFSTUIF.JOJTUFSPG'JOBODF UIF.JOJTUFSPG&DPOPNZ 5SBEFBOE

(PWFSONFOU *OEVTUSZBOEUIF.JOJTUFSPG"HSJDVMUVSF 'PSFTUSZBOE'JTIFSJFT%FTJHOBUFEGJOBODJBMJOTUJUVUJPOT1SJWBUFGJOBODJBMJOTUJUVUJPO$SJTJT3FTQPOTF'BDJMJUBUJPO"DDPVOU1SJWBUFGJOBODJBMJOTUJUVUJPOttt

1SFQBSFTBOEBOOPVODFTiDSJTJTSFTQPOTFGBDJMJUBUJPOHVJEFMJOFTw*NQMFNFOUTSJTLTVQQPSUBOE
PUIFSNFBTVSFTPOUIFCBTJTPG
BHSFFNFOUTXJUIEFTJHOBUFEGJOBODJBMJOTUJUVUJPOT5XPTUFQMPBOT
'JOBODJBMJOEFNJOJUJFT*OUFSFTUTVCTJEJFT

4IPLP$IVLJO#BOL

DBJ#VTJOFTTDPOEVDUFECBTFEPO
UIFBQQSPWBMPGUIFDPNQFUFOUNJOJTUFST-FOEJOHPGTQFDJGJDGVOET PUIFSTFSWJDFT$MJFOUTThe Great East Japan Earthquake
In response to the Great East Japan Earthquake, whichcrisis response operations for clients affected both directly

occurred on March 11, 2011, as a designated financial

and indirectly by the disaster.

institution for crisis response operations DBJ set up a fullfledged structure to facilitate the all-around operation ofPlease see pages 58–61 for “DBJ’s Initiatives Related to
the Great East Japan Earthquake.”

Annual Report & CSR Report 2011

55
Crisis Response Operations+BQBO'JOBODF$PSQPSBUJPO

DBJ’s Businesses

t%FTJHOBUFEt$BQJUBMDPOUSJCVUJPOt-FOEJOHPGGVOETt*OUFSFTUTVCTJEJFTResults of Crisis Response Operations
On October 30, 2008, Shoko Chukin and DBJ establishedon June 26, and the Revision to the New DBJ Act went into“lifestyle measures” in response to the worsening corporate

force and was promulgated on July 3, 2009. These mea-

cashflow conditions resulting from the global financial andsures paved the way to reinforce DBJ’s financial structure

economic crisis that commenced in the autumn of 2008.

and facilitate crisis response operations.

On December 11, these measures were granted crisis des-For cases following the Great East Japan Earthquake,

ignation under the category of “incidents related to confu-

which occurred on March 11, 2011, the Japanese govern-sion in the international financial order.” On December 19,

ment began conducting crisis certifications on Marchthese measures were augmented by economic measures, or

12, 2011. Upon notification of such certifications, the“emergency lifestyle defense measures,” funded throughimplementation period for crisis response operations was

an expanded budget and the commencement of the com-

re-extended. (Meanwhile, the implementation period for

mercial paper acquisition business, and labeled Cashflow

certain projects, such as those involving “incidents related

Countermeasures for Medium-Sized and Large Companies

to confusion in the international financial order” concluded

Employing the Crisis Response Operations of the Japanon March 31, 2011.)

Finance Corporation. On January 27, 2009, government
DBJ’s Businesses

regulations were amended, incorporating these items into

As of March 31, 2011, DBJ’s loan performance and com-the second supplementary budget for fiscal 2008, aug-

mercial paper acquisitions of crisis countermeasure loans

mented with funds generated by DBJ’s commercial paper

were as follows.

acquisition business on January 30.

• Cumulative loans: ¥3,338.5 billion (944 cases)

Additional economic crisis countermeasures were

• Cumulative loans executed with loss guarantee agreements: ¥236.3 billion (39 cases, including those slated forfor large-scale crisis response operations and earmarking aapplication to JFC)

56

total of ¥15 trillion for crisis response for medium-sized andCrisis Response Operations

announced on April 10, 2009, outlining specific measureslarge companies. In line with these measures, authorization• Cumulative commercial paper acquisitions: ¥361.0 billion(68 cases)of a supplementary budget for fiscal 2009 was announced
on May 29, 2009. This budget received Diet authorization=Loans as Crisis Countermeasures(Cumulative, at Month-End)(Billions of yen)
4,000

914
817

3,000

=Commercial Paper Acquisition as Crisis Countermeasures(Cumulative, at Month-End)2,625.4

3,273.0(Number of cases)
944
1,000

3,111.0

750

300

500

200

68

68

68

68

60

40
36

1,060.30Mar. 31,
2009

361.0

215.0

301
1,000

361.0

(Number of cases)
80
361.0
361.0

3,338.5

620

2,000

(Billions of yen)400

Sep. 30,
2009

Mar. 31,2010

Annual Report & CSR Report 2011

Sep. 30,
2010

Mar. 31,
2011

250

100

0

0

20

0
Mar. 31,2009

Sep. 31,2009

Mar. 31,2010

Sep. 31,2010

Mar. 31,2011

Providing a Safety Net
DBJ acts as a social safety net by providing investments andand other illnesses, as well as terrorist attacks and otherloans to support the rehabilitation and rebuilding of areas

emergency situations that cause widespread anxiety about

affected by earthquakes, typhoons or other large-scale

the financial system. In this way, we act as an emergency

natural disasters, the outbreak of severe acute respiratory

response unit to fill the gap that emerges when peacetime

syndrome (SARS), bovine spongiform encephalopathy (BSE)

financial platforms fail to function.

Disaster Recovery
DBJ Initiatives

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

DBJ has provided assistance in response to such disasters asthat people who provide information to local communities

the Great Hanshin-Awaji Earthquake in January 1995 and thebeset by a natural disaster have sufficient knowledge about

Chuetsu Offshore Earthquake in October 2004. In addition

those communities and take that knowledge into consider-to the electricity, gas, rail, communications, broadcasting,ation and (2) provide rapid responses to help rebuild impor-urban development and other infrastructure industries, DBJ

tant infrastructure that was destroyed. What is required is

assisted providers of everyday necessities such as foodstuffs

an entity that through its everyday business relationships

and other retail items. These efforts played a major role inhas accumulated know-how on the industries and business-

revitalizing the employment and economic situations of local

es that provide this core infrastructure. This entity also must

communities, prompting a revival in many fields.

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

Note: DBJ’s cumulative financing for recovery from twoearthquakes
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)

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)

Successful Safety Net Initiatives
1995 Reconstruction following the Great HanshinAwaji Earthquake
1997 Financial climate response (credit crunch)2000 Reconstruction following Mt. Usu eruption
Restoration support following torrential rains in
the Tokai Region
2001 Terrorist attacks on the United States
SARS countermeasures, BSE countermeasures
2004 Reconstruction following the Chuetsu Offshore
Earthquake
2005 Reconstruction following the Fukuoka Prefecture
Western Offshore Earthquakes

2006 Asbestos countermeasures
Response to major rise in crude oil prices
2007 Reconstruction following the Noto Peninsula
Earthquake
Reconstruction following the Mid Niigata
Prefecture Earthquake
2008 Reconstruction following the Iwate-Miyagi
Nairiku Earthquake
Financial crisis response2010 Yen appreciation and other countermeasures2011 Reconstruction following the Great East Japan
Earthquake

Annual Report & CSR Report 2011

57
Crisis Response Operations

Emergency Financing

DBJ’s Businesses

Societal Concerns

Initiatives Related to the Great East Japan Earthquake

Crisis Response Operations
In the fiscal 2011 supplementary budget (passed on May
2, 2011), ¥2.5 trillion was earmarked for the Japan FinanceCorporation (JFC) for Great East Japan Earthquake crisis response
operations targeting medium-sized and large companies.
This supplementary budget having been passed, as adesignated financial institution for the crisis response opera-

tions DBJ set up a full-fledged structure to facilitate implementation of crisis response operations for clients affectedboth directly and indirectly by the disaster. In addition, DBJ
is making a proactive effort to support increases in the production of materials needed for restoration and reconstruction in the aftermath of the recent disaster.

Responding to Electrical Power Supply Problems

DBJ’s Businesses
58

In addition to damage to power generation facilities asa result of the Great East Japan Earthquake, as problems
at the Fukushima Daiichi Nuclear Power Plant grew more
severe, startups were delayed at nuclear power plants that
had been shut for periodic maintenance, and operations
were halted at the Hamaoka Nuclear Power Plant. Suchdevelopments seriously limited electric power supplies. DBJ
introduced the following initiatives in relation to the electrical power supply problem.
Tohoku Electric Power: Taking into consideration theextensive damage it sustained, in March 2011 promptly
after the disaster struck we extended loans to Tohoku
Electric Power that should meet its immediate fundingneeds, thereby supporting the company’s efforts to supply
power to the Tohoku region.

The Tokyo Electric Power Company: To support the company’s restoration following the disaster, in April 2011 we
extended loans to help cover its fixed investment, as well
as fuel expenses and other long-term working capital. We
worked with private financial institutions on initiatives toensure that the supply of electric power to the Tokyo metropolitan area would not be disrupted.
Chubu Electric Power: Anticipating that fuel costs would
rise following the complete halt of operations at the Hamaoka
Nuclear Power Plant, in June 2011 we extended loans to support Chubu Electric Power’s fund-raising efforts. At the sametime, private financial institutions extended loans.
Given the public nature of the electric power business, inthe future we will continue to support fund-raising efforts
in order to ensure a stable supply of electric power.

Initiatives Related to the Great East Japan Earthquake

Tohoku Revival Reinforcement Office
On April 21, 2011, DBJ established the Tohoku Revival
Reinforcement Office within the Tohoku Branch to consolidate and better provide companywide knowledge andfinancial expertise toward the restoration and reconstruction of the Tohoku region, which was affected by the Great
East Japan Earthquake that struck on March 11, 2011.
The Tohoku Revival Reinforcement Office has a structurethat spans all departments and branches, comprising the

Public Sector Relationship Management Group, Regional
Development Group and Financial Institution Department.
The office provides beneficial information related to restoration and reconstruction and communicate with government
bodies, national institutions, economic organizations andregional financial and other institutions to conduct surveys
and introduce plans.

=M&A Advisory Services[Headquarters][Tohoku Branch]

1VCMJD4FDUPS3FMBUJPOTIJQ.BOBHFNFOU(SPVQ

Tohoku Revival Reinforcement Office

3FHJPOBM%FWFMPQNFOU(SPVQt"OBMZTJTCBTFEPOSFHJPOBMFDPOPNJDEBUB TVDIBTJOEVTUSZ
TUSVDUVSFBOEQPQVMBUJPOTUSVDUVSFt/FXQSFQBSBUJPONFUIPETBOEFYQFSUJTFGPSQVCMJDGBDJMJUJFT 
TVDIBT1'*BOE111
t'JOBODJBMNFUIPETUPTVQQPSUTZOEJDBUJPO GVOETBOEPUIFSSFDPOTUSVDUJPOTDIFNFT'JOBODJBM*OTUJUVUJPO%FQBSUNFOU
0UIFSSFMBUFEEFQBSUNFOUT

1SPWJEFCFOFGJDJBMJOGPSNBUJPO DPOEVDUTVSWFZTBOEJOUSPEVDFQMBOTGPSSFTUPSBUJPOBOESFDPOTUSVDUJPOConcentrate DBJ Group knowledge and expertise=Communications between Tohoku Revival
Reinforcement Office and Related Institutions

t$PNNVOJDBUJPOTXJUIHPWFSONFOUCPEJFT
Support government body structuring andplanning measures related to infrastructure
creation and community development aimed at
restoration and reconstruction

Government
Bodiest$PNNVOJDBUJPOTXJUISFHJPOBM
åOBODJBMJOTUJUVUJPOTCreate frameworks to facilitatesmooth provision of funds tocompanies and otherdisaster-stricken entities
Annual Report & CSR Report 2011

Regional
Financial
Institutions

TohokuRevivalReinforcement
OfficeNational
Institutions
and Economic
Organizations

t$PNNVOJDBUJPOTXJUIOBUJPOBMJOTUJUVUJPOTBOEFDPOPNJDPSHBOJ[BUJPOTSupport information provision and otheractivities in response to various
government measures and industries

Restoration and Reconstruction Issues and Responses
The Great East Japan Earthquake was a complex majordisaster, an infrequent type even on a global scale. We
believe that restoration and reconstruction measures must
be implemented on a step-by-step basis, in chronologi-

cal order. Also, given the broad expanse of the damaged
region, restoration and reconstruction measures must take
into careful consideration the regions where they are being
introduced and the type of damage they are targeting.

=Challenges and Responses to Restoration and Reconstruction

Phase A

Phase B

(Emergency responses)
March 11,2011

Earthquake
strikes(Full-scale reconstruction)

May 2

March 12tDesignated as“disaster of extreme
severity”tCrisis designation

Phase C

(Early phase ofrestoration works)tSupplementary budgettAct for Extraordinary
Expenditure and AssistanceenactedSupport for regional companies
Establishment of joint
investment fund, etc.

tFact-finding works with local
governments and others.
tCollaboration with regions in support ofrestoration works

Consulting and advisingon PFI/PPP, etc.

Responses to disruption of supply chain, etc.
Fact-findingworkst4VQQPSUGPSSFDPWFSZPGVQTUSFBNåSNT
operationst4VQQPSUGPSåSNTBGGFDUFECZTFDPOEBSZ
effects

Working in line withgovernment policies
including Act on Special
Measures forStrengthening Financial
Functions, PFI Act(revised) and special
zones

Strengthening global
competitiveness,
industry reorganization

Industries

Measures regarding energy (In support of activities toward stable energy supply)Supporting shortterm cash flowt1SPNQUPQFSBUJPOPGBMUFSOBUJWFQPXFS
sourcest'BDJMJUBUFQFOFUSBUJPOPGPOTJUFQPXFS
generationt$POTUSVDUJPOPGOFXQPXFSQMBOU
(e.g., thermal), etc.

Policy and crisis
response operationsFirst supplementary budget(May 2011)
Improve and expand crisis
response operationst*OEJSFDUEBNBHFTBSFBMTP
includedt*ODSFBTFJOBNPVOU FUD

Eligibility: Primary/secondary
damagesAmount: ¥2.5 trillion

Initiatives aligned with energy supply
policy going forwardtReconstruction measures,

regional reconstruction
plans

Implement our businessin line with government
policy objectives and in
partnerships withfinancial institutions

Annual Report & CSR Report 2011

59
Initiatives Related to the Great East Japan Earthquake

Prompt and smooth executionof crisis response operations

Regions

Support for restoration of lifeline and infrastructure

The need to provide mezzanine and equity
financing and long-term financingtApproaches tailored to various industriestIn partnerships with regional banks andmunicipalities

DBJ’s Businesses

Debt reschedulingSupply Chain Support Fund
In June 2011, DBJ joined the Japan Auto Parts Industries
Association (JAPIA) to form the Supply Chain Support Limited
Partnership. The partnership was formed to support the reconstruction of automotive supply chains (parts procurement networks) that were affected by the Great East Japan Earthquake.
The Great East Japan Earthquake disrupted the automotive industry’s supply chains. This fact, compounded byelectric power supply problems created uncertainties about
when the automotive industry production would resume.
Through the establishment of this fund, DBJ aimed toprovide long-term stable funding through equity-type funds
for companies supporting the supply chains employed by
Japan’s automotive industry. By assisting the industry insuch aspects as reconstruction following the earthquake,and supporting business and industry restructuring, we aim
to recover the confidence in the industry as a responsible
global supplier and toughen the supply chain. As a result,
we aim to respond to the mandate of helping to rebuild
one of Japan’s backbone industries and contribute to its
redevelopment and management stability.

=Structure of the Supply Chain Support Fund
Completed product manufacturers
Primary parts
manufacturers

EquitysupportSecondary parts
manufacturers

EquitysupportSupply Chain Support
Limited Partnership

60

Equityinvestment

DBJ’s Businesses

Japan Auto Parts
Industries
Association (JAPIA)

Investment andfinancing

DBJ

Tertiary parts
manufacturers

Initiatives Related to the Great East Japan Earthquake

Financing Employing DBJ Disaster Preparedness Ratings
Based on its experience to date with Financing Employing
DBJ Disaster Preparedness Ratings and the experience of
the Great East Japan Earthquake, DBJ has introduced majorrevisions to its ratings.
Formerly, evaluations of disaster ratings were basedon the content of self-assessment checklists following the
Corporate Initiatives for Disaster Preparedness announced
by the Cabinet Office of Japan. We augmented these categories by emphasizing rapid restoration from the perspective of business continuity in the face of disaster, thereby
revising the content of our structure for evaluating corporate initiatives.

We reflect five levels of evaluation results in financing by
creating three levels of interest rate incentives. As a result,the evaluations can be used to respond to companies’ disaster preparedness funding needs for preventive measures(before) and restoration measures (after) a disaster occurs.
Specifically, we have developed a menu assuming two
types of financing: (1) Financing Employing DBJ Disaster
Preparedness Ratings [prevention] (loans to companies for fixed
investment in disaster prevention during normal times) and (2)Financing Employing DBJ Disaster Preparedness Ratings [restoration] (loans to companies for fixed investment for emergency
relief following a disaster, to achieve full-fledged restoration).

=Basic Disaster Response Framework
First evaluates the company’s own efforts by checking
whether they have created a business continuity plan
(BCP) and then promotes initiatives outlined in the BCP
after differentiating them according to loan conditions.

DBJ
DBJ Disaster Preparedness Ratings
Financing Employing DBJ Disaster
Preparedness Ratings [prevention]

Financing Employing DBJ Disaster
Preparedness Ratings [restoration]

BCP measures establishedBCP measures establishedBCP measures not establishedBCP measures not establishedCompanies

Before(preventive measures)

Annual Report & CSR Report 2011

Disaster occurs

After(restoration measures)Providing Information
Effective Policies for a “5+1” Massive Complex Disaster
The Great East Japan Earthquake was not simply a (1) seismic event. Rather, it was a massive complex disaster that
also involved (2) water damage (tsunami), (3) a nuclear
accident, (4) unseen fears (reputational damage), (5) electric
power supply damage and (6) large-scale supply chain interruption. World experience with components (1) through (5)give us a body of effective policy experience from which todraw, but item (6), large-scale supply chain interruption, isbeyond the scope of global experience, so we had to study
the situation and formulate policies after careful consideration. Here we outline what DBJ believes are effective policies for dealing with this massive “5+1” massive complex
disaster.

Study Group on Regional Reconstruction
To encourage the “creative reconstruction” of the Tohoku
region and throughout the afflicted area, which was stricken by the Great East Japan Earthquake, DBJ established the
Study Group on Regional Reconstruction (chaired by Takashi
Onishi, Professor, the University of Tokyo), comprisingexperts in such fields as community development, disaster
preparedness and regional public finance.
The Great East Japan Earthquake, which combined anearthquake, tsunami and nuclear accidents, caused damage
on a massive scale. This unprecedented disaster will haveserious repercussions for Japanese economy, industry

and society.
To foster “creative reconstruction” in the Tohoku region
and throughout the afflicted area, the group is expected
to consider specific measures, including a strategic projectaiming for a “Calamity-Proof Nation (Strong in the Face ofMajor Disaster),” from three perspectives: (1) safety andsecurity, (2) regional entities and (3) looking to the future.
The study group met for the first time on May 18, 2011,and plans to convene approximately six more times before
March 2012. In addition to Tokyo, the group expects to holdmeetings in Sendai and other locations in the Tohoku region.

Annual Report & CSR Report 2011

61
Initiatives Related to the Great East Japan Earthquake

Compilation of Recommendations for Reconstructionin the Aftermath of the Great East Japan Earthquake
DBJ has compiled a set of urgent recommendations forreconstruction in the aftermath of the Great East Japan
Earthquake (see page 63).
This compilation describes the damage that the Great
East Japan Earthquake inflicted on regions directly, but also
covers the overall Japanese economy, industry, finance,
society and the lives of the country’s citizens, looking
deeply at the challenges and difficulties of the situationfrom numerous angles. We involved outside experts in the
Research Institute of Capital Formation’s network, asking
these people who are involved in research on a daily basis
to provide suggestions and opinions from an independent
perspective, which we integrated with viewpoints of DBJ
researchers. The topics raised in this compilation are wideranging, many themes are controversial, and in some cases
the suggested approaches differ. This reflects the academic
and liberal traditions that the Research Institute of Capital
Information has upheld since its establishment, and in general the discussions arising from different viewpoints areincluded as is.
The compilation reflects communications between
industry–government–academia and government bodies
in the stricken regions, and strives to uphold the views of
the people affected by the disaster and the people of Japanas a whole. We hope that this compilation, which includes
considerations from numerous angles, will be of assistancein initiatives targeting reconstruction of the affected region,
as well as the socioeconomic rebuilding of Japan.

DBJ’s Businesses

Estimated Damage to Capital Stock Resulting from theGreat East Japan Earthquake
In April 2011, soon after the Great East Japan Earthquake
struck, we issued a report estimating damage by region(segmented by the hardest-hit prefectures—Iwate, Miyagi,
Fukushima and Ibaraki—and by damage inland and on the
coast). In this report, we estimate the damage at ¥16.4
trillion. The damage was substantially worse on the coast
than in inland regions, indicating that the tsunami was amajor cause. Social capital stock, including ports, roads
and bridges, and even some hospitals and schools sufferedmajor damage. Significant damage to private-sector capitalstock included oil refineries and every type of factory—
steel, cement, food products and paper and pulp among
them. Because of the huge scale of this disaster, the stateof damage differed significantly by economic structure andregion. We consider future reconstruction plans, therefore,
rather than plans that are uniform across the board. For
example, we believe it is important to consider the situation
carefully by region, such as in the coastal region north ofthe city of Ishinomaki, the plains south of the city of Higashi
Matsushima and the coastal and inland areas of Fukushima
Prefecture.
In May, we estimated the damage, conducted local sur-veys and other activities that we summarized in the “Status
of Damage from the Great East Japan Earthquake andReconstruction Issues—An Analysis by Field and Region.”
This material examines the state of damage by area in six
categories—lifestyle/social infrastructure, housing, medical/welfare, manufacturing, non-manufacturing and agriculture/forestry/fisheries—serving as a key document forordering the approach to reconstruction-related issues.

Making Use of Information Functions

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.

Economic and Industrial Research

DBJ’s Businesses
62
Making Use of Information Functions

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 other parties.
Survey Examples
DBJ Monthly Overview
This report provides a brief commentary
on domestic and overseas economic andindustrial trends and monthly businessindicators.
The report explains domestic and overseas economic trends through an analysis
of economic and financial indices published each month. In
recent years, the global economic and financial markets havegrown more closely linked. With regard to these global markets, the report aims to further that integration by introducing overseas fiscal and monetary policy and commenting on
current topics.
In addition, the report addresses topics that are timely
from the perspective of industrial trends.
“Power Generation in the United States Using
Renewable Energy—Political, Technological and Finance
Trends, and Suggestions for Japan”(Surveys, No. 102, June 2011)
In Japan, solar power and other renewable energy is being
introduced to reduce carbon emissions from electrical power
generation systems and to bolster the country’s industrial
competitiveness. The Great East Japan Earthquake has
prompted a renewal of interest in generation using renewable energy. The United States is the most prominent generator of power using renewable energy (with the exceptionof hydro power) in terms of output. Federal government tax
incentives, as well as financing and other schemes that takeadvantage of such incentives, have contributed to the introduction and expansionof generation using renewable energy.
This report touches on trends in generation using renewable energy in the UnitedStates, and considers these in relation to
Japan’s policies and industry value chain.
Annual Report & CSR Report 2011

“Recent Trends in the U.S. Green Building Market and
Suggestions for the Japanese Market”(DBJ Monthly Overview, No. 153, November 2010)
The scale of the U.S. green building market had expanded
to a value of $49.0 billion by 2009, and the market appears
likely to continue growing. Based on the concept of “environmental consciousness,” the green building market generates a value chain that spans a range of considerations, fromarchitectural design to equipment, construction materials,
construction and maintenance/management. This report explains recent trends
in the U.S. green building market anddescribes in easy-to-understand terms
what will be needed in the Japanese market and what policy directions are required.
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 each week.
Focused on Japan and the United States, we offer a brief 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 important economic indicators and monetary
policy announced during the week, providing an outlook formarket trends based on the analysis of economic fundamentals.
“Determining Factors of Environmental Activities andCorporate Value—Analysis Based on Case Studies ofFinancing Employing Environmental Ratings”(Economics Today, Vol. 31, No. 1, April 2010)
Assuming that the market values corporate environmental
consciousness activities, which thereby affects corporate value,
we have conducted an empirical analysis of the relationshipbetween environmental activities and corporate value andindividual corporate data based on newspaper reports related
to Financing Employing DBJ Environmental Ratings. The
results of this analysis suggest that environmental consciousness activities and taking advantage of Financing Employing
Environmental Ratings boost companies’
corporate value and profitability. The result
also indicates that shareholder composition
and fund-raising capabilities are determining factors in corporate decision-making onwhether to employ such financing.

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.”

Capital Investment Planning Survey
Survey Example“Report on June 2010 Survey ofCapital Investment Plans for Years
to March 31, 2010, 2011 and 2012,”(Surveys, No. 101, September 2010)
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 recycling-oriented
society and sustainable corporate management. DBJ also conducts and contributes to specialty journals, newspapers andmagazines. In the year ended March 31, 2005, these activities
culminated in the introduction of Financing Employing DBJ
Environmental Ratings, which are used to determine preferential financing for environment-friendly projects and are used bymany 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 the corporate
business continuity plans companies have established. In
the year ended March 31, 2008, we incorporated survey
results to form the basis for Financing Employing 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 technical evaluations and conducts other activities
to help companies realize their potential for technologicalcommercialization.

Annual Report & CSR Report 2011

63
Making Use of Information Functions

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.

DBJ’s Businesses“The Great East Japan Earthquake—Recommendations
for Reconstruction for the Formulation of a
Sustainable Society”(Shigeru Ito, Masahiro Okuno, Takashi Onishi and Masaharu
Hanazaki [ed.], University of Tokyo Press, July 2011)
The Great East Japan Earthquake highlighted that theJapanese economy and society is built on an extremely
fragile base. With the earthquake having shaken some very
fundamental values, this report examines initiatives suitable
for reconstructing the disaster-stricken region and rebuilding the Japanese economy and society.
This report summarizes disasterreconstruction recommendations by 50
academics who are at the forefront ofsuch fields as economics, urban theory
and industry theory. The report is divided into three sections, Part I: Regional
Revitalization; Part II: Challenges for
the Japanese Economy; and Part III:
Reconstruction and Japanese Society.

Providing Information to Local Communities
Supplying Information to Help Local Community
Development

DBJ’s Businesses
64

Local communities areexperiencing increasingly
difficult environmental
circumstances, such asa declining birthrate,
an aging population,
the amalgamation of
towns, cities and villages, and financial crises. Addressingthese issues requires a greater degree of expertise and moreingenuity than ever. DBJ assists by analyzing the information
it accumulates through its network of offices (19 domestic
locations—headquarters, branches and representative offices—and three overseas locations—subsidiaries and a representative office), economic agencies of regional governments and local communities, and companies in Japan andabroad. DBJ disseminates this information through reports,
publications, lectures and other formats to encourage public/private partnerships, promote tourism, build up local
communities, and contribute to local government financing.

Building Local Communities

Making Use of Information Functions

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 thecurrent state of a local community and then conducts interviews in that community before preparing an independent
diagnosis that interprets its results. We then discuss the diagnosis results with people in the local community, which helps
them to understand what issues they may be able to addresson their own and provides them an opportunity to consider
future directions. (See page 53.)

Fiscal 2011 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
a compilation of individual regional policies and projects tofacilitate an overall understanding of regional policies, economies and societies and the current status ofregional projects. In the Topics section, Yuji
Nemoto, Professor, Faculty of Economics,
Toyo University, and members of suchoffices as the Cabinet Office of Japan’s PFI
Promotion Office contributed a special section entitled “A New Public Consciousness
and PPP.”

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 thereasons for their success and offers a deeper
analysis of the elements common to a variety
of flourishing projects.

Memorandum 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.

Branch Reports
Hokkaido Branch“Toward Higher Value Added ‘Food’ in Hokkaido—
From the Perspective of ‘Unfinished’ Initiatives
Required in Food Cluster Activities” (Mini Report,
October 2010)
Hokkaido is blessed with an abundance of food resources but is notknown for its processing and otherinitiatives that might add greater
value to its agricultural and fisheries products. This report summarizes
expectations of an important growthstrategy for the prefecture, “foodcluster activities,” the building of a

Annual Report & CSR Report 2011

“comprehensive food industry of the sort only possible in
Hokkaido” through the creation of high-value-added
products and logistics. This report examines “food cluster
activities” from various perspectives and makes suggestions
on the promoting them in Hokkaido.

Tohoku Branch“Tohoku Companies’ Activities in New Growth Fields—Their Initiatives and Challenges” (Survey Report,
September 2010)
Based on the Survey of Capital Investment Plans and the
Corporate Behavior Awareness Survey conducted in June
2010, this report summarizes the status of initiatives andissues faced by companies (large companies capitalized

at ¥1.0 billion or more with headquarters in the Tohoku region) in
new growth fields, such as electricvehicles, solar power generation, thesmart grid, healthcare and welfare,and emerging market demand. The
report relies mainly on graphs andis presented in an easy-to-visualize,
compact format.

Niigata Branch“Overview of the Toyama Economy” (Irregular Update)In this report, the Toyama Representative Office describes its
survey of the economy in Toyama and introduces its researchfindings. After presenting the basics of Toyama Prefecture’s
history, topography and climate, the report looks at major
economic indicators and the current status of the amalgamation of towns, cities and villages in the prefecture. The report
incorporates unique viewpoints surrounding the prefecture:
its slightly unusual companies, topics of conversation in theregion, development stemming from the Hokuriku
Shinkansen and the economic
effects of a popular year-longhistorical fiction TV series.

Tokai Branch“Biotechnology in Our Lives—Safe and Secure
Biotechnology,” a Symposium Held in Collaboration
with Nagoya City University (Public symposium,
December 2010)
The 21st century has been heralded as the “age of biotechnology,” and biotechnology has become an essential partof our everyday lives, from lifestyle products and food tohealthcare, the environment and energy. Working together
to contribute to regional society, DBJ and Nagoya City

“Western Japan Driving Japan’s Leadership in LEDs”(Region Report, July 2011)
Worldwide forecasts anticipate major
expansion in the LED market and,around the globe, countries are introducing strategic measures to support
this development. Meanwhile, privatesector competition is heating up ascompanies vie to benefit from this newmarket’s potential.
This report analyzes recent industry trends and thestrengths of Japan’s LED companies, particularly in theWestern Japan/Kansai region where they are concentrated.
The report also considers initiatives that companies, universities and government institutions should pursue to expand
the applications for LEDs and create added value to boost
international competitiveness and invigorate regional industry.
The report also touches on the potential for taking further
advantage of LEDs, given an enhanced awareness of energy
savings in the aftermath of the Great East Japan Earthquake.

Chugoku Branch“Survey on Initiatives and Measures Involving
Collaboration between the Government and Private
Sector to Maintain and Improve Public Services, theWeakening of Which Is a Concern in the Chusankan
Region” (Survey Report, March 2011)
The Chugoku region contains a large percentage ofmountain dwellers. Revitalizing this area is important andessential to the development of the Chugoku region, andits revitalization requires efforts to stem the outflow of
the population from this mountainous region by promoting U/I turns*. However, some evidence suggests that the“Heisei merger” trend toward consolidation has resulted
in a decline in the public services that serve as crucial infrastructure for residences. Based on surveys of the situation,
this report summarizes case studies and suggestions formaintaining public services and encouraging new public
service providers.

Annual Report & CSR Report 2011

65
Making Use of Information Functions

Hokuriku Branch

Kansai Branch

DBJ’s Businesses“Niigata Prefecture and Information Strategies, 1st
Installment” (Region Report, June 2011)
Known throughout Japan as a staple food producing areathat tops the nation in rice production, the Niigata region
lags in efforts to leverage the information tools of anindustrial modern-day society. This report considers Niigata
Prefecture’s information-related status
and the issues it faces. In addition tofurthering its promotion of strategies to add value to food, which the
Niigata Branch supports, this report
looks at Niigata Prefecture’s information strategies and considers how topromote initiatives to fulfill them.

