Development Bank of Japan Inc.
9-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-0004, Japan

Annual Report & CSR Report

http://www.dbj.jp/en

Applying Financial Expertiseto Design the Future

Development Bank of Japan

Printed in Japan

This report is printed on paper certified by the Forest Stewardship Council (FSC) as being made from sustainably
managed forests. The report is printed with soy ink using a waterless printing method. All the electricity used inprinting this report was supplied by green resources (wind power).

Annual Report & CSR ReportProfile (As of September 1, 2009)

Established:

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

President:

Minoru Murofushi

Number of employees:

1,064 (as of March 31, 2009)

Capital:¥1,103,232 million (100% owned by the Japanese government) (as of September 24, 2009)

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 offices, 2; andoverseas subsidiary, 1

Total assets:¥14,017.4 billion (as of March 31, 2009)

Loans:¥12,026.6 billion (as of March 31, 2009)

Capital adequacy ratio: 18.70% (as of March 31, 2009)
Issuer ratings:

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

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

Development Bank of Japan Inc.
Published in September 2009 by Public Relations & Corporate Social Responsibility Office,Corporate Planning & Coodination Department
URL: http://www.dbj.jp/en

DBJ̲AR̲Cover2-3̲1113.indd 1

09.11.13 3:22:50 PM

Contents

Message from the President . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

A Fresh Start for DBJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5History of DBJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

Overview of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

Overview of Operations in the Six-Month Period Ended
March 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

8

Privatizing DBJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Crisis Response Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10

Activities to Enhance Financial Expertise . . . . . . . . . . . . . . .

14Overseas Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Group Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15Management Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DBJ’s Target Business Model . . . . . . . . . . . . . . . . . . . . . . . . .

17

Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18

Overview of DBJ’s First Medium-Term
Management Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19Implementing CSR Management . . . . . . . . . . . . . . . . . . . . . .
Intellectual Asset Management . . . . . . . . . . . . . . . . . . . . . .
Financial Platform that Enables DBJ to Meet the Needs of
the Times . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

16

18

20
25
28

Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Integrated Investment and Loan Services . . . . . . . . . . . . . . .

29

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

32

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

36
38

Investment and Loan Business Practices(CSR through DBJ’s Core Business) . . . . . . . . . . . . . . . . . . .

40

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

57

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

58

Management Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

61Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

67

Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

68

30

62

71

Client Protection Management System/
Declaration on Personal Information Protection . . . . . . . . .

72

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

73

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

75

Corporate Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

79
93

Note:
The total of each column of figures may not equal
the total of the individual figures due to rounding.
In this report, “0“ indicates figures of less than theindicated unit. A “—“ indicates the absence of anamount.

Annual Report & CSR Report 20091

Message from the President

Founded on relationships of trust built with clients over the past
half-century, the Development Bank of Japan (DBJ) incorporated asa stock company in October 2008.

Expanding on the expertise and experience we have cultivatedin enhancing corporate value for our clients, we will retain our
public-mindedness and seek to become even more client-focused.
In addition, we will continue striving to provide integrated investment and loan services as a unique financial institution.

2

Annual Report & CSR Report 2009

Aiming to Be a Unique Financial Institution

Fundamental Stance on CSR

Development Bank of Japan Inc. took its first step on theThrough our crisis response business, we aim to realize ourpath toward privatization in October 2008. Until that time,

corporate philosophy through our investment and loan

we were a comprehensive policy-based financial institution

businesses. These activities illustrate our fundamental stancethat contributed to the development of the Japaneseon corporate social responsibility (CSR) initiatives.

economy, acting in accordance with the changing times.

We can fulfill our corporate social responsibilities

We thank our clients for their understanding and support ofand work toward the realization of a sustainable society

our activities during this period.

by linking our corporate activities directly to society, theIn our current incarnation, we have established the cor-

environment and the economy; by performing each of ourporate philosophy of “applying financial expertise to design

duties in an appropriate manner; and by striving to enhance

the future.” We will keep this objective firmly in mind as

the mutual values of DBJ and its clients.

we strive to build on, and remain deserving of, the trust we
have earned from our clients and work to help them realize

Shift to Autonomous Managementa prosperous future.

To ensure our ability to smoothly conduct financial crisis

We believe that our business model is distinctive in that

response business, the Japanese Diet passed the “Law for

it seeks to raise corporate value for clients in a balanced

Partial Amendment of the Development Bank of Japan Inc.

manner through the provision of integrated investment

Law.” According to this revision, the Japanese government

and loan services. We aim to be unique in our approach

may undertake various measures, such as reconsidering theto listening carefully and respectfully to clients’ needs, andstatus of its holdings in DBJ, to ensure the soundness of its

then delivering appropriate solutions.

finances.

In October 2008, we formulated our first medium-term

Particularly in these turbulent times, we are redoubling

management plan, Challenge 2010. Its core tenets are

our efforts to provide financial services that enhancedeveloping our overseas operations, diversifying our funding

corporate value for our clients. We aim to fill the classic

sources and applying full-fledged growth strategies.

role of financing through the universal quality of being
able to withstand change. We are striving to grow as a

Responding to the Financial Crisis

financial institution and earn the trust of its stakeholders

Applying its expertise and experience in policy-based financ-by participating more actively in domestic and overseas

ing to the financial crisis that has propagated outward fromfinancial markets. DBJ’s executives and employees are work-

its epicenter in the United States in 2008, DBJ has vigorously

ing together and pursuing their duties vigorously to achievetaken part in financial crisis response business. Taking fullautonomous management.

advantage of our long-held spirit of public-mindedness andI ask for your ongoing support of our endeavors.

neutrality, we maintained open lines of communication withother financial institutions as we worked to promptly meet

July 2009a host of client needs.

Minoru Murofushi
President & CEO
Development Bank of Japan Inc.

Annual Report & CSR Report 20093

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.

Commitment to Stakeholders

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

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

Networks
Netw
Net

Commitment to Stakeholders, Action Guidelines and Core Competencies
Commitment to Stakeholders

Action Guidelines

 Commitment to Clients

 Customers First

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

 Commitment to Society

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

 Professional

All business will be based on harmony among the three factors ofsociety, the environment and the economy in order to contributeto a sustainable, affluent society.

 Commitment to Investors

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

 Global & Local

DBJ will maintain transparency while raising corporate value overthe long term.

 Commitment to Employees

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

 Speed & Teamwork

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

Relying on skilled teamwork, DBJ will act rapidly and in goodfaith, building strong foundations for clients’ trust.

Core Competencies

4

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.

Annual Report & CSR Report 2009

A Fresh Start for DBJ

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:• Long-Term Perspective• Neutrality• Public-Mindedness• Reliability
Action Guidelines:• Customers First• Professional• Global & Local• Speed & Teamwork
The shade of blue in “DBJ” represents a prosperous future,
youthfulness and growth potential.

Launch Ceremony and Reception
Development Bank of Japan Inc. Launch Ceremony was held on October 1, 2008. The Development Bank ofJapan Inc. Privatization Banquet Reception was held on October 30, 2008.
Among the seven people cutting the ribbon at the launch ceremony were Shoichi Nakagawa, thenMinister of Finance; Tokio Kano, Senior Vice-Minister of Land, Infrastructure, Transport and Tourism; andMinoru Murofushi, President of DBJ.
The reception was attended by numerous members of the government and financial communities.
Attendees offered DBJ many warm words of encouragement.

Cutting the ribbon at the launch ceremony
President Murofushi delivering the reception speech

Annual Report & CSR Report 20095

History of DBJ
Here, we introduce DBJ’s history of supporting the reconstruction of post-war Japan
October 1, 2008: Privatization (conversion to a joint-stock company)
Structural reform towardsustainable development

Development Bank of Japan Inc. establishedFinancial solutions that support community, the environment and technology

From 2001

In 1999, the Japan Development Bank and the Hokkaido-Tohoku Development
Finance Public Corporation were dissolved and the Development Bank of Japan (DBJ)
was established. DBJ focused its operations in three areas: community development,
environmental conservation and sustainable societies and the creation of newtechnologies and industries. In these ways, DBJ contributes to the sustainable
development of Japan’s economy.

Creation of a vibrant and affluent society and stable economy
Post-bubble

1994–2000

The Japan Development Bank focused on such important areas as ongoing
improvements to social capital, environmental and other measures, and support for
venture businesses. In addition, we swiftly implemented reconstruction loans in thewake of the Great Hanshin-Awaji Earthquake and loans in response to the financial
environment to stabilize the financial system by functioning as a safety net.

Development of lifestyle and social infrastructure and a smooth industrial transformation

Economic
bubble1985–1995

Pressing needs arose for increased domestic demand and an industrial structuralshift, against a background of aggravating trade friction with other countries. The
Japan Development Bank focused on support for social capital improvement, creativetechnological development, an industrial transformation and other issues. In the 1990s,
we stressed environmental and energy measures and regional economic stimulation
with the aim of making Japan a lifestyle superpower.

Improvements to quality of life and stable supply of energy

Stable growth

1972–1984

As corrections to the imbalance of economic growth and standards of living, we began
to focus on antipollution measures, regional and urban development and other social
areas in addition to industrial development. Against the backdrop of the first oil shock,we provided investment and loans for energy alternatives to fossil fuels, as well as
efforts to conserve energy, to ensure stable energy supplies. We also supported efforts
to develop land into large-scale commercial sites.

Development of international competitiveness and social development loans
Expanding and reinforcing the industrial base

1966–1971
Rapid growth
Economic recovery

6

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

High-growth infrastructure development
Extending and reinforcing the industrial base

1956–1965

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

Reconstruction and independence of the economy
Rebuilding the industrial infrastructure and key industries

1951–1955

Annual Report & CSR Report 2009

In 1951, the Japan Development Bank was established. The Japan Development
Bank commenced accommodation loans to facilitate the development of the power
supply, which forms the basis of the economy and industry, and the rationalization,
modernization and cultivation of coal, steel, marine transportation and other majorindustries.

Business Summary

Management Policies

Financial Services

Management Structure

Corporate Data

Overview of Operations

Overview of Operations in the Six-Month
Period Ended March 31, 2009. . . . . . . . . . . . . .

8Privatizing DBJ . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Crisis Response Business . . . . . . . . . . . . . . . . . . 12
Activities to Enhance Financial Expertise . . . . . 14
Overseas Business. . . . . . . . . . . . . . . . . . . . . . . . 15
Group Companies . . . . . . . . . . . . . . . . . . . . . . . . 16

Annual Report & CSR Report 20097

Overview of Operations

Overview of Operations in the Six-Month Period Ended March 31, 2009

Operating Conditions
Economic Environment

For details regarding business loans in response to the

During the six months ended March 31, 2009, the Japanesefinancial crisis, please refer to the section on page 13 entitledeconomy was affected by the mid-September 2008 collapse“Financial Crisis Response Business.”of Lehman Brothers, a U.S. investment bank, which sparked a

Investment

financial crisis with effects that rippled outward rapidly into the

We work to resolve client issues involving business expan-

real economy throughout the rest of the world, culminatingsion and support strategies and the formation of financial

in the worst economic recession since World War II. Exports,

infrastructures. We achieve these activities by supporting thewhich had served as a driver of growth for the Japanesecreation of funds, as well as mezzanine, equity and othereconomy, shrunk with unprecedented speed, and industrial

financing methods, providing appropriate financing based on

production fell by more than 30%. These downturns rapidly

a long-term perspective. During the six-month period, ¥63.1

affected corporate earnings and profits, as well as income

billion was allocated to investing activities.

and employment levels. Furthermore, the downward trend inConsulting/Advisory Services

capital investment became more pronounced, and personal

Consulting and advisory services utilize the networks created byconsumption decreased.

the DBJ’s predecessor. Through these services, we help clientsof all sizes grow more competitive in a host of industries. We

Review of the Six-Month Period Ended

perform consulting on projects that help invigorate regional

March 31, 2009

communities, and provide advisors to support these activities.

Since its establishment on October 1, 2008, the core of DBJ’s

During the six-month period, investment and loan commissions,business has remained that same as those conducted by its

and fees from M&A and other advisory services amounted topredecessor, prior to privatization. As a highly specialized¥3.8 billion.

financial institution, we seek to resolve clients’ issues throughSubsidiaries

the provision of integrated investment and loan services.

In December 2008, our Singapore Representative Office was

Below is an overview of these activities during the six-month
period ended March 31, 2009. The figures provided for theloans, investment and consulting/advisory services described

Singapore Limited.
Situated in the middle of Southeast Asia, which has enjoyedbelow are for DBJ on a nonconsolidated basis.

rapid growth in recent years, Singapore has grown as aLoansresult of the role it serves as the region’s financial center. DBJ

We provide senior financing through traditional corporate

Singapore should serve as a springboard for other DBJ Grouploans, nonrecourse loans and other types of structured financ-companies to provide loans and investment and conduct M&A

ing as well as a variety of other loans that employ advanced

and advisory services to meet the broad-ranging needs of cli-financial methods. During the six-month period ended Marchents in the area.

31, 2009, we provided ¥1,670.3 billion in loans, includingloans for financial crisis response business.

8

incorporated, becoming the wholly owned DBJ subsidiary DBJ

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Overview of Operations in the Six-Month Period Ended March 31, 2009

Overview of Consolidated Operating Performance
Consolidated Financial Highlights

addition, the sudden downturn in the economic environment(Billions of yen)

For the Six-Month Period
Ended March 31, 2009
Total income

154.8

Net loss(128.3)

resulted in an increase in expenses associated with loan losses
and losses on shares, prompting net other losses of ¥149.6
billion. As a result, the loss before income taxes and minority
interests, excluding operating expenses, was ¥121.6 billion.
After declaring an extraordinary loss of ¥3.5 billion, the loss

Total assets

14,028.0

Loans

12,008.8

Securities

1,246.5

Total liabilities

11,941.6

Borrowed money

8,067.8

Debentures and corporate bonds

3,513.0

Total equity

2,086.4

Common stock

1,000.0

Capital adequacy ratio(BIS standard)

18.88%

Ratio of risk-monitored loans(Banking Law base)

1.60%

Return on equity(6.06)%

Return on assets(0.92)%

As of March 31, 2009, total assets amounted to ¥14,028.0

1,096

billion. Of that amount, loans were ¥12,008.8 billion, andNumber of employees

before income taxes and minority interests came to ¥118.1
billion.
In line with DBJ’s privatization (conversion to a joint-stockcompany), DBJ must pay taxes in the same manner as othergeneral corporations. During the year, current income taxes—
including corporate, resident and other taxes—came to ¥20.0
billion, and DBJ posted deferred income taxes of ¥6.4 billion.
As a result, during the period, DBJ posted a net loss of¥128.3 billion.

Consolidated Assets, Liabilities and Equity

securities came to ¥1,246.5 billion. These amounts include newfinancing for the provision of loans in response to the financial
crisis, as well as short-term corporate bonds issued to fund DBJ’s
The period under review is the six months from October 1, 2008,
through March 31, 2009. As DBJ was established on October 1,
2008, no previous figures are available for comparison.

entry into the commercial paper purchasing business.
Call loans and bills bought amounted to ¥145.0 billion at
the end of the term, and reverse repurchase agreements cameto ¥375.9 billion. These assets represent the investment ofConsolidated Income and Expenses

excess cash on hand.

During the period, DBJ posted total income of ¥154.8 billion.

Total liabilities as of March 31, 2009, stood at ¥11,941.6

Of this amount, interest income generated ¥135.7 billion, andbillion, of which debentures and corporate bonds amounted tofees and commissions ¥4.6 billion. Other operating income¥3,513.0 billion and borrowed money ¥8,067.8 billion. Also,came to ¥719 million, and other income was ¥13.6 billion.

during the period DBJ floated its first corporate bond issue follow-

Total expenses were ¥272.9 billion. This amount included

ing privatization (conversion to a joint-stock company). These

interest expenses of ¥84.1 billion, expenses on fees and commis-

bonds, issued under the registration statement method, weresions of ¥0.1 billion, other operating expenses of ¥11.0 billion andfloated on December 2008 and generated ¥57.0 billion. Also,

general and administrative expenses of ¥17.8 billion, as well as

acceptances and guarantees came to ¥157.2 billion.

other expenses of ¥159.7 billion.
Net interest income was ¥51.5 billion and net fees and com-

Total equity at the end of the period was ¥2,086.4 billion.
DBJ’s unrealized loss on available-for-sale securities came tomissions ¥4.5 billion. However, as a direct result of confusion¥1.6 billion. This amount includes valuation losses on securities

in the credit transaction market, DBJ posted valuation losses

that DBJ holds independently, as well as shares in listedon credit default swaps and expenses on other financial deriva-

companies that DBJ owns through funds.

tives, resulting in net other operating losses of ¥10.3 billion. In

Annual Report & CSR Report 20099

Overview of Operations

Privatizing DBJ

Development Bank of Japan Inc. was established on

autumn of 2008. On June 26, 2009, the Diet passed theOctober 1, 2008. Under the terms of the Development Bank

Law for Partial Amendment of the Development Bank ofof Japan Inc. Law (Law No. 85, 2007; the ”New DBJ Law”)

Japan Inc. Law (”Revised DBJ Law”), which, by extending

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

the government’s investment period to the end of March

the Law on the Promotion of Administrative Reform to Bring

2012, enables DBJ to strengthen its financial base in line

About a Simple and Efficient Government (Law No. 47,

with the economic crisis measures announced in April 2009.

2006; the ”Administrative Reform Promotion Law”) and theUnder the New DBJ Law, DBJ was to have achieved

fundamental reform of policy-based finance, DBJ, upon its

full privatization within five to seven years after its

establishment, took over all assets of the Development Bank

establishment. With the law’s revision, the target dateof Japan (the “predecessor”) as investment in kind, with thehas been extended to five to seven years after the end of

exception of assets transferred to the government under

the investment period mentioned above. At the end of

the provisions of Article 15, Paragraph 2, of the Appendix

fiscal year 2011, the government plans a review of DBJ’s

to the New DBJ Law. Under Article 15, Paragraph 1, of theorganization which will include the future of government-same law, DBJ also assumed all rights and obligations of theheld shares. The government will continue to hold its shares

predecessor, with the exception of assets transferred to theuntil then.

government under Article 15, Paragraph 2, of the Appendix
to the New DBJ Law.
DBJ has instituted emergency measures to deal withthe global financial and economic crisis which began in the

Note: Please refer to pages 86–92 for details of the New DBJ Law and
Law for Partial Amendment of the Development Bank of Japan Inc.
Law.

Law Passed for Partial Revision of the Development Bank of Japan Inc. Law
The Law for Partial Amendment of the Development Bank of Japan Inc. Law was passed today atan Upper House plenary session of the ongoing 171st ordinary session of the Diet.
The law introduced a number of amendments designed to help Japan’s medium-sized and large corporations
deal with funding problems arising from the global financial crisis which began in the United States last fall.
• The law provides for the strengthening of DBJ’s finances by enabling the government to make additional
investments in DBJ until the end of March 2012. Investments may now be made by means of delivery bonds.
• The law extends the disposal period for government-held shares in DBJ. Whereas existing provisions
stipulated a target of “approximately five to seven years after October 1, 2008,” the revised law states thatthe government must dispose of all of its shares in DBJ by “approximately five to seven years after April
2012.”• In view of the certain level of government involvement in DBJ required to ensure that crisis response businessare implemented properly—government shares are in excess of the one-third of all outstanding shares it
would normally hold, for example—a government review of DBJ’s crisis response business, including thefuture of government-held shares, will be held in or around the end of fiscal year 2011, followed by necessary
actions based on the findings. Until these steps are taken, the government will not dispose of any of its sharesin DBJ.

10

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Privatizing DBJ(Unofficial translation)

Reference 1: New DBJ Law (after the amendment
pursuant to the Law for Partial Amendment of theDevelopment Bank of Japan Inc. Law)
Disposition of Government-Owned Shares
Article 2
1. Pursuant to Article 6, Paragraph 2 of the Law Concerning
Promotion of Administrative Reform for Realizing the Simple
and Effective Government (Law No. 47 of 2006, as amended),the Government shall make efforts to reduce the number ofshares held by it in the Corporation (hereinafter in the following
Paragraph and the immediately following Article referred to as”Government-Owned Shares”), taking into account the market
situation, and shall dispose all of them in approximately five toseven years from April 1, 2012.
Government Investment
Article 2-2During the period ending March 31, 2012, the Government may
invest in the Corporation as it deems necessary within the limits set byits budget.
Delivery of Government Bonds
Article 2-3
1 During the period ending March 31, 2012, the Government, in
implementing the crisis response business specified in Article 2,
item 5 of the Japan Finance Corporation Law (Law No. 57 of 2007;
hereinafter ”Crisis Response Business”) may issue government
bonds in order to secure the capital required to ensure thesoundness of the Corporation’s finances.
Supplementary Provisions of the Law for Partial Amendment of
the Development Bank of Japan Inc. Law
Deliberation
Article 2
1 By the end of fiscal year 2011, the Government shall review theorganization of the Corporation, taking into account the status
of investments in Development Bank of Japan Inc. (hereinafter”the Corporation”) under the provisions of Article 2-2 of the
Supplementary Provisions to the Development Bank of Japan Inc.
Law as amended by this Law; the redemption of Government
bonds under the provisions of Article 2-4, Paragraph 2 of thesame Supplementary Provisions; the conduct of crisis response
Business by the Corporation (this refers to Crisis Response Businessconducted under the provisions of Article 2, Item 5 of the Japan
Finance Corporation Law (Law No. 57 of 2007); same hereinafter);and changes in socioeconomic and other circumstances. This
review, from a point of view of the Government’s practice of
maintaining a certain level of involvement in the Corporation, suchas by consistently holding more than one-third of the Corporation’s
issued shares, is meant to ensure that the Corporation’s Crisis
Response Business are properly implemented; it shall include
a consideration of the Corporation’s Crisis Response Business
and, based on that, of the Government’s holding of stock in the
Corporation. The Government shall take necessary measures basedon its findings.
2 Notwithstanding the provisions of Article 6, Paragraph 2 of the
Law on Promotion of Administrative Reform for Realizing Simple
and Efficient Government (Law No. 47 of 2006) as amended
under the provisions of the following Article (the ”Administrative
Reform Promotion Law”) and of Article 2, Paragraph 1 of the
Supplementary Provisions to the Development Bank of Japan Inc.
Law as amended by this Law, the Government shall not dispose of
its shares in the Corporation prior to taking the measures describedin the preceding paragraph.

Reference 2. The Law Concerning Promotion of
Administrative Reform for Realizing the Simple
and Effective Government (after the amendment
pursuant to the Law for Partial Amendment of theDevelopment Bank of Japan Inc. Law)
Status of the Shoko Chukin Bank Limited and the Development
Bank of Japan Inc.
Article 6
Full-scale privatization is prescribed for the Shoko Chukin Bank andDevelopment Bank of Japan Inc. and measures to this effect shall betaken in fiscal year 2008 to minimize Government involvement while
maintaining the autonomy of management.
2 The Government shall invest in the Shoko Chukin Bank andDevelopment Bank of Japan, Inc. taking into account the market
situation, and shall dispose all such investments in approximately
five to seven years from April 1, 2012.
3 The Government shall, with regard to full-scale privatization asprovided in Paragraph 1, take measures to ensure the financial
bases that are necessary to the smooth operations of the Shoko
Chukin Bank and Development Bank of Japan Inc. At the sametime, necessary measures shall be taken to ensure maintenance ofthe foundations of the financial functions for members of small
and medium-sized enterprise cooperatives and other organizations
composed of small and medium-sized corporate members that belong
to the Shoko Chukin Bank and investment and financing functionsof Development Bank of Japan Inc. for long-term business funds.

Reference 3: Supplementary Resolutions
Supplementary Resolutions on the Bill for Partial Amendmentof the Development Bank of Japan Inc. Law
House of Councilors Committee on Financial Affairs
June 25, 2009
The following matters should receive the Government’s carefulconsideration.
• In implementing Crisis Response Business based on the recent
measures for additional investment, Development Bank of Japan
Inc. shall ensure the measures result in a smooth supply of funds on
the basis of appropriate analysis by drawing upon its accumulated
knowledge and skills.
• With the global monetary crisis having serious economic andfinancial impacts, and the balance of loans to small and medium
enterprises falling steadily, efforts must be made to further facilitateloans by the Japan Finance Corporation to small and mediumsized businesses. In implementing Crisis Response Business forlarge and midscale enterprises, Development Bank of Japan Inc.
must be certain to expedite loans to associated small and medium
enterprises as well.
• The Government should review its holding of shares in
Development Bank of Japan Inc. and take necessary measures
based on its findings. Any such deliberations should take into
account the need to ensure that the Corporation acts for the goodof the community, that it has a stable source of the funds required
to fulfill its functions as a provider of long-term investment andloans, and that it has systems in place to secure competitive officers
and employees. The Government should take appropriate measures
to prevent any damage to the Corporation’s long-term value.
• The Government should reassess the future provision of policybased finance by Development Bank of Japan Inc. and the Japan
Finance Corporation, reaffirming the importance of their roles andfunctions and paying attention to their relationships not only withprivate financial institutions but also with the Japanese financial
sector as a whole, including affiliated organizations and the Japan
Post Bank.
Resolutions passed.
Annual Report & CSR Report 200911

Overview of Operations

Crisis Response Business

Crisis Response Business
Through the Japan Finance Corporation (JFC), the Japanesecredit (e.g. for two-step loans, financial indeminity or interest

government sets aside specific funds that are earmarked forsubsidies), institutions designated to provide such funds do souse in the event of crisis, such as disruptions in the domestic orquickly and flexibly.

overseas financial markets, large-scale disasters, terrorism andAt the time of its establishment, DBJ was designated as

epidemics of communicable diseases. Upon the receipt of such

such a financial institution, as was Shoko Chukin Bank Limited.

n Crisis Response Business Scheme(PWFSONFOU$PNQFUFOUNJOJTUFSTUIF.JOJTUFSPG'JOBODF UIF.JOJTUFSPG-BOE *OGSBTUSVDUVSF
BOE5SBOTQPSUBOEUIF.JOJTUSZPG"HSJDVMUVSF 'PSFTUSZBOE'JTIFSJFTt'JOBODJBMDPOUSJCVUJPOTt-FOEJOHPGGVOETt*OUFSFTUTVCTJEJFT

t%FTJHOBUFE%FTJHOBUFEGJOBODJBMJOTUJUVUJPOT+BQBO'JOBODF$PSQPSBUJPO1SJWBUFGJOBODJBMJOTUJUVUJPO$SJTJT3FTQPOTF'BDJMJUBUJPO"DDPVOU1SJWBUFGJOBODJBMJOTUJUVUJPO

1SFQBSFTBOEBOOPVODFTiDSJTJTSFTQPOTFGBDJMJUBUJPOHVJEFMJOFTw*NQMFNFOUTSJTLTVQQPSUBOE
PUIFSNFBTVSFTPOUIFCBTJTPG
BHSFFNFOUTXJUIEFTJHOBUFEGJOBODJBMJOTUJUVUJPOTttt

5XPTUFQMPBO
%BNBHFHVBSBOUFF
*OUFSFTUTVCTJEZ

4IPLP$IVLJO#BOL

DBJ#VTJOFTTDPOEVDUFECBTFEPO
UIFBQQSPWBMPGUIFDPNQFUFOUNJOJTUFST-FOEJOHPGTQFDJGJDGVOET PUIFSTFSWJDFT$MJFOUT

12

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Crisis Response Business

Financial Crisis Response Business
DBJ began conducting crisis response business on October 1,

Additional economic crisis countermeasures were2008. These services consist of providing necessary funds dur-announced on April 10, 2009, outlining specific measures foring such crises as disruptions in domestic or overseas financial

large-scale crisis response business and earmarking a total

markets or a large-scale disaster. These funds are provided byof ¥15 trillion for crisis response for medium-sized and large

the Japanese government via designated financial institutions

companies. In line with these measures, approval of a supple-

under the Japan Finance Corporation Law (Law 57 of 2007,

mentary budget for fiscal 2009 was announced on May 29,

later updated). Funds provided under this law receive a risk

2009. This budget received Diet approval on June 26, and thesubsidy from JFC.

revised New DBJ Law went into force and was promulgatedOn October 30, Shoko Chukin and DBJ establishedon July 3, 2009. These measures paved the way to reinforce“lifestyle measures” in response to the worsening corporate

DBJ’s financial structure and execute crisis response businesscashflow conditions resulting from the global financial andsmoothly.

economic crisis that commenced in the autumn of 2008. On

As part of the danger of loss related to the introduction

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

under the category of “incidents related to confusion in thecommercial paper acquisition, DBJ has drawn up with JFC ainternational financial order.” On December 19, these measures

framework for reimbursement on loss guarantee transactions,were augmented with economic measures, or “emergency

and DBJ appropriately employs this framework for reimburse-

lifestyle defense measures,” funded through an expanded

ment of loss guarantee transactions.
As of June 30, 2009, DBJ’s loan performance and com-budget and the commencement of the commercial paper
acquisition business, and labeled Cashflow Countermeasures

mercial paper acquisition of financial crisis countermeasure

for Medium-Sized and Large Companies Employing the Crisis

loans in response to the financial crisis was as follows.

Response Business of the Japan Finance Corporation. On• Cumulative loans: ¥1,827.1 billion (448 cases)

January 27, 2009, government regulations were amended,• Cumulative loans executed with loss guarantee agreements:

incorporating these items into the second supplementary¥163.1 billion (10 cases, including those slated for applicationbudget for fiscal 2008, supplemented with funds generated by

to JFC)• Cumulative commercial paper acquisition: ¥351.0 billion

DBJ’s commercial paper acquisition business.

(66 cases)n Loans as Financial Crisis Countermeasures(Cumulative, at Month-End)(Billions of yen)
2,000

n Commercial Paper Acquisition as Financial Crisis
Countermeasures (Cumulative, at Month-End)(Number of cases)
600
1,827.1

1,432.2

1,500

1,000

300

276.0
215.0

384
300

338

200

301
500

(Number of cases)
80
351.0

448

1,202.7
1,060.3450(Billions of yen)
400

135.0

108

150

100

0

0

298.0

66

60

56
50

40

36
20

20

313.0
0

Feb. 28,
2009

Mar. 31,2009

Apr. 30,
2009

May 31,2009

Jun. 30,
2009

Feb. 28,
2009

Mar. 31,2009

Apr. 30,
2009

May 31,2009

Jun. 30,
2009

Annual Report & CSR Report 2009013

Overview of Operations

Activities to Enhance Financial ExpertiseDBJ conducts its business activities according to the corpo-

DBJ Financial Academy

rate philosophy of ”applying financial expertise to design the

Since May 2008, the DBJ Financial Academy has held weekly

future.”courses with the objective of raising the level of financial

DBJ considers financial expertise to involve its core compe-

expertise of general employees by strengthening the knowledge

tencies of intention, intellectual assets and networks, and theand understanding that is essential to the advanced corporate

ability to leverage its accumulated financial infrastructure tofinancial business that lies at the heart of DBJ’s business model.

resolve clients’ issues.

During the year ended March 31, 2009, courses covered sta-

To enhance its financial expertise, during the six months
ended March 31, 2009, we established the DBJ Financial
Expertise Research Group and made theoretical adjustments.

tistics, an overview of technical financial theory and financial
legislation.
The DBJ Financial Academy accepts students from outside,

We also opened the DBJ Financial Academy with the aim

such as employees of regional financial institutions. We lookof raising the level of financial expertise among our generalforward to expanding the fields in which DBJ’s financial exper-personnel.

tise is applied.

DBJ Financial Expertise Research Group
Between May and September 2008, the DBJ Financial Expertise
Research Group met a total of eight times to make theoreticaladjustments.
This research group invited financial academics and otheroutside experts in an attempt to learn the realities of the financial crisis, as well as to participate in deliberations from thestandpoint of how DBJ’s future operations should address thesituation. One outcome of this research was a report entitled
The Investment Banking Model and DBJ’s Future Stance, which
was published in October 2008.

n DBJ Financial Academy Curriculum2008 Course

2009 Course(May 2008 through(Expected to run from June 2009

February 2009)

through February 2010)• Statistics

Core courses• Bond actuarial studies• Basic financial theory• Corporate finance• Corporate finance• Overview of technical• Valuation/case studies

financial theory• International finance• Business management and
M&A• Financial system theory• Financial policy• International financeElective courses• Financial legislation• Financial Instruments and• Japanese corporate financeExchange Law• Crystal ball practice• Real estate finance• Investments (investment
theory)The Investment Banking Model and DBJ’s Future Stance

14

Annual Report & CSR Report 2009

• M&A financeOverview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Activities to Enhance Financial Expertise/Overseas Business

Overseas Business

Since its conversion to a joint-stock company in October 2008,
DBJ has made a full-fledged entry into international business.
This business is positioned as one of DBJ’s growth strategies in
its first medium-term management plan. (See page 19.)
To achieve the targets set in the first medium-term management plan, we are creating an overseas risk management
structure, preparing operating bases, training personnel andmoving forward with core infrastructure. At the same time, we
are working to expand our network with trustworthy partners
and domestic and overseas financial institutions.
On June 1, 2009, we reconfigured our Department
for International Affairs into the International Strategy &Coordination Department as part of our move to commence
full-scale overseas investment and loan activities. This department is charged with gathering information and fostering
integrated risk management, which will contribute to building
structures to support overseas business.

By establishing our operational hub in Singapore, which
is located in the rapidly growing Southeast Asian region andincreasing its influence as a financial center, we hope to
respond to various needs of our clients, such as loans, investments and M&A advisory services.
DBJ Singapore’s principal activities spanning Asia andOceania include:
1. Supporting Japanese companies that are commencing or
expanding operations in Asia and Oceania
2. Supporting overseas companies that are interested in
venturing into Japan or forging business tie-ups withJapanese companies

Operations at Overseas Locations
New York Representative Office
The New York Representative Office is responsible for North
America, Canada, and Central and South America. This officemonitors financial, industrial and economic trends and economic policies. The office provides information to Japanesecompanies and other entities that are planning to commence
operations in North and South America, as well as client companies that are considering entry into the Japanese market.
London Representative Office
The London Representative Office is responsible for Europe(including those countries in Eastern Europe and countries
that were once part of the Soviet Union), the Middle East andAfrica. This office monitors international financial markets, aswell as economic trends and policies. The office provides information to Japanese companies that are planning to commence
operations in Europe, as well as overseas companies that areinterested in venturing into Japan.

Outline of DBJ Singapore Limited (As of July 1, 2009)
Established:

December 16, 2008

Capital:

S$1,000,000

Business:

Loans, investment and M&A advisory
services

Address:

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

CEO & Managing Director: Masamitsu Kawasumi

Business Tie-ups with Overseas Institutions
DBJ leverages its business alliances with the following overseas
institutions, according to specific objectives.
China International Investment Company (the CITIC Group)• Corporate group with a wide-ranging financial service network throughout Asia, including China
IE Singapore• Government institution that supports internationalization andprovides overseas investment for Singaporean companies

DBJ Singapore Limited
DBJ converted its Singapore Representative Office into a wholly
owned subsidiary, DBJ Singapore Limited, on December 16,
2008.
DBJ Singapore Limited opening ceremony

Annual Report & CSR Report 200915

Overview of Operations

Group Companies

The DBJ Group, including DBJ, its subsidiaries and affiliates, pro-companies’ new business creation efforts and expanding theirvides a variety of service to meet its clients’ needs.

fields and scales of operation. New Business Investment hashelped companies holding sophisticated and proprietary tech-Japan Economic Research Institute Inc.

nical and service expertise and knowledge invest in venture

Japan Economic Research Institute, which is wholly capitalizedcompanies in fields expected to grow rapidly.

by DBJ, is a research institution that primarily conducts surveys
and provides consulting services. In April 2009, the institutemade a fresh start, taking over the research and related
activities conducted by its predecessor.
Operating with a long-term perspective and from astandpoint of fairness and neutrality, the institute generates
synergies from its three fields of research—the public, solu-

Outline of New Business Investment Co., Ltd (As of July 1, 2009)
Established : June 1990
Capital:¥6 billion
Business:
Research, consulting and advisory services
Address:
6-2, Otemachi 2-chome, Chiyoda-ku,
Tokyo 100-0004, Japan
President:
Shinya Matsuno

tions and international arenas—targeting the public and private
sectors. The company meets clients’ research and consulting
needs from a comprehensive viewpoint.

IPO Information
Recently the market for companies seeking to make initial public
offerings has withered, but in 2009 New Business Investment helped
take public two companies in which it is an investor.

Public arena

Ubiquitous Energy, Inc.
Solution arena

International arena

Stock exchange listing: JASDAQ
Ubiquitous Energy is primarily an energy consultant that works withsmall and medium-sized manufacturers on ways to reduce theirelectric power expenditures.

Outline of Japan Economic Research Institute Inc. (As of July 1, 2009)
Established : December 1989
Capital:¥480 million
Business:
Research, consulting and advisory services
Address:
3-4, Kanda-surugadai 3-chome, Chiyoda-ku,
Tokyo 101-0062, Japan
President:
Kazuyuki MoriIn addition to its energy cost solution business, Ubiquitous
Energy helps other companies market energy-saving products, suchas Eco Cute heat pumps and stoves that cook through induction
heating, thereby reducing CO2 emissions and lowering the environmental impact of companies’ operations.
tella, Inc.
Stock exchange listing: NEO (JASDAQ)

New Business Investment Co., Ltd

Concentrating on dendritic cell (DC) vaccine therapy*, tella uses a

New Business Investment, which promotes Japanese industry

combination of chemotherapy and radiation therapy to fight cancer

and finance by encouraging venture companies to launcheffectively. The company provides its proprietary cancer treatment

diverse new businesses, was established in 1990 using venturetechnology and expertise to in immune maximizing therapies forcapital provided by the Japanese government. In 2004, thecompany made a fresh start by becoming a venture capitalist* Dendritic cell (DC) vaccine therapy is a cancer therapy method that useswith joint investment from DBJ and 126 other companies.

dendritic cells to recognize and record cancer antigens in lymphocytes. This

Since its establishment, New Business Investment has

approach supports a targeted attack on cancer cells, minimizing the damage

invested in nearly 200 venture businesses, contributing to

16cancer to contracted medical institutions.

Annual Report & CSR Report 2009

to healthy cells and virtually eliminating side effects.

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate DataManagement Policy

DBJ’s Target Business Model . . . . . . . . . . . . . . . 18
Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Overview of DBJ’s First Medium-Term
Management Plan. . . . . . . . . . . . . . . . . . . . . . . 19
Implementing CSR Management . . . . . . . . . . . . . . . 20
Fields of CSR Implementation at DBJ. . . . . . . 20
Triple Bottom Line. . . . . . . . . . . . . . . . . . . . . . 21
Social Effectiveness . . . . . . . . . . . . . . . . . . . . . 21
CSR through DBJ’s Core Business . . . . . . . . . . 22
Environmental and Social Contribution
Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Intellectual Asset Management . . . . . . . . . . . . . 25
Financial Platform that Enables DBJ to Meetthe Needs of the Times. . . . . . . . . . . . . . . . . . . 28

Annual Report & CSR Report 200917

Management Policy

DBJ’s Target Business Model
We work to resolve the issues clients face by providing specialized financial services involving integrated investments and loans.

Loans

Investment

Provision of medium- and long-term

Provision of mezzanine and equity

financing, as well as project financing

financingand other forms of structured andsubordinated financing

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

Businesses
DBJ combines the functions mentioned below with the long-term financing it provides to present clients through integrated
investment and loan services.

