Annual Report & CSR Report

http://www.dbj.jp/en
Development Bank of Japan Inc.
South Tower, Otemachi Financial City,
9-6, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8178, Japan2014

Applying Financial Expertiseto Design the Future

Development Bank of Japan Inc.

This report is printed on paper certified by the Forest Stewardship Council TM (FSC) as being made from managed forests.

Annual Report & CSR Report

2014

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Profile (As of July 1, 2014)

Established:

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

Legal basis:

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

President:

Toru Hashimoto

Number of employees:

1,189 (As of March 31, 2014)

Capital:¥1,206,953 million (100% owned by the Japanese government)

Address:

South Tower, Otemachi Financial City, 9-6, Otemachi 1-chome, Chiyoda-ku, Tokyo
100-8178, Japan

URL:

http://www.dbj.jp/en

Number of offices:

Branch offices, 10; representative offices, 8; overseas representative office, 1; andoverseas subsidiaries, 3

Subsidiaries andaffiliated companies: Consolidated subsidiaries, 21; non-consolidated subsidiaries, 29; and affiliated companies, 19(As of March 31, 2014)
Main business:

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

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

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







Total assets:¥16,247.9 billion (As of March 31, 2014)

Loans:¥13,963.0 billion (As of March 31, 2014)

Capital adequacy ratio:

15.23% (Basel 3, BIS standard) (As of March 31, 2014)

Issuer ratings:

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

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

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Published in September 2014 by the Public Relations & Corporate Social Responsibility Office,Corporate Planning & Coodination Department
URL: http://www.dbj.jp/en

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Contents

Message from the President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

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

4Corporate Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Logo and Corporate Color . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
DBJ’s Target Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Overview of DBJ’s Third Medium-term Management Plan . . . . . . . . . . . . . . . . . . . . . . . . 16
History of DBJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Privatizing DBJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Overview of Operations in Fiscal 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Operating Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Overview of Consolidated Operating Performance . . . . . . . . . . . . . . . . . . . . . . . . . 24
Overseas Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Group Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
DBJ’s Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Integrated Investment and Loan Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Investments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Consulting/Advisory Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Crisis Response Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Initiatives Related to the Great East Japan Earthquake . . . . . . . . . . . . . . . . . . . . . . 50
Addressing Energy Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Making Use of Information Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
CSR Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Implementing CSR Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
CSR through Investment, Loan and Other Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Environmental Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Business Continuity Plan (BCP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Fostering Human Resources and Creating a Comfortable Work Environment . . . . 94
Intellectual Asset Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Intellectual Asset Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Financial Platform That Enables DBJ to Meet the Needs of the Times . . . . . . . . . . 102
Management Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Client Protection Management System/Policy on Personal Information
Protection/Policy for Managing Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . 114
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Corporate Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

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

Annual Report & CSR Report 20141

Message from the President

2

Annual Report & CSR Report 2014

Issues Japan Faces and DBJ’s Role in
Resolving Them
These are challenging times for the Japanese economy. In

Using these three functions, DBJ will take part proactively
in four primary areas.
The first of these areas is “growth support.” To support

addition to intense global competition, the economy faces

corporate efforts toward restructuring and new businessenergy problems and, amid policy constraints, the need for

creation, mergers and acquisitions, and response to global-

infrastructure renewal. The country also needs to revitalize its

ization, including through the effective use of exploitablecommunities despite a decreasing population, and is expe-

operating resources, DBJ will offer mezzanine finance,

riencing a shortage of risk money and fund management

investments, consulting services and other “knowledge

opportunities.

products,” and provide support for growing fields such as

We see our role as supporting Japan’s sustained growth
as a global innovator. As a provider of both risk money
anchored in the real economy (capital funding such as

the environment, healthcare and opportunities for women in
the workplace.
The second area for response is “infrastructure andmezzanine financing and investment, long-term funding forenergy.” In addition to community development and theinfrastructure and other projects, and the stable provisionsafety of the nation’s transportation networks, DBJ will makeof funds that will drive the long-term growth of Japanese

use of PPP/PFI schemes to address the renewal of aging pub-companies) and original knowledge (knowledge services

lic infrastructure. We will also assist with reconstruction ofthat leverage “experiential knowledge”), DBJ works withthe energy supply system in response to the energy problems

diverse financial players to resolve Japan’s problems from aarising from the Great East Japan Earthquake.

long-term perspective, operating as a catalyst in creating a

The third area is “regional revitalization tailored tosmoothly functioning market. In these ways, we believe weregional needs.” As regional firms make up approximately

can accelerate initiatives that we have been pursuing under

half of DBJ’s clients, DBJ will work with regional financial

the theme of providing financing services that integrate

institutions, providing comprehensive support for companies

investment and loans.

whose activities help to revitalize their communities.
The final area is “strengthening the safety net.” In this

The Third Medium-term Management Plan

category, DBJ will utilize in times of crisis the information,

DBJ launched its Third Medium-term Management Plan

expertise and evaluation skills developed through day-to-day

during the fiscal year under review. We believe that manybusiness to mount crisis response operations and indepen-of the problems affecting the Japanese economy need todent initiatives swiftly and smoothly.