University concluded a collaborationagreement in April 2006. This public
symposium, themed “Biotechnology
in Our Lives—Safe and Secure
Biotechnology,” looked at the rolethat biotechnology plays in theeveryday lives of citizens. It sought todeepen participants’ understandingof our inextricable bond with biotechnology and encourage an awareness of how biotechnology contributes to ourprosperity.

* A growing number of people are leaving
the cities in search of a better life in the
country. The mini migration, which hasgathered force over the past few years, hasbeen named “I-turn” to contrast with anearlier phenomenon called “U-turn.” Thedifference is that the current flow does not
represent a backtrack to hometowns, as
was the case with the U-turn, but a singledirectional push out of urban areas.

Shikoku Branch

DBJ’s Businesses
66
Making Use of Information Functions

Seminar on “Exploring New Trends in Manufacturing:
The Possibilities of Electric Vehicles, Lithium-Ion
Batteries and Solar Cells” (Seminar, December 2010)
This seminar, designed as part of an effort to disseminate
information within the Shikoku region, was held as a lectureoffered by DBJ analysts in this field. The seminar consisted of
two parts, the first focusing on “The Emergence of Electric
Vehicles Offering the Potential to Alter the Value Chain.”
The lecture covered the industry of electric vehicles, which
are heralded as next-generation eco-cars, and coveredchanges in the value chain forecast for the materials, components and service industries. The second part concentrated
on “Battery Cluster Development from Kansai to Chugoku/
Shikoku.” This part of the seminar looked at how the concentration of industry involved in lithium-ion batteries andphotovoltaic cells is
expanding from Kansai to
the Chushikoku and Tokai
regions, and considers
future developments.

Kyushu Branch“The City of Fukuoka’s Population, Seen through aComparison of the Population of Young Men and
Women—Population Structure and Issues in theCity of Fukuoka, Seen through the Percentage ofUnmarried People” (Survey Report, February 2011)
The city of Fukuoka is working to boost its urban attrac-

tiveness through the vigor of its tertiary industry, particularly in service industries that tend to be a draw for young
women. Such initiatives include the opening of the Kyushu
Shinkansen Kagoshima Route trunk line and JR HAKATA
CITY, the largest station building in Japan. Through thesemoves, the city seeks to address one point of concern,
namely, the skewed male/female ratio
among its youth population.
This report compares the ratio of
men to women and the percentage ofunmarried people against other cities.
The report then surveys some of theupcoming issues the city faces, given
its population balance.

Minami-Kyushu Branch“Kagoshima Metropolitan Area: Regional Health
Check” (Mini Report, January 2010)
We conducted a Regional Health Check of the Kagoshima
metropolitan area to determine the region’s issues and potential. After analyzing the area’s population dynamics and comparing the age composition of the Kagoshima metropolitan
area’s working population against national and Fukuoka metropolitan area figures, the report explores issues the metropolitan area faces—structural issues in a society marked by ashrinking population—and strategies for leveraging the opening of the Kyushu Shinkansen Kagoshima Route trunk line topromote tourism and attract customers, and offers recommendations for improving the region’s retention of its youth anduncovering its potential
as a lifestyle, businessand tourism hub.

The Japan Economic Research Institute
The Japan Economic Research Institute (JERI) is a foundation
established for the purpose of contributing to the improvement of welfare and further development of the Japanese
economy through investigative research into important economic problems in Japan as well as overseas and funding
the promotion of scholarship. JERI’s investigation into issues
that impact the Japanese economic structure in the areasof urban and regional development, social capital infrastructure, energy, economy and industry are supported bya broad network that includes DBJ’s investigative research

Annual Report & CSR Report 2011

department, universities, research institutions and otherexperts, as well as national and regional government bodies
and the patronage
of approximately
500 companies. DBJ
works in conjunction
with JERI to disseminate the results of
its research.

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 as a member of society. Thisrequires all DBJ executives and regular employees to conduct their daily activities with constantconsideration of society, the environment and theeconomy. We believe our efforts will build DBJ
into a financial institution trusted, favored andchosen by the public.

67

Implementing CSR Management . . . . . . . . . . . . . . . . . 69
CSR through Investment, Loan and Other Businesses . . . . . 74
Environmental Management . . . . . . . . . . . . . . . . . . . . 94
Fostering Human Resources and Creating a
Comfortable Work Environment . . . . . . . . . . . . . . . . . 98

Annual Report & CSR Report 2011

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.

CSR Report68

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.
nn

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.

Editorial Policy

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, 2010, to March 31, 2011
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 theinformation indicated herein will have been updated by the time this report is published.

Publishing Details
Published:

September 2011

Next publication:

September 2012 (previous publication: September 2010; 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.

Annual Report & CSR Report 2011

Implementing CSR Management

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

Fields of CSR Implementation at DBJ

DBJ’s Two Fields of CSR
CSR through Investment, Loan and Other Businesses

Environmental and Social
Contribution Activities

Investment, Loan and Other Services
in Response to Client Issues

Industry

Building Social
Infrastructure

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

Regions

Crisis Response Operations (Disaster Response, etc.)

Reinforcing the functions offinancial and capital markets
Supporting industrial
restructuring

Providing financial
support in growth fields

Communication inInternational Cooperation

Providing a safety net for financial markets

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 2011

69
Implementing CSR Management

Community
Revitalization

CSR Report

Environment

Fields of CSR Implementation at DBJ
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.

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.

Investors

rnme

nt

As of March 31,
2011, DBJ’ semployees
numbered 1,102.

Implementing CSR Managementg
DBJ employee training

Employees

Society

is designed to enable its
employees to act
ake fullautonomously and makeuse of their abilities.

Gove

CSR Report70

Clients

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 society, environment and the economy. It is not simply evaluating a company’s financial performance, but rather assessing sustainable
development by incorporating environmental, social andeconomic aspects.
Economic issues are tied to DBJ’s investments andloans, and its considerations include region-specific andenvironmentally time-specific concerns, in addition to theeconomic issues that a company faces, thus spanning thethree elements that make up triple bottom line evaluation.
Accordingly, in “CSR through Investment, Loan and Other
Businesses,” DBJ carries out activities based on triple bottom line evaluations to help build a sustainable society.

Annual Report & CSR Report 2011

Creation ofSocial Sustainability

Environment

EconomySocial Effectiveness
During its time as a comprehensive policy-based financial

Even after privatization, DBJ aims to continue contrib-

institution, 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 from ourits responses to socioeconomic changes facing Japan. Theseown perspective those businesses that are truly useful toresponses were a way to evaluate CSR through Investment,

society and work to promote the realization of a sustain-

Loan and Other Businesses.

able society.

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

the sustainable development of enterprises. Accordingly,

Accordingly, DBJ considers the application of its intellectual

it is important that a corporation’s business activity brings

assets and service platforms for investments and loans to

new value to, contributes to problem-solving in, and gains

be of vital importance.

the trust of society.

Specifically, DBJ will apply the distinctive features andFinancial institutions can play a specific role in building afinancial services that it has realized in the past to provide
various solutions to clients that cover expected changes

meaningful projects for the economy and society and pro-and other issues that are forecast for the economic andviding quality financing and other financial solutions.

social environments. In this way, DBJ will fulfill its four

We believe that DBJ can gain the trust of society withroles: reinforcing the functions of financial and capital mar-

CSR through investment, loan and other businesses, such

kets, supporting industrial restructuring, providing financial

CSR Reportharmonious society over the long term by identifying truly

as the provision of services that lead to client satisfaction,

support in growth fields and providing a safety net for71

increases in corporate value, coexistence with regional

financial markets.
Implementing CSR Management

Corporate Philosophy

CSR through Investment, Loan
and Other Businesses

Building Social
Infrastructure

Industry

Regions

Crisis Response Operations (Disaster Response, etc.)
See
page 74.
Reinforcing the functions offinancial and capital markets

Supporting industrial
restructuring

Providing financial support
in growth fields

Providing a safety net for financial markets

Annual Report & CSR Report 2011

Environmental and Social Contribution Activities
DBJ recognizes that today’s social and environmental

Communication to Community Revitalization

problems can best be resolved by communication and the

DBJ considers working with local citizens to build communi-

exchange of opinions. Accordingly, DBJ strives to commu-

ties that suit their unique environments an important part

nicate with as many people as possible through seminars,

of supporting independent community development. To

symposiums, lectures and the Internet.

this end, DBJ sponsors such events as seminars and sym-Communication Focused on the Environment
Environmental problems such as global warming must be
resolved, starting with individual awareness of the severityof the issues.

posiums in collaboration with local authorities and regional
branches of the Japan Chambers of Commerce and Industry
and other economic organizations.
In our Regional Health Checks, we discuss objective
indicators and original analytical methods with residents

DBJ promotes understanding of the relationshipand help them identify their community’s issues and poten-

between the environment and financial and business activi-

tial. DBJ employees interview community stakeholders inties by participating in the Eco-Products Exhibition, Japan’s

advance, study the region’s resources and, on the final day,largest environmental event, and holding seminars andhold a participatory workshop with residents. (See page 53.)

symposiums in conjunction with relevant organizations.
DBJ has had a booth at the Eco-Products Exhibition

Hokkaido Branch
Environmental Exhibition on Building Hokkaido’s Future

we introduce various DBJ activities, such as Financing

The 2010 Environmental Exhibition on Building Hokkaido’s

Employing DBJ Environmental Ratings and our tie-up with

Future, a collaborative government–private sector event,the UNEP Finance

was held with the aim of “creating a sustainable society

Initiative. In fiscal
72

suited to Hokkaido that features virtuous environmental

2010, we deliv-

and economic cycles” and themed on “fostering a new

Implementing CSR Management

ered a lecture

green industry revolution.” At this exhibition we intro-

on the theme of

duced Financing Employing DBJ Environmental Ratings, the“New Trends in

Hokkaido Branch’s Regional Areas’ Genki Program, as wellEnvironmental

as DBJ’s other environment-related initiatives.

CSR Report

every year since fiscal 2001. Through display panels,

Financing,” attracting numerous visitors to our booth.

”Eco Presentation Stage”(Eco-Products 2010)

Since fiscal 2009, DBJ has been a participating sponsorof the eco japan cup*, Japan’s largest environment-related
contest. We are active on the organization’s executive andjudging committees.

Tokai Branch
Messe Nagoya*The ”eco japan cup” is sponsored by public and private entities,
including Japan’s Ministry of the Environment, Ministry of Land,
Infrastructure, Transport and Tourism, Ministry of Internal Affairs
and Communications, Sumitomo Mitsui Banking Corporation and
DBJ. The contest describes
itself as a ”contest forunearthing and growing
seeds of green business.” This
program is a continuationof the 2005 ”Environmental
Dynamite!” event. Renamedthe ”eco japan cup” in 2006,
this event is held on anannual basis.

Annual Report & CSR Report 2011

Messe Nagoya 2010 was held to carry forth the philosophiesof the 2005 World Exposition, Aichi, Japan (the environment, science and technology, and international cooperation).
This year’s themes centered on energy and the environment, in keeping with The 10th Conference of the Parties
to the Convention on
Biological Diversity, also
known as COP 10, held in
Nagoya.

Communication in International Cooperation

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.

financing to support the industrial economy of postwar

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.

Development Finance Course, for example, is a seminarthat has 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
DBJ began participating in the TABLE FOR TWO* program on

Agency to provide comprehensive technical cooperation

March 29, 2010. Under this program, one of the meals in ourto the China Development Bank and the Infrastructurecompany cafeteria each day is designated as a ”healthy menu”

Development Bank of Malaysia. We also concluded

option. Through proactive employee participation in this pro-a business cooperation agreement with the Vietnam

gram, as of the end of May 2011, DBJ’s contributions totaled

Development Bank in 2007. In addition, in fiscal 2009, we¥427,680—enough to provide 21,384 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

CSR Report

the World Bank and the Japan International Cooperation

73

Small Industries
of India, as well as
Mongolian government decision-makers
and mid-tier 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 2010 exhibition.
http://www.dbj.jp/co/csr/index.html (Japanese only)

Campaign

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 2011

Implementing CSR Management

Development BankCSR through Investment, Loan and Other Businesses

DBJ promotes CSR through investment, loan and other businesses to solve social problems.
Specifically, DBJ will apply the distinctive features and financial services that it has realized in the past
to provide various solutions to clients that cover expected changes and other issues that are forecast for the
economic and social environments. In this way, DBJ will fulfill its four roles: reinforcing the functions offinancial and capital markets, supporting industrial restructuring, providing financial support in growthfields and providing a safety net for financial markets.

CSR through Investment, Loan and Other Businesses
Building Social
Infrastructure

Industry

Regions

Crisis Response Operations (Disaster Response, etc.)

CSR Report

Reinforcing the functions offinancial and capital markets
DBJ bolsters its partnership with other financial institutions and helps to reinforce thefunctions of Japan’s financial and capital markets and through the appropriate provisionof risk capital to the market by leveraging the uniqueness of our financing—long terms,
large scale, an approach that integrates investment and loans, and neutrality.

74
CSR through Investment, Loan and Other Businesses

Supporting industrial
restructuring

Providing financial support
in growth fields

We provide financial support for thereconstruction of the Japanese industrial
structure that supports social andeconomic activities.

DBJ provides financial support to help
achieve Japan’s long-term strategies.

Providing a safety net for financial markets
We respond swiftly in times of market dysfunction and other crises.

Case StudiesnEnergy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75nRestructuring and Revitalization. . . . . . . . . 85

nTransportation . . . . . . . . . . . . . . . . . . . . . . 77n

M&A and Business Alliances . . . . . . . . . . . 86nUrban Development . . . . . . . . . . . . . . . . . 78nPrivate Finance Initiatives . . . . . . . . . . . . . 87n

DBJ Green Building Certification Program . . 79nnFinancing Employing DBJ Environmental
Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80nEnvironmental Technology . . . . . . . . . . . 82

nHealthcare and Welfare . . . . . . . . . . . . . . 83

Annual Report & CSR Report 2011

Financing Employing DBJ Disaster
Preparedness Ratings . . . . . . . . . . . . . . . . 88nCommunity Revitalization . . . . . . . . . . . . 89nOverseas . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

EnergyInternational interest in using solar power, wind power, biomass and other renewable energy ismounting amid ongoing concerns about global warming. Utilization of renewable energy is essential
for curbing greenhouse gas emissions and realizing a low-carbon society.

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

Given this certification, DBJ financed Showa Shell Sekiyu

Tokyo, is a Japanese oil refiner and distributor. While main-

as a designated financial institution defined in Article 8 oftaining a strong foundation in the oil business, the company

the same legislation.

is enterprisingly developing a next-generation CIS photovoltaic cell* project via wholly owned subsidiary Solar Frontier
K.K., aiming to turn it into an energy business to help real-* Thin-film photovoltaic cell made primarily from copper, indium andselenium (CIS)

ize a low-carbon society. In February 2011, the company’s
No. 3 photovoltaic cell plant—one of the world’s largest—commenced operations in Miyazaki Prefecture. Together
with plants No. 1 and No. 2, which are already in operation,
CSR Report

it aims to expand annual production to approximately one
gigawatt and to acquire 10% of the global market.
The new plant satisfies the requirements of a designated business under Paragraph 4, Article 2, of the Bill on
the Promotion of Businesses to Develop and Manufacture75

on March 22, 2011, the plant received the first certification under the Specified Business Plan of the Ministry of
Economy, Trade and Industry (METI).

Solar Frontier’s Miyazaki Plant

Case Study: Japan Bio Energy
With the aim of forming a business to generate electric-(Nihon Genki Program), recognizing the company as a con-ity through biomass employing wood and other materi-tributor to global warming prevention through the efficientals produced during construction, Japan Bio Energy Co.,

reuse and recycling of forest resources and the provision ofLtd., headquartered in the city of Kawasaki, Kanagawa

fuel to a CO2 -free power generator.

Prefecture, was established to provide wood chips.
The company was formed through joint investment by
Sumitomo Joint Electric Power Co., Ltd., Sumitomo ForestryCo., Ltd. and Fuluhashi EPO Corporation. The wood chipsthat the new company produces are supplied to the adjoining Kawasaki Biomass Power Plant (operator: Kawasaki
Biomass Electric Power Corporation; generation capacity:
33,000 kW). Using wood chips to fuel power generation,
the plant expects to reduce CO2 emissions by approximately
120,000 tons per year.
DBJ approved and provided financing to Japan Bio
Energy under the DBJ Development Support Program

Biomass-fired facility

Annual Report & CSR Report 2011

CSR through Investment, Loan and Other Businesses

Energy and Environmentally Friendly Products. Accordingly,

Energy
Case Study: Kankyo Recycle Energy
Kankyo Recycle Energy K.K., headquartered in the city of

DBJ, in collaboration with The Eighteenth Bank, Ltd.,

Sasebo, Nagasaki Prefecture, was established in July 2007

arranged a syndicated loan for Kankyo Recycle Energy.

by local operators of general and industrial waste-processing businesses.
The city’s Sasebo Biomass Town concept to invigorate
private sector companies and other entities explores thepossibilities of biomass and creates new industries throughtechnological and other types of innovation. Biomass-fired
and other electric power generation facilities as well as biomass fuel production facilities that are to be built and operated by Kankyo Recycle Energy are considered core projects
under the city’s concept.
Biomass-related businesses are expected to contribute to
global warming prevention and the creation of a recyclingCSR Reportoriented society, and to help reduce illegal dumping.

Rendering of biomass-fired and other power generation facility

Case Study: Wind Power Ibaraki
Wind Power Ibaraki, Ltd., headquartered in the city of Mito,

76

Ibaraki Prefecture, operates Japan’s first full-fledged wind

CSR through Investment, Loan and Other Businesses

power generation facility, Wind Power Kamisu. This facility, located offshore from the city of Kamisu, benefits from
more stable ocean breezes, and surrounding noise andoscillation are reduced.
As the importance of renewable energy has grown in
the aftermath of the Great East Japan Earthquake, Wind
Power Kamisu in particular is attracting a great deal ofattention for the earthquake and tsunami resistance of its
wind turbines, which were fully operational and continued
to provide electricity 24 hours a day immediately after theearthquake hit.
DBJ has provided financing to Wind Power Ibaraki under
the DBJ Development Support Program (Nihon Genki
Program).

Annual Report & CSR Report 2011

Wind Power Kamisu, Japan’s first full-fledged offshore wind power
generation facility

Transportation
Transportation infrastructure supports economic activity and is the foundation of a rich and abundant lifestyle. The promotion of investment is necessary for the maintenance and renovation oftransportation 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.

Case Study: Tokyo International Air Terminal
Tokyo International Air Terminal Corporation, headquartered in Ota-ku, Tokyo, was established to take charge ofan SPC to maintain and manage the international terminalbuildings of Tokyo International Airport, whose largest
shareholder is Japan Airport Terminal Co., Ltd.
This is the first case of national core transportation infrastructure being handled as a PFI.
CSR Report

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

Tokyo International Air Terminal, which began operationsin October 2010

Case Study: V-Lease
V-Lease Corporation, headquartered in Chiyoda-ku, Tokyo,

By applying the expertise it has cultivated to date,

was established to conduct the business of acquiring

DBJ entered the business of operating leases for aircraft

and leasing back spare engines owned by Zurich-basedengines, core parts for Japanese companies involved inInternational Aero Engines AG (IAE). DBJ’s investment

heavy industry. Through this business, we aim to promoteaccounted for 100% of the new company’s capital.

the further development of the Japanese airline industry.

Established as a joint venture by several companies,
including Rolls Royce Group plc and Japanese Aero Engines
Corporation, IAE manufactures and sells the V2500 enginesthat power the Airbus A320 family of aircraft. IAE has longterm maintenance agreements in place with various airlines
through which the company provides short-term leases ofspare engines to the airlines during maintenance intervals.
V-Lease and IAE concluded an agreement in which
V-lease purchases IAE’s spare engines, thereby moving thespare engine assets from IAE off the balance sheet.

V2500 engine

Annual Report & CSR Report 201177
CSR through Investment, Loan and Other Businesses

from its operational start-up.

©Tokyo International Air Terminal Corporation

Urban Development
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.

Case Study: Tobu Railway
Tobu Railway Co., Ltd., with its headquarters in Sumida-ku,

a wholly owned subsidiary of Tobu Railway, will introduce

Tokyo, is a major railway operator that operates two trunk

and operate a heat supply system in Tokyo Sky Tree’s vicinity.

lines, the Tobu Isesaki Line (between Asakusa and Isesaki
stations) and the Tobu Tojo Line (between Ikebukuro andYorii stations). Including Tokyo Sky Tree, the world’s tallest
free-standing broadcasting tower, this is a large-scale urban
redevelopment project in the Narihirabashi/Oshiage area.
Located in the area connecting Narihirabashi and Oshiage
stations, Tokyo Sky Tree is the key property in a developCSR Reportment slated to include commercial facilities, an aquarium,

78

arranged and provided financing for this project, including

a domed theater and other structures, and is expected torevitalize the area.
DBJ, together with Mizuho Corporate Bank, Ltd.,CSR through Investment, Loan and Other Businesses

Tokyo Sky Tree. DBJ has also invested in the tower’s operator, Tobu Tower Sky Tree Co., Ltd., and has provided funding to Tobu Energy Management Co., Ltd. This company,

Rendering of Tokyo Sky Tree, which is under construction andscheduled to begin operations in May 2012

Case Study: Tokyo Prime Stage
Tokyo Prime Stage Co., Ltd., is an SPC established jointlyWith DBJ as the lead arranger, 26 financial institutions

by Tokyo Tatemono Co., Ltd., and Taisei Corporation forare participating in the ¥270 billion syndicated loan—one

the purpose of developing a prime site located in Chiyoda-of the largest ever arranged in Japan.

ku, Tokyo, that is currently occupied by Mizuho Bank’s
Otemachi head office building and the Otemachi Financial=Structure of the Syndicated Loan

Center building into a large-scale multipurpose building,
Loan 1: ¥120 billion

tentatively named the Otemachi 1-6 Plan.
The current plan is for a standard floor area of approximately 2,970 square meters. The high-rise building will

Loan 2: ¥120 billion

house state-of-the-art office space and a luxury hotel,

Loan 3: ¥30 billion

with the premises providing around 3,600 square meters

Equityof green space. Construction is slated for completion inspring 2014.

Annual Report & CSR Report 2011

December 20092015

DBJ Green Building Certification Program
Demand is increasing for urban development and revitalization that take environmental conservation and disaster prevention into account in an attempt to realize a sustainable society. Recent years
have seen forward-looking initiatives among real estate providers to offer their stakeholders property
that is not only economical, but also incorporates consideration for the environment and society.

Case Study: Mitsubishi Estate
Mitsubishi Estate Co., Ltd., headquartered in Chiyoda-ku,(4) Displays an extremely high degree of environmental

Tokyo, is a comprehensive real estate developer that is cur-preservation awareness activities for tenants, and therently involved in the sequential redevelopment of property

owner cooperates with ongoing tenant initiatives.

in Tokyo’s Marunouchi district. This project commenced

As its first project to qualify under the DBJ Green

with the Marunouchi Building, which was completed in

Building Certification program, DBJ provided financing toAugust 2002.

Mitsubishi Estate, owner of the Marunouchi Park Building.

The Mitsubishi Estate-owned Marunouchi Park Building(located in 6-1, Marunouchi 2-Chome, Chiyoda-ku, Tokyo)
was completed in April 2009. This state-of-the-art office
CSR Reportbuilding, which rises 34 stories above ground, includes in
its first basement through fourth floors Marunouchi BRICK
SQUARE, a shopping zone that buzzes with activity during
the day. The Mitsubishi Ichigokan Museum, located on thepremises, features bricks restored from the first office build-79
CSR through Investment, Loan and Other Businesses

ing in the Marunouchi area.
For the reasons described below, DBJ ranks this structure
highly as “a Japanese building that serves as an excellent
example of environmental and societal consideration.”
Accordingly, DBJ awarded the Marunouchi Park Building
its top “platinum” ranking in the DBJ Green Building
Certification program, because it:(1) Boasts superior environmental performance by making
use of leading-edge technologies,(2) Delivers value beyond the simple function as an officebuilding through the inclusion of plazas, museums andthe like, thereby going beyond its business application toprovide space that promotes leisure and culture,(3) In addition to being well equipped on the disaster- andcrime-prevention fronts, includes a commercial zone withfitness club and other facilities that enhance the building’s convenience and make it an extremely amenable
offering for residents and others in its vicinity, andMarunouchi Park Building

Annual Report & CSR Report 2011

Financing Employing DBJ Environmental Ratings
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 society.

The graph below shows the amount of Financing Employing

The DBJ Environmental Ratings Advisory Committee

DBJ Environmental Ratings for the past seven years. Financing

meets to receive outside expert advice and make adjust-in the year ended March 31, 2011, amounted to ¥78.2 billion,

ments to the DBJ Environmental Ratings system in line withan increase of approximately 19% year on year. The total for

past scoring and results as well as with trends in environ-the seven years to March 31, 2011, stands at ¥361.4 billion.

mental policy. Revised DBJ rating sheet for Fiscal 2011, will
incorporate elements related to ISO 26000, which went

=Track Record of Financing Employing
DBJ Environmental Ratings

into effect in 2010, and enhancements related to corporatesocial responsibility (CSR). DBJ has also made adjustments(Billions of yen) Reference

78.2

80
60.3

60

CSR Report

40

40.3

65.5

to place an increased focus on the relationship between
a company’s core business and biodiversity, reflecting
The 10th Conference of the Parties to the Convention on
Biological Diversity, also known as COP 10, which took

44.7
36.5

35.8

place in Nagoya in 2010.

20

80
CSR through Investment, Loan and Other Businesses

0Year ended Year ended Year ended Year ended Year ended Year ended Year ended
March 31, March 31, March 31, March 31, March 31, March 31, March 31,
2005
2006
2007
2008
2009
2010
2011
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).

DBJ environmental logo

Case Study: Kanagawa Chuo Kotsu
Kanagawa Chuo Kotsu Co., Ltd., headquartered in the city

Ecopass, a commuter pass that incorporates carbon offsets.

of Hiratsuka, Kanagawa Prefecture, chiefly operates buses

The current environmental rating-based financing wasin Kanagawa Prefecture, but is also involved in real estate,provided to reinforce Kanagawa Chuo Kotsu’s environmen-

hotels and other businesses. The company has undertaken

tally conscious initiatives by providing funds to introduce

a number of forward-looking initiatives to enhance its

low-emission buses. Going forward, DBJ expects the com-level of service, such as being the first operator in Japan topany to provide an important role in the region’s transpor-

introduce steplifts on its buses, thereby helping to raise thetation infrastructure.

service level of bus transportation throughout Japan.
The operator was evaluated highly for its cooperationin constructing the Public Transportation Priority System* Designed to give priority to public-transport vehicles, this advanced
traffic light control system recognizes individual buses.

(PTRS)*, its position as the first operator in Japan to introduce a non-step bus—the Twin Liner—in response to
Japan’s Transportation Accessibility Improvement Law andits contribution to society as a whole by raising the efficiency of transport systems. Another factor behind its high rating was Kanagawa Chuo Kotsu’s effort to encourage a shift
from private vehicles to the use of public transportation
through the introduction of an environmental commuter
pass and the industry-leading implementation of the Green

Annual Report & CSR Report 2011

Twin LinerFinancing Employing DBJ Environmental Ratings
Case Study: FP Corporation
FP Corporation, headquartered in the city of Fukuyama,
Hiroshima Prefecture, leads the industry in the manufactureand sale of trays used for food products. The company has
set up a voluntary system to collect used trays, recycle themand convert them again into products. Recognizing earlyon that international society was sharpening its focus on
the growing responsibility of manufacturers, FP Corporation
introduced the first system in Japan to conduct ongoingrecycling awareness activities targeting packaging wholesalers, retailers and consumers.

*1 A recycling system in which post-use trays are voluntarily recovered and converted to Eco Tray products.
*2 Under this system, financial institutions having a high level ofenvironmental awareness provide syndicated loans that go
toward companies’ environmental expenses and investments. The
name derives from the English word “ecology” and the Japaneseword “wa,” which connotes harmony, cycles and rings.
*3 Acronym for the Association of Development Financing
Institutions in Asia and the Pacific.
FP Corporation

Consumers

DBJ gave the company high marks for (1) the FP Tray-toTray*1 environmental recycling system for lowering its environmental impact and (2) voluntary technical developments
to make food trays more lightweight.

To shops

ECONOWA*2, through which a total of ¥3.0 billion was provided via 14 regional financial institutions. At the ADFIAP*3

Sales

To thetable

Picked up by
FP Corporation

Packagingwholesalers

Supermarkets

annual meeting in April 2011, the ECONOWA loan to FP

81

Corporation received the Local Economic Development

Product distribution

Regular collection

Tray-to-Tray recycling system

Case Study: Valor
Valor Co., Ltd., headquartered in the city of Ena, Gifu

operational. By promoting initiatives in these areas, thePrefecture, an operator of supermarkets in Japan’s Chubu

company expects to reduce its environmental impact evenregion, is pursuing environmentally conscious management

further.

via thoroughgoing cost management and the rollout of
DBJ provided financing to the company based on its
high environmental rating. Earning this rating were (1) its
initiatives to improve its environmental burden through*1 Efficient energy management systems that use waste heat emitted from power generation to meet other demands for heat, suchas in air conditioning and hot water supply systems.
*2 Energy-efficient air conditioning systems that use desiccants fordehumidification.

certification of the energy efficiency of various facilities,(2) in existing stores, its cogeneration*1 and desiccant air
conditioning systems*2, as well as its steady installation ofother energy-saving equipment, and (3) the introduction inits Kusatsu Store in Shiga Prefecture of photovoltaic generation and geothermal temperature regulation and othersystems. Through its verification project, the company has
succeeded in reducing CO2 emissions by more than onethird compared with existing stores.
Valor plans to sustain its environmentally consideratemanagement approach from two angles—hardware andCogeneration system and solar panels at the Valor Hikone Store

Annual Report & CSR Report 2011

CSR through Investment, Loan and Other Businesses

Division Special Award in the ADFIAP Awards.

low-carbon stores.

CSR Report

After FP Corporation received its environmental rating,
DBJ arranged the Environmental Club Syndicated Loan

Environmental Technology
To solve global warming, energy problems and a whole range of environmental issues, and to promote the creation of a recycling-oriented society, it is important to support businesses financially sothat they can undertake the development of the required technologies. To achieve these objectives,companies must obtain and accumulate more advanced technical expertise, and a steady stream offunding is necessary to accommodate projects of different scales at varying stages of development.

Case Study: DB Masdar Clean Tech FundDB Masdar Clean Tech Fund, L. P., is a clean technology*1
fund managed by Abu Dhabi Future Energy Company(Masdar; head office: Emirate of Abu Dhabi), which is aconglomerate owned by the Emirate of Abu Dhabi*2 that
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.
CSR Report

the clean technology field as they work to commercialize

82

world and sharpen the country’s international competitive

Numerous companies worldwide are engaged in R&D inpromising environmental technologies.
To bring Japan’s environmental technologies to the*1 Refers to a range of technologies, products, services and processes that utilize renewable resources to lessen the consumptionof 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 anda 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 newmaterials; and automotive andother transportation-related
technologies.
*2 One of the emirates constituting the United ArabEmirates (U.A.E.)

CSR through Investment, Loan and Other Businessesedge through the environmental industry, DBJ provided
funding to the DB Masdar Clean Tech Fund, which has abroad-based network and a large technology team, withthe view that support is required for investment funds thathave global networks and technical evaluation capabilities.

Conceptual rendering of
Masdar City, which will
run entirely on renewableenergyCase Study: Kanmon Kowan Construction
Kanmon Kowan Construction Co., Ltd., headquartered in theincorporates global warming countermeasures and othercity of Shimonoseki, Yamaguchi Prefecture, is a marine con-environmental considerations on an unprecedented scale.

struction contractor involved primarily in dredging*1 and filling.
Leveraging the advanced dredging technology it cultivated on
the Kanmon Waterway, involving swift currents, rock plates
and hard ground, Kanmon Kowan Construction participates
actively in overseas projects, such as the Railway Bosphorus*1 Deepening waterways through the removal of underwater dirt
and sand.
*2 This type of working vessel, also known as a pump dredger, uses
a barge-mounted earth-moving shovel to place earth onto a conveyer, which is used to transport the material to a landfill location.

