Integrated Report Main Part
(Annual Report & CSR Report)

2017

Design the Futurewith Financial ExpertiseThrough the steadfast pioneering of financial
frontiers, we aim to solve issues faced byour customers and society, and help realize
sustainable development in Japan andthe rest of the world.

Contents
2

A Top Runner in Sustainability Management

4 Section One About DBJ Group
4 DBJ Group’s Corporate Philosophy
6 Our History
8 Future Social Issues and DBJ Group’s Role
10 Sustainability Management

13 Section Two DBJ Group’s Strategy
14 Fourth Medium-Term Management Plan: Initiate Change, Create the Future
18 Business Strategy
18• Sector Strategy

28• Function Strategy

38• Area Strategy

44 Capital Strategy
44• Financial Capital48• Human Capital

50• Intellectual Capital52• Relationship Capital54• Social Capital

56 Fiscal 2016 Topics

57 Section Three Corporate Governance
66 Section Four Risk Management
71

Corporate Data
Data Section
The Development Bank of Japan Inc. Act, Financial Condition
Note: Not included in the main part. See the integrated edition.

Corporate Website
Latest news, financial services, case studies for investment, loans, various reports, information forinvestors, and details about CSR initiatives
Note: Detailed information in the main part can also be found on the DBJ corporate website.

Publication of Integrated Report (Annual Report & CSR Report) 2017
Development Bank of Japan Inc. (DBJ) was established in October 2008 in accordance with theDevelopment Bank of Japan Inc. Act.
DBJ Group, including its predecessors the Japan Development Bank and the Hokkaido-Tohoku
Development Finance Public Corporation, has provided specialized financial solutions while evolving its
own businesses to solve the constantly changing issues faced by its customers and society.
In the current fiscal year, DBJ launched its Fourth Medium-Term Management Plan: Initiate Change,
Create the Future. Marking the commencement of a new medium-term management plan, Integrated
Report (Annual Report & CSR Report) 2017 explains for stakeholders DBJ Group’s mission, vision, sharedvalues and other aspects of its corporate philosophy, in addition to sustainability management that aims tocreate both economic and social value.
We aim to enhance communications with stakeholders through iterative improvements to thisIntegrated Report based on the opinions we receive from everyone.
Editorial Policy
This report covers DBJ Group, which consists of DBJ and its 11 main subsidiaries. Through business activities that solve social
issues and through environmental, social and governance (ESG) initiatives, DBJ Group aims to further the development of asustainable society. DBJ makes a concerted effort to disclose this information to stakeholders. In compiling this report, we havereferred to the International Integrated Reporting Framework recommended by the International Integrated Reporting Council (IIRC).

Integrated Report 20171

A Top Runner in Sustainability Management

2

Integrated Report 2017

With the publication of Integrated Report (Annual Report & CSR Report) 2017, I would like to extend
a warm greetings to all of our stakeholders on behalf of DBJ Group.

Sustainability Management: Realizing a Sustainable Society
All of our executives and employees have taken to heart the importance of balancing economic value
with social value. Creating a future society that is sustainable for generations to come—this is thevision we share throughout DBJ Group, a vision that has not changed throughout our history and willremain steadfast in the future.
The sustainability management targeted by DBJ Group is an aim to perpetually improve the process of creating economic and social value with the goal of realizing a sustainable society while
engaging in dialogue with all stakeholders.

Corporate Philosophy: Design the Future with Financial Expertise
Since becoming a joint-stock company in 2008, Development Bank of Japan Inc. (DBJ) has moved
toward a more sophisticated business foundation by augmenting its integrated investment and loan
services and strengthening risk management.
A growing range of issues, however, are affecting our business foundation, such as humanresource development and workstyle reforms, in addition to our business issues including a squeeze
on financing margins due to monetary easing as well as greater volatility in returns on investments.
While looking back on the progress made by DBJ Group in the past, we are looking ahead to therole we should play in a rapidly changing society in the future. We have reconstructed the essence ofour corporate philosophy, embodied in our vision of our future (Vision 2030), while staying true to our
mission and core values.

Fourth Medium-Term Management Plan: Initiate Change, Create the Future
Under the Fourth Medium-Term Management Plan, which commenced in the current fiscal year,
we are aggressively pushing forward with measures to achieve sustained growth in line with Vision
2030, such as delving deeper into fields of strength, developing new fields, and fortifying the management foundation to support these businesses, while taking into account our past achievements
and problems.
While considering the opinions of all our stakeholders, we aim to help solve the issues faced byour customers and society as a top runner in sustainability management.
July 2017

President and CEO
Development Bank of Japan Inc.

Integrated Report 20173

Section One About DBJ GroupDBJ Group’s Corporate Philosophy
Design the Future with Financial ExpertiseDBJ Group updated its corporate philosophy to coincide with the unveiling of its Fourth MediumTerm Management Plan.
With due consideration paid to progress it has made thus far, projected changes in the businessenvironment, and outstanding social issues, DBJ Group has formulated a mission to relentlessly
pursue, core values to share, and its Vision 2030 to follow as a guide into the future.
In connection with these elements of its corporate philosophy, DBJ Group has identified four
core corporate values—long-term perspective, impartiality, public-mindedness, and reliability—that also embody its strengths and areas of differentiation.

Our unwavering purpose andour incessant determination toshape the future

MissionVision 2030
Leveraging DBJ’s uniquestrengths to pursue its
mission and realize
its vision

Our vision for 2030, embodiedin our mission and strategies

Business strategy

Our strategy to reach our vision for 2030
Fourth Medium-Term Management Plan

Capital strategy

Sector strategy
Function strategy
Area strategy

Financial capital

Sustainability
management

Human andintellectual capital
Relationship capitalSocial capital

Our guidelines for taking
specific actions that
expresses our values

Execute strategy
based on values

Values put into
practice define
our strengths

Action Guideline
Our unwavering values sharedby management andemployees(base component)

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Integrated Report 2017

ValuesCOLUMN

Creation of New Action Guideline

In fiscal 2016, a project involving about 200 middle managers was undertaken
to impart the meaning of our corporate philosophy and formulate a new action
guideline. Around 1,000 people (for reference, we have 1,546 employees on aconsolidated basis) participated in the discussion about changing our action
guideline, with opinions flowing freely between middle management and theirsubordinates, followed by a debate among the directors.

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

Further propagating and applying ourcorporate philosophy will improveawareness of our social responsibility,
enhance the sense of unity in DBJ
Group, lower communication costs,
and motivate our employees togrow with intention and a sense

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

of mission.

DBJ’s unique strengths assist with strategy execution
Our DNA: a long-term perspective, impartiality,
public-mindedness and reliability

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

The customer’s perspective• We devote unequalled thought to each possibility—from thecustomer’s point of view.

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

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

neValues• We respect diversity and work together for greater shared value.

Initiative

Integrity

Integrated Report 20175

About DBJ GroupOur History
Our Mission and Values

The Japan Development Bank (JDB) and the Hokkaido-Tohoku Development Finance Public Corporation(HTDFP), the predecessors to DBJ, were established with the objective of reviving Japan’s economy and society
after the end of World War II.
These companies contributed to the sustained development of society by providing solutions in tune with thetimes, changing themselves while staying true to their core values of taking on challenges with integrity amid
significant changes in the economic and social landscape.

Kawasaki Steel Corporation(currently JFE Steel Corporation): Constructionof Chiba Steelworks (Chiba)
Modernization of steelmaking throughconstruction of the first postwar blast furnace

New urban center in Shinjuku:
Shinjuku Mitsui Building and others (Tokyo)
New urban center formation throughredevelopment of purification plant site

Nakayama Joint Power Generation Co., Ltd.:
Independent power producer (Osaka)
JDB offered project finance for Japan’s
first steelmaker to enter the power generation
business triggered by deregulation.

1951–1955

1972–1984

1996–2000

Reconstruction and self-relianceof the economy

Improvements to quality of life andstable energy supply

Creation of a vibrant and affluent
society and stable economy

In 1951, JDB was established and commenced accommodation loans to facilitate thedevelopment of the power supply, which forms
the basis of the economy and industry, and therationalization, modernization, and cultivation ofcoal, steel, marine transportation, and othermajor industries.

JDB began antipollution measures, regional
and urban development, other social initiatives,and industrial development. During the first oilcrisis, it provided investment and loans forenergy alternatives to fossil fuels, as well as
efforts to conserve energy, to ensure stableenergy supplies. It also supported development of large-scale industrial sites.

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

Economic recovery

Rapid growth

Stable growth

Economic bubble

1951 The Japan Development
Bank Law enacted

1956–1965

1966–1971

1985–1995

High-growth infrastructure development

Strengthening of international
competitiveness and creation ofsocial development loans

Development of lifestyle and social
infrastructure and a smooth industrial
transformation

Aiming to enhance international competitiveness in accordance with the transition toan open economic system, JDB focused on
support for industrial system improvements
and independent technological development.
It also emphasized social development throughregional development, urban redevelopment,
logistics modernization, pollution prevention,and other measures in a bid to relieve
problems accompanying high-level growth.

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

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

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

To expand and reinforce the energy and transportation activities that underpin industrial
infrastructure, JDB served to power new economic expansion. It also provided loans for local
development to correct regional disparities.
Established in 1956, the Hokkaido
Development Finance Public Corporation wasrestructured in 1957 to form HTDFP and beganproviding investments and loans to promoteindustry in these two regions.

Kawasaki Kisen Kaisha, Ltd.:The Tonegawa Maru tanker
Built tanker that was indispensable for theimport of energy and raw materials

6

Integrated Report 2017

Mission

Through thee steadfa
ast pioneering
g off
financia
al frontiers,, we aim too solve issues forr
our cuustomers an
nd society and help reallizeesustainable developme
entt in Japan and the worrld..

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

©TOKYO-SKYTREE

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

Post-bubble economy

Dexerials Corporation
DBJ supported the expansion of operations
by providing management resources, including
human resources, along with risk capital toDexerials, which has world-leading technologies
in the functional materials field.

Structural reform

2007 Enactment of the Development Bank of Japan Inc. Act

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

The Former Niigata Tekkosho Co., Ltd.
Through debtor-in-possession financing, mergers
and acquisitions, and business revitalization funds,
the Development Bank of Japan supported
business revitalization to preserve employment
and local companies’ superior technologies.

Tobu Railway Co., Ltd.
DBJ provided assistance for urban development
through redevelopment projects, including
Tokyo Skytree.

The 2008 financial crisis / The Great East Japan Earthquake2015 Amendments to the Development Bank of Japan Inc. Act(see page 73)

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

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

Senoko Power Ltd. (Singapore)
DBJ provided subordinated financing to
Senoko Power, the largest electric powercompany in Singapore.

Global financial crisis precipitated by the2008 financial crisis

Reinforcing the function of supplying
growth capital

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

The Act for Partial Amendment of theDevelopment Bank of Japan Inc. Act, which
was enacted on May 20, 2015, createdSpecial Investment Operations. This newinvestment scheme, a portion of the funding
for which is provided by the Japanese government, is a temporary measure to intensively
provide the growth capital needed to promote
the competitiveness of Japanese enterprises
and regional revitalization.

Integrated Report 20177

About DBJ Group

Future Social Issues and DBJ Group’s Role
Vision 2030

As before, DBJ Group continues to provide unique, creative solutions to various issues faced
by its customers and society amid rapid major changes in industry and finance caused by globalization andtechnological innovation.

Future Changes in the External Environment

Population problem

Climate change,
natural resources,and energy

GlobalizationAI, fintech, andother technologicalinnovations

Government
budgets, finances,and regulations

Realization of a Sustainable Economy and Society
Creation, conversion, andgrowth in industry

Self-reliance and revitalizationof local economies

Rebuild and reinforce
infrastructure

New technologies and businesses(promote innovation)

Solve issues specific toeach region

Rebuild energy andtransportation infrastructure,
upgrade public infrastructure

Reorganization

Overseas expansion

Environment

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

Disaster prevention

Promote urban growth

HealthProvision of creative solutions that only DBJ Group can offer amid emerging risks andopportunities brought on by faster changes in industry, finance, and society
Roles of DBJ Group

Invigorate and stabilize financial markets throughpartnerships and collaboration
Crisis Response Operations

Risk Capital Finance

Providing Our Knowledge

8

Integrated Report 2017

Originating Diverse Financial
Deal Opportunities

Vision 2030

As professio
onals in the industria
al and infrastrructure field
ds, leverag
ging our ability
y to
o
add
dress diverse risks, taking the leadd in creating
g businessses and markeets,,and precisely resp
ponding to suc
ch social deemands as crisis respon
nse,,
we aim to playy a unique rolee in the ecoono
omy andd society in 20
030..

Future Changes in the External Environment
In formulating Vision 2030, DBJ Group took into account changes in the external environment that would have a measurable
impact on its stakeholders, such as population problems, climate change, natural resources and energy, globalization, AI,
fintech, and other technological innovations, as well as government budgets, finances and regulations.

Realization of a Sustainable Economy and Society
Taking into account long-term changes in the external environment, DBJ contributes to the creation of a sustainable society
by providing professional, creative solutions to its regional customers’ industry- and infrastructure-related issues.
Industry

Regions

Infrastructure

Technological innovation and globalization,
also known as the Fourth
Industrial Revolution

More pronounced declines in populations,cuts in government budgets (concentrationof industrial and infrastructure
issues)nfra

Population declines,
cuts in government budgets,climate change,, natural resources

Commercialization of
new technologies, businessrestructuring to improve productivity
and hone competitiveness, businessdevelopment in global markets

Industrial revitalization basedon regional characteristics,
overseas business development,
response to inbound tourism,
business succession

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

Environment

Society
Climate change, natural resources,
population declines

Developing
social value

Realize a low-carbon society

Disaster prevention Promote industry and cities resilient tonatural disasters
HealthSupport health management

Invigorate and stabilize financial markets through partnerships and collaboration
While honing its ability to respond appropriately to diverse risks, DBJ Group helps invigorate and stabilize financial markets
as a participant through partnerships and collaboration with financial institutions and investors.

Crisis Response Operations
DBJ adequately prepares forfinancial Crisis Response Operations in
the event of a major natural disaster orturmoil in financial markets.

Risk Capital Finance
DBJ supplies the risk capital needed tostrengthen industrial competitiveness,
including Special Investment Operations,rebuild infrastructure, and invigorate
regional economies.

Originating Diverse Financial
Deal Opportunities
DBJ helps facilitate money flows
by originating diverse financial deal
opportunities in Japan and overseas.

Providing Our Knowledge
DBJ leverages its knowledge of industry and finance to build new financing platforms.

Integrated Report 20179

About DBJ Group

Sustainability Management
Creation of Both Economic and Social ValueIn accordance with its corporate philosophy, DBJ Group strives to solve issues faced byits customers and society, and, to this end, engages in sustainability management with the aimof realizing sustainable development for Japan and the rest of the world.
DBJ Group’s take on sustainability management entails the creation of both economic and social
value by enhancing tangible and intangible management resources that are invested in businessactivities based on business models designed to leverage the advantages of integrated investment
and loan services. Through engagement with stakeholders, DBJ Group contributes to the realizationof a sustainable society via ongoing initiatives to improve the value creation process.

DBJ Group’s Business Model

Industry
Sectorstrategy

Infrastructure

New technologies
and businesses

EnergyRestructuring

Urban development

Transportation

Overseas expansion

Inve
estm
ment ofmanagemmen
nt resouurces
P18–27

Asset
management

Investments
and loans

Functionstrategy

Customers

Business activities
in tune with risk
appetites

Sustainability
management
Creation of both economic andsocial value

P28–37Advisory
services

Regional

Crisisresponse

Overseas

Outcome of busin
ness
ac
ctiv
vitie
es

Area
strategy

P38–43

DBJ Group’s Business Model

P18–43

DBJ Group’s business activities, including in regions and overseas, entail the provisionof syndication and asset management services to customers who are investors, aswell as the provision of consulting and advisory services alongside financial services
with integrated investments and loans in accordance with the risk appetites of customers in industrial and infrastructure fields.
DBJ Group also engages in financial Crisis Response Operations to flexibly assist
in the event of large-scale disasters or turmoil in financial markets, as stipulated by its
legal obligations under the Development Bank of Japan Inc. Act.

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Integrated Report 2017

Communication withstakeholders

DBJ Group’s Management Capital

Financial
capitalShareholders’ equity
Borrowings

Creation offinancialvalue

P44–47

Increase andconversion ofcapital value

Human resources
Surveys and analysis
Organizations,processes, and ICTLong-term
impact on ability
to create
financial value

P48–51

RelationshipcapitalBrands, reputation
Relationships,
networking

Creation of
non-financial
value

Integrated reporting

Human andintellectual
capital

Stakeholders
Customers, communities,
employees, financial markets,
investors, shareholders,among others

P52–53Social capital

P54–55Natural environment
Industrial and regional
infrastructure
Financial systems
and markets

Corporate Governance and Risk Management
DBJ Group’s Management Capital

P57–70

P44–55

DBJ Group requires unique management capital to support the execution of its unique

Communication withstakeholders

business model. Having secured a sound financial position, DBJ Group takes an

Dialogue with stakeholders

integrated approach to raising the level of financial and non-financial capital, which it

reinforces the value creation

defines as the human and intellectual capital, relationship capital, and social capital

process for both economic

that have a long-term impact on its ability to create financial value.

and social value.

Integrated Report 201711

About DBJ Group

Sustainability Management
Creation of Both Economic and Social Value
DBJ Group contributes to the development of a sustainable

In the current fiscal year, DBJ Group will identify and exam-society through the provision of appropriate financial solutions

ine social issues in Japan and abroad that it should addressfor solving various social issues. With the intention of reinforc-

while referring to such international guidelines as the UN’s

ing this effort, in 2017 DBJ created Policy on Sustainability to

Sustainable Development Goals, GRI’s GRI Sustainability

promote continuous improvements in the value creation pro-

Reporting Standards and IIRC’s International Integrated

cess by advancing dialogue with stakeholders and generating

Reporting Framework. While taking into account discussions

both economic and social value through business activities

with stakeholders, the Sustainability Committee will advancebased on its unique business model.

debate on materiality (key issues) and shape future initiatives.

Policy on Sustainability (excerpt)

Contribution to a Sustainable Society
1. We work fairly and reliably to provide the solutions required
to create a sustainable society by identifying material
sustainability issues in our relevant fields based on trends
in government policy as well as legislation and norms
regarding environmental, social, and governance (ESG)
criteria in Japan and throughout the world and by incorporating a recognition of the need for a sustainable society
into our investing, lending, asset management and otherbusiness activities.
2. We exercise a leadership role in building the knowledge
required to create a sustainable society through ongoingsurveys, research and reporting on social issues.

3. We work to deepen our understanding of the impact of
our own business activities on society and consistently
improve them.
4. We are committed to meeting the legal and regulatory
responsibilities for human rights and give consideration
to the human rights of all people in each of our fields ofbusiness.
5. We work to consistently improve the process of value
creation, placing importance on communication with thestakeholders.

Engagement with Stakeholders
Sustainable Growth for Customers
We provide creative investment and lending solutions to ourcustomers in various industries and infrastructure sectors
both in Japan and overseas, thereby increasing our customers’ tangible and intangible value and contributing to theirsustainable growth.
Self-Reliant Development of Regional Society
We place importance on partnerships with regional communities, contributing to self-reliant development of regionalsociety through business activities conducted in cooperation with local authorities and financial institutions.
Cooperation with Employees
1. We work to promote the growth of each employee
through efforts to develop skills and raise motivation
while maintaining and enhancing our employees’ physicaland mental health.
2. We create a climate in which diverse employees, irrespective of gender, age, nationality, and physical ability,
can display their ability and expertise to the fullest extent,
and build an employee-friendly working environment asa necessary foundation.