be addressed over the medium to long term. As a first step

By introducing such initiatives dynamically and flexibly,in this direction, the Third Medium-term Management Plan

we aim to fulfill the roles outlined above and support Japanoutlines our path for the next three years and defines threein achieving sustained growth.

functions through which DBJ will fulfill its role.
organizations.” By supplying high-risk capital throughMeeting Our Corporate Social
Responsibilities

long-term, large-volume, mezzanine finance, DBJ will appro-

We meet these responsibilities through business activities

priately share risks with other banks and other organizations,that realize societal values in a variety of ways, and via

helping to activate the flow of funds.

our financial services. Accordingly, our business endeavors

The first function is “risk-sharing with banks and otherThe second is “opportunities for fund management bythemselves form the basis of our CSR activities. We plan toinvestors.” Through this function, DBJ works to stimulatecontinue increasing our CSR efforts by increasing our sensitiv-

the financial markets by arranging excellent investment

ity to societal needs and raising the level of the solutions that

opportunities and sharing them with regional banks, pension

we provide.

funds and other entities.
The third function is “knowledge extending beyond theJuly 2014

financial sphere.” By leveraging its neutral networks andits expertise in industry research, DBJ will strive to create

Toru Hashimoto

new business concepts that employ high-quality knowledge

President & CEO

provided from a long-term perspective, and help to identify

Development Bank of Japan Inc.

and resolve social, regional, and customer issues.
Annual Report & CSR Report 20143

Toward the Future Prosperity of Japan

Initiatives in the Energy Sector
DBJ supports the growth of Japanese industry through its investments and loans for resource development, oil storage and otherinitiatives. Against the backdrop of global warming, we also support clients’ efforts to encourage and promote renewable energy
from solar power, wind, biomass and other sources.
As of March 31, 2014, our balance of loans in the electric
power, gas, heat and water sector totaled ¥3,141.5 billion,
accounting for 22.5% of total loans, by industry.

See pages

53, 75–76¥ 3.1
trillion

Balance of loans in the electric power, gas, heat andwater sector(As of March 31, 2014)

Energy4

Annual Report & CSR Report 2014

Transportation¥ 2.5
trillion

Initiatives in the Transportation Sector
DBJ is involved in a wide range of initiatives in the development
and improvement of transportation infrastructure (including
railroads, airports, airlines, buses and roads). We also take partin the formation of a wide range of projects from a long-term
perspective, to support collaboration among multiple companies
from a position of neutrality.
As of March 31, 2014, our balance of loans in the transportation infrastructure sector (to transportation providers) totaled¥2,597.7 billion, accounting for 18.6% of total loans, by industry.

Balance of loans in thetransportation infrastructure sector(As of March 31, 2014)

See page

77

Annual Report & CSR Report 20145

Toward the Future Prosperity of Japan

Initiatives in the Urban Development (Real Estate) Sector
DBJ’s long-term financing of real estate projects began in the
1960s. We have participated in Japan’s real estate securitization
market from its early beginnings and continue striving to invigorate this market by leveraging our accumulated expertise andnetworks. In fiscal 2011, we introduced the DBJ Green Building
Certification, which is designed to provide financial support forenvironmental and socially considerate initiatives.
As of March 31, 2014, our balance of loans in the real estate
sector totaled ¥1,606.5 billion, accounting for 11.7% of totalloans, by industry.

See pages

78–79

¥ 1.6
trillion

Balance of loans in
the real estate sector(As of March 31, 2014)

Real Estate
6

Annual Report & CSR Report 2014

Infrastructure¥ 7.8
trillion

Balance of loans in the electric
power, gas, heating, water,
telecommunications, transportand real estate sector(As of March 31, 2014)

Social Infrastructure Initiatives
Since the era of reconstruction following World War II, DBJ has
supported the development and advancement of Japan’s economy and society. For the development and further sophisticationof Japan’s economy and improvements to quality of life, DBJ
applies its experience and expertise to support the efforts of its
clients to build and improve the social infrastructure.
As of March 31, 2014, DBJ’s balance of loans in the social infrastructure (electric power, gas, heating, water, telecommunications, transport and real estate) totaled ¥7,852.3 billion.

See pages

80–81

Annual Report & CSR Report 20147

Toward the Future Prosperity of Japan
日本社会の豊かな未来づくりに貢献する金融サービス

Initiatives Targeting Crisis Response Operations
DBJ began crisis response operations as a designated financial
institution on October 1, 2008.
Since March 2011, when the Great East Japan Earthquake
struck, we have poured all our energy into initiatives to support
the restoration and reconstruction of the disaster-stricken region.
In addition to implementing crisis responses targeting clientsaffected directly and indirectly by the disaster, DBJ is making aproactive effort to support increases in the production of materials needed for restoration and reconstruction.
As of March 31, 2014, DBJ’s cumulative amount of loans ascrisis countermeasures related to the Great East Japan
Earthquake was ¥1,997.0 billion.