Tube Crossing, Tunnels and Stations in the Republic of Turkey.
DBJ provided Kanmon Kowan Construction with financing
to build OCEAN No. 5, a backhoe reclaimer work vessel*2.
The OCEAN No. 5 contains equipment for transporting
dredged soil to the reclamation location without dirtying
the sea, a seawater desalination unit, oily water separationequipment, and sewage treatment facilities. Furthermore,
the vessel has adopted rooftop gardening technology. Itsdiesel engines satisfy International Maritime Organization
Tier II emission requirements and were introduced inadvance of their implementation. This combination of features makes the OCEAN No. 5 a reclaimer work vessel that

Annual Report & CSR Report 2011

New OCEAN No. 5 backhoe reclaimer work vessel

Healthcare and Welfare
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 and a needto rebuild aging facilities. Offering uninterrupted medical services involves solving fiscal and administrative problems and improving the skills of medical and other personnel and the quality of related
facilities and medical equipment.

Case Study: JR Sapporo Hospital
JR Sapporo Hospital, located in Chuo-ku, Sapporo, is a

DBJ strengthened ties with regional financial institutions

312-bed medical institution that plays a central role inin Hokkaido through a business cooperation agreement it

the region and is owned and operated by the Hokkaido

concluded in September 2005. DBJ expects that this financ-

Railway Company.

ing scheme, which supports the enhancement of local

In coordination with other organizations, DBJ supplied

healthcare and the assignment of regional healthcare func-

project financing for the reconstruction of JR Sapporo

tions to facilities with advanced medical capabilities, can be

Hospital’s dilapidated medical facilities. An SPC was establishedapplied to many hospitals.

to enable funding procurement that would take advantage of
CSR Report

the earning power of the new facility and to successfully
separate the ownership of the hospital from its 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 withmezzanine loan extended by DBJ.

Case Study: Trinity Healthcare FundIn cooperation with Mitsubishi Corporation, DBJ establishedand nursing facilities that require management support. The

the Trinity Healthcare Fund to provide equity to support busi-

fund then formulates management improvement plans andness revitalization/restructuring for healthcare operators.

cooperates with the management of firms requiring sup-Health Management Partners, Inc., was established toport to strengthen their financial and management struc-

operate the fund created by the two companies throughtures. The fund also proposes fund procurement methods

this joint investment. The fund buys loans issued by finan-that employ the securitization of real estate and provide

cial institutions throughout Japan to medical institutions

financing in response to regional medical needs.

=Overview of the Trinity Healthcare Fund
Example:SPC Project A

Hospitals
Creditobligations
Regionalbanks,
othersCollateralized Borrowings
loan
obligations
Disposal(forhospitals,
Equityetc.)
investment
Example:SPC Project B

Healthcare
corporations,others

DisposalBeneficiaryrights to Borrowings
enhancereal estateliquidity
Equityinvestment

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

Equityinvestment
in various
projects

Equityinvestment

Equityinvestment

Mitsubishi
Corporation

DBJ

Equityinvestment
in anonymous
associations

Annual Report & CSR Report 201183
CSR through Investment, Loan and Other Businesses

JR Sapporo
Hospital afterreconstruction

senior loans provided by regional financial institutions and a

Healthcare and Welfare
Case Study: Mitsui Memorial Hospital
Mitsui Memorial Hospital, located in Chiyoda-ku, Tokyo,
handles emergency and advanced medical care, and is oneof the metropolitan area’s leading general hospitals for acute* Difficult treatments, such as cardiovascular and cancer treatments,that require a high degree of expertise and that must be performed urgently

treatment. Since its establishment in 1906, the hospital has
maintained a spirit of social welfare, catering to the needy byat times waiving or reducing medical fees. Mitsui Memorial
Hospital also maintains ties with nearby university hospitals,
regional medical societies and private hospitals, playing animportant role as a core regional hospital.
The hospital had resolved to undergo a complete reconstruction to replace aging facilities and address the issue of
insufficient earthquake protection, as well as in the future tobuild a new hospital wing to provide advanced acute treatment*. DBJ met the hospital’s financing needs for constructCSR Report84

ing a new wing—taking a proactive approach toward projectrisk by concluding a financing agreement prior to the start of
Mitsui Memorial Hospital, as its reconstruction plan nears completion

construction.

Case Study: Takeda General Hospital

CSR through Investment, Loan and Other Businesses

With principal facilities in Aizu-Wakamatsu, Fukushima

the business and construction plans for Takeda General

Prefecture, Takeda General Hospital is one of Japan’s

Hospital’s new building.

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 inregional healthcare and is designated as a regional medical support hospital, regional perinatal mother-and-childmedical center and regional affiliated base hospital forcancer 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 withRendering of the new hospital building

Medical Management Database 2011
Edited by DBJ and Japan Economic Research Institute, Inc., and published in July 2011, this handbook
focuses on supporting hospital management reform. The handbook provides a compact and comprehensive overview of essential information, including updates to basic information such as thatindicated below.
• Environment surrounding the healthcare sector (such as trends involving hospital facilities andmanagement)• Analysis of the current status of hospital management (running costs, facility investment andtrends involving securing physicians and nurses)• Topics related to hospital management (such as examples of hospital management improvements
and cooperation among community healthcare facilities)

Annual Report & CSR Report 2011

Restructuring and Revitalization
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 the corporate business environment. Smooth revitalization is an important issue for not only the distressedcompanies that are viable businesses themselves but also the financial institutions and other entities
supporting their revitalization.

Case Study: Japan Industrial Solutions
Japan Industrial Solutions, Ltd., headquartered in Chiyoda-

and other requirements. At the same time, Japan Industrial

ku, Tokyo, was established to manage business revital-

Solutions plans to collaborate with the investee companies’

ization funds. The company was formed through joint

management teams as well as their main banks to achieve

investment by a number of companies, including DBJ,

its investees’ business revitalization.

Mizuho Corporate Bank, Ltd., Sumitomo Mitsui Banking

Working in concert with other financial institutions, DBJ

Corporation, The Bank of Tokyo-Mitsubishi UFJ, Ltd.,

aims to introduce a broad range of measures to enhance

Mitsubishi Corporation, and other companies.

corporate value, including through industry restructuring. In
this manner, we will support Japan Industrial Solutions in its

Solutions will provide equity and other capital support toendeavor to contribute to the efforts of Japanese industry

respond to companies’ needs for cash and capital reinforce-

to face increasingly stringent global competition and thement depending on the extent of business restructuring

structural issues underlying sluggish domestic demand.

CSR Report

By forming business revitalization funds, Japan Industrial

85=Fund schemes

Equity and other capital support<Business revitalization funds>
Japan Industrial Solutions No. 1 Limited Partnership

Current amount: approximately ¥40.0 billion
Expected maximum amount:¥100.0 billion

Fund
investment

Fundinvestment

Fundinvestment

Fundinvestment

Fundinvestment

Fundinvestment

Japan Industrial
Solutions, Ltd.

DBJ

MizuhoCorporate
Bank, Ltd.

Sumitomo Mitsui
Banking
Corporation

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

Mitsubishi
Corporation

Others14.9%
investment

14.9%
investment

14.9%
investment

14.9%
investment

14.9%
investment

25.5%
investment

Company
establishment

Fundinvestment
Other
institutional
investors

Case Study: Hokuto Solutions
Hokuto Solutions, Ltd., a wholly owned subsidiary of
Hokuto Bank Ltd., both headquartered in the city of Akita,

Holding Company

Divided subsidiaries
Hokuto Solutions(Established October 1, 2009)

was established in an attempt to improve its parent’s financial

Preferred stock

health by reducing nonperforming loans and providing management support to trading partners. DBJ concluded a business

The Shonai Bank

Hokuto Bank

alliance with Hokuto Bank and The Shonai Bank, Ltd., which
has headquarters in the city of Tsuruoka, Yamagata Prefecture.
Hokuto Solutions inherited ¥16.2 billion in nonperforming loans from Hokuto Bank and is engaged in debt management and the support of business revitalization activities

Temporary staff

for Hokuto Bank.
DBJ provided temporary staff to Hokuto Solutions andinvested approximately ¥1 billion in the form of nonvoting

DBJ

Division of disclosed
debt (divided
subsidiaries possess
100% voting rights),
temporary staff
Preferred stock acquisition,
temporary staff

preferred stock.
Annual Report & CSR Report 2011

CSR through Investment, Loan and Other Businesses

Investee Companies

M&A and Business Alliances
Mergers and acquisitions (M&A) have entered the spotlight with their increasing prevalence, owing
to such factors as more diverse forms of business development, Asia-centered overseas expansion, andgrowing activities in business and industry restructuring. M&As are considered effective and essential for aggressive business restructuring and to overhaul and revitalize underperforming businesses.

Case Study: Toppan Printing
Asia and the U.S. and European markets.

Toppan Printing Co., Ltd., which has its headquarters in

After careful analysis of SNP’s corporate value andChiyoda-ku, Tokyo, is involved in developing business in a

CSR Report86

broad range of areas that include information and networks

overseas business development, DBJ proposed theand are focused on the printing industry.

acquisition of SNP to Toppan, and as a result DBJ and

Through its extensive information network, DBJ

PricewaterhouseCoopers Singapore* supported Toppan’s

learned that investment company Temasek, owned bypurchase of SNP as joint M&A advisors. The combination of

the Singapore government, intended to offer for sale

Toppan’s advanced technology and SNP’s production and

SNP Corporation (currently Toppan Leefung Pte. Ltd.),sales network promises to enhance Toppan’s business ina Singapore-based printing company. Starting out asoverseas markets.

Singapore National Printers Pte Ltd., a government printing
office, SNP is now a major player in the printing industry,*PwC Singapore is a member of New York–based
PricewaterhouseCoopers, the world’s largest professional services firm.

operating domestically and in China, Hong Kong, Southeast=SNP Acquisition Scheme

CSR through Investment, Loan and Other Businesses

TemasekPwC Singapore

DBJ

100%

Advisory service

Green Dot Capital

Toppan Printing

53.55%TOB (Singapore market)

SNP Corporation

Case Study: Toko Electric
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 advanced electronic power meters (smart
meters*), (2) strengthening its gas, water and commercial*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 regular intervals. Smart meters also aid inelectricity supply planning by
power companies throughconstant monitoring of theamount of power used.

measuring gauge business, and (3) advancing 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.

Annual Report & CSR Report 2011

Electronic power meter(with communication function)

Private Finance Initiatives
Private finance initiatives (PFIs) draw on private-sector capital and management expertise, as wellas technology, to build, operate and maintain social infrastructure that has traditionally been theprovince of national and local governments. Advantages of the PFI method include reduced operating costs on the part of national and local governments, while taking advantage of private-sector
knowledge to receive high-quality public services, and business opportunities created for privatesector enterprises. Problems confronting PFIs include such practical operating concerns as allocating
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, as
well as operating the business.

Case Study: Water Next Yokohama
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.
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

87

for the overall renewal and management of a water treat-

Membrane filters
Solar panels

membrane filtration water treatment facility. The adoptionof a high-capacity membrane filtration system enables efficient operation and maintenance, and taking advantage ofOverview of the planned facilities

Case Study: Mine Inmate Rehabilitation Support
Mine Inmate Rehabilitation Support Co., Ltd., headquar-

expanding and upgrading the existing prison facility, as welltered in Shibuya-ku, Tokyo, was established as the firstas operating, maintaining and managing the new wing,organization in Japan to build and operate a new prison,

DBJ again collaborated with the Bank of Tokyo-Mitsubishi

the Mine Rehabilitation Program Center, under the PFI

UFJ to develop a collaborative project finance scheme withmethod. Secom Co., Ltd., was among the companies

regional financial institutions.

financing the establishment of the special-purpose company (SPC) to operate this prison, located in the city ofMine, Yamaguchi Prefecture.
In June 2006, DBJ and the Bank of Tokyo-Mitsubishi UFJ,
Ltd., arranged a project finance package to provide collaborative financing to promote Mine Inmate Rehabilitation
Support at each stage.
The Mine Rehabilitation Program Center has operated
smoothly since it opened in 2007, and in October 2010 thefemale inmates. To meet the PFI’s additional objectives ofRendering of the renovated and expanded Mine
Rehabilitation Program Center

Annual Report & CSR Report 2011

CSR through Investment, Loan and Other Businesses

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

operator decided to add a wing to house an additional 300

CSR Reportrenovate the Kawai Water Purification Plant in the city ofFinancing Employing DBJ Disaster Preparedness Ratings
Such recent disasters as the Great Hanshin-Awaji Earthquake, the Chuetsu Offshore Earthquake, theIwate-Miyagi Inland Earthquake and the recent Great East Japan Earthquake caused tremendous
damage to the economy, with many organizations forced to suspend operations for extended periods.
In addition to measures for protecting personnel and property, companies face the need to draft
business continuity plans (BCPs) to hedge themselves against lost revenue and retain their clients inthe event of disaster.
Case Study: Suminoe Textile
Suminoe Textile Co., Ltd., headquartered in Chuo-ku,

continuity by enrolling in earthquake insurance and businessOsaka, is a leading company in the interior industry, withinterruption insurance to shore up the company’s financesbusiness comprising automobile and other vehicle interiors.

in the event of disaster, and (2) providing its own water

Based on its evaluation of Suminoe Textile’s disaster-

resources through an internal storage lagoon, as one aspectpreparedness initiatives, DBJ provided the company withof cooperation with the regional community as demonstrated

Financing Employing DBJ Disaster Preparedness Ratings.

by its opening of an evacuation area on its own grounds toTo achieve its objectives, Suminoe Textile set up a risk
CSR Report88

the neighboring community.

management committee as an organization spanning theentire company. Centering on this committee, the company created an earthquake preparedness manual, clearly
defined organizations and functional responsibilities in theevent that disaster struck, and defined specific initial disaster responses.

CSR through Investment, Loan and Other Businesses

In addition to this internal preparedness, DBJ rated thecompany highly on its proactive disaster preparedness
efforts, including (1) its initiatives to promote business

SUMITRON recycled fiber,
produced by Suminoe Textile

Case Study: Nippon Kodoshi
Nippon Kodoshi Corporation, headquartered in the city ofmanagement organization, while ensuring management’s

Kochi, Kochi Prefecture, was established in 1941 to employ

concentration on business continuity and (2) building a new

the technology used in making Tosa paper to manufacture

factory to decentralize its operations to mitigate the risk ofviscose-impregnated paper. The company soon embarked

potential Nankai megathrust earthquakes while maintaining

on the manufacture of separators for aluminum electro-

its locus of production activities in Kochi Prefecture.

lytic capacitors, an area in which it is currently the leading
manufacturer, with a global market share of 70%. In recent
years, Nippon Kodoshi has also undertaken the mass production of separators used in lithium-ion batteries. These
batteries are a target of growing focus for their use in ecocars, which feature reduced environmental impact.
After giving high marks to Nippon Kodoshi’s disaster
response initiatives, we offered Financing Employing DBJ
Disaster Preparedness Ratings. We rated highly the company’s efforts to ensure a stable supply of products to its
customers in Japan and overseas. These included (1) the creation of a disaster response management procedure basedon such groups as the damage countermeasures department

Annual Report & CSR Report 2011

Rendering of Yonago plant in Tottori Prefecture

Community Revitalization
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.

Case Study: Amino Up Chemical
Amino Up Chemical Co., Ltd., headquartered in the city of

The eco-house wing will be an energy-saving facility,

Sapporo, is a pioneering Hokkaido-based bioventure that

employing natural energy sources such as geothermal

develops highly functional health foods from commonly

heating and snow and ice for cooling.

available foodstuffs, such as mushrooms and soybeans.
Promoting joint research in collaboration with a numberof other institutions, the products created through thecompany’s sophisticated biotechnologies* are rated highly
and are used at many medical institutions.
DBJ’s Hokkaido Branch has certified Amino Up Chemical
under its Regional Areas’ Genki Program (Food Industry) forthe company’s success in promoting cooperation among

CSR Reportby specialists in Japan and overseas for their scientific basis* Products include active hexose correlated compound (AHCC), a
mushroom-derived mycelia extract employed in cancer healthsupplements, and oligonol, a lychee-derived, low-molecular compound polyphenol with excellent antioxidant properties.

89

Hokkaido companies and other organizations to contribute
financing to be used in the construction of a new factory
and an eco-house wing (a new office wing housing an
exhibit space).

New plant and eco-house wing

Case Study: NEC TOKIN
NEC TOKIN Corporation, headquartered in the city of
Sendai, Miyagi Prefecture, holds an industry-leading shareof the market for tantalum capacitors. As the core companyof the NEC Group’s electronic component business, NEC
TOKIN also manufactures and sells globally a host of othercompact, high-capacity and high-performance electronic
components that are used in advanced mobile phones, personal computers, automobiles and other items.
The NEC Group currently is working to expand its envi-

Automobile transformer for eco-car

ronmental and energy-related business. Accordingly, thecompany is taking advantage of its highly advanced environmental technologies to promote energy savings in notebook
PCs, flat-screen televisions and other digital home electronics. NEC TOKIN is also stepping up its development andmaking an aggressive effort to expand its offerings of environmentally conscious automotive electronic components.
DBJ provided funding to NEC TOKIN on the basis of the
Tohoku Branch’s certification of the company under the
Regional Areas’ Genki Program (Clean Innovation).

Metal components and inductors that contributeto energy savings on notebook PCs

Annual Report & CSR Report 2011

CSR through Investment, Loan and Other Businesses

to higher-value-added foods. Accordingly, DBJ provided

Community Revitalization
Case Study: Kosoku
Kosoku Co., Ltd., headquartered in the city of Sendai,

DBJ provided funding to Kosoku on the basis of the

Miyagi Prefecture, is a trading company that specializes in

Tohoku Branch’s certification of the company under thethe sale of packaging materials, chiefly in the Tohoku andRegional Areas’ Genki Program (Clean Innovation).

Tokyo metropolitan regions. In response to mounting concern about environmental problems in recent years, Kosoku
is increasing the volume of biodegradable materials* and* Materials that can be broken down by microorganisms.
Biodegradable materials have less of an impact on the natural environment than conventional materials.

other environmentally conscious products it handles.
Kosoku has relocated its Yamagata sales office toArcadia Soft Park Yamagata, where many of the prefecture’s research and support institutions are gathered, andhas also expanded this facility. This new sales office will also
house a packaging material research laboratory, enhancing
the company’s ability to perform research into environmentally friendly packaging materials for the produce and proCSR Report90

cessed foods handled by local supermarkets.

Yamagata sales officeCase Study: AOKISHUZO The Sake Brewery
AOKISHUZO The Sake Brewery Co., Ltd, headquartered in
the city of Minamiuonuma, Niigata Prefecture, is a sake

CSR through Investment, Loan and Other Businesses

brewer that was founded in 1717.
Typical of AOKISHUZO’s offerings is Kakurei, which isbrewed in a special way to retain the fundamental deliciousness of sake but without the sharp, dry finish that iscommon among Niigata sake varieties.
AOKISHUZO aims to expand its brewing facilities in
response to heightened demand, as well as open a restaurant making use of its sake cellar to promote local tourism.
DBJ provided funding to AOKISHUZO on the basis of
the Niigata Branch’s certification of the company under

Brewery founded in 1717

the Regional Areas’ Genki Program (Food Industry: ValueAdded Rice Products and Services).
Case Study: Kobayashi Kako
Kobayashi Kako Co., Ltd., headquartered in the city of

to construct a new factory on the basis of the Hokuriku

Awara, Fukui Prefecture, is a pharmaceutical manufacturer

Branch’s certification of the company under the Regionalthat primarily handles generic drugs. Against a backdrop of

Areas’ Genki Program (Manufacturing Industry: Electronics,

current Japanese government policies promoting the use ofPharmaceuticals, Textiles, Plastics).

generic drugs, Kobayashi Kako has developed pharmaceuticals to meet the needs of medical practitioners. The company has received plaudits for its development of productsthat are easy for medical facilities to handle and simple forpatients to take. Accordingly, the company’s products haveearned broad-based acceptance in the medical community.
To enable the company to meet growing demand andcommence full-fledged production of value-added medical
formulations, DBJ provided Kobayashi Kako with financing

Annual Report & CSR Report 2011

Rendering of new plant

Community Revitalization
Case Study: Lithium Energy Japan
Lithium Energy Japan, headquartered in the city of Kyoto,capacity, following certification under the DBJ Development

was established in December 2007 to develop, manu-

Support Program (Nihon Genki Program).

facture and sell large lithium-ion batteries, such as thoseused in electric vehicles. The company is jointly financed
by GS Yuasa International Ltd., Mitsubishi Corporation and
Mitsubishi Motors Corporation.
Demand for lithium-ion batteries is increasing to meetgrowing demand for their use in electric vehicles, which
contribute to reduced CO2 emissions. DBJ provided financing for Lithium Energy Japan to construct a new facility, theRitto plant, to expand its lithium-ion battery production

Rendering of Ritto plant

Case Study: Nichia
Nichia Corporation is a leading manufacturer of lumi-

DBJ has extended loans to Nichia to provide financial
support for its activities in the manufacturing field that

Tokushima Prefecture. Recently, propelled by its successful

leverage its robust technical capabilities.

development of the high-brightness blue light-emitting
diode (LED), Nichia has garnered a major share of the global
market for LEDs. The company is also a global leader in the91

batteries. Recently, demand for these materials has grown,
owing to electricity-saving measures introduced in theaftermath of the Great East Japan Earthquake.
As a long-life, energy-efficient, mercury-free lighting
technology, the LED is a promising, environmentally friendly
light source. Advancements in brightness and color rendering
performance are building momentum for the use of LEDs inbacklights for notebook PCs and LCD televisions, with utilizaLEDs

Case Study: Kyuden Ecosol
Kyuden Ecosol Co., Ltd., headquartered in the city of

DBJ provided a financing program for Kyushu Ecosol

Fukuoka, is a wholly owned subsidiary of Kyushu Electric

through the collaboration of 11 Kyushu-based regional

Power Co., Inc. The company consistently designs andfinancial institutions. Employing this program gives Kyuden

constructs total solar power solutions for industrial andEcosol access to expeditious funding under favorable condi-

public-sector customers in the Kyushu region, including

tions. Also, for financial institutions, the program secures apost-installation management services.

common ground for

Kyuden Ecosol’s integrated services involve providing its

the parties, whichcustomers with power generation equipment that is erect-

reduces the admin-

ed within their own facilities, and then providing them withistrative burden formaintenance and operations management services. This

both the borrower

approach reduces customers’ initial investment and gives

and the lenders.

them access to solar power without concern for operations
management. Going forward, demand is expected to grow,as solar power attracts increasing attention as a major
source of renewable energy.

Environmentally conscious shopping mallthat uses Kyuden Ecosol’s services

Annual Report & CSR Report 2011

CSR through Investment, Loan and Other Businesses

manufacture and sale of cathode materials for lithium-ion

tion in general lighting and vehicle lighting well under way.

CSR Reportnescent materials with headquarters in the city of Anan,

Community Revitalization
Case Study: Fund to Support the Recovery of Small and Medium-Sized Enterprises

from the Impact of Infection by Foot-and-Mouth Disease
In addition to livestock-related industries, foot-and-mouth

age resulting from foot-and-mouth disease by using funddisease has a wide-ranging impact on a variety of indus-

investment returns to invigorate the community and assist

tries, including tourism. A recent infection by this diseasebusinesses to attract visitors from outside the prefecture.

has battered the overall economy of Miyazaki Prefecture.

DBJ financed this fund via the Minami-Kyushu Branch,

The Fund to Support the Recovery of Small and MediumSized Enterprises from the Impact of Infection by Foot-and-based on the Regional Areas’ Genki Program (Food, Healthand Environment Industry).

Mouth Disease helps to support recovery from the dam=Overview of the Fund to Support the Recovery of Small and Medium-Sized Enterprises
from the Impact of Infection by Foot-and-Mouth Disease

CSR Report

The Organization for
Small & Medium
Enterprises andRegional Innovation,
Japan (SME Support,
Japan)

MiyazakiPrefecture¥20.0
billion

DBJ¥22.0 billion

Local banks(The Miyazaki Bank,
Ltd. and other banks)¥1.0 billion¥2.0 billion

92
CSR through Investment, Loan and Other Businesses

Miyazaki Prefectural Industrial Support Foundation

Fund (¥25.0 billion)

Assistance throughfund investment returns
Introduction of support measures=Community revitalization event support=Support issuance of premium productvouchers, as well as other measures

Case Study: LEC
LEC, Inc., headquartered in Chuo-ku, Tokyo, manufacturesand sells everyday and sundry items such as interior,sanitary and kitchen goods, to general merchandise storesand ¥100 shops.
On the strength of the manufacturing and quality
control technologies it has accumulated over the years, thecompany has brought its production of principal products
in-house, thereby reducing costs and ensuring a stable supply of products to consumers. This approach has earned
the company a strong reputation in the market and from its
business partners.
We provided financing to LEC—which in addition to its
Shizuoka and Shikoku plants has operations in other partsof Japan and overseas and contributes to regional employment—through the DBJ Development Support Program(Nihon Genki Program).

Annual Report & CSR Report 2011

Gekiochi-Kun, which removes stains with only
water—no detergent required—and other popular
products

Overseas
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 developmental 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 its own processof economic development. Japan must also mobilize its unique profile of strengths in the fields of theenvironment and infrastructure to deploy business operations in the rest of Asia in a comprehensive
and strategic fashion.

Case Study: Senoko Power (now Senoko Energy)
Senoko Power Ltd. (hereinafter, “SP”; currently Senoko

technologies, and Marubeni Corporation, with its expertise

Energy Pte Ltd.) is Singapore’s largest power company.

in overseas power plant operations.

Amid the promotion of deregulation of the electric
CSR Report

power industry by Singapore’s Energy Market Authority(EMA) and rising concerns about global warming issues,
investment to raise efficiency within the approved energy
output (repowering) is being recognized as an importantmanagement challenge for SP. Given these circumstances,93

DBJ provided subordinated financing for SP in November
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

Senoko Energy power plant

Case Study: Saigon Paper
Saigon Paper Corporation, headquartered in Ho Chi Minhpotential capital and business alliance partner, provided advi-

City, Vietnam, is a leading manufacturer of paper, includ-sory services and extended joint financing to Saigon Paper.

ing household paper and paperboard. Saigon Paper, whichplays a role in a core industry in Vietnam, was preparing tocommence operations of a major plant and looking overseas for capital and business alliance partners.
Through its investment activities, DBJ aims to help
Japanese companies that intend to expand their operations
overseas with an opportunity for growth in Vietnam, whileat the same time supporting business expansion and cultivating industry in Vietnam.
Leveraging the experience and networks it has cultivatedin Vietnam, DBJ introduced Daio Paper Corporation as a

Saigon Paper products

Annual Report & CSR Report 2011

CSR through Investment, Loan and Other Businesses

2009, aiming to support the company’s projects in light ofEnvironmental Management

DBJ aims to realize a more prosperous sustainable society

strive for harmony between economic development andby 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-

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

CSR Report

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 resolution of environmental problems as an issue that is common to all
humankind. For this reason, DBJ has established a policy that aims
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 totheir creation of environmental measures and to the realization ofa sustainable society.
2. DBJ contributes to clients’ environmental measures through the risk
evaluations of investment and loan activities from an environmental perspective.
Promotion of Environmental Awareness through Environmental
Communication
Article 3.
1. Through continuing research and advisory activities relating to environmental issues, DBJ seeks to help resolve environmental issues

94
Environmental Management

through enhanced awareness, thereby contributing to the realization of a sustainable society.
2. DBJ seeks to promote environmental awareness through international 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 the activities 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.

nCommunication Focused on the Environment – See page 72.

Financing Employing DBJ Environmental Ratings – SeenCommunication to Community Revitalization – See page 72.

pages 48, 80-81.

nCommunication in International Cooperation – See page 73.

nn

DBJ Green Building Certification Program – See pages 50
and 79.

Annual Report & CSR Report 2011

Promotion of Environmental AwarenessPromotion of Environmental Awareness

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.

• Promotion of recycling and resource and energy• Head Officeconservation

Uchimizu Project 2010

Resource- and Energy-Saving Efforts

DBJ participates in theYear Ended
March 31,2009

Year Ended
March 31,2010

Year Ended
March 31,2011

Copy and printing paper usage（kg）

101,269

95,992

93,189campaign hosted by the

Waste emissions（kg）

85,86076,03061,610Otemachi, Marunouchi

Energy consumption（kWh）
Water usage（m3）4.94 million
25,257

4.82 million 4.50 million
24,85625,411

Note: Head office building only

Uchimizu Project 2009, a

and Yurakucho (OMY)
Uchimizu Project District
Executive Committee(Otemachi-Marunouchi-Yurakucho District Redevelopment• Promotion of environment-friendly sourcing ofProject Council/Cooperative for the Promotion of the OMYArea Management Association), Ministry of the Environment,

DBJ joined the Green Purchasing Network in December

Tokyo Metropolitan Government and Chiyoda-ku. DBJ is con-2000, and following the Act on Promotion of Procurement

tinuing with its participation in the Uchimizu Project 2010.

of Eco-Friendly Goods and Services by the State and Other

Volunteers planting seedlings and flower bulbs

Entities (Green Purchasing Act), which went into effect inservices with a lower environmental impact. We have continued to practice green purchasing following our privatization.

Volunteers planting seedlings and flower bulbs
Regional entities, companies and other organizations form agreements

Achievements of the Green Procurement Program
for Typical Items
Year Ended March 31, 2011

concerning certain public
facilities, such as theroads, parks and other facilities managed by national andother government bodies. Under these agreements, orga-

Paper

99.3%

Stationery

93.3%

Equipment

100.0%

ongoing basis in such a program in Tokyo’s Chiyoda-ku, theOffice equipment

95.7%

CAPPS in Tokiwabashi Park.

Lighting

70.3%

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.

nizations adopt public property, which they take responsibility for managing and cleaning. DBJ participates on an• Tokai Branch
Flower Hospitality Exercise
The branch has participated in the Flower Hospitality
Exercise, sponsored by the Chubu Association of Corporate
Executives, since its initiation in 2005. In fiscal 2010, the• Prevention of environmental pollution

Tokai Branch continued

DBJ complies with environmental laws and regulations.

its efforts toward building
a beautiful town, throughsuch activities as watering flower beds in the
Sakura-dori Otsu area of
Nagoya.

Annual Report & CSR Report 201195
Environmental Management

April 2001, DBJ made efforts to purchase products andCSR Reportsupplies• Kansai Branch• Kyushu Branch

Kansai Eco Office Declaration

Cleanup/beautification activity—Tenjin Clean Day

Registered since 2008, the ”Eco Office Declaration” calls

We participated in the Tenjin

for (1) a summer ”eco style,” (2) enforcing energy saving,

Clean Day activity sponsored(3) promoting green purchasing, (4) curbing automobile useby the We Love Tenjin con-and (5) engaging in waste recycling.

ference and helped to clean
up the area.

• Shikoku Branch• Minami-Kyushu Branch

Forest-thinning activities

Sakurajima cleanup project

We continue to participate
in forest-thinning activities

We continue to participate

conducted in collaborationin the cleanup of the recre-with the town of Inomachi,

ation area on Sakurajima’s

Kochi Prefecture, and Mitsui

coastline.

& Co., Ltd.
Other efforts

Earth-Friendly Office

We continue to participate in ”Candle-Night” (using candles rather than electric lights) at the waterfront commercial

mental department. We continued these activities in fiscal

facilities and uchimizu (sprinkling water to reduce heat) at

2010, and are making efforts to (1) curb paper consump-environmental learning facilities.

Office” program created by the city of Takamatsu’s environ-96

products, (3) raise employee aware-• Other Branches

ness of 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

CSR Report

In fiscal 2009, we registered with the “Earth-Friendlytion, (2) promote the use of recycled

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)

DBJ has set up the Public Relations & Corporate Social
Responsibility Office within the Corporate Planning &Environmental
Management
Conference

Heads of each department
and officeEnvironmentalGroupmembers

Environmental Group
Promotion Officer
Environmental
Group Promoter

mental management activities attended by all executives
and employees.