Contribution toward a Developed and Stable Financial
Market
1. We play a part in vitalizing the financial markets throughthe supply of risk money and the expansion of financial
frontiers in partnership and coordination with other financial institutions. “DBJ’s Special Investment Operations”
will be among the instruments used for this purpose.
2. We provide highly qualified and responsible investment
opportunities and investment management services as
we pursue the best outcomes for our clients in our asset
management business. By doing so, we meet our clients’
diverse needs for funds management and stimulate thecirculation of capital.
3. We serve as a safety net and thus contribute to stablefinancial markets through our Crisis Response
Operations.
Communication with Investors
We work to consistently raise corporate value as weenhance the transparency of disclosure and pursue constructive communication with investors.

On April 1, 2017, DBJ created the Sustainability Management Office within the Corporate Planning & Coordination Department toadvance these initiatives.

12

Integrated Report 2017

Section Two DBJ Group’s Strategy

14

Fourth Medium-Term Management Plan:
Initiate Change, Create the Future

18

Business Strategy
18 Sector Strategy
28 Function Strategy
38 Area Strategy

44

Capital Strategy
44 Financial Capital
48 Human Capital
50 Intellectual Capital
52 Relationship Capital
54 Social Capital

56

Fiscal 2016 Topics

Integrated Report 201713

DBJ Group’s Strategy

Fourth Medium-Term Management Plan
Initiate Change, Create the Future
Since becoming a joint-stock company in 2008, DBJ has

advancing investments and overseas business under the

executed three medium-term management plans with theSecond Medium-Term Management Plan and strengthening

overarching objectives of augmenting financial services

asset management operations under the Third Medium-Termthrough integrated investments and loans while enhancing theManagement Plan.
In recent years, however, a number of managerial issues

sophistication of risk management for DBJ Group.

have surfaced—including difficulties in hiring and training

In addition to making preparations for flexibly responding in
the event of a crisis, such as turmoil in financial markets ornecessary personnel and business reforms such as changes

natural disasters, DBJ Group has made steady progress

in workstyles—in addition to such business issues as narrower

Fourth Medium-Term Management Plan: Initiate Change, Create the Future
A

Business Strategy(1) Fields (Sectors)

Three infrastructure fields(2) Functions
Financing(including crisis response)
Investments(including special
investments)

Fees and commissions

EnergyTransportation

Industrial fields
Urban
development

New fields

Provide higher-value-added services, such as structured
financing and mezzanine financing

Promote long-term investments in infrastructure andgrowth investments in companies

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

Develop fields where
innovation is progressing
Aerospace
Communications
Healthcare
Other businessdevelopment

New functions

Develop new functions to complement financing, advisory, andasset management services(3) Areas

Regional and overseas

Support regional globalization, provide financing opportunities overseas, provide solutions
Role connecting regions to the world

Results through Third Medium-Term Management Plan
Timeline since Establishment of DBJ

1999

The Development Bank of Japan established

Highlights until Third Medium-Term Management Plan
1. Carried out Crisis Response Operations
Rapidly responded to financial crisis and Great East Japan Earthquake

2008

Became a joint-stock company

2. Provided risk capital through integrated investment andloan services
Advanced mezzanine financing and investments

2008–2010

First Medium-Term Management Plan
CHALLENGE 20102011–2013

Second Medium-Term Management Plan
Endeavor 2013

3. Created diverse opportunities for investments and lending
Appropriately shared risks with financial institutions, offered asset
management opportunities

Having achieved success with the above initiatives and results thatexceeded targets, and in consideration of its track record providing
solutions to social issues, DBJ’s Special Investment Operations

Third Medium-Term Management Plan
2014–2016 Supporting Japan’s Sustainable Growth
as a Global Innovator
14

Integrated Report 2017

was institutionalized with the enactment of the revised DBJ Act in2015 (see page 30).

The slogan of the management plan—Initiate Change,

margins on senior loans amid monetary easing and greater

Create the Future—designates our intention to spend the next

volatility in returns on investments.
Amid greater uncertainties in the external environment,

three years creating a future foundation for DBJ Group that

under the Fourth Medium-Term Management Plan, DBJ Groupwill allow it to respond flexibly to changes in the external

will take aggressive steps toward sustainable growth byenvironment and take on the challenge of changing itself fordelving deeper into fields of expertise, develop new fields, andthe better.

strengthen the management foundation to support operations
while emphasizing its core values of initiative and integrity.

B

Management Foundation Strategy(1) Financial capital

Invest management
resources

Diversify capital procurement methods,
including SRI bonds
Increase sophistication of risk–return management

Vision 2030

Integrated
management

As a professional in the industrial
and infrastructure fields, DBJ Groupwill play a unique role in the economy and society in 2030, accurately
meeting the needs of society,including responding in the eventof a crisis, while leading in thecreation of businesses and markets
by leveraging its ability to addressa broad range of risks.

(2) Non-financial capital
Human and intellectual capital
Alignment of human resources with strategy
Development of stronger capability for enhanced
risk responsivenessResults ofbusiness activities

Reform of workstyle
Acceleration of decision-making

Relationship capital and social capital
Collaborate with other companies,
including financial institutions
Improve communication with stakeholders

Addressing Issues in the Fourth Medium-Term Management Plan
Monetary easing /low interest rates

Decline in profitability of investments, hardship in asset
management, risk of fluctuation in interest rates

Build a stable investment portfolio,
strengthen asset management

Growing problems
in regions

Reassess the role of regional finance to address regional
economic exhaustion

Make investments, including cooperation with regional
financial institutions, and contribute knowledge

Globalization /innovation

Rise of protectionism, faster changes in industry, finance,and society

Flexibly respond to change, increase sophisticationof risk–return management

Fourth Medium-Term Management Plan
A

Business Strategy(1) Sector strategy × (2) Function strategy × (3) Area strategy• Strengthen structured financing and long-term investments ininfrastructure, asset management• Respond to industrial innovation

B

Management Foundation Strategy(human, intellectual,(1) Financial capital × (2) Non-financial capital relationship, social)• Increase value of human capital• Thoroughly rationalize business, including workstyle reforms• Increase sophistication of analysis and risk management• Advance solutions for regions

Integrated Report 201715

DBJ Group’s Strategy

Fourth Medium-Term Management Plan
Initiate Change, Create the Future

Invigorate and Stabilize Financial Markets via Collaboration and Cooperation
Under the Fourth Medium-Term Management Plan, DBJ Group will provide unique solutions through optimal partnerships with
an emphasis on collaboration and cooperation with other financial institutions and non-financial companies.

Industry

DBJ

New technologies
and businesses
Restructuring
Overseas expansion

Government
investments
and loansSpecial Investment Operations
Crisis Response Operations

SRI bonds
Financing

Infrastructure
EnergyTransportation
Urban development

Government

Investments

Consulting andadvisory services

Domestic andoverseas
institutional
investors

Bonds andloans

Risk capital andknowledge

Regional
financial
institutions

Asset management
Asset
management
Group companies

Leading financial
institutions
Creation ofRegional andoverseas

Collaboration

Cooperation financing

Collaborative
funds

opportunities

Financial institutions andnon-financial companies

Procurement and Management of Funds

Provision of Knowledge

DBJ receives funding in various formats, including the pro-

DBJ Group creates added value through the provision of

curement and management of funds from institutional inves-knowledge in such forms as surveys and analyses backed

tors and financial institutions in Japan and abroad, andby its experience in industrial and infrastructure fields and insupplies risk capital to customers in the domestic and over-risk analysis and structuring.

seas industrial and infrastructure fields.
Crisis Response Operations andSpecial Investment Operations
These operations are mandated by the DBJ Act and will beproperly undertaken as operations backed by the uniquestrengths of DBJ Group.

Financial Targets of the Fourth Medium-Term Management Plan
Over the time frame of the Fourth Medium-Term Managementbillion and ¥10 billion, respectively, from the targets of the Third

Plan, DBJ Group will increase the supply of risk capital, includ-Medium-Term Management Plan (see page 45).

ing Special Investment Operations, work diligently to secure a

DBJ aims to maintain robust levels of shareholders’ equity

stable earnings base for the long term, and strengthen over-and profitability in order to continue conducting Special

seas projects, such as infrastructure projects. The Fourth

Investment Operations, financial Crisis Response Operations,

Medium-Term Management Plan targets gross ordinary profits

and the supply of other risk capital.

of ¥190 billion and net income of ¥80 billion, increases of ¥30

16

Integrated Report 2017

C O LU M N

Process for Creating and Sharing the Fourth Medium-Term Management Plan
The following is an introduction to how DBJ created and distributed its medium-term management plan.

1Creation Process
Five directors and managing executive officers
participated in medium-term planning meetings

Off-site gathering
for department-level
managers(a total of 22 meetings held between August
2016 and March 2017) for face-to-face discussions with representative directors.
Off-site meetings were held at the department
and branch office levels, with managers andemployees participating in the creation process.
The Advisory Board (see page 59) also discussed the Fourth Medium-Term Management
Plan with outside experts and reflected theiropinions in the plan.

2

Sharing Process

After internal decisions were reached,
the Fourth Medium-Term Management

Head office briefings

A total of
10 briefings

About 800 participants

Branch office briefings

A total of
10 branch offices

About 120 participants

Major Group company briefings

A total of
11 companies

About 180 participants

Plan and the new corporate philosophy
were shared throughout DBJ Group.

A briefing at the head office

A briefing at a Group company

With managers and employees working in unison to lay a foundation for conducting operations, our philosophy and strategies
are shared through communications during this creation process.

Integrated Report 201717

DBJ Group’s Strategy

Business Strategy

Sector Strategy

Energy Sector

As of March 31, 2017

Balance of loans in the electricity, gas, heat,
and water sectors¥
Photo provided by Solar Frontier K.K.

3.2 trillion

Accomplishments and Initiatives to Date

VisionEver since the Japan Development Bank and Hokkaido-

DBJ will contribute to the realization of alow-carbon society worldwide and the globalization of Japanese energy companies by taking
a leadership role in the financing of change inJapan’s energy markets.

Tohoku Development Finance Public Corporation era, DBJ has
contributed to the formation of energy infrastructure in Japan.
In recent years, DBJ has assisted with business restructuring
and overseas business development in the electricity, gas, andoil sectors against a backdrop of structural reforms in thedomestic energy industry. DBJ has provided optimal financial

Main Business Fields

solutions in tune with the needs of the times, concentrating on
the replacement of aging thermal power plants, the construc-

Financing and advisory services are provided tocompanies and projects in the following sectors:

tion of new thermal power plants in tandem with growing
demand amid the deregulation of power sources, and theconstruction of new renewable energy power plants, andassisting with capital recycling. As of March 31, 2017, ourElectricity

Gas

Oil

balance of loans in the electricity, gas, heat, and water sectors
totaled ¥3,252.1 billion, accounting for 24.9% of total loans,by industry.

18

Integrated Report 2017

Longer-Term External Environment and Social Issues

Strategy

Japan’s energy industry is at a major crossroads. With changes

While maintaining strong relationships with customers, DBJ willin the macroeconomic structure, including the population

focus on providing capital funding (risk money) and advisorydecline, and advances in energy conservation, DBJ must

services to facilitate industry restructuring. Furthermore, DBJ

promote the reduction of CO2 emissions while dealing withwill focus on the smooth supply of capital by collaborating with

deregulation in the electric power and gas markets at thea broad range of financial institutions to meet demand forsame time.

investments in the deregulated electric power market in Japan,

Under these conditions, issues related to financial support
for the energy industry entail the supply of capital funding tospur the spread of renewable energy and other new technolo-

in addition to strengthening initiatives in project financing withclarified risk allocation.
DBJ Group will reinforce its asset management operations

gies and to address growing risks. Moreover, risks in projectin the energy field with the aim of nurturing markets able tofinancing need to be clarified more clearly, and efforts should

recycle capital, thereby allowing more financial institutions to

be undertaken to allow market participation by a broader

participate in the domestic energy infrastructure market.

range of companies.

Overseas, DBJ aims to become more involved in markets
that have taken the lead in fostering deregulation, and thenreturn any knowledge gained to the domestic market toadvance its development, while proactively supporting
Japanese companies in their efforts to develop business overseas. Through these and other efforts, we aim to contribute to
the realization of a low-carbon society on a global basis.

Case Studies
Case Study 1 Fukushima Gas Power Co., Ltd.

Case Study 2 Japan Wind Development Joint Fund Co., Ltd.

DBJ was the lead arranger for a total of ¥140 billion in project
financing for the construction of a new natural gas power plantfor Fukushima Gas Power Co., Ltd. DBJ aims to contribute to
the development of the economy and industry in the areaaround the power plant through the reliable supply of inexpensive electricity with low environmental load.

In collaboration with Japan Wind Development Co., Ltd., DBJ
established Japan Wind Development Joint Fund Co., Ltd. forthe purpose of acquiring and operating wind power generation
facilities. The funds procured by the new company for the project
financing were assigned a BBB rating by Rating & Investment
Information, Inc., marking the first time a domestic wind power
generation project received an external rating.

Rendering of completed facility

Japan Wind Development Co., Ltd. facilities

Integrated Report 201719

DBJ Group’s Strategy

Business Strategy

Sector Strategy

Transportation Sector

As of March 31, 2017

Balance of loans in the transportation
infrastructure (transportation industry) sector¥

2.3 trillion

Accomplishments and Initiatives to Date

VisionSince the time of the Japan Development Bank and Hokkaido-

DBJ aims to lead in a financial aspect the growthof the transportation sector and advancement oftransportation networks in Japan. DBJ will also
act as a bridge between Japan’s financial market
and the global transportation finance market.

Tohoku Development Finance Public Corporation, DBJ has
focused on providing investments and loans for the development of the transportation sector in Japan, including for fleetsof ships in marine transportation, upgrading Haneda Airportand other airports, procuring aircraft in the aerospace industry,and expanding cargo capacity in the railway industry. More

Main Business Fields

recently, DBJ has provided optimized financial solutions tailored to the needs of the times, such as debtor-in-possession

Financing is provided to companies and projects in thefollowing sectors:

financing to a Japanese start-up airline company, participationin airport concessions, and aircraft financing with a focus onmaterial value. As of March 31, 2017, the balance of loans forthe transportation infrastructure sector (to transportation pro-Landtransportation

20

Integrated Report 2017

MarinetransportationAirtransportation

viders) was ¥2,312.1 billion, accounting for 17.7% of totalloans, by industry.

Longer-Term External Environment and Social Issues

Strategy

Around the world, growing populations will lead to the greater

While maintaining relations with customers in the transporta-

movement of people and goods and spur growth in the trans-

tion sector, we will refine our ability to respond flexibly toportation sector. In Japan, a country reliant on trade, it ischanges in the external environment and society. More specifi-

imperative to maintain the reliable transportation of goods andcally, DBJ will further strengthen its optimal financial solutions

address issues, such as the declining and aging population, as

for quality projects and assets in the land, marine, and air

well as the influx of overseas visitors. Accordingly, varioustransportation fields, as well as supply risk capital to Japaneseissues are waiting for solutions for sustaining growth in thecompanies for sharpening their international competitiveness.

transportation sector and increasing the sophistication of

Additionally, DBJ will provide financing opportunities totransportation networks. Keen to help its customers solve

Japanese regional banks and other financial institutions andthese issues, DBJ Group will provide financial solutions tailoredinvestors in the global transportation finance market throughto diverse needs while acting as a bridge between financial

improved syndicated loans and various investment and loan

markets in Japan and the global transportation finance market.

products that utilize investment and securities functions.

Case Studies
Case Study 1 Financing for integrating operationsat Kansai International Airport and Osaka
International Airport

Case Study 2 Financing for acquisition ofultralarge container ship by
Kawasaki Kisen Kaisha, Ltd.

As the lead arranger, DBJ put together project financing totaling ¥190 billion, one of the largest in Japan, for Kansai Airport
as it began to integrate the operations of Kansai International
Airport and Osaka International Airport, the first and largest
airport concession in Japan.

Kawasaki Kisen Kaisha, Ltd. is one of the world’s largest
marine transportation companies involved in the ocean-going
field. DBJ helped the company arrange financing to purchasean ultralarge container ship with the latest energy-conserving
technologies. The vessel provides high-quality services along
the Asia–Europe route as a flagship in the company’s container
ship business.

Photo provided by Kansai Airport

Container ship that was financed

Integrated Report 201721

DBJ Group’s Strategy

Business Strategy

Sector Strategy

Urban Development Sector

As of March 31, 2017

Balance of loans in the real estate sector¥

1.7 trillion

Accomplishments and Initiatives to Date

VisionSince the 1960s, DBJ has been involved in long-term financing

Our vision is to grow alongside cities by helping
with the maintenance, renewal, and expansion ofurban functions. We also aim to grow with thereal estate financing market as a market-stabilizing mechanism.

for real estate projects. DBJ has participated in Japan’s realestate securitization market since its earliest days, plying its
accumulated know-how and networks to invigorate themarket. We began administrating the DBJ Green Building
Certification system in fiscal 2011 and have financially supported efforts to help the environment and society. As of
March 31, 2017, the balance of loans extended to the real

Main Business Fields

estate sector was ¥1,749.0 billion, accounting for 13.4% ofLoans and investments in urban development projects
undertaken by developers, special-purpose companies
for owning real estate, loans and investments for REITs,
management of DBJ Green Building Certification (seepage 55) with the Japan Real Estate Institute.

Urban
development
business

22

Integrated Report 2017

Real estate
financing

Green Building
Certification

total loans, by industry.

Longer-Term External Environment and Social Issues

Strategy

Increasing the international competitiveness of cities in Japan

DBJ will facilitate urban development through the supply of risk

is key to enhancing the country’s overall competitiveness.

capital, including financing for developers and individual devel-

Urban infrastructure, built up since 1945, is coming due for an

opment projects. We also support the growth of real estate

upgrade. Seamlessly upgrading urban infrastructure without

investment trusts, which have become increasingly importantinterruption is important from the standpoint of creating com-

entities for the stable management of properties.

munities that take into account the environment and society.

DBJ will provide opportunities to invest in quality assets for

The real estate finance market, an essential part of creating

institutional investors around the world as well as regional

communities, is prone to instability due to international expo-

financial institutions. By engaging in collaborative financing

sure. The securitization market in particular was greatly

through proper risk-sharing agreements, we will create stableaffected by the global financial crisis, while the real estate

cash flows in the real estate finance market.

finance market was thrown into disarray. In spite of such con-

DBJ will continue to manage the DBJ Green Building

ditions, it is necessary to ensure a reliable supply of capital,

Certification system with the Japan Real Estate Institute,spur growth in the real estate finance market, and promote

focusing efforts on improving real estate assessments within

urban development.

the context of their impact on the environment and society.

Case Studies
Case Study 1 Kyobashi EdograndCase Study 2 Tokyo Skytree

In November 2016, Nippon Tochi-Tatemono Co., Ltd., acting
as a special business agent (representative company), opened
the Kyobashi Edogrand as a part of the urban redevelopment
project at Kyobashi 2-chome in collaboration with the land
rights holder. This facility is one of the largest high-rise officebuildings in the Kyobashi area, and is a part of the historic
Meijiya Kyobashi Building. Kyobashi Edogrand is attracting
attention as a new landmark in the area. DBJ supported theconstruction by
providing financing
from the development stage.

Tobu Railway Co., Ltd. undertakes large-scale projects, including the Narihirabashi Oshiage District Redevelopment Projectthat involved Tokyo Skytree. The project—one of the largest forthe company since its founding—contributed to local
development.
DBJ supported the project by providing a hybrid of loan andinvestment financing, thus strengthening the company’s financial foundation.