See pages

47–53, 86-87¥ 1.9
trillion

Cumulative amount of loans
as crisis countermeasuresrelated to the Great East
Japan Earthquake(As of March 31, 2014)

Resilience
8

Annual Report & CSR Report 2014

GrowthApprox.

¥85 billion
Initiatives to Promote CompetitivenessThe growth of emerging nations and economic globalization areintensifying competition, while the Japanese economy is maturing and its rate of expansion is slowing as the country’s birthrate falls and the population ages. Given these conditions, it isessential for Japanese companies to bolster their competitivenessthough new business creation, restructuring and acquisitions.
DBJ supports efforts to promote the competitiveness ofJapanese companies by providing risk money through mezzanine
finance and investments such as the Fund for Japanese Industrial
Competitiveness. The size of the fund is currently set at ¥150.0
billion; this figure may be expanded to around ¥300.0 billion,
depending on how investment and loans progress.
As of March 31, 2014, our cumulative investment and lending
amounted to approximately ¥85.0 billion.

Cumulative investment
and lending by the Fundfor Japanese Industrial
Competitiveness(As of March 31, 2014)

See pages

67–69
Annual Report & CSR Report 20149

Toward the Future Prosperity of Japan

Overseas Business Initiatives
Since its conversion to a joint-stock company in October 2008,
DBJ has embraced international business.
We are building an overseas risk management structure forinvestment and loans, preparing operating bases, training personnel and moving forward with core infrastructure. At the sametime, we are working to expand our network with trustworthy
partners and domestic and overseas financial institutions.
As of March 31, 2014, more than 40 countries were targeted
for investments and loans.

See pages

26, 70–71

More thanOverseas

10

Annual Report & CSR Report 2014

40 countries

Number of countries targeted
for investments and loans(As of March 31, 2014)

Healthcare¥ 69.2billionInitiatives in the Healthcare and Welfare Sectors
DBJ is engaged in maintaining and improving the quality, including access, cost and technological standards, of each area of
healthcare in Japan through finance, consulting and the dissemination of information. As well as providing consulting services that include the development of business plans to support
improvements in hospital management, DBJ studies and conducts research into a variety of medical issues.
As of March 31, 2014, our balance of loans in the healthcare
and welfare sector stood at ¥69.2 billion.

Balance of loans in thehealthcare and welfare sector(As of March 31, 2014)

See pages

72, 74

Annual Report & CSR Report 201411

Toward the Future Prosperity of Japan
日本社会の豊かな未来づくりに貢献する金融サービス

Initiatives in the Environmental Business Sector
See pages

73, 88–91¥ 692.0

Beginning with antipollution measures implemented in the late1960s and early 1970s, DBJ has provided more than ¥3 trillion in
investments and loans for environmental projects over the past
40 years.
In fiscal 2004, DBJ began employing environmental ratings in
its financing based on knowledge we have cultivated.
As of March 31, 2014, we had provided such financing to morethan 417 companies, with the cumulative total amounting to¥692.0 billion.

billionCumulative amount of
DBJ Environmentally Rated
Loan Program(As of March 31, 2014)

Environment
12

Annual Report & CSR Report 2014

Network

101

institutions
Cumulative number of alliedfinancial institutions(As of March 31, 2014)

See pages

82–85

Community Revitalization Initiatives
DBJ provides optimal solutions from a long-term perspective thatare designed to realize a prosperous lifestyle. To this end, we stimulate regional economies, build local infrastructures and constructwide-ranging networks as we strive to tackle the variety of issues
facing the regions. Furthermore, DBJ maintains close relationships
with regional financial institutions, which have excellent insights
into the companies that operate in their regions. We have createda regional banking M&A network that links regional financial
institutions with information on corporate M&A activities, thereby
enhancing trust-based relationships and helping to achieve community revitalization.
As of March 31, 2014, a cumulative total of 101 financial institutions had entered into business alliances with DBJ.
Annual Report & CSR Report 201413

Corporate Philosophy

Corporate Philosophy

Applying financial expertise
to design the future

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

Commitment to Stakeholders

Action Guidelines• Commitment to Clients, Society,
Investors and Employees• Customers First• Professional• Global & Local• Speed & Teamwork

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

Networks

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

Action Guidelines

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

n Commitment to Society ll business will be based on harmony among the threeA
factors of society, the environment and the economy inorder to contribute to a sustainable, affluent society.

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

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

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

n Professional	With discernment and creative skill, DBJ will be a uniquefinancial platform providing integrated investment andloans both in Japan and abroad.

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

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

Core Competencies

14

Annual Report & CSR Report 2014

Intention

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

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

Networks

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

About DBJ

Logo and Corporate Color

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

Each Color Represents Two Aspects of DBJ
Corporate Values:

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

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

DBJ’s Target Business Model

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

Investment

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

Provision of mezzanine andequity financing

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

Annual Report & CSR Report 201415

Overview of DBJ’s Third Medium-term Management Plan (Announced May 16, 2014)

DBJ has formulated the Third Medium-term Management

to long-term perspective, and initiatives put in place toPlan for the fiscal years from April 1, 2014, to March

resolve them. The Third Medium-term Management Plan

31, 2017. We believe that many of the issues facing therepresents a first step in this direction, charting DBJ’s course

Japanese economy need to be addressed from a medium-for the next three years.