Medium- and Long-Term Financing Needs

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

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

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

Commercial banking

Loans

Syndicated loans

Mezzanine financing(corporate financing,asset financing)18

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

EquityCommon stock

Advisory services

M&A, consulting

Annual Report & CSR Report 2009

Investment banking

Investment
PE funds,
venture capital

Consulting/
Advisory Services

M&A advisory services

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

DBJ’s Target Business Model/Businesses
Overview of DBJ’s First Medium-Term Management Plan

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

DBJ is a unique financial institution in terms of the integrated

The period of the First Medium-Term Management Plan will

investment and loan services that it provides. We aim to takebe dedicated to establishing integrated investment and loan

advantage of our position and earn the trust of our clients.

services and building a foundation of core strengths. As specificAs part of this process, we have formulated our First Medium-long-term strategies, we have determined engagement policies

Term Management Plan, ”Challenge 2010: Establishingfor establishing integrated investment and loan services, mea-

Integrated Financial Services for Investments and Loans,”sures for full-scale expansion into overseas markets and plans

through the fiscal year ending March 31, 2011.

for diversified funding.

Growth Strategies of Challenge 2010, Our First Medium-Term Management Plan(Through March 31, 2011)

Provide integrated investment and loan services to meet needs in a range ofindustries and regions• Expanded services will address a diversity of client needs.
• Integrated investment and loan services will be used to forge broad alliances with other financial institutions.

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

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

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

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

Annual Report & CSR Report 200919

Management Policy

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) the CSR it fulfills by conducting its core business and (2) the environmental and social
contribution activities it undertakes. The combination of the two fields enhances corporate value.

Fields of CSR Implementation at DBJ

DBJ’s Two Fields of CSR

CSR through DBJ’s Core Business(Core Business = Resolving Societal Issues)

Environmental and Social
Contribution Activities

Investments, Loans and Other Services
in Response to Client Issues

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

Environment andTechnology

Environment

Local Community
Invigoration

Social Infrastructure

Communication inInternational Cooperation

Environmental
Management

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

20

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

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Implementing CSR Management

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

Society

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

Social infrastructure

incorporating environmental, social and economic aspects.
Tied to DBJ’s investments and loans are economic issues
involving the environment, technology and social infrastructure. DBJ’s considerations include region-specific and environmentally time-specific concerns, in addition to the economic
issues that a company faces, thus spanning the three elements

Creation ofsocial sustainability

Environment

EconomyEnvironment & technologythat make up triple bottom line evaluation. Accordingly, in“CSR through DBJ’s Core Business” DBJ carries out activities
based on triple bottom line evaluations to help build a sustainable society.

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

Following its privatization, DBJ aims to continue contributing

institution, evaluations of DBJ’s annual operations raised

to building an affluent future by solving problems through

DBJ’s business effectiveness and results, thereby improving

creative financial activities. We determine from our own per-its responses to socioeconomic changes facing Japan. These

spective those businesses that are truly useful to society andresponses were a way to evaluate CSR in its mainstay business.

work to promote the realization of a sustainable society.

Annual Report & CSR Report 200921

Management Policy

CSR through DBJ’s Core Business
Due consideration of compliance is a prerequisite for thecoexistence with regional societies and the creation ofsustainable development of enterprises. Accordingly, it isemployee-friendly workplaces. Accordingly, DBJ considers theimportant that a corporation’s mainstay business brings new

application of its intellectual assets and financial platforms forvalue to, contributes to problem-solving in, and gains the trust

investments and loans to be of vital importance.

of society.

We are working to provide additional sophisticated financial

Financial institutions can play a specific role in building aservices by leveraging our strengths related to the environment

harmonious society over the long term by identifying truly mean-

and technology and to social infrastructure and by taking

ingful projects for the economy and society and providing quality

advantage of our broad client base and accumulated industry

financing and financial solutions.

knowledge. We undertake these activities in line with our cor-

We believe that DBJ can gain the trust of society through
CSR in its core business, such as the provision of services

porate philosophy and our First Medium-Term Management
Plan.

that lead to client satisfaction, increases in corporate value,

Corporate Philosophy,
First Medium-Term Management Plan

Investments and loans = CSR through DBJ‘s core business

Environment
and Technology

Social Infrastructure
See page 40.

Materials andAssembly

Energy andNatural Resources

Transportation

Urban andRegional
Development

Everyday
Necessities

DBJ’s Financial ExpertiseIntellectual Assets
Accumulated
Equity Capital

22

Annual Report & CSR Report 2009

Industrial research,
analysis,
network

Structured financing
and otherfinancial technologies,
R&D

Risk Management

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Implementing CSR Management

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

Communication to Revitalize Local Communities

can best be resolved by communication and the exchange of

DBJ considers working with local citizens to build communities

opinions. Accordingly, DBJ strives to communicate with asthat suit their unique regions an important part of supporting

many people as possible through seminars, symposiums,

independent community development. To this end, DBJ holds

lectures and the Internet.

seminars and symposiums in collaboration with local authorities
and regional branches of the Japan Chambers of Commerce

Communication Focused on the Environment
Environmental problems such as global warming must be

and Industry and other economic organizations.
In our Regional Health Checks, we incorporate objective

resolved, starting with individual awareness of the severity ofindicators and original analytical methods in our discussions with

the issues.

residents and help them identify their community’s issues andDBJ promotes understanding of the relationship between thepotential. DBJ employees interview community stakeholders inenvironment and financial and business activities by participating

advance, study the region’s resources and on the final day holdin the Eco-Products Exhibit—Japan’s largest environmental

a participatory workshop with residents. (See page 39.)

event—and holding seminars and symposiums in conjunction
with relevant organizations.
DBJ has had a booth at the Eco-Products Exhibit every year
since the fiscal year ended March 31, 2001. Through descriptive
panels, we introduce various DBJ activities, such as the Programfor Promoting Environmentally Responsible Management, ourtie-up with the UNEP Finance Initiative and emissions credit
trading. During the year ended March 31, 2009, we distributed
reports introducing the DBJ Environmental Rating System,
attracting numerous visitors to our booth.
We also took part in the June 2008 Integrated Exhibitionof the Environment in celebration of the G8 Hokkaido Toyako
Summit and at New Earth 2008, which was held in Osaka in
November. As at the Eco-Products Exhibit, we introduced DBJ’s
initiatives and communicated with many visitors to promote aInteraction with community members

deeper understanding of the interplay between the environment
and financing.

“Eco Presentation Stage” (Eco Products 2008)

Annual Report & CSR Report 200923

Management Policy

Communication in International Cooperation

DBJ combines its annual report and CSR report under the

In cooperation with Japan Economic Research Institute Inc., DBJ

concept of “disclosure from a CSR perspective.” DBJ will

discusses its experience in applying policy-based financing tocontinue publishing CSR information introducing DBJ’s

support the industrial economy of post-war Japan with devel-

initiatives to help realize a sustainable society.

oping countries, primarily in Asia. We also offer the expertise
we have accumulated in recent policy issues, such as energy

Participating in Local Community Activities

conservation, environmental measures and private infrastruc-

Uchimizu Projectture. The Developmental Finance Course, for example, is a

DBJ participates in the Uchimizu Project, a campaign hosted byseminar that has attracted 346 people from more than 30

the Otemachi, Marunouchi and Yurakucho Uchimizu Project

countries since it was inaugurated by DBJ in 1967.

District Executive Committee.

During the year ended March 31, 2009, we held the course

Uchimizu, literally “sprinkling water,” refers to the Japanese

for the 40th time. Examples of our activities for individual

practice of sprinkling the pavement outside buildings to cool thedevelopment finance institutions include our cooperation withvicinity and mitigate the heat island phenomenon. As its name

Japanese and other institutions to provide technical assistancesuggests, the project is based in Tokyo’s Otemachi, Marunouchi

to the China Development Bank and the Development Bankand Yurakucho districts.

of Malaysia. In 2007, we entered into an agreement with theVietnam Development Bank on operational cooperation, andin 2009 we cooperated in such areas as training in Tokyo andHanoi for bank executives and employees.
In these ways, DBJ is using the experience and expertise it has
gained over the years to offer intellectual support to development
finance institutions overseas. At the same time, DBJ is strengthening its channels of communication with these institutions.
Participating in the Uchimizu Project

Support for the Operation of the Environmentally
Friendly Marunouchi Shuttle Bus
Since the year ended March 31, 2004, DBJ has co-sponsoredthe 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
Training at Vietnam Development Bank

Other Communication Efforts
Providing Information

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 accessfor disabled users.

Issuing Corporate Social Responsibility (CSR) Reports
To expand communication with all stakeholders, in 2003 DBJ
issued Environmental Report 2003 for a Sustainable Society.
This was followed by similar reports in 2004 and 2005. In
2006, DBJ published the CSR Report.

Marunouchi shuttle bus

24

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Implementing CSR Management/
Intellectual Asset Management

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 theyDifferentiating the products and services they offer is a large

are not recorded on a company’s financial statements, they arepart of the process. To enhance their operations, companies

a core component of corporate value. Managing intellectual

must identify their important management resources andassets effectively promotes clarity in terms of the corporation’ssources of competitiveness. Specific technologies, expertise,

key competencies and creates opportunities to increasehuman resources and business models are some factors that

corporate value.
Listed companies are finding that aggressively disclosing

lead to differentiation but are invisible to the casual observer.
Determining an entity’s true corporate value requires theintellectual asset information helps markets value them moreevaluation of these company-specific strengths. DBJ’s activities

appropriately. For this reason, the introduction of regulatory

related to intellectual assets are designed to foster the appli-

frameworks to encourage or require listed companies to dis-cation of these intangible sources of corporate value thatclose nonfinancial information has grown into a global trend,

underpin a company’s future economic performance.

beginning in Europe.

DBJ’s View on Intellectual Assets
Dating back to the time of our predecessor, maintaining theintellectual assets, which when combined represent an extra-

trust of our clients and society at large has been our mostordinary DBJ asset: our expertise in resolving issues through theimportant objective. From this standpoint, we have created aapplication of new financial methods, the widespread use ofwide variety of networks spanning both the public and private

our financial platform and our economic and social contribu-

sectors.

tions. This asset has led to our development of the financial

Based on our core values, our executives and regularmethods described below. It enables us to respond quickly toemployees have continued working to enhance their abilitychanging policy requirements and plays a major role in ourto evaluate companies and projects. We have accumulated aability to continue adding economic and social value.
Since privatization, we have aimed to maintain our economic

wealth of expertise in the screening and evaluation of longterm projects and a keen ability to identify and address issues

and social contributions. We believe that our ability to clearly

that are unique in terms of the times or the local communities

identify and make use of intellectual assets will be an increasinglythat face them. In the process, we have become a repository ofimportant factor in achieving this goal.

n 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

Related
Structural
AssetsHuman
Resources

Organizational
Structural
AssetsIntellectual Assets

Annual Report & CSR Report 200925

Management Policy

DBJ’s Utilization of Intellectual Assets
One school of thought defines intellectual assets as theprofessionals in various fields—as they consider such issues. All

understanding of and reporting on an entity’s networks and

DBJ executives and regular employees work to maintain a long-client bases (related structural assets), management teamterm and neutral perspective, approaching new business withand employees (human resources) and intellectual assets anda spirit of innovation and challenge.

business processes (organizational structural assets). Below, we

To impart various financial skills, DBJ maintains training

introduce DBJ’s intellectual assets and activities according tomenus that include a 2.5-month corporate finance training

this segmentation.

program. This program, for all new employees, helps develop
screening expertise. Our menus, combined with on-the-job

Related Structural Assets

training, raise the level of specialist expertise among DBJ

As our mission prior to privatization was to support projects

executives and regular employees. We maintain a number ofthat had policy significance, our system of planning andpersonnel exchange and dispatch programs with domestic andmaking investments and extending loans involved cooperation

overseas universities and research institutions, as well as with

with central government agencies and regional government

other international institutions, that help form our networks.

bodies. Now we take advantage of this network to disseminate

These programs help DBJ develop and introduce new finan-

information about our interest rate subsidy system based oncial methods, as well as strengthen network ties. DBJ has also

environmental ratings, as well as other interest subsidy systems

established the Research Institute of Capital Formation, which

put in place by national and regional government bodies. Also,

carries out financial research, as well as research on global

we continue to assist with crisis support.

warming countermeasures and other efforts to create a sus-

DBJ also works to create and develop financial platforms.

tainable society. The research that the center produces fromTo construct these platforms, we collaborate with public- anda neutral and long-term perspective is highly regarded by theprivate-sector financial institutions in Japan and overseas andcommunity and other experts.

maximize our networks of university professors, attorneys,
certified public accountants and other professionals. This multi-

Organizational Structural Assets

faceted combination of networks consisting of professionals

Unlike manufacturing companies, DBJ has no explicit intel-

in a host of fields in industry, academia and the government

lectual assets, such as patent rights. However, our introduc-

constitutes DBJ-related structural assets.

tion of new financial methods to Japan, our work with otherfinancial institutions to create financial platforms and our many

26

Human Resources

other contributions to the Japanese economy and society rely

Appropriately judging medium- to long-term investments andon our organizational adeptness, that is, our ability to quickly

loans requires all of DBJ’s executives and regular employees toascertain emerging issues and deploy appropriate personnel.

maintain a long-term perspective and make financial decisions

This ability, combined with the long-term financial data wefrom a neutral standpoint. In an era characterized by increas-

have accumulated over 50 years of investment and loan opera-

ingly complex economic and social issues and more sophisti-

tions and a corporate culture of always considering projects incated business skills, this long-term perspective has a majoran economically rational manner, as well as in terms of theirimpact on DBJ’s ability to contribute to business formation

broader economic and social significance, constitute DBJ’s

and the financial structure. Our ability to provide solutions thatorganizational structural assets, as does the smooth and rapid

are appropriate for companies, as well as for the economy

communication process resulting from the common knowledge

and society in a broader sense, depends on the ability of ourthat has evolved through corporate financing training andhuman resources—executives and regular employees who areother channels.

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate DataIntellectual Asset Management

Advanced Initiatives Involving New Financial Methods that Utilize Intellectual Assets
We are a leader in leveraging our intellectual assets to intro-

period when the viability of their plans is being reviewed. To

duce new financial methods to Japan. Our pioneering efforts

meet this need, DBJ provides debtor-in-possession (DIP) financ-come from maximization of our intellectual assets, cooperation

ing as temporary working capital to enable such companies towith local communities and extensive cultivation of in-house

continue operating and maintain value in the best portions ofhuman resources and expertise. Operating within complex

their businesses. In addition, DBJ creates business revitalization

financial markets, DBJ will maintain these activities while con-funds to help companies normalize their operations throughtinuing to control and distribute risk as effectively as possible.

a process of operational selection and focus, and reduce their

The United Kingdom introduced the Private Finance Initiative

debt levels.

(PFI) scheme in 1992 to encourage private companies to fundIn recent years, we have become actively involved in mezza-or manage projects that are typically operated by the publicnine financing. (“Mezzanine” literally refers to the partial story

sector. As a leader in absorbing and accumulating such exper-

between two main stories of a building.) In the repaymenttise, DBJ has participated in numerous PFI projects in Japan. Byhierarchy, mezzanine financing is lower than the senior financ-shifting to the private sector the responsibility for constructing,ing* typically provided by financial institutions, so it is a higher

maintaining and operating public facilities, the country benefits

investment risk. In the United States and other markets with afrom private-sector management expertise and technical capa-

broad range of investors, mezzanine financing plays an impor-bilities. By appropriately allocating risks among the private andtant role in diversifying the types of funding that are provided.

public sectors, PFI is an efficient and effective way to provide

Mezzanine financing can be used in a number of situations,public services. With PFI, project financing is the method

such as business or capital restructuring. Taking a long-term

generally used to raise funds, as project roles are allocatedperspective, DBJ provides mezzanine financing as one of its

appropriately and long-term business is assured.

tailor-made financing solutions.

DBJ provides a full range of financing options in the areaof business revitalization. After filing applications according to
Civil Rehabilitation Law or Corporate Rehabilitation Law procedures, companies typically require working capital during the*Senior financing involves relatively low risk. In Japan, most corporatebond issues and funds provided by financial institutions are seniorfinancing.

Relationship between Intellectual Assets and CSR at DBJ
The figure contrasts intellectual assets as viewed by DBJ andDBJ’s role as seen by society. Evaluated in this sense, intellectual assets and CSR are two sides of the same coin.
For example, DBJ’s Environmental Rating System andDisaster Preparedness Program—fully mobilized through intellectual asset networks with central government agencies andregional government bodies, experts and clients; our humanresources comprising executives and regular employees; andour accumulation of experience and expertise—serve a vitaln Relationship between Intellectual Assets and CSRIntellectual Asset
Elements

CSR Elements

Related
Structural Assets
Networks andClient Base

Client Satisfaction
Maintaining
Service Quality
Fair Competition

Human
Resources
Management Teamand Employees

Human Resource Education
Labor Standards
Human Rights
Working Environment

Organizational
Structural Assets
Intellectual Assets andBusiness Processes

Legal and Regulatory
Conformance
Corporate Ethics

CSR role. At the same time, our loan systems provide a strong
backup to the CSR activities of our business partners.
Companies that access our loans based on the DBJ Environmental Rating System or the DBJ Disaster Preparedness Ratings
have cause to reconsider their conformance with various laws

Created by DBJ from Ministry of Economy, Trade and Industry materials

Annual Report & CSR Report 200927

Management Policy

and regulations, ensure safe and secure workplace working

By employing our intellectual assets in these ways, we go

and surrounding environments and provide quality products

beyond merely providing financing. We also play a role in pro-and services through fair competition. These activities reinforce

moting increasingly sophisticated corporate CSR management.

a company’s client base and raise corporate value by fulfillingsocial responsibilities.

The various financial services described beginning on page
29 leverage the intellectual assets DBJ has accumulated over
the years.

Financial Platform that Enables DBJ to Meet the Needs of
the Times
Defining “Financial Platform”
In DBJ’s definition, “financial platform” refers to the amount

not formed overnight. Creating the framework of systems

and quality of funds to which corporate and other clientsand laws that support corporate economic activity involves thehave access, the systematic formulation of bases that affectapplication of experienced and real-world expertise of financial

the diversity of fund-raising methods, financial expertise andinstitutions and businesses, as well as an accumulated body ofpractices, market transparency and the degree of market

results that can be used for future reference (transaction cases,

participation.

precedents and the like). Furthermore, as financial platforms

The more complete the financial platforms, which are indis-

function inadequately if they are used by only a minority ofpensable to financial system soundness and macroeconomic

participants, a catalyst is needed to encourage participation

vigor, the greater is their effectiveness at promoting the revi-from a broad range of players. Owing to our neutral position

talization of businesses and urban and local communities andand advanced-player status, we are perfectly suited to serve as

the creation of new industries. However, financial platforms,

the catalyst for developing and maintaining financial platforms

which are an institutional, general-access capital good, arein cooperation with other financial institutions.

Activities Involving Financial Platforms
DBJ promotes and helps develop financial platforms for

The “Financial Services” section beginning on page 29

structured financing, venture company support, businessprovides an overview on DBJ’s activities involving financial

restructuring support, financing related to environmental andplatforms.

disaster policies, M&A advisory services, safety nets and otherfunctions.

28

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Financial Services

Integrated Investment and Loan Services. . . . . 30
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Consulting/Advisory Services . . . . . . . . . . . . . . 38
Investment and Loan Business Practices(CSR through DBJ’s Core Business) . . . . . . . . . . 40
DBJ Environmental Ratings . . . . . . . . . . . . . . . 42
Emissions Credits . . . . . . . . . . . . . . . . . . . . . . . . 45
Sustainable Energy . . . . . . . . . . . . . . . . . . . . . . 46
Promoting the 3Rs (Reduce, Reuse, Recycle) . . 47
Corporate and Business Revitalization . . . . . . 48
Transportation Infrastructure . . . . . . . . . . . . . 49
Urban Development . . . . . . . . . . . . . . . . . . . . . 50
DBJ Disaster Preparedness Ratings. . . . . . . . . . 51
Private Finance Initiatives . . . . . . . . . . . . . . . . 52
Community Revitalization . . . . . . . . . . . . . . . . 53
Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
M&A and Business Alliances . . . . . . . . . . . . . . 56
Providing a Safety Net . . . . . . . . . . . . . . . . . . . . 57
Making Use of Information Functions . . . . . . . 58

Annual Report & CSR Report 200929

Financial Services

Integrated Investment and Loan Services

DBJ provides seamlessly integrated investment and loan services. We assist clients with their financing needsby taking a position of neutrality and a long-term perspective that extends over all their activities, and by
employing leading-edge financial methods.
n We offer integrated investment and loan solutions that range from senior loans to mezzanine and equity financing.
n DBJ also provides a host of services (e.g., M&A advisory and CSR support services) that help raise corporate value.
n In collaboration with its Group companies, DBJ provides finely tuned services to meet individual clients’ needs.

Loans
Provision of medium- and long-term financing, as well as project financing
and other forms of structured subordinated financing
Medium- to
Long-Term Loans

Syndicated Loans

Debtor-in-Possession
Financing

Asset-Based Lending

Mezzanine Financing

Private Bond
Placements, Others

Project Financing/
Structured Financing

Asset Financing(Real Estate)

Hybrid Financing

Investment
Provision of mezzanine and equity financing

EquityLBOs/MBOs

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

30

Annual Report & CSR Report 2009

Practical Application
Support Center
for Technology

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Integrated Investment and Loan Services

n Loan Amounts Provided (Non-consolidated)

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

(Billions of yen)
2,000

Reference
1,670.3

1,500
1,278.0z Provide medium- and long-term loansz Offer unique high-value-added financial services (environmentally and socially responsible investment, disaster

1,000
639.3
500

countermeasures and safety measures and rating-linked
financing for technology commercialization)z Respond to diverse needs by offering nonrecourse loans
and develop and provide financing offering collateral andstructural flexibility (debtor-in-possession financing, inventory collateral, intellectual property rights as collateral, etc.)

Investment
DBJ provides investment funding, based ona long-term perspective, to meet specific needs

0Year ended
March 31, 2008

Six-month period ended
September 30, 2008

Six-month period ended
March 31, 2009

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

n Investment Amount Provided (Non-consolidated)(Billions of yen)
160.0

Reference

138.0
120.0

and address a host of issues that clients face.
80.0
63.1

z We provide investment to assist businesses in terms of
their revitalization, restructuring, growth strategies, inter-

40.0
22.3

national competitiveness and infrastructure operations.
We provide such funding through mezzanine financing,

0Year ended
March 31, 2008

as well as through equity and other funding.

Six-month period ended
September 30, 2008

Six-month period ended
March 31, 2009

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

Consulting/Advisory Services

n M&A Advisory and Consulting Agreements (Cumulative)(Agreements)

Through our advisory support services,
we help clients become more competitive andReference

200

186
159

150
129

invigorate regional economies.
100z Provide M&A advisory services
z Make proposals that apply our expertise in industry
research and ability to develop new financial technologies

50z Arrange structured and other types of financing

0
As of March 31,
2007

As of March 31,
2008

As of March 31,
2009

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

Annual Report & CSR Report 200931

Financial Services

Loans

DBJ provides medium- and long-term loans, answering a range of funding requirements. In addition to seniorfinancing through traditional corporate loans, we offer project financing, nonrecourse loans and other types ofstructured financing, as well as a variety of other loans that employ advanced financial methods.

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

When extending loans, we consider taking advantage ofWhen providing funds, DBJ first looks at the profitability

other interest subsidy systems offered by national and regional
government bodies.

of the business that requires funding, and then proposes a
medium- to long-term repayment plan. As part of our effort tomeet varied needs, a deferment period may be implemented.

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

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

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

Syndicated Loans
This type of loan involves multiple lead-managing financial

in the transaction to be increased, and clarity of borrowing

institutions (arrangers) that are combined into a syndicate. The

terms is ensured.

agreement with the client is based on a single contractual

As part of its services, DBJ actively structures loans, center-document, and financing is provided cooperatively according to

ing on term loans. DBJ invites a wide range of financial insti-

a single set of terms.

tutions to participate, making use of its neutral standpoint.

Having a single arranger in the point negotiating posi-

Structuring loans to include some items from its own lendingtion reduces the administrative burden. Conducting settle-

menu, such as DBJ financing based on environmental respon-

ment operations through an agent reduces the administrative

sibility ratings, helps raise the value-added level of services itburden. Large amounts can be raised expeditiously. Appointing

provides.

an arranger allows the number of financial institutions involved

Annual Report & CSR Report 2009

Arrangers

Financial Financial
Institutions Institutions
Financial Financial
Institutions Institutions

Market32

Arrangement

Appointment

Clients

Financial Financial
Institutions Institutions

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Loans

Asset-Based Lending
Asset-based lending (ABL) is a method of financing that uses as

As a frontrunner in corporate revitalization financing, DBJ

collateral a company’s liquid assets, such as aggregate movablehas gained abundant experience in the area of developing ABL

property, inventory collateral and receivables.

schemes to support companies, while at the same time secur-

As financing methods become more diverse, expeditious

ing their debt. Going forward, we plan to apply this expertisefund-raising, debt restructuring and the sale of surplus invento-

to develop ABL schemes that provide companies with growthries also enhance the robustness of internal control systems.

capital.

ABL

ClientCollateral Transfer

Inventory(Buyer)Third-Party
Borrower

Sale

DBJ

Accounts Receivable

Liquidate Inventory
Sell inventories, primarily throughexisting wholesale routes

Collateral Transfer
PledgeCash and Equivalents

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

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

Later-stage DIP financing provides the funding that is needed

the Japanese financial system in the late 1990s. Against this back-to implement restructuring plans. By providing medium- to

drop, DBJ has developed a host of tools to help underperforming

long-term financing to fund capital investment under different

companies sustain or develop profitable areas of operation.

conditions than those for revitalization plans that are being imple-

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

mented, an organization that is under rehabilitation can refinancepossession (DIP) financing. This temporary financing method

its debt, providing exit financing more quickly than is possible via

provides working capital that allows a company in bankruptcy

the legal liquidation process.

to continue operations during the period between a request forIn 2001, DBJ provided the first DIP financing in Japan. Since

the application the Civil Rehabilitation Law and the approval ofthat time, DBJ has worked to broaden the range of entities eligible

rehabilitation plans, thereby sustaining the valuable parts of its

for this financing and the methods of employing it in response tooperations.

varied needs.
Bankruptcy( priority obligation)
Common debts

Capital requirements

Bankruptcy( priority obligation)

Restructured
assetsWorking
capitalFunding forequipment andother items

Exitfinancing

DIP financing
Proceduralapplication

Decision to start

Early-stage

Approval of plan

Conclusion of plan

Later-stage

Annual Report & CSR Report 200933

Financial Services

Project Financing/Structured Financing
In 1998, DBJ pioneered project financing in Japan. From these

Securitization

beginnings, our accumulated expertise in this area, centering

Securitization allows companies to convert their rights to mon-on energy and infrastructure projects, has propelled us to ouretary interests into salable form. Securitized monetary claims,

current position as one of Japan’s leaders in project financing.

which are backed by the revenues and cash flows that are

Applying our accumulated expertise, we act as a financial

generated by the underlying claims, can be used to generateadvisor, providing clients with support and advice. We act asfunding through financial liquiditization. A method known

a lead arranger in putting together project financing packages,

as whole business securitization enables certain businesses tooffer senior and mezzanine loans and participate in projects

securitize their entire operations, backed by future cash flows.

through equity investment, meeting clients’ needs andThis method can be employed to restructure a client’s balance

addressing the various issues they face in a host of ways.

sheet and procure financing under favorable conditions. DBJ
uses various methods, including nonrecourse loans, to help

Project Financing

clients raise funds.

We have a wealth of expertise in helping companies in theenergy and infrastructure sectors find project financing that

Private Finance Initiative (PFI)

they can repay through operating revenues and working cash

Since the creation of the Private Finance Initiative (PFI)* inflow, without relying on specific corporate creditworthiness or

1999, DBJ has accumulated PFI expertise to the point where it

collateral value.

is now an industry leader in PFI. Taking advantage of this store
of knowledge, as well as strong relations with public-sector

Object Financing

entities, DBJ supports the efforts of clients who are considering

DBJ helps clients raise funds that take advantage of the reve-PFIs.

nue-generating characteristics of assets with special character* Law concerning Facilitation of the Improvement, Etc. of Public Facilities,
Etc. by Private Fund, Etc.

istics, such as ships and airplanes.

 Project Financing Example: Electric Power Generation ProjectSponsor A

FundingSponsor B
Banking Syndicate

Electric Power
Generation Company

Electric power supply
contract (15 years)

Power Plant G

Special-Purpose
Company (SPC)
Financing

Trading Company F
Fuel (coal, gas)
supply contract

Construction contract

Plant COperational repair and maintenance contract

Factory E

Plant D
Plant delivery contract

34

Annual Report & CSR Report 2009

Technical guidance contract

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Loans

Private Bond Placement
DBJ provides ways for clients to diversify their funding

Private bond placements involve selling bonds directly to asmall number of qualified investors instead of to a large groupsources and methods. By underwriting and guaranteeing pri-of general investors through a public offering involving a secu-

vate bond placements, DBJ helps clients raise funds directly

rities company.

(direct financing) and indirectly in the marketplace.
Corporate Bond
Issue

Clients

DBJ

Underwriting

Institutional Investors

Guarantee

DBJ

Asset Financing (Real Estate)
DBJ’s involvement in the long-term financing of real estatecontinue striving to invigorate this market. Our track record,

operations began in the 1960s. We have participated in Japan’s

expertise and networks in this arena enable us to provide non-real estate securitization market from its early beginnings andrecourse loans and a host of other solutions.

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

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

DBJ’s Distinguishing Features in Asset Financing• Has extensive arrangement expertise on numerous projects, as well as a strong performance record in investment and loans• Retains a network of leading investors and financial institutions in Japan and overseas to help realize projects and arrange financing• Creates project-tailored solutions to meet clients’ needs, such as providing senior, mezzanine and equity financing• Maintains a neutral standpoint, enabling projects to progress smoothly by appropriately diversifying risk and helping involved parties
realize profits

Annual Report & CSR Report 200935

Financial Services

Investment

We provide investment funding to meet specific needs, based on a long-term perspective, to resolve the myriad issues
that clients face. For example, DBJ provides investment to help clients expand their operational bases, meet long-term
growth strategies and shore up their financial bases. We offer funding support, mezzanine financing and financingthat employs equity and other methods.

EquityIn an environment characterized by growing needs for theAfter making equity investments, DBJ provides total solutions

operational selection and focus of group businesses, theinvolving its networks and strengths in information, research,

formulation of growth strategies and heightened corporate

and financing technologies, helping clients maximize theirgovernance demands, equity has become more important thanlong-term corporate value. DBJ shares the benefits of clients’

ever before.

growth, while at the same time helping them achieve future

Through equity investment, DBJ helps clients address theprosperity.

issues they face and promotes their long-term development.

Client Needs

DBJ’s Solutions

Results• Growing needs for
operational selection
and focus• Formulation of growthstrategies for globalization• Growth strategies making
use of the capital markets(mergers and acquisitions,
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, research, andfinancing technologies• Resolve clients’ issues• Help clients grow over thelong term and maximize
corporate value

LBOs/MBOs
An LBO is a method of acquiring a company or business using

take the form of an LBO. In the event that borrowed funds

borrowed money. If the business or company that is beingalone are insufficient, the management team may offer equity

acquired generates fixed cash flows, the acquirer (typically,

to a collaborative sponsor, such as a buyout fund or partner.

the sponsor providing equity) can purchase the business orcompany for relatively little cash. For this reason, the borrowed
funds are considered the “lever” that multiplies the return onsion of owner-operated companies.

the purchaser’s funds, which are constrained.

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

Management buyouts (MBOs) involve the acquisition bydetails, arranges investment and mezzanine financing, andexisting corporate management of a company’s shares or oper-

works out joint equity financing with sponsors. The ability toations. As the existing management team typically has a limited

handle this range of activities allows DBJ to offer

amount of cash available, MBOs generally require that funds

LBO/MBO solutions.

be raised to acquire an operation. For this reason, an MBO may

36

In recent years, this method has been used more frequently
by listed companies that are delisting and to enable the succes-

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Investment

Mezzanine Financing
Mezzanine financing is a method that typically involves

and business units, business succession, and by listed com-a greater degree of investment risk than the senior loans

panies that are delisting.
Mezzanine financing has the benefit of providing funding

employed by financial institutions.
Mezzanine financing is lower in the repayment hierarchy,

that may be difficult to obtain through senior loans. Such financ-so risk is higher than for senior loans. In markets such as theing also prevents dilution of the voting rights of existing share-

United States, which have a broad range of investors, mezza-

holders. Redemption schedules can be set to be rigid or flexible.

nine financing plays an important role in diversifying the types

From a long-term perspective, DBJ helps clients resolveof funding that are provided. As mezzanine financing is riskier

problems with their balance sheets through total solutions thatthan senior financing, it bears a correspondingly higher interest

range from the arrangement of financing to the provision ofpremium, making it an economically rational choice of invest-

funding.

ment funds.
Types of mezzanine financing

Depending on financing plans and capital policies, flexible
mezzanine financing can be introduced and set to have diverse• Subordinated loans, subordinate corporate bonds

characteristics corresponding to both equity and debt. In• Preferred shares, classified shares

recent years, demand for this type of financing has grown in• Hybrid securities, hybrid loans, etc.

association with business acquisitions, spinoffs of subsidiaries

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

After capital expansion

Preferred shares

CapitalProvide supplementary financing toovercome a shortfall between thepurchase price and the amount available
through equity funding and loans.

Objective

AssetsConventional restructuring methods
involve posting extraordinary losses,
which is problematic for companies
that are undercapitalized. This issue
was resolved by raising capital throughthe issuance of preferred stock.

Objective

AssetsObjective

Debt

Debt

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

Capital

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

Recipient company
Debt(LBO loan)

Debt

CapitalTargetbusiness

Acquisition of
non-core business(MBO)

Mezzanine
Capital

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

New company (recipient)

AssetsCapitalDebt

Business succession
Note: Successor acquires
common stock

AssetsPreferred shares

CapitalAnnual Report & CSR Report 200937

Financial Services

Consulting/Advisory Services

We offer consulting and advisory services and make use of networks with allied financial institutions. Through ourconsulting and advisory support services, we help clients become more competitive and contribute to the vigor ofregional 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 research andenvironmental and technical evaluations. We apply this accumulated expertise to help clients resolve the issues
they face.

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

growing interest in M&A activities in Japan and overseas, DBJ

is growing more prevalent, both for businesses restructuringprovides advisory services through its own networks. We offer

operationally and for industry restructuring overall. Mergers

comprehensive M&A solutions that match clients’ varied needs

and acquisitions can be a method for achieving better employ-and management strategies.

ment stability and a stronger competitive position. Amid
Strategic Consulting• Cohesive Domestic and Overseas Information Network• Comprehensive Business Strategies

DBJ maintains close relationships with regional financial

We create operating and management strategies that draw on

institutions, which have excellent insight into the companies

the knowledge we have cultivated through many years of pro-that operate in their regions, as well as with Japanese andviding investment, loan and project support from a medium- to

overseas financial institutions and accounting and legal firms.

long-term perspective.

Such relationships enable us to build information networks• Information on a Wide Range of Business Partners

to accumulate accurate information. We have created a

DBJ is involved in business entities in a broad range ofbanking M&A network that links information on 80 financial

industries, and its business partners in Japan number more

institutions (regional banks and trust banks) with information

than 3,500. Since 1984, we have provided loans for morethan 700 foreign-capitalized companies, enabling us toon corporate M&A activities.
• M&A Activities

also provide a wide variety of information on overseas

DBJ provides fundamental advisory services at every stage of acompanies as well.

merger or acquisition, from planning through to implementation.

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

Data gathering

38

Execution

Buy Side

Buy Side

Select and analyze
acquisition
candidateConnect withpotential acquirer

Analyze finances and computeinvestment yield

Sell Side

Sell Side

Select andanalyze potential
acquirer

Connect withacquisition
candidate

Annual Report & CSR Report 2009

Calculate purchase/sale priceMove toward specific contract
Due diligence
Consultation on finances andaccounting

Negotiatepurchase
contract andpreparedocumentation

CLOSING

Performance
analysis

Match-Making

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Consulting/Advisory Services

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, and then make an
independent diagnosis of the region’s health. We discuss our
findings (issues and possibilities) with the region’s constituents,
including those that we have uncovered through our interaction
with members of their community.

n Performance to DatelFiscal 2008
lFiscal 2005
lFiscal 2009
lFiscal 2006
21. Kurayoshi
lFiscal 2007
3. Nakaumi-Shinjiko Economic (Tottori Prefecture)
Zone (Tottori Prefecture,
Shimane Prefecture)
13. Tottori
18. Maniwa(Okayama Prefecture)

4. Hakodate
22. Goshogawara(Aomori Prefecture)
16. Sanjo(Niigata Prefecture)

8. Toyama

15. Soja(Okayama Prefecture)
11. Fuchu(Hiroshima Prefecture)

20. Suwa Region(Nagano Prefecture)
1. Choshi (Chiba Prefecture)
10. Tajimi (Gifu Prefecture)

19. Tosu (Saga Prefecture)

Mutual awareness of regional issues and possibilities provides
an opportunity for taking action, such as by formulating a project.

6. Seto (Aichi Prefecture)
23. Oita

12. Mizuho (Gifu Prefecture)

2. Kagoshima

7. Toyohashi (Aichi Prefecture)

9. Uwajima (Ehime Prefecture)
17. Kurashiki(Okayama Prefecture)

5. Shirahama (Wakayama Prefecture)
14. Wakayama

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

In addition to evaluating companies’ abilities to manage tech-Technology in February 2004 to help medium-sized companies

nologies and products, we support the development of appropri-

realize their potential for the commercialization of successfully

ate long-term strategies based on objective information obtained

developed technologies. The role of this center is to diagnose

via our extensive networks.

whether companies have the management strength (technology

We provide additional evaluations based on our expertise inmanagement expertise) to turn their technologies into products.

operational screening, and through consultation on financial strate-

We also provide mentoring, business planning and other advice

gies help clients consider optimal long-term strategies.

and technology management training, and support medium-sized

From the perspective of providing neutral and specialized busi-

manufacturing companies in the development of new value. DBJ

ness plans, we aim to be a partner that client management canworks with regional financial institutions, local government bodies,consult on any topic related to manufacturing management. By

universities, economic organizations and industrial support bod-

providing integrated expertise in this way, we help clients raise

ies to aggressively promote the expertise offered by the Practical

their corporate value and contribute to the development of the

Application Support Center for Technology, helping to raise

Japanese manufacturing industry.

regional industrial competitiveness.
Changes in the Operating Environment for Manufacturers
Past
The backgroundof the times

Period of rapid
economic growth
Mass production

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

Manufacturers’ main
points of emphasis

How can we
make products?

What should we make?

Technology,
production,equipment

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

Importantmanagement
elements

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

Manufacturing Companies

DBJ Practical Application Support Center for Technology

Need to enhance technology management skills

Formulate business strategies and help train anddevelop managerial level human resources

Achieve increases in corporate value
Annual Report & CSR Report 200939

Financial Services

Investment and Loan Business Practices(CSR through DBJ’s Core Business)
DBJ promotes CSR through its core business to solve social problems. Specifically, DBJ draws on its broadclient base and knowledge of industry to develop sophisticated financial services in two of its strongest areas:
environment and technology, and social infrastructure.