Public Relations &Corporate Social
Responsibility
Office,Corporate
Planning &Coordination
Department(Secretariat)

Implementation
division

Coordination Department. This office spearheads environ-

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.

Employees

Annual Report & CSR Report 2011

Public Relations & Corporate Social
Responsibility Office, Corporate Planning &Coordination Department

Environmental Group Promotion Officer

In charge of DBJ’s environmental management activities

Group Promoter designate a member in each branch andis the Public Relations & Corporate Social Responsibility

department to be in charge of environmental promotion

Office, Corporate Planning & Coordination Department.

and manage the level of achievement of annual environ-

In addition to setting environmental targets for each fiscal

mental targets.

To promote environmental management activities, theEnvironmental Group Promotion Officer and Environmental

year and confirming the degree to which established targets have been achieved, this office manages compliance

Employeeswith 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

97
Environmental Management

Annual Report & CSR Report 2011

CSR Report

Designation of sustainable development as an objective by the Development Bank of Japan Act (Act No. 73 of
1999)
2001 April
Start of green procurement and environmental training
JuneFirst Japanese bank to sign the UNEP Statement by Financial Institutions on the Environment and Sustainable
Development
October
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
2002 March
UNEP FI 2002 Global Roundtable in Rio de Janeiro, Brazil
July
Launch of the Development Bank of Japan Environmental Policy
November ISO 14001 certification
2003 October
Publishing of Environmental Report 2003 for a Sustainable Society (first annual edition)
October
Joint sponsorship of UNEP FI 2003 Global Roundtable in Tokyo, an international conference on finance and theenvironment
2004 April
Start of Financing Employing DBJ Environmental Ratings
September Second annual Sustainability Report
November Japan Carbon Finance, Ltd. (JCF) established
December Japan Greenhouse Gas Reduction Fund (JGRF) established2005 January
Assumption of chair of the UNEP FI Asia Pacific Task Force
September Third annual Sustainability Report
October
UNEP FI 2003 Global Roundtable
November Renewal of ISO 14001 certification
2006 May
Press conference to announce DBJ status as a signatory institution to the Principles for Responsible Investment
AugustCSR Report 2006 (fourth annual Sustainability Report)
2007 July
Annual Report & CSR Report (integrated annual report and CSR report)
2008 OctoberFirst Board of Directors and Management Committee meetings of Development Bank of Japan Inc.; formulationof Basic Environmental Policy and Environmental Management Regulations
2009 MarchFirst Environmental Club Syndicated Loan ECONOWA
April
Commendation for Financing Employing Environmental Ratings system: Environmental Development Award
September Start of cooperation with regional financial institutions to prepare a system to implement Financing Employing
Environmental Ratings
2010 January
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)
April
Business cooperation agreement to promote environmental measures with a non-life insurance company
December Selected as a designated financial institution under the Bill on the Promotion of Businesses to Develop andManufacture Energy and Environmentally Friendly Products (“Low Carbon Investment Promotion Act”)
2011 April
Established the DBJ Green Building Certification programFostering Human Resources and Creating a Comfortable Work Environment

DBJ considers its human resources to be its most valuable

environment to bring out the best in every employee. The

assets and thus endeavors to develop its employees’ capa-

superior employee performance resulting from such efforts

bilities. 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, blazing the trails that Japan needs to follow.

Human Resource Development Vision
DBJ has evolved significantly and developed its indepen-

specialists in many fields. Responding to society’s constantly

dence and creativity in line with the needs of the times inchanging demands requires broad experience, deep knowl-order to maintain its leadership position.

edge and the ability to see the big picture, as well as gaining

To develop its human resources, DBJ promotes autono-

specialist knowledge. DBJ has therefore created a humanmous and pioneering behavior in its employees as financial

resource development system that incorporates job rotation,

professionals through the vision of generalists who can be

performance evaluation, formal education and training.

Deploying the Target Management System

CSR Report

DBJ has introduced a Target Management System toPlan-Do-Check-Act (PDCA) cycle. Particularly through its

encourage employees to work autonomously and proac-encouragement of goal-setting, DBJ emphasizes enhancing

tively to develop their abilities and accurately evaluate suchmedium- and long-term value both internally and exter-

initiatives. DBJ is working to enrich this system by having

nally. DBJ also motivates employees by offering bonuses

subordinates meet individually with superiors to set goals

and other benefits based on operating performance.

and receive feedback, autonomously running through the98
Fostering Human Resources and Creating a Comfortable Work Environment

Creating a Comfortable Work Environment
DBJ actively strives to cultivate a comfortable workto Support Raising Next-Generation Children as a company

environment.

that provides child-rearing support. Specific grounds for thisTo maintain an environment in which all employees

approval included (1) the promotion of spousal support for

can feel secure, DBJ has notified employees of its policy

childbearing through special leave and childcare leave, (2)to prevent sexual and power harassment and has set up ameasures to ensure time for child-rearing and (3) measures

hotline to deal with such issues. Furthermore, to support

to promote the taking of annual paid vacation.

mental and physical health, DBJ provides its employees andtheir families with regular medical examinations and care
options. These systems include treatment by external specialists and access to counselors.
DBJ has also instituted childbirth, childcare and nursing
care leave programs to give motivated employees better
opportunities for long-term employment, as well as a system for continued employment options after retiring fromfull-time work.
On October 18, 2010, the Tokyo Labour Bureau recognized DBJ as having achieved the objectives of its generalbusiness operator action plan (from April 1, 2005, to March
31, 2010), based on the Act on Advancement of Measures

Annual Report & CSR Report 2011

DBJ has received next-generation Kurumin certification for its efforts to counter the falling birthrate,
including recognition as a company that provides
active support for child-rearing.

A Solid Human Resource Development System
DBJ’s financial professionals are supported by a well devel-

multiple departments employees are trained for highly spe-

oped education and training system. A combination of man-cialized positions, according to their skills and backgrounds.

datory training by level and elective self-training according

This system of strategic job rotation enables employees toto skills and interests enables each employee to plan his or

not only gain broad-based practical experience that gives

her career and support DBJ’s initiatives in innovative finance.

clarity to their medium- to long-term career goals but also

In fiscal 2008, we established the DBJ Financial

provides an environment for quickly and firmly acquiring

Academy, which is designed to help employees acquire

and improving their highly specialized skills.

and maintain basic competencies and deepen their under-

In step with globalization, DBJ cultivates employees

standing of finance, assuming they will become involved

able to perform in domestic and international settings.

in advanced financial operations. We are expanding the

To achieve this, DBJ actively assigns employees to a wide

academy, focusing on courses such as Corporate Finance,variety of external organizations, including overseas gradu-

Investment Theory and M&A.

ate schools (program currently being expanded), domestic

Regardless of age, employees undergo on-the-job train-

and overseas research institutes, international institutions,ing, which provides hands-on exposure to work that bears

related government agencies and corporations, thereby

responsibility. In addition, after experiencing employment insupporting skill development and network extension.

Training by Level

Business-Related Training

Business-Related(Self-Training)

Managertraining•Accounting•Basics of
Tax,
etc.

Commonskill areas•Problemsolving andcommunication•Logicalthinking•Englishconversation•Businesscomportment,
etc.

DBJ Financial Academy• Basic Corporate Finance• Basic Investment Theory• Basic M&A• Overview of International Financial
Reporting Standards, etc.

Secondarytraining after
joining DBJ

Introductory
training
for new
employees

Autonomous
career track• Valuation• Financial Modeling• M&A• Real Estate Finance• Relationship Management• Business Revitalization• Environmental Rating System Seminars• Disaster Preparedness Rating Seminars,
etc.

Cultivation ofmanagement andleadership skills

Planned and continuous
HR development

Rating and asset
assessment
training

Documentation

Systems related
to investments
and loans

Basic
Legal

Mastery of DBJ
procedures andbasic processes

Mastery offinance andlaw

99

Financial analysis training• Bookkeeping and Accounting• Company Analysis• Case Studies

Basic finance training• Interest Rate Basics• Basic Derivatives
Acquisition offinancialaccounting
knowledge

Mastery of knowledge andskills needed for work

Strategic and focus areas,such as financial skills
Addressing strategic and focus areas

Mastery of basic
business
execution skills

Acquisitionof businessrelated
knowledge

Mastery of knowledge andskills needed for work

Cultivation ofwork-related
knowledge,
mastery of
specialized
knowledge, HR
development

Annual Report & CSR Report 2011

Fostering Human Resources and Creating a Comfortable Work Environment

Careerdevelopment
plan training•Compliancetraining•Training in
financial
act,
etc.

Domestic and overseas exchange
students, trainees, etc.

Management
training•Training in
middle- andback-office
operations
involving
investments
and loans•Trainingin debt
management,
etc.

External seminars, lectures, etc.

PositionLife plan
training

Distance learning, night courses, acquiring public qualifications, etc.

Topmanagement
training

External
Assignments, etc.

CSR ReportDBJ’ s Human Resource Development System

Seeking Higher Ethical Standards
For half a century, DBJ has led Japan’s economy as a gen-issues of human rights in addition to ensuring legal compli-

eral policy-based financial institution. As DBJ transforms

ance, promoting eco-friendly conduct (through environ-

into a private-sector financial institution that still values themental management training) and maintaining information

long-term perspective, neutrality, public-mindedness andsecurity (through training to prevent fraudulent access andreliability it has cultivated, each employee is being held to a

information leaks). DBJ will henceforth devote even morehigher ethical standard.

resources toward such efforts.

DBJ has long desired that its employee training address

DBJ Financial Academy
Since May 2008, the DBJ Financial Academy typically has
held weekly courses with the objective of raising the levelof financial expertise of second-year employees throughout the organization by strengthening the knowledgen

CSR Report2010 Courses (May 2010 through January 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 (JERI) and University ofTokyo Joint SymposiumInternational Finance
Financial System Theory
Elective courses
Financial Instruments and Exchange Act
Basic Statistics Course
Real Estate FinanceCorporate Finance IInand understanding that is essential to the advanced cor-nporate financial business to realize DBJ’s business model.

nDuring fiscal 2010, courses covered Basic Financial Theory,nCorporate Finance, the Financial Instruments and ExchangenAct and Real Estate Finance.

nThrough the DBJ Financial Academy, each employee can100

seek to elevate his or her abilities in finance, whether aim-

Fostering Human Resources and Creating a Comfortable Work Environment

ing to acquire basic knowledge or to further deepen under-

DBJ Financial Academy Curriculum

n

n

n

standing. Students from outside DBJ, such as employees ofregional financial institutions, may also participate. We looknforward to expanding the fields in which DBJ’s financial

nexpertise is shared.

nn2011 Courses (Expected to run from May 2011 throughJanuary 2012)
Core courses
Introduction to Modern FinanceInternational FinanceSpecial Lecture: “Financial Policy”
Basic Corporate Finance
Basic Investment
M&A
Elective courses
Business Statistics
Financial Instruments and Exchange Act
Real Estate Finance
IFRS Accounting: Foundations and Practice
Insolvency and Corporate Reorganization
Corporate Finance Practice

n

n

n

n

n

n

n

n

n

n

n

n

Annual Report & CSR Report 2011

Intellectual Asset Report
DBJ’s executives and regular employees continually take on new challenges, while remaining
firmly committed to DBJ’s four core values: a longterm perspective, neutrality, public-mindedness
and reliability. The intellectual assets DBJ has built
up over the years help form the financial platformand enable DBJ to provide services that extend
beyond merely providing funds. Employing theseassets, we endeavor to address the needs of thetimes and fulfill our role in enhancing socially
responsible activities among companies.

Intellectual Asset Management . . . . . . . . . . . . . . . . . 102
Financial Platform That Enables DBJ to Meet the
Needs of the Times . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

Annual Report & CSR Report 2011101

Intellectual Asset Management

Corporate Value and Intellectual Asset Management
Intellectual Assets
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, com-they are a core component of corporate value. Managing

panies must identify their important management resources

intellectual assets effectively promotes clarity in terms of theand sources of competitiveness. Specific technologies,

corporation’s key competencies and creates opportunities toexpertise, human resources and business models are someincrease corporate value.
Listed companies are finding that aggressively disclos-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 thewhen combined represent an extraordinary DBJ asset: ourtrust of our clients and society at large has been our mostexpertise in resolving issues through the application ofimportant objective. From this standpoint, we have created

new financial methods, the widespread use of our financial

102

a wide variety of networks spanning both the public andplatform and our economic and social contributions. ThisIntellectual Asset Management

Intellectual Asset Reportfactors that lead to differentiation but are invisible to theprivate sectors.

asset has led to our development of the financial methods

Based on our core values, our executives and regulardescribed below. It enables us to respond quickly to chang-

employees have continued working to enhance their abil-ing policy requirements and plays a major role in our ability

ity to evaluate companies and projects. We have accumu-

to continue 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

to clearly identify and make use of intellectual assets will be

the local communities that face them. In the process, wean increasingly important factor in achieving this goal.

have become a repository of intellectual assets, which=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)

Annual Report & CSR Report 2011

Relational
Structural
AssetsHuman
Resources

Intellectual Assets

Organizational
Structural
Assets

DBJ’s Utilization of Intellectual Assets
One school of thought defines intellectual assets as thevarious fields—as they consider such issues. All DBJ execu-

understanding of and reporting on an entity’s networks

tives and regular employees work to maintain a long-termand client bases (related structural assets), management

and neutral perspective, approaching new business withteam and employees (human resources) and intellectuala spirit of innovation and challenge.

assets and business processes (organizational structural

To impart various financial skills, DBJ maintains training

assets). Below, we introduce DBJ’s intellectual assets andmenus that include a 2.5-month corporate finance train-

activities according to this segmentation.

ing program. This program, for all new employees, helps
develop screening expertise. Our menus, combined withon-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 insti-

tion with central government agencies and regional govern-

tutions, as well as with other international institutions, thatment bodies. Now we take advantage of these networks

help form our networks. These programs help DBJ develop

to our interest rate subsidy programs for the promotion

and introduce new financial methods, as well as strengthenof environmental management, as well as other inter-

network ties.

est subsidy systems put in place by national and regional

DBJ has also established the Research Institute of Capital

government bodies. Also, we continue to assist with crisis

Formation, which carries out financial research, as well as

response operations. DBJ also works to create and develop

research on global warming countermeasures and otherfinancial platforms. To construct these platforms, we col-efforts to create a sustainable society. The research that thelaborate with public- and private-sector financial institu-

center produces from a neutral and long-term perspective istions in Japan and overseas and maximize our networks ofhighly regarded by the community and other experts.

certified public accountants. This multifaceted combination

Organizational Structural Assetsof networks consisting of professionals in a host of fields in

Unlike manufacturing companies, DBJ has no explicit intel-

industry, academia and the government constitutes DBJ’s

lectual assets, such as patent rights. However, our intro-

relational structural capital.

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 contrib-

manner, as well as in terms of their broader economic andute to business formation and the financial structure. Oursocial significance, constitute DBJ’s organizational struc-ability to provide solutions that are appropriate for compa-

tural assets, as does the smooth and rapid communicationnies, as well as for the economy and society in a broader

process resulting from the common knowledge that has

sense, depends on the ability of our human resources—

evolved through corporate financing training and otherexecutives and regular employees who are professionals inchannels.

Annual Report & CSR Report 2011

103
Intellectual Asset Management

professionals including university professors, attorneys, andIntellectual Asset Report

DBJ’s Utilization of Intellectual Assets

Advanced Initiatives Involving New Financial Methods That Utilize Intellectual Assets

Intellectual Asset Report104

We are a leader in leveraging our intellectual assets toduring the period when the viability of their plans is being

introduce new financial methods to Japan. Our pioneering

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 operation-effectively as possible.

al 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.

Intellectual Asset Management

DBJ provides a full range of financing options in the areaof business revitalization. After filing applications according to Civil Rehabilitation Act or Corporate Reorganization
Act procedures, companies typically require working capital

Annual Report & CSR Report 2011

*Senior financing involves relatively low risk. In Japan, most corporate bond issues and funds provided by financial institutions aresenior financing.

Relationship between Intellectual Assets and CSR at DBJ
The figure contrasts intellectual assets as viewed by DBJ and

Building Certification program have cause to reconsider

DBJ’s role as seen by society. Evaluated in this sense, intel-

their conformance with various laws and regulations,lectual assets and CSR are two sides of the same coin.

ensure safe and secure workplace and surrounding environ-

For example, Financing Employing DBJ Environmental

ments and provide quality products and services throughRatings, Financing Employing DBJ Disaster Preparedness

fair competition. These activities reinforce a company’s

Ratings and the DBJ Green Building Certification program—client base and raise corporate value by fulfilling social

fully mobilized through intellectual asset networks withresponsibilities.

central government bodies and regional government bod-

By employing our intellectual assets in these ways, weies, experts and clients—our human resources comprising

go beyond merely providing financing. We also play a role

executives and regular employees, and our accumulation of

in promoting increasingly sophisticated corporate CSR man-experience and expertise serve a vital CSR role. At the same

agement.

time, these loan systems provide a strong backup to the

As can be seen on pages 40 to 55 ”Integrated
Investment and Loan Services,” and on pages 74 to 93

Companies that access our loans based on Financing”CSR through Investment, Loan and Other Businesses,” DBJ

Employing DBJ Environmental Ratings, Financing Employing

is taking advantage of its various accumulated intellectual

DBJ Disaster Preparedness Ratings or the DBJ Green

assets.

=Relationship between Intellectual Assets and CSRIntellectual Asset
Elements
Relational
Structural Assets

Human
Resources
Management Teamand Employees

Organizational
Structural Assets
Intellectual Assets andBusiness Processes

Client Satisfaction

105

Maintaining
Service Quality
Fair Competition

Intellectual Asset Management

Networks andClient BaseCSR Elements

Intellectual Asset Report

CSR activities of our business partners.

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 2011

Financial Platform That Enables DBJ to Meet the Needs of the Times

Defining “Financial Platform”
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

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 promot-

a broad range of players. Owing to our neutral position anding 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.

Intellectual Asset Reportaccess capital good, are not formed overnight. Creating

Activities Involving Financial Platforms
DBJ promotes and helps develop financial platforms for

As can be seen on pages 40 to 54 ”Integrated

structured financing, venture company support, business

Investment and Loan Services,” and on pages 74 to 93

restructuring support, financing related to environmental”CSR through Investment, Loan and Other Businesses,” DBJ

and disaster policies, M&A advisory services, safety nets

introduces its activities involving financial platforms.

and other functions.

106
Financial Platform That Enables DBJ to Meet the Needs of the Times
Annual Report & CSR Report 2011

Management Structure
DBJ’s most important public social responsibility
is to instill public confidence as a financial institution and achieve the highest levels of management transparency. We employ an operations
management cycle that 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 appropriate manner.
We undertake projects that are meaningful fromboth economic and social perspectives and work
to offer superior investment and loan solutions.
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Client Protection Management System/Declaration
on Personal Information Protection/Policy forManaging Conflicts of Interest . . . . . . . . . . . . . . . . . . 118
Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
107

Annual Report & CSR Report 2011

Corporate Governance

Basic Position on Corporate Governance
DBJ has formulated a corporate philosophy to encapsulate

financial technology and R&D, based on skills gathered overmanagement’s position regarding DBJ’s integrated invest-

many years of experience.

ment and loan services. We consider this philosophy the

Networks

core of our corporate activities.

Networks created with clients, local governments and otherfinancial institutions.

Corporate Philosophy

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.

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.
Professional
financial platform providing integrated investment and

The core competencies described below support DBJ’sloans both in Japan and abroad.

efforts to realize its corporate philosophy.

Global & Local

Intention

DBJ will maintain a long-term viewpoint, considering the

The fundamental stance at the core of our corporate values:

needs of the times, the world and the region.

long-term perspective, neutrality, public-mindedness andSpeed & Teamwork

reliability.

Relying on skilled teamwork, DBJ will act rapidly and in

108Intellectual Assets

good faith, building strong foundations for clients’ trust.

Corporate GovernanceManagement StructureWith discernment and creative skill, DBJ will be a uniqueCore Competencies

Expertise in fields including industry research, credit analysis,

Corporate Governance Measures and Their Implementation Status
Internal Organizations

Kazuo Ueda, Professor, Faculty of Economics, theDBJ elects outside directors from the standpoint of

University of Tokyo.

ensuring management transparency and enhancing
corporate governance.
The Advisory Board has been established as a

Corporate Auditors, Auditing Committee
The Auditing Committee comprises five auditors. This com-

Management Committee advisory body. This board pro-mittee convened 16 times during the fiscal year ended

vides advice on overall management issues, including DBJ’s

March 31, 2011.

management strategies, from a neutral standpoint.

As prescribed by the Companies Act, a majority of the five

The Compensation Committee, which includes out-

Auditing Committee members are outside corporate auditors.

side directors, has been created to deliberate on director

DBJ has three full-time corporate auditors, one of whom is ancompensation and advise the Board of Directors in thisoutside corporate auditor. The Office of Corporate Auditors

regard. At the same time, DBJ has established a Personnel

has been created to assist corporate auditors (including out-

Evaluation Committee comprising outside experts to evalu-

side auditors) in performing their duties. Specialized staff

ate personnel proposals on the selection and resignation ofmembers are assigned to the Office of Corporate Auditors,

directors and corporate auditors.

which is directed by the Auditing Committee.
The three outside corporate auditors are as follows:

Board of Directors

Kazuyoshi Arakawa, former Managing Director, Sumishin

The Board of Directors comprises nine members. To ensure

Panasonic Financial Services Co., Ltd. (Full-Timemanagement transparency, two Board members are outside

Corporate Auditor [Outside]);directors. During the fiscal year ended March 31, 2011, theMakoto Ito, Attorney and Visiting Legal Research

Board of Directors met 16 times.

Professor, Graduate School of Waseda University;

The following two members are outside directors:

Shinji Hatta, Professor of Graduate School of Professional

Akio Mimura, Chairman, Nippon Steel Corporation andAccountancy, Aoyama Gakuin University.

Annual Report & CSR Report 2011

Operations Audit Committee

General Risk Management Committee

The Board of Directors has established the Operations

This committee deliberates and makes decisions on impor-

Audit Committee, delegating to this body the authority totant items related to legal compliance, client protection

deliberate important matters related to internal audits. This

management, operational risk management and system risk

committee met twice during the fiscal year ended March

management.

31, 2011.

Committee on Investment and Loan Decisions
This committee handles, deliberates and makes decisions

Compensation Committee

related to investments and loans, as well as the investment

The Compensation Committee, whose members include

and loan management.

outside directors, has been established as an advisory body

New Operation Screening Committee

to the Board of Directors from the standpoint of ensuring

This committee deliberates and makes decisions on thetransparency and objectivity. The committee considers thecommencement of initiatives involving new businesses.

type of executive compensation structure that befits DBJ.

Advisory Panel on Investments and Loans
This panel handles the advance deliberation on and monitoring of investments and loans.

DBJ has established the Personnel Evaluation Committee,

Committee on International Operations

composed of outside directors and other outside experts, asThis committee deliberates items related to the overseas

an advisory body to the Board of Directors. The committee’sbusiness strategies, operations and management conditions.

Management Committee

the Management Committee, providing advice on DBJ’s

Management Structure

Personnel Evaluation Committee

The Board of Directors has vested in the Management

overall management.

109

role is to evaluate personnel proposals on the selection andresignation of directors and corporate auditors.

Advisory Board (As of July 1, 2011)
The Advisory Board has been created as a body to advise

tion of business.
Accordingly, the Management Committee makes important management decisions. The committee met 33 times
during the fiscal year ended March 31, 2011.

experts and outside directors.
Outside Experts
Kiyofumi Kamijo, Director and Executive Corporate
Advisor, Tokyu Corporation
Sakie Fukushima-Tachibana, President of G&S

Committees under the Management Committee
Various committees have been established under theManagement Committee assigned specific decision-making
tasks, excluding decisions made by the Board of Directors or
the Management Committee within each field of specialization.
ALM & Risk Management Committee
This committee deliberates and makes decisions pertaining

Global Advisors Inc., Senior Advisor of Korn/Ferry
International’s Asia PacificFujio Cho, Chairman of Toyota Motor Corporation
Outside Directors
Akio Mimura, Chairman, Nippon Steel Corporation
Kazuo Ueda, Professor, Faculty of Economics, theUniversity of Tokyo

to portfolio risk management and asset/liability management.

Annual Report & CSR Report 2011

Corporate GovernanceCommittee decision-making authority regarding the execu-

The Advisory Board is composed of the following outside

Matters Requiring Approval of Competent Minister• Disposition of surplus funds

The New DBJ Act prescribes matters for which DBJ requires• Merger, corporate split and dissolution

the permission of the Minister of Finance. Major items• Basic policy on business plans, redemption plans and fundprocurement

requiring such permission are as follows:• Appointment and dismissal of representative directors and

The organization outlined below has been put in place

auditors

to execute and supervise the abovementioned activities.

• Concurrent positions as directors• Amendments to Articles of Incorporation=Operating and Supervisory Structure

General Shareholders’Meeting
Matters requiring authorization ofcompetent minister

Management Structure
110

t 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
auditorCooperation

Compensation
Committee
Personnel Evaluation
Committee

Management
Committee

Decision-making
bodiesCorporate GovernanceALM & Risk
Management
Committee

Board of Directors

Corporate Auditors,
Auditing Committee

Internal Audit
Department
Reporting
AuditsAdvisory Board
Deliberative
bodiesGeneral Risk
Management
Committee

Committee on
Investment and
Loan Decisions

New Operation
Screening
Committee

Advisory Panel on
Investments andLoansCommittee on
International
Operations

AuditsDepartments
Subsidiaries

Executive Officer System

Status of Internal Control System

DBJ has an executive officer system to clarify responsibility

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 11 managing execu-

an internal control system under the Internal Control

tive officers, excluding officers who are concurrently direc-

System Basic Policy.

tors, and six 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.

Annual Report & CSR Report 2011

Internal Control System Basic Policy
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) toensure Development Bank of Japan Inc. (hereinafter, ”DBJ”) conducts operations in an appropriate manner.

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, a committee for risk management shall be created, and an executive and a department
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 of economic 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 to determine 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 and perform 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 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 2011

111
Corporate Governance

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.

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 and affiliated companies. Furthermore, the Board shall introduce appropriate measuresfrom 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.

Management Structure

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 the corporate
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, andan 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 inadvance matters for resolution by the Board of Directors. Furthermore, theManagement 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 made by the
Board of Directors, regulations shall be established regarding the organizational structure and the execution of tasks shall be allocated appropriately.
4. To enable swift decision-making, an executive officer system shall be established. Executive Officer Regulations shall be formulated to define executive
officers’ roles and responsibilities.

Status of Internal Audits and Audits by Auditors

other 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, is anof internal controls, including DBJ’s overall operational com-outside director of DBJ. DBJ has no special-interest relation-

pliance and risk management, and performs evaluations

ship with Mr. Mimura, and its business with Nippon Steeland recommends improvements.

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
audit plans, audit reports and other important mattersrelated to internal audits, and this information is reported to
the Board of Directors.
As of June 24, 2011, 22 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.
Management Structure
112

The Auditing Committee and the auditors audit theexecution of duties by directors, based on their audit policy
and audit plans.
The auditors attend Board of Directors and other impor-

Overview of Agreements with Outside
Directors and Outside Corporate Auditors underParagraph 1, Article 427, of the Companies Act(Liability Limitation Agreements)

tant meetings. When necessary, they query the execution

DBJ’s Articles of Incorporation allow it to establish liabilityof business by directors, peruse documents and conduct

limitation agreements with its outside directors and outside

branch audits.

corporate auditors, limiting their responsibility for damages
under Paragraph 1, Article 425, of the Companies Act, pro-

Corporate GovernanceStatus of Accounting Audits

vided their duties are executed with good intent and with-

DBJ has in place an agreement with Deloitte Toucheout gross negligence, to the total amounts specified in eachTohmatsu LLC to conduct accounting audits as its account-

item in Paragraph 1, Article 425, of the Companies Act.

ing auditor. During the fiscal year ended March 31, 2011,
these operations were conducted by designated certified

Number of Directors

public accountants (designated limited liability partners)

DBJ’s Articles of Incorporation limit the number of directors

Yukio Ono (continuous audit period* of three years),

to 13 or fewer.

Tomomitsu Umezu (same, three years) and Hayato Yoshida(same, three 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 three years for Yukio Ono,
three years for Tomomitsu Umezu and three years for Hayato
Yoshida. The number of business periods during which an audit
was performed is the standard used to indicate the number ofyears. Assisting in this audit were 22 people, including a specialist in
determining fair value, a systems specialist and a specialist in pension mathematics.

DBJ’s auditors, Audit Department and accounting auditor periodically and as necessary exchange opinions andinformation, and communicate in an effort to ensure effective and appropriate audits.

Annual Report & CSR Report 2011

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.

Limiting the Responsibility of Directors andAuditors

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, DBJ’s

that are expected of them, in accordance with ParagraphArticles of Incorporation stipulate that shareholders possess-

1, Article 426, of the Companies Act, DBJ has establisheding at least one-third of the voting rights exercisable shallin its Articles of Incorporation that the liability for damages

attend the meeting and determine by a two-thirds majority

incurred by directors (and former directors) and auditors

vote the ”requirements for special resolutions at general(and former auditors) may be reduced to the legal limit bymeetings of shareholders” provided in Paragraph 2, Article

resolution of the Board of Directors.

309, of the Companies Act.

Complianceconduct 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 have for-public.

mulated a corporate philosophy, a Compliance Basic Policy
and other compliance-related regulations.

Compliance System

113

DBJ has established the Legal and Compliance Department

ance, DBJ has created a Compliance Manual and a compli-

to take overall responsibility for planning, preparing andance program. Via activities in and around DBJ, we seek toadjusting compliance activities. In addition, DBJ has estab-thoroughly implement the compliance activities outlined

lished the General Risk Management Committee to reflect

below.

on legal compliance matters, determine the extent of compliance, and discuss improvements to DBJ’s internal system.
DBJ also has installed a Compliance Hotline. The objec-

DBJ has formulated the compliance principles indicatedtive of this internal reporting system is to swiftly identify

below as part of its creation of compliance regulations.

and resolve any legal violations.

1) DBJ’s executives and employees are keenly aware of

DBJ, in matters relating to managing conflicts of inter-

DBJ’s social mission and responsibilities as a public-sector

est, formulated as a basic policy ”Conflicts of Interestbank and recognize that illegal acts or improper busi-

Management Regulations” against undue infringement ofness operations harm the reputation of DBJ and interfere

the interests of its clients, and it is preparing a system tosignificantly with DBJ’s ability to fulfill its objectives undermanage conflicts of interest.

the New DBJ Act. We also realize DBJ’s need to always

Annual Report & CSR Report 2011

Corporate Governance, ComplianceIn addition to its fundamental regulations on compli-

Compliance Principles

Management Structure

Specific compliance initiatives are as follows.

Risk Management

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

maintaining financial soundness and improving operational efficiency, which are the prerequisites to ongoing
operational viability. To ensure appropriate management of

President

Management
Committee

ALM and Risk Management Committee

individual risk categories, DBJ has developed a risk management system that clarifies which department is responsible
Management Structure
114

for each type of risk. The Risk Management Department
Risk Management Department

oversees comprehensive asset/liability and risk management
activities. The ALM & Risk Management Committee, consisting of DBJ’s executives, deliberates on important matters

Credit Analysis Department

Treasury Department

concerning risks and conducts regular monitoring, in linewith the basic policy related to comprehensive risk management approved by the Board of Directors.

Investment and Loan Departments/Offices

Credit Risk Management

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 indi-

the financial condition of the borrower. Credit risk manage-

vidual loans and each department keeps the operations ofment requires credit management of individual loans as well

the other in check. The Committee on Investment and Loan

as bankwide portfolio management.

Decisions meets as needed to deliberate important issues
concerning the management and governance of individual

Credit Administration of Individual Loans

loans. These mutual checking functions serve to ensure theWhen making an investment or loan, DBJ examines theappropriateness of the lending operation and management

entity’s project viability and the project’s profitability from aenvironment.