Challenges for the Japanese economy
Issues in the macroeconomy
OO

Declining global competitivenessO

Decline in economic growth rateO

Globalization of the economy

O

Aging infrastructure

O

Issues for firms (“semi-macroeconomic”)

Contracting, aging population; fallingbirthrateO

OO

Decline in regional vitality

O

Earthquake reconstruction; response tonatural disasters
Global spread of crisesO

Creation of strategic markets

O

Innovation and technological development

O

Issues for financial and capital markets

Energy problems arising fromthe Great East Japan EarthquakeO

Short supply of risk money

O

Shortage of fund management opportunities

Elimination of excessive competition in similar
goods and services

Fostering crisis-resistance in industry, thegovernment, and the population

OthersIdentification of issues(Survey of Capital Investment, etc.)
DBJ actions

Role of DBJ

A neutral source of industrial finance

Growth support●●●

Infrastructure & energy

Promotion ofcompetitiveness●Support for growing
fields such as theenvironment,
healthcare, women’s
participation in theworkplace●●

Renewal & strengtheningof infrastructure

Regional revitalization tailored
to regional needs●

Stronger, moredisaster-resilienttransportation networks
and other infrastructure●

Reconstruction of theenergy supply system●

Response to globalization

Growth support(promotion of
innovation; discovery ofcorporate value in thevalue chain)

Risk-sharing with banks
and other organizations●

Risk-sharing finance→ Effective use ofstagnant funds

Infrastructure-building
through PPP/PFI
Support for community
development initiatives

Strengthening the safety net
Provision of necessary funds for crisis (natural disaster or financial markets disruption, etc.)
Use of analytical skills developed during normal times● Coordination with government●

Opportunities for fundmanagement byinvestors●

Providing anchored risk money and knowledge(intellectual services) from long-term
perspective

O

Specialized financial functions: Long-term perspective, large accounts, integrated investments and loans

O

Catalytic function: Platform for new value creation based on neutrality●→ Creation of newmoney flow

Knowledge extending
beyond the financial
sphere●

16

O

Customer baseOIntegrated application of managerial resources (neutrality, analytical and research capacity, R&D skills, networks)

O

Wealth of experience O Capital

Annual Report & CSR Report 2014

Market-stimulating
finance

Knowledge bank

→ New value creation

About DBJ

DBJ has defined three functions for fulfilling its roles. By pursuing proactive initiatives in four primary areas in line with thesefunctions, DBJ will work toward enhancing Japan’s sustainable growth.

Three Functions to Leverage(1) Risk-sharing finance• DBJ will promote the appropriate sharing of risk through many of the approaches it has pursued in the past, by
supplying high-risk capital through long-term, large-volume, mezzanine finance and in collaboration with general
financial institutions, companies and other entities, as well as through other forms of cofinancing and coinvestment.
<Case Studies> See pages 67–68, 72, 75, 77, 81–82, 85–87.

(2) Market-stimulating finance• DBJ arranges excellent opportunities for managing this capital through means including syndicated loans andasset management. Working with regional banks, pension funds and other entities, DBJ shares fund management
opportunities with them and helps stimulate the financial market.
<Case Studies> See pages 70–71, 73, 76–78, 84.

(3) Knowledge bank
• Utilizing not only high-quality knowledge* provided from a long-term perspective but also its neutral networks andindustrial research skills, DBJ will work on creating new business concepts.
* Knowledge services that leverage structured “experiential knowledge.”<Case Studies> See pages 69, 72–74, 78–81, 84, 86.

Four Primary Areas(1) Growth support• To strengthen Japan’s competitiveness in the global market, DBJ will provide support for the effective use of exploitable
operating resources, business creation, corporate restructuring, mergers and acquisitions or the challenges ofglobalization.
• DBJ will also support growth fields that will play key roles in Japan’s development as a sustainable society, such asenvironmental business, healthcare and opportunities for women.
<Case Studies> See pages 67–74.

(2) Infrastructure & energy• In addition to the safety of the nation’s transportation networks and community development, initiatives will concentrateon the renewal of aging public infrastructure.
• The Great East Japan Earthquake left Japan with serious energy issues. DBJ will address this problem by providing
comprehensive support for the restructuring of the energy system.
<Case Studies> See pages 75–81.

(3) Regional revitalization tailored to regional needs• Regional firms make up approximately half of DBJ’s clients. To ensure that regional revitalization is both sustainable andsuited to regional conditions, DBJ works with regional clients and banks in supporting innovative business development,
community-building, infrastructure renewal and other initiatives by which firms create vigorous and healthy
communities.
<Case Studies> See pages 82–85.

(4) Strengthening the safety net• DBJ will respond quickly and effectively to crises, whether natural or financial. It will conduct both governmentmandated crisis response operations and its independent initiatives based on information, expertise and evaluation skills
developed through day-to-day business.
<Case Studies> See pages 86–87.