©TOKYO-SKYTREEExternal view of Kyobashi EdograndTokyo Skytree

Integrated Report 201723

DBJ Group’s Strategy

Business Strategy

Sector Strategy

Industrial Sectors

Accomplishments and Initiatives to Date

VisionIn the 1990s, DBJ was involved from an early stage in financ-

In industrial fields seeing changes brought about
by technological innovation, the creation of new
businesses, and restructuring, DBJ Group willtake a direct approach to solving issues faced bycustomers and society while searching for
growth opportunities for itself. As an incubatorthat creates new businesses and markets, DBJ
aims to play an essential role in strengthening thecompetitiveness of industry in Japan.

ing new businesses, utilizing its ability to survey industry andanalyze corporations derived from its track record of providing
long-term capital for capital investments. From the early
2000s, when business and industry restructuring came to theforefront, DBJ ramped up debtor-in-possession financing,
private equity investments, and M&A advisory services. Since
becoming a joint-stock company in 2008, DBJ has leveraged
its knowledge and experience in these fields to further improve
its ability to survey industries. At the same time, DBJ helped
companies enhance their competitiveness and clients solve

Main Business Fields

various problems through advisory services backed by loans
and investments to create new businesses and rebuild

Financing and advisory services are provided to companies and projects in the following sectors:

24

Manufacturing

Communications,broadcasting,media

Healthcare

Hotels,Japanese-styleinns, tourism,
etc.

Integrated Report 2017

Retail and foods

finances while they entered overseas markets and spun off
non-core businesses.

Longer-Term External Environment and Social Issues

Strategy

Amid changes in the external environment, including popula-

DBJ will offer solutions to the issues faced by customers—

tion problems, globalization, and such technological innova-

centered on the fields of business portfolio optimization, newtions as AI, customers are dealing with a variety of issues thatbusiness creation, overseas business development, financial

include the commercialization of new technologies and otherstrategy, and capital policy—by mobilizing its financing func-

innovations, business restructuring to enhance productivity

tions, knowledge, and unique networks while leveraging its

and competitiveness, and overseas business development

insight and expert knowledge of each industry. In 2017, DBJ

with an eye on new growth opportunities. Meanwhile, thehas created teams of experts focused on establishing solid

financial environment is likely to include diversification in capitalbusiness foundations in the fields of aerospace, telecommuni-

providers, considering the ongoing surplus capital conditions

cations, and healthcare. While delving deep into each industry,

and advances in fintech and other technologies. As it becomes

DBJ will monitor broader trends and changes in the economic

easier to access capital, providing unique added value will

and social landscape. We will increase our responsiveness to

become essential to helping customers solve their problems

innovation through cross-sector business development thaton the financial front.

steps beyond traditional boundaries (e.g., move toward ahydrogen society).

AerospaceTo further improve its standing, having gained ground throughCase Study

international joint development with Europe and the U.S.,
the Japanese airline industry must engage in strategic efforts
to increase mass production efficiency by developing nextgeneration technologies and strengthening supply chains;expand its scope both quantitatively and qualitatively, centeredon mid-tier and small and medium-sized companies andregions; and fortify maintenance operations and the finishedaircraft business. Additionally, the Japanese aerospace industry has begun to transition from government-directed develop-

Assistance for strengthening the competitivenessof the civilian aircraft engine industry
DBJ supplied risk capital to Mitsubishi Heavy Industries
Aero Engines, Ltd., which was spun out of Mitsubishi Heavy
Industries, Ltd.’s civilian aircraft engine business. The objective was to increase the profile of the company in international markets while improving its competitiveness bypartnering with IHI Corporation on manufacturing and byclustering together partner companies.

ment to a mass production model.
DBJ has increased loans and investments to the airline
industry for more than 30 years in line with national policy. We
established the Aerospace Office on April 1, 2017, putting inplace a structure to better support the aerospace industry withthe collective strengths of DBJ Group. We will contribute to thedevelopment of the aerospace industry in Japan by, among
other means, supplying risk capital via Special Investment
Operations.

The plant floor

Integrated Report 201725

DBJ Group’s Strategy

Business Strategy

Sector Strategy
Industrial Sectors

Communications
Communications networks handle massive communications
traffic as the volume of data increases daily. Ever since thetelecommunications sector was deregulated in the 1980s, DBJ
Group has financially supported the build-out of networks inJapan, which boasts some of the highest speeds and capacities in the world. As things become increasingly interconnected
over networks, communications networks need to be mademore resilient and sophisticated to fulfill a role as basic infrastructure underpinning society.
DBJ will continue supporting the build-out of next-generation
telecommunications infrastructure by supplying risk capitalwhile proactively participating in forward-looking initiatives
around the world.

Case Study

Financing for one of Europe’s largest
telecommunications infrastructure companies
From its base in Spain, Cellnex Telecom, S.A. leases communications towers to telecommunications providers in fiveEuropean countries. It boasts the largest number of communications towers in Europe.
DBJ provided the company with capital to acquire communications towers and expand its network, thereby contributing to the development of global telecommunications
infrastructure. The knowledge DBJ gained from helping rollout telecommunications infrastructure
overseas will be ofinvaluable use inJapan as well.

Communications tower

Healthcare
In the healthcare field, DBJ Group has been long involved in
the medical and nursing care fields and has launched new
initiatives in the life sciences field. Specifically, DBJ sees anurgent need to mimic in Japan the U.S. healthcare model,
whereby external parties, such as venture companies thathave proven track records as innovators, are entrusted withthe development of needed products and services and thenwith bringing them to the world via the respective companies’
sales capabilities. To this end, DBJ focuses its energies on
networking with venture capital firms in the U.S. DBJ leverages
this network to help Japanese medical equipment makers andpharmaceutical companies strengthen their business development capabilities.

Case Study

Investment in a cutting-edge medical equipment
fund in Silicon Valley
In September 2014, DBJ invested in Emergent Medical
Partners II, L.P., an investment fund for cutting-edge medical devices in Silicon Valley. In its report Silicon Valley’s“Ecosystem” for the Development of Medical Devices: What
are Its Lessons for Japan?, DBJ examined the U.S. ecosystem, which is a major reason for the country’s success indeveloping medical devices. Dr. Thomas Fogarty, a worldrenowned innovator and entrepreneur with long experiencein the region, established the fund. By investing in this fund,
DBJ acts a bridge to this ecosystem for Japanese industry,
extending this network to Japan.

Silicon Valley

26

Integrated Report 2017

Latching onto Innovation
The sudden rise of technology and innovation in IT, new mate-

as well as share new value systems and create rules throughrials, new energy, life sciences, and robotics has the potential

public–private cooperation. From its impartial position, DBJ

to greatly change the fabric of the industrial and social land-Group engages in collaboration with diverse players while

scape. For these new technologies to reach commercialization

shaping projects from a long-term perspective. We help solveand become a part of society, it is essential to promote col-issues faced by customers and society through the creation oflaboration across industry, companies, and geographic areas,

new businesses.

Case Studies
Case Study 1 Initiatives to realize a hydrogen society

Case Study 2 DBJ Capital Co., Ltd.

Hydrogen fuel cells are expected to become a next-generation source of energy that contributes to energy security andthe alleviation of environmental problems. DBJ aims to
examine the development of a supply chain for overseasproduced hydrogen with the objective of improving costcompetitiveness on the supply side. In addition, DBJ will
participate in the creation of projects that lead to economies
of scale on the
demand side, suchas the rolling out ofhydrogen refuelingstations for fuel cellvehicles.

Regardless of business fields and scale, DBJ invests inequity as growth capital for venture firms with global competitiveness and growth potential that are utilizing newtechnologies and business models. DBJ Group offers thesecompanies its financial support and solutions that takeadvantage of its diverse networks. DBJ supports the commercialization of the excellent intellectual property andtechnology possessed by companies, research labs, anduniversities. In carving out this intellectual property andtechnology, DBJ supports the launch of venture capital firms
through hands-on assistance provided by teams focused onenhancing value.
DBJ Capital Co., Ltd.’s website:
https://www.dbj-cap.jp/english/

Photo provided by TOYOTA Global Newsroom

While advancing these initiatives, on April 1, 2017, DBJ created the Innovation Promotion Office in the Business Planning
Department for the purpose of developing new businesses that cross sectors and advancing industrial innovation.

Integrated Report 201727

DBJ Group’s Strategy

Business Strategy

Function Strategy

Integrated Investments and Loans (Supply of Risk Capital)

VisionAccomplishments and Initiatives to Date
Since its days as the Japan Development Bank and the

DBJ will provide optimal financing solutions tailored to customer needs, from loans to mezzanine financing and investments, while reinforcing
its ability to adequately evaluate various risks.

Hokkaido-Tohoku Development Finance Public Corporation,
DBJ has taken appropriate risks, backed by its deep insight
into industry and ability to analyze corporations, in the provision of long-term financing for capital investments. In addition
to its ability to examine corporations and businesses, DBJ has

Outlineproactively introduced sophisticated financing schemes, playing a leading role in project financing and debtor-in-possession

DBJ provides loans and investments after analyzing
business prospects, evaluating risks, and creating
financing schemes. Taking into consideration the traitsof each project and the intentions of participants, DBJ
specializes in an integrated investment and loan modelthat flexibly deploys loans, mezzanine financing, andinvestments.

28

Integrated Report 2017financing in Japan. Leveraging its ability to evaluate risks, DBJ
has broadened the scope of its involvement from loans tomezzanine financing and investments. DBJ has played a leading role in the provision of risk capital for supporting corporate
growth and infrastructure investments in Japan.

Longer-Term External Environment and Social Issues

Strategy

Amid surplus capital conditions, the value of capital itself has

From loans to mezzanine financing and investments, DBJ has

declined. However, it can also be said that there is a lack offlexibly provided financing optimized to the needs of its cus-

certain specific capital, especially risk capital, in areas where

tomers through a unique integrated investment and loan model.

industry is being created, transformed, and expanded; where

DBJ plans to make this model even more sophisticated. With

regions are becoming self-reliant and invigorated; and where

respect to providing loan services, DBJ is focusing on higher-

infrastructure is being rebuilt and reinforced. From the stand-value-added services, such as structured financing and mez-

point of regional revitalization, for example, the provision of notzanine financing. In investing, DBJ is encouraging long-term

only capital but also advice has led to the creation of revitaliza-

investments in infrastructure and investments in growth attion projects. We believe that there is considerable potential incorporations. With regard to long-term investments in infra-

investments and loans that create added value in this manner.

structure, DBJ is helping solve issues in Japan related to therebuilding and reinforcement of infrastructure by refining its
ability to evaluate asset value, increase value, and control risks.
As for investments in growth at corporations, DBJ is strengthening its ability to arrange projects from an impartial standpoint
and its ability to analyze industry and companies. At the sametime, DBJ is focusing on raising value post-investment as apart of its contribution to helping customers strengthen theircompetitiveness and to the creation and turnaround of industry.

Case Studies
Case Study 1

Investment with Yanmar Holdings Co., Ltd.
in Indian company

Yanmar Holdings Co., Ltd. is an industry pioneer highly
regarded by its customers worldwide for its clean diesel
engines. The company aims to expand sales in India, theworld’s largest market for tractors, by taking an additional stakein International Tractors Limited, a major manufacturer of tractors. Through its Special Investment Operations, DBJ arrangeda joint investment in this endeavor.

Tractor produced andsold by International
Tractors LimitedCase Study 2

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

In addition to providing finance, DBJ-IA taps DBJ Group’s
domestic and international networks to support companies’
growth strategies revolving around M&A strategies, capital
strategies, and overseas strategies as well as their efforts tosecure the right personnel.
Investment and loan example: Dexerials Corporation
http://www.dbj.jp/case/dexerials.html

Lineup of functional material products

Integrated Report 201729

DBJ Group’s Strategy

Business Strategy

Function Strategy
Integrated Investments and Loans (Supply of Risk Capital)

DBJ’s Initiatives to Supply Risk CapitalSpecial Investment Operations
Special Investment Operations, established as an intensive but

private-sector enterprises and ensuring appropriate competi-

temporary scheme to supply growth capital* from the perspec-tive relationships. To improve the structure of Special

tive of promoting the competitiveness of Japanese enterprises

Investment Operations and thereby maintain objective evalua-along with regional revitalization, draws only a portion of thetion and supervision of activities, an advisory body to theinvestment (industrial investment) from the Japanese govern-

Board of Directors was established—the Special Investment

ment, enough to encourage the private sector to supply

Operations Monitoring Board—with participation from outside

growth capital. In June 2015, DBJ kicked off Special

experts in financial and capital markets, industry, and other

Investment Operations with risk capital for the overseas inde-

professional groups (see page 60).

pendent power producer business of Shizuoka Gas Company,
Ltd. As of March 31, 2017, a total of ¥167.0 billion in investments and loans had been extended to 33 projects.
Special Investment Operations follows policy objectives, in* According to the Japanese government’s Study Panel Concerning the Promotionof Expanding Growth Funding, certain financial institutions, including DBJ, areexpected to serve in a pump-priming capacity for the foreseeable future to
attract private-sector investment by cultivating new capital providers, markets,and investors, thereby fostering the development of an investment cycle led by
the private sector.

accordance with the law, complementing and encouraging

Special Investment Operations Scheme
Other financial
institutions

DBJ(megabanks,regional banks,
private funds, etc.)

Capital account(¥50 billion in
fiscal 2017)(¥50 billion in
fiscal 2017)

Japanesegovernment(industrial
investment)

Special Investment
Operations(Managing loans in special account)
Fiscal 2017: ¥100 billion

Loans, etc.

Complement andencourage private-sector
enterprises(including pump-priming)
Provide capital(including preferred sharesand subordinated loans)

Evaluate/
inspect

Special Investment
Operations
Monitoring Board

Policy objectives• Encourage self-reliant
development of regional
economies• Increase competitivenessof Japan and domestic
enterprises• Develop markets for
growth capital

Enhance risk capital supporting growth

Provision
Investment

Target company initiatives• Initiatives for effective useof management resources• Initiatives to promotemanagement innovation– Cultivate new business– Form alliances among
various sectors andgroupsConsidering the need to encourage the private sector to supply

regional economies and improve the competitiveness of Japanese

growth funds within a limited time frame, DBJ promotes the invigo-

companies, DBJ advances operations and makes investment andration of capital markets centered on private enterprises whileloan decisions while being careful to maintain appropriate partner-complementing and encouraging the private sector. To revitalize

ships and collaborative efforts with private financial institutions.

30

Integrated Report 2017

Results of Special Investment Operations (Fiscal 2016)
Loan and investment recipients(co-entities)

Project overview

AeroEdge Co., Ltd.
(Kikuchi Gear Co., Ltd.)

Invested in preferred shares of a new company established to supply parts to major aircraft
engine makers overseas utilizing the advanced technologies of Kikuchi Gear Co., Ltd.

JFE Holdings, Inc.

Arranged subordinated loans with several financial institutions to facilitate investments by
JFE Holdings, Inc. in its domestic manufacturing base and in support of its initiatives toreinforce its earnings foundation by steadily executing overseas growth investments.

DMG Mori Co., Ltd.

Helped by acquiring subordinated bonds for the purchase of shares in a European company
with the objective of increasing production efficiency and advancing the development ofhigh-value-added products.

Mercuria Japan Industrial Growth
Support Investment, LLC

Joint investment with private financial institutions in the fund, which supports initiatives tocreate new businesses through overseas development with local mid-tier companies.

Softbank Group Corporation

Acquired subordinated bonds for strengthening competitiveness in telecommunications
business through ARM Holdings in the U.K.

DSTI HOLDINGS, INC.
(Daiwa Steel Tube Industries Co., Ltd.)

Through an SPC, joint acquisition with Daiwa Steel Tube Industries Co., Ltd. of some sharesissued by U.S. engineering companies.

Shelter Co., Ltd.

Helped by investing in preferred shares issued for R&D spending to increase the performanceof wooden structure technologies used by building construction companies that process andsell parts and materials for wooden structures in Yamagata City.

Hanabi Creative Enterprise

Invested in common shares issued by Hanabi Creative Enterprise Co., Ltd., which wasestablished as a core company for the Daisen City Hanabi Industry Concept, thereby helping
promote efforts aimed at regional revitalization through the manufacture of fireworks, planningand operation of fireworks events, and overseas business development.

Dai-Ichi Hotel

By supplying growth capital for this project, contributed to efforts to improve local attractions,
including the complete renovation of the hotel’s deluxe hot springs facility, which uses natural
resources in the Tokachi area for open-air hot springs.

Yanmar Holdings Co., Ltd.

Joint investment for acquisition of additional shares in a major tractor manufacturer in India
with the aim of increasing sales in the country, the world’s largest tractor market.

Yokohama Reito Co., Ltd

Helped arrange subordinated loans with Bank of Yokohama, the company’s main bank,for growth investments to expand overseas operations and the construction of a new
distribution center.

IHI Corporation

Supplied risk capital for investments in international joint development project for civilian
aircraft engines.

UACJ Corporation

Arranged subordinated loans with the company’s main bank for capital investments in
Thailand and the U.S. that were essential for its growth strategy.

National Private Leasing Services, LLC

Supplied risk capital to the company so it could provide large-scale rental housing ataffordable prices across the country for broad segments of the population.

Integrated Report 201731

DBJ Group’s Strategy

Business Strategy

Function Strategy

Crisis Response Operations
Vision
DBJ’s Crisis Response Operations function as a stabilizing force during periods of instability in the economy,society, and markets.
Outline
Crisis Response Operations, on the basis of the Japan Finance Corporation Act (Act No. 57 of 2007, including later
revisions) consist of the provision of necessary funds during such crises as disruptions in domestic or overseas financial
markets or large-scale disasters. In response to crisis-related damage, Japan Finance Corporation provides two-step loans
as complementary risk and other measures to government-designated financial institutions (designated financial institutions) that supply necessary funds to address crisis damage.

Crisis Response Operations Scheme

Japanese Government• Capital contribution• Lending of funds• Interest subsidies

Japan Finance Corporation(Crisis Response Facilitation Account)

DesignatedTwo-steploans, etc.

• Prepares and announces “crisis response facilitation guidelines”(approved by the competent minister)• Implements complementary risk and other measures on the basis ofagreements (approved by the competent minister) with designatedfinancial institutions

Designated financial
institutions
Private financial institution

Private financial institution

Private financial institution
Defines a new scope for DBJ’s responsibilities,
making Crisis Response Operations obligatory for
an indefinite period• Extends the scope of Japanese government recapitalization securing
DBJ’s financial structure, etc.
• Establishes a new crisis response reserve account, reflecting this obligationin the Articles of Incorporation, and indicates mandatory Japanese government ownership of more than one-third of shares and other measures
Note: Capital increases related to Crisis Response Operations before the 2015 revisions
to the DBJ Act were transferred from capital to a crisis response reserve(¥206.5 billion). Capital increases for Crisis Response Operations after therevisions are to be added directly to the crisis response reserve.

DBJ• Designated financial institutions
conduct business in accordancewith the Crisis Response Operations
Rules (based on approval of thecompetent minister).
• Designated financial institutions
conduct business with complete
double checks of required compliance at their financing departments
and their departments responsible
for crisis response operations.

Provision offunds, etc.