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 creditworthiness byto the Banking Act or the Act on Emergency Measures for

combining an evaluation point rating and a borrower cat-the Revitalization of the Financial Functions (Act No. 132 ofegory rating, with the result quantifying a potential client’s

1998) but carries out independent asset assessments in line

credit circumstances. The evaluation point rating selectswith internal policies for self-assessment of credit quality

indicator/evaluation categories that are common across all

based on the Financial Services Agency’s Financial Inspectionindustries, scoring the creditworthiness of the potential bor-

Manual. The results of self-assessments are subject to an

rower quantitatively and qualitatively. On the other hand,audit by an auditing corporation and are reported to thethe borrower category rating measures specific items related

management. Credit risk and amounts are monitored toto the borrower, looking at the borrower’s realistic financial

confirm they are within the limits established for individual

condition, cash flows and debt repayment history. By put-borrowers.

ting the ratings together, the system generates a comprehensive assessment of a borrower’s repayment capacity.

Annual Report & CSR Report 2011Borrower Rating Classifications
Claims Classified
under the Financial
Revitalization Act

Borrower Category

Borrower
RatingDefinition

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

Asset Self-Assessment System

Portfolio Management

Asset self-assessments are used to define asset classifica-

DBJ performs a comprehensive analysis of data based ontions that will offset recoverability risk or the degree of riskborrower ratings, and calculates the loan portfolio’s overallof value loss, based on the borrower rating, the correspond-

exposure to credit risk. Credit risk exposure can be classified

ing borrower category and the collateral or guarantee sta-as (1) expected loss (EL), the average loss expected during atus. Such assessments help DBJ establish timely and appro-

specific loan period; and (2) unexpected loss (UL), the maxi-

priate amortization schedules and reserve levels.

mum loss that could be incurred at a certain rate of prob-

115& Risk Management Committee.
Monitoring the situation and considering countermeasures allow DBJ to control risk and devise effective measures
to improve risk return.

Market and Liquidity Risk Management
Market Risk

ing the risk of reduced profits or the risk of losses. Interest

Market risk can be broadly classified into interest rate risk,

rate risk can reduce the economic value of DBJ’s assets or

exchange risk and stock market risk. Market risk describesinterest income.
DBJ calculates and analyzes risk exposure with cash flow

liabilities (including off-balance sheet items), owing toladder analyses (gap analysis), value at risk (VaR), inter-changes in interest rates, exchange rates, stock markets andest rate sensitivity analyses (basis point value), and othervarious other markets. DBJ divides these risks broadly into

methods. A portion of the interest rate risk associated withinterest rate risk and exchange risk.

lending operations is covered through interest rate swaps,

Interest Rate Risk

which are used solely for hedging purposes. DBJ does not

Interest rate fluctuations can create mismatches on rates ofhave any trading-related risk because it does not engage ininterest on assets and liabilities or on interest periods, creat-

trading (specified transactions).

Annual Report & CSR Report 2011

Risk Management

ability. The EL and UL calculations are reported to the ALM

the risk of loss from fluctuations in the value of assets orManagement Structure

Claims in bankruptcy,
reorganization claims
and similar claims

Exchange Risk

complexities, entities in these circumstances may become

Exchange risk is the risk of loss due to unexpected shifts inunable to participate in market transactions, compellingexchange prices, and this risk affects entities holding a net

them to conduct transactions under substantially less favor-

excess of assets or liabilities denominated in foreign curren-

able terms than otherwise would be the case. The risk ofcies. Exchange risk entails the possibility of a decline in thelosses for these reasons is known as market liquidity risk.

economic value of DBJ’s assets due to the impact of chang-

As its main methods of acquiring funds, in addition to

es in currency exchange rates. DBJ’s exchange risk derives

issuing corporate bonds and taking out long-term loans,from foreign currency investment and financing and issuing

DBJ relies on the stable procurement of long-term funds

foreign currency bonds. DBJ uses currency swaps and otherfrom the government’s Fiscal Investment and Loan Program

instruments to hedge this risk.

(FILP) and government-guaranteed bonds rather than on

DBJ manages counterparty risk in swap transactions, theshort-term funds such as deposits. To meet unexpectedManagement Structurerisk that the counterpart in the swap transaction will be

short-term funding requirements, funds on hand are used,unable to fulfill its obligations, by continually monitoringtaking security and liquidity into consideration. Overdraft

the creditworthiness of all parties, and by diversifying trans-lines of credit have been established with multiple otheractions among several institutions.

financial institutions.
Additionally, DBJ maintains daytime liquidity by using the

Liquidity Risk

Bank of Japan’s Real Time Gross Settlement (RTGS), where-

Liquidity risk is the risk of a mismatch occurring in the peri-

by settlements are made instantly for each transaction.

ods when funds are used and raised, causing unexpected

Every effort is made to ensure that settlement conditions

differences in the flow of funds (cash liquidity risk). This sit-

are managed appropriately.

uation makes securing funds difficult and creates situations

In addition to credit risk, the ALM & Risk Managementin which interest rates on borrowed funds are substantially

Committee deliberates DBJ’s market risk and liquidity risk.

116

higher than usual rates. At such times, because of market

Risk Management

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 computer sys-or nonfunctioning, or from external events. DBJ works to

tem breakdown or malfunction, system defects, or improp-

establish a risk management system to minimize risk ander computer usage. To properly manage systems risk, DBJ

prevent potential risks from materializing.

has implemented the following internal processes to opti-

The General Risk Management Committee has beenmize system risk management. The Information Resources

established to deliberate topics concerning operational risk

Department is responsible for managing DBJ’s system risk

management.

centrally, based on its system risk management regula-Within operational risk management, DBJ conducts

tions. By determining security standards from a variety ofoperational risk management and systems risk management

viewpoints, from information system planning and develop-

as described below.

ment to operation and use, the department extends the risk

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

Annual Report & CSR Report 2011

management system bankwide, and addresses appropriate
system risk management operations.

Building a PDCA Cycle
DBJ follows the Plan, Do, Check, Act management cycle to

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.
=DBJ’ s PDCA Cycle
Formulation ofmanagement plan

Competent minister

Budgetary plan

Plan

Matters 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 fundprocurementn

Review of resource
allocation

Act

Board of Directors
Management
Committee

Advisory Board

Advice(Outside experts andoutside directors)

Do
Execution of
investments andloansManagement Structure

Conclusions
reflected inplanning andbudget117
Risk Management

Fund-raising
Other activities

Check
Evaluation ofbusiness
performance
Status & results
reportAnnual Report & CSR Report 2011

Client Protection Management System/Declaration on Personal
Information Protection/Policy for Managing Conflicts of Interest
The establishment and maintenance of a client protectionlevel of convenience. DBJ recognizes the extreme impor-management system is vital because it protects the people

tance of such a system from the standpoint of operational

who use the financial institution’s systems and raises theirsoundness 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 andto ensure strict compliance with laws and regulations,appropriate means and manage such information safely.

protect the interests of its clients and raise the level of cli-

In transactions with clients, in the event that DBJ out-

ent convenience. We have also created internal regulations

sources 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 relat-

below:

ed to personal information into our Declaration on Personal

1) When transacting with clients, we endeavor to provide

Information Protection.

Management Structureand 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 ofthe client’s point of view, listen sincerely and respond ininterest under this act and provides an overview of the pub-an operationally appropriate manner.

licly announced policy.

118
Client Protection Management System/Declaration on Personal Information Protection/Policy forManaging Conflicts of Interest

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 Act 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 the scopethat 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 specific purposes and uses such information only within the scope necessary
to satisfy such purpose of use. In the event that other purposes
of use are limited by legal regulations concerning specified purposes of use, such information is not used for purposes otherthan so specified. DBJ discloses on its website the purposes ofuse of clients’ personal information. If information is obtainedfor 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 2011

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 and regular 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 theevent that the content of such information is incorrect, responding to clients’ requests for revisions, additions or deletions,discontinuing use, deleting information, or discontinuing theprovision 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.

Overview of Policy for Managing Conflicts of Interest

n

n

n

n

n

n

n

Annual Report & CSR Report 2011

119
Client Protection Management System/Declaration on Personal Information Protection/Policy forManaging Conflicts of InterestnFurthermore, Subject Transactions do not include acts that are prohibited under the Financial Instruments and Exchange Act or other laws
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 August 3, 2011, 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.
DBJ Europe Limited
DBJ Investment Advisory Co., Ltd.
Asuka DBJ Investment LPS
Hitachi Capital Securities Co., Ltd.
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 those oftransactions 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.

Management Structure

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 the likelihood 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 interests of 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 in existingtransactional relationships, (b) parties in negotiation with the DBJ Group
with regard to transactions or otherwise having the potential to becomecounterparties in transactional relationships, or (c) parties that have beentransactional counterparties in the past and that currently are also legallycompetent with respect to past transactional relationships.
”Business operations related to financial instruments” are those businesses provided for in Article 70 (2) of the Cabinet Office Ordinancepertaining 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 in danger 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
infringing on the interests of clients owing to Situations of Opposing
Interests.

Disclosure

DBJ believes that public relations and investor relations

status and operating policies, which are an essential part

have the important function of bringing management andof being trusted in a wide range of markets and societies.

stakeholders together. In addition, these activities help

Accordingly, we seek to disclose information through our

stakeholders gain an accurate understanding of DBJ’s

public relations and investor relations activities.

Basic PR/IR Philosophy
In its PR and IR activities, DBJ aims to comply with rel-

DBJ maintains personal and client information, with-evant laws and regulations, operate in good faith andout disclosing such information in a manner that wouldin a dignified manner with its stakeholders, and disclose

encroach upon the rights of individuals or related parties.

information clearly and accurately in a timely and appro-

We do not disclose information that would counter the

priate manner.

doctrine of good faith.

PR/IR StructureManagement 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:120(1) Materials legally required for disclosure
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
DBJ Quarterly Journal (newsletter)
The DBJ Quarterly Journal is also available in iPhone and iPad
formats.
http://itunes.apple.com/jp/app/id389307222 (Japanese)

DBJ News Digest (mail magazine; Japanese)
Website:http://www.dbj.jp/en

Annual Report & CSR Report 2011

Corporate Data
Timeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .122
Board of Directors, Corporate Auditors andExecutive Officers . . . . . . . . . . . . . . . . . . . . . . . . . .123
Organization Chart . . . . . . . . . . . . . . . . . . . . . . . . . .124
Locations and Directory . . . . . . . . . . . . . . . . . . . . . .125
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126
Stock Information . . . . . . . . . . . . . . . . . . . . . . . . . . .127
Excerpt from the Development Bank ofJapan Inc. Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . .128

Development Bank of Japan Inc. Act. . . . . . . . . 131
Act for Extraordinary Expenditure and Assistance toCope with the Great East Japan Earthquake . . . . 133

Corporate Data

Act for Partial Amendment of the121

Annual Report & CSR Report 2011

Timeline

The Japan Development Bank, the Hokkaido-Tohoku Development Finance Public Corporation and the Development Bank of Japan
1951 April
1952
1956 June
1957 April

1960
1961
1962 April
1963
1964 July
1972 January
1985 June

Corporate Data

1987 September
1989
1995 February
1997 September

122
Timeline

1997 December
1999 June
1999 October

2002 May
2005 December
2006 May
2006 June2007 June

Japan Development Bank (JDB) establishedJDB branches opened in Osaka (now the Kansai Branch), Sapporo (now the Hokkaido Branch), Nagoya (nowthe Tokai Branch) and Fukuoka (now 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 (now the Hokkaido Branch) and Sendai(now 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 JDB and HTDFP and consolidate them as a new bank)
JDB and HTDFP commenced loans in response to the financial environment (introduction of March 31, 2001,
sunset clause)
The Development Bank of Japan Law (Law No. 73 of 1999) approved
Transfer of approval of all rights and responsibilities of JDB and HTDFP to the Development Bank of Japan (DBJ)
Transfer of financing operations from Japan Regional Development Corporation and Japan Environment
Corporation
DBJ representative offices opened in Kushiro and Singapore
The Development Bank of Japan Law revised (introduction of additional spot inspections by the Financial
Services Agency)
Cabinet approval of the Important Policy of Administrative Reform
The Act on Promotion of Administrative Reform for Realization of Small and Efficient Government (Act No.
47 of 2006) approved
Policy-Based Financing Reform Plan decided upon by the Headquarters for the Implementation of Policy Finance
ReformThe Development Bank of Japan Inc. Act (Act No. 85 of 2007) approved

Development Bank of Japan Inc.
2008
2008
2009
2009
2009
2010
2011

October
December
June
September
November
March
May

Development Bank of Japan Inc. established (Capital: ¥1 trillion)
DBJ Singapore Limited launched
Act for Partial Amendment of the Development Bank of Japan Inc. Act (New DBJ Act) (Act No. 67 of 2009)
Increase of capital to ¥1,103,232 million
DBJ Europe Limited launched
Increase of capital to ¥1,181,194 million
Partial amendment of the Development Bank of Japan Inc. Act (based on establishment of Act for
Extraordinary Expenditure and Assistance to Cope with the Great East Japan Earthquake (Act No. 40 of 2011))

Annual Report & CSR Report 2011

Board of Directors, Corporate Auditors and Executive Officers (As of July 1, 2011)

Toru Hashimoto
President & CEO

Hideto Fujii

Deputy President

Masanori Yanagi
Deputy President

Yo Takeuchi

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

Mitsuhiro Usui

Nozomu Kano

Managing Executive Officer
In charge of Special Missions

Yoichiro Yokoyama

Managing Executive Officer
In charge of Risk Management Department, Legal Affairs &Compliance Department

Masaaki Komiya

Managing Executive Officer
In charge of Business Planning & Coordination Department

Susumu Kusano

Managing Executive Officer
In charge of Urban Development Department, Corporate Finance
Department [Division 3], Asset Finance Group

Director and Managing Executive Officer

Naoto Yamamoto

In charge of Information Resources Department, Business
Development Department, Economic & Industrial Research
Department, Research Institute of Capital Formation

In charge of Corporate Finance Department [Division 1 and 2], Kyushu
Branch, Minami-Kyushu Branch

Director and Managing Executive Officer
In charge of Accounting Department, Credit Analysis Department

Hajime Watanabe

Director and Managing Executive Officer
In charge of Corporate Planning & Coordination Department(excluding the Public Relations & Corporate Social Responsibility
Office), General Affairs Department

Kenichiro Hirata

Managing Executive Officer
In charge of Corporate Finance Department [Division 4]

Hisato Nagao

Managing Executive Officer
In charge of Corporate Finance Department [Division 5]

Tetsumi Hashimoto

Managing Executive Officer

Director (Outside)

In charge of Corporate Finance Group, Mid-Size & Growth,
Environmental Initiative & Corporate Social Responsibility-Support
Department, Hokuriku Branch, Tokai Branch

Kazuo Ueda

Satoshi Tomii

Director (Outside)

Takeshi Kobayashi

Full-Time Corporate Auditor

Yasuhito Mitani

Full-Time Corporate Auditor

Kazuyoshi Arakawa

Managing Executive Officer
In charge of Portfolio Investment Group, Strategic Finance Group,
Growth & Cross Border Investment Group, Structured Finance Group,
Syndication GroupRyo IshimoriManaging Executive Officer
In charge of Regional Planning Department (Public Sector RelationshipManagement Group, Regional Development Group), Hokkaido Branch,
Tohoku Branch, Niigata Branch

Full-Time Corporate Auditor (Outside)

Masanao Maeda

Makoto Ito

In charge of Kansai Branch, Chugoku Branch, Shikoku BranchManaging Executive Officer, Head of Kansai Branch

Corporate Auditor (Outside)

Shinji Hatta

Corporate Auditor (Outside)

Naoyuki Nakamura

Executive Officer, Head of Internal Audit

Masafumi Aizawa

Executive Officer, Head of Financial Institution

Kazuhiro Takahashi
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 Human Resources
Management Department

Shin Kikuchi

Executive Officer, Head of Corporate Planning &Coordination Department

Haruhisa Kawashita

Executive Officer, Head of International Strategy &Coordination Department

Osamu Koyanagi

Executive Officer, Head of Corporate Finance
Department [Division 5]

Annual Report & CSR Report 2011123
Board of Directors, Corporate Auditors and Executive Officers

Akio Mimura

Corporate Data

Tetsuhiko ShindoManaging Executive Officer

Organization Chart (As of July 1, 2011)

Business Planning & Coordination Department
Urban Development Department
International Strategy & Coordination Department
Corporate Finance Department, Division 1
Corporate Finance Department, Division 2
Corporate Finance Department, Division 3
Corporate Finance Department, Division 4

Corporate Auditors/
Board of Corporate Auditors

Corporate Finance Department, Division 5
Corporate Finance Group, Mid-Size & Growth
Hokkaido Branch

Office ofCorporate Auditor

Healthcare & Hospitality
Industry Office

Tohoku Revival
Reinforcement Office

Tohoku Branch
Niigata Branch
Hokuriku Branch
Tokai Branch

GeneralMeeting of
Shareholders

Kansai Branch

Board ofDirectors

Executive
Committee

Chugoku Branch
Shikoku Branch

Corporate Data

Kyushu Branch

124

Growth & Cross Border Investment GroupMinami-Kyushu Branch
Asset Finance Group
Portfolio Investment Group
Strategic Finance Group

Structured Finance Group

Organization Chart

Syndication Group
Environmental Initiative & Corporate Social Responsibility-Support Department
Business Development Department
Economic & Industrial Research Department

Economic Research Office

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

Public Relations & Corporate
Social Responsibility Office

Risk Management Department
Information Resources Department
General Affairs Department
Accounting Department
Treasury Department

Otemachi Redevelopment
Project Office
Settlement & Accounting
Operation OfficeFinancial Institution Department

Operations Audit
Committee

Internal Audit Department

Representative Offices: Hakodate, Kushiro, Aomori, Toyama, Matsue, Okayama, Matsuyama, Oita
Overseas Representative Office: New York

Annual Report & CSR Report 2011

Overseas Subsidiaries: DBJ Singapore Limited, DBJ Europe Limited

Locations and Directory (As of July 1, 2011)

To Kanda

Head Office
Shuto Expressway

Development Bank of Japan Inc.

NTT

KDDI
Chiyoda Line
Otemachi Sta.
(Exit C1)

Marunouchi Line
Otemachi Sta.
(Exit A1)
*Exit A1 and A3

are closed

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
Branch Offices:

Representative Offices:

Hokkaido

Hakodate

TohokuKushiroNiigata

Aomori

Hokuriku

ToyamaTokai

MatsueKansai

Okayama

Chugoku

Matsuyama

Shikoku

Oita

KyushuMinami-Kyushu

Overseas Representative Office and Subsidiaries
DBJ Europe Limited

New York Representative Office
Corporate Data
125
Locations and Directory

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 2011

Subsidiaries (As of March 31, 2011)

Consolidated Subsidiaries
Company

Corporate Data
126

Established

CapitalPercentage of(Millions of Total Voting
Yen)
Rights (%)

Subsidiaries

Address

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
business startups

June 1, 1990

99

100.00DBJ 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

29,58650.00(0.00)UDS III Corporate Mezzanine Limited
Partnership

Chiyoda-ku,
Tokyo

Investment associations

February 15,
2008

33,61950.00(0.00)

Asuka DBJ Investment LPS

Chiyoda-ku,
Tokyo

Investment associations

October 28,
2005

6,680

49.40

DBL Capital Co., Ltd.

Chiyoda-ku,
TokyoManagement ofinvestment associations

October 14,
2005

99

100.00DBJ Capital Investment Fund No. 1

Chiyoda-ku,
Tokyo

Investment associations

July 9, 2010

977

100.00(0.01)DBJ New Business Investment Fund

Chuo-ku,Tokyo

Investment associations

July 9, 2010

1,781

99.99

DBJ Capital Investment Fund No. 2

Chiyoda-ku,
Tokyo

Investment associations

October 1,
2010

600

100.00(0.01)

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
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. DBJ Capital Co., Ltd., was newly consolidated due to increased materiality. The company’s name changed from Intellectual Properties Development &Investment, Inc., effective June 2010.
7. DBJ Capital Investment Fund No. 1, DBJ New Business Investment Fund and DBJ Capital Investment Fund No. 2 were newly consolidated upon theirformation this consolidated fiscal year.
8. There are 16 consolidated subsidiaries and 14 affiliated companies.

Annual Report & CSR Report 2011

Stock Information (As of March 31, 2011)

Number of Shares Issued and Paid-in Capital
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)

October 1, 2008
June 26, 2009
September 24, 2009
Note 4

March 23, 2010
Note 440,00040,0001,000,000

1,000,000—

40,000—1,000,000

2,064

42,064103,232

1,559

43,623

77,962

Changes incapital surplus(Millions of yen)

Capital surplus(Millions of yen)

Note 2

Note 2(97,248)

1,060,466

Note 3Note 3

1,103,232—

1,060,466

1,181,194—

1,060,466

Shareholder

Corporate Data

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 Act, 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 under Paragraph 2, Article 15, of the
Supplementary Provisions to the Act), 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 Act 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.

127
Percentage of
total equity (%)

Finance Minister

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

43,623100.00Total—

43,623100.00

Annual Report & CSR Report 2011

Stock Information

Address

Number of shares held(Thousands of shares)

Excerpt from the Development Bank of Japan Inc. Act (Act No. 85 of 2007)(Unofficial translation)

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 ofinvestment and financing functions of long-term business funds as
the Development 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.

Corporate Data
128
Excerpt from the Development Bank of Japan Inc. Act (Act No. 85 of 2007)

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 Act (ActNo. 25 of 1948, as amended); hereinafter in this Item andItem 11 the same), or enter into securities-related derivatives
transactions (limited to those made for investment
purposes), except in cases where these business operations
fall within those operations referred to in Item (3);(6) To lend Securities;(7) To acquire or transfer monetary claims (including claims
represented by certificates stipulated in the Ministry of
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 Ordinance (hereinafterin 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 (Act 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
Act (other than those that fall within the securities-related
derivatives transactions), except in cases where these
Annual Report & CSR Report 2011

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 Act;
(13) To do the activities referred to in Article 2, Paragraph 8,
Item (9) of the Financial Instruments and Exchange Act(limited, in the case of the handling of primary offering or
secondary distribution, to those to be conducted upon
entrustment by financial instruments business operators
engaged in the type I financial instruments trading businessset forth in Article 28, Paragraph 1 of the Financial
Instruments and Exchange Act (the financial instruments
dealers set forth in Article 2, Paragraph 9 of the Financial
Instruments and Exchange Act; hereinafter the same), andfor such financial instruments business operators);(14) To do the activities referred to in Article 2, Paragraph 8,
Item (11) of the Financial Instruments and Exchange Act;
(15) To do the activities referred to in Article 2, Paragraph 8,
Item (13) of the Financial Instruments and Exchange Act;
(16) To do the activities referred to in Article 2, Paragraph 8,
Item (15) of the Financial Instruments and Exchange Act;
(17) With respect to securities (including, if such securities are
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 Act,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 (Act 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 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 Act Concerning theCentral Depositary System of Corporate Debentures (Act 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 Act (Act 100 of 1951, as amended), the fiscal
loan funds (which means the fiscal loan funds set forth in Article 2of the Fiscal Loan Funds Act; 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 Act, 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 Act on
Restrictions on Financial Assistance by the Government to
Corporations (Act 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 Act 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 2011

129
Excerpt from the Development Bank of Japan Inc. Act (Act No. 85 of 2007)

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.

Corporate Data

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 Act (Act 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 Act);(4) Money lenders (the money lenders set forth in Article 2,
Paragraph 2 of the Money Lending Business Act (Act No.
32 of 1983, 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 Act (Act No. 154 of
2004, as amended));(6) Insurance companies (the insurance companies set forthin Article 2, Paragraph 2 of the Insurance Business Act (ActNo. 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.

Paragraph 1, the competent ministers for the following mattersshall be the Minister of Finance and the Prime Minister.

Supplementary Provisions
Article 2
Disposition of the Government-Owned Shares
1. Pursuant to Article 6, Paragraph 2 of the Act on Promotion of
Administrative Reform for Realization of Small and Efficient
Government (Act No. 47 of 2006), the Government shall intend
to reduce the number of the shares held by it of the
Corporation (hereinafter in the following Paragraph and theimmediately following Article referred to as ”GovernmentOwned Shares”), taking into account the market situation, andshall dispose all of them in approximately five to seven years
from the date set forth in Item (3) of the preceding Article.
2. For a period from the effectuation of this act 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.

Corporate Data
130
Excerpt from the Development Bank of Japan Inc. Act (Act No. 85 of 2007)

Article 3
Abolition of this Act and Other Measures
If the Government disposes of all of the Government-Owned
Shares, the Government shall immediately take measures toabolish this act, as well as measures necessary to smoothly assign
the business operations, functions, and rights and obligations of
the Corporation to any organization to be formed as a bearer ofthe functions commensurate with the investment and financing
functions held by the Corporation.
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 Act (ActNo. 73 of 1999, as amended; hereinafter, except for Article 26of the Supplementary Provisions, referred to as the ”DBJ Act”),
during the Preparatory Period (the period from the date on
which this act comes into force up to September 30, 2008; thesame 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.

Annual Report & CSR Report 2011

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
Review
On or prior to the date set forth in Article 1, Item (3) of the
Supplementary Provisions, the Government shall review 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 acts (including ordinances under those acts), such as the
Act on Security for Loans from the Development Bank of Japan toElectric Utility Corporations (Act No. 145 of 1950, as amended),
the Oil Stockpiling Act (Act No. 96 of 1975, as amended), the Act
on the Promotion of Development and Introduction of Alternative
Energy (Act No. 71 of 1980, as amended), the Act on Special
Measures Concerning the Promotion of Urban Development by
Private Sectors (Act No. 62 of 1987, as amended), the Act on
Temporary Measures to Promote Business Activities for the Rationaluse of Energy and the Utilization of Recycled Resources (Act No. 18
of 1993, as amended) and the Act on Promotion of Private FinanceInitiative (Act No. 117 of 1999, as amended), while considering theconvenience of users of those systems, and take the required
measures based on the results of such review.
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 act 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 act to any legal issues ordisputes.

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

The Development Bank of Japan Inc. Act (Act No. 85 of 2007)
shall be 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.
Capital Contribution by the Government
Article 2-2
The Government may make capital contributions to the
Corporation, to the extent of the amount approved by thebudget, whenever the Government deems necessary, until March
31, 2012.

Return of the 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 Ministry of Finance Ordinance.
Exception to Imposition of Registration and License Tax
Article 2-6
When capital contributions are made under the provisions ofArticle 2-2 of the Supplementary Provisions or redemptions madeunder the provisions 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 Ministry of
Finance Ordinance.

Supplementary Provisions
Enforcement Date
Article 1
This act shall take effect on the date of its promulgation.
Review, Etc.
Article 2
1 By the end of fiscal year 2011, the Government shall review
what the appropriate implementation of the Crisis Response
Operations (referring to the Crisis Response Operationsprescribed under the provisions of Article 2, Item 5 of the Japan
Finance Corporation Act (Act No. 57 of 2007); same
hereinafter) implemented by the Development Bank of Japan
Inc. (hereinafter” the Corporation”) and the appropriateorganization of the Corporation based on that including theway of holding its shares by the Government should be, andshall take necessary measures based on these reviews, taking

into account the status of the capital contributions by theGovernment to the Corporation under the provisions of Article
2-2 of the Development Bank of Japan Inc. Act as amended bythis Act; the redemption of the Government bonds under the
Article 2-4, Paragraph 2 of the supplementary provisions of theDevelopment Bank of Japan Inc. Act as amended by this Act;the implementation of the Crisis Response Operations by the
Corporation; and the changes in socioeconomic and othercircumstances from a point of view of maintaining the
involvements with the Corporation by the State such as letting
the Government consistently hold its shares exceeding onethird of the Corporation’s issued shares in the aim of ensuring
the appropriate implementation of the Crisis Response
Operations by the Corporation.
2 Notwithstanding the provisions of Article 6, Paragraph 2 of the
Act on Promotion of Administrative Reform for Realization ofAnnual Report & CSR Report 2011131
Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 67 of 2009)

Redemption of the Government Bonds
Article 2-4
1 The Corporation, may request the redemption of thegovernment bonds delivered as set forth in the provisions ofParagraph 2 of the preceding Article, only within the amount of
capital calculated by the Ministry of Finance Ordinance as thenecessary amount of capital in response to the increase of
assets related to its Crisis Response Operations (limited to those

conducted by March 31, 2012).
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” shall be deemed to be replaced with ”case, or in cases
where Article 2-4, Paragraph 3 of the Supplementary Provisions
to the Development Bank of Japan Inc. Act (Act No. 85 of
2007) is applied.”
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

Delivery of the Government Bonds
Article 2-3
1 The Government, in implementing the crisis response
operations in Article 2, Item 5 of the Japan Finance Corporation
Act (Act No. 57 of 2007; hereinafter referred to as ”Crisis
Response Operations”) may issue the government bonds inorder to use for securement of the capital required to ensure
the financial strength of the Corporation, until March 31, 2012.
2 The Government, pursuant to the provisions of the preceding
paragraph, to the extent of the amount approved by thebudget, shall issue the 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 in
Paragraph 3, shall be determined by Ministry of FinanceOrdinance.

(Unofficial translation)

Small and Efficient Government (Act No. 47 of 2006) as
amended pursuant to the provisions of the following Article
and the provisions of Article 2, Paragraph 1 of the
Supplementary Provisions of the Development Bank of Japan
Inc. Act as amended pursuant to this Act, the Government shallnot dispose of its holding shares of the Corporation prior to themeasures described in the preceding paragraph shall be taken.
Partial Amendment of the Act on Promotion of
Administrative Reform for Realization of Small and Efficient
Government
Article 3
The Act on Promotion of Administrative Reform for Realization of
Small and Efficient Government shall be partially amended asfollows.
”In the measures described in the preceding paragraph” in Article
6, Paragraph 2 shall be revised to ”from April 1, 2012.”

Corporate Data

Adjusted Provisions
Article 4
1 If this Act come into effect prior to the date of enforcement of
the Act for Partial Amendment of the Shoko Chukin Bank
Limited Act and Other Act to Facilitate the Supply of Funds to
Small and Medium-sized Enterprises (Act No. 54 of 2009;
mentioned in the following paragraph as the ”Shoko Chukin

Amendment Act”), in regard to the application of the provisionsof Article 6, Paragraph 2 of the Act on Promotion of
Administrative Reform for Realization of Small and Efficient
Government as amended under the provisions of the preceding
Article up to the day before the said date, ”and” shall bedeemed to be replaced with ”taking into account the market
situation, and shall dispose of all such capital contributions inapproximately five to seven years after implementation of themeasures mentioned in the preceding paragraph, and theGovernment shall make capital contributions in.”2 If this Act come into effect after the date of enforcement of the
Shoko Chukin Amendment Act, the provisions of the preceding
Article shall not apply. In this case, ”the following Article” inArticle 2, Paragraph 2 of the Supplementary Provisions shall bedeemed to be replaced with ”Article 4 of the Supplementary
Provisions to the Act for Partial Amendment of the Shoko
Chukin Bank Limited Act and Other Act to Facilitate the Supply
of Funds to Small and Medium-sized Enterprises (Act No. 54 of2009).”
Delegation to Government Ordinance
Article 5
Transitional measures required for the enforcement of this Act
shall be determined by government ordinance.