Annual Report & CSR Report 201417

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

1951–1955
Reconstruction and independence of the economy
In 1951, the Japan Development Bank was established and commenced
accommodation loans to facilitate the development of the power
supply, which forms the basis of the economy and industry, and therationalization, modernization and cultivation of coal, steel, marinetransportation and other major industries.

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

1956–1965
High-growth infrastructure development

Rapid growth

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

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

1966–1971
Development of international competitiveness and social
development loans
Aiming to hone international competitiveness in accordance with thetransition to an open economic system, the Japan Development Bank
focused on support for industrial system improvements and independent
technological development.
It also emphasized social development through regional development,
urban redevelopment, logistics modernization, pollution prevention andother measures in a bid to relieve the problems of high-level growth.

Stable growth
Economic bubble

18

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

1972–1984
Improvements to quality of life and stable supply of energy
As corrections to the imbalance of economic growth and standards ofliving, the Japan Development Bank began to focus on antipollution
measures, regional and urban development and other social elements
in addition to industrial development. Against the backdrop of thefirst oil crisis, it provided investment and loans for energy alternatives
to fossil fuels, as well as efforts to conserve energy, to ensure stableenergy supplies. It also supported efforts to develop land into large-scalecommercial sites.

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

1985–1995
Development of lifestyle and social infrastructure and a smoothindustrial transformation
Pressing needs arose for increased domestic demand and an industrial
structural shift, against a background of aggravating trade friction withother countries. The Japan Development Bank focused on support forsocial capital improvement, creative technological development, an
industrial transformation and other issues. In the 1990s, it stressed environmental and energy measures and regional economic stimulation with theaim of making Japan a lifestyle superpower.

Annual Report & CSR Report 2014

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

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

1996–2000
Post-bubble

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

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

2001–2007
Financial solutions that support communities, the environment
and technology

Structural reform

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

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

2008 onward
Development Bank of Japan Inc. established
Development Bank of Japan Inc. was established on October 1, 2008, as a
special stock company by means of conversion to a joint-stock company.
As a neutral source of industrial finance, long-term funds and anchoredrisk money provided through integrated investments and loans, DBJ
addresses the various issues that clients face.

V-Lease Corporation

The Lehman shock / The Great East Japan Earthquake

Global financial crisis precipitated by the Lehman shock
The Lehman shock in the autumn of 2008 precipitated a global financial
crisis. As this situation impaired the functioning of the bond markets,
corporate cashflow worsened. DBJ responded promptly with financial crisis
response operations. Furthermore, in response to falling functionality in themarket for commercial paper DBJ commenced purchases of commercial
paper in January 2009 as part of its financial crisis response operations.

By applying the expertise it has cultivated todate, DBJ entered the business of operatingleases for aircraft engines, of which core parts
are produced by Japanese companies involved
in heavy industry. Through this business, we
aim to promote the further development of theJapanese airline industry.

Disaster and crisis response to the Great East Japan Earthquake
As a disaster and crisis response to the Great East Japan Earthquake, which
struck on March 11, 2011, DBJ worked with other financial institutions toprovide appropriate financing, particularly to electric power companies.
Through the Great East Japan Earthquake Reconstruction Fund, establishedjointly with banks in the disaster-stricken region, DBJ is providing anchoredrisk money through such methods as subordinated loans and preferredshares.

Joban Kosan, Ltd.: Spa Resort Hawaiians
By providing anchored risk money through theGreat East Japan Earthquake Reconstruction
Fund, DBJ supports restoration andreconstruction initiatives by stricken companies.

Annual Report & CSR Report 201419

Privatizing DBJ

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

establishment, took over all assets of the Development

October 1, 2008, under the terms of the Development

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

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

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

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

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

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

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

the Appendix to the New DBJ Act.

Highlights of the New DBJ Act
Investment and Loans

Predecessor

New DBJ

Loans

Yes

Yes

Equityinvestments

Yes

Yes

Debt guarantees

Yes

Yes

Funds transfer,money exchange

No

No

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

Bond issuanceYes(including bankdebenture bonds)

Transitional Measures

Borrowings

Fiscal Loan FundThe object of the New DBJ Act is to maintain thefoundations of the investment and loan functions of longterm business funds of the Development Bank of Japanby conducting business activities utilizing the methodsof integrated investment and loan services and othersophisticated financial methodologies with the goal of
realizing full-scale privatization.

Fund-raising

In terms of fund-raising, DBJ depends largely on borrowing
from the government and government-guaranteed bonds.
To facilitate a smooth transition toward independent fundraising following full privatization, measures have beenenacted to allow DBJ to issue government-guaranteedbonds and borrow from the Fiscal Loan Fund. Upon theestablishment of the new DBJ, the act provided for longterm borrowing from the private sector.

Yes

Fiscal Loan Fund +Private-sector
borrowings

Yes
Deposits

No(Deposits covered by
the deposit insurance
system shall not be
accepted.)