Projects to Serve the Needs of Each Client Base

Environment and Technology
Social Infrastructure

CSR through DBJ’ s Core Business
40

Materials andAssembly• Resource- and energy-saving initiatives• Restructuring of businesses and industries on
a global scale

Energy andNaturalResources• Renewable energy (power generation at home andabroad)• Carbon funds, CDMs
• Precious metals and other natural resources

Transportation• Improvement and redevelopment of railroad
environs• Financing for airport-related business and airplanematerials• Shipping financing

Urban andRegional
Development• High-quality infrastructure building through urban
development• Asset mobilization• Business restructuring and succession throughalliances with local financial institutions

Everyday
Necessities• Development of commercial and distribution
infrastructure• Upgrading and restructuring of telecommunicationsindustry• Health and social welfare measures

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Investment and Loan Business Practices

Case Studies

DBJ Environmental Ratings

Environmental Club Syndicated Loan Eco-no-Wa
Financing Employing Environmental Ratings
Kansai CSR Financing

Emissions Credits

Developing a Greenhouse Gas Emissions Credit Transfer Scheme

Sustainable Energy

Financing Wind Power Generation Business with a Private Bond Placement

Promoting the 3Rs(Reduce, Reuse, Recycle)

Mezzanine Financing of Recycled Product Manufacturer
Financing Promotion of the Effective Use of Resources with Interest
Subsidies

Corporate and Business
Revitalization

Preferred Stock Issue for Regional Corporations Conducting
Business Assistance Activities

Transportation Infrastructure

Syndicated Loan for New Rapid Railway
Development Project

Urban Development

Hybrid Financing for Urban Redevelopment Project

DBJ Disaster Preparedness Ratings Financing Employing Disaster Preparedness Ratings
Private Finance Initiatives

Project Financing of PFI Projects

Community Revitalization

Financing Businesses Targeted in Regional Revitalization Plans

Healthcare

Investing in Business Revitalization and Restructuring Funds for
Healthcare Providers
Nonrecourse Loan for Private Placement Real Estate Fund
Project Financing for Hospital SPCs

M&A and Business Alliances

M&A Advisory Service for
the Acquisition of Overseas Companies

Annual Report & CSR Report 200941

Financial Services

DBJ Environmental Ratings
The environment is a matter of global concern, and corporations are responsible for conducting business inan environmentally responsible manner. Financial institutions are no exception, being tasked with themission of contributing to a sustainable economy in an environmentally responsible manner.

DBJ Initiatives
Beginning with the antipollution measures implemented inpast five years. Compared to the previous year, financing in thethe late 1960s and early 1970s, DBJ has provided more thanyear ended March 31, 2009, increased 70% and was ¥200 bil-

¥3 trillion in investments and loans for environmental measureslion more than the amount in the year ended March 31, 2006.

over the past 40 years.

In the year ended March 31, 2009, DBJ furnished syndi-

In the year ended March 31, 2006, DBJ began employing

cated loans to Sumitomo Metal Industries, Ltd., Nankai Electric

environmental ratings in its financing based on knowledge

Railway Co., Ltd., Kirin Holdings Company, Limited, and Sekisui

cultivated for over five decades. DBJ developed a screening

Chemical Co., Ltd. The number of collaborative financing(rating) system that scores companies on the level of theirprojects with other banking institutions, including syndicatedenvironmental management and then applies one of threeloans, grew significantly in the Kansai region, more than dou-

different interest rates reflecting that effort. This was thebling from four projects in the previous fiscal year to a total

world’s first incorporation of environmental ratings in financ-of nine projects in the year under review, with the amount ofing menus. In the year ended March 31, 2009, we launched ancollaborative banking institution financing increasing sixfold tointerest rate subsidy system1 based on environmental ratings

approximately ¥37 billion.

to advance global warming countermeasures. In recognition

In October 2008, banking institutions also selected theof these efforts, DBJ received an Outstanding Development

Financing for Tokyo Small and Medium Enterprises that

Project Award2 in the Environmental Development category

Support Environmental Initiatives system. This system aims tofrom the Manila-based Association of Development Financing

accelerate environmental initiatives by providing low-interest

Institutions in Asia and the Pacificfinancing to small and medium-sized enterprises with business(ADFIAP) at its annual meeting in

offices in Tokyo. DBJ employed its proprietary screening system

April 2009.

for small and medium-sized enterprises to determine the envi-

The graph below shows theronmental rating of companies including Bespack Inc. andamount of financing employing

Trillion Co., Ltd.

DBJ Environmental Ratings for the
ADFIAP Awards Ceremonyn Financing Employing DBJ Environmental Ratings(Billions of yen)

Reference

80
60.3

60

40

40.3

44.7
36.5

Under the Ministry of Environment’s interest rate subsidy system, companies that acquire a DBJ environmental rating and pledge to reduce
per unit CO2 emission volumes by more than 5% within five years
receive a 1% reduction on loan interest rates in an effort to provide
capital as a means of addressing global warming issues.
*2 Awarded to Asian-Pacific development finance organizations that haveattained excellence in the objectives of offering highly superior andenlightened deals and sharing financing techniques and technology in
the Asia-Pacific region.
*1

35.8

20

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

42

Annual Report & CSR Report 2009

DBJ environmental logo

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Investment and Loan Business Practices

n Outline of Financing Employing DBJ Environmental Ratings

Financing

Application

Environmental screening

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

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

Investment and Loan Case Study: Kirin Holdings Company, Limited, Environmental Club Syndicated Loan Eco-no-Wa
Kirin Holdings Company, Limited (head office: Chuo-ku,
Tokyo) is the holding company for the Kirin Group, the largest
domestic maker of alcoholic beverages centered on Kirin Beer.

n Effluent Treatment Facility Flowchart
Electricity

In addition to significantly reducing CO2 emissions throughmeasures such as the installation of photovoltaic devices, theSteamtreatment of anaerobic effluent using biogas and boiler fuelconversion, the Kirin Group completely recycles byproducts andwaste at its beer breweries and is engaged in the practice of

Effluent
from plant

BiogasCogeneration

high-level global warming prevention and recycling measures.
DBJ gave Kirin Holdings its highest rating, with special
acknowledgement as a model corporation, furnishing themwith an Eco-no-Wa* environmental club syndicated loan for¥20 billion with the participation of 11 regional financial institutions. Eco-no-Wa is a syndicated loan furnished by financial
institutions with a high environmental awareness whose funds

Anaerobic
treatment
deviceTreated water
Aerobic
treatment
equipment

Final effluent

are used solely for the purpose of environmental investments
and expenses. Financing was provided primarily by regional
financial institutions whose operating bases are the areas
where Kirin Group plants are located to promote eco-friendly
activities in regional areas.
* Eco-no-Wa is an environmental club-type syndicated loan whose nameis currently under application for trademark registration. The name isderived from the English word “ecology” and the Japanese word “wa,”which connotes harmony, cycles and rings.
Photovoltaic generation panels at
Kirin Beer Park Fukuoka

Annual Report & CSR Report 200943

Financial Services

Investment and Loan Case Study: Saraya Co., Ltd., Financing Employing Environmental Ratings
Osaka-based Saraya created Yashinomi, a natural, 99% biode-In recognition of these efforts, DBJ gave Saraya its highest

gradable dish soap in 1971 and is aggressively engaged in therating, and provided financing that reflected this environmental

development and sales of products that improve sanitation, therating.

environment and health. Saraya’s strength is its cooperation
with environmental groups and other stakeholders to proactively procure raw materials that contribute to biodiversity,
including the sustainable procurement of palm oil, the main
ingredient in soaps and detergents.
Saraya established the Borneo Conservation Trust, and forthe past few years the company has donated some of theproceeds from the products it sells to support conservation in
Borneo. Deepening its commitment to the environment, in May

Yashinomi dish soap

2008 Saraya signed the Business and Biodiversity Leadership
Initiative endorsed by the U.N. Biodiversity Treaty.

Topics: Kansai CSR Financing
In 2007, DBJ’s Kansai Branch created CSR Financing, aand consideration for employees, and provides a preferential

unique regional financing system to support the environ-

low fixed interest rate to companies recognized as leaders ofmental contribution, disaster prevention and welfare initia-

these initiatives.

tives conducted by companies with headquarters located inCompanies engaged in these initiatives are evaluated not

Osaka. This system evaluates the CSR initiatives of companies

only on their activities, but from the perspective of the poten-with headquarters in Osaka in terms of social contribution

tial tangible and intangible impacts of those initiatives on theactivities, compliance efforts, transparency, safety, quality

creation and development of regional communities.

Investment and Loan Case Study: Mitsuboshi Belting Ltd., Kansai CSR Financing
Established in 1919, Mitsuboshi Belting (Kobe, Hyogo Prefecture)(3) Disaster prevention practices were conducted by Mitsuboshi

makes power transmission belts used primarily in automobiles

employees in collaboration with local residents, andand office automation equipment. In addition to initiatives

extension of the actual firefighting activities Mitsuboshi

reducing environmental burdens, Mitsuboshi Belting is pro-

employees engaged in after the Great Hanshin-Awaji

actively involved in regional contribution activities and highly

Earthquake to stop the spread of fire in the city.

regarded for its efforts as applied to Kansai CSR Financing.
(1) Mitsuboshi employees have created over 80 ponds since1996 at Kobe schools and public facilities to heal children
who were victims of the Great Hanshin-Awaji Earthquake inaccordance with its corporate philosophy of giving attentive
consideration to both humanity and nature.
(2) Mitsuboshi employees volunteered their time and efforts
via a volunteer holiday system the company established toencourage employees to get involved and create the ponds.

44

Annual Report & CSR Report 2009

Environmentally friendly rubber
timing belts that are halogen
substance-free
Supporting the creation of ponds at
schools and public facilities

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Investment and Loan Business Practices

Emissions Credits
Some predict that climate change caused by global warming will significantly impact the environment in such areas as
ecology, agriculture, human health and social order. International initiatives are thus underway to devise
international frameworks to reduce greenhouse gases. The Kyoto Protocol, adopted in December 1997, set a target forJapan to reduce its greenhouse gases by an average of 6% compared with 1990 levels by 2012. Japan’s greenhouse gas
emissions in the year ended March 31, 2008, however, actually exceeded the 1990 baseline by some 9.0%. Excluding
the effects of the Japanese government’s purchase of emissions credits and the measures to offset emissions throughafforestation, Japan must reduce greenhouse gas emissions by an annual average of approximately 2.3%.
Industry accounts for one-third of Japan’s total carbon dioxide emissions. Tireless efforts during the year managed
to move this level down around 9.6% against the baseline for the year ended March 31, 2007. However, as Japaneseindustry is already among the world’s most energy-efficient, there is little room to reduce emissions further.
The Kyoto Mechanisms, as Defined by the Kyoto Protocol
The Kyoto mechanisms—the clean development mechanism

developed countries to meet their goals, while contributing(CDM) and joint implementation (JI)—are supplementary

to sustained growth by developing countries. For all of its

means by which countries can meet their targets under theadvantages in meeting greenhouse gas emissions, the CDM/

Kyoto Protocol. The core CDM/JI mechanisms allow devel-

JI business is still new, and all of the uncertainties about theoped nations to use technology support or loans to reduce

potential risks of doing business in the developing world

greenhouse gas emissions and count the amount of such

(e.g., sovereign risk and construction risk) are likely to apply.

reductions as credits toward meeting their reduction goals.

Hence, individual corporations are still uneasy about engaging

Given the circumstances mentioned above, the Kyoto mecha-

in such operations on their own.

nisms are increasingly seen as highly cost-effective means for
DBJ Initiatives
With reductions in greenhouse gas emissions a matter of

Gas Reduction Fund (JGRF) and Japan Carbon Finance, Ltd.

paramount concern for Japanese corporations, DBJ has put(JCF). The fund framework identifies the most efficient projects

forth two possible structures for obtaining large quantities ofand distributes risk by investing in dozens of projects at a time.

adequate and reliable emissions credits: the Japan Greenhouse
Investment and Loan Case Study: JGRF and JCF Develop Greenhouse Gas Emissions Credit Transfer Scheme
In the more than four years since their inauguration in lateextensive portfolio in China, India and elsewhere in Asia, Latin

2004 as a collaboration between the public and private sectors,

America and Africa, where they continue to regularly purchase

JGRF and JCF have leveraged to the fullest DBJ’s knowledge

emissions credits, manage projects and conduct monitoring. In

and experience of fund operations, as well as its knowledge

August 2007, JGRF acquired its first emissions credits on theand experience of private-sector businesses in reducing green-order of 100,000 tons through the Antonio Moran wind powerhouse gases. To date, these organizations have assembled angeneration project in Argentina.

n Emissions Credit Transfer Scheme
Developing
Nations
Implement Project for
Dealing with Global
Warming

Estimated
Emissionsif Project
Is NotCarriedOut

Japan
Transferred to
Developing
Nations in Form ofEmissions Credits

Amountof Reductions

Emissions

Total
Emissions
Frameworkfor Investor
Project Assistance:
Nations

JGRF/JCF

Amount ofEmissionsCredits
Purchased+
Emissions
Reductions
within Japan
ProperEmissionsTargets
Achieved

Antonio Moran Wind
Power Plant Project inArgentina

Hydro Power Project Kanfeng in China

Annual Report & CSR Report 200945

Financial Services

Sustainable Energy
International interest in wind power as a sustainable alternative to carbon-based generation is mounting
amid ongoing concerns about global warming. However, Japan has lagged Europe and the United States inaggressively developing wind power generation, ranking only 13th in the world in terms of domestic
generation capacity (1,530,000 kW as of December 31, 2007). A steady stream of funding is needed toaccelerate wind power generation initiatives, help developers accumulate technical expertise and meet theneeds of projects of different scales and at varying stages of development.
DBJ Initiatives
In 1999, DBJ became the first entity in Japan to create a project
financing scheme for extending funds for a wind power generation plant. Active in financing wind power generation facilities since that time, we now provide financing for some 38.6%

 Loans Provided by DBJ for Wind-Power Generation Plants(Projects Completed as of March 31, 2008)

Wind Power Generation Capacity in Japan
by Region, as of March 31, 2008
(Source: National Economic
DevelopmentpOffice))(as of March 31, 2008) of Japan’s wind power generation, in
terms of generation output.
The pie chart to the right indicates Japan’s total wind power
generation capacity. The figure above the map of Japan shows
how many wind power generation facilities are financed by
DBJ.

Chugoku/
Shikoku/
KyushuHokkaido/Tohoku(342,000 kW)

Hokkaido/

Generation
26%
Tohokucapacity as of
47%
March 31, 2008:
1,530,000
kW
Chubu/

Kansai 9%18%
Kanto/
Koshinetsu
Kanto/Koshinetsu(25,000 kW)

Chugoku/Shikoku/
Kyushu(165,000 kW)

Chubu/Kansai(62,000 kW)

Investment and Loan Case Study: Japan Wind Development Generation Facility Financed with a Private Bond Placement
Japan Wind Development, with its headquarters in Minato-ku,

plants to be situated in locations off the electricity grid, such

Tokyo, is an active developer of wind power generation facili-

as remote islands and other outlying areas. These advantages

ties, primarily in Japan. Drawing on this expertise, the company

increase the autonomy of such regions, as well as help toconstructed a wind power generation plant using a system of

ensure stable sources of renewable energy. DBJ conducted asodium-sulfur (NaS) storage batteries to store electricity—the

private bond placement to provide long-term, stable funding

world’s first such system. In addition to being a safe way tofor this project.

store electricity, this system allows wind power generation

Battery storage system for wind power generation plant

46

Annual Report & CSR Report 2009

Wind farmOverview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Investment and Loan Business Practices

Promoting the 3Rs (Reduce, Reuse, Recycle)
Since the oil shocks of the 1970s, Japanese corporations have promoted the development of energy-saving
products. At present, Japan leads the world in energy-saving technology, but there is still much to be done.
The promotion of the 3Rs (Reduce, Reuse, Recycle) is necessary to further the formation of a sustainable
resource-saving society.

DBJ Initiatives
Dating back to the time of our predecessor, beginning withcreation (reduce), the improvement of facilities necessary towaste treatment and recycling facilities using new technolo-

perform processes appropriate for the collection and reuse ofgies, DBJ has supported projects aimed at increasing theused products (reuse) and the improvement of facilities neces-resource efficiency of product manufacturing and usage andsary to collect used products to reuse as raw materials (recycle)

the improvement of facilities linked to the suppression of waste

through medium- and long-term financing.

Investment and Loan Case Study: Mezzanine Financing of Recycled Product Manufacturer Eco Research Institute Ltd.
Eco Research Institute Ltd. (Head office: Shibuya-ku, Tokyo)

equity financing needs, requiring comparatively large-scaleutilizes proprietary technology to recycle industrial waste paper

financing with a margin of surplus capital in the start-up phase.

to create paper powder pellets as plastic alternatives, buffer-

In response to the additional capital investment required toing materials for product packaging, heat-insulating materials

increase MAPKA production capacity, DBJ provided mezzanineand foam food trays as well as products for daily use including

financing via preferred

combs and chopsticks.

stock issuance to

One of ERI’s main products is MAPKA. MAPKA is a plastic

enable ERI to increase

alternative created from the combination of resin and paper

the stability of its

powder made from recycled paper with the same properties asfinancial structure

plastic, a highly generic and eco-friendly alternative to existingand strengthen its

plastic and paper products.

fund procurement

While demonstrating a potential for high growth, ERI had

capability.
Products made from MAPKA

Investment and Loan Case Study: Kashima Senko Co., Ltd., Financing Promotion of the Effective Use of Resources with
Interest Subsidies
Kashima Senko, headquartered in Kashima, Ibaraki Prefecture,

Ministry of Economy,

and a wholly owned subsidiary of Konoike Transport, locatedTrade and Industry

in the Kashima Steel Works of Sumitomo Metal Industries,

2008 initiative Financing

Ltd., recycles steel dust as well as the waste of steel- and zinc-

Promotion of the Effec-

smelting processes. At its sole plant, Metal Circle Kashima,

tive Use of Resources

where high-quality iron and zinc ore products with no impu-

with Interest Subsidies.*

rities are manufactured, Kashima Senko has established aperfect recycling system through strict materials selection andexpertise cultivated over its long history—that is, it completely
eliminates secondary waste, thus mitigating the company’senvironmental burden.
DBJ provided ¥2.4 billion in financing to Kashima Senko’s
investment in increasing plant capabilities. This was the first

Recycling plant*Financing Promotion of the Effective Use of Resources with Interest
Subsidies aims to contribute to the health and development of theJapanese economy by promoting the rationalization and appropriate useof resources and energy by providing interest subsidies on the financing
provided by financial institutions for capital expenditure promoting theeffective use of resources.

project by a steel dust recycler to be authorized under the

Annual Report & CSR Report 200947

Financial Services

Corporate and Business Revitalization
Following the emergence of nonperforming loans as a major problem in Japan in the late 1990s, manyefforts have been made to revitalize corporations and business. In recent years, the disarray in theinternational financial order and economic globalization has accelerated the rate of change in the corporate
operating environment. Smooth rehabilitation is an important issue for the distressed companies
themselves, the entities supporting their revitalization and financial institutions.
DBJ Initiatives
DBJ believes it is necessary to construct a mechanism tothat have applied for legal arrangements, business revitaliza-

support the preservation and development of distressed cor-tion funds that support capital reconstruction through stockporations that possess business value, and is a pioneer in theacquisitions of distressed corporations, the allocation of capital

support of corporate and business revitalization employing athough exit financing, the refinancing of existing debt, thediverse range of tools. These methods primarily include earlyprovision of medium- to long-term funding and M&A support

debtor-in-possession financing, which involves the allocation

to enable the normal corporate activities of reconstructedof funds for formulating revitalization plans to corporations

firms.

Investment and Loan Case Study: Hokuto Solutions Preferred Stock Issue for Regional Corporations Conducting
Business Assistance Activities
Hokuto Solutions, a wholly owned subsidiary of Hokuto Bank,

Hokuto Solutions inherited ¥16.2 billion in disclosed debt

both headquartered in Akita Prefecture, was established in anfrom Hokuto Bank and is engaged in debt management andattempt to improve its parent’s financial health by reducing

the support of business revitalization activities for Hokuto Bank.

disclosed debt and providing management support to trading

The business alliance combines the expertise of DBJ, Hokuto

partners. DBJ commenced a business alliance with Hokuto

Bank and The Shonai Bank in an attempt to achieve the busi-

Bank and The Shonai Bank, Ltd., which has headquarters inness aims of Hokuto Solutions. DBJ provides temporary staff toTsuruoka, Yamagata Prefecture.

Hokuto Solutions and invested approximately ¥1 billion in theform of nonvoting preferred stock.

Holding Company(Establishment scheduled for October 1, 2009)The Shonai Bank

Acquisition ofpreferred stock

Temporary staff

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

Divided subsidiaries
Hokuto Solutions
Preferred stock

Preferred stock acquisition, temporary staff

DBJ

48

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Investment and Loan Business Practices

Transportation Infrastructure
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 of thetransportation infrastructure in accordance with aging and requirements of increased transport capacityand efficiency, as well as in response to an aging population and environmental issues. As the amount ofinvestment needed grows larger and investment horizons grow longer, projects requiring a longer period oftime to realize a return on investment have increased, and as a result, the procurement of long-term funding
has become an increasingly important issue.
DBJ Initiatives
Since the days of post-war reconstruction, DBJ has beenSpecifically, we are engaged a wide range of activities

engaged in the development of the Japanese economy andincluding the stable provision of long-term financing, projectindustry and the construction of a social infrastructure contrib-

financing repaid solely by cash flows generated by the project,uting to the improved quality of people’s lifestyles. As a result,projects formulated with a long-term perspective and the sup-DBJ has been able to use this expertise to support the activities

port of business alliances between multiple companies making

of its clients through the construction and improvement of theuse of our neutral position.

transportation infrastructure.
Investment and Loan Case Study: Narita Rapid Railway Access Co., Ltd., Syndicated Loan for New Rapid Railway
Development Project
Narita Rapid Railway Access Co., Ltd., of Funabashi, Chiba

anticipated to greatly increase the number of overseas visitors

Prefecture, is a class-three railway operator established in

to Japan.

April 2002 to create a new high-speed access route connect-

In conjunction with Mizuho Corporate Bank, DBJ provided

ing central Tokyo and Narita Airport by extending the Hokuso

Narita Rapid Railway Access with a syndicated loan. Both banks

and Chiba New Town Lines to Narita Airport (scheduled forprovided Narita International Airport Corporation, the parent

completion in 2010).

company of Narita Rapid Railway Access, with partial means

Construction of the Narita New Rapid Railway was approved

to complement creditworthiness while constructing a creative

as a national urban renewal project by the Cabinet Secretariat

financing scheme that ensures profitability through the estab-

Urban Renewal Headquarters. This project will reduce the time

lishment of rational covenants, providing both companies withrequired to travel from Narita Airport to central Tokyo fromthe financing necessary to proceed towards completion of the

51 minutes to 36 minutes, increasing convenience and bring-project.

ing Narita Airport access to a level on par with other major
airports around the world. In addition to increasing transportcapacity, this project will have the added effect of supporting
the increase in international airport facilities demand expected*A collaborative campaign involving the development and introductionof attractive travel products to Japan that communicate the attractive
qualities of sightseeing in Japan overseas with the objective of attracting
10 million foreign visitors to Japan by 2010.

from the government-sponsored Visit Japan Campaign*,

Narita Rapid Railway exterior construction
at the Matsumushi River Bridge

Narita Rapid Railway construction at the
Yoshitakahigashi Bridge

Annual Report & CSR Report 200949

Financial Services

Urban Development
Efforts to develop and upgrade urban infrastructure and functions in response to the information age, adecreasing birth rate and an aging population, and the creation of urban culture and a comfortableenvironment for the lifestyles of working people through urban development are the driving forces behind
the revitalization of economies and communities at the regional and national levels.
In recent years, there has been an increasing demand for urban development and renewal that takes
environmental conservation and disaster prevention into consideration in an attempt to realize asustainable society.
DBJ Initiatives
DBJ will continue to support urban development by pro-

DBJ is actively involved in urban development through theestablishment of an urban renewal fund that provides mezza-viding financing to developers employing various financing

nine financing for urban development projects in collaboration

schemes including securitization and other methods.

with multiple financial institutions.

Investment and Loan Case Study: Tobu Railway Co., Ltd., Hybrid Financing of Urban Redevelopment Project
To maintain a robust capital structure, in October 2008, Tobu

Rating and Investment Information, Inc., and Japan Credit Rating

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

Agency, Ltd., as being 70% or more capital. Issuing such securi-from direct participation in a massive commercial developmentties is a fund-raising method that substantially improves the

project focused on the Narihirabashi and Oshiage areas. Project

financial distribution ratio while increasing financial stability.

highlights include construction of the Tokyo Sky Tree, a broad-

Assuming that this large-scale project would affect Tobu

casting tower for terrestrial digital television content.

Railway’s financial structure, DBJ suggested mezzanine financ-Tobu Railway’s wholly owned special purpose company,

ing and undertook TR’s issuance of the preferred contribu-

TR Preferred Capital Limited (TR), issued ¥80 billion in euro-tion securities (hybrid securities) in conjunction with Mizuho

denominated convertible bonds with preemptive rights

Corporate Bank, Ltd., and The Chuo Mitsui Trust and Banking(subordinated), procuring funds through euro-denominatedCorporation, Limited. This fund procurement through the issue

convertible bonds with preferred contribution securities.

of securities contributed to the strengthening of Tobu Railway’s

Preferred contribution securities are hybrid securities com-financial structure while effortlessly procuring funds necessary

prising capital and debt. These securities possess special debt

for the creation of social infrastructure.

provision measures, and are recognized by major rating agencies
n Overview of Fund Procurement Scheme
Consolidate
Tobu Railway
Issue of euro-denominatedconvertible bonds withpreemptive rights(subordinated)¥80 billion

Subordinatedcontract ofguarantee

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

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

50

Annual Report & CSR Report 2009

Conceptual illustration of completed Tokyo Sky TreeOverview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Investment and Loan Business Practices

DBJ Disaster Preparedness Ratings
Such recent disasters as the Great Hanshin-Awaji Earthquake, the Chuetsu Offshore Earthquake and the
Iwate-Miyagi Inland Earthquake caused tremendous damage to the economy, with many organizations
forced to suspend operations for extended periods. In addition to plans for protecting personnel andproperty, companies face the need to draft business continuity plans (BCPs) to hedge themselves against
lost revenue and protect their clients in the event of disaster. Protecting their operations from disaster andreinforcing their operations with continuity in mind have increasingly become important issues forcompanies.
DBJ Initiatives
In addition to helping businesses create countermeasures tofinancing method employing a comprehensive method ofhedge against disaster and provide contingency financing torating disaster preparedness. The DBJ Disaster Preparedness

help recover their operations in the event that they are affected

Ratings is a unique evaluation system based on the Corporate

by disaster, DBJ assists companies from a continuing businessInitiatives for Disaster Preparedness Self-Evaluation Inventory

standpoint. We help with a full range of disaster prepared-

created by the Central Disaster Prevention Committee (Cabinet

ness, from the formulation of business continuity plans to the

Office, Government of Japan) that evaluates and selects com-earthquake-proofing of facilities and preparation of IT backup

panies engaged in high-level initiatives and provides themsystems. At the same time, DBJ provides new financing meth-with low interest rate financing as a reward for their excellent

ods to assist the recovery of disaster-struck businesses.

disaster preparedness measures, introducing the world’s first

In the year ended March 31, 2007, DBJ inaugurated adisaster preparedness-based financing method.

 Overview of DBJ Disaster Preparedness Ratings
ClientLoan

New Initiatives

Conduct separate screening toevaluate corporate credit risk andevaluate collateral

DBJ

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

Excellent Initiatives

Superior Initiatives

Satisfactory

Field of involvement including
Cabinet Office required or core items

Field of involvement including Cabinet
Office core or recommended items

Disaster Response
Initiatives in Place(1) Formulate disaster management plans as(7) Formulate business continuity plans
emergency measures(8) Reduce susceptibility to earthquake damage by(2) Put in place measures to ensure life safety
reinforcing structures(3) Understand equipment safety measures and(9) Create backup plans for important businesses
condition of facilities(10) Build regional alliances(4) Encourage education and training
Satisfactory (11) Ensure disaster preparedness of supply chain(5) Introduce backup disaster prevention plans for(12) Introduce disclosure and social contribution
surrounding areas
initiatives(6) Create check and review structure
Proprietary Assessment System that Complies with Japanese Government Guidelines
Unsatisfactory

Ineligible for Loan

Central Disaster Planning Committee, Japanese Cabinet Office
Corporate Disaster Preparedness Self-Assessment Checklist

Investment and Loan Case Study: Wellthy Corporation Financing Employing Disaster Preparedness Ratings
Wellthy, which has its headquarters in Chiyoda-ku, Tokyo, isThrough financing and business introductions, DBJ is

engaged in the development and sales of drinkable ground-encouraging the proliferation of groundwater purificationwater used at a wide range of facilities including hospitals,

plants.

supermarkets, department stores, hotels, train stations, foodprocessing plants and schools.
DBJ gave Wellthy its highest disaster preparedness ratings andprovided financing that reflected this achievement. This financing provided capital to Wellthy’s groundwater purification plant,
which has the collateral function of providing drinking water,
is expected to enhance the disaster preparedness structure by
ensuring the stable supply of water in times of emergency.

Diffusion example: A hospital in Kanagawa Prefecture

Annual Report & CSR Report 200951

Financial Services

Private Finance Initiatives
Private finance initiatives (PFIs) draw on private-sector capital and managerial competence, as well as
technology, to build, operate and maintain social infrastructure that has traditionally been the provinceof municipal and regional public-sector administrative bodies. PFIs were first introduced in the United
Kingdom, and the Act on Promotion of Private Finance Initiative was enacted in Japan in 1999. Their use
has grown since then. Advantages include reduced operating costs on the part of local governments, while
taking advantage of private-sector knowledge to receive high-quality public services, and business
opportunities created for private-sector enterprises. Problems confronting PFIs include such practicaloperating concerns as distributing responsibility and accountability across multiple vendors. Numerous
financing problems arise as well, and the ability to negotiate with, and manage, the various participantsis also important.
DBJ Initiatives
Using its expertise in structured financing with financial institu-

support a wide range of project types, from water supply andtions and its wide public/private network, DBJ has introduced

residential housing businesses to school and lodging facilities.

PFIs in Japan since before the establishment of the PFI Law toInvestment and Loan Case Study: Project Financing of Shinjo PFI
Acting as the arranger, DBJ and The Hokuriku Bank, Ltd.,

Shinjo PFI, based in Toyama Prefecture, is a special-purpose
company established by project bid-winner Hokutate Group

provided Shinjo PFI with ¥1.85 billion in project financing,Co., Ltd., headquartered in Toyama Prefecture, to conduct thewhich included financing provided by other financial institu-

design, construction, maintenance and management of a com-

tions based in Toyama Prefecture.

munity center and the establishment of a detached facility at
Shinjo Elementary School in Toyama City.
Playing an important role in the regional community, every
resource involved in the construction, maintenance and management of the elementary school and community center facilities,
from the developers to the financial institutions that provided
the financing, was drawn from the local community, the realization of what can be called a locally completed PFI project.

Conceptual illustration of the completed elementary
school and community center facilities

 Shinjo PFI Business Scheme
Financial Institution
Arranger

Shareholders
Hokutate, etc.

DBJ
Financing, subordinated loan

Arranger AgentTheT
he Hokuriku
Bank, Ltd.
Toyama City

Business contract

Design andsupervision

Construction work

Shinjo PFI (SPC)

Furniture andfixtures

Design, procurement, construction

52

Annual Report & CSR Report 2009

Preferred loan
agreement

Maintenance andmanagement

Regional
financial
institutions

PM/SPC business
agent

Operation, maintenanceOverview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Investment and Loan Business Practices

Community Revitalization
Revitalization of the country as a whole begins with balanced regional development and building upon thequalities that make each region unique. Circumstances differ by region, however, starting with declining
birth rates and increasing growth of elderly populations, as well as economic differences. Hence, a uniform
plan for economic recovery has only limited applicability.
For this reason, the Regional Reconstruction Center was established within the Japanese Cabinet in
October 2003 to revitalize local regions. (In October 2007, the center became part of the Regional
Revitalization Bureau.) The government’s purpose in founding the center was to revitalize the country’s
local regions by authorizing and assisting in the regional reconstruction plans that various regional
administrative bodies devise.

DBJ Initiatives
Dating back to the time of its predecessor, DBJ has provided
medium- to long-term funding in support of regional revitalization, one of our key investment and loan areas, based on local
revitalization projects.
Even after privatizing, DBJ will continue to support projects
that contribute to regional revitalization by making use ofinterest subsidies in support of regional revitalization* created*This is a support measure independently created by regional publicorganizations based on regional revitalization plans authorized by theJapanese government. When the implementers of regional revitalization
projects fund their projects with money necessary for the project that isborrowed from financial institutions, the Japanese government grants
the selected financial institution interest subsidies within the limit of theestablished budget. This low-interest fund procurement is expected tofacilitate the smooth implementation of regional revitalization projects.

through the partial revision of the Local Revitalization Act in
May 2008.

Investment and Loan Case Study: Nitto Medic Co., Ltd., Financing Businesses Targeted in Regional Revitalization Plans
In addition, by completely separating their production areas

DBJ provided financing to Nitto Medic, headquartered in
Toyama Prefecture, for the construction of a Third Preparation

for steroids from those for generic preparations, Nitto Medic

Building used to produce eye medicine. This was the first proj-

improved its production practices to conform to both Japanese

ect in Japan that took advantage of interest subsidies in sup-GMP and U.S. FDA standards, enhancing its technologicalport of regional revitalization.

competitiveness.
This funding strengthened the operational foundation ofSince its establishment in 1994, Nitto Medic has devoted
itself to eye medicine more than any other pharmaceuticalmanufacturers involved in the production of medical supplies ascompany, with the construction of the Third Preparation

defined by the Toyama Prefecture’s regional revitalization plan,

Building as an attempt to respond to increased demand as“Genki Toyama Manufacturing Industry Activation Plan,” and iswell as to strengthen production capacity.

expected to increase employment in the region.

Nitto Medic’s Third Preparation Building

Annual Report & CSR Report 200953

Financial Services

Healthcare
Society faces a wide range of issues on the healthcare front, including an increasingly elderly population, advancesin medical procedures, mergers and acquisitions by medical corporations, and a need to rebuild aging facilities.
Offering uninterrupted medical services involves solving fiscal and administrative problems and improving theskills of medical and other personnel and the quality of related facilities and medical equipment.
DBJ Initiatives
DBJ is engaged in the mission of maintaining and improving

consulting in support of management plan formulation for

the quality (including access, cost and technological standards)

public hospitals, and in April 2008 we established a medicalof each area of healthcare in Japan through financial and proj-

welfare department to enhance our involvement in this area.

ect consulting and the dissemination of information.

Consulting activities in this department include the formulationof a hospital reform plan based on the analysis of public hos-

Support for business restructuring/
management improvementst&OIBODJOHMJRVJEJUZTFDVSJUJ[BUJPOt#VTJOFTTSFHFOFSBUJPO)Ft)FBMUIDBSFGVOETt*NQSPWJOHNBOBHFNFOUGPSMPDBMHPWFSONFOUSVOIPTQJUBMTt1VCMJDQBSUOFSTIJQTt)JHIMZBEWBODFENFEJDBMDBSFt)FBMUIDBSFQBSUOFSTIJQTt*OSPBETJOOFXTFDUPSTt3FHJPOBMQBSUOFSTIJQTt4ZOEJDBUFEMPBOTSupport for various types
Support in responding to advancingof partnershipand diversifying needs

pital management and the formulation of a hospital basic planfor planning activities, as well as a management consulting
business for the improved management and creation of business plans for private hospitals. JERI also conducts investigations and research into a variety of medical treatment issues.

Hospital Industry Conditions
Handbook 2009

FinanceBusiness
consulting

Published by DBJ in cooperation with

Disseminating
information

JERI at the end of May 2009.
Focused on supporting hospitalmanagement reform, the handbook

DBJ is aggressively engaged in healthcare industry consult-provides a compact and comprehen-

ing in conjunction with DBJ Group think tank Japan Economic

sive overview of essential information.

Research Institute Inc. (JERI). In the treatment and hospitalareas, JERI is involved in hospital PFI–related advisory andInvestment and Loan Case Study: Trinity Healthcare Fund Investment in Business Revitalization andRestructuring Funds for Healthcare Providers
In cooperation with Mitsubishi Corporation, DBJ establishedthe Trinity Healthcare Fund, providing equity to support busi-n Overview of the Trinity Healthcare Fund
Equity participation

Hospitals

ness regeneration/restructuring for healthcare operators.
We cooperate with the management of medical and nursing
facilities owned by financial institutions over the formulation of

its and stabilize sustainable management.

54

Annual Report & CSR Report 2009

(For
Loans
hospitals,
etc.)
Obligations Equity
Regionalfrom loans participation
banks,
others Disposal
Example:SPC Project B
DisposalBeneficiary Loans
Healthcare
rights tocorporations,enhanceothersreal estate Equity
liquidity participation

Mitsubishi
Miti subibishi
i hi
Corporation
Corporp ationDBJ

Equity participation
Trinity
Healthcare Fund

Equity participationin anonymous
associations

financial standing and management frameworks, improve prof-

Creditobligations

GP company(Healthcare
Management
Partners, Inc.)

Equity participationin various projects

management improvement plans and other initiatives to bolster

Example:SPC Project A

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Investment and Loan Business Practices

Investment and Loan Case Study: Nonrecourse Loan to the Hospitality Residence Fund, Private Placement Real Estate FundDBJ collaborated with other financial institutions to put

was uncommon in Japan. The institutions participating in this

together a private placement real estate fund and provide a

project first evaluated its viability against other opportunities

nonrecourse loan to finance senior housing, such as fee-basedand ensured the appointment of a backup operator to ensure

senior care homes with caregivers, through a fund structured

a stable level of ongoing service to facility residents. We believeby the Mitsui Fudosan Group.

that the popularization of such funds will make facility opera-

The senior care facility fund was structured differently fromtypical real estate investments in terms of viability, and its typetion easier for operators who provide high levels of service on
the part of the originator.

n Overview of the Hospitality Residence Fund
Company A(Operator)

Lease contract

Lease contract

Company C(Operator)

Lease contract

Originator

Backup operator

Company B(Operator)

Transfer of position inlease contract
Company D(Originatorand operator)

DBJ

Transfer of trust
beneficiary right

Nonrecourse
loans

Hospitality
Residence (SPC)

FundingTrustformation
Trust
dividends

Lease contract

Anonymous
investment

Trust bank

Other financial
institutions

Institutional
investors
Generalincorporated
associations

Asset management contracts

Trust formation
Transfer of trust beneficiary rightAsset manager

Investment and Loan Case Study: JR Sapporo Railway Hospital
JR Sapporo Railway Hospital is a general hospital owned andmanagement resources, such as the consulting services for

operated by the JR Sapporo Railway. The hospital provides pri-

Lifetime Partners.

mary care to the Sapporo area, with particular competencies ininternal medicine; respiratory and circulatory medicine; and ear,nose and throat medicine.
Owing to the increasing age of the building, Lifetime
Partners, Inc., and other members of the Mitsubishi Group
have partnered with the hospital to rebuild the facility withfunding provided through a project financing method thatuses an SPC to convert the financing to cash. DBJ was a joint
arranger on the loan. The robust scheme involved the construction of a mezzanine loan that involved senior loans from
community financial institutions. The SPC provides external

An illustration of the reconstruction of JR Sapporo
Railway Hospital

Annual Report & CSR Report 200955

Financial Services

M&A and Business Alliances
Amid an increasingly diverse range of corporate development options, business restructuring that involves
operational selection and focus, as well as industry restructuring, M&A activity is increasingly prevalent. Mergers
and acquisitions are considered effective and essential for aggressive business restructuring and real estate renovation
and revitalization, as they allow restructuring to be conducted quickly, while retaining the human resources andphysical and intellectual assets of a business.