132
Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 67 of 2009)(Unofficial translation)

Supplementary Resolutions on the Bill for Partial Amendment of the Development Bank of Japan Inc. Act
House of Councilors Committee on Financial Affairs
June 25, 2009

The following matters should receive the Government’s carefulconsideration.
• In implementing Crisis Response Operations based on the recent
measures for additional capital contribution, Development Bankof Japan Inc. shall ensure the measures result in a smoothsupply 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
Operations for large and midscale enterprises, Development
Bank of Japan Inc. must be certain to expedite loans to
associated small and medium enterprises as well.

based on its findings. Any such reviews 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

Annual Report & CSR Report 2011

Amendment of the Development Bank of Japan Inc. Act (based on establishment of the
Act for Extraordinary Expenditure and Assistance to Cope with the Great East Japan Earthquake (Act No. 40 of 2011))(Unofficial translation)

Special Rules for the Development Bank of Japan Inc. Act
Article 36
With regard to the capital contribution and the issuance orredemption of Government bonds to facilitate implementation of
the crisis response operations (operations specified in Article 2,
Item (5) of the Japan Finance Corporation Act (Act No. 57 of2007), as well as in Article 133) by the Development Bank ofJapan Inc. to cope with the Great East Japan Earthquake, within
Article 2-2 of the Supplementary Provisions to the Development
Bank of Japan Inc. Act (Act No. 85 of 2007), “March 31, 2012”
shall be deemed to be replaced with “March 31, 2015,” and “asit deems necessary” shall be deemed to be replaced with “as it
deems necessary to facilitate implementation of the crisis response
operations,” and within Article 2-3, Paragraph 1 and Article 2-4,
Paragraph 1 of the same supplementary provisions, “March 31,
2012,” shall be deemed to be replaced with “March 31, 2015,”
and within Article 2-5, Paragraph 1 of the same supplementaryprovisions, “July 1, 2012” shall be deemed to be replaced with
”July 1, 2015.”(Reference 1) The Supplementary Provisions of theDevelopment Bank of Japan Inc. Act (After the amendment
pursuant to the Act for Partial Amendment of theDevelopment Bank of Japan Inc. Act and the Amendment
and Replacement reading pursuant to the Act for
Extraordinary Expenditure and Assistance to Cope with theGreat East Japan Earthquake (hereinafter, referred to as the”Act for Extraordinary Expenditure”.))

Supplementary Provisions

Capital Contribution by the Government
Article 2-2
The Government may make capital contributions to the
Corporation, to the extent of the amount approved by thebudget, whenever the Government deems necessary to facilitate
implementation of the crisis response operations, until March 31,
2015.

Redemption of the Government Bonds
Article 2-4
The Corporation may request the redemption of the government
bonds delivered as set forth in the provisions of Paragraph 2 ofthe preceding Article, only within the amount of capital calculatedby the Ministry of Finance Ordinance as the necessary amount of
capital in response to the increase of assets related to its Crisis
Response Operations (limited to those conducted by March 31,2015).

Annual Report & CSR Report 2011

Expenditure and Assistance to Cope with the Great East Japan Earthquake (Act No. 40 of 2011))

Partial Amendment of the Act for Partial Amendment of theDevelopment Bank of Japan Inc. Act
Article 11
The Act for Partial Amendment of the Development Bank of Japan
Inc. Act (Act No. 67 of 2009) shall be partially amended asfollows.
Within Article 2, Paragraph 1 of the Supplementary Provisions of
the Development Bank of Japan Inc. Act, “the end of fiscal year
2011” shall be revised to “the end of fiscal year 2014,” and”(including the cases where it shall be applied by replacing theterm and phrase pursuant to the provisions of Article 36 of the
Act for Extraordinary Expenditure and Assistance to Cope with theGreat East Japan Earthquake (Act No. 40 of 2011))” shall be
added next to “Article 2, Paragraph 2 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act”, and”Article 2-4, Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act” shall be revised to “Article
2-4, Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act after the amendment
pursuant to this Act.”

133
Amendment of the Development Bank of Japan Inc. Act (based on establishment of the Act for Extraordinary

Partial Amendment of the Development Bank of Japan Inc.
Act
Article 9
The Development Bank of Japan Inc. Act shall be partiallyamended as follows.
”April 1, 2012” in Article 2, Paragraph 1 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act shall berevised to “April 1, 2015”.

Delivery of the Government Bonds
Article 2-3
1 The Government, in implementing the crisis response
operations (hereinafter referred to as the “Crisis Response
Operations”) prescribed in Article 2, Item 5 of the Japan
Finance Corporation Act (Act No. 57 of 2007) may issue thegovernment bonds in order to use for securement of the capitalrequired to ensure the financial strength of the Corporation,
until March 31, 2015.
2 The Government, pursuant to the provisions of the preceding
paragraph, to the extent of the amount approved by thebudget, shall issue the government bonds and deliver them to
the Corporation.

Corporate Data

Partial Amendment of the Act on Promotion of
Administrative Reform for Realization of Small and Efficient
Government
Article 7
The Act on Promotion of Administrative Reform for Realization of
Small and Efficient Government (Act No. 47 of 2006) shall be
partially amended as follows.
”from April 1, 2012.” in Article 6, Paragraph 2 shall be revised to”from April 1, 2015.”

Disposition of the Government-Owned Shares
Article 2
Pursuant to Article 6, Paragraph 2 of the Act on Promotion of
Administrative Reform for Realization of Small and Efficient
Government (Act No. 47 of 2006), the Government shall intend
to reduce the number of the shares held by it of the Corporation(hereinafter in the following Paragraph and Article 3 of the
Supplementary Provisions, referred to as “Government-Owned
Shares”), taking into account the market situation, and shalldispose all of them in approximately five to seven years from
April 1, 2015.

(Reference 2) The Supplementary Provisions of the Act for
Partial Amendment of the Development Bank of Japan Inc.
Act (After the amendment pursuant to the Act for
Extraordinary Expenditure)
Review, Etc.
Article 2
1 By the end of fiscal year 2014, the Government shall review
what the appropriate implementation of the Crisis Response
Operations (referring to the Crisis Response Operationsprescribed under the provisions of Article 2, Item 5 of the Japan
Finance Corporation Act (Act No. 57 of 2007); same
hereinafter) implemented by the Development Bank of Japan
Inc. (hereinafter “the Corporation”) and the appropriateorganization of the Corporation based on that including theway of holding its shares by the Government should be, andshall take necessary measures based on these reviews, taking
into account the status of the capital contributions by theGovernment to the Corporation under the provisions of Article
2-2 of the Supplementary Provisions (including the replacement
readings pursuant to the Act for Extraordinary Expenditure andAssistance to Cope with Great East Japan Earthquake (Act No.

Corporate Data
134
Amendment of the Development Bank of Japan Inc. Act (based on establishment of the Act for
Extraordinary Expenditure and Assistance to Cope with the Great East Japan Earthquake (Act No. 40 of 2011))
Annual Report & CSR Report 2011

40 of 2011) Article 36) of the Development Bank of Japan Inc.
Act as amended by this Act; the redemption of the Government
bonds under the Article 2-4, Paragraph 2 of the supplementaryprovisions of the Development Bank of Japan Inc. Act asamended by this Act; the implementation of the Crisis
Response Operations by the Corporation; and the changes insocioeconomic and other circumstances, from a point of viewof maintaining the involvements with the Corporation by theState such as letting the Government consistently hold its
shares exceeding one-third of the Corporation’s issued shares in
the aim of ensuring the appropriate implementation of the
Crisis Response Operations by the Corporation.
2 Notwithstanding the provisions of Article 6, Paragraph 2 of the
Act on Promotion of Administrative Reform for Realization of
Small and Efficient Government (Act No. 47 of 2006) as
amended pursuant to the provisions of the following Article
and the provisions of Article 2, Paragraph 1 of the
Supplementary Provisions of the Development Bank of Japan
Inc. Act as amended pursuant to this Act, the Government shallnot dispose of its holding shares of the Corporation prior to themeasures described in the preceding paragraph shall be taken.

Financial Condition

Consolidated Financial Statements . . . . . . . . . . 136
Non-Consolidated Financial Statements . . . . . . 178
Capital Adequacy Status . . . . . . . . . . . . . . . . . . . 181
135

Annual Report & CSR Report 2011

Consolidated Balance Sheets
Development Bank of Japan Inc. and Consolidated Subsidiaries
As of March 31, 2011 and 2010
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2011

2010

2011

AssetsCash and due from banks (Note 28)
Call loans and bills bought (Note 28)
Reverse repurchase agreements (Note 3)
Money held in trust (Notes 28 and 30)

233,297¥

168,696$

2,805,741

61,852125,000

743,860—

179,991—

24,81930,740298,492

Securities (Notes 3, 14, 28 and 30)

1,165,580

1,289,495

14,017,804

Loans (Notes 4, 5, 14 and 28)

13,031,480

13,514,661

156,722,553

Other assets (Notes 6 and 14)

122,296

89,701

1,470,790

Tangible fixed assets (Note 7)

181,486

162,227

2,182,643

5,960

5,098

71,686

Intangible fixed assets

Financial Condition
136¥

Deferred tax assets (Note 24)

36,13744,383434,602

Customers’ liabilities for acceptances and guarantees (Note 13)

145,068

192,172

1,744,661

Allowance for loan losses (Notes 8 and 28)(161,607)(203,422)(1,943,564)(1,158)(3,004)(13,932)¥14,845,213¥15,595,740$178,535,338

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

Consolidated Financial Statements¥ 3,312,713¥ 3,504,212$ 39,840,209

Call money and bills sold (Note 28)—

153,000—

Borrowed money (Notes 10 and 28)

8,576,482

9,082,479

103,144,706

Corporate bonds (Notes 9 and 28)

316,675

242,1813,808,488

Other liabilities (Notes 11 and 12)

52,98149,780637,174

Accrued bonuses to employees

4,581

2,238

55,096

Accrued bonuses to directors and corporate auditors

17

22

209

Reserve for employees’ retirement benefits (Note 23)

25,88532,613311,317

Reserve for directors’ and corporate auditors’ retirement benefits

52

34

629

Reserve for contingent losses

711

2,815

8,554

Reserve for losses on headquarter relocation

—

6,536

—

Deferred tax liabilities (Note 24)
Acceptances and guarantees (Note 13)
Total liabilities

48

114

589

145,068

192,172

1,744,661

12,435,218

13,268,201

149,551,631

Equity:Common stock authorized, 160,000 thousand shares in 2011 and2010; issued, 43,623 thousand shares in 2011 and 2010 (Note 15)

1,181,194

1,181,194

14,205,580

Capital surplus (Note 15)

1,060,466

1,060,466

12,753,654

Retained earnings (Note 15)

132,329

40,7791,591,458

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

13,169

11,091

158,382

Deferred gain on derivatives under hedge accounting

17,406

11,154

209,343

(101)

(54)

(1,223)2,404,464

2,304,630

28,917,195

5,530

22,90866,511

Accumulated other comprehensive income:

Foreign currency translation adjustments
Total
Minority interests
Total equity
Total liabilities and equity
See notes to consolidated financial statements.

Annual Report & CSR Report 2011

2,409,995

2,327,538

28,983,706¥14,845,213¥15,595,740$178,535,338

Consolidated Statements of Income
Development Bank of Japan Inc. and Consolidated Subsidiaries
For the years ended March 31, 2011 and 2010
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2011

2010

2011

IncomeInterest income:¥298,929¥301,482$3,595,066

Interest on loans

271,860

278,176

3,269,513

Interest and dividends on securities

19,26815,793

231,734

Interest on call loans and bills bought

165

55

1,989

Interest on reverse repurchase agreements

149

322

1,802

Interest on due from banks

171

116

2,067

Interest on swaps

7,238

6,996

87,059Other interest income

75

22

902

Fees and commissions (Note 17)

9,998

15,683

120,251

12,642

19,880152,043

Other income (Note 19)

42,275

16,661

508,423

Total income

363,846

353,7074,375,784

172,231

180,1112,071,337

52,92055,409636,451

Expenses
Interest expense:
Interest on debentures
Interest on call money and bills soldInterest on borrowed money
Interest on short-term corporate bonds
Interest on corporate bonds
Other interest expense

64

1,796

122,527

1,402,848

10

—

127

2,500

2,105

30,072

3

4

43

607

1,043

7,311

Other operating expenses (Note 21)

12,012

34,072

144,473

General and administrative expenses

36,70835,037

441,476

Other expenses (Note 22)37,90352,336455,847

Total expenses

259,464

302,6023,120,444

Income before income taxes and minority interests

104,381

51,105

1,255,339

371

25,382

4,470

944(14,558)

11,356

1,315

10,824

15,826

Income taxes (Note 24):
Current
Deferred
Total income taxes
Net income before minority interests
Minority interests in net income
Net income

103,065

1,239,513

1,481

387

17,818¥101,583¥ 39,893$1,221,695

Yen

U.S. Dollars (Note 1)

Per share of common stock (Note 16)
Basic net income
Cash dividend applicable to the year

¥2,328.63¥970.47$28.01

1,147

230

13.79

See notes to consolidated financial statements.

Annual Report & CSR Report 2011137
Consolidated Financial Statements

Fees and commissions (Note 20)149
116,646

Financial Condition

Other operating income (Note 18)

Consolidated Statement of Comprehensive Income
Development Bank of Japan Inc. and Consolidated Subsidiaries
For the year ended March 31, 2011

Millions of Yen

Thousands of
U.S. Dollars (Note 1)

2011

2011

¥103,065$1,239,513

Unrealized gain on available-for-sale securities

2,073

24,939Deferred gain on derivatives under hedge accounting

6,273

75,445

(46)

(563)

Net income before minority interests
Other comprehensive income (Note 26)

Foreign currency translation adjustments
Share of other comprehensive income in affiliates accounted forby the equity method
Total other comprehensive income
Comprehensive income (Note 26)

(22)

(268)

8,277

99,553¥111,343$1,339,066¥109,867$1,321,322

1,475

17,745

Total comprehensive income attributable to (Note 26)
Owners of the parent
Minority interests
See notes to consolidated financial statements.

Financial Condition
138
Consolidated Financial Statements
Annual Report & CSR Report 2011

Consolidated Statements of Changes in Equity
Development Bank of Japan Inc. and Consolidated Subsidiaries
For the years ended March 31, 2011 and 2010
Thousands of U.S.
Dollars (Note 1)

Millions of Yen

2011

Common stock:
Balance at beginning of year
Issuance of new shares of common stock
Balance at end of year

2010

2011

¥1,181,194¥1,000,000$14,205,580—

181,194—

1,181,194

1,181,194

14,205,580

1,060,466

1,157,715

12,753,654

Capital surplus:
Balance at beginning of year
Transfer from capital surplus to retained earnings—(97,248)—

1,060,466

1,060,466

12,753,654

Balance at beginning of year

40,779(96,363)

490,430

Cash dividends(10,033)—(120,667)—

97,248—Net income

101,583

39,893

1,221,695

Balance at end of year

132,329

40,7791,591,458

11,091(1,667)

133,390

Balance at end of year
Retained earnings:

Transfer from capital surplus to retained earnings

Unrealized gain on available-for-sale securities:
Balance at beginning of year
Net change during the year

2,078

12,75924,993

Balance at end of year

13,169

11,091

158,382

11,154

17,182

134,147

Financial Condition

Accumulated other comprehensive income:Deferred gain on derivatives under hedge accounting:
Balance at beginning of year

6,252

(6,028)75,197

Balance at end of year

17,406

11,154

209,343

Balance at beginning of year

(54)

3

(660)

Net change during the year

(46)

(58)

(563)

Balance at end of year

(101)

(54)

(1,223)Foreign currency translation adjustments:

Minority interests:
Balance at beginning of year

22,908

9,586

275,509

Net change during the year

(17,378)

13,322(208,998)

5,530

22,90866,511

2,327,538

2,086,456

27,992,050—

181,194—

Balance at end of year
Total equity:
Balance at beginning of year
Issuance of new shares of common stock
Cash dividends(10,033)—(120,667)

Net income

101,583

39,893

1,221,695

Net change during the year
Balance at end of year

(9,094)19,994(109,371)¥2,409,995¥2,327,538$28,983,706

See notes to consolidated financial statements.

Annual Report & CSR Report 2011

Consolidated Financial Statements

Net change during the year139Consolidated Statements of Cash Flows
Development Bank of Japan Inc. and Consolidated Subsidiaries
For the years ended March 31, 2011 and 2010
Thousands of U.S.
Dollars (Note 1)

Millions of Yen

2011

Financial Condition
140
Consolidated Financial Statements

Cash flows from operating activities:
Income 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 in allowance for loan losses
Decrease in allowance for investment losses
Increase in accrued bonuses to employees(Decrease) increase in accrued bonuses to directors andcorporate auditors(Decrease) increase in reserve for employees’ retirement benefits(Decrease) increase in reserve for contingent losses
Increase in reserve for losses on headquarter relocation
Interest income
Interest expense
Loss on securities—net
Gain on money held in trust—net
Foreign exchanges losses(Gain) loss on sales of fixed assets—net
Net decrease (increase) in loans
Net (decrease) increase in debentures
Net (decrease) increase in borrowed money
Net increase in corporate bonds
Net increase in due from banks
Net decrease in call loans and bills bought
Net decrease in reverse repurchase agreements
Net (decrease) increase in call money and bills soldInterest received
Interest paid
Other—net
Sub-total
Payments for income taxes
Net cash provided by (used in) 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
Proceeds from sales of intangible fixed assets
Payments for purchases of stocks of subsidiaries
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Payments for cash dividends
Proceeds from issuance of stock
Proceeds from issuance of securities to minority shareholders ofsubsidiaries
Dividends paid to minority shareholders of subsidiaries
Net cash (used in) 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
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
See notes to consolidated financial statements.
Annual Report & CSR Report 2011¥¥

104,381

2010

¥

2011

51,105$ 1,255,339

1,984
—
21
(1,837)(41,815)(1,845)
2,342

1,948
1,858
0
(958)
(73,267)(1,289)14

23,864—262(22,100)(502,891)(22,200)
28,169(4)(6,727)(2,104)—(298,929)
172,231
7,923(623)
15,330(3)
483,181(191,498)(505,997)
74,494(9,665)
63,148
179,991(153,000)
303,109(175,029)(2,107)
16,948(15,157)
1,790

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)(57)(80,904)(25,304)—(3,595,066)
2,071,337
95,293(7,495)
184,367(45)
5,810,961(2,303,054)(6,085,358)
895,906(116,245)
759,447
2,164,655(1,840,048)
3,645,328(2,104,987)(25,347)
203,828(182,295)
21,532(1,727,311)
362,248
1,469,407(1,215)8,111(26,021)17(2,020)0—83,217(2,195,175)
15,8592,087,747(3,418)
1,608
(934)
23
(1,504)—(4,339)(100,135)(20,773,434)
4,356,566
17,671,774(14,612)97,550(312,946)
205(24,304)8—
1,000,808(10,033)——
181,194(120,667)—

2,848(22,439)(29,624)

16,600(1,313)
196,481

34,252(269,868)(356,284)(553)
54,828
106
144,756
199,692(346)
95,984
7
48,763
144,756(6,660)659,397
1,284
1,740,908$ 2,401,588¥

Notes to Consolidated Financial Statements
Development Bank of Japan Inc. and Consolidated Subsidiaries
For the years ended March 31, 2011 and 2010

1. Basis of Presentation

2. Summary of Significant Accounting Policies

Financial Condition

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. (“DBJ Inc.”) and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirementsof International Financial Reporting Standards.
Under Japanese GAAP, a consolidated statement of comprehensive income is required from the fiscal year ended
March 31, 2011 and has been presented herein. Accordingly, accumulated other comprehensive income is presented in
the consolidated balance sheets and the consolidated statements of changes in equity. Information with respect to othercomprehensive income for the year ended March 31, 2010 is disclosed in Note 26. In addition, “net income before minority
interests” is disclosed in the consolidated statement of income from the year ended March 31, 2011.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been madeto the consolidated financial statements issued domestically in order to present them in a form which is more familiar toreaders outside Japan. In addition, certain reclassifications have been made in the 2010 financial statements to conform tothe classifications used in 2011.
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 ¥83.15=$1.00, the effective exchange rate prevailing as of March 31, 2011, 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.

141(i) Consolidated Subsidiaries
The number of consolidated subsidiaries as of March 31, 2011 and 2010 is 16 and 13, respectively. The consolidated
subsidiaries as of March 31, 2011 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.
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.
DBL Capital Co., Ltd.
DBJ Capital Investment Fund No. 1
DBJ New Business Investment FundDBJ Capital Investment Fund No. 2

Annual Report & CSR Report 2011

Consolidated Financial Statements(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.

In the year ended March 31, 2011, DBJ Capital Co., Ltd. was newly consolidated due to increased materiality, andDBJ Capital Investment Fund No. 1, DBJ New Business Investment Fund and DBJ Capital Investment Fund No. 2 were
newly consolidated upon their formation. New Business Investment No. 1 Investment Limited Liability Partnership,
which was a consolidated subsidiary, was deconsolidated due to liquidation.
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.
(ii) Unconsolidated Subsidiaries
The numbers of unconsolidated subsidiaries as of March 31, 2011 and 2010 are 15 and 14, respectively. The major
unconsolidated subsidiary as of March 31, 2011 and 2010 was UDS II Corporate Mezzanine Limited Partnership.
Unconsolidated subsidiaries are excluded from the scope of consolidation because such exclusion has no material
impact on the consolidated financial statements in terms of total assets, income, net income, retained earnings anddeferred hedge gains and losses.

Financial Condition
142(iii) Entities not recognized as subsidiaries where DBJ Inc. owns the voting rights over 50%
The following companies of which DBJ Inc. owns the voting rights over 50% were not recognized as subsidiaries,
since DBJ Inc.’s intent is to nurture the venture business and not to exercise control over their operating andfinancing policies:
As of March 31, 2011
Hydro-Device Company, Limited
As of March 31, 2010
Dyflex Holdings Co.
Hydro-Device Company, Limited

Consolidated Financial Statements(2) Application of the Equity Method
Under the influence concept, unconsolidated subsidiaries and affiliates over which DBJ Inc. has the ability to exercise
significant influence are accounted for by the equity method.
(i) Unconsolidated subsidiaries not accounted for by the equity method
The number of unconsolidated subsidiaries not accounted for by the equity method as of March 31, 2011 and 2010
was 15 and 14, respectively. The major unconsolidated subsidiary not accounted for by the equity method was 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, 2011 and 2010 was 14. The majoraffiliates accounted for by the equity method as of March 31, 2011 and 2010 were as follows:
Makuhari Messe, Inc.
Hokkaido International Airlines Co., Ltd.
Urban Redevelopment Private Fund(iii) Affiliates not accounted for by the equity method
The number of affiliates not accounted for by the equity method as of March 31, 2011 and 2010 was 88 and 91,
respectively. One of the major affiliates as of March 31, 2011 and 2010 was:
New Perspective One LLC
Unconsolidated 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 recognized as affiliates where DBJ Inc. owns the voting rights between 20% and 50%
The following companies of which DBJ Inc. owns the voting rights between 20% and 50% were not recognized asaffiliates accounted for by the equity method, since DBJ Inc.’s intent is to nurture the venture business and not toexercise significant influence on their operating and financing policies:

Annual Report & CSR Report 2011

As of March 31, 2011
Siti, Inc.
Gordon Brothers Japan Co., Ltd.
Narumi Corporation
Shinwa Seiko Corporation
Mediclude Co., Ltd.
Green Power Investment Corporation
Advangen, Inc.
Vaxiva Biosciences
Asahi Fiber Glass Company, Limited
Takumi Technology Corp.
Nihon Shoryoku Kikai Co., Ltd.
PRISM BioLab Corporation
Izumi Products Company

Financial Condition

As of March 31, 2010
Sunsay International Technology, Inc.
Gordon Brothers Japan Co., Ltd.
Narumi Corporation
Shinwa Seiko Corporation
Mediclude Co., Ltd.
Green Power Investment Corporation
Advangen, Inc.
Vaxiva Biosciences
Asahi Fiber Glass Company, Limited
Takumi Technology Corp.
Nihon Shoryoku Kikai Co., Ltd.
PRISM BioLab Corporation

143

Number of subsidiaries

December 31
March 31

2011

2010

7
9

6
7

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.
The excess of the fair value over the cost of acquired subsidiaries, which had been amortized over not exceeding
20 years in prior years, is recognized as income immediately on and after April 1, 2011 due to the revision of theaccounting standard for business combination effective April 1, 2010.

Annual Report & CSR Report 2011

Consolidated Financial Statements(3) Balance Sheet Dates of Consolidated Subsidiaries
Balance sheet dates of consolidated subsidiaries are as follows:

(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

Millions of Yen

Cash and due from banks

Financial Condition
144

2011

2010

2011

¥233,297¥168,696$2,805,741

Time deposits with banks(33,605)(23,939)(404,153)

Cash and cash equivalents¥199,692¥144,756$2,401,588(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 gains and losses 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 other securities.
(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 ofincome.

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 areused 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.
(2) Hedging Instruments and Hedged Items• Hedging Instruments : Interest rate swaps
Hedged Items: Debentures, Borrowed money, Corporate bonds, Securities and Loans• Hedging Instruments : Foreign currency swaps
Hedged Items: Foreign currency denominated loans, Debentures and Corporate bonds(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.

Annual Report & CSR Report 2011

*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 income 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.

(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 statement of income to the extent that they are not hedged byforward 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 thehistorical rate. Differences arising from such translation were shown as “Foreign Currency Transaction Adjustments” ina separate component of equity. Revenue and expense accounts of consolidated foreign subsidiaries are translated into
yen at the exchange rate prevailing as of the balance sheet date.

Annual Report & CSR Report 2011

145
Consolidated Financial Statements(2) Amortization of Intangible Fixed Assets
Intangible Fixed Assets are amortized using the straight-line method. Capitalized software for internal use isamortized using the straight-line method based on the estimated useful lives (mainly from 3 to 5 years).

Financial Condition(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. aredepreciated using the declining-balance method, except for buildings (excluding installed facilities) that are
depreciated on a straight-line basis, and depreciation of consolidated subsidiaries is computed principally using thestraight-line method based on the estimate durability of assets.
The estimated useful lives are principally as follows:
Buildings: 3 years to 50 years
Others: 4 years to 20 years

Financial Condition
146(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 onan 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 based on
the historical default rate, which is calculated based on the actual defaults over a certain historical period. All claims areassessed 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
were written-off, and totaled ¥45,551 million ($547,827 thousand) and ¥115,954 million for the years ended March
31, 2011 and 2010, respectively. The consolidated subsidiaries calculate the general reserve for “normal” categories
based on the specific actual historical loss ratio, and the specific reserve for the “possibly bankrupt,” “effectively
bankrupt” and “legally bankrupt” categories based on estimated losses, considering the recoverable value.
(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.

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 years ended March 31, 2011 and 2010.
(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.
On July 1, 2010, DBJ Inc. obtained an approval from the Minister of Health, Labour and Welfare regarding
exemption of future payment duties for a substitute portion of welfare pension fund, following the enforcement of the
Act of Corporate Defined Benefit Pension. The amount corresponding to the refund (minimum policy reserve) measured
as of March 31, 2011 was ¥7,503 million ($90,235 thousand) and the expected gain, if the paragraph 44-2 of “Practical
Guidance concerning Accounting Standard for Retirement Benefits (Interim Report)” (the Japanese Institute of Certified
Public Accountants (JICPA), Accounting System Committee Report No. 13) were applied assuming that such amount
had been paid at March 31, 2011, would be ¥11,130 million ($133,864 thousand).
(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.

Annual Report & CSR Report 2011

(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.

(r) Consumption Taxes
Income and expenses subject to consumption taxes exclude related consumption taxes paid or received.

(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 years ended March 31, 2011 and 2010 is not disclosed because there are no dilutive
securities.
Cash dividends per share presented in the accompanying consolidated statements of income are dividends
applicable to the year including dividends to be paid after the end of the year.
(u) Asset Retirement Obligations
In March 2008, the ASBJ issued the accounting standard for asset retirement obligations, ASBJ Statement No. 18“Accounting Standard for Asset Retirement Obligations” and ASBJ Guidance No. 21 “Guidance on AccountingStandard for Asset Retirement Obligations”.
Under this accounting standard, an asset retirement obligation is defined as a legal obligation imposed either by law
or contract that results from the acquisition, construction, development and the normal operation of a tangible fixed
asset and is associated with the retirement of such tangible fixed asset.
The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset
retirement and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If areasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement obligation
is incurred, the liability should be recognized when a reasonable estimate of asset retirement obligation can be made.
Upon initial recognition of a liability for an asset retirement obligation, an asset retirement cost is capitalized byincreasing the carrying amount of the related fixed asset by the amount of the liability.
The asset retirement cost is subsequently allocated to expense through depreciation over the remaining useful life of
the asset. Over time, the liability is accreted to its present value each period. Any subsequent revisions to the timing or
the amount of the original estimate of undiscounted cash flows are reflected as an increase or a decrease in the carrying
amount of the liability and the capitalized amount of the related asset retirement cost.
This standard was effective for fiscal years beginning on or after April 1, 2010.
DBJ Inc. applied this accounting standard effective April 1, 2010. The effect of this change was to decrease income
before income taxes and minority interests for the year ended March 31, 2011 by ¥401 million ($4,824 thousand).
Annual Report & CSR Report 2011147
Consolidated Financial Statements(s) Income Taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statements ofincome. 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.
Deferred taxes are measured by applying currently enacted tax laws to the temporary differences.

Financial Condition(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 account forleases which existed at March 31, 2008 and were transferred to DBJ Inc. on October 1, 2008, and does not transfer
ownership of the leased property to the lessee as operating lease transactions.

3. Securities
Securities as of March 31, 2011 and 2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Japanese government bonds

2011

2010

2011

¥ 418,710¥ 608,089$ 5,035,603

Corporate bonds

282,139

184,884

3,393,134

Equities

164,136

203,555

1,973,975

Other securities

300,594292,966

3,615,092¥1,165,580¥1,289,495$14,017,804

Total

Financial Condition*1. Investments in unconsolidated subsidiaries and affiliates included in “Equities” as of March 31, 2011 and 2010, are ¥24,293 million($292,167 thousand) and ¥15,428 million. Investments in unconsolidated subsidiaries and affiliates included in “Other securities” as ofMarch 31, 2011 and 2010, are ¥42,919 million ($516,167 thousand) and ¥38,922 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 the Financial Instruments and Exchange Act) and amount to ¥697 million ($8,387 thousand) and ¥3,070 million, as ofMarch 31, 2011 and 2010.
*3. There are no securities repledged as of March 31, 2011 and 2010. Securities accepted under repurchase agreements can be sold or
repledged. Securities neither sold nor repledged are ¥179,991 million as of March 31, 2010.
*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 impairment loss for the fiscal year.
The criterion for determining “Considerable decline in market value” is as follows:
Market value declined by 50% or more of the acquisition cost.
Market value declined by 30% or more of the acquisition cost, and such decline is not considered as recoverable.

Impairment losses on marketable securities available-for-sale for the years ended March 31, 2011 and 2010 are as follows:

148

Thousands of
U.S. Dollars

Millions of Yen

Consolidated Financial Statements

2011

2010

Equities

¥

Bonds

4,104

8

¥

2011

38

$

28,897

107

49,358

Other

6

259

79

Total

¥4,119¥29,195$49,544

4. Non-Performing Loans
The amounts of non-performing loans included in “Loans” on the consolidated balance sheets as of March 31, 2011 and2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2011

2010

2011

Loans to bankrupt debtors

¥

6,811

¥497,652$

Delinquent loans

111,000

143,789

1,334,941

Loans past due three months or more
Restructured loans
Total

81,913

259

23

3,124

49,21043,726591,827¥167,281¥685,192$2,011,805*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.”

Annual Report & CSR Report 2011

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, 2011
and 2010, the amounts of unused commitments are ¥245,482 million ($2,952,291 thousand) and ¥341,159 million. As of
March 31, 2011 and 2010, the amounts of unused commitments whose remaining contract term are within one year are¥132,978 million ($1,599,266 thousand) and ¥127,260 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 canrefuse customers’ 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 obtainreal estate, securities or other assets as collateral if considered necessary. Subsequently, DBJ Inc. and its subsidiaries performperiodic reviews of the customers’ business results based on internal rules, and take necessary measures to reconsider
conditions in contracts and/or require additional collateral and guarantees.

6. Other Assets
Other assets as of March 31, 2011 and 2010 are as follows:

2011

2010

2011

Prepaid expenses¥ 11,895¥15,239$ 143,065

Accrued income

40,25042,293

484,076

Derivatives

49,50923,715595,421

Other

20,6408,452

248,228

Total¥122,296¥89,701$1,470,790

149

Thousands of
U.S. Dollars

Consolidated Financial Statements

Financial Condition

Thousands of
U.S. Dollars

Millions of Yen

7. Tangible Fixed Assets
Tangible fixed assets as of March 31, 2011 and 2010 are as follows:
Millions of Yen

2011

Buildings
Land

¥

2010

2011

9,191

¥ 13,976$ 110,545

47,808147,396574,962

74

121

891

Leased assets
Construction in progress

123,589126

1,486,349

Other

822

606

9,896

Total

¥181,486¥162,227$2,182,643

Note: Accumulated depreciation of tangible fixed assets as of March 31, 2011 and 2010, is ¥1,837 million ($22,094 thousand) and ¥1,423
million.