Clients

32

Integrated Report 2017

Results and Strategies
2008/10

2008/12

Commenced Crisis
Response Operations
as a designatedfinancial institution

2011/3Financial Crisis Response Operations
and Earthquake Disaster Crisis
Response Operations

Main events that were
designated a crisis:• Turmoil in international
financial markets(Global financial crisis)• Great East Japan Earthquake• Damage from heavy rainfall
during typhoon #18 in 2015
• Kumamoto earthquakes
in 20162017/3

Earthquake Disaster Crisis Response Operations(through March 31,
1, 2011)20

Total funds raised by the government in Crisis Response Operations(as of March 31, 2017)¥206,529 million

Total crisis countermeasure loans, loans with loss guarantee agreements, andcommercial paper purchases as of March 31, 2017:• Loans: ¥6,130.6 billion (1,145 projects)• Loans executed with loss guarantee agreements: ¥268.3 billion(47 projects, including those slated for application to Japan Finance Corporation)• Commercial paper acquisitions: ¥361.0 billion (68 projects)

Case Studies
Case Study 1 Great East Japan Earthquake of 2011

Case Study 2 Kumamoto earthquakes in 2016

In the fiscal 2011 supplementary budget passed in the wake of
the Great East Japan Earthquake, ¥2.5 trillion was earmarked
for Japan Finance Corporation for Crisis Response Operations
targeting medium- and large-sized enterprises. DBJ proactively
provided assistance for clients affected both directly and indirectly by the disaster.
Along with designated financial institutions in the disasterarea, DBJ arranged the Great East Japan Earthquake
Reconstruction Fund, which has financed 47 reconstruction
projects to date.
In December 2014, in response to the shift of the stage ofearthquake reconstruction from the restoration of production
facilities (the “restoration stage”) to efforts to open up a newenterprise-based market that resumes production, collaborates
among multiple enterprises to boost industry competitiveness,builds infrastructure and reinforces functions (the “reconstruction and growth stage”), we have established a new reconstruction and growth support fund in collaboration with the Regional
Economy Vitalization Corporation of Japan. The new fund is
aimed at providing subordinated loans and preferred shares toenterprises whose businesses are contributing to the reconstruction and growth of the disaster-stricken region. We arepromoting forward-looking initiatives with a nationwide businessmodel, aiming to support regional growth and revitalization.

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

Integrated Report 201733

DBJ Group’s Strategy

Business Strategy

Function Strategy

Asset Management

Accomplishments and Initiatives to Date

VisionDBJAM was established in November 2006 for the purpose of

Backed by the DBJ Group philosophy andcomprehensive financial expertise, DBJ AssetManagement Co., Ltd. (DBJAM) provides
investment and asset management services
which meet the clients’ best interests.
By appropriately addressing diverse investment
needs, DBJAM aims to spur the development of
capital markets in Japan by stimulating the flowof funds.

energizing the real estate finance market in Japan. Since then,
DBJAM has provided domestic real estate fund management
and asset management services. In 2016, it formed and beganasset management in DBJ Private REIT Co., Ltd., a private
unlisted REIT.
In addition, since 2013, DBJAM has begun to enhance its
wings into providing discretionary investment services andinvestment advisory services related to alternative investmentsin overseas / domestic private equity and infrastructure, andoverseas real estate.

OutlineAs a specialist in managing alternative investments, DBJAM
strives to meet the diverse needs of its clients. As of March 31,

DBJAM is an asset management company that specializes in investments in the real estate, private equity,and infrastructure fields.

Real estate

34

Integrated Report 2017

Private equity

Infrastructure

2017, it had ¥818.5 billion in assets under management.

Longer-Term External Environment and Social Issues

Strategy

Japan is a nation with considerable assets, including over

DBJAM, as a fiduciary investment manager, works in the best

¥1,700 trillion in household financial assets and ¥200 trillion ininterests of its institutional investor clients with the aim ofpension assets. With the Japanese economy confronted by aachieving longer-term growth in returns on each investments,

declining population and an aging society, it is imperative thatbeing aware of the profits flowing to the ultimate beneficiaries.

this wealth (financial assets) is steadily expanded.

DBJAM also works to help its clients increase their asset man-In realizing sustainable asset formation for the nation, it isan extremely important policy issue for Japan to have aagement capabilities.
To achieve these aims, DBJAM deeply understands financial

healthy and efficient capital market. Financial institutions,standings, investment policies, and risk/return preferences ofpension funds and other institutional investors must also

its clients through active, thorough and faithful engagement.

advance their investment capabilities in order to maintain a

DBJAM believes that such an attitude allows us to provide

vibrant capital market.

investment and asset management services which are truly

DBJAM acknowledges the importance of such policy

optimized for the client.

objectives and believes that its services are well aligned withthe public interest.

Through the provision of dedicated and qualified investment
management services, DBJAM contributes to the developmentof capital markets in Japan, as well as the transformation of thefunds flow into more diversified and longer-term minded one
which will ultimately lead to the promotion of the national wealth.

Case Study

DBJ Private REIT Co., Ltd.
From an unbiased position and long-term standpoint, DBJAM
provides qualified investment opportunities to clients such as
regional financial institutions and pension funds. Through its
services, DBJAM helps its clients diversify their investments
and invigorate the real estate finance market. With this objective in mind, DBJAM set up a private REIT in August 2016.

DBJ Private REIT Co., Ltd. invests in properties that havereceived the DBJ Green Building Certification or other environmental certifications, contributing to the spread of sustainable
real estate properties.

DBJ Private REIT Co., Ltd.

Subcontract

Loan
procurement

Financial institution
Outsourcing
Agency management
Accounting
Asset custody
Investment unit agent

Board meeting
Accounting auditor

100%
ownership

DBJ

Investors’ general meeting
Equityinvestment

Investors(limited to the qualified
institutional investors)

Asset management
contract

DBJ Asset Management Co., Ltd.

Integrated Report 201735

DBJ Group’s Strategy

Business Strategy

Function Strategy

Advisory Services

Strategy

VisionBacked by its experience supporting projects and industry

DBJ helps Japanese companies realize their
growth strategies and improve their international
competitiveness through support for M&A,
backed by its extensive experience and trackrecord around the world.

knowledge, DBJ takes an impartial approach to providing
advisory services to Japanese companies by utilizing its farreaching network with foreign companies and private equity
funds. DBJ also addresses needs for multifaceted support ininvestments and loans for capital needs related to acquisitions.

OutlineCase Study
DBJ offers expert advice related to corporate M&A—
ranging from the formulation of strategies, screeningof acquisition candidates, and assessment of corporate
value to negotiations, structure policy, and post-merger
integration assistance—for a variety of situations,
including industry restructuring, overseas businessdevelopment, business domain expansion, businesssuccession, as well as fund investments and exits.

Accomplishments and Initiatives to Date
Since it began offering advisory services in fiscal 2000, DBJ
has supported a diverse range of projects inside and outside
Japan. In fiscal 2015, DBJ created the Social Value andCapital Formation M&A Awards as a system for recognizing
excellent M&A deals that create social value. In April 2016,
DBJ established the Asia M&A Support Center in response to
growing needs for business development overseas, as well as
the Post-Merger Integration Support Center to assist withintegration after mergers.

36

Integrated Report 2017

ANA Holdings Inc.’s strategic investment in Vietnam
Airlines JSC
DBJ acted as the financial advisor to ANA Holdings Inc.
for its strategic investment in Vietnam Airlines JSC. Helping
the company execute its strategy in Asia, DBJ provided
comprehensive advice, including investment schemes,
calculations of corporate value, support for negotiatingwith the other party, and coordination of the drafting of
the agreement.

Research & Consulting

Strategy

VisionAmid accelerating change in industry, finance, and society that

DBJ helps its customers find solutions to problems through research and consulting services
using techniques it has accumulated over theyears, including far-sighted concept proposals
from an impartial and objective standpoint andfeasibility studies from a long-term standpoint.
OutlineUtilizing its extensive network of connections to universities, research institutions, experts, national governments, and local governments, DBJ provides support
through surveys and problem-solving ideas related tobusiness strategies and policy formation for urban
development, regional development, social capital
maintenance, energy, the economy, and industry.

creates new risks and opportunities, DBJ will provide valueadded research and consulting services that look beyond
stereotypes. At the same time, DBJ Group aims to create newknowledge platforms in tune with the latest trends, backed by
its ability to provide creative solutions.

Case Study

Support for Daisen City Hanabi Industry Concept
To support event commercialization and regional revitalization, Japan Economic Research Institute compiled a reporton Growth Strategies for the Fireworks Industry for the
Omagari Fireworks Festival in Akita, where Japan’s best
fireworks are on display in friendly competition. DBJ supplied
risk capital to Hanabi Creative Enterprise, the entity behind
the Daisen City Hanabi Industry Concept. DBJ Group willcontinue to provide new financial solutions through a
combination of research and financing.

Accomplishments and Initiatives to Date
Japan Economic Research Institute, Inc. is a comprehensive
think tank that conducts research in the public, solutions andinternational fields. In the public–private partnership and project finance initiative fields, it has a top-class track record inJapan backed by unparalleled experience and know-how.
Value Management Institute, Inc. is also a comprehensive
think tank that excels in analysis using proprietary economic
models and insight into cutting-edge technologies. Its highly
specialized knowledge encompasses a broad range of policy

Omagari Fireworks Festival “Kanki”

fields, including the formulation of integrated strategies for
local governments across Japan.

Integrated Report 201737

DBJ Group’s Strategy

Business Strategy

Area Strategy

RegionMarch 31, 2017

Total number of business alliances withfinancial institutions

107
Accomplishments and Initiatives to Date

VisionDBJ Group has worked to invigorate the economies of regions

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

dealing with various issues since the time it was the HokkaidoTohoku Development Finance Public Corporation and theJapan Development Bank. In recent years, DBJ has provided
financing tailored to the characteristics of each region throughits Regional Areas Genki Program (see page 40), co-investment
for overseas business development, risk capital through joint

Outlinefunds with regional financial institutions, and consulting serDBJ Group provides services tailored to the characteristics of each region in Japan from 10 branches andeight representative offices across the country.

vices to help create integrated regional strategies.
Through Crisis Response Operations, DBJ has also provided assistance for reconstruction in the wake of natural
disasters in various regions, including the Great East Japan

Investments
and
loans

38

Integrated Report 2017

Consulting
services

Planning
andresearch
services

Earthquake and the Kumamoto earthquakes.
As of March 31, 2017, DBJ has entered into business alliances with a total of 107 financial institutions.

Kushiro
Representative Office

Hokkaido Branch

Hakodate Representative Office
Aomori Representative OfficeNiigata Branch
Toyama Representative Office
Okayama Representative Office
Matsue Representative Office

Tohoku Branch

Hokuriku
BranchChugoku Branch
Kyushu Branch
Head Office
Tokai Branch
Kansai Branch
Shikoku Branch
Matsuyama Representative Office
Oita Representative Office

Head office
10 branches
Eight representative offices

Minami-Kyushu BranchLonger-Term External Environment and Social Issues

capital and consulting. More specifically, while taking into

The regional economic outlook is severe with declining house-entail improving the productivity and growth strategies ofhold spending and weaker demand for loans alongside aregional companies through business restructuring and over-long-term downtrend in their populations. As regional econo-seas business development, respectively, and cooperating

mies contract, regional enterprises need growth strategies thatwith regional financial institutions to create opportunities ininclude overseas business development, measures to improveasset management. As a part of these initiatives, DBJ createdcorporate value through business restructuring and succes-

the Regional Investment Promotion Office in the Strategic

sion, and ascertainment of good opportunities in asset

Finance Department under the chief investment officer on April

management.

1, 2017, for the purpose of facilitating the supply of risk capital

account regional characteristics, the themes of key objectives

to regional mid-tier companies and small and medium-sizedenterprises.

Strategy
DBJ will provide services with two objectives in mind—namely,
to create value by connecting regions throughout Japan toTokyo, domestic regions to those overseas, and regions theBy providing detailed solutions to regional problems, DBJ
Group strives to increase the value of its human capital (e.g.,
the skills and experience of its managers and employees), andrelationship capital (e.g., networks).

world over to each other, and to solve problems through risk

Integrated Report 201739

DBJ Group’s Strategy

Business Strategy

Area Strategy
RegionInnovative Initiatives at DBJ

Regional Areas Genki Program
Facing the challenges of population constraints, severe finan-

To further promote these initiatives, DBJ periodically revises

cial conditions, environmental restrictions and global competi-

the content of programs set by each of its branches and hastion, Japan’s regions must coordinate with one another andadopted nationwide the concepts of “enterprises that contrib-

implement diverse regional development schemes that capital-

ute to the region”*1 and “production bases that are vital to theize on their respective strengths, competitive advantages, andregion.”*2 DBJ is helping foster a virtuous circle of genki

latent potential.

between regions and enterprises.

In fiscal 2010, DBJ arranged a unique initiative, the Regional
Areas Genki Program, to support regional growth that capitalizes on each region’s respective strengths and potential frominformation and funding aspects. In addition, each DBJ branch
focuses on its region’s distinctive fields and businesses, basedon its industrial structure, and partners with regional financial*1 Enterprises that contribute to the region: Enterprises that create employment
opportunities and utilize the region’s personnel and resources, effectively
employing people, physical goods, and money for the benefit of the region,
including increasing its productivity. DBJ supports these enterprises by providing information and funding.
*2 Production bases that are vital to the region: Enterprises that support regions
by keeping major manufacturing plants and R&D bases in their regions, thereby
contributing to the creation of jobs, economic benefits, and brands in the region.
DBJ supports these enterprises through its Mother Factory Support Program.

institutions to offer financial support.

Areas Supported by DBJ’s Head Office (as of April 2017)
Hokkaido Area (Hokkaido)

40

Strengthening of the food value chain to drive growth
Development of the tourism industry by communicating the area’s attractions
Creation of an environment and the infrastructure to support sustainable growth

Tohoku Area

(Aomori, Iwate, Miyagi, Akita,
Yamagata, and Fukushima)“Creation of new business in Tohoku” program

Niigata Area

(Niigata)

Improvement of the area’s attractiveness by using regional resources
Advancement of innovation
Advancement of safety and security in regional development

Kanto-Koshin
Area(Ibaraki, Tochigi, Gunma,
Saitama, Chiba, Tokyo,
Kanagawa, Yamanashi,
and Nagano)Development of new market-creation businesses that fully leverage population and industry
concentrations
Construction and renovation of infrastructure based on regional conditions
Development of businesses in manufacturing regions that boost competitiveness in response
to globalization
Advancement of initiatives that contribute to higher labor productivity and an improved labor
participation rate

Hokuriku Area

(Toyama, Ishikawa, and Fukui)

Fostering of hospitable, technological and physical support for the Hokuriku area

Tokai Area

(Gifu, Shizuoka, Aichi,
and Mie)

Development of programs that advance the creation of next-generation industries
Development of programs that support efforts to make the Tokai area more appealing
Development of measures to prepare for a massive earthquake in the Nankai TroughKansai Area

(Shiga, Kyoto, Osaka, Hyogo,
Nara, and Wakayama)

Development of programs that support leading-edge manufacturers
Development of a program to support the invigoration of commerce and distribution
Development of a program that aids efforts to help the tourism industry thrive

Chugoku Area

(Tottori, Shimane, Okayama,
Hiroshima, and Yamaguchi)

Promotion of the “Three arrows” initiative to invigorate the Chugoku area

Shikoku Area

(Tokushima, Kagawa, Ehime,
and Kochi)

Development of a program for Shikoku enterprises evolving at the top of their niches
Development of programs that support efforts to reinforce industrial clusters
Development of measures to prepare for a massive earthquake in the Nankai TroughKyushu Area

(Fukuoka, Saga, Nagasaki,
Kumamoto, and Oita)

Enhancement of the competitiveness of the Kyushu area as the door to Asia
Creation of a new growth engine for the Kyushu region
Development of measures to increase the competitiveness of area enterprises that have uniquegrowth strategies

MinamiKyushu Area

(Miyazaki, Kagoshima,
and Okinawa)

Development of a project to promote Minami-Kyushu as an advanced region in terms of food,health, and the environment and energy

Integrated Report 2017

Case Studies
Case Study 1 Supply of growth capital to Dai-Ichi Hotel

Dai-Ichi Hotel is a major operator of Japanese-style inns in the
Tokachigawa hot springs area. With the aim of helping improve
the attractiveness of the region by renovating hospitality facilities, DBJ supplied risk capital through Special Investment
Operations by arranging syndicated loans to supply growth
capital with North Pacific Bank, Ltd., including subordinatedcapital loans.

Case Study 2 Support for world’s first university-affiliatedjoint-use medical facility dedicated to BNCTDBJ arranged syndicated loans for a project to prepare theKansai BNCT Medical Center (tentative name) with the
Educational Foundation of Osaka Medical and Pharmaceutical
University. The center is the world’s first university-affiliatedjoint-use medical facility dedicated to boron neutron capture
therapy (BNCT). It holds promise for leading the world in
advanced cancer treatments through collaboration withresearch networks including Kyoto University Research Reactor
Institute, Osaka University’s Graduate School of Medicine,and Osaka Prefecture University’s BNCT Research Center.

Garden-themed, outdoor hot spring bathRendering of completed facility

Case Study 3 Be Smile Project Co., Ltd. (Kamichiku Group)

Case Study 4 Initiatives to promote Setouchi brands

Be Smile Project Co. Ltd. aims to move Kyushu’s livestock
sector to the sixth industrial tier (tier characterized by the added
value resulting from vertical integration) by invigorating andsharpening the sector’scompetitiveness throughexpansion into the restaurant business. DBJ supports
this effort by supplying risk
capital through Special
Investment Operations
in cooperation with theAgriculture, Forestry and
Fisheries Fund Corporation
for Innovation, Value Chain
and Expansion in Japan,
livestock feed producers,
trading companies, andlocal financial institutions.

DBJ set up the Setouchi Kanko Kasseika Fund and financing
for Setouchi Brand Corporation to create a system for promoting Setouchi brands in collaboration with the Setouchi Tourism
Authority as well as seven financial institutions in the region(Chugoku Bank, Hiroshima Bank, Yamaguchi Bank, Awa Bank,
Hyakujushi Bank, Iyo Bank, and Minato Bank). This fund provides financial support to tourism-related businesses as thebearer of growth capital.

Integrated Report 201741

DBJ Group’s Strategy

Business Strategy

Area Strategy

Overseas

DBJ Europe Limited

DBJ Investment
Consulting (Beijing)Co., Ltd.

DBJ Investment
Consulting (Beijing) Co., Ltd.’sShanghai Office
DBJ Singapore
Limited

VisionAccomplishments and Initiatives to Date
When it first became a joint-stock company, DBJ began to

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

extend corporate loans in advanced countries where it could
ply its knowledge of industries in Japan. DBJ then gradually
diversified into project finance, asset finance, and investment
operations as business foundations were laid overseas inaccordance with DBJ Group’s sector strategies and function

Outlinestrategies.
In Singapore and China, DBJ set up an M&A advisory team

DBJ engages in overseas operations in line with
its sector strategies and function strategies. To coordinate these operations, it has subsidiaries in London,
Singapore, and Beijing (including a branch officein Shanghai), as well as a representative officein New York.

42

Integrated Report 2017

to coordinate with the head office’s Business Development
Department in meeting the M&A needs of customers in the
Asia region.

Longer-Term External Environment and Social Issues

sectors against a backdrop of population growth and theincreasing volumes of movement in people and physicalBased on projections for continued growth in the world econ-

goods. It is imperative that Japan’s economy and industry

omy, DBJ Group is likely to see continued needs for global

sustain growth by effectively tapping into these overseas

business development from its core customers in domestic

growth opportunities.

industries. At the same time, demand for capital should
increase strongly from the infrastructure and transportation

Strategy
DBJ will continue to engage in overseas operations in line with
its sector strategies and function strategies.
1) In infrastructure fields such as energy and transportation,
DBJ will provide investments and loans for the overseas
development of Japanese industry and for projects thatbring overseas knowledge to domestic markets.

New York Representative Office2) DBJ will provide investment and advisory services to support the overseas industrial expansion needs of its customers, including customers headquartered regionally in Japan.
3) Group companies will manage investments in infrastructure
assets and corporate assets for the purpose of providing
Japanese investors with investment opportunities overseas.

One overseas
representative office
Three overseas
subsidiaries

Case Studies
Case Study 1 Participation in natural gas power plant

project in New York State

Case Study 2 Participation in biomass power plant projectin the U.K.

DBJ participated in the financing of a project to construct andoperate a natural gas power generation plant (output about
1.1 million kW) in New York, U.S.A., being promoted by lead
investor JERA Co., Inc. We aim to acquire knowledge offinance in deregulated markets in the U.S., a pioneer in electric
power deregulation, and bring this knowledge back to help
Japan’s deregulated
electricity market.