DBJ Initiatives
In 1999, DBJ established an M&A advisory business that makes

and accounting offices with the cooperation of regional finan-use of its unique network with regional banks (80 participatingcial institutions. DBJ uses this network to provide funding andinstitutions including banks and credit unions cooperating toservices to a diverse range of industries and clients, including

create a regional corporate M&A framework) as well as busi-

strategic consulting and M&A advisory services for purchasers

ness cultivated up to now through this extensive network. DBJ

and sellers.

has created an information infrastructure network among legal

Investment and Loan Case Study: Toppan Printing Co., Ltd., M&A Advisory Services for the Acquisition of Overseas Companies
Toppan Printing, which has its headquarters in Chiyoda-ku,

of SNP to Toppan, and as a result DBJ, in conjunction with

Tokyo, is involved in developing business in a wide range ofPricewaterhouseCoopers Singapore,* became the M&A advi-areas including information and communication, living environ-

sor in support of Toppan’s purchase of SNP. Temasek quickly

ment and electronics.

embarked on the sales process, entering a competitive bid
while DBJ conducted due diligence and acquired exclusive

DBJ was informed that investment company Temasek,
owned by the Singapore government, intended to purchasenegotiating rights and a share purchase agreement, creating a

the SNP Corporation, a Singapore-based printing company.

final agreement between Toppan and Temasek that switched

Originally Singapore National Printers Pte Ltd., a government

to a takeover bid resulting in the completion of the acquisition

printing office, SNP is now a major player in the printing indus-

process in September 2008.
The combination of Toppan’s advanced technology andtry and develops business domestically and in China, Hong
Kong, Southeast Asia and the U.S. and European markets, with

SNP’s production and sales network promises to enhance

particular activity in China in recent years.

Toppan’s business in overseas markets.

After careful analysis of SNP’s corporate value and over*PwC Singapore is a member of New York–based PricewaterhouseCoopers,
the world’s largest professional services firm.

seas business development, DBJ proposed the acquisitionn SNP Acquisition Scheme

Temasek

DBJ

100%

Advisory service

Green Dot Capital

Toppan Printing

53.55%TOB (Singapore market)

SNP Corporation

56

PwC Singapore

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Investment and Loan Business Practices/
Providing a Safety Net

Providing a Safety Net

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

Disaster Recovery
Societal Concerns
Required responses to natural disaster are to (1) ensure thatthat was destroyed. What is required is an entity that throughpeople who provide information to local communities beset byits everyday business relationships has accumulated know-how

a natural disaster have sufficient knowledge about those com-on the industries and businesses that provide this core infra-

munities and take that knowledge into consideration and (2)structure. This entity also must have a wealth of expertise inprovide rapid responses to help rebuild important infrastructure

supplying long-term funds.

DBJ Initiatives
DBJ has provided assistance in response to such disasters as
the Great Hanshin-Awaji Earthquake in January 1995 and the
Chuetsu Offshore Earthquake in October 2004. In addition to

Note: DBJ’s cumulative financing for recovery from twoearthquakes
Great Hanshin-Awaji Earthquake: ¥184.8 billion

the electricity, gas, rail, communications, broadcasting, urban(Year ended March 31, 1995, to year ended March 31, 2003)

development and other infrastructure industries, DBJ assisted

Chuetsu Offshore Earthquake: ¥20.3 billion

providers of everyday necessities such as foodstuffs and other(Year ended March 31, 2005, to year ended March 31, 2007)

retail items. These efforts played a major role in revitalizing theemployment and economic situations of local communities,
prompting a revival in many fields.

Emergency Financing
Societal Concerns
Society requires institutions whose day-to-day operations

These institutions must also have the working capital and fund-provide a solid foundation for financing in response to terror-

ing expertise to respond quickly to these situations.

ist attacks, natural disasters and other emergency situations.
DBJ Initiatives
In the year ended March 31, 2002, DBJ established an emer-

Note: DBJ’s cumulative emergency financing provided

gency response support system that provided financing to theduring terrorism and SARS outbreaks: ¥437.0 billion

Japanese airline industry, which was immediately affected by a(Year ended March 31, 2002, to year ended March 31, 2005)

downturn in business following the September 11, 2001, terrorist attacks on the United States and the SARS outbreak.

Annual Report & CSR Report 200957

Financial Services

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 a neutral standpoint.

Economic and Industrial Research
In a broad range of industrial circles, DBJ researches conditions
in various sectors and among different types of businesses,
conducting surveys and performing research on such topics asinternational competitiveness. DBJ also prepares reports on conditions in individual industries, technical development trends andnew industries and innovation. We provide feedback on thesereports to our clients, as well as other parties.
Survey Examples
DBJ Monthly Overview
This report provides brief commentary on domestic and overseas
economic and industrial trends and monthly business indicators.
This report explains domestic and overseas
economic trends through analysis of economic
and financial indices published each month.
Recent years have witnessed increased cooperation on the global economic and financial
fronts and integrated market perspectives. This
report aims to further that integration by introducing overseas fiscal and monetary policy.
In terms of industry trends, this report also comments oncurrent topics.
“Transformation in the Automotive Industry—A New
Future Powered by Batteries”(DBJ Monthly Overview, No.135, May 2009)
Sharp declines in global automotive industry performance spurredby the financial crisis have focused attention on the expected
increase in demand for the eco-car and the current status andissues surrounding hybrid vehicles and secondary batteries for automobiles. Sorting out
and analyzing the trend toward alliances andrestructuring in the auto and battery makers,
we investigate the possibility of a recovery froma medium- to long-term perspective.

58

Annual Report & CSR Report 2009

“Retail Market Trends Amid a Declining Birthrate and the
Graying of Society”(DBJ Monthly Overview, No.136, June 2009)
As the domestic retail market continues to steadily decline, welook at how declining birthrates and the graying of society arechanging the composition of households andaffecting the retail market. Our analysis covers
current changes in market scale, by industry,
and the characteristics of companies with favorable performance, providing our outlook for the
future of the retail market and medium-term
strategies for retailers.
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 andother events scheduled in the current week.
DBJ economists comment on the effects ofimportant economic indicators and monetary
policy announced during the week, providing
an outlook for market trends based on theanalysis of economic fundamentals.
“Challenges and Prospects for the Financial System andPublic Policy”—abstract from a 2008 symposium jointly
sponsored by Tokyo University and DBJ(Economic Management Research, Vol. 30, No.1, April 2009)
The Center for Advanced Research in Finance (CARF) at Tokyo
University and DBJ’s Research Institute of Capital Formation
jointly sponsored a symposium titled Challenges and Prospects
for the Financial System and Public Policy,
which was held on November 21, 2008. Thissummary of the symposium includes reports on
the eight information sessions as well as minutes from the panel discussion Direction of the
U.S. Financial Crisis and Financial Industry.

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Making Use of Information Functions“Status and Challenges of Emergency Medical Treatment
3: Emergency Transport”(Medical Treatment Report, March 2009)
With the anxiety surrounding emergency medical treatment,
responding to the ever-increasing demandfor emergency services has become a serious and urgent issue. This report analyzes
the status and challenges surrounding
emergency transport systems and thedemand for emergency services and introduces specific examples addressing thosechallenges.

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

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

Survey Example“Report on June 2008 Survey of Capital Investment Plans
for Years to March 31, 2008, 2009 and 2010,” Surveys,
No. 98, September 2008
After completing our questionnaire-based
survey on corporate capital investment
activity, the Survey of Capital Investment
Plans, we publicized the results, as well as
our analysis.

Combining Surveys, Research and Investment and Loan Activities
In addition to publicizing the results of its surveys, research andother activities, DBJ introduces its information at speaking engagements and seminars. In addition, by reflecting 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 andcontributes to specialty journals, newspapers and magazines.
In the year ended March 31, 2005, these activities culminatedin the DBJ Environmental Rating System promoting loans andfinancing for environmentally conscious management. We also
developed a financing menu for global warming countermeasures that many companies employ.

Disaster Response
In the event of an earthquake or other natural disaster,
responding to the situation and continuing operations is acommon theme for every company. Companies need to put
disaster response measures in place. DBJ conducts surveys
covering corporate business continuity plans. In the year ended
March 31, 2008, we incorporated the survey results into theDisaster Preparedness Promotion Loan Program (now, financing
employing DBJ Disaster Prevention Ratings).

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

Annual Report & CSR Report 200959

Financial Services

Providing Information to Local Communities
Supplying Information to Help Local Community

community before preparing an independent diagnosis that

Development

interprets its results. We then discuss the diagnosis results with

Local communities are experiencing increasingly difficult

people in the local community, which helps them to understandenvironmental circumstances, such as a declining birthrate;

what issues they may be able to address on their own and pro-an aging population; the amalgamation of towns, cities

vides an opportunity to consider future directions. (See page 39.)and villages; and financial difficulties. These issues require agreater degree of expertise and more ingenuity than ever. DBJ
addresses these issues by analyzing the information it accumulates through its network of 19 domestic locations (headquarters, branches and offices) and three overseas locations(representative offices and subsidiary) and communiqués fromthe economic agencies of regional governments and local communities and advisories from companies in Japan and abroad.
DBJ uses this information to encourage public/private partnerships, promote tourism, build up local communities, andcontribute to local
government financing
by sharing its analy-

Memorandum on the Issue ofthe Invigoration of Regional
Economies—Concepts,
Negotiations and Main Initiatives
for Invigorating Regional
Economies Case Study (Regional
Survey Research, Vol. 4, January
2009)
As material for the basis of ameaningful discussion of the urgent
issue of invigorating regional
economies, this publication organizes
the debate over the invigoration ofregional economies and provides
examples of specific initiatives.

sis results throughreports, publications,lectures and various
other formats.

Building Local Communities
One way DBJ puts its expertise to work in building up local
communities is by conducting “local community-building diagnostics.” In this process, a DBJ local-community diagnosis teamanalyzes publicly available data to determine the current stateof a local community, and then conducts interviews in that

Fiscal 2009 Regional Handbook
This handbook is a collection ofdata that includes fundamental
economic, industrial, lifestyle andpolicy indicators for regional blocks,
administrative regions and principal
cities, as well as a compilation ofindividual regional policies andprojects to facilitate an overall
understanding of regional policies,
economies, societies and the current
status of regional projects.

The Japan Economic Research Institute60

The Japan Economic Research Institute (JERI) is a foundationand industry are supported by a broad network that includes

established for the purpose of contributing to the improvement

DBJ’s investigative research department, universities, researchof welfare and further development of the Japanese economy

institutions and other experts, as well as national and regional

through investigative research into important economic prob-

government bodies and thelems in Japan as well as overseas and funding the promotion

patronage of approximately 500

of scholarship. JERI’s investigation into issues that impact thecompanies. DBJ works in con-Japanese economic structure in the areas of urban and regional

junction with JERI to dissemi-

development, social capital infrastructure, energy, economy

nate the results of its research.

Annual Report & CSR Report 2009

Overview
O
Ove
Overvi
vervi
rv ew
w of
of Op
Ope
O
Operations
perat
prationra
io sionManageManagement
agemenm tP
Policyolicy

Financial Services

Management Structure

Corporate DataManagement Structure

Corporate Governance . . . . . . . . . . . . . . . . . . . . 62

Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Risk Management . . . . . . . . . . . . . . . . . . . . . . . . 68

Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Client Protection Management System/
Declaration on Personal Information
Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

Fostering Human Resources and Creatinga Comfortable Work Environment. . . . . . . . . . 73

Environmental Management . . . . . . . . . . . . . . . 75

Annual
all ReR
Reportepor
p t & CS
CSR
SR RepoR
Report
e ort
epo
rt 20
2
200
2009
0
009

61
61

Management Structure

Corporate Governance

Basic Position on Corporate Governance
DBJ has formulated a corporate philosophy to encapsulatethat we have built through our experience in applying ourmanagement’s position regarding DBJ’s integrated investment

industry, analytic and R&D expertise.

and loan services. We consider this philosophy the core of our

Networks

corporate activities.

DBJ enjoys trust-based networks with clients, as well as partners among regional governments and financial institutions.

Corporate Philosophy

Applying financial expertise
to design the future
We apply creative financing to resolve clientissues, as we work to earn the trust of our clientsand achieve 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 theirchallenges and sharing pleasure in their success.
ProfessionalCore Competencies

With discernment and creative skill, DBJ will be a one-stop

The core competencies described below support DBJ’s efforts

financial platform providing integrated investment and loans

to realize its corporate philosophy.

both in Japan and abroad.

Intention

Global & Local

DBJ’s fundamental stance is based on sharing with its clients

DBJ will maintain a long-term viewpoint, considering the needs

a long-term perspective, neutrality, public-mindedness andof the times, the world and the region.

reliability.

Speed & Teamwork

Intellectual Assets

Relying on skilled teamwork, DBJ will act rapidly and in goodIntellectual assets refers to the abilities to think ahead, makefaith, building strong foundations for clients’ trust.

discerning judgments and introduce new financial technologies

Corporate Governance Measures and Their Implementation Status
Internal Organizations
DBJ elects outside directors from the standpoint of ensuring

The following two members are outside directors:

management transparency and enhancing corporate governance.

Akio Mimura, Chairman, Nippon Steel Corporation and

The Advisory Board has been established as a Management
Committee advisory body. This board provides advice on overall

Kazuo Ueda, Professor, Faculty of Economics, the Universityof Tokyo.

management issues, including DBJ’s management strategies,
from a neutral standpoint.
The Compensation Committee, which includes outside

Corporate Auditors, Auditing Committee
The Auditing Committee comprises five auditors. This

directors, has been created to deliberate on director

committee convened seven times during the six months ended

compensation and advise the Board of Directors in this regard.

March 31, 2009.
As prescribed by the Companies Act, a majority of the five62

Board of Directors

Auditing Committee members are outside corporate auditors.

The Board of Directors comprises nine members. To ensure

DBJ has three full-time corporate auditors, one of whom is an

management transparency, two Board members are outside

outside corporate auditor. The Office of Corporate Auditors

directors. During the six-month period ended March 31, 2009,has been created to assist corporate auditors (including outside

the Board of Directors met seven times.

auditors) in performing their duties. Specialized staff members

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Corporate Governanceare assigned to the Office of Corporate Auditors, which isGeneral Risk Management Committee

directed by the Auditing Committee.

This committee deliberates and makes decisions on important

The three outside corporate auditors are as follows:

items related to legal compliance, client protection management,

Hiroshi Saito, former Executive Vice President and Director,

operational risk management and system risk management.

Japan Securities Finance Co., Ltd. (Full-Time Corporate

Committee on Investment and Loan Decisions

Auditor (Outside));This committee handles deliberates and makes decisions

Makoto Ito, Attorney and Visiting Legal Research Professor,

related to investments and loans, as well as the investment andGraduate School of Waseda University;

loan management.

Shinji Hatta, Professor of Graduate School of Professional

New Product Screening Committee

Accountancy, Aoyama Gakuin University.

This committee deliberates and makes decisions on thehandling of new products and the commencement of initiatives

Operations Audit Committee

involving new businesses.

The Board of Directors has established the Operations Audit

Advisory Panel on Investments and Loans

Committee, delegating to this body the authority to deliberateThis panel handles the advance deliberation on and monitoring

important matters related to internal audits. This committee

of investments and loans.

met once during the six-month period ended March 31, 2009.

Committee on International Operations
This committee deliberates items related to the overseas

Compensation Committee

business strategies, operations and management conditions.

The Compensation Committee, whose members include
outside directors, has been established as an advisory body

Advisory Board

to the Board of Directors from the standpoint of ensuring

The Advisory Board has been created as a body to advise thetransparency and objectivity. The committee considers theManagement Committee, providing advice on DBJ’s overall

type of executive compensation structure that befits DBJ.

management.
The Advisory Board is composed of the following outside

Management Committee

experts and outside directors.

The Board of Directors has vested in the Management

Outside Experts

Committee decision-making authority regarding the execution

Tadashi Ogawa, President of the Regional Banks Associationof business.

of Japan and Head of the Bank of Yokohama

Accordingly, the Management Committee makes importantmanagement decisions. The committee met 25 times during
the six-month period ended March 31, 2009.

Kiyofumi Kamijo, Chairman, Tokyu Corporation
Sakie Fukushima-Tachibana, Regional Managing Director ofJapan, Korn/Ferry International
Fujio Cho, Chairman of Toyota Motor Corporation

Committees under the Management Committee

Toru Hashimoto, former Chairman of Deutsche Securities

Various committees have been established under theInc., and Honorary Advisor to Mizuho Financial GroupManagement Committee assigned specific decision-making

Outside Directors

tasks, excluding decisions made by the Board of Directors or

Akio Mimura, Chairman, Nippon Steel Corporation

the Management Committee within each field of specialization.

Kazuo Ueda, Professor, Faculty of Economics, the University

ALM & Risk Management Committeeof TokyoThis committee deliberates and makes decisions pertaining toportfolio risk management and asset/liability management.

Annual Report & CSR Report 200963

Management Structure

Matters Requiring Approval of Competent Minister• Disposition of retained earnings

The New DBJ Law prescribes matters for which DBJ requires• Resolutions on corporate merger, separation andthe permission by the Minister of Finance. Major items

dissolution• Basic policy on business plans, amortization plans andrequiring such permission are as follows:• Appointment and removal of representative directors andfund procurement

auditors• Concurrently holding the position of director in another

The organization outlined below has been put in place to
execute and supervise the abovementioned activities.

organization• Changes to the Articles of Incorporationn Operating and Supervisory Structure

General Shareholders
Meeting
Matters requiring approval ofcompetent Ministert Appointment and removal of
representative directors and auditorst Changes to articles of incorporationt Disposition of profitst Resolutions on corporate merger,
separation and dissolutiont Basic policy on business plans,amortization plans and fundprocurement

General Risk
Management
Committee

ReportingOperations Audit
Committee

Accounting
auditorCompensation
Committee

Internal Audit
Department

Board of Directors

Cooperation

ReportingManagement
Committee

Decision-making
bodiesCorporate Auditors,
Auditing Committee

AuditsAdvisory Board
Deliberative
bodies

ALM & Risk
Management
Committee

Committee on
Investment and
Loan Decisions

New Product
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 an

The Board of Directors has designated eight managing

internal control system under the Internal Control System Basic

executive officers, excluding officers who are concurrently

Policy.

directors, and five executive officers.

Specifically, this system is designed to determine the statusof legal compliance, risk management and internal audits, aswell as other items of management importance. The internal
control system is designed to confirm the formulation ofvarious regulations and the status of their implementation invarious departments.

64

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Corporate GovernanceInternal 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) to ensure
Development Bank of Japan Inc. (hereinafter, “DBJ”) conducts operations in an
appropriate manner.
System to Ensure Compliance with Laws and the Articles of Incorporationin the Execution of Duties by Directors and Employees
Article 2. The directors and the Board of Directors recognize legal compliance as
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 withlaws and the Articles of Incorporation and establishes the corporate philosophy anda basic policy on legal compliance.
2. A Compliance Manual, compliance program and internal regulations shallbe created in preparation to ensure compliance by executives with laws andregulations.
3. A committee shall be formed to promote and manage legal compliance, and an
executive and a control division shall be placed in charge of legal compliance.
4. A compliance hotline system shall be established to enable to acts that
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 shallestablish internal audit departments that are independent of departments
responsible for the execution of business and that report audit results promptly
and appropriately.
System for the Storage and Management of Information Related to the
Execution of Duties by Directors
Article 3. Information pertaining to the execution of duties by directors shall be
stored and managed appropriately, and this information shall be accessible, as
necessary.
Regulations and Other Systems Related to Managing the Risk of Loss
Article 4. To ensure the soundness of management and manage risk properly, arisk management process that defines, evaluates, monitors and controls risks withvarious 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 shallbe 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 incrisis 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 decisions on
the items with which it has been entrusted, to contribute to expeditious decision-

making the Management Committee shall deliberate in advance matters forresolution by the Board of Directors. Furthermore, the Management Committee
shall establish various committees as advisory institutions or as bodies to which todelegate 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.
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 affiliatedcompanies. Furthermore, the Board shall introduce appropriate measures fromthe 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 affiliated companies
and report the results of these audits promptly and appropriately to the Board of
Directors.
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 andthe 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 be left in
the control of the Auditing Committee.
System for Reporting by Directors and Employees to Auditors and Other
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 the party towhom 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 meetingsand 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 and exchanges
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 andother regulations.
5. To ensure the adequacy and reliability of accounting audits, directors andemployees shall cooperate in creating a system to ensure the independence of
the accounting auditors.

Annual Report & CSR Report 200965

Management Structure

Status of Internal Audits and Audits by Auditors

Assisting in this audit were 24 people, including a

DBJ has established the Audit Department under the direct

specialist in determining fair value, a systems specialist andsupervision of the DBJ president and independent froman actuarial specialist.

other operating departments. The department conducts

DBJ’s auditors, Audit Department and accounting

inspections to ensure the appropriateness and effectivenessauditor periodically and as necessary exchange opinions

of internal controls, including DBJ’s overall operational

and information, and communicate in an effort to ensurecompliance and risk management, and performs evaluations

effective and appropriate audits.

and recommends improvements.
The Operations Audit Committee deliberates and decides

Overview of Personal, Equity, Transactional oraudit plans, audit reports and other important matters

Other Special-Interest Relationships with Outside

related to internal audits, and this information is reported to

Directors and Outside Corporate Auditors

the Board of Directors.

Akio Mimura, Chairman of Nippon Steel Corporation,

As of June 25, 2009, 20 people belonged to the Audit
Department.
The Auditing Committee and the auditors audit theexecution of duties by directors, based on their audit policy
and audit plans.

is an outside director of DBJ. DBJ has no special-interest
relationship with Mr. Mimura, and its business with Nippon
Steel Corporation is conducted normally.
DBJ has no special-interest relationship with any other of
its outside directors or outside corporate auditors.

The auditors attend Board of Directors and other

DBJ has signed liability limitation agreements with its

important meetings. When necessary, they query theoutside directors and outside corporate auditors, based on

execution of business by directors, peruse documents andParagraph 1, Article 427, of the Companies Act.

conduct branch audits.

Status of Accounting Audits
DBJ has in place an agreement with Deloitte Touche
Tohmatsu LLC, to conduct accounting audits as its

Overview of Agreements with Outside Directors
and Outside Corporate Auditors underParagraph 1, Article 427, of the Companies Act

accounting auditor. During the six-month period ended(Liability Limitation Agreements)

March 31, 2009, these operations were conducted by

DBJ’s Articles of Incorporation allow it to establish liability

designated certified public accountants (designatedmember) Yukio Ono (continuous audit period* of one year),limitation agreements with its outside directors and outside

Tomomitsu Umezu (same, one year) and Hayato Yoshida

under Paragraph 1, Article 425, of the Companies Act,

(same, one year).

provided their duties are executed with good intent andcorporate auditors, limiting their responsibility for damages

without gross negligence, to the total amounts specified in* 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 one year for Yukio Ono, one
year for Tomomitsu Umezu and one year for Hayato Yoshida. The
number of business periods during which an audit was performed isthe standard used to indicate the number of years.

66

Annual Report & CSR Report 2009each item in Paragraph 1, Article 425, of the Companies
Act.

Number of Directors
DBJ’s Articles of Incorporation limit its number of directors
to 13 or fewer.

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Corporate Governance/
Compliance

Requirements for Determination of Director
Appointments

its Articles of Incorporation that the liability for damages

DBJ’s Articles of Incorporation stipulate that shareholders(and former auditors) may be reduced to the legal limit bypossessing at least one-third of the shareholder voting

resolution of the Board of Directors.

incurred by directors (and former directors) and auditors

rights exercisable at the General Meeting of Shareholders
shall attend the meeting and determine the appointment

Requirements for Special Resolutions at theof directors based on a majority vote. The Articles ofGeneral Meeting of Shareholders

Incorporation further specify that the appointment of

To ensure a smooth General Meeting of Shareholders,

directors shall not be resolved by cumulative voting.

DBJ’s Articles of Incorporation stipulates that shareholders
possessing at least one-third of the voting rights exercisable

Limiting the Responsibility of Directors andshall attend the meeting and determine by a two-thirds

Auditors

majority vote the “requirements for special resolutions at

To enable them to perform their duties and fulfill the roles

general meetings of shareholders” provided in Paragraph 2,that are expected of them, in accordance with Paragraph 1,

Article 309 of the Companies Act.

Article 426, of the Companies Act, DBJ has established inCompliance
Specific compliance initiatives are as follows.

significantly with DBJ’s ability to fulfill its objectives under
the New DBJ Law. We also realize DBJ’s need to always

DBJ recognizes compliance as one of its most importantmanagement issues. As basic policies to ensure that the

conduct activities appropriately and in compliance withthe law.

execution of duties by directors complies with laws and2) DBJ’s executives and employees are well aware that DBJ

regulations and the Articles of Incorporation, we havemust conduct its businesses legally and appropriately andformulated a corporate philosophy, a Compliance Basicbe responsible for explaining its actions to the general

Policy and other compliance-related regulations.

public.

In addition to its fundamental regulations on compliance,
DBJ has created a Compliance Manual and a compliance

Compliance System

program. Via activities in and around DBJ, we seek to

DBJ has established the Legal and Compliance Department

thoroughly implement the compliance activities outlined

to take overall responsibility for planning, preparing andbelow.

adjusting compliance activities.
In addition, DBJ has established the General Risk

Compliance Principles

Management Committee to reflect on legal compliance

DBJ has formulated the compliance principles indicatedmatters, determine the extent of compliance, and discuss

below as part of its creation of compliance regulations.

improvements to DBJ’s internal system.

1) DBJ’s executives and employees are keenly aware of

DBJ also has installed a Compliance Hotline. The

DBJ’s social mission and responsibilities as a public-sector

objective of this internal reporting system is to swiftlybank and recognize that illegal acts or improper business

identify and resolve any represent legal violations.

operations harm the reputation of DBJ and interfere

Annual Report & CSR Report 200967

Management Structure

Risk Management

To ensure management soundness and safety, as well

From the standpoint of comprehensive risk management,

as raise corporate value, DBJ works to manage risk

DBJ has established an ALM & Risk Management

appropriately in line with specific business and risk

Department, which is overseen by a director in an official

characteristics. Controlling risk is an issue of utmost

capacity. DBJ seeks to control its total risk within a specified

importance, and therefore we have established risktarget range. In addition, we have set risk guidelines for

management processes and methods.

each risk category to help manage total risk.

Risk Management System
DBJ conducts risk management from the perspectives ofManagement Department oversees comprehensive asset/

maintaining financial soundness and improving operational

liability and risk management activities. The ALM & Risk

efficiency, which are the prerequisites to ongoing

Management Committee, consisting of DBJ’s executives

operational viability. To ensure appropriate management

and president, determines basic policies related toof individual risk categories, DBJ has developed a risk

comprehensive risk management and conducts regularmanagement system that clarifies which department

monitoring.

is responsible for each type of risk. The ALM & Risk

Credit Risk Management
Credit risk refers to the risk of sustaining losses resulting

The sales and credit analysis departments hold separate

from a decline in the value of assets due to deterioration

roles in the screening and administering of credit forin the financial condition of the borrower. Credit risk

individual loans and each department keeps the operations

management requires credit management of individualof the other in check. The Committee on Investment andloans as well as bankwide portfolio management.

Loan Decisions meets as needed to deliberate important
issues concerning the management and governance ofCredit Administration of Individual Loansindividual loans. These mutual checking functions serve

When making an investment or loan, DBJ examines theto ensure the appropriateness of lending operation andentity’s project viability and the project’s profitability

management environment.

from a fair and neutral standpoint, as well as its benefits.

Borrower Rating System

We also have an internal borrower rating system. DBJ is

DBJ’s borrower rating system measures creditworthinessnot subject to the Banking Law or the Law concerningby combining an evaluation point rating and a borrower

Emergency Measures for the Revitalization of the Functions

category rating, with the result quantifying a potentialof the Financial System but carries out independent assetclient’s credit circumstances. The evaluation point ratingassessments in line with internal policies for self-assessment

selects indicator/evaluation categories that are commonof credit quality based on the Financial Services Agency’s

across all industries, scoring the creditworthiness of the

Financial Inspection Manual.

potential borrower quantitatively and qualitatively. On the

The results of self-assessments are subject to an audit

other hand, the borrower category rating measures specificby an auditing corporation and are reported to theitems related to the borrower, looking at the borrower’s

management. Credit risk and amounts are monitored torealistic financial condition, cash flows and debt repayment

confirm they are within the limits established for individual

history. By putting the ratings together, the systemborrowers.

generates a comprehensive assessment of a borrower’s
repayment capacity.

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Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Risk Management

Asset Self-Assessment System

Portfolio Management

Asset self-assessments are used to define asset

DBJ performs a comprehensive analysis of data basedclassifications that will offset recoverability risk or theon borrower ratings, and calculates the loan portfolio’s

degree of risk of value loss, based on the borrower rating,overall exposure to credit risk. Credit risk exposure can be

the corresponding borrower category and the collateralclassified as 1) expected loss (EL), the average loss expected

or guarantee status. Such assessments help DBJ establish

during a specific loan period; and 2) unexpected loss (UL),

timely and appropriate amortization schedules and reserve

the maximum loss that could incur at a certain rate oflevels.

probability. The EL and UL calculations are reported to
the ALM & Risk Management Committee. Monitoring thesituation and considering countermeasures allow DBJ tocontrol risk and devise effective measures to improve risk
return.

Market and Liquidity Risk Management
Market Riskin the economic value of DBJ’s assets due to the impact ofMarket risk can be broadly classified into interest rate risk,changes in currency exchange rates. DBJ’s exchange risk

exchange risk and stock market risk.

derives from foreign currency investment and financing

Market risk describes the risk of loss from fluctuations inand issuing foreign currency. DBJ uses currency swaps

the value of assets or liabilities (including off-balance sheet

and other instruments to hedge this risk. DBJ manages

items), owing to changes in interest rates, exchange rates,

counterparty risk in swap transactions, the risk thatstock markets and various other markets. DBJ divides these

the counterpart in the swap transaction will be unablerisks broadly into interest rate risk and exchange risk.

to fulfill its obligations, by continually monitoring theInterest Rate Risk

creditworthiness of all parties, and by diversifying

Interest rate fluctuations can create mismatches on rates

transactions among several institutions.

of interest on assets and liabilities or on interest periods,
creating the risk of reduced profits or the risk of losses.

Liquidity Risk

Interest rate risk can reduce the economic value of DBJ’s

Liquidity risk is the risk of a mismatch occurring inassets or interest income. DBJ calculates and analyzes risk

the periods when funds are used and raised, causing

exposure with cash flow ladder analyses (gap analysis),

unexpected differences in the flow of funds (cash liquidity

value at risk (VaR), interest rate sensitivity analyses (basisrisk). This situation makes securing funds difficult andpoint value), and other methods. A portion of the interest

creates situations in which interest rates on borrowed

rate risk associated with lending operations is covered

funds are substantially higher than usual rates. At suchthrough interest rate swaps, which are used solely fortimes, because of market complexities entities in these

hedging purposes. DBJ does not have any trading-related

circumstances may become unable to participate in market

risk because it does not engage in trading (specified

transactions, compelling them to conduct transactionstransactions).

under substantially less favorable terms than otherwise

Exchange Risk

would be the case. The risk of losses for these reasons is

Exchange risk is the risk of loss due to unexpected shifts

known as market liquidity risk.

in exchange prices, and this risk affects entities holding a

As its main methods of acquiring funds, in addition to

net excess of assets or liabilities denominated in foreignissuing corporate bonds and taking out long-term loans,currencies. Exchange risk entails the possibility of a decline

DBJ relies on the stable procurement of long-term funds

Annual Report & CSR Report 200969

Management Structurefrom the government’s Fiscal Investment and Loan Program

liquidity by using the Bank of Japan’s Real Time Gross(FILP) and government-guaranteed bonds rather than on

Settlement (RTGS), whereby settlements are made instantly

short-term funds such as deposits. To meet unexpected

for each transaction. Every effort is made to ensure thatshort-term funding requirements, funds on hand are used,settlement conditions are managed appropriately.

taking security and liquidity into consideration. Overdraft

In addition to credit risk, the ALM & Risk Management

lines of credit have been established with multiple otherCommittee deliberates DBJ’s market risk and liquidity risk.

financial institutions. Additionally, DBJ maintains daytime

Operational Risk Management
DBJ defines operational risk as the risk of loss arising from

System Risk Management

internal processes, people or systems that are inappropriate

System risk refers to the risk of loss due to a computeror nonfunctioning, or from external events. DBJ works tosystem breakdown or malfunction, system defects, or

establish a risk management system to minimize risk andimproper computer usage. To properly manage systems risk,

prevent potential risks from materializing. The General Risk

DBJ has implemented the following internal processes toManagement Committee has been established to deliberate

optimize system risk management.

topics concerning operational risk management. Within

Based on its system risk management regulations, DBJ

operational risk management, DBJ conducts operational risk

has established the System Risk Management Department

management and systems risk management as describedto manage its system risk centrally. This department

below.

considers security standards from a variety of viewpoints,from information system planning and development toOperational Risk Management

operation and use. The department extends the system

Operational risk refers to the risk of sustaining losses

risk management system bankwide, striving to ensure

resulting from employees neglecting to perform their duties

that system risk management operations are conducted

correctly or from accidents, fraud, and the like. To reduce

appropriately.

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.

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Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Risk Management/Disclosure

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 relevant

DBJ maintains personal and client information, without

laws and regulations, operate in good faith and in adisclosing such information in a manner that would

dignified manner with its stakeholders, and disclose

encroach upon the rights of individuals or related parties.

information clearly and accurately in a timely and

We do not disclose information that would counter theappropriate manner.

doctrine of good faith.

PR/IR Structure
The Corporate Planning & Coordination Department takes

printed materials and over the Internet, the department uses

overall charge of PR and IR activities and plays a central role

numerous communication tools to disclose information.

in the flow of information within and outside DBJ. ThroughInformation Disclosure Materials
DBJ offers a wide range of information, using such media as
newsletters and its website:(1) Materials legally required for disclosure
Securities Report (Japanese)
Stock Exchange Report (Japanese)
Business Report (Japanese)(2) Voluntarily disclosed information
Annual Report & CSR Report
End-of-Period Financial Reports(3) Others
DBJournal (newsletter)
DBJ News Digest (mail magazine; Japanese)
Website:http://www.dbj.jp/en(Renovated October 2008)

Annual Report & CSR Report 200971

Management Structure

Client Protection Management System/Declaration on
Personal Information Protection
The establishment and maintenance of a client protection

their level of convenience. DBJ recognizes the extreme

management system is vital because it protects the people

importance of such a system from the standpoint of

who use the financial institution’s systems and raises

operational soundness and appropriateness.

Client Protection Management Policy and Declaration on Personal Information Protection
DBJ has formulated a Client Protection Management Policy

requests or complaints, we strive to see the issue fromto ensure strict compliance with laws and regulations,the client’s point of view, listen sincerely and respond inprotect the interests of its clients and raise the level of clientan operationally appropriate manner.

convenience. We have also created internal regulations based3) We acquire information about clients through legal

on this policy, which we employ in briefings to raise in-houseand appropriate means and manage such information

awareness.

safely. In transactions with clients, in the event that DBJ

Our Client Protection Management Policy is outlined
below:

outsources operations it ensures appropriate information
management and client response.

1) When transacting with clients, we endeavor to provide
and explain information that is accurate and appropriate
in line with laws and regulations.
2) When we receive requests for consultation, otherWe have incorporated a declaration on our policies
related to personal information into our Declaration on
Personal Information Protection.

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 conforming with therequirements of the Law on the Protection of Personal Information,
as well as other related laws and regulations, as well 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 tosatisfy such purpose of use. In the event that other purposes ofuse are limited by legal regulations concerning specified purposes
of use, such information is not used for purposes other than so
specified. DBJ discloses on its website the purposes of use ofclients’ personal information. If information is obtained for otherpurposes of use, such purposes are clearly indicated at the timesuch information is obtained.
4. Providing Personal Information to Third Parties
In principle, DBJ does not provide clients’ personal information tothird parties unless it has received from the client permission toprovide such information or unless it is legally required to provide
such information. However, DBJ may, without obtaining client
approval, provide clients’ personal information to parties it has

72

Annual Report & CSR Report 2009

commissioned to conduct activities within the scope for which theinformation was obtained or provide such information in the eventof 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 clients of the
purpose of use of the personal information it retains; responding
to requests to disclose such information; and in the event that thecontent of such information is incorrect, responding to clients’requests for revisions, additions or deletions, discontinuing use,
deleting information, or discontinuing the provision of suchinformation to third parties.
8. Inquiries
DBJ endeavors to respond in good faith to all opinions or requests
regarding the use of personal information.

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Client Protection Management System/Declaration on Personal
Information Protection/
Fostering Human Resources and Creating a Comfortable Work
Environment

Fostering Human Resources and Creating a Comfortable
Work Environment
As a financial institution, DBJ considers its human resources

environment to bring out the best in every employee. DBJ’s

to be its most valuable assets. We truly consider each ofsuperior employee performance resulting from such efforts

our employees to be assets, and we work to develop theiris what drives DBJ ahead on a daily basis and keeps it ancapabilities. DBJ actively works to build a systematic humaninnovator in the finance sector.

resource development system and a comfortable work

Human Resource Development Vision
DBJ’s role has evolved and developed substantially to meetcan be specialists in many fields. Although gaining specialist

the needs of the times. DBJ considers such innovation

skills is certainly important, responding to the constantly

crucial to maintaining its leadership position in thechanging demands of the times requires broad experience,

constantly advancing financial field.

deep knowledge and the ability to see the big picture.

To develop its human resources assets, DBJ encourages

DBJ has therefore created a human resource development

autonomous and pioneering behavior in its employees assystem that incorporates job rotation, performancefinancial professionals through the vision of generalists who

evaluation, education, and training.

Deploying the Target Management System
DBJ is implementing a Target Management System toautonomously running through the Plan-Do-Check-Act

encourage employees to work autonomously and modify(PDCA) cycle. Particularly in goal setting, DBJ emphasizes

their actions and to accurately evaluate such efforts. DBJ isenhancing medium- and long-term value internally andworking to enrich this system by having subordinates meetexternally, while motivating employees by offering bonuses

individually with superiors to set goals and receive feedback,and other benefits based on performance.

Creating a Comfortable Work Environment
DBJ actively strives to cultivate a comfortable work

employees’ families. These systems include treatment byenvironment.

external specialists and access to counselors.

To maintain an environment in which all employees can

DBJ has also introduced pioneering programs to givefeel secure, DBJ has notified employees of its campaign

motivated employees better opportunities for long-term

to prevent sexual and power harassment and has set up aemployment by allowing leave for childbirth, childcare andhotline to deal with such issues. Furthermore, to support

nursing care, as well as a system for continued employment

mental and physical health, DBJ provides regular medical

options after retiring from full-time work.

examinations and care options that are also available to

A Solid Human Resource Development System
DBJ’s financial professionals are supported by a welldeveloped education and training system. DBJ’s

employee to plan his or her career.
In 2008, we established the DBJ Financial Academy,

combination of mandatory training by level and elective

which is designed to help employees acquire and maintainself-training according to skills and interests enables eachbasic competencies and deepen their understanding ofAnnual Report & CSR Report 200973

Management Structure

finance, assuming they will become involved in advanced

achieve this, DBJ actively assigns employees to a wide

financial operations. We are expanding the academy,variety of external organizations, including overseas graduate

focusing on courses such as Basics of Finance, Corporate

schools (program currently being expanded), domestic

Finance and Valuations/Case Studies.

and overseas research institutes, international institutions,

In step with globalization, DBJ cultivates employees

related government agencies and corporations, thereby

able to perform in domestic and international settings. To

supporting skill development and network extension.

 DBJ’s Human Resource Development System
Mandatory Training by Level

Business-Related(Self-Training)

Elective Training

Careerdevelopment
plan training

Secondarytraining after
joining DBJ

Basicknowledge
areas•Accounting•Finance,
etc.

•Compliancetraining•Practical
legal
training•Training in
corporateandfinanciallaw, etc.

•Structured financetraining•Training in
syndicated loans•Seminars on
creation ofindustries•Environmental
and disasterprevention
seminars, etc.

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

•Finance theory
training•Finance casestudy training•Valuation training•Equity-related
training•Practical risk
management
training, etc.