8. Allowance for Loan Losses
An allowance for loan losses as of March 31, 2011 and 2010 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

General allowance for loan losses
Specific allowance for loan losses
Total

2011

2010

2011

¥ 88,187¥ 66,416$1,060,580

73,420137,005

882,984¥161,607¥203,422$1,943,564

Annual Report & CSR Report 2011

9. Debentures and Corporate Bonds
Debentures and corporate bonds as of March 31, 2011 and 2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Issue date

Interest rate(%)

Maturity date

2011

2010

2011

¥ 882,338$ 8,207,895

Debentures
Japanese government-

Aug. 2000–

0.8–

Aug. 2010–¥ 682,486

guaranteed bonds 1-23*1, 5, 6

Aug. 2008

2.2

Jun. 2023[49,991]
348,923

269,233

4,196,320[601,223]

Japanese government-

Nov. 2008–

0.4–

Jul. 2016–

guaranteed bonds 1-9

Sep. 2010

2.1

Feb. 2024

Japanese government-

Sep. 1998

1.81

Sep. 2028

25,07025,075

301,515

Japanese government-

Nov. 1999–

1.05–

Jun. 2010–

936,344

1,036,122

11,260,907

guaranteed foreign bonds

Nov. 2007

6.875

Nov. 2027[158,598]
163,092

32,564

1,961,425

1,204,758

13,286,980

guaranteed foreign bond 67*2, 5[1,907,380]

1-14*1, 5, 6
Financial Condition
150
Consolidated Financial Statements

Japanese government-

Dec. 2009–

0.5405–

Dec. 2014–

guaranteed Euro MTN bonds

Mar. 2011

2.875

Mar. 2016

FILP agency domestic bonds

Oct. 2002–

0.57–

Aug. 2010–

1,104,812

5, 7, 9-11, 13, 16, 17, 19-22,

Aug. 2008

2.74

Mar. 2047[274,992]

FILP agency foreign bond 1*3, 5 Jun. 2007

1.65

Jun. 2012

49,982

49,967

601,1142.032–

Sep. 2010–

2,000

4,153

24,053

3.142

Sep. 2023
187,000

3,211,064

1-3*4[3,307,188]

24-52*3, 5, 6
Euro MTN bonds 1-2*3, 4, 5

Sep. 2008

Corporate bonds
Corporate bonds throughDec. 2008–

0.247–

Dec. 2011–

267,000

public placement 1-11*6

Oct. 2010

1.745

Mar. 2019[33,000]

Corporate bonds throughAug. 2009

0.847

Sep. 2014

10,00010,000120,265

Corporate bonds Euro MTN

Dec. 2008–

0.49625– Dec. 2010–

39,67545,181

477,159

1, 2, 6-15, 17-22*4, 6

Feb. 2010

1.3095¥3,746,393$43,648,696[396,873]

private placement 1

Total

Feb. 2015[5,157]¥3,629,389[62,026]*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 MTN program.
*5. Under the Development Bank of Japan Inc. Act (“DBJ Inc. Act”) (Act No. 17 and 26), the Development Bank of Japan Act (“DBJ Act”)(Act No. 43), obligations created by the bonds issued by DBJ Inc. are secured 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.

Scheduled redemptions of debentures and corporate bonds which have been assumed and repaid by DBJ Inc. forsubsequent years as of March 31, 2011 are as follows:
The fiscal year ending March 31, 2012

Annual Report & CSR Report 2011

¥521,740 million$6,274,690 thousand

2013

464,082

5,581,265

2014

276,4143,324,290

2015

346,770

4,170,425

2016

332,6104,000,124

10. Borrowed Money
Borrowed money as of March 31, 2011 and 2010 is as follows:
Thousands of
U.S. Dollars

Millions of Yen
Average interest rate (%)

Due date of repayment

2011

2010

2011

1.26

Apr. 2011–Nov. 2030

¥8,576,482¥9,082,479$103,144,706

Borrowings

Scheduled redemptions of borrowings for subsequent years as of March 31, 2011 are as follows:
The fiscal year ending March 31, 2012

¥1,168,010 million$14,047,028 thousand

2013

1,224,228

14,723,136

2014

1,120,761

13,478,797

2015

1,033,414

12,428,319

2016

942,138

11,330,593

Other liabilities as of March 31, 2011 and 2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2011

2010

2011

Accrued expenses¥30,908¥32,808$371,715

Unearned income

739

1,109

8,890

Accrued income taxes
Derivatives

3,368

923

6,663

105,899

132

213

1,593

Asset retirement obligations (Note 12)

1,046

—

12,581Other

11,272

5,617

135,573

Total¥52,981¥49,780$637,174

12. Asset Retirement Obligations
As discussed in Note 2 (u), DBJ Inc. applied ASBJ Statement No. 18 “Accounting Standard for Asset Retirement Obligations”
and ASBJ Guidance No. 21 “Guidance on Accounting Standard for Asset Retirement Obligations’ effective April 1, 2010.
DBJ Inc. recognizes asset retirement obligations associated with the recovery obligations provided by the real estate
rental agreements. In addition, asset retirement obligations related to the obligations of pulling down the previous head
office buildings and removing the toxic substances were recognized in connection with the head office relocation due toOtemachi redevelopment project.
The asset retirement obligation is calculated based on the sum of the discounted cash flows using discount rates from
0.4% to 2.2% with the estimated useful lives of 4 to 8 years.
The changes in asset retirement obligations for the year ended March 31, 2011 are as follows:
Millions of Yen

Thousands of
U.S. Dollars

2011

2011

¥1,043$12,547

Reconciliation associated with passage of time

1

14

Other

1

20

¥1,046$12,581

Balance at beginning of year

Balance at end of year

Annual Report & CSR Report 2011

151
Consolidated Financial Statements

Lease obligations

76
8,805

Financial Condition

11. Other Liabilities13. Acceptances and Guarantees
Acceptances and guarantees as of March 31, 2011 and 2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Guarantees

2011

2010

2011

¥145,068¥192,172$1,744,661

14. Assets Pledged as Collateral

Financial Condition
152
Consolidated Financial Statements

Loans and securities pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥700,942 million ($8,429,862 thousand) and ¥235,556 million ($2,832,914 thousand) as of March 31, 2011. In addition,
they are deposited as replacement of margin money for future trading and collateral for transactions, including exchange
settlements as of March 31, 2011. ¥1,575 million ($18,942 thousand) of securities are pledged as collateral for loans ofcompanies which are investees of DBJ Inc. as of March 31, 2011. Also, in other assets, ¥937 million ($11,276 thousand)of margin deposits for futures transactions is included and ¥41 million ($504 thousand) of guarantee deposits are included
as of March 31, 2011. Under the DBJ Inc. Act (Act No. 17 and 26), the DBJ Act (Act 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 ¥2,802,443 million ($33,703,466 thousand) as of March 31, 2011.
Loans and securities pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥626,670 million and ¥411,869 million 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 of securities are pledged as collateral for loans of companies which are investees of DBJ Inc. as of March 31, 2010.
Also, in other assets, ¥1,000 million of margin deposits for futures transactions is included and ¥35 million of guarantee
deposits are included as of March 31, 2010. Under the DBJ Inc. Act (Act No. 17 and 26), the DBJ Act (Act No. 43),
obligations created by the bonds issued by DBJ Inc. are secured by a statutory preferential right over the property of DBJ Inc.
Denomination value of these debentures amounts to ¥3,204,596 million as of March 31, 2010.

15. Equity
Japanese companies including DBJ Inc. are regulated by the Companies Act. In addition, DBJ Inc. is regulated by the DBJ Inc.
Act. The significant provisions in the Companies Act and the DBJ Inc. Act that affect financial and accounting matters are
summarized as follows:(a) Dividends
Under the Companies Act, companies can distribute dividends at any time during the fiscal year in addition to the 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 theBoard 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. Act provides that the timing and amounts for
dividends shall be authorized by the Finance Minister.
(b) Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be set aside as a legal reserve (acomponent of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on theequity account charged upon the dividends until the total aggregate amount of legal reserve and additional paid-in
capital equal 25% of Common stock. Under the Companies Act, the total amount of additional paid-in capital andlegal 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 undercertain conditions upon resolution by the shareholders.

Annual Report & CSR Report 2011

(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 stockacquisition rights.
(d) Solicitation and Delivery of Shares or Stock Acquisition Rights
The Article 12 of the DBJ Inc. Act regulates that, if DBJ Inc. intends to solicit those who will subscribe for shares or stockacquisition rights offered, or to deliver shares or stock acquisition rights in connection with a share-for-share exchange,
DBJ Inc. shall obtain an authorization from the Finance Minister.

16. Per Share Information
Basic net income per common share (“EPS”) for the year ended March 31, 2011 and 2010 is as follows:
Thousands of Shares

Yen

U.S. Dollars

Net income

Weighted average shares

EPS

EPS

Basic EPS
Net income available to commonshareholders¥101,583

43,623¥2,328.63¥ 39,893

41,107¥ 970.47$28.01

Year ended March 31, 2010

Basic EPS
Net income available to commonshareholders

Note: Diluted net income per share for the years ended March 31, 2011 and 2010 is not disclosed because there are no dilutive securities.

17. Fees and Commissions (Income)Fees and commissions (income) for the years ended March 31, 2011 and 2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Commissions

2011

2010

2011

¥9,998¥15,683$120,251

Annual Report & CSR Report 2011

153
Consolidated Financial Statements

Millions of Yen
Year ended March 31, 2011

Financial Condition(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. 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. As a result, ¥181,194 million was included in Capital stock.

18. Other Operating Income
Other operating income for the years ended March 31, 2011 and 2010 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2011

Gains on sales of bonds

¥

121

2010

2011

¥

$

151

1,464

Gains on redemption of bonds

77

350

928

Gains on derivative instruments

12,301

19,019147,945

Other

141

358

1,707

Total

¥12,642¥19,880$152,043

19. Other Income
Other income for the years ended March 31, 2011 and 2010 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Financial Condition

Reversal of allowance for investment losses

2011

2010

2011

¥

¥ 1,183

$

445

5,360

Reversal of allowance for loan losses

8,095

—

97,359

Reversal of reserve for contingent losses

2,104

—

25,304

Gains on sales of equities and other securities

12,471

1,278

149,986

Gains on money held in trust

1,194

1,502

14,368Equity in net income of affiliates

1,837

958

22,100154

Gains on sales of fixed assets

Consolidated Financial StatementsCollection of written-off claims

7

8

91

8,002

4,594

96,238

Other

8,116

7,135

97,617

Total¥42,275¥16,661$508,423

20. Fees and Commissions (Expenses)
Fees and commissions (expenses) for the years ended March 31, 2011 and 2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2011

Commissions

2010

¥607

2011

¥1,043$7,311

21. Other Operating Expenses
Other operating expenses for the years ended March 31, 2011 and 2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2011

2010

2011

¥ 6,939¥ 4,314$ 83,457

Debentures issuance costs

434

537

5,230

Corporate bonds issuance costs

184

299

2,219

Foreign exchange losses

Write-off of bonds

4,104

28,89749,358

Other

350

24

4,209

Total

¥12,012¥34,072$144,473

Annual Report & CSR Report 2011

22. Other Expenses
Other expenses for the years ended March 31, 2011 and 2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2011

Provision for allowance for loan losses
Write-off of loans

2010

2011

—

¥ 3,563

$

3,104

2,413

¥

—
37,335Losses on sales of equities and other securities

1,311

2,478

15,777

Write-off of equities

15,18822,334

182,667

Losses on money held in trust

571

24

6,873

Losses on sales of fixed assets

3

49

46

Impairment loss

21

0

262

Provision for reserve for losses on headquarter relocation

—

6,536

—

8,881

—

106,815

Early redemption charges
Other

8,819

14,936

106,072

Total¥37,903¥52,336$455,847

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.

Financial Condition

23. Employees’ Retirement Benefits

155(a) The Funded Status of the Pension Plans
Thousands of
U.S. Dollars

Millions of Yen

Projected benefit obligation

2011

2010

¥(47,110)¥(46,812)

2011$(566,569)

Fair value of plan assets

19,316

12,634

232,310

Unfunded pension obligation(27,793)(34,178)(334,259)

Unrecognized net actuarial losses

2,370

1,519

28,510

Unrecognized prior service cost

(462)

45

(5,568)¥(25,885)¥(32,613)$(311,317)

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. Certain subsidiaries apply the simplified method for the calculation of liability for employees’ retirement benefits.

(b) Components of Pension Cost
Thousands of
U.S. Dollars

Millions of Yen

2011

2010

2011

Service cost

¥1,167¥1,397$14,045

Interest cost

923

909

11,109

Expected return on plan assets

(63)

(57)

(760)

Amortization of prior service cost

(35)

5

(430)

Amortization of net actuarial losses

171

199

2,067

1

—

18

¥2,166¥2,454$26,050

Other
Net pension cost

*1. All retirement benefit costs are classified as service cost for the subsidiaries applying the simplified method.
*2. Contribution of pension premiums to the defined contribution pension plans of certain consolidated overseas subsidiaries is included in“Other”.
Annual Report & CSR Report 2011

Consolidated Financial Statements

Reserve for employee retirement benefits as of March 31, 2011 and 2010 consisted of the following:

(c) Principal Assumptions Used
Discount rate

2011

2010

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

24. 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 years ended March 31, 2011
and 2010.
A reconciliation of the actual effective tax rate with the normal effective statutory tax rate for the years ended March 31,
2011 and 2010 is as follows:
Financial Condition
156

2011

2010

40.69%

40.69%(37.59)(17.89)—

1.48

Minority interests in net income of subsidiaries(0.71)(0.76)

Other(1.13)(2.34)

Actual effective tax rate

1.26%

21.18%

Normal effective statutory tax rate
Increase (decrease) in taxes resulting from:
Change in valuation allowance
Amortization of goodwill

Consolidated Financial Statements

The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets andliabilities as of March 31, 2011 and 2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2011

2010

2011

Deferred tax assets:
Allowance for loan losses¥71,580¥114,083$860,865

Losses from revaluation of securities

37,91637,470456,006

Reserve for retirement benefits

10,49913,237

126,278

Allowance for investment losses
Tax loss carryforwards

—

1,085

—

12,7895,117

153,813

Other

5,374

6,581

64,642Sub-total

138,162

177,574

1,661,604(85,281)(124,532)(1,025,639)

52,88053,042635,965

Deferred gains or losses on hedges(11,873)(7,569)(142,791)

Unrealized gain on available-for-sale securities(4,136)(1,204)(49,750)(782)—(9,412)

Less—valuation allowance
Total
Deferred tax liabilities:

Other
Total

(16,792)(8,773)(201,952)

Net deferred tax assets¥36,088¥ 44,268$434,013

Annual Report & CSR Report 2011

25. Lease Transactions
DBJ Inc. and its domestic consolidated subsidiaries lease certain equipment and others. Lease payments under finance leases
for the year ended March 31, 2011 and 2010 amounted to ¥208 million ($2,508 thousand) and ¥247 million.
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 years ended March 31, 2011 and 2010 is as follows:
Millions of Yen

2011
Tangible fixed assets

Intangible fixed assets

Total

Acquisition cost

¥448

¥224

¥673

Accumulated depreciation

(328)

(144)

(473)

Accumulated impairment losses
Net leased property

(3)

—

(3)

¥115

¥ 80

¥195

Millions of Yen

2010
Intangible fixed assets

Total

Acquisition cost

¥470

¥251

¥721

Accumulated depreciation

(213)

(108)

(321)

Accumulated impairment losses
Net leased property

(5)

—

(5)

¥251

¥143

¥394

Thousands of U.S. Dollars

Financial Condition

Tangible fixed assets

2011

157

Intangible fixed assets

Acquisition cost

$5,396$2,704$8,099

Accumulated depreciation(3,956)(1,741)(5,697)

(46)

—

(46)

$1,394$ 962$2,357

Accumulated impairment losses
Net leased property

Total

Pro forma amounts of obligations under finance leases as of March 31, 2011 and 2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2011

2010

2011

Due within 1 year

¥149

¥202

$1,797

Due after 1 year

53

204

649

¥203

¥406

$2,446Total

Pro forma amounts of depreciation expense and interest expense under finance leases for the years ended March 31, 2011
and 2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2011

Depreciation expense
Interest expense
Total

2010

¥200

2011

¥236

$2,411

5

9

71

¥206

¥246

$2,482*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.

Annual Report & CSR Report 2011

Consolidated Financial Statements

Tangible fixed assets

The minimum rental commitments under non-cancelable operating leases as of March 31, 2011 and 2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2011

Due within 1 year

2010

¥218

¥178

2011

$2,624Due after 1 year

148

215

1,788

Total

¥366

¥394

$4,412

26. Comprehensive Income
Other comprehensive income for the year ended March 31, 2010 consisted of the following:
Millions of Yen

2010

Other comprehensive income:Unrealized gain on available-for-sale securities¥12,881Deferred loss on derivatives under hedge accounting(6,232)Financial Condition

Foreign currency translation adjustments(58)

Share of the other comprehensive income of affiliates accounted for by the equity method

203

Total other comprehensive income¥ 6,793

Total comprehensive income for the year ended March 31, 2010 was the following:
Millions of Yen

2010

158

Total comprehensive income attributable to:Consolidated Financial Statements

Owners of the parent¥46,566

Minority interests

508

Total comprehensive income¥47,074

27. Segment Information
For the year ended March 31, 2011
In March 2008, the ASBJ revised ASBJ Statement No. 17 “Accounting Standard for Segment Information Disclosures”
and issued ASBJ Guidance No. 20 “Guidance on Accounting Standard for Segment Information Disclosures”. Under the
standard and guidance, an entity is required to report financial and descriptive information about its reportable segments.
Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating
segments are components of an entity about which separate financial information is available and such information isevaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
Generally, segment information is required to be reported on the same basis as is used internally for evaluating operating
segment performance and deciding how to allocate resources to operating segments. The accounting standard and theguidance are applicable to segment information disclosures for the fiscal years beginning on or after April 1, 2010.
DBJ Inc. consists of only one business segment of long-term financing and accordingly, the disclosure of the reportablesegment information is omitted.
Related information:
Segment information by service for the year ended March 31, 2011 is following:
Millions of Yen
Year ended March 31, 2011

Loan business

Securities investment

Other

Total

Ordinary income from external customers¥271,860¥37,716¥35,612¥345,189

Year ended March 31, 2011

Loan business

Securities investment

Other

Total

Ordinary income from external customers$3,269,513$453,591$428,298$4,151,402

Thousands of U.S. Dollars

Annual Report & CSR Report 2011

For the year ended March 31, 2010(a) Segment Information by Type of Business
DBJ Inc. and its consolidated subsidiaries are engaged in business such as private equity investment and fundmanagement and other activities as well as banking business. Such segment information, however, is not presented, as
the percentages 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.

28. 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
and currency-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, securities, borrowings, debentures andcorporate bonds. Hedged items of foreign currency swaps are foreign-currency denominated loans, debentures andcorporate bonds. According to the risk management policy, DBJ Inc. evaluates the effectiveness of the hedges by
testing whether the derivatives are effective in reducing the risks associated with the hedged items.

Annual Report & CSR Report 2011159
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.” Thisaccounting 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
project viability 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 roles in the screening and administering of credit for individual loans and each department keeps
the operations of the other in check. The Committee on Investment and Loan Decisions meets as needed todeliberate important issue concerning the management and governance of individual loans. DBJ Inc. performs acomprehensive analysis of data based on borrower ratings, and calculates the loan portfolio’s overall exposure tocredit risk, which is measured 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 costof restructuring its transactions and creditworthiness of each counterparty. Additionally, DBJ Inc. diversifies
transactions among several counterparties to manage counterparty risk.
Financial Condition
160
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 futureplans. 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 (gapanalysis), value at risk (VaR), interest rate sensitivity analyses (basis point value), and other methods. As a partof 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 arehedged or controlled 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-relatedtransactions.
3) Price Volatility Risk Management
When DBJ Inc. acquires financial assets entailing price volatility risk such as securities with market value, itfollows in-house regulations and policies which have been developed taking into account market fluctuation
risks, and risk 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.
5) Quantitative Information about Market Risk
DBJ Inc. has not been engaged in trading activities, and all the assets and liabilities are financial instruments
other than for trading purposes.
Market risk volume (estimated loss) is based on VaR using historical simulation method (holding periodof 1 year, observation period of 5 years, and confidence interval of 99.9%). The amount of market risk
(risks pertaining to the changes in interest rates, foreign exchanges and market prices) as of March 31,
2011 is ¥73,672 million ($886,017 thousand). Such measurements are conducted by the risk management
department on a regular basis and reported to ALM & Risk Management Committee to utilize forestablishing ALM operating policies.

Annual Report & CSR Report 2011

DBJ Inc. conducts backtesting to compare the VaR calculated by the model with hypothetical performances
calculated based on the actual market movements and confirms that the measurement models in use
capture the market risk on a sufficient accuracy. VaR measures the market risk volume under a definite
probability of incidence calculated statistically based on the historical market movements and accordingly,
and therefore there may be cases where market risk cannot be captured in such situations as when market
conditions are changing dramatically beyond what was experienced historically.
(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.

Millions of Yen

2011
Carrying amount

Cash and due from banks¥

Call loans and bills bought

233,297

Fair value¥

233,297

Difference¥—

61,852—526,637

548,939

22,301

360,318

360,318—

12,871,187

13,449,875

578,687

Total assets¥14,053,292¥14,654,282¥600,989

Debentures*2

3,312,713

3,410,637

97,924

Borrowed money

8,576,482

8,692,747

116,264

Corporate bonds

316,675

318,865

2,190¥12,205,871¥12,422,250¥216,379

13,262

13,262—

Securities*1
Held-to-maturity debt securities
Available-for-sale securities
Loans

13,031,480(160,292)

Allowance for loan losses*1

Total liabilities
Derivative transactions
Derivative transactions not qualifying forhedge accounting
Derivative transactions qualifying forhedge accounting
Total derivative transactions¥

27,44140,703¥27,44140,703¥——

Annual Report & CSR Report 2011161
Consolidated Financial Statements

61,852Financial Condition(b) Fair Values Information of Financial Instruments
The following are the carrying amount, fair value and differences between them as of March 31, 2011 and 2010.
Unlisted equities and others, whose fair value cannot be reliably determined, are excluded from the table below (see (2)).

Millions of Yen

2010
Carrying amount

Cash and due from banks¥

168,696

Fair value¥

Difference

168,696¥—

Call loans and bills bought

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

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

—

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
Financial Condition
162

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

Thousands of U.S. Dollars

2011
Carrying amount

Cash and due from banks$

2,805,741

Call loans and bills bought$

Fair value

Difference

2,805,741$—

743,860

743,860—

6,333,583

6,601,793

268,210

4,333,354

4,333,354—

154,794,799

161,754,363

6,959,563$169,011,337$176,239,111$7,227,774

Securities*1
Held-to-maturity debt securities
Available-for-sale securities
Loans

156,722,553(1,927,753)

Allowance for loan losses*1
Total assets
Debentures*2

39,840,209

41,017,889

1,177,680

Borrowed money

103,144,706

104,542,959

1,398,254

Corporate bonds
Total liabilities
Derivative transactions
Derivative transactions not qualifying
for hedge accounting
Derivative transactions qualifying forhedge accounting
Total derivative transactions

3,808,488

3,834,828

26,340$146,793,402$149,395,676$2,602,274

159,498

159,498—

330,024489,522330,024489,522

—
—

$

$

$

*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 2011

(1) Following are the methods used to calculate the fair values of financial instruments:
Assets(i) Cash and due from banks
For deposits without maturity, the carrying amount is presented as the fair value, as the fair value approximatessuch carrying amount. For deposits with maturity, the carrying amount is presented as the fair value, as the fairvalue approximates such carrying amount because the remaining maturity period of the majority of such deposits
is short (maturity within 1 year).
(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 thatis based on types of securities, internal ratings and maturity length.

(ii) Call money and bills sold
The carrying amount is presented as the fair value, as the fair value approximates such carrying amount because
the majority 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 suchborrowed money because the terms of these were set within a short time period for such variable rateborrowings and that there has been no significant change in the creditworthiness of DBJ Inc. nor consolidated

Annual Report & CSR Report 2011163
Consolidated Financial Statements

Liabilities(i) Debentures
For floating rate debentures 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 fairvalue of such debentures because the terms of these were set within a short time period and that there has beenno significant change in the creditworthiness of DBJ Inc. before and after the issuance. For fixed rate debentureswith market prices, the fair value is determined based on their market price. For fixed rate debentures withoutmarket prices, the fair value is determined by discounting contractual cash flows based on types of maturity
lengths (when interest rate swap contracts which meet the hedging requirements of the accrual method isqualified to debentures, the contractual cash flows are based on the interest rate swap) at the rates that consistof the risk free rate and the rate of certain costs applicable to DBJ Inc. Foreign currency swap contracts whichmeet the hedging requirements of the assignment method is qualified to debentures, the contractual cash flows
are based on the interest rate and foreign currency swap.

Financial Condition(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, the contractual cash flows are based on the interest rate swap and foreign currency swap. For loans
which are short contract terms (1 year or less), the carrying amount is presented as the fair value, as the fairvalue approximates such carrying amount. With respect to the claims on debtors who are likely to becomebankrupt or to be closely monitored, and for which future cash flows can reasonably be estimated, the fairvalues 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 disposalof 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.

subsidiaries before and after such borrowings were made. For fixed rate borrowed money, the fair values
are determined by discounting contractual cash flows based on types of maturity lengths (when interest rate
swap contracts which meet the hedging requirements of the accrual method is qualified to borrowings, thecontractual 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. or consolidated subsidiaries.
(iv) Corporate bonds
For floating rate corporate bonds issued by DBJ Inc., the carrying amount is presented as the fair value, as thefair value approximates such carrying amount. This is on the basis that the market interest rate is reflected in theinterest rate set within a short time period and that there has been no significant change in the creditworthinessof us before and after the issuance. For fixed rate corporate bonds with market prices, the fair value isdetermined based on their market price. For fixed rate corporate bonds without market prices, the fair value isdetermined by discounting contractual cash flows based on types of maturity lengths (when interest rate swap
contracts which meet the hedging requirements of the accrual method is qualified to corporate bonds, thecontractual 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.
Financial Condition

Derivatives
The information of the fair values for derivatives is included in Note 29.
(2) Following are the financial instruments whose fair value cannot be reliably determined as of March 31,
2011 and 2010:
These securities are not included in the amount in the table summarizing fair values of financial
Instruments.

164

Carrying amount

Consolidated Financial Statements

Thousands of
U.S. Dollars

Millions of Yen

2011

2010

2011

¥ 24,819¥ 30,740$ 298,492

—

1,000

—

Unlisted equities*2, 3

133,860

182,031

1,609,869

Investments in limited partnerships and other similar
partnerships*1, 3
Unlisted other securities*2, 3

117,040
27,723

100,244
51,762

1,407,578
333,420

Total¥303,444¥365,778$3,649,359

Money held in trust*1
Unlisted corporate bonds*2*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, 2011
and 2010 was ¥15,173 million ($182,481 thousand) and ¥22,036 million, respectively. The breakdown is; unlisted equities¥13,548 million ($162,944 thousand) and ¥22,025 million, unlisted other securities ¥1,592 million ($19,148 thousand) and¥10 million and investments in limited partnerships ¥32 million ($389 thousand) and ¥0 million for the years ended March 31,
2011 and 2010, respectively.

Annual Report & CSR Report 2011

(3) Following are the maturity analysis for financial assets and securities with contractual maturities as ofMarch 31, 2011:
Millions of Yen

2011

Due from banks

Due in 1
year or lessDue after 1
year through3 years

Due after 3
years through5 years

Due after 5
years through7 years

Due after 7
years through10 years

Due after
10 years¥233,292

¥

¥

¥

¥

¥

—

—

—

—

—

Call loans and bills bought

61,852

—

—

—

—

—

Securities
Held-to-maturity debt securities
with market values
Japanese government bonds

26,423—60,580—205,595—

110,172
83,67260,48040,676

63,38550,885

—

—

—

—

—

—

Japanese local government bonds
Short-term corporate bonds

—

—

—

—

—

60,58089,185

16,9001,800

12,500——116,4109,600

18,004—150,903150,401

48,43845,45081,11540,264

11,071
5,308

30,328
2,051

2,895
—

Japanese local government bonds

—

—

—

—

—

—

Short-term corporate bonds

—

—

—

—

—

—

Corporate bonds

502

611

38,964

5,474

28,277

—

Other

—

2,376

1,886

288

—

2,895

Other
Available-for-sale securities with
contractual maturities*
Japanese government bonds

1,709,267

3,582,936

3,116,738

1,816,658

1,952,092

735,975

Total¥2,181,738¥3,691,955¥3,403,449¥1,937,902¥2,042,902¥802,256

Due after
10 yearsThousands of U.S. Dollars

2011
Due in 1
year or lessDue from banks$ 2,805,683

Due after 1
year through3 years

Due after 3
years through5 years

Due after 5
years through7 years

Due after 7
years through10 years

$

$

$

$

—

—

—

—

$

—

Call loans and bills bought

743,860

—

—

—

—

—

Securities
Held-to-maturity debt securities
with market values
Japanese government bonds

317,778

728,569

2,472,583

1,324,983

727,368

762,302———

1,006,282

489,193

611,971

Japanese local government bonds

—

—

—

—

—

—

Short-term corporate bonds

—

—

—

—

—

—

317,778

728,569

1,072,583

203,247

21,648150,331——1,400,000

115,454

216,528—

1,814,838

582,538

975,529

133,154364,750

34,827

1,808,797

546,609484,233

63,842

24,676

—

—

—

—

—

—

—

Corporate bonds
Other
Available-for-sale securities with
contractual maturities*
Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

—

—

—

—

—

—

6,041

7,349

468,606

65,841

340,074——

28,581

22,6893,471—

34,827Loans*

20,556,430

43,090,042

37,483,326

21,847,966

23,476,761

8,851,174

Total$26,238,590$44,401,149$40,931,438$23,306,103$24,568,879$9,648,303

Note: Obligations to “Legally Bankrupt,” “Effectively Bankrupt” and “Possibly Bankrupt” amount to ¥118,731 million ($1,427,921
thousand) are not included as of March 31, 2011. The breakdown is; available-for-sale securities with contractual maturities¥920 million ($11,068 thousand) and loans ¥117,811 million ($1,416,853 thousand).

Annual Report & CSR Report 2011165
Consolidated Financial Statements

Loans*

Financial Condition—
26,423

Corporate bonds

(4) Maturity analysis for Debentures, Borrowed money and Other Liability with Interest as of March 31, 2011
are as follows:
Millions of Yen

2011

Borrowed money
Debentures and corporate bonds
Total

Due in 1
year or lessDue after 1
year through3 years

Due after 3
years through5 years

Due after 5
years through7 years

Due after 7
years through10 years

Due after
10 years¥1,168,010¥2,344,990¥1,975,553¥1,042,799¥1,020,035¥1,025,092

521,740

740,496

679,381557,847

388,856

741,066¥1,689,750¥3,085,487¥2,654,934¥1,600,647¥1,408,891¥1,766,158

Due after 7
years through10 years

Due after
10 yearsThousands of U.S. Dollars

2011
Due in 1
year or less

Borrowed money
Debentures and corporate bonds
Total

Due after 1
year through3 years

Due after 3
years through5 years

Due after 5
years through7 years$14,047,028 $28,201,933 $23,758,912 $12,541,190 $12,267,414 $12,328,230
6,274,690

8,905,555

8,170,549

6,708,935

4,676,562

8,912,405$20,321,718 $37,107,487 $31,929,461 $19,250,125 $16,943,975 $21,240,635

Financial Condition

29. 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 for fiscal
years ending on or after March 31, 2010.