DBJ participated in project financing for one of the largest
biomass power plants (output about 300,000 kW) in the U.K.,
which is scheduled to be constructed near Middlesbrough incentral England. By acquiring knowledge in the financing andoperation of the biomass power plant project, we will contributeto the spread of renewable energy in Japan.

Rendering of completed facility

Rendering of completed facility

Integrated Report 201743

DBJ Group’s Strategy

Capital Strategy

Financial Capital

Vision
We target sustainable growth byconstructing an optimal risk–return
portfolio while maintaining andstrengthening a robust financial basethat supports our unique businessactivities, including integrated investment and loan services.

Basic Policy
Financial capital is a vital element of our business foundation

maintain and strengthen our financial capital by managing it

implementing advanced business strategies centered on our

within the context of a risk appetite framework based on

sector strategy (see page 18) and function strategy (see pagesophisticated analysis of risks and returns with due consider-28) under the Fourth Medium-Term Management Plan. A

ation paid to regulatory capital (management focused on

robust financial foundation of funds and capital is necessary forshareholders’ equity ratios) and economic capital (manage-

DBJ Group to execute its sector strategy, supply risk capital,

ment of capital using stress tests).

and engage in Crisis Response Operations. We aim toBusinessstrategy
External
environment
Scenarioplanning

Stress test

Strategy for
financial capital

44

Integrated Report 2017

Business plan

Execution

Monitoring

Specific Initiatives to Improve Value of Financial Capital
A pillar of DBJ Group’s business strategy is to provide long-fund procurement activities with diversified maturities andterm financing for infrastructure projects. To do so, DBJ Groupmethods. In fiscal 2015, DBJ was the first Japanese issuer toprocures long-term funds through corporate bonds and theissue sustainability bonds (see page 55), and it plans to

Fiscal Investment and Loan Program (FILP).

strengthen efforts in this area. We intend to help invigorate thesocially responsible investing bond market while diversifying

In recent years, DBJ has stably procured funds through FILP

our fund procurement base.

as well as by issuing corporate bonds, thereby augmenting its

Capital Procurement (Non-Consolidated)(¥100 million)

Fiscal 2014

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

Fiscal 2015

2,544.2
661.6
300.0
200.0
161.6
374.8
378
1,129.9

Fiscal 2016

3,027.7
634.4
300.0
200.0
134.3
395.3
358.2
1,639.7

4,012.6
1,127.7
800.0
150.4
177.3
497.1
861.5
1,526.1* Borrowings from FILP in fiscal 2016 included ¥500 billion in the supplementary budget for “economic stimulus measures for investments in the future.”

Injections of financial capital are periodically monitored and assessed, and are reflected in operational plans and financial capital plans.
Financial Soundness Indicators
Issuer ratings
Common equity Tier 1 risk-weighted capital ratio

A1 (Moody’s), A (S&P), AA (R&I), AAA (JCR)
17.2%(As of March 31, 2017)(As of March 31, 2017)

Financial Targets of Fourth Medium-Term Management Plan
DBJ has set the following numerical targets and is keen to strengthen profitability further over the longer term.
(In the Third Medium-Term Management Plan, our target for net income was ¥70 billion in the final fiscal year.)
Third Medium-Term Management Plan

(Consolidated)

Gross ordinary income*1
Current net income
Of which, credit costs (negative = cost)*
Profitability

2

Expense ratio*3

Actual(Average for fiscal
2014–2016)

Actual(Fiscal 2016)

Target(Fiscal 2019)¥182.6 billion¥171.1 billion¥190 billion¥103 billion¥87.6 billion¥80 billion¥19.2 billion¥4.5 billion

—

26%

30%

About 35%—

¥16.5 trillion¥16 trillion

ROA*3 *4

1.1%

1.1%

About 1%

ROE*3 *4

3.7%

3.0%

About 3%—17.2%

At least 14%

Total assets

Soundness

Fourth Medium-Term
Management Plan

Capital adequacy ratio*5*1 Includes stock-related gains/losses, before credit costs and expense
deductions*2 Credit costs (negative = cost) = reversal of allowance for loan losses (negative= provision) + reversal of reserve for contingent losses (negative = provision) +loan write-offs (negative) + collection of written-off claims + gain on sale ofclaims (negative = loss)*3 Expense ratio and ROA versus gross operating profit, ROE versus net income*4 Average for fiscal 2014–2016 uses simple average of ROA and ROE for eachfiscal year
*5 Common equity Tier 1 risk-weighted capital ratio

Integrated Report 201745

DBJ Group’s Strategy

Capital Strategy

Financial Capital

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

2008–2010

Became ajoint-stock company

First Medium-Term Management Plan
CHALLENGE 2010

Fiscal 2008

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

Fiscal 2009

Fiscal 2010

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

Total income

151.2

347.9

345.1

Income before income taxes(121.6)

51.9

95.0

N/A

(26.7)

(2.9)

3.5

(0.8)

9.3

Income before income taxes and minority interests(118.1)

51.1

104.3

Total income taxes(13.5)(10.8)(1.3)

Net income attributable to owners of the parent(128.3)

39.8

101.5

—

10.0

50.0

Total assets

14,028.0

15,595.7

14,845.2

Loans

12,008.8

13,514.6

13,031.4

Securities

1,246.5

1,289.4

1,165.5

Total liabilities

11,941.6

13,268.2

12,435.2

Borrowed money

8,067.8

9,082.4

8,576.4

Debentures and corporate bonds

3,513.0

3,746.3

3,629.3

Total equity

2,086.4

2,327.5

2,409.9

Common stock

1,000.0

1,181.1

1,181.1

Total capital ratio (Basel II, BIS standard)

18.87%

19.13%

20.50%

Total capital ratio (Basel III, BIS standard)

—

—

—

Ratio of risk-monitored loans (Banking Act basis)

1.60%

5.07%

1.28%

Return on assets (ROA)(0.92)%

0.27%

0.67%

Return on equity (ROE)(6.06)%

1.82%

4.31%

Number of employees

1,096

1,181

1,203

1,733.4

3,793.1

2,116.6

1,670.3

3,682.0

2,034.4

Investments

63.1

111.1

82.2

Funds raised (flow)

1,733.4

3,793.1

2,116.6

184.3

840.9

1,212.8

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

Total dividend amount

Investment and fundraising flow (non-consolidated)
Loans and investments (flow)
Loans

Of which, recovery, etc.

46

Integrated Report 2017

(¥100 million)

2011–20132014–2016

Second Medium-Term Management Plan
Endeavor 2013

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

Fiscal 2011

Fiscal 2012

Fiscal 2013

Fiscal 2014

Fiscal 2015

Fiscal 2016

(April 1, 2011 toMarch 31, 2012)(April 1, 2012 toMarch 31, 2013)(April 1, 2013 toMarch 31, 2014)(April 1, 2014 toMarch 31, 2015)(April 1, 2015 toMarch 31, 2016)(April 1, 2016 to
March 31, 2017)

318.7

340.0

361.6

339.0

358.6

285.4

99.2

115.6

165.7

153.0

185.1

122.5

(1.3)

30.0

30.3

32.1

70.8

41.1

10.9

0.6

0.2

0.6

1.5

(0.0)

110.2

116.2

166.0

153.6

186.7

122.4

(31.9)(44.5)(40.8)(58.9)(57.6)(34.6)

77.3

71.3

124.3

92.7

128.9

87.6

37.3

35.2

30.8

22.5

29.2

19.7

15,579.8

16,248.7

16,310.7

16,360.6

15,907.1

16,570.4

13,645.4

13,918.2

13,838.4

13,261.3

12,952.5

13,039.5

1,176.6

1,357.0

1,637.5

1,887.9

1,803.0

1,750.3

13,118.8

13,710.1

13,682.9

13,613.3

13,022.9

13,584.2

9,170.5

9,448.3

9,182.6

8,598.2

7,892.1

8,472.3

3,671.8

3,924.5

4,237.4

4,569.3

4,727.9

4,711.8

2,461.0

2,538.5

2,627.7

2,747.2

2,884.2

2,986.2

1,187.7

1,206.9

1,206.9

1,206.9

1,000.4

1,000.4

18.56%

—

—

—

—

—

—

15.52%

15.83%

16.80%

17.87%

17.47%

1.47%

1.23%

0.99%

0.77%

0.64%

0.54%

0.51%

0.45%

0.76%

0.57%

0.80%

0.54%

3.18%

2.86%

4.83%

3.47%

4.60%

2.99%

1,270

1,315

1,391

1,407

1,435

1,546

2,927.0

2,652.4

2,943.3

2,544.2

3,027.7

4,012.6

2,849.0

2,524.5

2,805.1

2,262.7

2,861.3

3,805.8

78.0

127.8

138.2

281.4

166.3

206.7

2,927.0

2,652.4

2,943.3

2,544.2

3,027.7

4,012.6

691.7

502.2

1,307.5

1,129.9

1,639.7

1,526.1

Integrated Report 201747

DBJ Group’s Strategy

Capital Strategy

Human Capital

VisionAs of March 31, 2017

We aim to become a “humanresource development bank” withdiverse human resources, and help
employees develop skills whileraising their motivation.

Number of employees(consolidated)
Number of employees(non-consolidated)
Average length of service(non-consolidated)

1,546
1,192
14.3
years

Basic Policy
We believe the sustained creation of economic and social

a framework where diverse personnel can engage in work withvalue hinges on the hiring and training of talented personnel

high levels of motivation. Under the Fourth Medium-Term

who can put into practice our unique business model of inte-

Management Plan, we are advancing specific initiatives tograted investment and loan services, while sharing DBJ

improve the value of human capital as a high-priority issue.

Group’s corporate philosophy. It is also vital that we create

Specific Initiatives to Improve Value of Human Capital(1) Intensification of Hiring
DBJ will secure the personnel necessary across the entire
Group to implement its sector strategy, function strategy, andarea strategy.

• Provide abundant opportunities for training through combinations of rank-based training, business-related training,and self-improvement training• Augment study abroad program at overseas universities
and international training programs to nurture globally aware(2) Skills Development
DBJ prioritizes human resource development across the Group.

employees• Implement measures to strengthen management abilities• Help employees shape career paths for personalized growth• Strategically rotate employees so they steadily develop
highly specialized skills by gaining practical experience in

We focus efforts on promoting employee motivation andmultiple departmentssound physical and mental health.

• Develop skills through practical on-the-job training• Dispatch employees to central government agencies, Group
companies inside and outside Japan, and companies thathave received investments• Enhance quality and quantity of spending on human48(3) Motivation and Health Management• Maintain an optimal human resource system, share ourcorporate philosophy, and focus on improving productivity
as factors that affect motivation• In addition to periodic health checkups, introduce counseling services staffed by external professionals as a part ofresource development (career development, management

management that cares for the physical and mental well-ability, global awareness, etc.)

being of employees

Integrated Report 2017

DBJ’s Human Resource Development System
Training by Rank

Business-Related Training

External
Assignments, etc.

Business-Related(Self-Training)

Domestic andoverseas exchange
students, trainees,
seconding, etc.

Common skill areas• Communication• Logical thinking• Facilitation• Presentation• Design thinking• English
conversation, etc.

Leadership program
Life plan training

Management training

Manager training• Financial skill-related training(Valuation, corporate reorganization, real estate finance, accounting,monetary policy, corporate finance, etc.)

Career development
plan training

Position• Compliance training• Training on finance-related laws

• Accounting standards training• Tax basics training, etc.

Financial analysis training• Bookkeeping and accounting
knowledge• Corporate analysis• Individual company analysis
Case studies

Introductory training
for new employees
Contract
writing

Autonomous
career track

Cultivation ofmanagement andleadership skills

Basic legal
training

Basic finance training• Interest rate basics• Basics of derivatives
Cultivation ofbusiness-related
knowledge, acquisitionof specialized
knowledge, humanresource training

Acquisition of financial skills, legal andfinancial accounting knowledge

Planned and ongoing HR development

Mastery of knowledge
and skills needed
for work

DBJ’s Work-Life Balance Systems
Pregnancy, Childbirth, and Child-Rearing
Pregnancy and childbirthBalancesupportsystems• Maternity leave before
and after childbirth• Special leave when
spouse gives birthChild-rearing
Leave for child-rearing
Shortened working hours for childcare
Flextime system for childcare
Special vacation for helping with childcare
Exemption from or reduction of overtime
Time off for nursing babies

Caring for Family Members
Leave to care for the elderly
Shortened working hours to care for the elderly
Balancesupportsystems

Flextime system to care for the elderly
Exemption from or reduction in overtime
Nursing care leave
Accumulation of unused paid vacation
Nursing care seminars

Advice for returning to work after taking leave
Training andsupport

Preparation seminars for returning to work
Seminars for managers with subordinates raising children

Training andsupportReturn entry system
System for rehiring retired employees

Return entry system (registration system for employees returning to work)(4) Workstyle Reforms and Employee Diversity(5) Worry-Free Work Environments

The way people work has continued to evolve as productivity

We take proactive steps to maintain worry-free work

improves through business reforms, work-life balanceenvironments.

becomes more important, and diverse human resources• Proactively hire people with disabilities, maintain work envi-

work together.
• Create Work Reform Project to improve productivity

ronments for diverse human resources• Raise awareness of measures to prevent sexual harassment• Enhance work and leave systems for childcare and elderly

and power harassment, set up a consultation service

care (flextime system, leave for helping with childcare)• Mandate human rights training to deepen understanding of• Career training for supporting women in management posi-

human rights issues, compliance training, and information

tions, training for managers to support subordinates withsecurity training, and focus on improving morale

childbirth and childcare issues, and seminars aimed atworkstyle reforms for employees preparing to return to work
after taking leave• Set targets for empowering women, specifically for hiring
women and promoting them to management positions
Note: Ratio of women in management positions: Target a 50% increase in thenumber of women in management positions by the end of fiscal 2018
compared with April 1, 2014, and target a ratio of 5% for women in
management positions by the end of fiscal 2020
Integrated Report 201749

DBJ Group’s Strategy

Capital Strategy

Intellectual Capital

Vision
DBJ aims to build on strengths inknowledge, the wellspring for valueadded operations such as research,
analyses, and risk management, as
well as strengths in frameworks,
including processes, informationand communication technology (ICT)systems, and organizations.

Basic Policy(1) Knowledge(2) Processes

We strive to improve skills as a core element of operations

We will improve operations, including via investments in ICT,

necessary to differentiate our business model through surveys,

by clarifying and simplifying business processes from the cus-

research, analyses, and risk management centered on industry.

tomer’s standpoint in order to rapidly and properly address
customer needs.

Specific Initiatives to Improve Value of Intellectual Capital(1) Knowledge
Industry analysis

cooperation and collaboration between DBJ and external

In April 2017, DBJ established the Chief Research Officer andexperts at universities and other organizations. Research

placed under it the Economic & Industrial Research

focuses on the formation of a sustainable economy and soci-Department and the Sustainability Planning & Support

ety from an academic and liberal standpoint. The outcomes

Department (formerly the Environmental Initiative & Corporateof this research are reflected back in the operations of DBJ

Social Responsibility–Support Department). We provide knowl-

Group and shared with the general public with the aim of cre-edge-based solutions to customers in various industries,

ating both economic and social value. RICF, a pioneer in iden-

including from an ESG perspective, based on our broad

tifying issues, is highly regarded by academia for its impartiality

knowledge of industry.

and the robustness of its research. It is well known as a center
for industry, academia, and government knowledge. In recent

Research Institute of Capital Formation

years, the institute has expanded the means for creating intel-

The Research Institute of Capital Formation (RICF) was estab-lectual capital by establishing new committees for researchinglished in 1964 with Dr. Osamu Shimomura, who advocated forsustainability, publishing research papers through Springer, an

the principles behind Japan’s stage of high economic growthinternational academic publishing company, and holding inter-

after the 1940s, as its first executive director. The institutenational academic conferences in conjunction with foreign

serves as a venue for creating intellectual capital throughacademic journals and think tanks.

50

Integrated Report 2017

Screening(2) Processes, etc.

While engaging in high-risk operations, such as integrated

Business processes

investment and loan services and crisis response, DBJ GroupDBJ established the Work Reform Project in fiscal 2016 tomust have excellent screening capabilities to evaluate corpora-look into measures to enhance productivity and increasetions and businesses, in addition to economic and industry

added value for customers, including reforming workstyles,

analysis, in order to continue carrying out its mission. To

streamlining how meetings are run, and reviewing theenhance the value of this intellectual capital, arguably thedecision-making process.

biggest distinguishing factor for a financial institution, DBJ
offers a variety of training programs for new employees, includ-

Rebuilding of backbone systems

ing financial analysis training. As employees gain experience

DBJ is advancing projects to rebuild backbone systems,

in financing deals and share it with others, they become theincluding core systems for financing and decision-making.

screening ability of DBJ as it addresses social issues.

Case Studies
Case Study 1 Analysis of economic andindustrial trends
In addition to analyzing macroeconomic and financial trends
around the world, DBJ conducts industry surveys andresearch about market trends inside and outside Japanthrough its network of contacts in the industry, as well as
surveys about the latest technological developments andthe international competitive landscape. DBJ puts its findings in research reports and disseminates them to customers as well as investment and loan departments and offices.
Research about the aerospace industry, the IoT,
“Industry 4.0”
Lately, we have been following the latest trends in the aerospace industry, which shows promise as a growth field,
while publishing reports containing the entire Group’s cumulative knowledge of the aerospace industry. We have also
conducted field research on the latest IoT trends and the“Industry 4.0” initiative, and shared this information with ourcustomers and the general public through discussions,study sessions, and lectures. In May 2017, DBJ set up the
Cross-Sector Conference as a platform for sharing information about the entire industry, including our periodical
reports on industry trends and sector analysis.
These reports are available
on DBJ’s website.

Case Study 2 Capital Investment Planning Survey

With a history of more than 60 years (since 1956), DBJ’s
Capital Investment Planning Survey looks at trends in corporate capital investment in Japan, capital investment overseas, and spending on R&D. The results of the survey areused for many purposes, such as furthering education atuniversities and research at R&D organizations, in addition
to serving as a reference for national economic policy andcorporate planning.
Fiscal 2016 Capital Investment Planning Survey,
60th anniversary symposium
In fiscal 2016, the survey was designed to illuminate corporate activities based on the “broad definition of investment,”
covering intangible fixed asset investment in Japan andoverseas, as well as spending on R&D, M&A, and humanresources. This was a new trial aligned with current corporate activities that split budgets between investments andcorporate acquisitions flexibly—that is, without setting
specific amounts. The results of the survey will be reflectedin future surveys after a frank exchange of opinions between
management at DBJ and corporate managers.
On September 16, 2016, in celebration of the 60th
anniversary of the Capital Investment Planning Survey, DBJ
and Nihon Keizai Shimbun sponsored the “How Investment
for the Future Is Changing the Japanese Economy” symposium, with this “broad definition of investment” as themain topic.

Integrated Report 201751

DBJ Group’s Strategy

Capital Strategy

Relationship Capital

Vision
DBJ aims to create value bycooperating with other parties toenhance the value of its networkand brand.