DBJ Financial
AcademyIntroductory
training for
new employees
Autonomous
careerdevelopment

Cultivation ofmanagement andleadership skills

Accounting
system andrelated training

Legal
training

Mastery of DBJ
procedures andbasic processes

Mastery offinance andlaw

Planned and continuous HR development

Financialanalysis training
Acquisition offinancialaccounting
knowledge

Mastery of knowledge andskills needed for work

Domestic and overseas exchange
students, trainees, etc.

Management
training•Practicaltraining ininvestment
and loans•Rating
and asset
assessment
training•Basic loaninterest
training•Trainingin debt
management,
etc.

External seminars, lectures, etc.

PositionLife Plan
training

Distance learning, night courses, acquiring public qualifications

Top management
training

External
Assignments, etc.

Basic financetraining for
new employees
Mastery ofbasic businessexecution skills

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

Financialknowledge,
etc.

Mastery of knowledge andskills needed for work

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

Seeking Higher Ethical Standards
For half a century, DBJ has led Japan’s economy as a general

DBJ has long sought to enhance ethical standards bypolicy-based financial institution. As DBJ transforms into arequiring employee training to assure legal compliance,

private-sector financial institution that values the long-term

promote eco-friendly conduct (through environmental

perspective, neutrality, public-mindedness and reliability

management training) and maintain information security

it has cultivated, each employee is being held to a higher(training to address the risk of fraudulent access andethical standard.

information leaks). DBJ will henceforth devote even moreresources toward such efforts.

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Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Fostering Human Resources and Creating a Comfortable Work
Environment/Environmental Management

Environmental Management

DBJ aims to realize a more prosperous sustainable society

common to all humankind. For this reason, DBJ has establishedby achieving harmony through the triple bottom line ofa Basic Environmental Policy that aims to contribute to thesociety, the environment and the economy. We recognize

formation of an environmentally friendly economic society.

the resolution of environmental problems as an issue that isEnvironmental Preservation Activities
Through autonomous environmental preservation activities

Promotion of environmental awareness activities

that it conducts systematically and on an ongoing basis,

in offices

DBJ aims to make a sustained contribution to economic

In addition to complying with environmental regulations, DBJ

society. We incorporate environmental preservation into ourworks to reduce the environmental impact of its operations. As

investment and loan activities from this perspective.

such, we promote the measures described below in an effort

Promotion of environmental measures through our

to make our offices environmentally friendly.

investment and lending operations•Promotion of resource and energy conservation and recycling

DBJ’s investment and loan activities support projects toactivities

prevent global warming and create a recycling-based•Promotion of environmentally friendly sourcing of supplies

society. Furthermore, we promote clients’ efforts toward•Prevention of environmental pollution

environmentally conscious management. By contributing
to clients’ environmental measures, we help to achieve a

In June 2001, DBJ became the first Japanese bank tosustainable society.

sign the UNEP Statement by Financial Institutions on the

Promotion of environmental awareness throughEnvironment and Sustainable Development, promising toenvironmental communication

strive for harmony between economic development andDBJ addresses environmental problems by conducting ongoingenvironmental conservation and to cooperate in resolving

environmental studies and proposals. These efforts help toenvironmental problems. In addition, in November 2002 weenhance environmental awareness, support involvement inacquired ISO 14001 certification. Such efforts indicate ourenvironmental issues and contribute to the realization of aorganizational commitment to environmental preservation andsustainable society.

realizing a sustainable society.
At present, we are pursuing independent initiatives andpromoting environmental efforts in the communities where
our branches and offices are located.

Environmental Management Structure
DBJ has set up the Public Relations & Corporate Social

in DBJ’s Corporate Planning & Coordination Department.

Responsibility Office within the Corporate PlanningThe officer confirms environmental education and training& Coordination Department. This office spearheads

and accepts annual environmental targets.

environmental management activities attended by all
executives and employees.

General Risk Management Committee
Situated below the Management Committee, the General

Environmental Management Officer

Risk Management Committee deliberates annual environ-

The Environmental Management Officer is located within

mental targets and environmental management reviews.

the Public Relations & Corporate Social Responsibility Office

Annual Report & CSR Report 200975

Management Structure

Public Relations & Corporate Social Responsibility

Employees

Office, Corporate Planning & Coordination

Employees are responsible for putting environmental

Department

management activities in action.

In charge of DBJ’s environmental management activities is
the Public Relations & Corporate Social Responsibility Office, Environmental Management Structure
Environmental
Management Officer(Director in charge of Public Relations &Corporate Social Responsibility Office,Corporate Planning &Coordination Department)

Corporate Planning & Coordination Department. In addition
to setting environmental targets for each fiscal year andconfirming the degree to which they have been achieved,
this office manages compliance with relevant laws andGeneral Risk
Management
Committee

Environmental
Management Officer(Corporate Planning &Coordination Department Manager)

regulations.

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

Environmental Group Promotion Officer
To promote environmental management activities, we

Implementation
division

have situated an environmental member in each branch

Heads of each department
and officeand department. The Environmental Group Promotion
Officer designates personnel in charge of environmental
promotion and manages the level of achievement of annual
environmental targets.

EnvironmentalGroupmembers

Environmental Group
promotion officer
Environmental
Group promoter

Employees

Environmental Management Activities during the Year Ended March 31, 2009
Green Purchasing

Goods and Services by the State and Other Entities), which

Following the Green Purchasing Law (official title: Law

went into effect in April 2001, DBJ purchases products andConcerning the Promotion of Procurement of Eco-Friendly

services effective in reducing environmental impacts.

 Achievements of the Green Procurement
Program for Typical Items

 Resource- and Energy-Saving Efforts
Year Ended March 31, 2009

Procurement Achievements in
the Year Ended March 31, 2009

Paper

100%

1

ResultTarget for theYear Ending
March 31, 2010

Copy and printing paper usage

(1)%

13.1%

(1)%2

Stationery

89–100%Waste emissions(1)%(8.2)%(1)%3

Equipment

89–100%

Energy consumption

(1)%

7.8%

(1)%2

Office equipment

87–100%Lighting
Interior items

76

Target1

100%—

Notes: 1. Targets and results for the year ended March 31, 2009, are relative to the previous year’s levels.
2. Figures for copying and printing paper usage and energy consumption are 1% lower than the
average level achieved in DBJ’s loan products for the fiscal year ended March 31, 2009.
3. Waste emission figures correspond to 1% less than the level achieved in the year ended March 31, 2008,
after accounting for periodic personnel transfers.

Environmental Management Activities at Branches

environmental target set branch or department at theand Departments

beginning of the fiscal year, the rules stipulated that the

To encourage environmental management at each ofactivity could not be limited to the efforts of an individual

our branches and departments, we created an award forand that the environmental activity had to be conducted

the branch or department with the best environmental

in cooperation with the local community. The winner was

activities. To win, in addition to reaching the annual

selected based on these and other criteria.

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Environmental Management

Branch/Department Recognition

Toyako Summit, DBJ’s Hokkaido Branch was an exhibitor.

• “Compact Electronics Collection Trial,” Department for

The exhibit introduced DBJ’s environmental initiatives,

Public Sector Solutions (Now, the Business Planning &Coordination Department)

including the DBJ Environmental Rating System.
These activities were highly acclaimed, with Harumi

The department collected unused digital cameras, portable

Takahashi, the Governor

game units, portable music players and other compactof Hokkaido and theelectrical and electronic devices and took them to a center

Chairperson of thewhere the rare metals they contained could be extracted

Hokkaido Toyako

and tested to see whether they could be disposed ofSummit Preparation

properly. The compact electronics collection trial was

Council expressing his

conducted mainly in the city of Ohdate, Akita Prefecture, inappreciation.

December 2006.
DBJ employees participatedin the trial. Collection boxes• Shikoku BranchParticipated in Forest Thinning Activities

were set out at three loca-

The Shikoku Branch participated in forest thinning* activities

tions in DBJ’s headquarters

conducted by Mitsui & Co., Ltd., in October 2008. After

cafeteria. A total of 210

receiving instruction fromelectrical and electronic

an NPO on forest thinningdevices were collected.

participants helped withthese activities, joining• Department for Corporate Finance, Division 6 (Now,local residents andthe Regional Planning Department, Corporate Financestrengthening community

Group, Mid-Sized & Growth)ties.

Collecting Used Stamps

This department collected stamps from letters and parcels
posted to executives and employees and sent the cancelled*Thinning is a type of forest preservation activity. Too-dense growthof trees limits the health of the overall forest. As a countermeasure,some saplings are cut away.

stamps to the Japan Overseas
Christian Medical Cooperative
Service. The funds these• Minami-Kyushu Branch
Cleanup Activity on Sakurajima

stamps generate are used to

Located in the Kirishima-Yaku National Park, Sakurajima is

maintain health and improvea symbol of Kagoshima Prefecture. In November 2008, themedical treatment in Asia,

Minami-Kyushu Branch participated in a cleanup project

Africa and other regions.

covering the ocean leisure spot in a famed tourist areaadjoining Sakurajima. This area attracts many seaborne• Hokkaido Branch

objects, some of them

Exhibition at the Integrated Exhibition of thea result of tourism. This

Environment in Celebration of the 2008

cleanup activity helped

Hokkaido Toyako Summit

preserve the area as a

In addition to serving as an advisor to the executive

future tourism resource.

committee for the Exhibition at the Integrated Exhibitionof the Environment in Celebration of the 2008 Hokkaido

Annual Report & CSR Report 200977

Management Structure

DBJ’s Primary Achievements in the Environmental Sector since Its Establishment
1999 October
2001 April
June
October
2002 March
July
November
2003 October
October
2004 April
September
November
December2005 January
April
September
OctoberNovember
2006 April
May
August2007 April
2008 April
October

The Development Bank of Japan Law (Law No. 73 of 1999) stipulated objective is explicitly stated as “sustainable development”
Starts green procurement and environmental training
Becomes first Japanese bank to sign the UNEP Statement by Financial Institutions on the Environment and Sustainable
Development
Forms the Social Environment Committee and Social Environment Group; hosts discussions between UNEP and Wa no Kuni
Financial Institutions on Environmental Considerations for Financial Institutions
Attends UNEP FI 2002 Global Roundtable in Rio de Janeiro, Brazil
Launches the Development Bank of Japan Environmental Policy
Obtains ISO 14001 certification
Publishes Environmental Report 2003 for a Sustainable Society (first annual edition)
Jointly sponsors UNEP FI 2003 Global Roundtable in Tokyo, an international conference on finance and the environment
Starts Loans for Promoting Environmentally Conscious Management
Issues the second annual Sustainability Report
Establishes Japan Carbon Finance, Ltd. (JCF)
Establishes Japan Greenhouse Gas Reduction Fund (JGRF)
Assumes chairmanship of the UNEP FI Asia Pacific Task Force
Starts program to promote the spread of equipment meeting Top Runner standards in accordance with the Energy
Conservation Law
Issues the third annual Sustainability Report
Presents at the UNEP FI 2003 Global Roundtable
Renews ISO 14001 certification
Starts program to support projects in line with the Kyoto Protocol Target Achievement Plan
Holds press conference to announce DBJ status as a signatory institution to the Principles for Responsible Investment
Publishes CSR Report 2006 (fourth annual Sustainability Report)
Starts interest subsidy system for the global warming countermeasure portion of the Promoting Environmentally Conscious
Management financing system
Revises environmental policy, creating the Basic Environmental Policy
In line with the launch of the New DBJ, the first Board of Directors and Management Committee meetings convene andthe Basic Environmental Policy and Environmental Management Regulations are formulated

DBJ’s Basic Environmental Policy
Promulgated and Put into Effect October 1, 2008

Purpose
Article 1. DBJ aims to realize a more prosperous sustainable society
by achieving harmony through the triple bottom line of society,the environment and the economy. We recognize the resolutionof environmental problems as an issue that is common to all
humankind. For this reason, DBJ has established a policy thataims to contribute to the formation of an environmentally friendly
economic society.
Promotion of Environmental Measures through Loan and
Investment Activities
Article 2. Through its investment and loan activities, DBJ supports
global warming prevention measures and the promotion of arecycling-oriented society. In addition, by supporting environmentally
sustainable corporate management by its clients, DBJ contributes totheir creation of environmental measures and to the realization of asustainable 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. Through continuing research and advisory activities relating
to environmental issues, DBJ seeks to help resolve environmental

78

Annual Report & CSR Report 2009

issues through enhanced awareness, thereby contributing to therealization of a sustainable society.
2. DBJ seeks to promote environmental awareness throughinternational cooperation, including the distribution of information
about environmental initiatives by Japan.
3. DBJ endeavors to improve its initiatives by sharing information on its
environmental activities and through communication with society.
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 creation ofenvironmentally 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 regionalsocieties.

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Corporate Data

Timeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Board of Directors, Corporate Auditors andExecutive Officers . . . . . . . . . . . . . . . . . . . . . 81

Organization Chart . . . . . . . . . . . . . . . . . . . . . 82

Locations and Directory . . . . . . . . . . . . . . . . . 83

Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

Stock Information . . . . . . . . . . . . . . . . . . . . . . 85

Excerpt from the New DBJ Law . . . . . . . . . . . 86

Law for Partial Amendment of
the Development Bank of Japan Inc. Law . . 90

Annual Report & CSR Report 200979

Timeline

The Japan Development Bank, the Hokkaido-Tohoku Development Finance Public Corporation and the Development Bank of Japan
1951 April
1952 Japan

Japan Development Bank (JDB) established
Development Bank; branches opened in Osaka (currently, the Kansai Branch), Sapporo (currently, the Hokkaido
Branch), Nagoya (currently, the Tokai Branch) and Fukuoka (currently, the Kyushu Branch)1956 June
Hokkaido Development Finance Public Corporation established1957 April
Hokkaido Development Finance Public Corporation reorganized as the Hokkaido-Tohoku Development Finance Public
Corporation (HTDFP); branches opened in Sapporo (currently, the Hokkaido Branch) and Sendai (currently, the Tohoku
Branch)1960
JDB branch opened in Takamatsu (now the Shikoku Branch)
1961
JDB branches opened in Hiroshima (now the Chugoku Branch) and Kanazawa (now the Hokuriku Branch)
1962 April
JDB representative office opened in New York1963
JDB representative offices opened in Kagoshima (renamed Minami-Kyushu Branch in October 1999) and Matsue
1964 JulyJDB representative office opened in London
1972 January
HTDFP representative office opened in Niigata (renamed Niigata Branch in July 1989)
1985 June
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
1987 September JDB and HTDFP creation of low interest rate loan system funded partially by sale of NTT shares
1989
JDB representative offices opened in Oita, Matsuyama, Okayama and Toyama HTDFP representative offices opened in
Hakodate and Aomori
1995 February
JDB commenced loans to assist disaster recovery
1997 September Cabinet approval of bill entitled “Pertaining to Consolidation and Rationalization of Special-Purpose Companies, etc.”(decision to dissolve Japan Development Bank and Hokkaido-Tohoku Development Finance Public Corporation andconsolidate them as a new bank)1997 December JDB and HTDFP commenced loans in response to the financial environment (establishment of March 31, 2004, sunset
clause)1999 June
The Development Bank of Japan Law (Law No. 73 of 1999) established1999 OctoberTransfer of approval of all rights and responsibilities of JDB and HTDFP to DBJ
Transfer of financing operations from Japan Regional Development Corporation and Japan Environment Corporation
Representative offices opened in Kushiro and Singapore
2002 May
Partial revision of the Development Bank of Japan Law (introduction of spot inspections by the Financial Services Agency)
2005 December Cabinet approval of The Important Policy of Administrative Reform
2006 May
Establishment of the Law concerning Administrative Reform for Realizing the Simple and Effective Government(Law No. 47 of 2006)
2006 June
Policy-Based Financing Reform Plan decided upon by the Headquarters for the Implementation of Policy Finance Reform
2007 June
Establishment of the Development Bank of Japan Inc. Law (New DBJ Law) (Law No. 85 of 2007)

Development Bank of Japan Inc.
2008 October
Establishment of Development Bank of Japan Inc. (Capital: ¥1 trillion)
2008 December Singapore Representative Office incorporated (DBJ Singapore Limited established)2009 June
Law for Partial Amendment of the Development Bank of Japan Inc. Law (New DBJ Law) (Law No. 67 of 2009)80

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Board of Directors, Corporate Auditors and Executive Officers(As of September 1, 2009)

Minoru Murofushi

Norihiro Fukunaga

President & CEO

Managing Executive Officer

Hideto Fujii

In charge of Urban Development Department, Corporate Finance
Department [Division 3], Asset Finance Group

Deputy President

Naoto Yamamoto

Mikio Araki

Managing Executive Officer

Deputy President

In charge of Corporate Finance Department [Division 1 and 2]

Yo Takeuchi

Kenichiro Hirata

Director and Managing Executive Officer

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

In charge of Corporate Finance Department [Division 4]

Hisato Nagao
Managing Executive Officer
In charge of Corporate Finance Department [Division 5]

Masanori Yanagi
Director and Managing Executive Officer
In charge of Business Planning & Coordination Department, Research &Design Department, Investment Strategy Department

Hiroshi Takahashi
Director and Managing Executive Officer
In charge of General Affairs Department, Accounting Department, Credit
Analysis Department, Legal Affairs & Compliance Department

Hisato Nagaoka
Managing Executive Officer
In charge of Corporate Finance Group, Mid-Size & Growth, Economic &Industrial Research Department, Hokuriku Branch, Tokai Branch

Kan Ishii
Managing Executive Officer

Mitsuhiro UsuiIn charge of Investment Planning Group, Fund Investment Group, Strategic
Finance Group, Growth & Cross Border Investment Group, Structured
Finance Group, Syndication Group, Kyushu Branch, Minami-Kyushu Branch

Director and Managing Executive Officer

Ryo Ishimori

In charge of Corporate Planning & Coordination Department (excluding
the Public Relations & Corporate Social Responsibility Office), ALM & Risk
Management Department, Information Resources Department

Managing Executive Officer

Akio Mimura

In charge of Business Development Department, Regional Planning
Department (Public Sector Relationship Management Group, Regional
Development Group), Hokkaido Branch, Tohoku Branch, Niigata Branch

Director (Outside)

Nozomu Kano

Kazuo Ueda

Managing Executive Officer, Head of Kansai Branch

Director (Outside)

In charge of Kansai Branch, Chugoku Branch, Shikoku Branch

Tsuyoshi Inoue

Yasuhito Mitani

Full-Time Corporate Auditor

Executive Officer, Head of Internal Audit

Tetsuhiko Shindo

Masafumi Aizawa

Full-Time Corporate Auditor

Executive Officer, Head of Financial Institution

Hiroshi Saito

Takeshi Kobayashi

Full-Time Corporate Auditor (Outside)

Makoto Ito

Executive Officer, Head of Human Resources
Management Department

Corporate Auditor (Outside)

Hajime Watanabe

Shinji Hatta

Executive Officer, Head of Corporate Planning &Coordination Department

Corporate Auditor (Outside)

Masanao Maeda
Notes: 1. Akio Mimura and Kazuo Ueda are outside directors under Article
15 of Section 2 of the Companies Act.
2. Hiroshi Saito, Makoto Ito and Shinji Hatta are outside corporate
auditors under Article 16 of Section 2 of the Companies Act.

Executive Officer, Head of Business Planning &Coordination Department

Annual Report & CSR Report 200981Organization Chart (As of September 1, 2009)

Business Planning & Coordination Department
Research & Design Department
Urban Development Department
International Strategy & Coordination Department
Corporate Finance Department, Division 1
Corporate Finance Department, Division 2
Corporate Finance Department, Division 3
Corporate Finance Department, Division 4
Corporate Finance Department, Division 5

Corporate Auditors/
Board of Corporate Auditors

Corporate Finance Group, Mid-Size & Growth
Hokkaido Branch
Tohoku Branch
Niigata Branch

Office ofCorporate Auditor

Hokuriku Branch
Tokai Branch
Kansai Branch
Chugoku Branch
Shikoku Branch

GeneralMeeting of
Shareholders

Board ofDirectors

Executive
Committee

Kyushu Branch
Minami-Kyushu Branch
Investment Strategy Department
Asset Finance Group
Investment Planning Group
Fund Investment Group
Strategic Finance Group
Growth & Cross Border Investment Group
Structured Finance Group
Syndication Group
Business Development Department
Economic & Industrial Research Department
Regional Planning Department
Public Sector Relationship Management GroupRegional Development Group
Research Institute of Capital Formation
Credit Analysis Department
Legal Affairs & Compliance Department
Secretariat Office
Human Resources Management Department
Corporate Planning & Coordination Department
ALM & Risk Management Department
Information Resources Department
General Affairs Department
Accounting Department
Treasury Department
Financial Institution Department

Operations Audit Committee

Internal Audit Department

Representative Offices: Hakodate, Kushiro, Aomori, Toyama, Matsue, Okayama, Matsuyama, Oita
Overseas Representative Offices: New York, London
Overseas Subsidiary: DBJ Singapore Limited

82

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Locations and Directory (As of September 1, 2009)

Shuto Expressway

Development Bank of Japan Inc.

NTT

KDDI
Chiyoda Line
Otemachi Sta.
(Exit C1)

Marunouchi Line
Otemachi Sta.
(Exit A1)

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

To Kanda

Head Office*Exit A1 and A3

are closed

Branch Offices:

Representative Offices:

Hokkaido

Hakodate

TohokuKushiroNiigata

Aomori

Hokuriku

ToyamaTokai

MatsueKansai

Okayama

Chugoku

Matsuyama

Shikoku

Oita

KyushuMinami-kyushu

Overseas Representative Offices and Subsidiary
London Representative Office

New York Representative Office

DBJ Singapore Limited

New York Representative OfficeLondon Representative Office

DBJ Singapore Limited

1251 Avenue of the Americas, Suite 830,
New York, NY 10020, U.S.A.
Tel: +1-212-221-0708

Level 12, City Tower, 40 Basinghall Street,
London, EC2V 5DE, United Kingdom
Tel: +44-20-7638-6210

9 Raffles Place, #30-03 Republic Plaza,
Singapore 048619
Tel: +65-6221-1779

Development Bank of Japan Inc.
London Wall

St.

5

th
49

Radio City Music Hall
St.

Rockefeller Center

50th St.
49th St.

Gresham St.

ChUOB Plaza

55 Market StreeturchRaffles PlaceSt.

Lothbury St.

Golden Shoe Park

Bharat Bldg.

Bank

Ocean Bldg.

Equity Plaza
Cecil St.

St.

5th Ave.

6th Ave.

7th Ave.

PrinceDevelopment Bank of Japan Inc.

GuildhallBasinghall St.

51st St.
0th

Moorgate

52nd St.

Coleman St.

way

Sheraton New York Hotel and Towers

Market St.

Broad

Hilton New YorkDBJ Singapore Limited

Annual Report & CSR Report 200983

Subsidiaries (As of March 31, 2009)

Consolidated Subsidiaries
Company

Address

Principal Businesses

DBJ Business Investment Co., Ltd.

Chiyoda-ku,
Tokyo

New Business Investment Co., Ltd.

Chiyoda-ku,
TokyoManagement of investment
associations, investment
consulting
Investment in new businesses
startups

New Business Investment No. 1
Chiyoda-ku,
Investment Limited Liability Partnership TokyoManagement of investment
associations

March 10,2003

40

100.00June 1, 1990

6,000

63.83

June 23, 2006

3,200

100.00(10.00)April 3, 200650

100.00Chiyoda-ku,
Tokyo

December 13,
1989

479

100.00

Republic ofSingapore

Investment support and advisory
services

64
December 16,(Equivalent to2008
S$1 million)

100.00Chiyoda-ku,
Tokyo
Chiyoda-ku,
Tokyo
Minato-ku,
TokyoManagement of investment
associations
Management of investment
associations
Management of investment
associations

June 6, 2003

3

50.00

23,45350.00(0.00)

5,130

49.40

Chiyoda-ku,
TokyoJapan Economic Research Institute Inc.
DBJ Singapore Limited

Asuka DBJ Investment LPS

Percentage ofTotal Voting
Rights (%)

Acquisition of beneficiary rights,
consigned trusts operation andguidance
Provision of consulting andadvisory services

DBJ Credit Line, Ltd.

DBJ Corporate Mezzanine
Partners Co., Ltd.
UDS Corporate Mezzanine Limited
Partnership

Capital(Millions ofYen)

Established

January 18,
2006
October 28,
2005

Notes:
1. Amounts of less than ¥1 million have been omitted in the figures stated above.
2. Capital amounts have been converted into yen at the prevailing exchange rate on the final day of the fiscal year.
3. DBJ’s percentage of total voting rights in subsidiaries is shown to three decimal places. Percentages less than that amount have been omitted.
4. Figures indicated within parentheses ( ) in the column showing DBJ’s percentage voting rights in subsidiaries indicate indirect holdings.
5. The date of establishment shown for DBJ Singapore Limited indicates the date the company was incorporated.
6. Although it holds 50% or less of the shares in DBJ Corporate Mezzanine Partners Co., Ltd., UDS Corporate Mezzanine Limited Partnership and Asuka DBJ Investment
LPS, DBJ effectively controls these companies.

84

Annual Report & CSR Report 2009

Overview of Operations

Management Policy

Financial Services

Management Structure

Corporate Data

Stock Information (As of March 31, 2009)

Number of Shares Issued and Paid-in Capital
Changes in number
Number of sharesof shares issued
issued(Thousands of shares) (Thousands of shares)

October 1, 2008

40,00040,000Changes in
paid-in capital(Millions of yen)

1,000,000

Changes in
Additional paid-in
Paid-in capital additional paid-in
capital(Millions of yen)capital(Millions of yen)
(Millions of yen)

1,000,000

Note 2

Note 2

Notes:
1. All shares issued on October 1, 2008, were to raise capital corresponding to incorporation.
In accordance with Article 9 of the Supplementary Provisions to the New DBJ Law, on October 1, 2008, all assets of the predecessor were transferred to the
new DBJ as an in-kind contribution (except those prescribed for ongoing use by the Japanese government of under Paragraph 2, Article 15, of the Supplementary
Provisions to the Law), and these shares were transferred to the Japanese government, the capital investor in the predecessor, through a gratuitous conveyance.
2. As of October 1, 2008, according to the provisions of Article 2 of the Supplementary Provisions to DBJ’s Articles of Incorporation, the value of the capital reserve wascalculated by evaluation officers as stipulated in Paragraph 1, Article 16, of the Supplementary Provisions to the New DBJ Law to be the value of assets less the valueof 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 (asof October 1, 2008) for transfer approval. 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, the deficit was covered by transferring the capital reserve to other additional paid-in capitaland transferring other additional paid-in capital to the earned surplus carried forward. As the capital reserve fell ¥97,248 million as a result of these transfers, thecapital reserve had a post-transfer balance of ¥1,060,466 million.

Shareholder
Address

Finance Minister
Total

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

Number of shares held(Thousands of shares)

Percentage of
total equity (%)

40,00040,000

Annual Report & CSR Report 2009100.00100.0085

Excerpt from the New DBJ Law (Law 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 (kabushiki-kaisha)
whose object is to maintain the foundations of investment andfinancing functions of long-term business funds as the Development
Bank of Japan by conducting business activities utilizing the methodsof combining investments and financing and other sophisticatedfinancial methodologies, while maintaining the autonomy ofmanagement with the goal of realizing full-scale privatization, thereby
contributing to smooth supply of funds to those who need long-termbusiness funds, as well as to the sophistication of financial functions.
Article 3
Scope of Business Operations
1. The Corporation shall engage in the following business operations
to attain its objectives:(1) To accept deposits (limited to certificates of deposit (CDs) andother deposits stipulated in the Cabinet Order);(2) To lend money;(3) To make capital contributions;(4) To guarantee the due performance of debts and obligations;(5) To sell and purchase Securities (other than those that fall withinmonetary claims represented by certificates set forth in Item (7),
Short-term Notes, Etc.; the same in Item (8)) (other than thosethat fall within securities-related derivatives transactions (whichmean the securities-related derivatives transactions set forth in
Article 28, Paragraph 8, Item (6) of the Financial Instruments
and Exchange Law (Law No. 25 of 1948, as amended);hereinafter in this Item and Item 11 the same), or enter into
securities-related derivatives transactions (limited to those madefor investment purposes), except in cases where these business
operations fall within those operations referred to in Item (3);(6) To lend Securities;(7) To acquire or transfer monetary claims (including claims
represented by certificates stipulated in the Ministry of FinanceOrdinance such as negotiable bank deposit certificates);(8) To subscribe for Specified Debentures or Preferred Investment
Securities issued by a Specified Purpose Company (limited to thecases where the Specified Purpose Company acquires only
designated monetary claims or beneficial interests in trusts withwhich designated monetary claims are entrusted with cash
proceeds derived from issue of those Specified Debentures orPreferred Investment Securities as set forth in the Asset
Liquidation Plans, and except for, in case of Specified
Debentures, Specified Short-term Notes), and other similar
securities stipulated in the Ministry of Finance (hereinafter in this
Item referred to as the ”Specified Debentures”) (except in cases
where it is intended for secondary distribution (uridashi)), or tohandle 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 of agreements
which provides for lending money on behalf of banks (thebanks set forth in Article 2, Paragraph 1 of the Banking Act(Law No. 59 of 1981, as amended); hereinafter the same) andother entities engaged in the financial business stipulated in the
Cabinet Order;

86

Annual Report & CSR Report 2009(11) To enter into derivatives transactions set forth in Article 2,
Paragraph 20 of the Financial Instruments and Exchange Law(other than those that fall within the securities-related
derivatives transactions), except in cases where these business
operations fall within those operations referred to in Item (7);(12) To do the activities referred to in Article 2, Paragraph 8, Item (7)of the Financial Instruments and Exchange Law;
(13) To do the activities referred to in Article 2, Paragraph 8, Item (9)of the Financial Instruments and Exchange Law (limited, inthe case of the handling of primary offering or secondary
distribution, to those to be conducted upon entrustment byfinancial instruments dealers engaged in the type I financial
instruments trading business set forth in Article 28, Paragraph 1of the Financial Instruments and Exchange Law (the financial
instruments dealers set forth in Article 2, Paragraph 9 of the
Financial Instruments and Exchange Law; hereinafter the same),and for such financial instruments dealers);(14) To do the activities referred to in Article 2, Paragraph 8, Item
(11) of the Financial Instruments and Exchange Law;
(15) To do the activities referred to in Article 2, Paragraph 8, Item(13) of the Financial Instruments and Exchange Law;
(16) To do the activities referred to in Article 2, Paragraph 8, Item(15) of the Financial Instruments and Exchange Law;
(17) With respect to securities (including, if such securities are notissued, rights to be represented by such securities) ortransactions referred to in each Item of Paragraph 2 of Article
33 of the Financial Instruments and Exchange Law, to do theactivities set forth in each Item of said Paragraph (other thanthose referred to in Items 3, 5, 7 through 9, 11 and 13);(18) To provide other entities with consulting services regarding
business transfer, merger, corporate split, share-for-shareexchange (kabushiki kokan) or share transfer (kabushiki iten), or
to act as a broker for these transactions;(19) To provide other entities with consulting services regarding
management, and to conduct investigations or provide
information as required for the business operations of 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 forthin Article 3, Paragraph 1, Item (1) or issue of the Development Bankof Japan Bonds, the Corporation shall obtain 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.

Overview of Operations

Management Policy

Financial Services

Article 12
Shares
1. If the Corporation intends to solicit those who will subscribe forshares offered for sale set forth in Article 199, Paragraph 1 of theCompanies Act (Law No.86 of 2005, as amended) (hereinafter in
Article 34, Item (4) referred to as the ”Shares Offered for Sale”) or
stock acquisition rights offered set forth in Article 238, Paragraph 1of the Companies Act (hereinafter in Article 34, Item (4) referred tothe ”Stock Acquisition Rights Offered”), or to deliver shares orstock acquisition rights in connection with a share-for-shareexchange, 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 Law Concerning the Central
Depositary System of Corporate Debentures (Law No. 75 of 2001,
as amended) from both the Corporate Debentures and theDevelopment Bank of Japan Bonds, respectively; hereinafter inthis Article and Article 18 the same), as well as regarding theborrowings (limited to those with more than one year to maturity;
hereinafter in this Article and Article 18 the same), which provides
for matters relating to the issue of the Corporate Debentures andthe Development Bank of Japan Bonds, and the borrowing ofmoney, such as the amounts of issue and borrowings, denominatedcurrency of the Corporate Debentures, the Development Bank ofJapan Bonds and the borrowings, as stipulated in the Ministry of
Finance Ordinance, and obtain authorization of the Minister ofFinance. If the Corporation intends to revise it, the same shallapply.
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 anddismissal of audit committee members (kansaiin) shall not become
effective without authorization of the Minister of Finance.
Article 16
Authorization of Concurrent Positions of Directors
1. 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 withoutauthorization of the Minister of Finance.
2. The Minister of Finance shall, upon receipt of an application for theauthorization referred to in the preceding Paragraph, grant his/herauthorization, except in cases where it is determined that any

Management Structure

Corporate Datamatter so applied may interfere with sound and proper
management of the Corporation.
Article 17
Business Plan
Prior to the beginning of each fiscal year, the Corporation shall drawout a business plan for the new fiscal year and obtain authorizationof the Minister of Finance, as stipulated in the Ministry of FinanceOrdinance. If the Corporation intends to revise it, the same shallapply.
Article 18
Redemption Plan
Prior to the beginning of each fiscal year, the Corporation shall drawout redemption plans for the Corporate Debentures, the Development
Bank of Japan Bonds and the borrowings and obtain authorizationof the Minister of Finance, as stipulated in the Ministry of FinanceOrdinance. If the Corporation intends to revise it, the same shallapply.
Article 19
Subsidiaries Subject to Authorization
1. If the Corporation intends to make any of the following entities(other than individuals in the cases of those referred to in Items (3),(4) and (7); hereinafter referred to as the ”Subsidiaries Subject toAuthorization”) its subsidiary (the subsidiary set forth in Article 2,
Item (3) of the Companies Act), the Corporation shall obtain
authorization of the Minister of Finance in advance:(1) Banks;(2) Long-term credit banks (the long-term credit banks set forth in
Article 2 of the Long-Term Credit Bank Law (Law No.187 of1952, as amended));(3) Financial Instruments Dealers (limited to those who engage intype I financial instruments trading business set forth in Article
28, Paragraph 1 of the Financial Instruments and Exchange
Law);(4) Money lenders (the money lenders set forth in Article 2,
Paragraph 2 of the Money Lending Business Law (Law No. 32
of 1983, as amended), and exclude those who concurrently
conduct the business referred to in the preceding Items or fallwithin other requirements stipulated in the Ministry of FinanceOrdinance);(5) Trust companies (the trust companies set forth in Article 2,
Paragraph 2 of the Trust Business Law (Law No. 154 of 2004,
as amended));(6) Insurance companies (the insurance companies set forthin Article 2, Paragraph 2 of the Insurance Business Law (Law
No. 105 of 1995, as amended)); and(7) Those stipulated by the Ministry of Finance Ordinance as those
who are similar to each of the foregoing.
Article 20
Amendment to the Articles of Incorporation, Etc.
1. Resolutions for amendment to the Articles of Incorporation of the
Corporation, disposition of surplus funds (other than disposition oflosses) such as distribution, merger, corporate split, and dissolution

Annual Report & CSR Report 200987

shall not become effective without authorization of the Minister ofFinance.
Article 22Special Exemptions from Management of Fiscal Loan Funds
Notwithstanding the provisions of Article 10, Paragraph 1 of the Fiscal
Loan Funds Law (Law 100 of 1951, as amended), the fiscal loan funds(which means the fiscal loan funds set forth in Article 2 of the Fiscal
Loan Funds Law; hereinafter the same) may be appropriated for loans(hereinafter in Article 24 referred to simply as the ”Loans”) to the
Corporation when the Corporation borrows money for appropriationfor expenses required for its operations set forth in Article 3,
Paragraphs 1 and 2.
Article 23
1. Notwithstanding the provision of Article 10, Paragraph 1 of the
Fiscal Loan Funds Law, the fiscal loan funds may be appropriatedfor the Corporate Debentures and the Development 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 25
Guarantee of Obligations
1. Notwithstanding the provision of Article 3 of the Law Concerning
Restrictions on Fiscal Assistance by the Government to
Corporations (Law No. 24 of 1946, as amended), the Government
may enter into a guarantee agreement for the obligations relating
to the Debentures, Etc., to the extent of the amount approved by
the resolutions of the Diet.
Article 29
Competent Ministers
1. The competent minister under this Law shall be the Minister ofFinance provided, however, that in the case that the Corporation
obtains the approval referred to in Article 9, Paragraph 1, thecompetent ministers for the following matters shall be the Ministerof Finance and the Prime Minister.

Supplementary Provisions
Article 2
Disposition of Government-Owned Shares
1. Pursuant to Article 6, Paragraph 2 of the Law Concerning
Promotion of Administrative Reform for Realizing the Simple andEffective Government (Law No. 47 of 2006, as amended), theGovernment shall make efforts to reduce the number of shares
held by it in the Corporation (hereinafter in the following
Paragraph and the immediately following Article referred to as”Government-Owned Shares”), taking into account the market
situation, and shall dispose all of them in approximately five toseven years from the date set forth in Item (3) of the preceding
Article.
2. For a period from the effectuation of this law until the Government
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 Government-Owned Shares should be
disposed of and take the required measures based on the result ofsuch review, so that the foundation of the Corporation’s investment
and financing functions for long-term business funds will bemaintained.
Article 3
Abolition of This Law and Other Measures
If the Government disposes of all of the Government-Owned Shares,
the Government shall immediately take measures to abolish this law,as well as measures necessary to smoothly assign the business
operations, functions, and rights and obligations of the Corporation
to any organization to be formed as a bearer of the functionscommensurate 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 Bankof Japan (hereinafter referred to as ”DBJ”) may borrow Long-term
Loans, in addition to those set forth in Article 42, Paragraphs 1 and
2 of the Development Bank of Japan Law (Law No. 73 of 1999, as
amended; hereinafter, except for Article 26 of the Supplementary
Provisions, referred to as the ”DBJ Law”), during the Preparatory
Period (the period from the date on which this law comes into
force up to September 30, 2008; the same in Paragraph 5).
Article 9
Capital Contribution
Upon the incorporation of the Corporation, DBJ shall contribute all of
its properties, except assets to be assumed by Japan pursuant to
Article 15, Paragraph 2 of the Supplementary Provisions, to the
Corporation.

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Overview of Operations

Management Policy

Financial Services

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 those assets tobe assumed by the Government as set forth in the following
Paragraph.
2. Of the rights actually held by DBJ at the time of establishment of
the Corporation, the assets which will be considered no longer
necessary for the Corporation to smoothly perform its futurebusiness operation shall be assumed by Japan at the time ofestablishment of the Corporation.
Article 16
Values of Properties Assumed
1. The values of assets and liabilities assumed by the Corporation from
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 of Article 29,
Paragraph 1, be as follows:(1) For management of the Assumed Assets set forth in the Cabinet
Order in the Hokkaido or the Tohoku Region (which means theareas of Aomori, Iwate, Miyagi, Akita, Yamagata, Fukushima andNiigata prefectures): Minister of Finance and Minister 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 of Finance.

Management Structure

Corporate Dataconsidering the convenience of users of those systems, and take therequired measures based on the results of such examination.
Article 67
Utilization of the Corporation’s Investment and Financing
Functions for Long-term Business Funds
If the Government utilizes the Corporation’s investment and financing
functions for long-term business funds on or after the date set forthin Article 1, Item (3) of the Supplementary Provisions, the Government
shall take measures necessary to secure the equal competition
conditions, as well as other measures necessary for utilization of suchinvestment and financing functions, paying attention to the
Corporation’s appropriate competitive relationships with otherbusiness entities.
This is an unofficial English translation. Only the original Japanese
texts of the law have legal effect and prevail over this translation.
This translation has been prepared solely for reference purposes.
The reader of this translation should consult the original Japanese
text for the purposes of interpreting and applying the law to any
legal issues or disputes.