166
Consolidated Financial Statements(a) Derivative Transactions to which Hedge Accounting is not applied(1) Interest Rate-related Transactions
Millions of Yen

2011
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)

Receive fixed/ Pay float¥603,529¥532,868¥15,372¥15,372

Receive float/ Pay fixed

602,607532,028(11,479)(11,479)——¥ 3,892¥ 3,892

Over-the-counter
Swaps

Total

Millions of Yen

2010
Contract amountTotal

Due after 1 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

Over-the-counter
Swaps

Total

Annual Report & CSR Report 2011

Thousands of U.S. Dollars

2011
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)

Receive fixed/ Pay float$7,258,316$6,408,517$184,874$184,874

Receive float/ Pay fixed

7,247,228

6,398,413(138,056)(138,056)——$ 46,817$ 46,817

Over-the-counter
Swaps

Total

*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statements of income.
*2. Fair values for the over-the-counter transactions are based primarily on discounted present values.

(2) Currency-related Transactions
Millions of Yen

2011
Contract amountDue after 1 year

Unrealized gains(losses)

Fair value

Over-the-counter
Swaps¥ 97,497¥97,497¥12,779¥12,779

Sold

158,859—(1,620)(1,620)Bought38,139

—

(76)

(76)

¥11,082¥11,082

Forwards

Total

—

—

167

Millions of Yen

Due after 1 year

Unrealized gains(losses)

Fair value

Over-the-counter
Swaps¥97,497¥97,497

¥ 329

¥ 329

57,541

—

(890)

(890)

Forwards
Sold
Bought
Total

540

—

—

—

0

0

¥(560)¥(560)

Thousands of U.S. Dollars

2011
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)$1,172,550$1,172,550$ 153,694$ 153,694

Sold

1,910,520—(19,492)(19,492)

Bought458,687

Over-the-counter
Swaps
Forwards

Total

—

—
—

(922)

(922)

$(133,281)$(133,281)*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statements of income.
*2. Fair values are based primarily on discounted present values.

(3) Equity-related Transactions
Not applicable.

Annual Report & CSR Report 2011

Consolidated Financial Statements

2010
Contract amount
Total

Financial Condition

Total

(4) Bond-related Transactions
There was no bond-related derivative at Mach 31, 2011.
Millions of Yen

2010
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)

ListedFutures
Sold

¥100

¥—

¥ 0

¥ 0

Bought

—

—

—

—

¥ 0

¥ 0

Total

—

—

*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statements of income.
*2. Fair values of listed transactions represent the closing price on the Tokyo Stock Exchange and other exchanges at theconsolidated balance sheet date.

Financial Condition
168(5) Commodity-related Transactions
Not applicable.
(6) Credit Derivatives Transactions
Millions of Yen

2011
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)Over-the-counter
Credit default options

Consolidated Financial Statements

Sold¥178,660¥95,110

Bought36,00011,000

(439)

(439)

—

—

¥(1,712)¥(1,712)

Total¥(1,272)¥(1,272)

Millions of Yen

2010
Contract amount
Fair value

Unrealized gains(losses)Total

Due after 1 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

Total

Thousands of U.S. Dollars

2011
Contract amount

Unrealized gains(losses)Total

Due after 1 year

Fair valueSold$2,148,657$1,143,846$(15,308)

Bought432,952

132,291(5,291)(5,291)——$(20,600)$(20,600)

Over-the-counter
Credit default options

Total$(15,308)*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statements of income.
*2. Fair values are based on discounted present values or the counterparties’ tendered price.
*3. ‘Sold’ means the underwriting of credit risk and ‘Bought’ means the transferring of credit risk.

Annual Report & CSR Report 2011

(b) Derivative Transactions to which Hedge Accounting is applied(1) Interest Rate-related Transactions
Millions of Yen
2011
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, Securities
and Loans
Debentures,
Borrowed money,
Corporate bonds and
Loans

Total

Due after 1 year

Fair value¥585,389¥577,498¥29,925

50,23145,129(2,484)

405,804

394,040

*3

Total

563

444

—

—

¥27,4412010
Contract amount
Hedged item

Deferral method
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed
Accrual method
Receive fixed/ Pay float
Receive float/ Pay fixed

Debentures,
Borrowed money,
Corporate bonds and
Loans

Total

Fair value¥588,542¥585,389¥18,516

52,903

48,231(2,342)

278,808

271,199

*3

681

563

—

—

¥16,174

Thousands of U.S. Dollars
2011
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
Total

Debentures,
Borrowed money,
Corporate bonds, Securities
and Loans
Debentures,
Borrowed money,
Corporate bonds and
Loans

Total

Due after 1 year

Fair value$7,040,156$6,945,260$359,901

604,109542,753(29,877)

4,880,388

4,738,917

*3

6,771

5,346

—

—

$330,024*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 28 “Financial Instruments and Related Disclosures” isincluded in that of hedged items such as debentures, borrowed money, corporate bonds and loans.

Annual Report & CSR Report 2011169
Consolidated Financial Statements

Swaps

Debentures,
Borrowed money,
Corporate bonds andLoans

Due after 1 year

Total

Financial Condition

Millions of Yen

(2) Currency-related Transactions
Millions of Yen
2011
Contract amount
Hedged item

Translated at contractual rates

Total

Due after 1 year

¥164,228¥5,427——

Fair value

Foreign-currency debenturesand loans

Swaps
Total

*
—

Millions of Yen
2010
Contract amount
Hedged item

Translated at contractual rates

Financial Condition

Due after 1 year

¥164,998¥164,228——

Fair value

Foreign-currency debenturesand loans

Swaps

170

Total

Total

*
—

Thousands of U.S. Dollars
2011
Contract amount
Hedged item

Translated at contractual rates

Consolidated Financial Statements

Total

Due after 1 year

$1,975,090$65,274——

Fair value

Foreign-currency debenturesand loans

Swaps
Total

*
—

Note: The above foreign currency swap contracts which qualify for the hedging requirements of assignment method are notsubject to the disclosure of fair value information. In addition, the fair value of such foreign currency swaps in Note 28“Financial Instruments and Related Disclosures” is included in that of hedged items such as foreign-currency debentures andloans.

(3) Equity-related Transactions
Not applicable.
(4) Bond-related Transactions
Not applicable.

30. Fair Value of Securities and Money Held in Trust
Fair value of securities, money held in trust and negotiable certificate of deposit classified as “Cash and due from banks” asof March 31, 2011 and 2010 are summarized below.

Annual Report & CSR Report 2011

(a) Securities(1) Held-to-maturity Debt Securities as of March 31, 2011
Millions of Yen

2011

Fair value exceeds
carrying amountJapanese government bonds

Carrying amount

Fair value

Difference¥175,234¥178,884¥ 3,650———

Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds
Short-term corporate bonds

—

—

—

107,993

114,241

6,248

109,469

123,851

14,382392,696

416,977

24,281

—

—

—

—

—

—

—

—

—

Corporate bonds

99,396

98,633

(762)

Other

34,54533,328(1,216)

133,941

131,961(1,979)

Total¥526,637¥548,939¥22,301

Thousands of U.S. Dollars

2011Japanese government bonds

Fair value

Difference$2,107,445$2,151,347$ 43,902

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

171

Corporate bonds

1,298,773

1,373,924

75,150Other

1,316,528

1,489,497

172,969

4,722,747

5,014,768

292,021

—

—

—

—

—

—

Consolidated Financial Statements

Fair value exceeds
carrying amount

Carrying amountSub-total
Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds
Short-term corporate bonds
Corporate bonds

—

—

—

1,195,382

1,186,207(9,175)415,454400,819(14,635)

Sub-total

Other

1,610,836

1,587,026(23,810)

Total$6,333,583$6,601,793$268,210(2) Held-to-maturity Debt Securities as of March 31, 2010
Millions of Yen

2010

Fair value exceeds
carrying amountFinancial Condition

Sub-total

Japanese government bonds

Carrying amount

Fair value

Difference¥ 77,187¥ 77,530

Japanese local government bonds

—

—

¥

342
—

Short-term corporate bonds

—

—

—

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)

—

—

—

Short-term corporate bonds
Corporate bonds
Other

—

—

—

56,64554,914(1,731)

18,60818,489(118)

Sub-total

174,070

171,959(2,110)Total¥438,015¥453,073¥15,058

Note: Fair value is based on the closing price at the consolidated balance sheet date.
Annual Report & CSR Report 2011

(3) Available-for-sale Securities as of March 31, 2011
Millions of Yen

2011

Carrying amountexceeds cost

Carrying amount(Fair value)

Acquisition cost

Difference

Equities¥ 22,824¥ 15,762¥ 7,062

Bonds

317,387

311,496

5,891

243,476

242,898

577

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

Japanese government bonds

Corporate bonds
Other
Sub-total
Carrying amount does
not exceed cost

73,911

68,597

5,313

13,876

6,779

7,097

Financial Condition

354,089

334,037

20,051Equities

7,450

10,296(2,846)

Bonds

838

859

(20)

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

Corporate bonds

838

859

(20)

30,01430,014—38,303

41,170(2,866)¥392,392¥375,207¥17,185

Other
Sub-total
Total

Thousands of U.S. Dollars

172

2011

Consolidated Financial Statements

Carrying amountexceeds cost

Carrying amount(Fair value)

Acquisition cost

Difference

Equities$ 274,504$ 189,563$ 84,941

Bonds

3,817,047

3,746,195

70,851

2,928,158

2,921,207

6,950

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

Japanese government bonds

Corporate bonds
Other
Sub-total
Carrying amount does
not exceed cost

85,3594,017,289

241,151

89,603

123,830(34,227)

Bonds

10,08910,336(247)

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Other

Annual Report & CSR Report 2011

63,901

81,531

4,258,440

Corporate bonds

Total

824,988

Equities

Short-term corporate bonds

Sub-total

888,889
166,890———

10,08910,336(247)

360,964

360,964—

460,657

495,131(34,474)$4,719,097$4,512,420$206,677

(4) 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

151,118882

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

46,91845,997

920

7,459

3,339

4,119

Japanese government bonds

Corporate bonds
Other
Sub-total
Carrying amount does
not exceed cost

209,527

11,439

6,935

7,644

(709)

Bonds

286,833

286,932(99)

280,083

280,144

(60)

—

—

—

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

—

—

—

6,749

6,788

(38)

21,706

21,756(50)

Sub-total

315,474

316,333

(858)

Total

¥536,442¥525,861¥10,580

Note: Carrying amount above represents the fair values determined based on the closing price at the fiscal year-end.

173

Millions of Yen

2011
Proceeds from sales

Total amount ofgains on sales

Total amount oflosses on sales

Equities¥ 39,944¥11,244¥1,225

Bonds

265,7681217

265,768

121

7

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

—

—

—

Other

Corporate bonds

36,547

1,205

86

Total

¥342,260¥12,571¥1,319Millions 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—

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

Corporate bonds

Japanese government bonds

481

—

19

Other

343

111

126

Total

¥266,940¥1,380¥2,515

Annual Report & CSR Report 2011

Consolidated Financial Statements(5) Available-for-sale Securities sold during the year ended March 31, 2011 and 2010

Japanese government bonds

Financial Condition

220,967
Equities

Thousands of U.S. Dollars
2011
Proceeds from sales

Total amount ofgains on sales

Total amount oflosses on sales

Equities$ 480,389$135,227$14,736

Bonds

3,196,258

1,464

90

Japanese government bonds

3,196,258

1,464

90

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

—

—

—

Other

Corporate bonds

439,539

14,497

1,042

Total

$4,116,186$151,187$15,868

Financial Condition(6) 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 ¥2,460 million ($29,585 thousand) and ¥28,926 million for the years ended March
31, 2011 and 2010, respectively.
(b) Money Held in Trust(1) Money Held in Trust for the Purpose of Investment
Millions of Yen

2011

174

Net unrealized loss on
the consolidated statements
of incomeCarrying amount

Consolidated Financial Statements

Money held in trust for the purpose of investment

¥38

¥(1)
Millions of Yen

2010
Net unrealized loss on
the consolidated statements
of incomeCarrying amountMoney held in trust for the purpose of investment

¥25

¥(2)

Thousands of U.S. Dollars

2011
Net unrealized loss on
the consolidated statements
of incomeCarrying amountMoney held in trust for the purpose of investment

$464

$(19)

(2) Other (other than for the purpose of investment and held to maturity)
Millions of Yen

2011
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost¥24,781¥21,834

Net

Carrying amountexceeds cost

(Carrying amount
does not exceed
cost)¥2,946¥2,968¥(21)

Millions of Yen

2010
Unrealized gains (losses)

Other money held in trust

Annual Report & CSR Report 2011

Carrying
amountAcquisition
cost¥30,715¥28,115

Net

Carrying amountexceeds cost

(Carrying amount
does not exceed
cost)¥2,599¥2,618¥(18)

Thousands of U.S. Dollars

2011
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisitioncost$298,028$262,594

Net

Carrying amountexceeds cost

(Carrying amount
does not exceed
cost)$35,435$35,695$(261)(c) Unrealized Gain on Available-for-sale Securities
The breakdown of unrealized gain on available-for-sale securities is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2011

2010

2011

available-for-sale securities¥14,352¥ 9,819$172,606

Other money held in trust

2,946

2,599

35,435

Deferred tax liabilities(4,136)(1,204)(49,750)

Unrealized gain on available-for-sale securities before interest
adjustments

13,161

11,214

158,291

Amount corresponding to minority interests

14

(117)

173

DBJ Inc.’s interest in net unrealized gain on available-for-salesecurities held by affiliates accounted for by the equity method

(6)

(5)

(81)

¥13,169¥11,091$158,382

Unrealized gain on

Note: Unrealized gain includes foreign currency translation adjustments on non-marketable securities denominated in foreign currency.

175

Related party transactions for the years ended March 31, 2011 and 2010 are as follows:

Related party

Finance
Minister

Account item

Millions of Yen

Thousands of
U.S. Dollars

Shareholder Borrowings *1 Borrowedmoney¥ 300,000$ 3,607,937

Repayments

836,315

10,057,919

Category

Description

Balance at March 31, 2011
Millions of Yen

Thousands of
U.S. Dollars¥4,866,584$58,527,777

Payment forinterest

Accruedexpenses

78,916

949,082

18,434

221,705

Guarantees *2—

2,164,887

26,035,925——*1. 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, 2030 without putting up collateral.
*2. The Guarantees are for debentures issued by DBJ Inc. free of guarantee charge.
*3. According to Article 2, item 5 of the Japan Finance Corporation Act, DBJ Inc. has borrowed ¥3,035,757 million ($36,509,405
thousand) from Japan Finance Corporation relating to the crisis response business. In the year ended March 31, 2011, DBJ Inc.
implemented early redemption in an amount of ¥307,520 million ($3,698,376 thousand) to Japan Finance Corporation and recognized
early redemption charges in an amount of ¥8,881 million ($106,815 thousand) in the consolidated statements of income for the year
ended March 31, 2011.

Annual Report & CSR Report 2011

Consolidated Financial Statements

31. Related Party Transactions
Amounts of the transactions

Financial Condition

Unrealized gain on available-for-sale securities, net of taxes

Related party

Finance
MinisterCategory

Description

Shareholder Underwritten
additional
share *1

Amounts of the transactions

Balance at March 31, 2010

Account item

Millions of Yen

Millions of Yen—¥ 181,194¥

Borrowings *2
Repayments

300,000
Borrowedmoney—

5,402,900

934,240

Payment forinterest

Accruedexpenses

93,596

19,909

Guarantees *3—

2,255,851—*1. DBJ Inc. has allocated new shares issued at ¥50,000 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 Act, DBJ Inc. has borrowed ¥3,199,746 million from Japan FinanceCorporation relating to the crisis response business.

Financial Condition176

32. Subsequent Event
On June 23, 2011, 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, 2011

Year-end cash dividends-Common stock (¥1,147-$13.79 per share)

Consolidated Financial Statements
Annual Report & CSR Report 2011

Millions of Yen

Thousands of
U.S. Dollars¥50,036$601,763

Independent Auditors’ Report

Financial Condition
177
Consolidated Financial Statements

Annual Report & CSR Report 2011

Non-Consolidated Balance Sheets (Unaudited)
Development Bank of Japan Inc.
As of March 31, 2011 and 2010
Thousands of
U.S. Dollars (Note)

Millions of Yen

2011

2010

2011

AssetsCash and due from banks
Call loans
Reverse repurchase agreements
Money held in trust

Financial Condition
178¥

220,743¥

128,309$2,654,762

61,852125,000

743,860—

179,991—

20,90327,193

251,397

Securities

1,150,145

1,281,454

13,832,171

Loans

13,067,978

13,538,070

157,161,491

Other assets

123,178

89,057

1,481,401

Tangible fixed assets

156,032

162,105

1,876,520

Intangible fixed assets

5,937

5,072

71,408

Non-Consolidated Financial Statements

Deferred tax assets

36,08344,326433,953

Customers’ liabilities for acceptances and guarantees

148,068

195,172

1,780,741

Allowance for loan losses(158,806)(200,587)(1,909,883)(1,158)(7,919)(13,932)¥14,830,957¥15,567,245$178,363,891

Debentures¥ 3,312,713¥ 3,504,212$ 39,840,209

Call money—

153,000—

Borrowed money

8,573,482

9,079,459

103,108,626

Corporate bonds

316,675

242,1813,808,488

Other liabilities

52,882

49,594

635,992

Accrued bonuses to employees

4,500

2,150

54,119

17

22

209

Allowance for investment losses
Total assets
Liabilities and equity
Liabilities:

Accrued bonuses to directors and corporate auditors
Reserve for employees’ retirement benefits

25,74832,495

309,669

Reserve for directors’ and corporate auditors’ retirement benefits

52

34

629

Reserve for contingent losses

711

2,815

8,554

Reserve for losses on headquarter relocation

—

6,536

—

Acceptances and guarantees
Total liabilities
Equity:Common stock authorized, 160,000 thousand shares in 2011 and2010; issued, 43,623 thousand shares in 2011 and 2010
Capital surplus
Retained earnings
Unrealized gain on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Total equity
Total liabilities and equity

148,068

195,172

1,780,741

12,434,852

13,267,674

149,547,236

1,181,194

1,181,194

14,205,580

1,060,466

1,060,466

12,753,654

129,855

39,834

1,561,708

7,350

7,092

88,397

17,238

10,982

207,317

2,396,104

2,299,751

28,816,656¥14,830,957¥15,567,245$178,363,891

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥83.15=$1.00, the effective
exchange rate prevailing as of March 31, 2011, has been used in the conversion.

Annual Report & CSR Report 2011

Non-Consolidated Statements of Income (Unaudited)
Development Bank of Japan Inc.
For the years ended March 31, 2011 and 2010
Thousands of
U.S. Dollars (Note)

Millions of Yen

2011

2010

2011

IncomeInterest income:¥295,863¥299,429$3,558,192

Interest on loans

272,466

278,493

3,276,807

Interest and dividends on securities

15,603

13,438

187,654

165

55

1,989

Interest on call loans
Interest on reverse repurchase agreements

149

322

1,802

Interest on due from banks

164

100

1,978

Interest on swaps (net)

7,238

6,996

87,059Other interest income

75

22

902

10,033

15,768120,669

Fees and commissions

12,642

19,880152,043

Other income

38,895

14,073

467,770

357,434

349,151

4,298,674

172,186

180,058

2,070,788

52,92055,409636,451

Total income
Expenses
Interest expense:
Interest on debentures
Interest on call money and bills soldInterest on borrowed money
Interest on short-term corporate bonds
Interest on corporate bonds
Other interest expense
Other operating expenses

64

1,796

122,474

1,402,299

10

—

127

2,500

2,105

30,072

3

4

43

611

1,028

7,359

11,917

34,059143,331

General and administrative expenses

35,30731,722424,626

Other expenses

36,35851,655437,262

Total expenses

256,381298,524

3,083,366

Income before income taxes

101,052

50,626

1,215,308

Current

56

25,308

683

Deferred941(14,516)

11,323998

10,792

12,006¥100,054¥ 39,834$1,203,302

Income taxes:

Total income taxes
Net income

Yen

U.S. Dollars (Note)

Per share of common stock
Basic net income¥2,293.57¥969.04$27.58

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥83.15=$1.00, the effective
exchange rate prevailing as of March 31, 2011, has been used in the conversion.

Annual Report & CSR Report 2011179
Non-Consolidated Financial Statements

Fees and commissions

149
116,601

Financial Condition

Other operating income

Non-Consolidated Statements of Changes in Equity (Unaudited)
Development Bank of Japan Inc.
For the years ended March 31, 2011 and 2010
Thousands of
U.S. Dollars (Note)

Millions of Yen

2011

2010

2011

¥1,181,194¥1,000,000$14,205,580—

181,194—

1,181,194

1,181,194

14,205,580

1,060,466

1,157,715

12,753,654—(97,248)—

1,060,466

1,060,466

12,753,654

39,834(97,248)

479,073

Common stock:
Balance at beginning of year
Issuance of new shares of common stock
Balance at end of year
Capital surplus:
Balance at beginning of year
Transfer from capital surplus to retained earnings
Balance at end of year
Retained earnings:
Balance at beginning of year
Transfer from capital surplus to retained earnings

Financial Condition
180—

97,248—Cash dividends(10,033)—(120,667)

Net income

100,054

39,834

1,203,302

Balance at end of year

129,855

39,834

1,561,708

7,092(2,425)85,303

Unrealized gain on available-for-sale securities:
Balance at beginning of year
Net change during the year

Non-Consolidated Financial Statements

257

9,518

3,094

7,350

7,092

88,397

Balance at beginning of year

10,982

17,808132,086

Net change during the year

6,255

(6,825)75,231

Balance at end of year

17,238

10,982

207,317

2,299,571

2,075,849

27,655,696—

181,194—

Balance at end of year
Deferred gain on derivatives under hedge accounting:Total equity:
Balance at beginning of year
Issuance of new shares of common stock
Cash dividends(10,033)—(120,667)

Net income

100,054

39,834

1,203,302

Net change during the year
Balance at end of year

6,512

2,693

78,325¥2,396,104¥2,299,571$28,816,656

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥83.15=$1.00, the effective
exchange rate prevailing as of March 31, 2011, has been used in the conversion.

Annual Report & CSR Report 2011

Capital Adequacy Status

Capital adequacy ratios were calculated in accordance with the guidelines stipulated by Article 14-2 of the Banking Act 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 2011), DBJ has not yet applied Article 14-2 of the Banking Act 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)
Quantitative Disclosure
1. Items Related to Credit Risk (Excluding Securitization Exposure)(a) Fiscal year-end credit risk exposure and breakdown by principal categories(Millions of yen)March 31, 2010

¥12,483,080¥12,970,521

Equities, funds

242,864

255,014

Commitments and customers’ liabilities for acceptances and guarantees

295,370

396,136

Bonds (JGBs and corporate bonds, etc.)

827,885

916,690Loans

61,866

304,998

Other

605,151496,229

Total¥14,516,218¥15,339,590

March 31, 2011

March 31, 2010

Domestic total¥14,515,336¥15,338,656

Overseas total

882

934

(b) Fiscal year-end credit risk exposure, broken down as follows:(1) By region(Millions of yen)

Note: ”Overseas” refers to overseas consolidated subsidiaries. DBJ has no overseas branches.

(2) Breakdown by industry and transaction counterparty(Millions of yen)March 31, 2011

March 31, 2010

¥3,494,246¥3,514,512

922

1,063

Mining45,34836,243

Construction

40,32525,622Wholesale and retail

1,156,814

1,130,017

Finance and insurance

1,082,887

1,134,074

Real estate

1,383,031

1,439,661

Transportation and communications

3,735,347

4,275,122

Electrical, gas and water

1,818,276

1,879,565

Services

1,012,804

965,183

Other

746,214

938,522

Manufacturing
Forestry and fisheries

Annual Report & CSR Report 2011

181
Capital Adequacy Status

Repurchase agreement/call loan

Financial Condition

March 31, 2011

(3) Breakdown by period to maturity(Millions of yen)March 31, 2011

March 31, 2010

Five years or less

¥5,767,717¥5,884,768

More than five years, up to 10

5,412,965

5,715,819

More than 10 years, up to 15

1,988,982

2,336,480

More than 15 years

824,102

913,910No maturity date522,451488,611(c) Breakdown of exposure by risk weight (after accounting for credit risk mitigations)

Financial Condition
182(Millions of yen)March 31, 2011

March 31, 2010

Risk weight 0%¥ 550,730¥ 895,996

Risk weight 10%

98,610175,621

Risk weight 20%

3,817,147

4,074,386

Risk weight 50%

4,244,213

3,932,772

Risk weight 100%

5,613,238

6,021,593

Risk weight 150%

32,081

20,732

2. 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(Millions of yen)

Capital Adequacy Status

March 31, 2011

March 31, 2010

Structured finance¥690,796¥723,423

Credit derivatives

120,510290,299

Funds*

175,106

189,701* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

Annual Report & CSR Report 2011

(2) Balance of retained securitization exposure by risk weight and required capital amounts

Risk weight

20%

Risk weight

50%

Risk weight

100%

Risk weight350%

Risk weight

Capital deductions

Risk weight

Other*

Balance(Millions of yen)March 31, 2011

March 31, 2010

¥213,080¥380,274

Capital requirement

3,409

6,084

Balance

13,86731,334

Capital requirement

554

1,253

Balance

304,261

311,581

Capital requirement

24,34024,926954

36,440

Balance
Capital requirement
Balance267

10,203444,358

429,016

Capital requirement——

Balance

9,891

14,776

Capital requirement

1,697

2,594

* Applying to exposure the transitional measures indicated in Article 15 of the Supplementary Provisions to the Capital Adequacy Ratio Notification.

March 31, 2011

March 31, 2010

Structured finance¥269,252¥239,982

Funds*

175,106

189,701* 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 Provisions to the Capital
Adequacy Ratio Notification(Millions of yen)March 31, 2010

¥21,220¥32,361

3. Interest Rate Risk in the Banking Book
Decrease in economic value resulting from interest rate shock

March 31, 2011

March 31, 2010

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:¥56.4 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:¥8.3 billion

Annual Report & CSR Report 2011

183
Capital Adequacy Status

Credit risk assets

March 31, 2011

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)

[2] Capital Adequacy Ratio Status (Non-Consolidated)
Qualitative Disclosure

Financial Condition

1. Overview of FundRaising Methods

All capital contributions are from 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. Eligible rating agencies are not selected according totype 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 Exposure
The rating agencies that DBJ uses for weighting risk are among the four that the FSA has
named eligible to perform such weighting. Eligible rating agencies are not selected according totype of securitization exposure.
The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating
Agency, Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

184
Capital Adequacy Status

Annual Report & CSR Report 2011

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.
* 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.)

Annual Report & CSR Report 2011

185
Capital Adequacy Status

Based on Article 16 of the Capital Adequacy Ratio Notification, DBJ includes in its calculation
method no market risk equivalent amount.

Financial Condition

7. Market Risk

Quantitative Disclosure
1. Items Related to Capital Adequacy Level(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

¥714,187¥753,259

684,046

708,297

—

—

7,527

5,858

(iii) Exposure to corporations

639,510

667,640(iv) Equity exposure

18,711

17,038(v) Other exposure

18,29517,75930,14144,961——(c) Capital requirement to operational risk

19,194

16,971(d) Non-consolidated total capital requirement ((a) + (b) + (c))

733,382

770,231(e) Non-consolidated capital ratio and non-consolidated Tier I ratio Capital ratio

20.39%

18.79%

25.32%

23.59%March 31, 2011

March 31, 2010

¥12,483,395¥12,967,415(2) Securitization risk exposure(b) Capital requirement to market risk

Financial Condition
186

March 31, 2011

Tier I ratio
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)

Capital Adequacy Status

Equities, funds

267,120

277,622

Commitments and customers’ liabilities for acceptances and guarantees

295,370

396,136

Bonds (JGBs and corporate bonds, etc.)

827,885

916,690

Repurchase agreement/call loan

61,866

304,998

Other

564,120452,133

Total¥14,499,758¥15,314,996(b) Fiscal year-end credit risk exposure, broken down as follows:(1) By region(Millions of yen)March 31, 2011

March 31, 2010

Domestic total¥14,499,758¥15,314,996

Overseas total——

Note: DBJ has no overseas sales locations.

Annual Report & CSR Report 2011

(2) Breakdown by industry and transaction counterparty

Manufacturing(Millions of yen)March 31, 2011

March 31, 2010

¥3,494,246¥3,514,512

922

1,063

45,34836,243

Forestry and fisheries
MiningConstruction
Wholesale and retail40,32525,622

1,156,814

1,130,017

Finance and insurance

1,099,731

1,181,018

Real estate

1,411,058

1,467,664

Transportation and communications

3,735,347

4,275,122

Electrical, gas and water

1,818,276

1,879,565

Services

1,013,870

966,249

Other

683,817

837,916

March 31, 2011

March 31, 2010

Five years or less

¥5,767,717¥5,884,768

More than five years, up to 10

5,412,965

5,715,819

More than 10 years, up to 15

1,988,982

2,336,480(3) Breakdown by period to maturity(Millions of yen)

824,102

913,910No maturity date

505,991

464,017(c) Breakdown of exposure by risk weight (after accounting for credit risk mitigations)(Millions of yen)March 31, 2010

Risk weight 0%¥ 550,730¥ 895,996

Risk weight 10%

98,610175,621

Risk weight 20%

3,808,137

4,037,850

Risk weight 50%

4,244,213

3,932,772

Risk weight 100%

5,608,858

6,031,105

Risk weight 150%

32,081

20,7323. 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, 2011

March 31, 2010

Eligible financial collaterals¥—¥ 179,985

Guarantees or credit derivatives

1,426,488

1,619,222

Annual Report & CSR Report 2011

187
Capital Adequacy Status

March 31, 2011

Financial Condition

More than 15 years

4. Transaction Counterparties’ Risk on Derivative Product Transactions and Transactions with Long Settlement Periods(Millions of yen)March 31, 2011

March 31, 2010

Current exposure
methodCurrent exposure
method¥133,529¥116,247

98,100110,838

Interest rate transactions

59,55468,724Foreign exchange transactions

36,74539,314Equivalent credit calculation method
Gross restructuring cost
Gross add-on, by transaction type

1,800

2,800

Reducing credit equivalent amounts through netting

142,371

124,489

Net equivalent credit

89,258102,596

Credit derivative transactions

39,18043,590

Notional amounts of credit derivatives forcalculated credit equivalent amount by type ofCredit default swaps provisioncredit derivative, by protection purchase or provision

178,660

390,449

Credit default swaps purchase

36,00056,000——

Net restructuring cost

Financial Condition
188

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.

Capital Adequacy Status

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, 2011

March 31, 2010

Structured finance¥657,037¥692,668

Credit derivatives

120,510290,299

Funds*

210,271

227,244

March 31, 2011

March 31, 2010

* 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%

Risk weight

50%

Risk weight

100%

Risk weight350%

Risk weight

Capital deductions

Risk weight

Other*

Balance(Millions of yen)

¥213,080¥380,274

Capital requirement

3,409

6,084

Balance

13,86731,334

Capital requirement

554

1,253

Balance

304,009311,581

Capital requirement

24,32024,926569

36,083

Balance
Capital requirement
Balance
Capital requirement

159

10,103446,402436,162——

Balance

9,891

14,776

Capital requirement

1,697

2,594

* Applying to exposure the transitional measures indicated in Article 15 of the Supplementary Provision to the Capital Adequacy Ratio Notification.

Annual Report & CSR Report 2011

(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, 2011

March 31, 2010

Structured finance¥237,072¥210,668

Funds*

209,329

226,160* 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)March 31, 2011

March 31, 2010

¥21,220¥32,361

Credit risk assets

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

(Millions of yen)March 31, 2010

Exposure to listed shares¥ 34,209¥ 24,806

Exposure to other equity investments and capital injections

221,289

218,228

10,034(1,804)(a) Market value of below-listed items as included within categories in
the non-consolidated balance sheets(b) Gains or losses on the sale of equity investments or shares

14,19921,358(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

7,350

7,092

(d) Included amount stipulated in Article 18, Paragraph 1, Item 1 of the Capital
Adequacy Ratio Notification

5,168

3,697

189

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
March 31, 2011

March 31, 2010

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:¥56.4 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:¥8.3 billion

Annual Report & CSR Report 2011

Capital Adequacy Status

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.

Decrease in economic value resulting from interest rate shock

Financial Condition

March 31, 2011

Development Bank of Japan Inc.
Published in September 2011 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

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