Basic Policy(1) Networks and Relationships
DBJ Group has built diverse networks with customers, financial institutions, investors, and national and local government

Customers

Regions

agencies for the purpose of exchanging information and avoiding conflicts of interest. DBJ Group utilizes its unique networks
to identify issues affecting the economy and society and to
conduct investment and loan operations.
(2) Brand and Reputation

Universities
and researchorganizations

DBJ
Group

Financial
institutions

We aim to maintain our reputation and improve our brandvalue through the services DBJ Group provides to customers.
National
and local
governments

Investors

Specific Initiatives to Improve Value of Relationship Capital
Regional Financial Institutions

collaborative funds and introducing investment products such

In fiscal 2007, DBJ began borrowing money from local finan-

as syndicated loans. As a part of initiatives to revitalize regions,cial institutions as a part of its credit-raising activities. In addi-

DBJ creates M&A opportunities for local companies through itstion to its fund-raising relationships, DBJ has enhanced andnetwork of regional banks (75 regional banks as of March 31,

diversified its network of relationships by establishing2017). DBJ also helps local companies get a toehold in Asian

52

Integrated Report 2017

markets through its Asia Financial Support Center (67 regional

iHub (innovation Hub)banks as of March 31, 2017). Moreover, DBJ has formed a

Along with Japan Economic Research Institute, DBJ engages

total of 20 funds with regional financial institutions throughin management of technology training and innovation Hubinitiatives to supply risk capital to regions. Lately, DBJ has(iHub) activities. Using its impartial position and broad network,

promoted new money flows by creating diverse investment

DBJ aims to resolve social issues through logical and innova-

opportunities for regional financial institutions, jointly investingtive business solutions.

in overseas private equity funds along with six regional financial
institutions through its overseas private equity investment
program.
National and Local Governments
With the aim of solving regional issues, DBJ has deepened its
relationships with leading organizations and broadened thescope of its relationships by planning and holding seminars at
its PPP/PFI Academy for local governments and regional financial institutions, as well as by putting in place platforms for
local industry, government, and academia collaboration with
the national government. In its fifth year, the PPP/PFI Academy

DBJ Women Entrepreneurs Center (DBJ-WEC)

counts 63 local governments and 125 people as participants

DBJ provides comprehensive support, including entrepreneur-(as of March 31, 2017). DBJ also supports the public asset

ial know-how and networking opportunities, to nurture growth

management functions of a number of local governments

businesses led by women from new vantage points that could

through advisory services and help creating PPP/PFI projects.

change society and the economy for the better. As a part ofthese efforts, DBJ holds a business plan competition every

Universities and Research Organizations

year for women entrepreneurs. New business ideas that evince

Our network of over 430 academics at 115 universities aroundexcellent business potential and innovativeness are awarded

the world, centered on the social science field, helps with ourbusiness grants of up to ¥10 million. After the competition

research activities and human resource training. From an earlyfinishes, the winners are connected with outside experts andstage, we have worked to internationalize our network. Our

venture capitalists who help them turn their business plans into

guest foreign researcher system, which began in 1991, hasreality by supporting the growth and development of theirwelcomed 34 researchers from the U.S., Canada, the U.K.,

business ideas. More than 1,800 business plans have been

Germany, Denmark, Singapore, Malaysia, Thailand, China,

submitted over the past five competitions, expanding theSouth Korea, Taiwan, Australia, and New Zealand. Leveraging

scope of opportunity for women entrepreneurs.

this diverse relationship capital, DBJ invited around 50 foreign
professors from over 20 universities in six countries andregions, including Japan, to give lectures at seminars andMore information is on the Women Entrepreneurs Center
website (https://www.jeri.or.jp/wec/).

conferences held in fiscal 2016. The events were uniformly
hailed as excellent venues for sharing research outside theuniversity setting. The DBJ Financial Academy is a part of ourhuman resource training program that focuses on advanced
financial operations for DBJ employees as well as students
accepted from outside the Bank. Over the past 10 years, theDBJ Financial Academy has welcomed over 550 students fromoutside the Bank and 20 guest professors from 11 universities
who represent their respective fields.

Integrated Report 2017

53

DBJ Group’s Strategy

Capital Strategy

Social Capital

VisionDBJ Group aims to achieve sustainable growth in business and corporate value while developing social
capital for society as a whole.

Basic Policy
DBJ Group defines social capital as a resource

Social capital

Details

Example of initiatives

shared across society that underpins the foundations of market economics. Increasing thevalue of social capital is a basic tenet for realizing a sustainable society. DBJ specificallyengages in unique initiatives within the context

Environmentally Rated
Loan Program(1) Naturalenvironment

Forests, mountains, rivers,
lakes, soil, air(2) Social
infrastructure

Energy, transportation,
urban infrastructure, industrial
value chains

Loans and investments for infrastructure and industrial projects

Crisis Response Operations(3) System capital

Stabilization and stimulationof the financial system, development and invigoration offinancial marketsof (1) the natural environment, (2) social infrastructure, and (3) system capital.

DBJ Green Building Certification

BCM Rated Loan Program

Supply of risk capitalSocially responsible investingbond issuanceSpecific Initiatives to Improve Value of Social Capital
DBJ undertakes the following unique initiatives to support

improve the productivity of its employees through workstylea sustainable society through loan and investments for infra-

reforms and measures to raise employee awareness of healthstructure and industrial projects and its legally mandated Crisis

issues. Our screening sheet for rating loans was created with

Response Operations and Special Investment Operations.

the cooperation of public institutions, experts, and top runnercompanies. This screening sheet is revised every year by a

DBJ Certification Programs

panel of advisors consisting of external experts with due atten-

DBJ has more than 40 years of experience facilitating overtion paid to the latest issues and trends around the world.

¥3 trillion in financing for environmental conservation projects.
Using this knowledge, we launched the Environmentally Rated
Loan Program in 2004, the first such program in the world.

Environmental
RatingUsing an independently developed screening system, DBJ(Environmental risk)

evaluates companies’ track records in environmental management. The environmental rating system entails the setting ofloans’ terms and conditions based on their environmental
ratings. In 2006, DBJ launched the BCM Rated Loan Program

BCM Rating

to evaluate disaster preparedness and measures to ensure(Business
continuation risk)business continuation. We help companies devise comprehensive crisis management policies in addition to providing loans
for disaster prevention measures and disaster recovery forcritical social infrastructure. In 2012, DBJ began to offer the
Employees’ Health Management Rated Loan Program, whichassesses a company’s efforts at health management to54

Integrated Report 2017

Health Management
Rating(Human productivity risk)

Total number of
rated loans:

960¥1,663 billion(As of March 31, 2017)

DBJ Rated Loans(Number)(¥100 million)

150

2,000

(Left axis)(Right axis)

Environmental rating
Cumulative amount

BCM rating

Health management rating
28

120

30

3

32

1,600

44

1,200

48
90

60
5
11
30

33

35

2

33

5

4

36

36

2008

2009

1

13

27

42

45

44

55

53

800

64
61
46

46

51
400

27

0

(Fiscal year) 2004

2005

2006

2007

DBJ has provided over 900 rated loans to customers while

2010

2011

2012

2013

2014

2015

2016

0

DBJ Socially Responsible

engaging in dialogue with them to broadly support their envi-

Investment Bond (SRI Bond)ronmental, social, and governance (ESG) initiatives. These loans

In 2014, DBJ became the firsthave contributed to increasing the value of social infrastructure

issuer in Japan to issue a green

Issuance of SRI bonds

and natural capital through sustainable corporate activities.

bond. Also, DBJ has issued(As of March 31, 2017)

DBJ certification programs facilitate dialogue and coordina-

DBJ Sustainability Bond eachtion between companies and their stakeholders with the aim ofyear since 2015. The raised

encouraging financial markets to appreciate companies based

funds are allocated toward the$500 million in 2016€300 million in 2015€250 million in 2014

on their long-term growth potential.

creation of a sustainable society through DBJ Green Building Certification and the

DBJ Green Building Certification

Environmentally Rated Loan Program. DBJ has contributed to

Applying the expertise and networks

the development of the SRI bond market in various ways. In

accumulated over many years of real

January 2017, DBJ became an issuer member, the firstestate financing, DBJ inaugurated

Japanese firm with an issuer status, of the Green BondDBJ Green Building Certification in

Principles* and in March participated on a committee createdby the Ministry of the Environment to draw up the Green Bondfiscal 2011. Real estate that takes
environmental and societal considerations (green buildings) is comprehen-

Number of certified
properties: 379(As of March 31, 2017)

Guidelines, 2017. DBJ will continue to support the sustainablegrowth of this market by continuing to issue SRI bonds as well

sively evaluated for its environmental

as proactively engaging in the international and/or domestic

performance, disaster preparedness, and community consid-

initiatives.

erations, including engagement with various stakeholders. The* Green Bond Principles
The Green Bond Principles (GBP) are voluntary process guidelines that recommend transparency and disclosure and promote integrity in the development of
the Green Bond market by clarifying the approach for issuance of a Green
Bond. Members consist of the International Capital Market Association, investors, issuers, and underwriters across the globe. The GBP are updated annuallyand intended for broad use by the market. The official link is https://www.
icmagroup.org/Regulatory-Policy-and-Market-Practice/green-social-andsustainability-bonds/green-bond-principles-gbp/.

real estate is assessed and certified based on this evaluation
within the context of social and economic needs. Along withJapan Real Estate Institute, DBJ currently certifies four types ofproperties comprising office buildings, logistics centers, retailfacilities, and residences. Moreover, in 2014 DBJ became aninvestor member in the Global Real Estate Sustainability

Details about these initiatives are available on DBJ’s website.

Benchmark (GRESB),* a first in Japan, and was appointed to
GRESB’s Real Estate Advisory Board in 2016. Through its
Green Building Certification system, DBJ will promote sustainability and ESG investment in the real estate industry.
* GRESB is a benchmark for assessing the sustainability performance of realestate firms and asset managers. It was created by major pension funds in
Europe in 2009. GRESB’s Real Estate Advisory Board provides diverse information to GRESB management that is pertinent to strategy formulation andproduct development.

Integrated Report 201755

DBJ Group’s Strategy

Fiscal 2016 Topics

October

2016

Issued second DBJ Sustainability Bond
Held Invest in Japan 2030–2050 at annual conference ofYoung Global Leaders at World Economic Forum

April
Established the Kumamoto Recovery Office within the Kyushu
Branch to support the restoration and reconstruction ofregions affected by the Kumamoto earthquakes

December
Became signatory of Principles for
Responsible Investment

May
Former President Toru Hashimoto awarded the ADFIAP
Distinguished Person Award in the individual category of the
ADFIAP Awards 2016, which took place at the annual meetingof the Association of Development Financing Institutions in
Asia and the Pacific

Participated in Eco-Products 2016, one of the largest environmental exhibitions in Japan (16 years running)

Ceremony for Second Social Value andCapital Formation M&A Awards
Winner:Shizuoka Gas Co., Ltd.
Special mention: Sekishinkai

June
Held Fifth DBJ Women Entrepreneurs New Business Plan
Competition award ceremony

2017
January
Became an issuer member of the Green Bond Principles

July
Created Kumamoto Reconstruction Assistance Fund

AugustReleased survey results for 60th Capital Investment Planning
Survey (national and by region)

September
Appointed to Global Real Estate Sustainability Benchmark’s
Real Estate Advisory Board
Held “How Investment for the Future Is Changing theJapanese Economy” symposium to commemorate 60th anniversary of the DBJ Capital Investment Planning Survey

56

Integrated Report 2017

Received two awards as an exemplary financial institution that
contributes to regional revitalization from the Cabinet Office’s
Creation of Towns, Human Resources, and Employment
Secretariat• Support for PPP/PFI and public asset management• Creation of a collaboration framework for invigorating the
tourism industry in the Setouchi region

Section Three Corporate Governance58

Basic Position on
Corporate Governance

61

Messages from Outside Directors

62Internal Control System Basic Policy /Compliance

63

Client Protection Management
Basic Policy
Declaration on Personal Information
Protection
Policy for Managing Conflictsof Interest
Responses to Japan’s
Stewardship Code64

Directors, Audit & Supervisory
Board Members,
and Executive Officers

Integrated Report 201757

Corporate Governance

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

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

DBJ is working to enhance its unique governance system indeliberate and evaluate business results, including consistency

addition to usual management supervision as a company with

with the policy objectives of Special Investment Operations,a board of directors and company auditors (Audit & Supervisory

ensuring that appropriate competitive relations are maintained

Board) through a business model built upon features such aswith private financial institutions.

integrated investments and loans and proper execution of thepreceding objective in order to raise the value of tangible andDBJ’s Corporate Governance System

intangible management resources to be invested and to realize

A company with a board of
directors and company auditors(Audit & Supervisory Board)

Institutional design configuration

sustainable management that aims for both economic andNumber of directors

10Specifically, the 2015 revisions to the DBJ Act established

Of whom are outside directors

2

the creation of Special Investment Operations and obligatory

Monitoring Board, composed of outside experts, which func-

Number of Board of Directors’
meetings this fiscal year
Number of Audit & Supervisory
Board members
Of whom are outside Audit &Supervisory Board members
Number of Audit & Supervisory
Board meetings this fiscal year
Adoption of executive officer
systemtion as advisory bodies to the Board of Directors. These

Accounting auditorsocial value.

measures to be considered, requiring that DBJ conduct its
operations in a manner that does not obstruct appropriatecompetitive relations with other entities, in particular, applying
these requirements to the Advisory Board, made up of outside
experts and directors, and the Special Investment Operations

13
5
3
14
Yes
Deloitte Touche Tohmatsu Limited

bodies provide advice on DBJ’s overall management andOverview of DBJ’s Corporate Governance System
General Meeting of
Shareholders

Matters requiring authorization ofcompetent minister• Appointment and dismissal of representative
directors and Audit & Supervisory
Board members• Concurrent positions as directors• Amendments to Articles of Incorporation• Disposition of surplus funds• Merger, corporate split, and dissolution• Basic policy on business plans,
redemption plans, and fund procurement

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

Board of Directors

Accounting auditor

Compensation Committee
Personnel Evaluation
Committee

Reporting

Cooperation
ReportingInternal Audit
Department

Advisory Board

Executive Committee

AuditsSpecial Investment Operations
Monitoring Board

Decision-making bodies
Deliberative bodies

ALM & Risk
Management
Committee

Departments
Subsidiaries

58

Integrated Report 2017

General Risk
Management
Committee

Committee on
Investment and
Loan Decisions

New Operation
Screening
Committee

Advisory Panel on
Investments andLoans

Sustainability
Committee(new)Core Business
SystemRestructuring
Committee

AuditsAudit & Supervisory Board Members, Audit & Supervisory Board
The Audit & Supervisory Board comprises five members. The

Audit & Supervisory Board and Audit & Supervisory Board

Companies Act prescribes that a majority of Audit &members audit the execution of duties by directors, based on

Supervisory Board members be outside members (in DBJ’s

their audit policy and audit plans.

case, three of the five). DBJ offices contribute three members

Audit & Supervisory Board members attend Board of(two members proper to DBJ and one an outside member).

Directors’ and other important meetings and may query theAlso, DBJ has created the Audit & Supervisory Board Office,execution of business by directors, peruse documents, andwhich under the board’s direction, assists board members,

conduct branch audits.

including outside members, in performing their duties. The

Advisory Bodies to the Board of Directors
In pursuit of sustainability management and DBJ’s corporate

Advisory Board

objectives, the following committees have been established as

Since DBJ’s establishment as a joint-stock company inadvisory bodies to the Board of Directors for the purpose of

October 2008, the Advisory Board has been in place as an

maintaining transparency in management and to reflect theadvisory body to advise the Executive Committee, providing

knowledge of outside experts.

advice on overall management. Revisions in 2017 to the DBJ
Act stipulate for an indefinite period obligatory measures to beOperations Audit Committee

considered, in particular, requiring that DBJ conduct its opera-

The Board of Directors has established the Operations Audit

tions in a manner that would not obstruct appropriate com-Committee, delegating to this body the authority to deliberate

petitive relations with other entities. Accordingly, this board isimportant matters related to internal audits. This committee

positioned anew as an advisory body to the Board of

met two times during the fiscal year ended March 31, 2017.

Directors. As one of its roles, even more than before, theAdvisory Board is tasked with deliberating and evaluating

Compensation Committee

important affairs related to ensuring that appropriate competi-

The Compensation Committee, whose members include out-

tive relations are maintained with private financial institutions.

side directors, considers the type of executive compensation

This board convened twice during the fiscal year ended Marchstructure that befits DBJ from the standpoint of ensuring trans-

31, 2017. This board is composed of the following outside

parency and objectivity regarding compensation.

directors and experts in fields including manufacturing, infrastructure, regional communities, and finance.

Personnel Evaluation Committee
The Personnel Evaluation Committee, composed of outside
directors and other outside experts, evaluates personnel proposals on the selection of directors and Audit & Supervisory
Board members.

Outside Experts
Reiko Akiike, Senior Partner and Managing Director,
The Boston Consulting Group

Masayuki Oku, Honorary Advisor of
Sumitomo Mitsui Financial Group, Inc.

Kazuaki Kama, Executive Corporate Advisor, IHI Corporation
Katsunori Nakanishi, Chairman and CEO,The Shizuoka Bank Ltd.

Yoshizumi Nezu, President, Tobu Railway Co., Ltd.
Note: Sakie Fukushima-Tachibana, president of G&S Global Advisors Inc., left theAdvisory Committee on June 29, 2017, to be replaced by Reiko Akiike on
the same day.

Outside Directors
Akio Mimura, Senior Advisor, Honorary Chairman of
Nippon Steel & Sumitomo Metal Corporation

Kazuo Ueda, Professor and Head of Office for New Department
Planning, Kyoritsu Women’s University,
Faculty of International Studies

Integrated Report 201759

Corporate GovernanceSpecial Investment Operations Monitoring Board

entities’ private financial institution members. Each group met

One of the measures of the 2015 revisions to the DBJ Act was

twice in fiscal 2016, for a total of six meetings. Disputes andin regard to Special Investment Operations. The act stipulates

opinions raised in these meetings are reported to and deliber-

the establishment of a Special Investment Operations

ated by the Advisory Board and the Special Investment

Monitoring Board as an advisory body to the Board of

Operations Monitoring Board.

Directors. This monitoring board is tasked with deliberating
projects and evaluating their performance in terms of appropriateness against policy objectives and with emboldening pri-

Outside Experts
Masayuki Oku, Honorary Advisor of
Sumitomo Mitsui Financial Group, Inc.

vate-sector enterprises and complementing their operations
while maintaining appropriate competitive relations. This board,

Shin Takagi, Vice Chairman & Senior Executive Director ofJapanese Bankers Association

whose members include outside experts in fields such as manufacturing, infrastructure, regional communities, and finance,

Katsunori Nakanishi, Chairman and CEO,The Shizuoka Bank Ltd.

convened twice during the fiscal year ended March 31, 2017.
In order to examine whether appropriate competitive relations with other entities are being maintained, roundtable dis-Takashi Yamanouchi, Advisor, Mazda Motor Corporation
Keisuke Yokoo, Vice Chairman & President of Japan Association ofcussions are held regularly with the Japanese Bankers
Association, the Regional Banks Association of Japan, and the

Corporate Executives

Fumiaki Watari, Honorary Executive Consultant of JXTG Holdings, Inc.

Second Association of Regional Banks, including these

Executive Committee
The Board of Directors has vested in the Executive Committee decision-making authority regarding the execution of business.
Accordingly, the Executive Committee makes important management decisions. The committee met 36 times during the fiscal year
ended March 31, 2017.
Committees under the Executive Committee
Name

Role

ALM & Risk Management
Committee

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

General Risk Management
Committee

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

Committee on Investment
and Loan Decisions

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

New Operation Screening
Committee

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

Advisory Panel on
Investments and Loans

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

Sustainability Committee

This committee deliberates on items related to both economic and social value as well as dialogues
with stakeholders.

Core Business System
Restructuring Committee

This committee deliberates items related to policies for restructuring core business systems.

DBJ established the Sustainability Committee, which will oper-

Matters Requiring Authorization of Competent Ministerate from fiscal 2017 onward, as part of efforts to contribute to

The DBJ Act prescribes matters for which Minister of Financea sustainable society, in accordance with DBJ’s Basic Policy

authorization is required. Major items requiring such authoriza-

on Sustainability (please refer to page 12). This committee willtion are as follows:

approach important social issues from an ESG perspective• Appointment and dismissal of representative directors andand incorporate this attitude into business activities, including
investments and loans as well as asset management.