Article 66
Examinations
On or prior to the date set forth in Article 1, Item (3) of the
Supplementary Provisions, the Government shall examine measures tosecure the equal competitive conditions with other business entities,
with respect to the systems for which the investment and financing
functions of DBJ are utilized pursuant to the provisions of relevant laws(including ordinances under those laws), such as the Law Concerning
Collaterals for Borrowings of Electricity Companies from The
Development Bank of Japan (Law No. 145 of 1950, as amended), the
Law Concerning the Securement of Oil Reserves, Etc. (Law No. 96 of1975, as amended), the Law Concerning Promotion of Development
and Promotion of Introduction of Alternative Energy to Oil (Law No. 71
of 1980, as amended), the Special Measures Law Concerning
Promotion of Private Urban Development (Law No. 62 of 1987, as
amended), the Extraordinary Measures Law Concerning Promotion ofBusiness Activities for Rationalization of Usage of Energy and Effective
Use of Resources (Law No. 18 of 1993, as amended) and the Law
Concerning Facilitation of the Improvement, Etc. of Public Facilities,
Etc. by Private Fund, Etc. (Law No. 117 of 1999, as amended), while

Annual Report & CSR Report 200989

Law for Partial Amendment of the Development Bank ofJapan Inc. Law (Law No. 67 of 2009)(Unofficial translation)

The Development Bank of Japan Law (Law No. 85 of 2007) shall be
partially amended as described below.
In Article 2, paragraph 1 of the Supplementary Provisions, ”thefollowing Article” shall be amended to read ”Article 3 of the
Supplementary Provisions” and ”the day stipulated in item 3 of thepreceding Article” to read ”April 1, 2012”. The following five articles
shall be added after Article 2.
Government Investment
Article 2-2During the period ending March 31, 2012, the Government may
invest in the Corporation as it deems necessary within the limits set byits budget.
Delivery of Government Bonds
Article 2-3
1 During the period ending March 31, 2012, the Government, in
implementing the crisis response business specified in Article 2,
item 5 of the Japan Finance Corporation Law (Law No. 57 of 2007;
hereinafter ”Crisis Response Business”) may issue government
bonds in order to secure the capital required to ensure thesoundness of the Corporation’s finances.
2 The Government, under the provisions of the preceding paragraphand within the limits set by its budget, shall issue government
bonds and deliver them to the Corporation.
3 Government bonds issued under the provisions of paragraph 1
shall be noninterest-bearing.
4 Government bonds issued under the provisions of paragraph 1
may not be transferred, attached as security rights, or otherwise
disposed of.
5 Necessary matters concerning government bonds issued under theprovisions of paragraph 1, other than that provided in paragraph 3,
shall be determined by Finance Ministry ordinance.
Redemption of Government Bonds
Article 2-4
1 The Corporation, to obtain necessary funds for the capital increase
required for its Crisis Response Business (limited to those conductedby March 31, 2012), may request the redemption of government
bonds delivered under the provisions of paragraph 2 of thepreceding Article, only for amounts calculated according to rules
set down in Finance Ministry ordinances.

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Annual Report & CSR Report 2009

2 The Government, when requested by the Corporation to redeem allor a part of the government bonds delivered under the provisionsof paragraph 2 of the preceding Article, must comply without
delay.
3 When redemption has been made under the provisions of thepreceding paragraph, the amount of the Corporation’s capital shallbe the sum of its capital immediately prior to the redemption andthe amount of the money redeemed.
4 When the provisions of Article 445, paragraph 1 are applied inapplying the provisions of the preceding paragraph, the term”case” in the said paragraph shall be ”case, or in cases where
Article 2-4, paragraph 3 of the Supplementary Provisions to theDevelopment Bank of Japan Inc. Law (Law No. 85 of 2007) isapplied.”
5 Other than the matters stipulated in each of the preceding
paragraphs, necessary matters concerning the redemption of
government bonds delivered by the Government under theprovisions of paragraph 2 of the preceding Article shall be
determined by Finance Ministry ordinance.
Return of Government Bonds
Article 2-5
1 In the event that as of July 1, 2012, any government bondsdelivered under the provisions of Article 2-3, paragraph 2 of the
Supplementary Provisions remain unredeemed, the Corporationmust return such unredeemed bonds to the Government.
2 The Government must immediately retire any government bonds
returned to it under the provisions of the preceding paragraph.
3 Other than the matters stipulated in the preceding two paragraphs,
necessary matters concerning the return and retirement ofgovernment bonds delivered by the Government under theprovisions of Article 2-3, paragraph 2 shall be determined by
Finance Ministry ordinance.
Exception to Imposition of Registration and License Tax
Article 2-6
When investments are made under the provisions of Article 2-2 of the
Supplementary Provisions or redemptions made under the provisionsof Article 2-4, paragraph 2 of the Supplementary Provisions, a
Registration and License Tax shall not be imposed on the increase incapital received by the Corporation, provided that registration is
obtained as specified by Finance Ministry ordinance.

Overview of Operations

Management Policy

Financial Services

Supplementary Provisions
Enforcement Date
Article 1
This law shall take effect on the date of its promulgation.
Deliberation
Article 2
1 By the end of fiscal year 2011, the Government shall review theorganization of the Corporation, taking into account the status
of investments in Development Bank of Japan Inc. (hereinafter”the Corporation”) under the provisions of Article 2-2 of the
Supplementary Provisions to the Development Bank of Japan Inc.
Law as amended by this Law; the redemption of Government
bonds under the provisions of Article 2-4, paragraph 2 of the same
Supplementary Provisions; the conduct of crisis response businessby the Corporation (this refers to Crisis Response Businessconducted under the provisions of Article 2, item 5 of the Japan
Finance Corporation Law (Law No. 57 of 2007); same hereinafter);and changes in socioeconomic and other circumstances. This
review, from a point of view of the Government’s practice of
maintaining a certain level of involvement in the Corporation, suchas by consistently holding more than one-third of the Corporation’s
issued shares, is meant to ensure that the Corporation’s Crisis
Response Business are properly implemented; it shall include aconsideration of the Corporation’s Crisis Response Business and,based on that, of the Government’s holding of stock in the
Corporation. The Government shall take necessary measures basedon its findings.
2 Notwithstanding the provisions of Article 6, paragraph 2 of the Law
on Promotion of Administrative Reform for Realizing Simple andEfficient Government (Law No. 47 of 2006) as amended under
the provisions of the following Article (the ”Administrative
Reform Promotion Law”) and of Article 2, paragraph 1 of the
Supplementary Provisions to the Development Bank of Japan Inc.
Law as amended by this Law, the Government shall not dispose of
its shares in the Corporation prior to taking the measures describedin the preceding paragraph.

Management Structure

Corporate Data

Partial Amendment of the Law on Promotion of Administrative
Reform for Realizing Simple and Efficient Government
Article 3
The Law on Promotion of Administrative Reform for Realizing Simple
and Efficient Government shall be partially amended as follows.
”In the measures described in the preceding paragraph” in Article 6,paragraph 2 shall be amended to read ”from April 1, 2012.”
Adjusted Provisions
Article 4
1 If this Law come into effect prior to the date of enforcement of the
Law for Partial Amendment of the Shoko Chukin Bank Law andOther Laws to Facilitate the Supply of Funds to Small and Mediumsized Enterprises (Law No. 54 of 2009; mentioned in the following
paragraph as the ”Shoko Chukin Amendment Law”), in regard to
the application of the provisions of Article 6, paragraph 2 of the
Law on Promotion of Administrative Reform for Realizing Simple
and Efficient Government as amended under the provisions of thepreceding Article up to the day before the said date, ”and” in thesaid paragraph shall be changed to read, ”taking into accountthe market situation, and shall dispose all such investments inapproximately five to seven years after implementation of themeasures mentioned in the preceding paragraph, and theGovernment shall invest in.”2 If this Law come into effect after the date of enforcement of the
Shoko Chukin Amendment Law, the provisions of the preceding
Article shall not apply. In this case, ”the following Article” in Article
2, paragraph 2 of the Supplementary Provisions shall be changed
to read ”Article 4 of the Supplementary Provisions to the Law for
Partial Amendment of the Shoko Chukin Bank Law and Other
Laws to Facilitate the Supply of Funds to Small and Medium-sizedEnterprises (Law No. 54 of 2009).”
Delegation to Government Ordinance
Article 5
Transitional measures required for the enforcement of this Law shallbe determined by government ordinance.

Annual Report & CSR Report 200991

(Unofficial translation)

Supplementary Resolutions on the Bill for Partial Amendment of the Development Bank of Japan Inc. Law
House of Councilors Committee on Financial Affairs
June 25, 2009

The following matters should receive the Government’s carefulconsideration.
• In implementing Crisis Response Business based on the recent
measures for additional investment, Development Bank of Japan
Inc. shall ensure the measures result in a smooth supply of funds on
the basis of appropriate analysis by drawing upon its accumulated
knowledge and skills.

• The Government should reassess the future provision of policybased finance by Development Bank of Japan Inc. and the Japan
Finance Corporation, reaffirming the importance of their roles andfunctions and paying attention to their relationships not only withprivate financial institutions but also with the Japanese financial
sector as a whole, including affiliated organizations and the Japan
Post Bank.
Resolutions passed.

• 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 facilitateloans by the Japan Finance Corporation to small and medium-sizedbusinesses. In implementing Crisis Response Business for large andmidscale enterprises, Development Bank of Japan Inc. must be
certain to expedite loans to associated small and medium
enterprises as well.
• The Government should review its holding of shares in
Development Bank of Japan Inc. and take necessary measures
based on its findings. Any such deliberations should take into
account the need to ensure that the Corporation acts for the goodof the community, that it has a stable source of the funds required
to fulfill its functions as a provider of long-term investment andloans, and that it has systems in place to secure competitive officers
and employees. The Government should take appropriate measures
to prevent any damage to the Corporation’s long-term value.

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Annual Report & CSR Report 2009

Financial Condition

Consolidated Financial Statements . . . . . . . . . . 94
Non-Consolidated Financial Statements . . . . . . 121
Capital Adequacy Status . . . . . . . . . . . . . . . . . . 137

Annual Report & CSR Report 200993

Consolidated Balance Sheet

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

As of March 31

AssetsCash and Due from Banks (Note 28)¥

67,521$

687,383

Call Loans and Bills Bought

145,000

1,476,127

Reverse Repurchase Agreements (Note 3)

375,966

3,827,412

Money Held in Trust (Note 28)

24,873

253,218

Securities (Notes 3, 13 and 28)

1,246,587

12,690,496

Loans (Notes 4 and 13)

12,008,856

122,252,428

Other Assets (Note 6)

88,075

896,630

Tangible Fixed Assets (Note 7)

162,375

1,653,011

4,576

46,591Intangible Fixed Assets
Deferred Tax Assets (Note 25)

27,930284,342

Customers’ Liabilities for Acceptances and Guarantees (Note 12)

157,276

1,601,101

Allowance for Loan Losses (Note 8)(276,689)(2,816,754)

Allowance for Investment Losses(4,294)(43,716)¥14,028,056$142,808,269

Total Assets

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

¥ 3,431,597$ 34,934,309

Borrowed Money (Note 10)8,067,892

82,132,678

Corporate Bonds (Note 9)

81,423828,902

Other Liabilities (Notes 11 and 24)

169,043

1,720,898

Accrued Bonuses to Employees

2,224

22,646

As of March 31

Liabilities and Equity
Liabilities
Debentures (Note 9)

Accrued Bonuses to Directors and Corporate Auditors

20

213

Reserve for Employees’ Retirement Benefits (Note 23)

32,050326,282

Reserve for Directors’ and Corporate Auditors’ Retirement Benefits

11

122

Deferred Tax Liabilities (Note 25)

58

599

157,276

1,601,101

11,941,600

121,567,750

Common Stock authorized, 160,000 thousand shares; issued,
40,000 thousand shares (Note 14)

1,000,000

10,180,189

Capital Surplus (Note 14)

1,157,715

11,785,760

Deficit (Note 14)(96,363)(980,999)

Unrealized Loss on Available-for-sale Securities (Note 28)(1,667)(16,980)

Deferred Gain on Derivatives under Hedge Accounting

17,182

174,9233

36

2,076,870

21,142,930

9,586

97,589Acceptances and Guarantees (Note 12)
Total Liabilities
EquityForeign Currency Translation Adjustments
Total
Minority Interests
Total Equity
Total Liabilities and Equity
See accompanying Notes to Consolidated Financial Statements.

94

Annual Report & CSR Report 2009

2,086,456

21,240,519¥14,028,056$142,808,269

Financial Condition
Consolidated Financial Statements

Consolidated Statement of Operations

For the six-month period ended March 31

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

IncomeInterest Income¥ 135,793$ 1,382,405

130,490

1,328,420Interest and Dividends on Securities

4,771

48,575Interest on Call Loans and Bills Bought

14

150

Interest on Reverse Repurchase Agreements

387

3,943

Interest on Due from Banks

129

1,318

Fees and Commissions (Note 16)

4,646

47,298Other Operating Income (Note 17)

719

7,321

Other Income (Note 18)

13,672

139,192

Total Income

154,831

1,576,216

84,118856,338

25,991

264,596

Interest on Loans

Expenses
Interest Expense
Interest on Debentures
Interest on Call Money and Bills Sold
Interest on Borrowed Money0

656,029570,391

Interest on Corporate Bonds
Other Interest Expense
Fees and Commissions (Note 19)

216

2,204

1,880

19,142142

1,449

Other Operating Expenses (Note 20)

11,090112,902

General and Administrative Expenses

17,803

181,242

Other Expenses (Note 21)

159,798

1,626,777

Total Expenses

272,952

2,778,708

Loss before Income Taxes and Minority Interests(118,120)(1,202,492)

Current

20,021

203,823

Deferred(6,492)(66,093)

Total Income Taxes

13,529137,730

Minority Interests in Net Loss

(3,308)(33,677)¥(128,342)$(1,306,546)

Income Taxes (Note 25)

Net Loss

Yen

U.S. Dollars (Note 1)

Per Share of Common Stock (Note 15)
Basic Net Loss¥(3,208.55)$(32.66)

See accompanying Notes to Consolidated Financial Statements.

Annual Report & CSR Report 200995

Consolidated Statement of Changes in Equity

For the six-month period ended March 31

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

Common Stock:
Balance at October 1, 2008 (Note 22)¥1,000,000$10,180,189

Balance at March 31, 2009

1,000,000

10,180,189

Balance at October 1, 2008 (Note 22)

1,157,715

11,785,760

Balance at March 31, 2009

1,157,715

11,785,760

Capital Surplus:

Deficit:
Balance at October 1, 2008 (Note 22)——

31,978

325,547

Net Loss(128,342)(1,306,546)

Balance at March 31, 2009

(96,363)(980,999)

The Amount of Tax Effect Adjustment due to Change in Legal Structure

Unrealized Loss on Available-for-sale Securities:
Balance at October 1, 2008 (Note 22)——

Net Change(1,667)(16,980)

Balance at March 31, 2009

(1,667)(16,980)

Deferred Gain on Derivatives under Hedge Accounting:
Balance at October 1, 2008 (Note 22)——

Net Change

17,182

174,923

Balance at March 31, 2009

17,182

174,923

Balance at October 1, 2008 (Note 22)——

Net Change

336

Balance at March 31, 2009

3

36

—

—

Net Change

9,586

97,589Balance at March 31, 2009

9,586

97,589¥2,086,456$21,240,519

Foreign Currency Translation Adjustments:

Minority Interests in Subsidiaries:
Balance at October 1, 2008 (Note 22)

Total Equity
See accompanying Notes to Consolidated Financial Statements.

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Annual Report & CSR Report 2009

Financial Condition
Consolidated Financial Statements

Consolidated Statement of Cash Flows

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

For the six-month period ended March 31

Cash Flows from Operating Activities
Loss before Income Taxes and Minority Interests
Adjustments for:
Depreciation
Amortization of Goodwill
Losses on Impairment of Long-lived Assets
Equity in Gains of Affiliates
Increase in Allowance for Loan Losses
Decrease in Allowance for Investment Losses
Increase in Accrued Bonuses to Employees
Increase in Accrued Bonuses to Directors and Corporate Auditors
Increase in Reserve for Employees’ Retirement Benefits
Interest Income
Interest Expense
Loss on Securities-net
Loss on Money Held in Trust-net
Foreign Exchanges Gains
Loss on Sales of Fixed Assets-net
Net Increase in Loans
Net Increase in Debentures
Net Increase in Borrowed Money
Net Increase in Corporate Bonds
Net Decrease in Due from BanksNet Increase in Call Loans
Net Increase in Reverse Repurchase Agreements
Interest Received
Interest Paid
Other-net
Sub-total
Payments for Income Taxes
Net Cash provided by Operating Activities
Cash Flows from Investing Activities
Payments for Purchases of Securities
Proceeds from Sales of Securities
Proceeds from Redemption of Securities
Payments for Increase of Money Held in Trust
Proceeds from Decrease of Money Held in Trust
Payments for Purchases of Tangible Fixed Assets
Proceeds from Sales of Tangible Fixed Assets
Payments for Purchases of Intangible Fixed Assets
Net Cash used in Investing Activities
Cash Flows from Financing Activities
Proceeds from Issuance of Securities to Minority Shareholders of Subsidiaries
Dividends Paid to Minority Shareholders of Subsidiaries
Net Cash provided by Financing Activities
Foreign Currency Translation Adjustments on Cash and Cash Equivalents
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at October 1, 2008
Cash and Cash Equivalents at March 31, 2009

¥ (118,120)$ (1,202,492)

598
2,273
43
(988)
120,060(1,632)210
20
89(135,793)
84,11824,651
1,388
(321)
8
(747,836)
56,7481,459,394
81,423
165,469(145,000)(218,968)
136,689(85,080)
3,055
682,500(562)
681,938

6,097
23,147443(10,059)
1,222,235(16,618)
2,147
213
911
(1,382,405)
856,338
250,954
14,132(3,276)84(7,613,117)
577,709
14,856,908
828,902
1,684,515(1,476,127)(2,229,137)
1,391,521(866,138)
31,103
6,947,988(5,729)6,942,259(1,037,782)
7,631
327,769(2,350)41,175
(144)
13
(591)
(664,277)(10,564,817)
77,695
3,336,757(23,923)
419,176(1,471)
135(6,018)(6,762,467)

750
(54)
696
326
18,68330,08048,763

7,637
(550)
7,087
3,322
190,201
306,224
496,425¥$

See accompanying Notes to Consolidated Financial Statements.

Annual Report & CSR Report 200997

Notes to Consolidated Financial Statements
1. Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its related accounting regulations and Ministerial Ordinance for Accountingof the Development Bank of Japan Inc. (the “DBJ Inc.”) and in conformity with accounting principles generally accepted in Japan,
which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside
Japan.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million yen. Accordingly,
the sum of each amount appearing in the accompanying financial statements and the notes thereto may not be equal to thesum of the individual account balances. Amounts in U.S. dollars are presented solely for the convenience of readers outside
Japan. The rate of ¥98.23=$1.00, the effective exchange rate prevailing as of March 31, 2009, has been used in the conversion.
The presentation of such amounts is not intended to imply that Japanese yen amounts have been or could have been readilytranslated, realized or settled in U.S. dollars at that rate or any other rate.
The financial period of the accompanying financial statements is from October 1, 2008 through March 31, 2009. DBJ Inc. wasestablished on October 1, 2008, as a joint stock corporation under the Development Bank of Japan Inc. Law (Law No. 85 of 2007,
as amended) (the “DBJ Inc. Law”). Development Bank of Japan (the “predecessor”) contributed all assets and liabilities to DBJ Inc.
except for those assets to be assumed by the Japanese Government pursuant to Article 15, Paragraph 2 of the Supplementary
Provisions, in exchange for shares of DBJ Inc.’s common stock, and thereafter, upon transferring such shares to the Japanese
Government, the predecessor was dissolved on October 1, 2008.
Except for those assets to be assumed by the Japanese Government pursuant to Article 15, Paragraph 2 of the Supplementary
Provisions, DBJ Inc. has succeeded substantially all of the rights and obligations of the predecessor pursuant to the DBJ Inc. Law.

2. Summary of Significant Accounting Policies(a) Principles of Consolidation(1) Scope of Consolidation
Under the control concept, companies in which DBJ Inc., directly or indirectly, is able to exercise control over operations
are fully consolidated. On September 8, 2006, the Accounting Standards Board of Japan (“ASBJ”) issued Practical Issues
Task Force No. 20, “Practical Solution on Application of Control Criteria and Influence Criteria to Investment Associations”
which was effective for the period and the fiscal years ending on or after September 8, 2006. The practical solution clarifies
how the control and influence concept should be practically applied to the consolidation scope of collective investment
vehicles, such as limited partnerships, Tokumei Kumiai and other entities with similar characteristics.
(i) Consolidated Subsidiaries
The number of consolidated subsidiaries as of March 31, 2009 is nine. The Consolidated subsidiaries as of March 31, 2009
are as follows:
DBJ Business Investment Co., Ltd.
DBJ Corporate Mezzanine Partners Co., Ltd.
UDS Corporate Mezzanine Limited Partnership
DBJ Credit Line, Ltd.
New Business Investment Co., Ltd.
New Business Investment No.1 Investment Limited Liability Partnership
DBJ Singapore Limited
Japan Economic Research Institute Inc.
Asuka DBJ Investment LPS(ii) Non-consolidated Subsidiaries
The number of non-consolidated subsidiaries as of March 31, 2009 is 18. Such subsidiaries as of March 31, 2009 are
mainly as follows:
UDS II Corporate Mezzanine Limited Partnership
UDS III Corporate Mezzanine Limited Partnership

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Annual Report & CSR Report 2009

Financial Condition
Consolidated Financial Statements

Non-consolidated subsidiaries are excluded from the scope of consolidation because such exclusion has no material impact
on the consolidated financial statements in terms of total assets, income, net income, retained earnings and deferredhedge gains and losses.
(iii) Entities not considered to be subsidiaries where DBJ Inc. has more than a 50% ownership interest
The number of entities not considered to be subsidiaries where DBJ Inc. has more than a 50% ownership interest as ofMarch 31, 2009 is four. Such entities as of March 31, 2009 are as follows:
ADS Global Partners Ltd.
Sunsay International Technology, Inc.
Dyflex Holdings Co.
Hydro-Device Company, Limited
These entities are excluded from the scope of consolidation since DBJ Inc.’s intent is to nurture the venture business andnot to exercise control over their operating and financing policies.
(2) Application of the Equity Method
Under the influence concept, non-consolidated subsidiaries and affiliates over which DBJ Inc. has the ability to exercise
significant influence are accounted for by the equity method.
(i) Non-consolidated Subsidiaries accounted for by the Equity Method
The number of non-consolidated subsidiaries not accounted for by the equity method as of March 31, 2009 is 18. Suchsubsidiaries as of March 31, 2009 are mainly as follows:
UDS II Corporate Mezzanine Limited Partnership
UDS III 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, 2009 is 13. EBANK Corporation is removed
from affiliates. The affiliates accounted for by the equity method as of March 31, 2009 are mainly as follows:
Makuhari Messe, Inc.
Hokkaido International Airlines Co., Ltd.
(iii) Affiliates not accounted for by the Equity Method
The number of affiliates not accounted for by the equity method as of March 31, 2009 is 95. Such affiliates as of March
31, 2009 are mainly as follows:
Urban Redevelopment Private Fund
New Perspective One LLC
Non-consolidated subsidiaries and affiliates that are not accounted for by the equity method have been excluded from thescope of the equity method because their aggregate effect in terms of net income, retained earnings and deferred gains
and losses has no material impact on the consolidated financial statements of DBJ Inc.
(iv) Entities not considered to be affiliates where DBJ Inc. has greater than 20% but less than a majority of voting stock
The number of entities not considered to be affiliates where DBJ Inc. has greater than 20% but less than a majority ofvoting stock as of March 31, 2009 is nine. Such entities as of March 31, 2009 are as follows:
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.
These entities are not accounted for by the equity method because DBJ Inc.’s intent is to nurture the venture business andnot to exercise significant influence on their operating and financing policies.

Annual Report & CSR Report 200999

(3) Balance sheet Dates of Consolidated Subsidiaries
Balance sheet dates of consolidated subsidiaries are as follows:
December 31
4 subsidiaries
March 31
5 subsidiaries
Consolidated subsidiaries are consolidated based on the financial statements that are prepared as of their interim or yearend balance sheet date.
The necessary adjustments are made in the consolidated financial statements to reflect material transactions that occur
between the interim or 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 of control.
(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 on a straightline basis over the estimated beneficial period not exceeding 20 years. Minor differences are charged to income in the yearof acquisition.
(b) Cash and Cash Equivalents“Cash and Cash Equivalents” in the consolidated statements of cash flows consist of cash on hand and due from banks.
The reconciliation between “Cash and Cash Equivalents” and “Cash and Due from Banks” in the consolidated balance
sheet is as follows:
Millions of Yen

Thousands of U.S. Dollars(Note 1)

As of March 31

2009

2009

Cash and Due from Banks¥ 67,521$ 687,383

Time Deposits with Banks(18,757)(190,958)

Cash and Cash Equivalents¥ 48,763$ 496,425(c) Securities
Held-to-maturity debt securities are stated at amortized cost with amortization computed on a straight-line basis, using theweighted average method. Available-for-sale securities with readily available market quotations are stated at market value(cost is calculated principally using the weighted average method). Other securities without market quotations are stated atcost or amortized cost computed using the weighted average method.
Investments in limited partnerships and other similar partnerships are accounted for at their original cost plus DBJ Inc.’sinterest in earnings since acquisition and less any dividends received, based on their most recent financial statements.
Unrealized gain and loss on available-for-sale securities are included in equity, net of income taxes.
Securities which are held as trust assets in money held in trust accounts are valued in the same way as 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 of operations.
(e) Hedge Accounting(i) Hedge Accounting
DBJ Inc. applies the deferral method of hedge accounting. Foreign currency swaps which are used to hedge foreign
currency fluctuations are not translated at market values but at contractual rates, as the foreign currency swap contracts
meet the hedging criteria under the Accounting Standards for Financial Instruments.

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Financial Condition
Consolidated Financial Statements(ii) Hedging Instruments and Hedged Items• Hedging Instruments: Interest Rate Swaps
Hedged Items:
Debentures, Corporate Bonds, Borrowed Money and Loans• Hedging Instruments: Foreign Currency Swaps
Hedged Items:
Foreign currency denominated Loans, Debentures and Corporate Bonds(iii) Hedging Policy
DBJ Inc. utilizes hedging instruments to hedge interest rates and foreign currency fluctuations on its assets and liabilities.
Individual contracts are drawn for each hedge item.
(iv) 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 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 requirements of the assignment method (*2), under the
Accounting Standards for Financial Instruments at the inception date, DBJ Inc. is not required to periodically evaluate theirhedge effectiveness.
*1 If interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or received under theinterest 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, forward foreign exchange contracts andhedged items are accounted for in the following manner;
1) If a foreign currency swap is executed to hedge existing foreign currency assets or liabilities, a) the difference, if any, between theJapanese yen amount of the hedged foreign currency asset or liability translated using the spot rate at the inception date of thecontract and the book value of the asset or liability is recognized in the statement of operations in the period which includes the
inception date, and b) the discount or premium on the contract (that is, the difference between the Japanese yen amount of thecontract 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.
2) If a foreign currency swap is executed to hedge a future transaction denominated in a foreign currency, the future transaction will berecorded using the contracted forward rate, and no gains or losses on the forward foreign exchange contract are recognized.

(f) Fixed Assets(i) Depreciation of Tangible Fixed Assets
Tangible Fixed Assets of DBJ Inc. are depreciated 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 the straight-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(ii) Amortization of Intangible Fixed Assets
Intangible Fixed Assets are amortized using the straight-line method. Capitalized software for internal use is depreciatedusing the straight-line method based on the estimated useful lives (mainly from 3 to 5 years).
(iii) Lease Assets
Depreciation for lease assets is computed under 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 amountof an asset or asset group may not be recoverable. Impairment losses are recognized if the carrying amount of an asset or
asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual

Annual Report & CSR Report 2009101

disposition of the asset or asset group. The impairment losses would be measured as the amount by which 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 prevailingas of the balance sheet date.
Foreign currency accounts held by consolidated foreign subsidiaries are translated into the currency of the subsidiaries at
the respective year-end exchange rates.
The foreign exchange gains and losses from transaction are recognized in the income statement to the extent that they are
not hedged by forward exchange contracts.
The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current
exchange rate as of the balance sheet date except for equity, which is translated at the historical rate.
Differences arising from such transaction were shown as “Foreign Currency Transaction Adjustments” in a separate
component of equity.
Revenue and expense accounts of consolidated foreign subsidiaries are translated into yen at the exchange rate prevailingas of the balance sheet date.
(j) Allowance for Loan Losses
DBJ Inc. provides for “Allowance for Loan Losses” as detailed below pursuant to the internal policies for self-assessment ofcredit quality and loan losses.
The allowance for claims on debtors who are legally bankrupt, in special liquidation or effectively bankrupt is provided
for based on the amount of claims, after the write-off described below, net of amounts expected to be recovered throughdisposal 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, andfor which future cash flows cannot reasonably be estimated, is provided for at the amount considered to be necessary basedon an overall solvency assessment performed on the claims, net of amounts expected to be recovered through disposal ofcollateral or execution of guarantees.
With respect to the claims on debtors who are likely to become bankrupt or to be closely monitored, and for which future
cash flows can reasonably be estimated, the allowance is provided for as the difference between the present value of expected
future cash flows discounted at the contracted interest rate and the carrying value of the claims.
The allowance 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 are assessed initially by the investment and lending departments and then by the Credit Analysis Department,
which is independent of the investment and lending departments based on internal policies for self-assessment of credit
quality. The allowance is provided for based on the results of the self-assessment.
With respect to the claims on debtors who are legally or substantially bankrupt with collateral or guarantees, the amountof claims exceeding the estimated market values of collateral or guarantees which are deemed uncollectible have been writtenoff, and totaled ¥51,303 million ($522,277 thousand) for the six-month period ended March 31, 2009.
The consolidated subsidiaries are calculated the general reserve for “normal” categories based on the specific actual
historical loss ratio.
(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.
(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 estimated bonuses
which are attributable to the six-month period.

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Financial Condition
Consolidated Financial Statements(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 toemployees. It is accrued based on the projected benefit obligations and estimated pension plan assets at the six-month period
ended. 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 the straight-line method overthe period of ten years within the employees’ average remaining service period commencing from the next fiscal year after
incurrence.
(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) Lease Transactions
In March 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for Lease Transactions”, which revised theprevious accounting standard for lease transactions issued in June 1993. The revised accounting standard for lease transactions
is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted for fiscal years beginning on orafter April 1, 2007.
Under the previous accounting standard, finance leases that deem to transfer ownership of the leased property to thelessee were to be capitalized. However, other finance leases were permitted to be accounted for as operating leasetransactions if certain “as if capitalized” information is disclosed in the note to the lessee’s financial statements. The revised
accounting standard requires that all finance lease transactions should be capitalized to recognize lease assets and leaseobligations in the balance sheet. In addition, the revised accounting standard permits leases which existed at the transition
date and do not transfer ownership of the leased property to the lessee to be accounted for as operating lease transactions.
DBJ Inc. applied the revised accounting standard on October 1, 2008. In addition, DBJ Inc. accounted for leases which
existed in the predecessor at March 31, 2008 and were transferred to DBJ Inc. on October 1, 2008, and do not transfer
ownership of the leased property to the lessee as operating lease transactions.
(p) Consumption Taxes
Income and expenses subject to consumption taxes exclude related consumption taxes paid or received.
(q) Income Taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statement of operations.
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequencesof 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.
(r) Per Share Information
Basic Net Income Per Share is computed by dividing net income available to common stockholders by the weighted-average
number of shares of common stock outstanding for the period, retroactively adjusted for stock splits. Diluted net income pershare for the six-month period ended March 31, 2009 is not disclosed because of no dilutive securities.

Annual Report & CSR Report 2009103

3. Securities
Securities as of March 31, 2009 are as follows:

As of March 31

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

Japanese Government Bonds¥ 251,413$ 2,559,437

Short-term Corporate Bonds

461,514

4,698,302

Corporate Bonds

114,431

1,164,932

Equities

166,537

1,695,381

Other Securities

252,691

2,572,444¥1,246,587$12,690,496

Notes: 1. Investments in unconsolidated subsidiaries and affiliates included in “Equities” as of March 31, 2009 are ¥14,391 million ($146,508
thousand). Investments in unconsolidated subsidiaries and affiliates included in “Other securities” as of March 31, 2009 are ¥38,817
million ($395,173 thousand).
2. DBJ Inc. has contingent liabilities for guarantees of corporate bonds among Securities which were issued by private placement (Article 2
Paragraph 3 of Financial Instruments and Exchange Law) and amount to ¥3,280 million ($33,391 thousand) as of March 31, 2009.
3. There are no securities repledged as of March 31, 2009. Securities accepted under repurchase agreements can be sold or repledged.
Securities neither sold nor repledged are ¥375,966 million ($3,827,412 thousand).
4 Other Securities with market value are considered impaired if there is a considerable decline in the market value below the acquisition
cost and such decline is not believed to be recoverable. The difference between the acquisition cost and the market value is the losses forthe six-month period.
The criterion for determining “Considerable decline in market value” is as follows:
Market value is 50% or more lower than acquisition cost.
Market value is 30% or more lower than acquisition cost, and such decline is not considered as recoverable.

4. Non-performing Loans
The amounts of Non-performing Loans included in “Loans” on the consolidated balance sheets as of March 31, 2009 are as
follows:
Millions of Yen

Thousands of U.S. Dollars(Note 1)

As of March 31

2009

2009

Loans to Bankrupt Debtors¥ 18,967$ 193,093

Delinquent Loans

116,843

1,189,486

Loans Past Due Three Months or More
Restructured Loans

23

238

56,795578,185¥192,629$1,961,002

Notes: 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 fallunder 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”.

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Financial Condition
Consolidated Financial Statements

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, 2009, theamount of unused commitments was ¥266,886 million ($2,716,957 thousand). As of March 31, 2009, the amount of unused
commitments whose remaining contract term was within one year was ¥79,128 million ($805,547 thousand).
Since many of these commitments expire without being drawn down, the unused amount does not necessarily represent a
future cash requirement. Most of these contracts have conditions whereby DBJ Inc. and its subsidiaries can refuse customers’application for loans or decrease the contract limits for proper reason (e.g., changes in financial situation, deterioration incustomers’ credit worthiness). At the inception of contracts, DBJ Inc. and its subsidiaries obtains real estate, securities or otherassets as collateral if considered necessary. Subsequently, DBJ Inc. and its subsidiaries performs periodic reviews of the customers’
business results based on internal rules, and takes necessary measures to reconsider conditions in contracts and/or require
additional collateral and guarantees.

6. Other Assets
Other Assets as of March 31, 2009 are as follows:
Millions of Yen

Thousands of U.S. Dollars(Note 1)

As of March 31

2009

2009

Prepaid Expenses¥ 8,283$ 84,333

Accrued Income

39,549402,626

Derivatives

39,052397,564

Other

1,189

12,107¥88,075$896,630

7. Tangible Fixed Assets
Tangible Fixed Assets as of March 31, 2009 are as follows:
Millions of Yen

Thousands of U.S. Dollars(Note 1)

As of March 31

2009

Buildings¥ 14,487$ 147,489

Land

147,396

1,500,520

160

1,635

Leased Assets

2009

Construction in Progress

27

277

Other

303

3,089

¥162,375$1,653,011

Notes: Accumulated Depreciation of Tangible Fixed Assets as of March 31, 2009 is ¥432 million ($4,401 thousand).

8. Allowance for Loan Losses
Allowance for Loan Losses as of March 31, 2009 is as follows:
Millions of Yen

As of March 31

2009

General Allowance for Loan Losses¥215,245

Specific Allowance for Loan Losses

Thousands of U.S. Dollars(Note 1)2009

$2,191,243

61,443

625,511¥276,689$2,816,754

Annual Report & CSR Report 2009105

9. Debentures and Corporate Bonds
Debentures and Corporate Bonds as of March 31, 2009 are as follows:

Description of Debentures and Corporate Bonds

Issue date

Interest rate (%)

Millions of Yen

Thousands of U.S.
Dollars (Note 1)

Maturity date

As of March 31,
2009

As of March 31,
2009¥ 882,176$ 8,980,719

119,672

1,218,284

Debentures
Japanese Government-

Aug. 2000–

0.8–

Aug. 2010–

guaranteed Bonds 1-23*1, 5

Aug. 2008

2.2

Jun. 2023

Japanese Government-

Nov. 2008–

1.4–

Nov. 2018–

guaranteed Bonds 1-4

Feb. 2009

2.1

Feb. 2024

Japanese Government-

Sep. 1998

1.81

Sep. 2028

25,079255,311

Nov. 1999–

1.05–

Jun. 2010–

1,035,868

10,545,340

Nov. 2007

6.875

Nov. 2027

FILP Agency Domestic Bonds

Oct. 2002–

0.57-

Sep. 2009–

1,314,695

13,383,847

5,7,9-14,16-52*3, 5, 6

Aug. 2008

2.74

Mar. 2047[109,994][1,119,764]

FILP Agency Foreign Bond 1*3, 5

Jun.2007

1.65

Jun. 2012

49,952508,529

Euro MTN Bonds 1-2*3, 4, 5

Sep. 2008

4,153

42,27857,000580,271

guaranteed Foreign Bond 67*2, 5Japanese Governmentguaranteed Foreign Bonds
1-14*1, 5

2.032–

Sep. 2010–

3.142

Sep. 2023

1.116–

Dec. 2011–

1.367

Dec. 2013

Dec. 2008–

0.68–

Mar. 2010–

24,423248,631Mar. 2009

2.3125Mar. 2014[7,100][72,279]¥3,513,020$35,763,211[117,094][1,192,044 ]Corporate Bonds
Corporate Bonds 1-2
Corporate Bonds Euro MTN
1-12*4, 6

Dec. 2008

Notes: 1. These bonds are government-guaranteed bonds issued by the Development Bank of Japan.
2. This bond is a government-guaranteed bond issued by the Japan Development Bank.
3. Fiscal Investment and Loan Program (FILP) Agency Bonds issued are not government-guaranteed. These bonds are issued by theDevelopment Bank of Japan.
4. These bonds are non-guaranteed bonds established by EMTN programme.
5. Under the DBJ Inc. Law (Law No. 17 and 26), the DBJ Law (Law No.43), obligations created by the bonds issued by DBJ Inc. 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. for subsequent
years as of March 31, 2009 are as follows:
The fiscal year ending March 31, 2010

106

¥117,094 million$1,192,044 thousand

2011

403,562

4,108,341

2012

522,334

5,317,466

2013

394,837

4,019,519

2014

233,793

2,380,059

Annual Report & CSR Report 2009

Financial Condition
Consolidated Financial Statements

10. Borrowed Money
Borrowed Money as of March 31, 2009 is as follows:
Millions of Yen

Thousands of U.S. Dollars(Note 1)

Average interest rate (%)

Due date of repayment

As of March 31, 2009

As of March 31, 2009

1.46

Apr. 2009–Mar. 2029

¥8,067,892$82,132,678

Borrowings

Scheduled redemptions of Borrowings for subsequent years as of March 31, 2009 are as follows:
The fiscal year ending March 31, 2010

¥1,587,053 million$16,156,506 thousand

2011855,142

8,705,508

2012

952,316

9,694,760

2013

945,447

9,624,835

2014

797,137

8,115,009

11. Other Liabilities
Other Liabilities as of March 31, 2009 are as follows:
Millions of Yen

Thousands of U.S. Dollars(Note 1)

As of March 31

2009

Accrued Expenses¥ 33,650$ 342,573

Unearned Income

1,194

12,162

Accrued Income Taxes

20,109204,721

Derivatives

112,651

1,146,810

287

2,925

Lease Obligation
Other

2009

1,150

11,707¥169,043$1,720,898

12. Acceptances and Guarantees
Acceptances and Guarantees as of March 31, 2009 are as follows:
Millions of Yen

As of March 31

2009

Guarantees¥157,276

Thousands of U.S. Dollars(Note 1)2009

$1,601,101

13. Assets Pledged as Collateral
Loans and Securities pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are ¥228,799
million ($2,329,217 thousand) and ¥633,024 million ($6,444,309 thousand), respectively, as of March 31, 2009. Also, ¥2,291
million ($23,324 thousand) of Securities are pledged as collateral for loans of companies which DBJ Inc. invests as of March 31,
2009.
Under the DBJ Inc. Law (Law No. 17 and 26), the DBJ Law (Law No. 43), obligations created by the bonds issued by DBJ Inc.
are secured by a statutory preferential right over the property of DBJ Inc. Denomination value of these debentures amounts to¥3,314,596 million ($33,743,217 thousand).