Amendment to the New DBJ Act (June 2009)
Since its establishment, DBJ has been engaged in crisis
response operations as a designated financial institution.

promulgated and went into effect on July 3, 2009.
Under the New DBJ Act, DBJ was to have achieved full

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

privatization within five to seven years after its establish-

ment capital contribution and enable DBJ to introduce more

ment. The act’s amendment allowed government invest-

broad-ranging initiatives in response to the global financial

ment through March 31, 2012, and extended the target

and economic crisis that commenced in autumn of 2008, thedate for full privatization to five to seven years after April

Act for Partial Amendment of the Development Bank of Japan

1, 2012. By the end of fiscal 2011, the government was toInc. Act (“amendment to the New DBJ Act”) was passed into

have reviewed DBJ’s organization, and the ways the govern-

law by the Japanese Diet on June 26, 2009, and the act wasment held its stake.

Note: Please refer to pages 124–130 for details of the New DBJ Act, the amendment to the New DBJ Act and the Act for Extraordinary
Expenditure and Assistance to Cope with the Great East Japan Earthquake.

20

Annual Report & CSR Report 2014

About DBJ

Act for Extraordinary Expenditure and Assistance to Cope with theGreat East Japan Earthquake (May 2011)
On May 2, 2011, in response to the damage caused by theextended by three years (to March 31, 2015) the period forGreat East Japan Earthquake, the Act for Extraordinary

government capital contribution in order to facilitate DBJ’s

Expenditure and Assistance to Cope with Great East Japan

implementation of crisis response operations. Furthermore,

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

the target date has been extended to five to seven years

Expenditure), which included the partial amendment andfrom April 1, 2015. The government is to review of DBJ’s

the exception to New DBJ Act, was passed into law by theorganization, which shall include the way the government isJapanese Diet.

to hold its stake, by the end of fiscal 2014. The government

The amendment and the exception to the New DBJ Act

shall continue to hold its shares until then.

in Accordance with the Act for Extraordinary Expenditure

The Amendment and the Exception to the New DBJ Act in Accordance with the Act for
Extraordinary Expenditure
The Amendment of the Development Bank of Japan Inc. Act (based on establishment of the Act for
Extraordinary Expenditure and Assistance to Cope with the Great East Japan Earthquake) was passed at
an Upper House plenary session of the ongoing 177th ordinary session of the Diet.
The act was revised to facilitate implementation of DBJ’s crisis response operations with regard to the damage
resulting from the Great East Japan Earthquake. The main thrust of the amendments is as follows.
To strengthen DBJ’s financial base in order to facilitate a smooth response to crisis response operations, theperiod during which the government may make additional capital contributions to DBJ has been extended
by three years, until March 31, 2015. Furthermore, the period for requiring the redemption of delivery bonds
has similarly been extended by three years, to June 30, 2015.
In addition to extending the period for repayment of capital contribution and redemption of delivery bonds,
the act extends the disposition period for government-held shares in DBJ. Whereas existing provisions
stipulated a target of “approximately five to seven years after April 1, 2012,” the revised act states that the
government must dispose of all of its shares in DBJ by ”approximately five to seven years after April 2015.”

In view of a certain level of government involvement in DBJ, such as the government holding in excess of
one-third of its outstanding shares at any given point, to ensure the proper implementation of crisis response
operations, its organizational structure, including crisis response operations and the future of governmentowned shares, are to be reviewed and necessary measures are to be taken. The target deadline for such
reviewing and measurement was revised to the end of fiscal 2014.

Amendments to the New DBJ Act
FY2006

FY2007

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

Preparation Period

Transition Period(Government-affiliatedfinancial institution)

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

October 2008
Privatization(conversion toa joint-stockcompany)

June 2009
May 2011
Establishment of Amendment to
the Act for
the New DBJ Act
Partialin Accordance
Amendment of with the Act for
the New DBJ Act Extraordinary
Expenditure

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

Shareholder

100% government

100% government

Company form

Government-affiliated financial institution(special public corporation)

Joint-stock company (special stock company)

Business

Based on former DBJ Act

Based on New DBJ Act

Fund-raising

Government-guaranteed bonds, fiscal loans,independent funding

Independent funding, government-guaranteedbonds and FILP agency bonds* Owing to the Revised New DBJ Act
in Accordance with the Act for
Extraordinary Expenditure, thedisposition of DBJ shares wasrescheduled to within approximately
five to seven years after April 2015.
Under the provisions of the revisedact, the government shall review its
organizational structure and otheraspects of DBJ by the end of FY2014.
Based on the review, the government
shall take necessary measure in viewof a certain level of government
involvement in DBJ, such as thegovernment holding in excess of
one-third of its outstanding shares at
any given point.
The government shall not disposeof its shares in DBJ until thenecessary measure described above
have been taken.