Audit & Supervisory Board members• Amendments to Articles of Incorporation• Disposition of surplus funds; Merger, corporate split,
and dissolution; Basic policy on business plans,
redemption plans, and fund procurement

60

Integrated Report 2017

Messages from Outside Directors

Akio Mimura

Outside Director
April
April

1963: Joined Fuji Iron & Steel Co., Ltd.
2000: Representative Director and Executive Vice President of
Nippon Steel Corporation
April
2003: Representative Director and President of Nippon SteelCorporation
April
2008: Representative Director and Chairman of Nippon SteelCorporation
October 2008: Director at DBJ (current position)
October 2012: Director, Member of the Board and Senior Advisor of
Nippon Steel& Sumitomo Metal CorporationJune
2013: Senior Advisor of Nippon Steel & Sumitomo Metal Corporation
November 2013: Senior Advisor, Honorary Chairman of Nippon Steel &Sumitomo Metal Corporation (current position)
Chairman of the Japan Chamber of Commerce & Industry(current position)
Chairman of the Tokyo Chamber of Commerce & Industry(current position)

Strengthening Corporate Governance in Pursuit of
DBJ’s Fourth Medium-Term Management Plan
I have served as an outside director for DBJ since it madeeffective for the goal of creating both economic and social

a new start as a joint-stock company in 2008. I have also

value from a third-party perspective. For fulfilling the DBJ’s

recently become a member of the Advisory Board, a part ofrole in this time of drastically changing economic and social

DBJ’s own corporate governance, tasked with incorporat-

environments, I believe that it is dispensable for the DBJ

ing the knowledge of outside experts into management.

management to adequately incorporate the knowledge of

The Advisory Board has played an important role of notoutside experts—who are also stakeholders in DBJ—in the

only evaluating whether appropriate competition withfields of manufacturing, infrastructure, regional

private financial institutions are maintained, but also check-

communities, and finance.

ing if the management and the governance system are

Kazuo Ueda

Outside Director
July
April
April
March
April
April
OctoberApril

1980: Assistant professor at the University of British Columbia,
School of Economics
1982: Assistant professor at Osaka University,
School of Economics
1989: Assistant professor at Tokyo University,
School of Economics
1993: Professor at Tokyo University, School of Economics
1998: Deliberative member of the Bank of Japan’s Policy Board
2005: Professor at Tokyo University, School of Economics
2008: Outside director at DBJ (current position)
2017: Professor and Head of Office for New Department Planning,
Kyoritsu Women’s University, Faculty of International
Studies (current position)
Director of Tokyo University’s Center for Advanced
Research in Finance (current position)

Strengthening Corporate Governance in Pursuit of
Sustainability Management
DBJ operates under the belief that to realize a modern,

DBJ undertakes said initiatives with an eye to continuous

sustainable society, corporations will have to establish

economic and social development over the medium to longhelpful stances and initiatives. Examples of such initiatives

term. To support these goals, DBJ has included a Monitoringthat DBJ has pursued to promote ESG activities from a

Board and an Advisory Board in its corporate governancefinancial perspective include building cutting-edge financial

system. As a member of the latter, I provide advice on overall

platforms, such as financial systems based on evaluations

management together with outside experts.

and certifications, and offering risk management via Special

I will do my part in pursuit of sustainable social develop-

Investment Operations conducted thanks to complemen-ment and the sustainability management that DBJ strives for.

tary relationships with private financial institutions.

Integrated Report 201761

Corporate GovernanceInternal Control System Basic Policy

Internal Audits

DBJ has established the following internal controls to ensure

DBJ has established the Internal Audit Department under theoperational soundness, with the Board of Audit, Ministry of

direct supervision of the president of DBJ and independent

Finance, Financial Services Agency, and other institutions also

from other operating departments. The department conducts

conducting examinations of overall management.

inspections to ensure the appropriateness and effectiveness ofinternal controls, including overall operational compliance andStatus of Internal Control Systemrisk management, and performs evaluations and recommends

In accordance with the Companies Act, the Board of Directors

improvements. The Operations Audit Committee deliberates

has established an internal control system under the Internaland decides audit plans, audit reports, and other important

Control System Basic Policy. Specifically, this system ismatters related to internal audits, and this information isdesigned to determine the status of legal compliance, risk

reported to the Board of Directors. As of the end of Junemanagement, and internal audits, as well as other items of

2017, 21 people belonged to the Internal Audit Department.

importance to management. The internal control system isdesigned to confirm applicable regulations and the status of
their implementation in various departments.

Accounting Audits
DBJ has in place an agreement whereby Deloitte Touche

The full text of the Internal Control System Basic Policy isalso available on the DBJ website.

Tohmatsu LLC conducts accounting audits as its
accounting auditor.

Three-Pronged Auditing Approach
DBJ’s Audit & Supervisory Board members, Internal Audit
Department, and accounting auditor periodically and as necessary exchange opinions and information, and communicate
in an effort to ensure effective and appropriate audits.

Compliance
DBJ recognizes compliance as one of its most important man-2) DBJ’s executives and employees are well aware that DBJ

agement issues. As basic policies to ensure that the execution

must conduct its businesses legally and appropriately and beof duties by directors and regular employees complies withresponsible for explaining its actions to the general public.

laws and regulations and the Articles of Incorporation, we haveformulated a corporate philosophy, a Basic Compliance Policy3) DBJ refuses all advances from anti-social forces and coop-and other compliance-related regulations. In addition to its

erates with police and other related institutions to prevent

basic regulations on compliance, DBJ has created and pro-any sort of relationship with such elements.

vided notice throughout the organization of a Compliance
Manual and a compliance program. We seek to thoroughlyCompliance System

implement the compliance activities outlined below.

DBJ has established the Legal and Compliance Department totake overall responsibility for planning, preparing, and adjusting

Compliance Principles

compliance activities. In addition, DBJ has established the

DBJ has formulated the compliance principles indicated below

General Risk Management Committee to reflect on legal com-

as part of its creation of compliance regulations.

pliance matters, determine the extent of compliance, anddeliberate on improvements to DBJ’s internal system. One

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

The objective of this internal reporting system is to swiftly

and recognize that illegal acts or improper business opera-

identify and resolve any legal violations. DBJ is also preparing

tions harm the reputation of DBJ and interfere significantly

Conflicts of Interest Management Regulations as a basic policy

with DBJ’s ability to fulfill its objectives under the new DBJ

in addition to systems to manage conflicts of interest.

Act. We also realize DBJ’s need to always conduct activities
appropriately and in compliance with the law.

62

specific initiative is the establishment of a compliance hotline.

social mission and responsibilities as a public-sector bankIntegrated Report 2017

Client Protection Management Basic Policy / Declaration on Personal Information Protection /Policy for Managing Conflicts of Interest
The establishment and maintenance of systems for client

We have incorporated a declaration on our policies into ourprotection management and the protection of personal infor-

Declaration on Personal Information Protection.

mation are vital because doing so protects the people who use

DBJ is a registered financial institution under the Financial

the financial institution’s systems and raises their level of con-Instruments and Exchange Act. In accordance with this act

venience. DBJ recognizes the extreme importance of suchand the Cabinet Office Ordinance on Financial Instruments

systems from the standpoint of operational soundness andBusiness, etc., DBJ has drawn up a policy introduced for theappropriateness. DBJ has formulated a Client Protection

management of conflicts of interest and provides an overview

Management Basic Policy to ensure strict compliance withof the publicly announced policy.

laws and regulations, protect the interests of its clients, andraise the level of client convenience. We have also createdinternal regulations based on this policy, which we employ inbriefings to raise in-house awareness.

The Client Protection Management Basic Policy,
Declaration on Personal Information Protection,
and Policy for Managing Conflicts of Interest can also
be found on the DBJ website.

Responses to Japan’s Stewardship CodeIn August 2014, DBJ stated its acceptance of the “Principles

environments, and their management teams’ intention and to

for Responsible Institutional Investors (Japan’s Stewardshipshare with investee enterprises in their long-term strategies.

Code)” (the “Code”). Under the Code, stewardship responsi-

After investing, we leverage our networks and strengths inbilities refers to the responsibilities to enhance the medium- to

information, industry research, and financing technologies tolong-term investment return for clients and beneficiaries by

provide total financing solutions that address the issues they

improving and fostering investee enterprises’ corporate value

face. Through dialogue with investee enterprises, we work toand sustainable growth through constructive “purposeful dia-realize their long-term development and maximize their corpo-

logue” (engagement), based on an in-depth understanding ofrate value over the long term.

the investee enterprises and their business environments.

DBJ believes that its investment operations have been

DBJ recognizes that, in addition to operational selection andconducted in close affinity with the spirit of the Code. In pro-focus and the realization of growth strategies, calls for corpo-

viding risk capital and knowledge, we consider the appropriate

rate governance are growing. Recognizing the importance offulfillment of stewardship responsibilities by institutional inves-the meaning of equity, in our equity investments we support

tors to be of service from the perspective of working withthe long-term advancement of the investee enterprises that are

diverse financial players to ensure the smooth formulation of

our clients, taking particular note of their social responsibilities.

financial and capital markets. Accordingly, we are in agreement

When making investments, we endeavor to gain an in-depthwith the meaning of the principles provided in the Code.

understanding of investee enterprises, their business

Integrated Report 201763

Corporate GovernanceDirectors, Audit & Supervisory Board Members, and Executive Officers(as of the End of June 2017)

Directors
President and CEO

Director and Managing Executive Officer

Masanori Yanagi

Satoshi Tomii

1974: Joined The Japan
Development Bank
2015: President and CEO of DBJ

In charge of Strategic Finance
Department Growth & Cross Border
Investment Department
1985: Joined The Japan
Development Bank
2015: Director and Managing Executive
Officer of DBJ

Deputy President

Director and Managing Executive Officer

Yasushi Kinoshita

Kenkichi Fukuda

1979: Joined the Ministry of Finance2015: Deputy President of DBJ

In charge of Credit Analysis
Department, Accounting Department,
Economic & Industrial Research
Department
1983: Joined The Japan
Development Bank
2016: Director and Managing Executive
Officer of DBJ

Deputy President

Director and Managing Executive Officer

Hajime Watanabe

Koji Narita

1981: Joined The Japan
Development Bank
2015: Deputy President of DBJ

In charge of Treasury Department,
Syndication & Credit Trading
Department, Sustainability Planningand Support Department
1987: Joined the Ministry of Finance2017: Director and Managing Executive
Officer of DBJ

Director and Managing Executive Officer

Outside Director

Shin Kikuchi

Akio Mimura

In charge of Corporate Planning &Coordination Department,
Information Resources Department,
General Affairs Department
1984: Joined The Japan
Development Bank
2015: Director and Managing Executive
Officer of DBJ

64

Integrated Report 2017

Senior Advisor, Honorary Chairmanof Nippon Steel & Sumitomo Metal
Corporation; Chairman of Tokyo
Chamber of Commerce and Industry;
Chairman of Japan Chamber ofCommerce and Industry
2008: Director at DBJ

Director and Managing Executive Officer

Outside Director

Hideo Oishi

Kazuo Ueda

In charge of Business Planningand Coordination Department,
Financial Institutions Department,International Strategy & Coordination
Department, Research Institute of
Capital Formation

Professor and Head of Office for
New Department Planning,
Kyoritsu Women’s University,
Faculty of International Studies;
Director of Tokyo University’s Center
for Advanced Research in Finance

1985: Joined The Japan
Development Bank
2015: Director and Managing Executive
Officer of DBJ

2008: Director at DBJ

Audit & Supervisory Board Members

Executive Officers (excluding those who are concurrently directors)

Audit & Supervisory Board Member

Managing Executive Officer

Executive Officer

Atsushi Kurashige

Ikuro Hirozane

Masafumi Aizawa

1986: Joined The Japan
Development Bank
2017: Audit & Supervisory Board
Member at DBJ

In charge of Corporate Finance
Department: Division 5

Managing Executive Officer

Executive Officer

Hisanobu Sekine

Takeshi Kiriyama

In charge of Corporate Finance
Department: Division 6,
Hokkaido Branch, Tohoku Branch,
Niigata BranchManaging Executive Officer
Audit & Supervisory Board Member

Mitsue Kurihara
1987: Joined The Japan
Development Bank
2015: Audit & Supervisory Board
Member at DBJ

In charge of Financial Institutions
Department

Takao Kaizu
In charge of Risk Management
Department, Legal Affairs &Compliance Department

Head of Growth & Cross Border
Investment Department

Executive Officer

Norifumi Sugimoto
Head of Corporate Planning &Coordination Department

Executive Officer

Hiroshi Shimizu
Managing Executive Officer

Makoto Anayama
In charge of Corporate Finance
Department: Divisions 1 and 2

Head of Business Planning &Coordination Department

Executive Officer

Ryusei Segawa
Managing Executive Officer
Outside Audit & Supervisory Board Member

Tatsuya Tsuboi
1978: Joined Sumitomo Trust andBanking Co., Ltd.
2009: Audit & Supervisory Board
Member of Sumitomo Trustand Banking
2013: President and CEO of Sumitomo
Mitsui Trust Research InstituteCo., Ltd.
2014: Audit & Supervisory Board
Member at DBJ

In charge of Regional Planning
Department, Structured Finance
Department, Hokuriku Branch,
Tokai Branch, Kyushu Branch,
Minami-Kyushu Branch

Makoto Ito
Advisor at Nagashima Ohno &Tsunematsu; Visiting Professor,
Nihon University Law School
2008: Audit & Supervisory Board
Member at DBJ

Executive Officer

Tsutomu Murakami
Head of Human Resources
Management Department

Managing Executive Officer

Executive Officer

Taketsugu Shinobe

Keisuke Takegahara

In charge of Corporate Finance
Department: Division 4

Managing Executive Officer
Outside Audit & Supervisory Board Member

In charge of Internal Audit

Seiji Jige

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

Yoshinao Ikeda
In charge of Kansai Branch,
Chugoku Branch, Shikoku BranchManaging Executive Officer

Masayuki Tsuda
In charge of Urban Development
Department, Real Estate Finance
Department, Corporate Finance
Department: Division 3

Outside Audit & Supervisory Board Member

Shinji Hatta
Professor of Graduate School ofProfessional Accountancy,
Aoyama Gakuin University
2008: Audit & Supervisory Board
Member at DBJ

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

Integrated Report 201765

Section Four Risk Management

66

Integrated Report 2017

67

Risk Management System

67

Comprehensive Risk Management

70

Business Continuity Initiatives

Risk Management System
DBJ conducts risk management from the perspective of

The ALM & Risk Management Committee and the Generalensuring management soundness. To ensure appropriate

Risk Management Committee deliberate on important mattersmanagement of individual risk categories, DBJ has developed

concerning risks and conduct regular monitoring, in line witha vital risk management system that specifies and evaluates

the basic policy related to comprehensive risk management

manageable risks and clarifies which department is respon-

approved by the Board of Directors.

sible for each type of risk. The Risk Management Department
oversees comprehensive risk management activities.

Asset/Liability and Risk Management System Overview

President

Executive
Committee

ALM & Risk Management
Committee

Risk
Management
Department

Credit Analysis
Department

Investment
and Loan
Departments/
Offices

Treasury
Department

Comprehensive Risk Management
The Risk Management Department assesses both compre-

categories at a determined level. Furthermore, the Corporate

hensive and individual risks. Based on risk guidelines that

Planning & Coordination Department has begun efforts toweigh Executive Committee business plans and the results ofmeasure risk–return by such means as risk-adjusted returnstress tests, the Risk Management Department controls theon capital.

amount of comprehensive risk and that of individual risk

1. Credit Risk Management
Credit risk refers to the risk of sustaining losses resulting fromfor self-assessment of credit quality based on the Financial

a decline in or loss of the value of assets due to deterioration

Services Agency’s Financial Inspection Manual. The resultsin the financial condition of the borrower. DBJ provides corpo-of self-assessments are subject to an audit by an auditing

rate loans and non-recourse loans, making credit risk acquisi-

corporation and are reported to management. Credit risk andtion a source for profits. As such, it represents a significant

amounts are monitored to confirm that they are within therisk category, with DBJ conducting credit management oflimits established for individual borrowers.

individual projects as well as bank-wide portfolio management,
accordingly.

The sales and credit analysis departments hold separate
roles in the screening and administering of credit for individual
projects, and each department keeps the operations of thei. Credit Administration of Individual Loans
When making an investment or loan, DBJ examines the entity’s

other in check.
The Committee on Investment and Loan Decisions meets

project viability and the project’s profitability from a fair andas needed to deliberate important issues concerning the man-

impartial standpoint. DBJ is not subject to the Banking Act oragement and operation of individual projects.

the Act on Emergency Measures for the Revitalization of the
Financial Functions (Act No. 132 of 1998), but carries out

These mutual checking functions serve to ensure the appropriateness of the finance operation and management system.

independent asset assessments in line with internal policies

Integrated Report 2017

67

Risk Management

Borrower Rating System

Asset Self-Assessment System

DBJ’s borrower rating system measures creditworthiness by

Asset self-assessments are used to define asset classifications

combining an evaluation point rating and a borrower categorythat will offset recoverability risk or the degree of risk of value

rating with the results quantifying a potential client’s credit

loss based on the borrower rating, the corresponding borrower

circumstances.

category, and the collateral or guarantee status. Such assess-

The evaluation point rating selects indicator and evaluation
categories that are common across all industries, scoring thements help DBJ establish timely and appropriate amortization
schedules and reserve levels.

creditworthiness of the potential borrower quantitatively andqualitatively. On the other hand, the borrower category rating
measures specific items related to the borrower, looking at theborrower’s realistic financial condition, cash flows, and debt
repayment history, generating a comprehensive assessmentof a borrower’s repayment capacity.
Borrower Rating Classifications
Borrower
RatingBorrower Category

Definition

Claims Classified under the
Financial Revitalization Act

Normal borrowers

1–8

Borrowers with favorable business conditions who have been confirmed to haveno particular problematic financial circumstances.

Borrowers requiringcaution

9–11

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

Substandard
borrowers

12

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

Substandard claims

Borrowers in dangerof bankruptcy

13

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

Doubtful claims

Effectively bankrupt
borrowers

14

Although not legally or formally in bankruptcy, these borrowers are experiencing
severe financial difficulties and are realistically falling into bankruptcy as their lackof potential for restructuring has been confirmed.

15

These borrowers are in bankruptcy, legally and formally. Specifically, these borrowers are in bankruptcy or liquidation, under corporate reorganization, bankruptcy proceedings or civil rehabilitation, or have had transactions suspended bya bill clearinghouse.

Bankrupt borrowers

Normal claims

Claims in bankruptcy,
reorganization claims,
and similar claims

ii. Portfolio Management

maximum loss that could be incurred at a certain rate of prob-

DBJ performs a comprehensive analysis of data based on

ability minus the EL. The EL and UL calculations are reported

borrower ratings and calculates the loan portfolio’s overall

to the ALM & Risk Management Committee.

exposure to credit risk. Credit risk exposure can be classified

Through such monitoring and the consideration of counter-as (1) expected loss (EL), the average loss expected during ameasures, DBJ is committed to controlling risk and devising

specific loan period; and (2) unexpected loss (UL), theeffective measures to improve risk return.

2. Investment Risk
Investment risk refers to the risk of sustaining losses resulting

In addition to investment analysis and management in linefrom a decline in or loss of the economic value of assets duewith credit risk management, investment decisions based on

to worsening financial conditions for entities receiving funds

target returns in accordance with investment category andand to changing market environments. DBJ’s investments

regular monitoring are utilized to manage individual invest-

include the provision of mezzanine and equity financing, par-ments. In terms of portfolio management, we conduct risk

ticularly to unlisted entities, such as corporations, funds, infra-

measurement that applies credit and market risk assessment

structure, and real estate. As a source of profits, investments

methods, with a focus on differences between investment

represent one of DBJ’s most significant risk categories. DBJ

categories and recovery methods.

makes investment decisions and manages individual investments as well as its bank-wide portfolio accordingly.