14. Equity
Since May 1, 2006, Japanese companies including DBJ Inc. have been regulated by the Companies Act. In addition, DBJ Inc. isregulated by DBJ Inc. Law. The significant provisions in the Companies Act and DBJ Inc. Law that affect financial and accounting
matters are summarized as follows:

Annual Report & CSR Report 2009107

(a) Dividends
Under the Companies Act, companies can distribute dividends at any time during the fiscal year in addition to the year-end
dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having the Boardof Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of thedirectors 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 , prescribed that the Board of Directors
can declare dividends in its articles of incorporation. DBJ Inc., however, shall not distribute such dividends based on resolutionof the Board of Directors, since its article of incorporation is not prescribed that the Board of Directors can do such an action.
The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The
Article 20 of the DBJ Inc. Law provides that the timing and amounts for dividends shall be authorized by the Finance Minister.
(b) Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be set aside as a legal reserve (a component ofretained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged
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 and legal reserve may be reversed without
limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus
and retained earnings can be reclassified among the accounts under certain conditions upon resolution by the shareholders.
(c) Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of the treasury stock based on
resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the distributable amount to theshareholders which is determined by specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of equity.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock.
The treasury stock acquisition rights are presented as a separate component of equity or deduction of stock acquisition rights.
(d) Solicitation and Delivery of Shares or Stock Acquisition Rights
The Article 12 of the DBJ Inc. Law regulates that, if DBJ Inc. intends to solicit those who will subscribe for shares or stockacquisition rights offered, or to deliver shares or stock acquisition rights in connection with a share-for-share exchange, DBJ
Inc. shall obtain an authorization from the Finance Minister.

15. Per Share Information
Basic Net Loss Per Common Share (“EPS”) for the six-month period ended March 31, 2009 is as follows:

Basic EPS
Net Loss Available to Common
Shareholders

Millions of Yen

Thousands of Shares

Yen

U.S. Dollars

Net Loss

Weighted Average Shares

EPS

EPS

¥(128,342)

40,000¥(3,208.55)$(32.66)

Notes: Diluted net income per share for the six-month period ended March 31, 2009 is not disclosed because there are no dilutive securities.

16. Fees and Commissions (Income)Fees and Commissions (Income) for the six-month period ended March 31, 2009 are as follows:

For the six-month period ended March 31

Commissions

108

Annual Report & CSR Report 2009

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

¥4,646$47,298

Financial Condition
Consolidated Financial Statements

17. Other Operating Income
Other Operating Income for the six-month period ended March 31, 2009 is as follows:
Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

For the six-month period ended March 31

Foreign Exchange Gains¥718$7,3120

9¥719$7,321Other

18. Other Income
Other Income for the six-month period ended March 31, 2009 is as follows:
Thousands of U.S. Dollars(Note 1)Millions of Yen

For the six-month period ended March 31

2009

Reversal of Allowance for Investment Losses

¥

2009

308

$

3,139

Gains on Sales of Equities and Other Securities

3,525

35,887

Gains on Money Held in Trust

1,815

18,479Equity in Net Income of Affiliates

988

10,059Gains on Sales of Fixed Assets
Collection of Written-off Claims
Other

0

7

3,316

33,762

3,718

37,858¥13,672$139,192

19. Fees and Commissions (Expenses)
Fees and Commissions (Expenses) for the six-month period ended March 31, 2009 are as follows:
Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

For the six-month period ended March 31

Commissions¥142$1,4480

1¥142$1,449Other

20. Other Operating Expenses
Other Operating Expenses for the six-month period ended March 31, 2009 are as follows:
Millions of Yen

For the six-month period ended March 31

2009

Debentures Issuance Costs¥

Thousands of U.S. Dollars(Note 1)

2009

368

$

3,751

Corporate Bonds Issuance Costs

147

1,505

Losses on Derivative Instruments

10,065

102,472

Other

508

5,173

¥11,090$112,902

Annual Report & CSR Report 2009109

21. Other Expenses
Other Expenses for the six-month period ended March 31, 2009 are as follows:
Millions of Yen

Thousands of U.S. Dollars(Note 1)For the six-month period ended March 31

2009

2009

Provision for Allowance for Loan Losses¥125,431$1,276,913

2,583

26,305

Write-off of Loans
Losses on Sales of Equities and Other Securities

320

3,266

Write-off of Equities

14,558148,213

Losses on Money Held in Trust

3,203

32,611

Losses on Sales of Fixed Assets

992

Impairment Loss

43

443

Other

13,647

138,935¥159,798$1,626,777

22. Consolidated Statement of Changes in Equity
The financial period of this financial statement is from October 1, 2008 through March 31, 2009. DBJ Inc. was established on
October 1, 2008, as a joint stock corporation under the DBJ Inc. Law (Law No. 85 of 2007, as amended). The predecessor
contributed all assets and liabilities to DBJ Inc. except for those assets to be assumed by the Japanese Government pursuant to
Article 15, Paragraph 2 of the Supplementary Provisions, in exchange for shares of DBJ Inc.’s common stock, and thereafter, upontransferring such shares to the Japanese Government, the predecessor was dissolved on October 1, 2008. Valuation of Assets andLiabilities evaluated by evaluation officers (hyoka iin) pursuant to Article 16 of the Supplementary Provisions on the DBJ Inc. Law is
as follows:
As of October 1, 2008

Millions of Yen

Thousands of U.S. Dollars

Assets¥12,414,193$116,565,194

As of October 1, 2008

Millions of Yen

Thousands of U.S. Dollars

Liabilities¥10,256,477$96,304,957

Equity2,157,715

20,260,237¥12,414,193$116,565,194

Notes: Valuation of Assets, Liabilities and Equity succeeded from the predecessor on October 1, 2008 is converted at the rate of ¥106.50=$1.00 asof October 1, 2008.

23. Employees’ Retirement Benefits
Employees whose service with DBJ Inc. is terminated are, under most circumstances, entitled to retirement and pension benefits
determined by reference to basic rates of pay at the time of termination, length of service and conditions under which thetermination occurs. If the termination is involuntary, caused by retirement at the mandatory retirement age or caused by death,the employee is entitled to greater payment than in the case of voluntary termination.

110

Annual Report & CSR Report 2009

Financial Condition
Consolidated Financial Statements

Reserve for Employee Retirement Benefits as of March 31, 2009 consisted of the following:(a) The Funded Status of the Pension Plans
Millions of Yen

Thousands of U.S. Dollars(Note 1)

As of March 31

2009

2009

Projected Benefit Obligation¥(45,541)$(463,619)

Fair Value of Plan Assets

11,448

116,548

Unfunded Pension Obligation(34,092)(347,071)

1,991

20,276

Unrecognized Net Actuarial Losses
Unrecognized Prior Service Cost
Reserve for Employees’ Retirement Benefits

50

514

¥(32,050)$(326,282)

Notes: 1. The above Projected Benefit Obligations include a portion in which the pension fund manages on behalf of the Japanese Government
welfare program.
2. Reserve for Employees’ Retirement Benefits includes the benefits for executive directors and corporate auditors in the six-month period
ended March 31, 2009.
3. Certain subsidiaries apply the simplified method for the calculation of liability for employees’ retirement benefits.

(b) Components of Pension Cost

For the six-month period ended March 31

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

Service Cost

¥ 698

$ 7,111

Interest Cost

450

4,581

Expected Return on Plan Assets

(32)

(333)

Amortization of Prior Service Cost

0

4

¥1,116$11,364

Net Pension Cost

Notes: All retirement benefit costs are classified as service cost for the subsidiaries applying the simplified method.

(c) Principal Assumptions Used
As of March 31, 2009

Discount Rate

2.0%

Expected Rate of Return on Plan Assets

0.5%

Amortization Period of Prior Service Cost

10 Years

Amortization Period of Actuarial Gains/Losses

10 Years

24. Lease Transactions
DBJ Inc. and its domestic consolidated subsidiaries lease certain equipment and others.
Lease payments under finance leases for the six-month period ended March 31, 2009 amounted to ¥146 million ($1,493
thousand).
For the six-month period ended March 31, 2009, DBJ Inc. recorded an impairment loss of ¥5 million ($55 thousand) on certain
leased property held under finance leases that do not transfer ownership and an allowance for impairment loss on leased
property, which is included in Other Liabilities.

Annual Report & CSR Report 2009111

Pro forma information of leased property such as acquisition cost, accumulated depreciation, obligations under finance leases,
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 six-month period ended March 31, 2009 is as follows:
Millions of Yen

2009
As of March 31

Tangible Fixed Assets

Intangible Fixed Assets

Total

¥514

¥254

¥ 768

Accumulated Depreciation

(94)

(37)

(131)

Accumulated Impairment Losses

(5)

—

(5)

¥414

¥216

¥ 631

Acquisition Cost

Net leased property

Thousands of U.S. Dollars (Note 1)2009
As of March 31

Tangible Fixed Assets

Intangible Fixed Assets

Total$5,237$2,586$ 7,823

Accumulated Depreciation

(959)

(381)

(1,341)

Accumulated Impairment Losses

(54)

—

(54)

$4,224$2,205$ 6,429

Acquisition Cost

Net leased property

Pro forma amounts of obligations under finance leases as of March 31, 2009 are as follows:

As of March 31

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

Due within One Year¥238

$2,425Due after One Year

406

4,142

¥645

$6,567

Pro forma amounts of depreciation expense, interest expense and impairment loss under finance leases for the six-month period
ended March 31, 2009 are as follows:

As of March 31

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

Depreciation Expense¥141$1,437

6

67

147

1,504

5

55

Interest Expense
Impairment Loss

Notes: 1. Depreciation expense is calculated using the straight-line method, assuming that useful life is equal to the lease term and that theresidual value at the end of the lease term is zero.
2. The difference between total lease payments and the assumed acquisition cost of leased assets is charged to assumed interest expense
and is allocated to each fiscal year using the interest method.

The minimum rental commitments under non-cancelable operating leases as of March 31, 2009 are as follows:

As of March 31

112

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

Due within One Year¥173

$1,767

Due after One Year

109

1,115

¥283

$2,882

Annual Report & CSR Report 2009

Financial Condition
Consolidated Financial Statements

25. 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 six-month period ended March 31,
2009.
A reconciliation of the actual effective tax rate with the normal effective statutory tax rate for the six-month period ended
March 31, 2009 is as follows:
For the six-month period ended
March 31, 2009

Normal Effective Statutory Tax Rate

40.69%

Increase (Decrease) in Taxes Resulting From:
Change in Valuation Allowance(50.66)

Amortization of Goodwill(0.78)

Minority Interests in Net Income of Subsidiaries

0.34

Other

(1.04)

Actual Effective Tax Rate

(11.45%)The tax effects of significant temporary differences and losses carryforwards which resulted in deferred tax assets and liabilities asof March 31, 2009 are as follows:

As of March 31

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

Deferred Tax Assets:
Allowance for Loan Losses¥ 128,030$ 1,303,371

Losses from Revaluation of Securities

21,317217,020

Reserve for Retirement Benefits

13,041

132,763

Allowance for Investment Losses

3,715

37,820

Tax Loss Carryforwards

3,227

32,853

Unrealized Loss on Available-for-sale Securities

1,690

17,205

Other

5,500

55,996

Sub Total
Less—Valuation Allowance
Total

176,521

1,797,027(136,373)(1,388,305)¥ 40,148$

408,722¥ (12,246)$ (124,668)

(30)

(311)

(12,276)(124,979)

Deferred Tax Liabilities:
Deferred Gains or Losses on Hedges
Other
Total
Net Deferred Tax Assets¥ 27,872$

283,743

26. Segment Information(a) Segment Information by Type of Business
DBJ Inc. and its consolidated subsidiaries are engaged in business such as private equity investment and fund management andother 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 locatedin 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.
Annual Report & CSR Report 2009113

27. Derivative Transactions
1. Details Related to Transactions(a) Details of Transactions
DBJ Inc. utilizes derivative financial instruments, which comprise interest rate swaps, currency swaps, forward foreignexchange contracts and credit default options.
(b) Policy for Derivative Transactions
DBJ Inc. utilizes interest rate swaps, currency swaps and forward foreign exchange contracts to reduce its exposure tomarket risks from fluctuations in interest rates and foreign currency exchange rates, and to respond to the customers’
financial needs. DBJ Inc. does not hold or issue derivative financial instruments for trading purposes.
DBJ Inc. also utilizes credit default options as part of its “acceptances and guarantees on customers’ debt” businesswithin the limit of a certain definite amount of risk.
(c) Risks Involved in Derivative Transactions
Derivatives involve the following risks:(i) Market Risk
Potential losses from changes in the market value of financial products due to fluctuations in interest rates or exchange
rates.
(ii) Credit Risk
Potential losses from the failure of a counterparty to perform its obligations in accordance with the terms andconditions of the contract governing the transaction due to the counterparty’s bankruptcy or deteriorating businessconditions.
With regards to derivative transactions for hedging purpose, the market risk on derivatives is offset against the hedgedtransactions. As for credit risk, DBJ Inc. limits the counterparty to financial institutions highly rated by the credit rating
agencies, and constantly monitors the cost of restructuring its transactions and creditworthiness of each counterparty. In
addition, DBJ Inc. transacts with multiple counterparties to reduce credit risk. With regards to credit derivative transactions,
DBJ Inc. holds credit risk of target debt itself in the transaction.
(d) Risk Management Policies for Derivatives
The Treasury Department enters into and the ALM and Risk Management Department monitors derivative transactionsin accordance with the internal management policy, which defines the authorization procedures, including pre-approvalby authorized personnel, and limits on derivative transactions. Also, total contract amount, total amount of risk, market
value, and total amount of counterparties’ credit risk in the derivative transactions are reported to the directors in charge
periodically.
(e) Supplementary explanation on Market Value of Derivatives
It should be noted that ‘Contract Value’ represents nominal contract value or notional principal amount used indetermining the value of receipts or payments of interest, but this does not necessarily reflect the risks of derivativetransactions themselves.

114

Annual Report & CSR Report 2009

Financial Condition
Consolidated Financial Statements

2. Information on Market Value of Derivatives
The market values of derivatives as of March 31, 2009 are as follows:(a) Interest Rate-related Transactions
Millions of Yen

2009
Contract Value
Total

Over one year

Market Value

Unrealized Gains(Losses)

Receive Fixed/ Pay Float¥191,015¥191,015¥ 6,584¥ 6,584

Receive Float/ Pay Fixed

189,090

189,090(2,169)(2,169)——¥ 4,415¥ 4,415

As of March 31

Over-the-Counter
Swaps

Thousands of U.S. Dollars (Note 1)

2009
Contract Value
Total

Over one year

Market Value

Unrealized Gains(Losses)

Receive Fixed/ Pay Float$1,944,569$1,944,569$ 67,035$ 67,035

Receive Float/ Pay Fixed

1,924,972

1,924,972(22,081)(22, 081)——$ 44,954$ 44,954

As of March 31

Over-the-Counter
Swaps

Notes: 1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the Consolidated Statement of
Operations. Derivative transactions qualifying for hedge accounting are excluded from the tables above.
2. Market values for the over-the-counter transactions are based primarily on discounted present values.

(b) Currency-related Transactions
Millions of Yen

2009
Contract Value
Over one year

Market Value

Unrealized Gains(Losses)¥112,742¥97,497¥(3,877)¥(3,877)

Sold

43,118

—

(503)

(503)

Bought

6,555

—

86

86

¥(4,295)¥(4,295)

As of March 31

Total

Over-the-Counter
Swaps
Forwards——

Thousands of U.S. Dollars (Note 1)

2009
Contract Value
Total

Over one year

Market Value

Unrealized Gains(Losses)$1,147,740$992,543$(39,475)$(39,475)

Sold

438,959—(5,129)(5,129)Bought

66,737

—

876

876

$(43,728)$(43,728)

As of March 31

Over-the-Counter
Swaps
Forwards——

Notes: 1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the Consolidated Statement of
Operations. Derivative transactions qualifying for hedge accounting are excluded from the tables above.
2. Market values for the over-the-counter transactions are based primarily on discounted present values.

Annual Report & CSR Report 2009115

(c) Credit Derivatives Transactions
Millions of Yen

2009
Contract Value
Total

Over one year

Market Value

Unrealized Gains(Losses)Sold¥861,210¥446,610¥(17,874)¥(17,874)

Bought451,100

56,000

680

680

—

—

¥(17,193)¥(17,193)

As of March 31

Over-the-Counter
Credit Default Options

Thousands of U.S. Dollars (Note 1)

2009
Contract Value
Total

Over one year

Market Value

Unrealized Gains(Losses)Sold$8,767,283$4,546,577$(181,964)$(181,964)

Bought

4,592,283

570,091

6,933

6,933

—

—

$(175,032)$(175,032)

As of March 31

Over-the-Counter
Credit Default Options

Notes: 1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the Consolidated Statement of
Operations.
2. Market values are based on the counterparties’ tendered price.
3. ‘Sold’ means the underwriting of credit risk and ‘Bought’ means the transferring of credit risk.

28. Market Value of Securities and Money Held in Trust
Market value of Securities, Money held in Trust and Negotiable Certificate of Deposit classified as “Cash and Due from banks” asof March 31, 2009 are summarized below.
1. Securities(a) Held-to-maturity Debt Securities with market values
Millions of Yen

2009
Unrealized Gains (Losses)
As of March 31

Book Value

Market Value

Japanese Government Bonds

¥

¥

—

—

Net

¥

Gains

—

(Losses)

¥ —

¥

—

Japanese Local Government Bonds

—

—

—

—

—

Short-term Corporate Bonds

—

—

—

—

—

Corporate Bonds

54,05951,095(2,963)197(3,161)

Other

98,23097,857

(372)

—

(372)

¥152,289¥148,953¥(3,336)¥197¥(3,533)

Thousands of U.S. Dollars (Note 1)

2009
Unrealized Gains (Losses)
As of March 31

Japanese Government Bonds

Book Value

$

—

$

—

Net

$

Gains

—

$

(Losses)—$—

Japanese Local Government Bonds

—

—

—

—

—

Short-term Corporate Bonds

—

—

—

—

—

Corporate Bonds
Other

550,337

520,165(30,172)

2,010(32,182)

1,000,000

996,210(3,790)—(3,790)$1,550,337$1,516,375$(33,962)$2,010$(35,972)

Notes: Market value is based on the closing price at the period end.

116

Market Value

Annual Report & CSR Report 2009

Financial Condition
Consolidated Financial Statements(b) Available-for-sale Securities with market values
Millions of Yen

2009
Unrealized Gains (Losses)

As of March 31

Acquisition
Cost

Market /Book ValueNet

Equities¥ 28,159¥ 24,628¥(3,530)¥139¥(3,669)

Bonds

713,681714,410

728

774

(46)

250,670

251,413

743

772

(29)

Japanese Government Bonds
Japanese Local Government Bonds
Short-term Corporate Bonds
Corporate Bonds
Other

Gains

(Losses)

—

—

—

—

—

461,514461,514

—

—

—

1,496

1,482

(14)

2

(16)

5,407

4,492

(914)

—

(914)

¥747,247¥743,531¥(3,716)¥914¥(4,630)

Thousands of U.S. Dollars (Note 1)2009
As of March 31

Equities
Bonds
Japanese Government Bonds
Japanese Local Government Bonds
Short-term Corporate Bonds
Corporate Bonds
Other

Unrealized Gains (Losses)

Acquisition
Cost

Market /Book ValueNet$ 286,665$ 250,722$(35,943)

Gains(Losses)$1,416$(37,360)

7,265,413

7,272,832

7,419

7,889

(470)

2,551,871

2,559,437

7,566

7,866

(300)

—

—

—

—

—

4,698,302

4,698,302———

15,24015,093

(147)

23

(170)

55,04645,738(9,309)—(9,309)$7,607,124$7,569,291$(37,833)$9,306$(47,139)

Notes: Book value above represents the market values determined based on the closing price at the six-month period.

(c) Available-for-sale Securities soldMillions of Yen

2009
As of March 31

Available-for-sale Securities

Proceeds from Sales

Total amount of
Gains on Sales

Total amount ofLosses of Sales¥6,170¥3,415¥327

Thousands of U.S. Dollars (Note 1)2009
As of March 31

Available-for-sale Securities

Proceeds from Sales

Total amount of
Gains on Sales

Total amount ofLosses of Sales$62,813$34,772$3,339(d) Held-to-maturity Debt Securities and Available-for-sale Securities whose market values are not readily determinable

As of March 31

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

Held-to-maturity Debt Securities
Unlisted Corporate Bonds¥ 54,424$ 554,053

127,478

1,297,758

Available-for-sale Securities
Unlisted Equities
Unlisted Corporate Bonds

4,464

45,449Unlisted Foreign Securities

46,721

475,629

Negotiable Certificate of Deposit

10,158103,410

Other

64,468656,298¥307,715$3,132,597

Annual Report & CSR Report 2009117

(e) Redemption Schedule of Available-for-sale Securities with maturities and Held-to-maturity Debt Securities
Millions of Yen

2009
Maturity
As of March 31

Within 1 year

1 to 5 years

5 to 10 years

Japanese Government Bonds¥174,956¥ 76,457¥

Short-term Corporate Bonds

461,514—

Corporate Bonds

14,07910,000¥660,550

More than 10 years

Bonds

Other

—

¥

—

—

—

75,386

21,9651,000

798,245—¥151,850¥120,211¥1,000Thousands of U.S. Dollars (Note 1)

2009
Maturity
As of March 31

Within 1 year

1 to 5 years

5 to 10 years

Japanese Government Bonds$1,781,090$ 778,347

Short-term Corporate Bonds

4,698,302—

143,331
101,802$6,724,526

More than 10 years

Bonds

Corporate Bonds
Other

$

—

$

—

—

—

767,447

223,613

10,18076

1,000,159—$1,545,870$1,223,772$10,180

2. Money Held in Trust(a) Money Held in Trust for the Purpose of Investment
Millions of Yen

2009

As of March 31

Net Unrealized Loss on
the Consolidated Statementof Operations

Book Value

Money Held in Trust for the Purpose of Investment

¥12

¥(1)

Thousands of U.S. Dollars (Note 1)2009

As of March 31

Net Unrealized Loss on
the Consolidated Statementof Operations

Book Value

Money Held in Trust for the Purpose of Investment

$129

$(20)

(b) Other (other than for the purpose of investment and held to maturity)
Millions of Yen

2009
Unrealized Gains (Losses)

As of March 31

Acquisition
Cost

Market /Book Value

Net

Gains

(Losses)

Other Money Held in Trust¥28,074¥24,860¥(3,213)¥5¥(3,219)

Thousands of U.S. Dollars (Note 1)

2009

118

Unrealized Gains (Losses)

As of March 31

Acquisition
Cost

Market /Book Value

Net

Gains

(Losses)

Other Money Held in Trust$285,803$253,089$(32,715)$55$(32,770)

Annual Report & CSR Report 2009

Financial Condition
Consolidated Financial Statements

3. Unrealized Loss on Available-for-sale Securities
The breakdown of Unrealized Loss on Available-for-sale Securities is as follows:
Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

As of March 31

Unrealized Loss on
Available-for-sale Securities¥(3,254)$(33,129)

Other Money Held in Trust

555

Add: Deferred Tax Assets

1,631

16,606(1,617)(16,468)

Amount corresponding to Minority Interests

(46)

(471)

DBJ Inc.’s interest in net unrealized gains on available-for-sale securities heldby affiliates accounted for by the equity method

(3)

(40)

¥(1,667)$(16,980)

Unrealized Loss on
Available-for-sale Securities, Net of Taxes

Notes: Unrealized loss includes foreign currency translation adjustments on non-marketable securities denominated in foreign currency.

29. Related Party Transactions
Related Party Transactions for the six-month period ended March 31, 2009 are as follows:
Amounts of the Transactions
Related Party

Category

Description

Account Item

Millions of Yen

Thousands of U.S.
Dollars (Note 1)

Finance
Minister

Shareholder

Borrowings

Borrowed
Money *1

¥ 247,700$ 2,521,633

Repayments

Balance at March 31, 2009
Millions of Yen

Thousands of U.S.
Dollars (Note 1)¥6,037,140$61,459,235

601,214

6,120,475

Payment forInterest

AccruedAmountPayable54,550555,333

22,429228,332

Guarantees *2—

2,072,206

21,095,455——

Notes: 1. The interest rate of Borrowed Money is from 0.00% to 4.75%, and the last redemption period is March 20, 2029.
2. The Guarantees are for Debentures issued by DBJ Inc.

Annual Report & CSR Report 2009119

Independent Auditors’ Report120

Annual Report & CSR Report 2009

Financial Condition
Consolidated Financial Statements/
Non-Consolidated Financial Statements

Non-Consolidated Balance Sheet

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

As of March 31

AssetsCash and Due from Banks¥

58,386$594,388

Call Loans

145,000

1,476,127

Reverse Repurchase Agreements (Note 3)

375,966

3,827,412

Money Held in Trust

23,981

244,137

Securities (Notes 3, 10 and 11)

1,226,683

12,487,872

Loans (Notes 4 and 11)

12,026,675

122,433,833

Other Assets (Note 6)

88,436900,298

Tangible Fixed Assets (Note 7)

162,367

1,652,930

4,573

46,562Intangible Fixed Assets
Deferred Tax Assets (Note 23)

27,915284,187

Customers’ Liabilities for Acceptances and Guarantees (Note 10)

160,276

1,631,642

Allowance for Loan Losses (Note 8)(273,813)(2,787,468)

Allowance for Investment Losses(9,015)(91,775)¥14,017,435$142,700,145

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

¥ 3,431,597$ 34,934,309

Borrowed Money

8,064,872

82,101,934

Corporate Bonds

81,423828,902

Other Liabilities (Notes 9 and 21)

169,143

1,721,909

Accrued Bonuses to Employees

2,217

22,575

Total Assets

As of March 31

Liabilities and Equity
Liabilities
Debentures

Accrued Bonuses to Directors and Corporate Auditors
Reserve for Employees’ Retirement Benefits
Reserve for Directors’ and Corporate Auditors’ Retirement Benefits

20

213

32,023

326,001

11

122

160,276

1,631,642

11,941,586

121,567,607

Common Stock authorized, 160,000 thousand shares; issued,
40,000 thousand shares (Note 12)

1,000,000

10,180,189

Capital Surplus (Note 12)

1,157,715

11,785,760(97,248)(990,012)

Acceptances and Guarantees (Note 10)
Total Liabilities
EquityDeficit (Note 12)
Unrealized Loss on Available-for-sale Securities(2,425)(24,696)

Deferred Gain on Derivatives under Hedge Accounting

17,808181,297

Total Equity
Total Liabilities and Equity

2,075,849

21,132,538¥14,017,435$142,700,145

See accompanying Notes to Non-Consolidated Financial Statements.

Annual Report & CSR Report 2009121

Non-Consolidated Statement of Operations

For the six-month period ended March 31

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

IncomeInterest Income
Interest on Loans¥ 135,733$ 1,381,790

131,160

1,335,234

4,064

41,37514150Interest and Dividends on Securities
Interest on Call Loans
Interest on Reverse Repurchase Agreements

387

3,943

Interest on Due from Banks

106

1,089

Fees and Commissions (Note 14)

4,626

47,097

Other Operating Income (Note 15)

632

6,438

Other Income (Note 16)

10,873

110,695

Total Income

151,865

1,546,020

Expenses
Interest Expense

83,995855,086

Interest on Debentures

25,991

264,596

Interest on Borrowed Money55,906569,139

Interest on Corporate Bonds

216

2,204

Interest on Swaps (net)

1,880

19,141Other Interest Expense

0

7

Fees and Commissions (Note 17)

140

1,426

Other Operating Expenses (Note 18)

10,730109,235

General and Administrative Expenses

15,225

154,998

Other Expenses (Note 19)

157,476

1,603,140

Total Expenses

267,567

2,723,884

Loss before Income Taxes(115,701)(1,177,864)

Current

20,016

203,772

Deferred(6,490)(66,077)

Income Taxes (Note 23)

Total Income Taxes
Net Loss

13,525

137,695¥(129,227)$(1,315,559)

Yen

U.S. Dollars (Note 1)

Per Share of Common Stock (Note 13)
Basic Net Loss
See accompanying Notes to Non-Consolidated Financial Statements.

122

Annual Report & CSR Report 2009¥(3,230.68)$(32.89)Financial Condition
Consolidated
Financial
Statements
Non-Consolidated
Financial
Statements

Non-Consolidated Statement of Changes in Equity

For the six-month period ended March 31

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

Common Stock:
Balance at October 1, 2008 (Note 20)¥1,000,000$10,180,189

Balance at March 31, 2009

1,000,000

10,180,189

Balance at October 1, 2008 (Note 20)

1,157,715

11,785,760

Balance at March 31, 2009

1,157,715

11,785,760

Capital Surplus:

Deficit:
Balance at October 1, 2008 (Note 20)——

31,978

325,547

Net Loss(129,227)(1,315,559)

Balance at March 31, 2009

(97,248)(990,012)

The Amount of Tax Effect Adjustment due to Change in Legal Structure

Unrealized Loss on Available-for-sale Securities:——

Net Change

Balance at October 1, 2008 (Note 20)(2,425)(24,696)

Balance at March 31, 2009

(2,425)(24,696)

Deferred Gain on Derivatives under Hedge Accounting:
Balance at October 1, 2008 (Note 20)
Net Change
Balance at March 31, 2009
Total Equity——

17,808181,297

17,808181,297¥2,075,849$21,132,538

See accompanying Notes to Non-Consolidated Financial Statements.

Annual Report & CSR Report 2009123

Notes to Non-Consolidated Financial Statements
1. Basis of Presentation
The accompanying non-consolidated financial statements have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its related accounting regulations and Ministerial Ordinance for Accountingof the Development Bank of Japan Inc. (the “DBJ Inc.”) and in conformity with accounting principles generally accepted in Japan,
which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
As consolidated statements of cash flows and certain disclosures are presented in the consolidated financial statements of DBJ
Inc., non-consolidated statement of cash flows and certain disclosures are not presented herein in accordance with accounting
principles generally accepted in Japan.
In preparing these non-consolidated financial statements, certain reclassifications and rearrangements have been made to DBJ
Inc.’s financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million yen. Accordingly, thesum of each amount appearing in the accompanying financial statements and the notes thereto may not be equal to the sum of
the individual account balances. Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The
rate of ¥98.23=$1.00, the effective exchange rate prevailing as of March 31, 2009, has been used in the conversion. The
presentation of such amounts is not intended to imply that Japanese yen amounts have been or could have been readilytranslated, realized or settled in U.S. dollars at that rate or any other rate.
The financial period of the accompanying financial statements is from October 1, 2008 through March 31, 2009. DBJ Inc. wasestablished on October 1, 2008, as a joint stock corporation under the Development Bank of Japan Inc. Law (Law No. 85 of 2007,
as amended) (the “DBJ Inc. Law”). Development Bank of Japan (the “predecessor”) contributed all assets and liabilities to DBJ Inc.
except for those assets to be assumed by the Japanese Government pursuant to Article 15, Paragraph 2 of the Supplementary
Provisions, in exchange for shares of DBJ Inc.’s common stock, and thereafter, upon transferring such shares to the Japanese
Government, the predecessor was dissolved on October 1, 2008.
Except for those assets to be assumed by the Japanese Government pursuant to Article 15, Paragraph 2 of the Supplementary
Provisions, DBJ Inc. has succeeded substantially all of the rights and obligations of the predecessor pursuant to the DBJ Inc. Law.

2. Summary of Significant Accounting Policies(a) Securities
Held-to-maturity debt securities are stated at amortized cost with amortization computed on a straight-line basis, using theweighted average method. Investments in subsidiaries and affiliates are stated at cost computed using the weighted averagemethod. Available-for-sale securities with readily available market quotations are stated at market value (cost is calculated
principally using the weighted average method). Other securities without market quotations are stated at cost or amortizedcost computed using the weighted average method.
Investments in limited partnerships and other similar partnerships are accounted for at their original cost plus DBJ Inc.’sinterests in earnings since acquisition and less any dividends received, based on their most recent financial statements.
However, regarding certain investments in limited partnerships, assets and liabilities are recorded in proportion to DBJ Inc.’s
underlying interests based on their most recent financial statements.
Unrealized gain and loss on available-for-sale securities are included in equity, net of income taxes.
Securities which are held as trust assets in Money Held in Trust accounts are valued in the same way as other securities.
(b) 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 statements of operations.
(c) Hedge Accounting(i) Hedge Accounting
DBJ Inc. applies the deferral method of hedge accounting. Foreign currency swaps which are used to hedge the foreign
currency fluctuations are not translated at market values but at contractual rates, as the foreign currency swap contracts
meet the hedging criteria under the Accounting Standards for Financial Instruments.

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Financial Condition
Consolidated
Financial
Statements
Non-Consolidated
Financial
Statements(ii) Hedging Instruments and Hedged Items• Hedging Instruments: Interest Rate Swaps
Hedged Items:
Debentures, Corporate Bonds, Borrowed Money and Loans• Hedging Instruments: Foreign Currency Swaps
Hedged Items:
Foreign currency denominated Loans, Debentures and Corporate Bonds(iii) Hedging Policy
DBJ Inc. utilizes hedging instruments to hedge interest rates and foreign currency fluctuations on its assets and liabilities.
Individual contracts are drawn for each hedge item.
(iv) 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 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 requirements of the assignment method (*2) under the
Accounting Standards for Financial Instruments at the inception date, DBJ Inc. is not required to periodically evaluate theirhedge effectiveness.
*1 If interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or received under theinterest 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, forward foreign exchange contracts andhedged items are accounted for in the following manner;
1) If a foreign currency swap is executed to hedge existing foreign currency assets or liabilities, a) the difference, if any, between theJapanese yen amount of the hedged foreign currency asset or liability translated using the spot rate at the inception date of thecontract and the book value of the asset or liability is recognized in the statement of operations in the period which includes the
inception date, and b) the discount or premium on the contract (that is, the difference between the Japanese yen amount of thecontract 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.
2) If a foreign currency swap is executed to hedge a future transaction denominated in a foreign currency, the future transaction will berecorded using the contracted forward rate, and no gains or losses on the forward foreign exchange contract are recognized.

(d) Fixed Assets(i) Depreciation of Tangible Fixed Assets
Tangible Fixed Assets are depreciated using the declining-balance method, except for buildings (excluding installedfacilities) that are depreciated on a straight-line basis.
The estimated useful lives are principally as follows:
Buildings:
3 years to 50 years
Others:4 years to 20 years(ii) Amortization of Intangible Fixed Assets
Intangible Fixed Assets are amortized using the straight-line method. Capitalized software for internal use is depreciatedusing the straight-line method based on the estimated useful lives (from 3 to 5 years).
(iii) Lease Assets
Depreciation for lease assets is computed under the straight-line method with zero residual value over the lease term.
(e) Long-lived Assets
DBJ Inc. reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amountof an asset or asset group may not be recoverable. Impairment losses are recognized if the carrying amount of an 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 by which 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.
Annual Report & CSR Report 2009125

(f) Debentures and Corporate Bonds Issuance Costs“Debentures and Corporate Bonds Issuance Costs” are charged to income as incurred.
(g) Foreign Currency Translation and Revaluation Method
Assets and liabilities denominated in foreign currencies held by DBJ Inc. have been translated at the exchange rates prevailingas of the balance sheet date, except for subsidiary stocks translated at the exchange rates of acquisition.
The foreign exchange gains and losses from transaction are recognized in the income statement to the extent that they are
not hedged by forward exchange contracts.
(h) Allowance for Loan Losses
DBJ Inc. provides for “Allowance for Loan Losses” as detailed below pursuant to the internal policies for self-assessment ofcredit quality and loan losses.
The allowance for claims on debtors who are legally bankrupt, in special liquidation or effectively bankrupt is provided
for based on the amount of claims, after the write-off described below, net of amounts expected to be recovered throughdisposal 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, andfor which future cash flows cannot reasonably be estimated, is provided for at the amount considered to be necessary basedon an overall solvency assessment performed on the claims, net of amounts expected to be recovered through disposal ofcollateral or execution of guarantees.
With respect to the claims on debtors who are likely to become bankrupt or to be closely monitored, and for which future
cash flows can reasonably be estimated, the allowance is provided for as the difference between the present value of expected
future cash flows discounted at the contracted interest rate and the carrying value of the claims.
The allowance 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 are assessed initially by the investment and lending departments and then by the Credit Analysis Department,
which is independent of the investment and lending departments based on internal policies for self-assessment of credit
quality. The allowance is provided for based on the results of the self-assessment.
With respect to the claims on debtors who are legally or substantially bankrupt with collateral or guarantees, the amountof claims exceeding the estimated market values of collateral or guarantees which are deemed uncollectible have been writtenoff, and totaled ¥51,303 million ($522,277 thousand) for the six-month period ended March 31, 2009.
(i) 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.
(j) Accrued Bonuses to Employees, Directors and Corporate Auditors“Accrued Bonuses to Employees, Directors and Corporate Auditors” are provided for in the amount of the estimated bonuses
which are attributable to the six-month period.
(k) 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 toemployees. It is accrued based on the projected benefit obligations and estimated pension plan assets at the six-month period
ended. 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 the straight-line method overthe period of ten years within the employees’ average remaining service period commencing from the next fiscal year after
incurrence.
(l) 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.

126

Annual Report & CSR Report 2009

Financial Condition
Consolidated
Financial
Statements
Non-Consolidated
Financial
Statements(m) Lease Transactions
In March 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for Lease Transactions”, which revised theprevious accounting standard for lease transactions issued in June 1993. The revised accounting standard for lease transactions
is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted for fiscal years beginning on orafter April 1, 2007.
Under the previous accounting standard, finance leases that deem to transfer ownership of the leased property to
the lessee were to be capitalized. However, other finance leases were permitted to be accounted for as operating leasetransactions if certain “as if capitalized” information is disclosed in the note to the lessee’s financial statements. The revised
accounting standard requires that all finance lease transactions should be capitalized to recognize lease assets and leaseobligations in the balance sheet. In addition, the revised accounting standard permits leases which existed at the transition
date and do not transfer ownership of the leased property to the lessee to be accounted for as operating lease transactions.
DBJ Inc. applied the revised accounting standard on October 1, 2008. In addition, DBJ Inc. accounted for leases which
existed in the predecessor at March 31, 2008 and were transferred to DBJ Inc. on October 1, 2008, and do not transfer
ownership of the leased property to the lessee as operating lease transactions.
(n) Consumption Taxes
Income and expenses subject to consumption taxes exclude related consumption taxes paid or received.
(o) Income Taxes
The provision for income taxes is computed based on the pretax income included in the statement of operations. The asset andliability 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.
(p) Per Share Information
Basic Net Income Per Share is computed by dividing net income available to common stockholders by the weighted-average
number of shares of common stock outstanding for the period, retroactively adjusted for stock splits. Diluted net income pershare for the six-month period ended March 31, 2009 is not disclosed because of no dilutive securities.
(q) Related Party Transactions
The note of Related Party Transactions is omitted because it refers to Note 29 of Notes to Consolidated Financial Statements.