Annual Report & CSR Report 201421

Overview of Operations in Fiscal 2013

Operating Results
Financial and Economic Environment

Japan determined monetary easing measures and then ris-

During fiscal 2013, the global economy experienced a mild

ing sharply to more than 1% at one point before gradually

recovery. Although progress was gradual, in the United

returning to a lower level and remaining in the neighbor-States employment improved and personal consumption

hood of 0.6% during the second half of the fiscal year.

rose, leading to ongoing economic recovery. Against thisImpacting currency exchange rates, in Japan the central

backdrop, the U.S. Federal Open Market Committee beganbank continued to pursue both quantitative and qualitative

to scale back on its third round of large-scale quantitativeeasing, while the United States began to scale back its leveleasing (QE III).

of QE III. The growing disparity between Japanese and U.S.

In China, structural reforms are gradually progressing.

interest rates caused the yen to remain low against the dol-Although the rate of growth leveled off, the economy

lar. On March 31, 2014, the yen was trading above ¥102

maintained the Chinese government’s target annual rate ofagainst the U.S. dollar.

growth, at 7.5%.
In Europe, the government debt crisis abated and, as thepace of financial tightening eased somewhat, the region
showed a slight economic upturn.
In Japan, the impact of high share prices and improved

On March 31, 2014, the yen was trading at around ¥141
against the euro, as the euro rose due to the abatement of
the European debt crisis.
The Nikkei stock average, in the ¥12,300 range on
March 31, 2013, has risen to the ¥14,800 range as of

economic sentiment, combined with a spike in demand

March 31, 2014, as economic recovery and ongoing yen

in the second half of the fiscal year ahead of the April 1,

depreciation caused corporate earnings to improve.

2014, consumption tax hike, caused consumption to rise.

Looking at commodity prices, gasoline prices rose, elec-

Furthermore, public-sector spending continued to increase,

tricity rates were increased, and yen depreciation drove up

owing to earthquake reconstruction and measures tothe price of imports. As a result, consumer prices (excluding

address the issue of aging infrastructure, and capital expen-

perishable goods) turned upward year on year from June

diture rose, prompting economic recovery.

2013, reaching a year-on-year growth rate of more than

However, export growth was sluggish, and the halting

1% in the second half of the fiscal year.

of the country’s nuclear reactors necessitated greater fossil
fuel purchases. These factors, plus the upturn in domestic

Progress and Results of DBJ Group Operations

demand, caused imports to rise. Thus, Japan’s substantially

Review of the Year Ended March 31, 2014

negative balance of payments continued.

Since its establishment on October 1, 2008, the core of

In the corporate sector, the recovery in domestic

DBJ’s business has remained the same as that conducted bydemand encouraged an uptick in production, and in foreign

its predecessor. As a highly specialized financial institution,exchange markets the yen stabilized at a relatively low level,

we have sought to resolve clients’ issues by providing inte-

leading to substantial increases in corporate earnings, cen-grated investment and loan services.

tered on manufacturers. The slow rise in exports resulted

Below is an overview of these activities during the fis-in sluggish capital investment by manufacturers, but capital

cal year ended March 31, 2014. The figures provided forinvestment by the non-manufacturing sector grew firmly.

the loans, investment and consulting/advisory services

For households, the employment situation continued

described below are on a non-consolidated basis.

to improve, marked by a rise in the number of people
employed and a decrease in unemployment. Also, stockLoansprices and asset prices rose. These conditions, plus theWe provided senior loans through traditional corporate

demand spike ahead of the consumption tax increaseloans, non-recourse loans and other types of structured

pushed up consumption and housing investment.

financing as well as a variety of other loans that employ

On the financial front, in April 2013 the Bank of Japanadvanced financial methods. During the year ended Marchembarked on a campaign of monetary easing, centered on

31, 2014, we provided ¥2,805.1 billion in loans, including

massive purchases of Japanese government bonds (JGBs).

loans for crisis response operations.

Consequently, the fund-raising environment remained generally accommodating.
Long-term interest rates fluctuated substantially, falling to a historic low of 0.315% shortly after the Bank of22

Annual Report & CSR Report 2014

For details regarding business loans in response to thefinancial crisis, please refer to the section on page 48 entitled “Results of Crisis Response Operations.”About DBJ

Investment

regional communities and assign advisors to support these

We work to resolve client issues involving business expan-

activities. During the year, investment and loan commissions

sion and support strategies and the formation of financial

and fees from M&A and other advisory services amounted

infrastructure. We achieve these goals by supporting theto ¥12.3 billion.

creation of funds, as well as mezzanine, equity and otherfinancing methods, providing appropriate financing based

Subsidiaries

on a long-term perspective. Above all, in recent years we

In April 2013, the DBJ Group acquired additional shares inhave taken the approach of temporarily acquiring corporate

Value Management Institute, Inc., a business alliance part-shares and promoting measures to increase their value.

ner, converting the company to a wholly owned subsidiary.

Owing to these activities, ¥138.2 billion was allocated toBy making the company a subsidiary, the DBJ Groupinvesting activities during the year.

expects to augment its research and consulting functions
that target both the private and public sectors, helping toConsulting/Advisory Services
Consulting and advisory services utilize the networks cre-provide solutions that will resolve the issues customers face.
Two consolidated subsidiaries underwent corporate liqui-

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

dations during the year, New Business Investment Co., Ltd.,clients of all sizes grow more competitive in a host of indus-

in September 2013 and DBJ Credit Line, Ltd., in March 2014,

tries. We provide consulting on projects that help invigorate

and accordingly ceased to be consolidated subsidiaries.