68

Integrated Report 2017

3. Market Risk
The primary focuses in terms of market risk management areinterest rate risk and financial liquidity risk. In regard to control-interest rate risk and exchange risk. DBJ classifies market risk

ling interest risk, a portion of the interest rate risk is covered

as passive risk pertaining to investment and loan activities andthrough interest rate swaps.

implements management in the manner detailed below. DBJ
does not have any trading-related risk because it does not

ii. Exchange Risk

engage in trading (specified transactions).

Exchange risk is the risk of loss due to volatility in exchange
rates, and this risk affects entities holding a net excess ofi. Interest Rate Risk

assets or liabilities denominated in foreign currencies. DBJ’s

Interest rate fluctuations can create mismatches on rates of

exchange risk derives from financing in foreign currencies

interest on assets and liabilities or on interest periods, creating

and issuing foreign currency bonds. However, DBJ uses

the risk of reduced profits or the risk of losses. Interest rate risk

exchange swaps and other instruments to limit this risk in

can reduce the economic value of DBJ’s assets or interest

terms of assets and liabilities denominated in foreign curren-

income.

cies at a net-base position.

Based on monitoring through multifaceted indexes, suchas value at risk (VaR) and interest rate sensitivity analyses

DBJ uses swap transactions to manage counterparty risk by(basis point value), as well as ALM policies established by thecontinuously monitoring the creditworthiness of all parties andExecutive Committee, DBJ conducts comprehensive manage-by setting a limit to financing for each counterparty. DBJ alsoment of current assets and liabilities to optimize net interest

conducts risk management through margin transfers by means

expenses and economic value by adequately controllingof a centralized exchange and mutual credit support annex.

4. Liquidity Risk
Liquidity risk is the risk of a mismatch occurring in the periods

relies on the stable procurement of long-term funds from thewhen funds are used and raised or of an unexpected outflow

Japanese government’s Fiscal Investment and Loan Programof funds, causing differences in the flow of funds (cash liquidity

and government-guaranteed bonds rather than on short-termrisk). Such situations make securing funds difficult and create

funds such as deposits. Contingency plans are established as

situations in which interest rates on borrowed funds are sub-appropriate to meet unexpected short-term funding require-stantially higher than usual rates. At other times, because ofments and cash flow shortfalls.

market complexities, entities in these circumstances may

Additionally, DBJ maintains daytime liquidity by using the

become unable to participate in market transactions, compel-

Bank of Japan’s real-time gross settlement system, whereby

ling them to conduct transactions under substantially lesssettlement is made instantly for each transaction. Every effort

favorable terms than otherwise would be the case. The risk

is made to ensure that settlement conditions are managedof losses for these reasons is known as market liquidity risk.

appropriately.

As its main methods of acquiring funds, in addition to issuing corporate bonds and taking out long-term loans, DBJ

In addition to credit risk, the ALM & Risk Management
Committee deliberates DBJ’s market risk and liquidity risk.

5. Operational Risk Management
DBJ defines operational risk as the risk of loss arising frompotential risks from materializing. The General Risk

internal processes, people or systems that are inappropriate orManagement Committee has been established to deliberate

non-functioning, or from external events. DBJ works to estab-

topics concerning operational risk management.

lish a risk management system to minimize risk and prevent

Integrated Report 2017

69

Risk Management

Within operational risk management, DBJ conducts adminis-

ii. System Risk Management

trative risk management and systems risk management as

System risk refers to the risk of loss due to a computer systemdescribed below.

breakdown or malfunction, system defects, or improper computer use. DBJ has implemented the following internal pro-i. Administrative Risk Management

cesses to optimize system risk management and properly

Administrative risk refers to the risk of sustaining losses result-manage risk with regard to systems risk. The System Risk

ing from employees neglecting to perform their duties correctlyManagement Division is responsible for managing DBJ’sor from accidents, fraud, and the like. To reduce or prevent

system risk centrally, based on its system risk managementadministrative risk, DBJ prepares manuals, performs checks onregulations. By determining security standards from a variety

administrative procedures, provides education and training, andof viewpoints—from information system planning and develop-

uses systems to reduce the burden of administrative duties.

ment to operation and use—the department extends the risk
management system bank-wide and addresses appropriate
system risk management operations.

Business Continuity Initiatives
DBJ prepares a business continuity plan (BCP) to protect the

When formulating policies to ensure the continuity andinterests of its stakeholders, including its clients, its share-

recovery of core operations, we took the approach of consid-

holder, and its executives and employees, as well as to fulfill its

ering responses to cases in which important managementsocial mission. The BCP aims to ensure the continuity andresources were damaged due to a large-scale disaster, affect-

rapid recovery of core operations in the event of emergencies,

ing head office (1) buildings and facilities, (2) executives andsuch as natural disasters (in particular, large-scale earth-employees, and (3) systems, instead of considering responses

quakes), influenza and other pandemics, system failures, andto individual events such as earthquakes and fires.

power outages.

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

Chain of Command and Delegation of Authority

We ensured advanced security levels at the main center and

To assure that decision-making concerning the continuity ofcreated a backup center to operate in the event that the maincore operations is prompt and certain, in the event that thecenter ceases to operate.

Disaster Response Committee is established, we have put inplace a chain of command and an alternative hierarchy byMultilayered Communication Procedures

which authority can be delegated.

We introduced a safety confirmation system to quickly determine the whereabouts and status of executives and employ-

Clarification of Initial Response and Procedures forees even at night and on holidays. In addition, we distributed

Continuing or Recovering Core Operations

satellite telephones to key locations and personnel to ensure

For individual business units, we have established in advance

multilayered communication procedures.

the procedures for the initial response and the continuation or
recovery of core operations so that relevant divisions can
respond quickly and with certainty on core operations evenwhen in a state of confusion.

Initiatives to Maintain or Improve BCP Viability
DBJ conducts various types of instruction and training of exec-

cycle, we revise the BCP to reflect training results and recent

utives and regular employees to maintain or improve the viabil-

information, and the Executive Committee reviews it regularly

ity of its BCP. Furthermore, employing a Plan-Do-Check-Act

and amends it as necessary.

70

Integrated Report 2017

Corporate Data

72 Timeline
73 Shareholder
Summary of Changes to the
DBJ Act after Conversion toa Joint-Stock Company

74 Organizational Structure
75 Initiatives Addressing ESG Issues
76 Column:
DBJ’s Connection to Sustainability

Integrated Report 201771

Corporate Data

Timeline

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

Month

Event

1951

April

The Japan Development Bank (JDB) established1952

JDB branches opened in Osaka (now the Kansai Branch), Sapporo (now the Hokkaido Branch),
Nagoya (now the Tokai Branch), and Fukuoka (now the Kyushu Branch)

1956

June

The Hokkaido Development Finance Public Corporation established

1957

April

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

1960

JDB branch opened in Takamatsu (now the Shikoku Branch)

1961
1962

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

1963

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

1964

July

1972

January

HTDFP representative office opened in Niigata (renamed Niigata Branch in July 1989)

JDB representative office opened in London

1985

June

The Japan Development Bank Law revised1) Investment function (pertaining to business in such areas as research and development,
urban development, and energy use stipulated by government ordinance) added
2) R&D fund investment function added

1987 September Low interest rate loan system funded partially by sale of NTT shares created by JDB and HTDFP1989

JDB representative offices opened in Oita, Matsuyama, Okayama, and Toyama
HTDFP representative offices opened in Hakodate and Aomori

1995 February

JDB loans to assist disaster recovery commenced

1997 September Bill entitled “Pertaining to Consolidation and Rationalization of Special-Purpose Companies, etc.” approvedby the Cabinet (decision dissolving JDB and HTDFP and consolidating them as a new bank approved)
1998 December JDB and HTDFP loans in response to changes in the financial environment commenced(March 31, 2001, sunset clause introduced)
1999

June
October

2002

May

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

2005 December Important Policy of Administrative Reform approved by the Cabinet
2006

2007

May

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

June

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

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

Development Bank of Japan Inc.
Year

2008

Month

October

Event

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

December DBJ Singapore Limited launched
2009

June

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

September Capital increased to ¥1,103,232 million
November DBJ Europe Limited launched
2010

March

Capital increased to ¥1,181,194 million

2011

May

The Development Bank of Japan Inc. Act partially amended based on establishment of the Act for Extraordinary
Expenditure and Assistance to Cope with the Great East Japan Earthquake (Act No. 40 of 2011)

December Capital increased to ¥1,187,364 million
2012

March

Capital increased to ¥1,187,788 million

June

Capital increased to ¥1,198,316 million

December Capital increased to ¥1,206,953 million
2014

June

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

2015

May

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

AugustCapital reduced by ¥206,529 million, and crisis response reserve increased by the same amount72

Integrated Report 2017

Shareholder
As of March 31, 2017
Name

Address

Number of shares held (thousands of shares)

Percentage of total equity (%)

Finance Minister

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

43,632100.00Total—

43,632100.00

Summary of Changes to the DBJ Act after Conversion to a Joint-Stock Company
On October 1, 2008, DBJ transitioned from a special public

response to large-scale disasters and economic crises, thecorporation to a joint-stock company. In preparation for full-amending act makes DBJ’s Crisis Response Operations oblig-

scale privatization following the disposal of all Japanese govern-

atory for an indefinite period. From the perspective of promot-

ment-owned shares, DBJ has continued working to enhance its

ing the provision of growth capital to revitalize regional

corporate value through integrated investment and loan ser-economies and increase the competitiveness of enterprises,

vices. These activities include providing long-term loans; equity,

the amending act calls for DBJ to accept a certain amount of

mezzanine financing and other types of risk capital; and M&A

capital from the Japanese government (industrial investment).

advisory services.

This investment is to be used for a new scheme, Special

On the other hand, shortly after DBJ’s conversion to a joint-

Investment Operations, to strengthen and develop the Fund forstock company, the global financial crisis and the Great East

Japanese Industrial Competitiveness. In addition, with regard

Japan Earthquake occurred. The Japanese government called

to the application of DBJ’s investment and loan functions

on DBJ to steadily mount large-scale Crisis Response

toward crisis response and the provision of growth capital,

Operations. Due to these crises, the Development Bank ofmeasures were introduced obliging the Japanese government

Japan Inc. Act (Act No. 85 of 2007: “DBJ Act”) was amended

to hold at least a certain percentage of DBJ’s shares.

twice, with DBJ accepting an additional increase in Japanese

As part of this structural revision, deliberations by thegovernment capital. Also, by the end of fiscal 2014, theJapanese government’s Study Panel Concerning the Promotion

Japanese government was to review DBJ’s organization,of Expanding Growth Funding covered such topics as DBJ’s

including its shareholdings, as stipulated by the revision.

proper implementation of Crisis Response Operations, theBased on the deliberations by the Japanese government’s

importance of initiatives for providing growth capital (equity andStudy Panel Concerning the Promotion of Expanding Growth

mezzanine financing) to address shortages in Japanese finan-

Funding, the Act for Partial Amendment of the Development

cial and capital markets, and an evaluation of DBJ’s initiatives

Bank of Japan Inc. Act, which was enacted on May 20, 2015,

following its conversion to a joint-stock company.

maintains the direction toward full-scale privatization. At theNote: For the full text of the DBJ Act, please refer to the data section

same time, in order to fully ensure the provision of funding in

Highlights of 2015 Revisions to the DBJ Act
1. Measures maintaining direction toward full-scale privatization
Full-scale privatization and disposal of all
BeforeJapanese government-held shares, targeting
revisionaround five to seven years from April 1, 2015

• No changes in the main provisions, including Article 1, which stipulates
DBJ’s objectives
Afterrevision • Disposal of shares as soon as practicable (considering its effect on achieving
DBJ’s objectives as well as on the market situation)

2. Measures ensuring appropriate implementation of Crisis Response Operations• Conducting Crisis Response Operations as
a designated financial institution
Beforerevision • Enabling Japanese government recapitalizationin crisis response by March 31, 2015

• Assuming responsibility for Crisis Response Operations for an indefinite period(at the same time reflecting this obligation in the Articles of Incorporation)Afterrevision • Extending for an indefinite period the scope of the Japanese government’s

recapitalization securing DBJ’s financial structure, with the Japanese government
having such obligations as holding more than one-third of DBJ’s shares

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

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

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

Integrated Report 201773

Corporate Data

Organizational Structure (as of April 1, 2017)

Business Planning & Coordination Department

General Meeting of
Shareholders

Innovation Promotion OfficeFinancial Institutions Department
Urban Development Department
International Strategy & Coordination Department

Audit & Supervisory
Board Members /Audit & Supervisory
Board

Corporate Finance Department, Division 1
Corporate Finance Department, Division 2

Aerospace Office

Corporate Finance Department, Division 3
Audit & Supervisory
Board Office

Corporate Finance Department, Division 4
Corporate Finance Department, Division 5
Corporate Finance Department, Division 6

Healthcare Industry Office

Hokkaido Branch
Board of Directors

Executive Committee

Tohoku Branch

Tohoku Recovery & Growth Support OfficeNiigata Branch
Hokuriku Branch
Tokai Branch

Advisory Board

Kansai Branch
Chugoku Branch
Shikoku BranchSpecial Investment
Operations
Monitoring Board

Kyushu Branch

Kumamoto Recovery Office

Minami-Kyushu Branch
Real Estate Finance Department

Chief
Investment
Officer

Strategic Finance Department

Regional Investment Promotion Office

Growth & Cross Border Investment Department
Structured Finance Department
Syndication & Credit Trading Department
Business Development Department

Chief
Research
Officer

Sustainability Planning & Support Department

Economic Research Office

Economic & Industrial Research Department

Industrial Research & Customer Solutions
Planning Office

Regional Planning Department
Research Institute of Capital Formation

Corporate Management & Accounting
Research OfficeSecretariat Office
Human Resources Management Department

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

Corporate Planning & Coordination Department
Risk Management Department

Public Relations OfficeSustainability Management OfficeInformation Resources Department

Overseas Representative Office:
New York

General Affairs Department
Accounting Department

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

Settlement & Accounting Operations Office

Credit Analysis Department
Legal Affairs & Compliance Department
Treasury Department

Operations Audit
Committee

Internal Audit Department

Group Companies
DBJ Group offers diverse services in accordance with client needs.

Overseas locations

DBJ Singapore Limited

Current subsidiary based in Singapore

DBJ Europe Limited

Current subsidiary based in London

DBJ Investment Consulting (Beijing) Co., Ltd. Current subsidiaries based in Beijing and Shanghai
DBJ Capital Co., Ltd.

Venture capital to support the establishment of start-ups that apply a hands-on approach to increasing corporate value

DBJ Investment Advisory Co., Ltd.

Company that performs advisory functions related to DBJ’s value-added equity investment

DBJ Securities Co., Ltd.

Subsidiary providing a securities function to complement DBJ Group’s investment and loan functions

DBJ Asset Management Co., Ltd.

Asset management company focused on real estate, private equity, etc.

Research
Consulting

Japan Economic Research Institute Inc.

Comprehensive think tank that primarily conducts surveys and provides consulting services

Value Management Institute, Inc.

Comprehensive think tank with analytical capabilities characterized by cutting-edge technical knowledge and original economic models

Real estate
management/
services, etc.

DBJ Real Estate Co., Ltd.

Company that takes on administrative functions for DBJ Group

Consist Inc.

Company that performs functions from consulting to development, maintenance, and operation of information systems

Investments and loans
Asset management

74

Integrated Report 2017

Initiatives Addressing ESG Issues
To bring about a sustainable society and achieve both economic

Vision 2030, we are conducting Plan-Do-Check-Act cycles inand social value, each and every employee at DBJ Group takes

accordance with targets for important economic issues thaton business activities with an awareness of environmental,

must be addressed in relation to the Fourth Medium-termsocial, and governance (ESG) issues. The following table pres-Management Plan.

ents DBJ initiatives from an ESG standpoint. In pursuit of

Issue

Association with the Sustainable
Development Goals

Main Initiative• Enhancements to the transportation network (pages 20–21)• Maintenance, renovation, and expansion of urban functions(pages 22–23)
Offering financial
services to help addresssocial issues• Support for transforming and growing industrial structures(pages 24–27)• Creation of a resilient society through the Enterprise Disaster
Resilience Rated Loan Program (pages 54–55)• Improvements in companywide productivity through the
Employees’ Health Management Rated Loan Program(pages 54–55)

Provision of risk capital

Development of
human resources with
an emphasis on diversity• Crisis Response Operations (pages 32–33)• Special Investment Operations (pages 30–31)• Development of human resources, improvements in motivation,and reforming of workstyles (pages 48–49)

Contribution to a
low-carbon society
through investments
and loans• Support for spreading the use of renewable energy(pages 18–19)

Consideration for theenvironment in all ofour business activities• Issue of DBJ Sustainability Bond (page 55)• Environmentally Rated Loan Program (pages 54–55)• DBJ Green Building Certification (page 55)• Promotion of environmental management (DBJ website)

Corporate governanceRisk management• Advisory Board (page 59)• Enhancements to comprehensive risk management(pages 67–70)• Special Investment Operations Monitoring Board (page 60)• Business continuity initiatives (page 70)

Integrated Report 201775

Corporate Data

CO LU MN

DBJ’s Connection to Sustainability
Sustainability Report
DBJ issued the Environmental Report for a Sustainable
Society in 2003 as a way to communicate with its diverse
stakeholders, a first for a state-run financial institution.
In 2004, the name was changed to the Sustainability
Report, showing DBJ’s strong desire to use finance asa tool to contribute to the creation of a sustainable society. From then on, DBJ has not only remained compliant
with laws and regulations while engaging in social contribution activities, it has conducted corporate social
responsibility through its business operations. Based on
its aspirations to realize a sustainable society, DBJ Grouphas united as one in the pursuit of business activities,
with its current corporate philosophy as the foundationof the value system they reflect, through both its executives and its regular employees.

Sustainability Research
DBJ’s Research Institute of Capital Formation has
been tackling sustainability from an academic
standpoint for many years. Dr. Osamu Shimomura,
who lent theoretical support to Japan’s rapid
growth following World War II and worked as theinstitute’s first director, developed the “zero growththeory” after the first oil crisis as an approach tomaintaining a sustainable economy under resource
constraints. Furthermore, the world-renowned theoretical economist Dr. Hirofumi Uzawa, who worked
as an advisor to the research institute for nearly 50
years, argued for an economy that allowed the natural environment and society to coexist in his 1974
work entitled “The Social Cost of Automobiles” andadvocated for social common capital, an indispensable element to creating a sustainable society as thebasis for a market economy.
The institute has inherited and developed similar lines of research with thecooperation of a number of scholars. For instance, it was responsible for theestablishment of a climate change research center in 1993. In this way, theResearch Institute of Capital Formation has led the way in research on sustainable economics and corporate management.

76

Integrated Report 2017

Disclosure
DBJ Group considers public relations and investor relations to be important functions for connecting management with each andevery stakeholder. With the goal of gaining the trust of all its stakeholders, DBJ Group strives for disclosure through PR and IR toaccurately convey information on its current status, operations policy, and more.

Information Disclosure Materials
DBJ Group 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
Integrated Report (Annual Report & CSR Report)
End-of-Period Financial Reports

3. Others
DBJ Quarterly Journal (newsletter)
DBJ News Digest (mail magazine; Japanese)
Websitehttp://www.dbj.jp/en/

Glossary (Japanese)

http://www.dbj.jp/glossary/

Integrated Report 201777

http://www.dbj.jp/en/

In consideration of the environment, this report is printed on
FSC-certified paper using vegetable oil ink.

Printed in Japan