3. Securities
Securities as of March 31, 2009 are as follows:
Millions of Yen

As of March 31

2009

Thousands of U.S. Dollars(Note 1)

2009

Japanese Government Bonds¥ 251,413$ 2,559,437

Short-term Corporate Bonds

461,514

4,698,302

Corporate Bonds

112,431

1,144,571

Equities

149,052

1,517,385

Other Securities

252,2722,568,177¥1,226,683$12,487,872

Notes: 1. Investments in subsidiaries and affiliates included in “Equities” as of March 31, 2009 are ¥76,753 million ($781,368 thousand).
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 Law) and amount to ¥3,280 million ($33,391 thousand) as of March 31, 2009.
3. There are no securities repledged as of March 31, 2009. Securities accepted under repurchase agreements can be sold or repledged.
Securities neither sold nor repledged are ¥375,966 million ($3,827,412 thousand).
4 Other securities with market value are considered impaired if there is a considerable decline in the market value below the acquisition
cost and such decline is not believed to be recoverable. The difference between the acquisition cost and the market value is the losses forthe six-month period.
The criterion for determining “Considerable decline in market value” is as follows.
Market value is 50% or more lower than acquisition cost.
Market value is 30% or more lower than acquisition cost, and such decline is not considered as recoverable.

Annual Report & CSR Report 2009127

4. Non-performing Loans
The amounts of Non-performing Loans included in “Loans” on the non-consolidated balance sheet as of March 31, 2009 are as
follows:
Millions of Yen

Thousands of U.S. Dollars(Note 1)

As of March 31

2009

Loans to Bankrupt Debtors¥ 18,967$ 193,093

Delinquent Loans

113,773

1,159,240

23

238

Loans Past Due Three Months or More
Restructured Loans

2009

56,795578,185¥189,559$1,929,756

Notes: 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 fallunder 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”.

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, 2009, theamount of unused commitments was ¥266,886 million ($2,716,957 thousand). As of March 31, 2009, the amount of unused
commitments whose remaining contract term was within one year was ¥79,128 million ($805,547 thousand).
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. can refuse customers’ application 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. obtains real estate, securities or other assets as collateral if considerednecessary. Subsequently, DBJ Inc. performs periodic reviews of the customers’ business results based on internal rules, and takes
necessary measures to reconsider conditions in contracts and/or require additional collateral and guarantees.

6. Other Assets
Other Assets as of March 31, 2009 are as follows:
Millions of Yen

As of March 31

2009

2009

Prepaid Expenses¥ 8,277$ 84,268

Accrued Income

40,634

413,671

Derivatives

39,052397,564

Other

128

Thousands of U.S. Dollars(Note 1)

Annual Report & CSR Report 2009

471

4,795

¥88,436$900,298

Financial Condition
Consolidated
Financial
Statements
Non-Consolidated
Financial
Statements

7. Tangible Fixed Assets
Tangible Fixed Assets as of March 31, 2009 are as follows:
Millions of Yen

Thousands of U.S. Dollars(Note 1)

As of March 31

2009

2009

Land

¥147,396$1,500,520

14,485

147,465

Leased Assets

158

1,611

Construction in Progress

27

277

Buildings

Other

300

3,056

¥162,367$1,652,930

Notes: The Accumulated Depreciation of Tangible Fixed Assets as of March 31, 2009 is ¥430 million ($4,379 thousand).

8. Allowance for Loan Losses
Allowance for Loan Losses as of March 31, 2009 is as follows:
Millions of Yen

Thousands of U.S. Dollars(Note 1)

As of March 31

2009

General Allowance for Loan Losses¥215,438$2,193,204

2009

Specific Allowance for Loan Losses

58,374594,264¥273,813$2,787,468

9. Other Liabilities
Other Liabilities as of March 31, 2009 are as follows:
Millions of Yen

As of March 31

2009

Accrued Income Taxes¥ 20,091

Thousands of U.S. Dollars(Note 1)2009

$ 204,532

Unearned Income

1,199

12,214

Accrued Expenses

33,823344,326

Derivatives

112,633

1,146,634

284

2,893

Lease Obligation
Other

1,111

11,312¥169,143$1,721,909

10. Acceptances and Guarantees
Acceptances and Guarantees as of March 31, 2009 are as follows:
Millions of Yen

Thousands of U.S. Dollars(Note 1)

As of March 31

2009

2009

Guarantees¥160,276$1,631,642

Annual Report & CSR Report 2009129

11. Assets Pledged as Collateral
Loans and Securities pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are ¥228,799
million ($2,329,217 thousand) and ¥633,024 million ($6,444,309 thousand), respectively, as of March 31, 2009. Also, ¥2,025
million ($20,615 thousand) of Securities are pledged as collateral for loans of companies which DBJ Inc. invests as of March 31,
2009.
Under the DBJ Inc. Law (Law No. 17 and 26), the DBJ Law (Law No. 43), obligations created by the bonds issued by DBJ Inc.
are secured by a statutory preferential right over the property of DBJ Inc. Denomination value of these debentures amounts to¥3,314,596 million ($33,743,217 thousand).

12. Equity
Since May 1, 2006, Japanese companies including DBJ Inc. have been regulated by the Companies Act. In addition, DBJ Inc. isregulated by DBJ Inc. Law. The significant provisions in the Companies Act and DBJ Inc. Law that affect financial and accounting
matters are summarized as follows:(a) Dividends
Under the Companies Act, companies can distribute dividends at any time during the fiscal year in addition to the year-end
dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having the Boardof Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of thedirectors 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 , prescribed that the Board of Directors
can declare dividends in its articles of incorporation. DBJ Inc., however, shall not distribute such dividends based on resolutionof the Board of Directors, since its article of incorporation is not prescribed that the Board of Directors can do such an action.
The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The
Article 20 of the DBJ Inc. Law provides that the timing and amounts for dividends shall be authorized by the Finance Minister.
(b) Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be set aside as a legal reserve (a component ofretained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged
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 and legal reserve may be reversed without
limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus
and retained earnings can be reclassified among the accounts under certain conditions upon resolution by the shareholders.
(c) Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of the treasury stock based on
resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the distributable amount to theshareholders which is determined by specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of equity.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock.
The treasury stock acquisition rights are presented as a separate component of equity or deduction of stock acquisition rights.
(d) Solicitation and Delivery of Shares or Stock Acquisition Rights
The Article 12 of the DBJ Inc. Law regulates that, if DBJ Inc. intends to solicit those who will subscribe for shares or stockacquisition rights offered, or to deliver shares or stock acquisition rights in connection with a share-for-share exchange, DBJ
Inc. shall obtain an authorization from the Finance Minister.

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Annual Report & CSR Report 2009

Financial Condition
Consolidated
Financial
Statements
Non-Consolidated
Financial
Statements

13. Per Share Information
Basic Net Loss Per Common Share (“EPS”) for the six-month period ended March 31, 2009 is as follows:
Millions of Yen

Thousands of Shares

Yen

U.S. Dollars

Net Loss

Weighted Average Shares

EPS

EPS

¥(129,227)

40,000¥(3,230.68)$(32.89)

Basic EPS
Net Loss Available to Common
Shareholders

Notes: Diluted net income per share for the six-month period ended March 31, 2009 is not disclosed because there are no dilutive securities.

14. Fees and Commissions (Income)Fees and Commissions (Income) for the six-month period ended March 31, 2009 are as follows:

For the six-month period ended March 31

Commissions

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

¥4,626$47,097

15. Other Operating Income
Other Operating Income for the six-month period ended March 31, 2009 is as follows:

For the six-month period ended March 31

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

Foreign Exchange Gains¥632$6,438

16. Other Income
Other Income for the six-month period ended March 31, 2009 is as follows:
Thousands of U.S. Dollars(Note 1)Millions of Yen

For the six-month period ended March 31

2009

2009

Gains on Sales of Equities and Other Securities¥ 3,236$ 32,948

Gains on Money Held in Trust

866

8,822

Gains on Sales of Fixed Assets

07Collection of Written-off Claims

3,316

33,762

Other

3,453

35,155¥10,873$110,695

Notes: “Other” includes profit of collective investment vehicles, such as limited partnerships, Tokumei Kumiai and other entities with similar
characteristics, attributable to DBJ Inc. as the equity participants, totaling ¥2,916 million ($29,690 thousand) for the six-month period
ended March 31, 2009.

Annual Report & CSR Report 2009131

17. Fees and Commissions (Expenses)
Fees and Commissions (Expenses) for the six-month period ended March 31, 2009 are as follows:
Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

For the six-month period ended March 31

Commissions¥140$1,426

18. Other Operating Expenses
Other Operating Expenses for the six-month period ended March 31, 2009 are as follows:
Thousands of U.S. Dollars(Note 1)Millions of Yen

For the six-month period ended March 31

2009

Debentures Issuance Costs

¥

2009

368

$

3,751

Corporate Bonds Issuance Costs

147

1,505

Losses on Derivative Instruments

10,065

102,472

Other

147

1,506

¥10,730$109,235

19. Other Expenses
Other Expenses for the six-month period ended March 31, 2009 are as follows:
Thousands of U.S. Dollars(Note 1)Millions of Yen

For the six-month period ended March 31

2009

Provision for Allowance for Loan Losses¥122,603$1,248,129

Provision for Investment Losses

4,277

43,547

Write-off of Loans

2,583

26,305

Write-off of Equities

10,959111,570331

Losses on Money Held in Trust

2009

Losses on Sales of Fixed Assets

8

92

Impairment Loss

30

312

Other

17,008173,154¥157,476$1,603,140

Notes: “Other” includes losses of collective investment vehicles, such as limited partnerships, Tokumei Kumiai and other entities with similar
characteristics, attributable to DBJ Inc. as the equity participants, totaling ¥16,496 million ($167,940 thousand) for the six-month period
ended March 31, 2009.

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Annual Report & CSR Report 2009

Financial Condition
Consolidated
Financial
Statements
Non-Consolidated
Financial
Statements

20. Non-Consolidated Statement of Changes in Equity
The financial period of this financial statement is from October 1, 2008 through March 31, 2009. DBJ Inc. was established on
October 1, 2008, as a joint stock corporation under the DBJ Inc. Law (Law No. 85 of 2007, as amended). The predecessor
contributed all assets and liabilities to DBJ Inc. except for those assets to be assumed by the Japanese Government pursuant to
Article 15, Paragraph 2 of the Supplementary Provisions, in exchange for shares of DBJ Inc.’s common stock, and thereafter, upontransferring such shares to the Japanese Government, the predecessor was dissolved on October 1, 2008. Valuation of Assets andLiabilities evaluated by evaluation officers (hyoka iin) pursuant to Article 16 of the Supplementary Provisions on the DBJ Inc. Law is
as follows:
As of October 1, 2008

Millions of Yen

Thousands of U.S. Dollars

Assets¥12,414,193$116,565,194

As of October 1, 2008

Millions of Yen

Thousands of U.S. Dollars

Liabilities¥10,256,477$ 96,304,957

Equity2,157,715

20,260,237¥12,414,193$116,565,194

Notes: Valuation of Assets, Liabilities and Equity succeeded from the predecessor on October 1, 2008 is converted at the rate of ¥106.50=$1.00 asof October 1, 2008.

21. Lease Transactions
DBJ Inc. leases certain equipment and others.
Lease payments under finance leases for the six-month period ended March 31, 2009 amounted to ¥145 millions yen ($1,482
thousand).
Pro forma information of leased property such as acquisition cost, accumulated depreciation, obligations under finance leases,
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 six-month period ended March 31, 2009 is as follows:
Millions of Yen
2009
As of March 31

Acquisition Cost
Accumulated Depreciation
Net leased property

Tangible Fixed Assets

Intangible Fixed Assets

Total

¥508

¥254

¥ 762

(93)

(37)

(130)

¥414

¥216

¥ 631

Thousands of U.S. Dollars (Note 1)2009
As of March 31

Acquisition Cost
Accumulated Depreciation
Net leased property

Tangible Fixed Assets

Intangible Fixed Assets

Total$5,174$2,586$ 7,760

(950)

(381)

(1,332)$4,224$2,205$ 6,429

Pro forma amounts of obligations under finance leases as of March 31, 2009 are as follows:

As of March 31

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

Due within One Year¥236

$2,406

Due after One Year

402

4,103

¥639

$6,509Annual Report & CSR Report 2009133

Pro forma amounts of depreciation expense and interest expense under finance leases for the six-month period ended March 31,
2009 are as follows:

As of March 31

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

Depreciation Expense¥140$1,427

6

66

¥146

$1,492

Interest Expense

Notes: 1. Depreciation expense is calculated using the straight-line method, assuming that useful life is equal to the lease term and that theresidual value at the end of the lease term is zero.
2. The difference between total lease payments and the assumed acquisition cost of leased assets is charged to assumed interest expense
and is allocated to each fiscal year using the interest method.

The minimum rental commitments under non-cancelable operating leases as of March 31, 2009 are as follows:

As of March 31

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

Due within One Year¥157

$1,606

Due after One Year

108

1,100

¥265

$2,706

22. Market Value of Securities
Market value of Securities, excluding investments in subsidiaries and affiliates, are reported in the notes to consolidated financial
statements. DBJ Inc. holds no investments in subsidiaries with market value as of March 31, 2009.

23. Income Taxes
DBJ Inc. is subject to Japanese national and local income taxes which, in the aggregate, resulted in normal effective statutory tax
rate of approximately 40.69% for the six-month period ended March 31, 2009.
A reconciliation of the actual effective tax rate with the normal effective statutory tax rate for the six-month period ended
March 31, 2009 is as follows:
For the six-month period ended
March 31, 2009

Normal Effective Statutory Tax Rate

40.69%

Increase (Decrease) in Taxes Resulting From:
Change in Valuation Allowance(52.35)

Other(0.03)

Actual Effective Tax Rate

134

Annual Report & CSR Report 2009(11.69%)Financial Condition
Consolidated
Financial
Statements
Non-Consolidated
Financial
Statements

The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities as of March 31, 2009 are as
follows:

As of March 31

Millions of Yen

Thousands of U.S. Dollars(Note 1)

2009

2009

Deferred Tax Assets:
Allowance for Loan Losses¥ 128,029$ 1,303,369

Reserve for Retirement Benefits

13,030132,650

Losses on Investment Securities

9,640

98,142

Allowance for Investment Losses

3,668

37,343

Unrealized Loss on Available-for-sale Securities

1,664

16,943

Other

5,145

52,378Sub Total

161,178

1,640,825

Less—Valuation Allowance(121,044)(1,232,258)

Total¥ 40,133$

408,567¥ (12,217)$ (124,380)(12,217)(124,380)

Deferred Tax Liabilities:
Deferred Gains or Losses on Hedges
Total
Net Deferred Tax Assets¥ 27,915$

284,187

Annual Report & CSR Report 2009135

Independent Auditors’ Report

136

Annual Report & CSR Report 2009

Financial Condition

Capital Adequacy Status

Consolidated
Financial
Statements
Non-Consolidated
Financial
Statements/
Capital Adequacy Status

Capital adequacy ratios were calculated in accordance with the guidelines stipulated by Article 14-2 of the Banking Law of Japan(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 both to uniform international
standards.
As of this disclosure (July 2009), DBJ has not yet applied Article 14-2 of the Banking Law of Japan, but for reference the capital
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, andoperational risk was calculated using the basic indicator approach. Also, as the Bank 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)
Settlement of the consolidated accounts for the 9th business term.

Qualitative Disclosure
1. Scope ofConsolidation

The DBJ’s consolidated capital adequacy ratio is calculated for the corporate group, as stipulated in Article
3 of the Capital Adequacy Ratio Notification (hereinafter, the ”Consolidated Group”). For companies thatbelong to the Consolidated Group, no differences exist in the wording of the consolidated financial
statements or regulations pertaining to shares and preparation methods (Ministry of Finance Directive No.
28 of 1976 (hereinafter, the ”Consolidated Financial Statement Regulations”) of companies included in
the scope of consolidation. The Consolidated Group has nine consolidated subsidiaries, including New
Business Investment Co., Ltd., (provides funding, etc. to operators of new businesses) and DBJ Credit LineLtd. (acquires beneficial interests in trust, operates and directs trusts on a commissioned basis, etc.).
No affiliated companies conduct financial business to which Article 9 of the Capital Adequacy Ratio
Notification applies; no companies are subject to exclusion items under Item 2 (a) to (c), Paragraph 1,
Article 8, of this Notification; and no companies conduct business in accordance with Item 11, Paragraph
1, Article 16-2 of the Banking Law of Japan (Law No. 59 of 1981, hereinafter, the ”Law”) or in accordancewith Item 12 of this Paragraph that do not belong to the Consolidated Group.
In the Consolidated Group no particular restrictions are in place to limit the movement of funds orcapital.

2. Overview of FundRaising Methods

All capital is funded by the government of Japan.

3. Overview of Methods
for Evaluating the
Degree of Capital
Adequacy of theConsolidated GroupRegarding the degree of capital adequacy, the Consolidate Group quantifies credit risk, interest rate risk
and operational risk, compares the total risk amount with total capital and measures the capital surplus.
This surplus enables the Consolidated Group to respond to unquantifiable risks and unforeseen events,
decide whether to take new financing risks and establish the operating directions.

4. Credit Risk(a) Overview of Risk Management Policies and Procedures
Credit risk refers to the risk of loss to the Bank 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 (UL), or losses that on average can be expected to occur within acertain measurement period; and unexpected losses (UL), which go extend beyond the boundaries oflosses that, on average, are expected within a period of time. The Bank periodically compares UL andcapital to measure the amount of capital in surplus.
(b) Rating Agencies Eligible to Weight Risks
The rating agencies that the Bank uses for weighting risk are among the four that the FSA has named
eligible to perform such weighting. Rating agency eligibility is not selected depending on the type of
exposure.
The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating Agency,
Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

5. Overview of Risk
Management Policies
and Procedures for
Reducing Credit Risk

DBJ obtains collateral or guarantees as necessary based on changes in the borrower’s creditworthiness. If
required, the effectiveness of collateral is determined from the perspective of the amount that could bereasonably expected to resolve the situation through liquidation or the creditworthiness of the guarantor,
respectively.
In principal, collateral valuation is performed by the Credit Analysis Department, based on the requestof investment and loan departments/offices. Investment and loan departments/offices and the Credit
Analysis Department manage credit risk based on valuation results. In principle, the valuation of all
collateral property is reviewed once or twice each year to ensure the Bank is aware of the current status ofits collateral property.

Annual Report & CSR Report 2009

137

138

6. Overview of Risk
Management Policies
and Procedures
Related to Risk
Involving Counter–parties in Derivative
Product Transactions
and Transactions withLong Settlement
Periods

The Bank regularly refers to the ratings and credit amounts of transaction counterparties to determine theadvisability of entering a transaction or to understand the risks of existing transactions.

7. Securitization
Exposure(a) Overview of Risk Management Policies and Procedures
Excluding credit derivatives, the majority of DBJ’s securitization exposure falls into the category of
specialized lending (Item 47, Article 1, of the Capital Adequacy Ratio Notification) employing internalrating methods. Different from the internal ratings that are applied to standard corporate credit, thisexposure is given a rating by using a grading system applied to match the characteristics of specialized
lending. The Bank conducts risk management in line with changes in rating level. In addition to rating
its exposure when making new acquisitions, the Bank reviews these ratings periodically.
The Bank’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 Securitization Transactions
Securitized transactions are recognized from an accounting standpoint at the time of inflows or
outflows of cash, such as when selling assets or raising funds.
(d) Rating Agencies Eligible to Weight Risks by Type of Securitization
The rating agencies that DBJ uses for weighting risk are among the four that the FSA has named
eligible to perform such weighting. Eligible rating agencies are not selected according to investment
type.
The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating Agency,
Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

8. Market Risk

In accordance with Article 4 of the Capital Adequacy Ratio Notification, the Bank includes in its calculation
method no market risk equivalent amount. Consequently, this topic is not applicable.

9. Operational risk(a) Overview of Risk Management Policies and Procedures
DBJ defines operational risk as the risk of loss arising from internal processes, people or systems thatare inappropriate or non-functioning, or from extrinsic events. DBJ works to ensure its risk
management preparedness to prevent potential risks from materializing.
The Bank establishes its management structure and basic risk management policy pertaining tomanagement methods after considering the wide range of operational risks that it potentially faces,such as operational risk, systems risk, legal risk, human risk and tangible asset risk.
The Bank 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, the Bank
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 Amount
The Bank uses the basic indicator approach to calculate these risks.

10. Overview of Risk
Management Policies
and Procedures
Regarding Exposure
to Shares and Other
Equity Investments
and Capital
Injections into the
Banking Book

The Bank defines investment risk as its risk of sustaining a partial or total loss on the value of aninvestment, owing to such factors as the worsening of an investee’s profitability or 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, the Bank regularly
conducts performance evaluations on its exposure.

Annual Report & CSR Report 2009

Financial Condition
Consolidated
CapitalAdequacy
Financial
StatusStatements

11. Interest Rate Risk on
the Banking Book(a) Overview of Risk Management Policies and Procedures
Long-term, fixed-rate funding makes up the majority of the DBJ’s borrowings, and the Bank seeks to
reduce its interest rate risk by raising funds featuring similarly long-term, fixed rates therefore, measureinterest rate risk. 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 Controlof the Banking Book
The Bank 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-year time
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 the change ineconomic value((ii) and (iii) are methods for measuring the standardized interest rate shock under Basel II.)

Quantitative Disclosure
1. Of companies covered under the deductions from capital provided by Article 8, Paragraph 1, Item 2 (a) to (c) or by Article
31, Paragraph 1, Item 2 (a) to (c) of the Capital Adequacy Ratio Notification, names of companies that fall below
legislatively required capital adequacy and the total amount by which they fail to meet the required capital adequacy.
Not applicable.
2. Items Related to Capital Adequacy Level(Millions of yen)March 31, 2009(a) Capital requirement to total credit risk

702,205(1) Exposure by portfolio to which standardized approach applied

650,833(i) Japanese government and regional municipal entities(ii) Exposure to financial institutions

0
5,111

(iii) Exposure to corporations

613,433(iv) Equity exposure

16,536(v) Other exposure

15,752(2) Securitization risk exposure

51,372(b) Capital requirement to market risk—(c) Capital requirement to operational risk

14,234(d) Consolidated total capital requirement ((a) + (b) + (c))(e) Consolidated capital ratio and consolidated Tier I ratio

716,440
Capital ratio

18.88%

Tier I ratio

23.10%

Annual Report & CSR Report 2009139

3. 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, 2009Loans

11,562,800

Equities, funds

216,535

Commitments and customers’ liabilities for acceptances and guarantees

379,029

Bonds (JGBs and corporate bonds, etc.)

888,443

Repurchase agreement/call loan

520,972

Other

375,860

Total

13,943,641(b) Fiscal year-end credit risk exposure, broken down as follows:(1) By region(Millions of yen)March 31, 2009

Domestic total

13,943,566

Overseas total

75

Note: ”Overseas” refers to overseas consolidated subsidiaries. DBJ has no overseas branches.

(2) Breakdown by industry and transaction counterparty(Millions of yen)March 31, 2009

Manufacturing

2,832,973

Forestry and fisheries

1,221

Mining26,965Construction

58,995Wholesale and retail875,540

Finance and insurance

1,149,726

Real estate

1,276,177

Transportation and communications

4,064,028

Electrical, gas and water

2,028,789

Services

1,137,269

Other

491,953(3) Breakdown by period to maturity(Millions of yen)March 31, 2009

140

Five years or less

5,043,231

More than five years, up to 10

4,818,836

More than 10 years, up to 15

2,646,779

More than 15 years

1,040,599

No maturity date

394,194

Annual Report & CSR Report 2009

Financial Condition
Consolidated
CapitalAdequacy
Financial
StatusStatements(c) Breakdown of exposure by risk weight (after accounting for credit risk mitigations)(Millions of yen)March 31, 2009

Risk weight 0%753,431

Risk weight 10%

294

Risk weight 20%

4,624,103

Risk weight 50%

2,743,958

Risk weight 100%

5,444,070

Risk weight 150%

263,0144. Items Related to the Effect of Credit Risk Mitigations
Exposure to Items to Which Effect of Credit Risk Mitigations Applied(Millions of yen)March 31, 2009

Eligible financial collaterals

375,963

Guarantees or credit derivatives

1,852,601

5. Transaction Counterparties’ Risk on Derivative Product Transactions and Transactions with Long Settlement Periods(Millions of yen)March 31, 2009

Equivalent credit calculation method

Current exposure method

Gross restructuring cost

117,323

Gross add-on, by transaction type103,801
Interest rate transactions

60,822Foreign exchange transactions

40,079Credit derivative transactions

2,900

Reducing credit equivalent amounts through netting

110,391

Net equivalent credit
Amounts of hypothetical holdings of credit derivatives
for calculated credit equivalent amount by type ofcredit derivative, by protection purchase or provision

110,732
Net restructuring cost

53,719Credit default swaps provision861,210Credit default swaps purchase451,100

Hypothetical holdings of credit derivatives taking
into account credit risk mitigations

393,100

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 with securitization
exposure indicated elsewhere and what are known as single-name CDS offerings include the measurement of acceptances and guarantees as consisting of
the legal and other exposure of the company in question.

6. Securitization Exposure(a) Securitization exposure in which the Consolidated Group is the originator
Not applicable.
(b) Securitization exposure in which the Consolidated Group is an investor(1) Retained securitization exposure amount and breakdown by major underlying asset type(Millions of yen)March 31, 2009

Structured finance613,337

Credit derivatives

739,574

Funds*

192,854* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

Annual Report & CSR Report 2009141

(2) Balance of retained securitization exposure by risk weight and required capital amounts(Millions of yen)March 31, 2009

Risk weight

20%

Risk weight

50%

Risk weight

100%

Risk weight350%

Risk weight

Capital deductions

Risk weight

Other*

Balance594,454

Capital requirement

9,511

Balance

201,778

Capital requirement

8,071

Balance261,237

Capital requirement

20,899Balance

35,000Capital requirement

9,800

Balance

437,337

Capital requirement—

Balance

15,958

Capital requirement

3,090* Applying to exposure the transitional measures indicated in Article 15 of the Supplementary Provision to the Capital Adequacy Ratio Notification.

(3) Breakdown of securitization exposure amounts and underlying asset categories deducted from capital in accordance with Article
247 of the Capital Adequacy Ratio Notification(Millions of yen)March 31, 2009

Structured finance244,482

Funds*

192,854* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

(4) Amount of credit risk assets calculated with application of Article 15 of the Supplementary Measure to the Capital Adequacy
Ratio Notification(Millions of yen)March 31, 2009

Credit risks and assets

38,6357. Items Related to Market Risk
The Bank falls into the category indicated in Article 4 of the Capital Adequacy Ratio Notification. Consequently, calculation of themarket risk equivalent amount indicated in Article 2 was not performed, and this item does not apply.
8. Items Related to Shares and Other Equity Investments and Capital Injections into the Banking Book

(Millions of yen)March 31, 2009(a) Market value of below-listed items as included within categories in
the consolidated balance sheets
Exposure to listed shares

28,961

Exposure to other equity investments and capital injections

180,170(b) Gains or losses on the sale of equity investments or shares

3,204

Gain or loss on amortization of exposure on equity investments or shares

14,558(c) Gains or losses from valuation recognized on the consolidated balance sheets
but not recognized on the consolidated statements of income statements(1,667)(d) Included amount stipulated in Article 6, Paragraph 1, Item 1 of the Capital Adequacy
Ratio Notification—

Notes: 1. The Group has no overseas sales locations.
2. The Group has no exposure to shares to which Article 13 of the Supplementary Provisions to the Capital Adequacy Ratio Notification applies.

9. Amount of Exposure Applied for the Deemed Calculation of Credit Risk Assets
As the Bank employs the standardised approach for calculating credit risk, this item does not apply.
10. Interest Rate Risk in the Banking Book
March 31, 2009

Decrease in economic value resulting from interest rate shock

142

Annual Report & CSR Report 2009

Decrease in economic value
resulting from an interest rate
shock measuring interest rate
fluctuations in the 1st percentile
and 99th percentile, using a
one-year holding period anda five-year time horizon:¥19.4 billion

Financial Condition
Consolidated
CapitalAdequacy
Financial
StatusStatements[2] Capital Adequacy Ratio Status (Non-Consolidated)
Settlement of the non-consolidated accounts for the 9th business term.

Qualitative Disclosure
1. Overview of FundRaising Methods

All capital is funded by the government of Japan.

2. Overview of Methods
for Evaluating the
Degree of Capital
Adequacy of the Bank

Regarding the degree of capital adequacy, the Bank quantifies credit risk, interest rate risk and operationalrisk, compares the total risk amount with total capital and measures the capital surplus. This surplus
enables the Bank to respond to unquantifiable risks and unforeseen events, decide whether to take newfinancing 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 the Bank 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 (UL), or losses that on average can be expected to occur within acertain measurement period; and unexpected losses (UL), which go extend beyond the boundaries oflosses that, on average, are expected within a period of time. The Bank periodically compares UL andcapital to measure the amount of capital in surplus.
(b) Rating Agencies Eligible to Weight Risks
The rating agencies that the Bank uses for weighting risk are among the four that the FSA has named
eligible to perform such weighting. Rating agency eligibility is not selected depending on the type of
exposure.
The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating Agency,
Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

4. Overview of Risk
Management Policies
and Procedures for
Reducing Credit Risk

DBJ obtains collateral or guarantees as necessary based on changes in the borrower’s creditworthiness. If
required, the effectiveness of collateral is determined from the perspective of the amount that could bereasonably expected to resolve the situation through liquidation or the creditworthiness of the guarantor,
respectively.
In principal, collateral valuation is performed by the Credit Analysis Department, based on the requestof investment and loan departments/offices. Investment and loan departments/offices and the Credit
Analysis Department manage credit risk based on valuation results. In principle, the valuation of all
collateral property is reviewed once or twice each year to ensure the Bank is aware of the current status ofits collateral property.

5. Overview of Risk
Management Policies
and Procedures
Related to Risk
Involving Counterparties in Derivative
Product Transactions
and Transactions withLong Settlement
Periods

The Bank regularly refers to the ratings and credit amounts of transaction counterparties to determine theadvisability of entering a transaction or to understand the risks of existing transactions.

6. Securitization
Exposure(a) Overview of Risk Management Policies and Procedures
Excluding credit derivatives, the majority of DBJ’s securitization exposure falls into the category of
specialised lending (Item 47, Article 1, of the Capital Adequacy Ratio Notification) employing internalrating methods. Different from the internal ratings that are applied to standard corporate credit, thisexposure is given a rating by using a grading system applied to match the characteristics of specialised
lending. The Bank conducts risk management in line with changes in rating level. In addition to rating
its exposure when making new acquisitions, the Bank reviews these ratings periodically.
The Bank’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 Securitization Transactions
Securitized transactions are recognized from an accounting standpoint at the time of inflows or
outflows of cash, such as when selling assets or raising funds.
(d) Rating Agencies Eligible to Weight Risks by Type of Securitization
The rating agencies that DBJ uses for weighting risk are among the four that the FSA has named
eligible to perform such weighting. Eligible rating agencies are not selected according to investment
type.
The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating Agency,
Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

Annual Report & CSR Report 2009143

7. Market Risk

In accordance with Article 16 of the Capital Adequacy Ratio Notification, the Bank includes in its
calculation method no market risk equivalent amount. Consequently, this topic is not applicable.

8. Operational risk(a) Overview of Risk Management Policies and Procedures
DBJ defines operational risk as the risk of loss arising from internal processes, people or systems thatare inappropriate or non-functioning, or from extrinsic events. DBJ works to ensure its risk
management preparedness to prevent potential risks from materializing.
The Bank establishes its management structure and basic risk management policy pertaining tomanagement methods after considering the wide range of operational risks that it potentially faces,such as operational risk, systems risk, legal risk, human risk and tangible asset risk.
The Bank 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, the Bank
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 Amount
The Bank 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

The Bank defines investment risk as its risk of sustaining a partial or total loss on the value of aninvestment, owing to such factors as the worsening of an investee’s profitability or 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, the Bank 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 funding makes up the majority of the DBJ’s borrowings, and the Bank seeks to
reduce its interest rate risk by raising funds featuring similarly long-term, fixed rates therefore, measureinterest rate risk. 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 Controlof the Banking Book
The Bank 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-year time
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 the change ineconomic value((ii) and (iii) are methods for measuring the standardized interest rate shock under Basel II.)

144

Annual Report & CSR Report 2009

Financial Condition
Consolidated
CapitalAdequacy
Financial
StatusStatements

Quantitative Disclosure
1. Items Related to Capital Adequacy Level(Millions of yen)March 31, 2009(a) Capital requirement to total credit risk

701,671(1) Exposure by portfolio to which standardized method applied

650,299(i) Japanese government and regional municipal bodies0(ii) Exposure to financial institutions

5,020(iii) Exposure to corporations

612,793(iv) Equity exposure

16,805(v) Other exposure

15,680(2) Securitization risk exposure

51,372(b) Capital requirement to market risk—(c) Capital requirement to operational risk

14,222(d) Non-consolidated total capital requirement ((a) + (b) + (c))

715,893(e) Non-consolidated capital ratio and non-consolidated Tier I ratio Capital ratio

18.70%

Tier I ratio

22.99%

2. 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, 2009Loans

11,552,191

Equities, funds

228,976

Commitments and customers’ liabilities for acceptances and guarantees

378,629

Bonds (JGBs and corporate bonds, etc.)

888,443

Repurchase agreement/call loan

520,972

Other

364,641

Total

13,933,855(b) Fiscal year-end credit risk exposure, broken down as follows:(1) By region(Millions of yen)March 31, 2009

Domestic total

13,933,855

Overseas total—

Note: DBJ has no overseas sales locations.

Annual Report & CSR Report 2009145

(2) Breakdown by industry and transaction counterparty(Millions of yen)March 31, 2009

Manufacturing

2,832,973

Forestry and fisheries

1,221

Mining26,965Construction

58,995Wholesale and retail875,540

Finance and insurance

1,164,797

Real estate

1,276,177

Transportation and communications

4,064,028

Electrical, gas and water

2,028,789

Services

1,138,241

Other

466,123(3) Breakdown by period to maturity(Millions of yen)March 31, 2009

Five years or less

5,042,831

More than five years, up to 10

4,818,836

More than 10 years, up to 15

2,646,779

More than 15 years

1,040,599

No maturity date

384,808(c) Breakdown of exposure by risk weight (after accounting for credit risk mitigations)(Millions of yen)March 31, 2009

Risk weight 0%753,431

Risk weight 10%

294

Risk weight 20%

4,618,368

Risk weight 50%

2,743,836

Risk weight 100%

5,438,599

Risk weight 150%

263,0143. 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, 2009

Eligible financial collaterals
Guarantees or credit derivatives

146

Annual Report & CSR Report 2009

375,963
1,852,601

Financial Condition
Consolidated
CapitalAdequacy
Financial
StatusStatements

4. Transaction Counterparties’ Risk on Derivative Product Transactions and Transactions with Long Settlement Periods(Millions of yen)March 31, 2009

Equivalent credit calculation method

Current exposure method

Gross restructuring cost

117,323

Gross add-on, by transaction type103,801
Interest rate transactions

60,822Foreign exchange transactions

40,079Credit derivative transactions
Reducing credit equivalent amounts through netting

2,900
110,391

Net equivalent credit

110,732
Net restructuring cost

Amounts of hypothetical holdings of credit derivatives
for calculated credit equivalent amount by type ofcredit derivative, by protection purchase or provision

Credit default swaps provision

Credit default swaps purchase
Hypothetical holdings of credit derivatives taking
into account credit risk mitigations

53,719861,210451,100
393,100

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 with securitization
exposure indicated elsewhere and what are known as single-name CDS offerings include the measurement of acceptances and guarantees as consisting of
the legal and other exposure of the company in question.

5. Securitization Exposure(a) Securitization exposure in which the Bank is the originator
Not applicable.
(b) Securitization exposure in which the Bank is an investor(1) Retained securitization exposure amount and breakdown by major underlying asset type(Millions of yen)March 31, 2009

Structured finance

586,961

Credit derivatives

739,574

Other*

225,527* 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(Millions of yen)March 31, 2009

Risk weight

20%

Risk weight

50%

Risk weight

100%

Risk weight350%

Risk weight

Capital deductions

Balance
Capital requirement
Balance
Capital requirement594,4549,511
201,777
8,071

Balance261,237

Capital requirement

20,898

Balance

35,000Capital requirement
Balance

9,800
443,636

Capital requirement
Risk weight

Other*—

Balance

15,958

Capital requirement

3,090* Applying to exposure the transitional measures indicated in Article 15 of the Supplementary Provision to the Capital Adequacy Ratio Notification.

Annual Report & CSR Report 2009147

(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, 2009

Structured finance

218,414

Funds*

225,221* 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, 2009

Credit risks and assets

38,635

6. Items Related to Market Risk
The Bank falls into the category indicated in Article 4 of the Capital Adequacy Ratio Notification. Consequently, calculation of themarket risk equivalent amount indicated in Article 2 was not performed, and this item does not apply.
7. Items Related to Shares and Other Equity Investments and Capital Injections into the Banking Book

(Millions of yen)March 31, 2009(a) Market value of below-listed items as included within categories in
the non-consolidated balance sheets(1) Exposure to listed shares
Exposure to other equity investments and capital injections

28,492(2) Shares in subsidiaries and affiliated companies, and other marketable securities

186,518(b) Gains or losses on the sale of equity investments or shares
Gain or loss on amortization of exposure on equity investments or shares(c) Gains or losses from valuation recognized on the non-consolidated balance sheets
but not recognized on the non-consolidated statements of income statements

3,236
10,959(2,425)(d) Included amount stipulated in Article 18, Paragraph 1, Item 1 of the Capital Adequacy
Ratio Notification—

Notes: 1. The Group has no overseas sales locations.
2. The Group has no exposure to shares to which Article 13 of the Supplementary Provisions to the Capital Adequacy Ratio Notification Applies

8. Exposure Applied for the Deemed Calculation of Credit Risk Assets
As the Bank employs the standardised approach for calculating credit risk, this item does not apply.
9. Interest Rate Risk in the Banking Book
March 31, 2009

Decrease in economic value resulting from interest rate shock

148

Annual Report & CSR Report 2009

Decrease in economic value
resulting from an interest rate
shock measuring interest rate
fluctuations in the 1st percentile
and 99th percentile, using a
one-year holding period anda five-year time horizon:¥19.4 billion

Profile (As of July 1, 2009)

Established:

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

President:

Minoru Murofushi

Number of employees:

1,064 (as of March 31, 2009)

Capital:¥1 trillion (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 offices, 2; andoverseas subsidiary, 1

Total assets:¥14,017.4 billion (as of March 31, 2009)

Loans:¥12,026.6 billion (as of March 31, 2009)

Capital adequacy ratio: 18.69% (as of March 31, 2009)
Issuer ratings:

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

Notes: 1. Total assets, loans and the capital adequacy ratio are calculated on a non-consolidated basis.
2. Moody’s downgraded DBJ’s issuer rating to Aa2 on July 22, 2009.

Development Bank of Japan Inc.
Published in September 2009 by Public Relations & Corporate Social Responsibility Office,Corporate Planning & Coodination Department
URL: http://www.dbj.jp/en

Development Bank of Japan Inc.
9-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-0004, Japan

Annual Report & CSR Report

http://www.dbj.jp/en

Applying Financial Expertiseto Design the Future

Development Bank of Japan

Printed in Japan

This report is printed on paper certified by the Forest Stewardship Council (FSC) as being made from sustainably
managed forests. The report is printed with soy ink using a waterless printing method. All the electricity used inprinting this report was supplied by green resources (wind power).

Annual Report & CSR Report