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

For the Year Ended
March 31, 2013

(Billions of yen)

For the Year Ended
March 31, 2014

Loan and investment balance

2,652.4

2,943.3

Loans

2,524.5

2,805.1

Investment*2

127.8

138.2

Funds raised

2,652.4

2,943.3

895.1

510.7

Of which, FILP agency bonds

600.0

300.0

Of which, government-guaranteed bonds (domestic)

160.0

110.0

Of which, government-guaranteed bonds (overseas)*4

135.1

100.7

Corporate bonds (FILP bonds)

386.6

372.0

Long-term debt

868.3

753.1

Recovery, etc.

502.2

1,307.5*1

Fiscal Investment and Loans
*3

*4, 5

*6

Notes: 1. Figures, including those for corporate bonds, are on a management accounting basis.
2. Figures, including those for securities, money held in trust and other assets (funds), are on a management accounting basis.
3. This figure includes industrial investment and borrowings (special accounting for fiscal investment and loans).
4. Of government-guaranteed bonds and corporate bonds denominated in foreign currencies, appropriated government-guaranteed bonds and corporate bonds areconverted to yen at market rates according to the conditions at the time of settlement.
5. The figure does not include short-term corporate bonds.
6. Long-term debt borrowed from Japan Finance Corporation in conjunction with crisis response operations during the fiscal year ended March 31, 2014, amounted
to ¥500.0 billion.

Annual Report & CSR Report 201423

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

For the Year Ended
March 31, 2013

For the Year Ended
March 31, 2014

Total income

341.1

362.1

Net income

71.3

124.3

Total assets

16,248.7

16,310.7

Loans

13,918.2

13,838.4

Securities

1,357.0

1,637.5

Total liabilities

13,710.1

13,682.9

Borrowed money

9,448.3

9,182.6

Debentures and corporate bonds

3,924.5

4,237.4

Total equity

2,538.5

2,627.7

Common stock

1,206.9

1,206.9

Total capital ratio (Basel 3, BIS standard)

15.52%

15.83%

Ratio of risk-monitored loans (Banking Act base)

1.23%

0.99%

Return on equity

2.86%

4.83%

Return on assets

0.45%

0.76%

Number of employees

1,315

1,391

Consolidated operating performance during the year under¥8.4 billion, compared with net other operating loss of ¥4.2

review is described below.

billion in the preceding fiscal year. Moreover, DBJ recorded
net other income of ¥67.9 billion, expanding ¥35.9 billion,

Consolidated Income and Expenses

owing to the reversal of allowances for loan losses.

During the period, DBJ posted total income of ¥362.1 bil-Consequently, income before income taxes and minority

lion, up ¥21.0 billion from the previous fiscal year. Of thisinterests came to ¥166.0 billion, up ¥49.7 billion from theamount, interest income was ¥255.3 billion, down ¥12.5

previous fiscal year.

billion, and fees and commissions rose ¥3.6 billion, to ¥13.9

After posting current income taxes of ¥25.1 billion,

billion. Other operating income expanded ¥7.8 billion, to¥16.6 billion less than in the preceding fiscal year, deferred¥15.6 billion, while other income increased ¥22.6 billion, toincome taxes amounted to ¥15.7 billion, up ¥12.9 billion,¥76.6 billion.

and minority interests in net income increased ¥0.5 billion,

Total expenses were ¥195.8 billion, down ¥28.6 billion.

to ¥0.8 billion. As a result, consolidated net income came toThis amount included interest expenses of ¥132.1 billion,¥124.3 billion, ¥52.9 billion more than in the previous term.

down ¥12.1 billion, expenses on fees and commissionsof ¥0.2 billion, decreasing ¥0.8 billion, other operating

Consolidated Assets, Liabilities and Equity

expenses of ¥7.2 billion, falling ¥4.9 billion, and general

As of March 31, 2014, total assets amounted to ¥16,310.7

and administrative expenses of ¥47.4 billion, which rosebillion, up ¥61.9 billion from one year earlier. Of that

¥2.5 billion, as well as other expenses of ¥8.7 billion, whichamount, loans were ¥13,838.4 billion, down ¥79.8 billion.

decreased ¥13.3 billion.

The main reason for the decrease in loans was the collec-

Net interest income fell ¥0.4 billion, to ¥123.1 billion,
whereas net fees and commissions increased ¥4.4 billion,to ¥13.6 billion. We posted net other operating income of24

Annual Report & CSR Report 2014tion of crisis-countermeasure loans that DBJ had extended
in the past.

About DBJ

Also, in June 2013, at DBJ’s General Meeting of

Due to increased acquisitions of short-term JGBs andongoing investment operations, securities expanded ¥280.5

Shareholders a resolution was passed to award dividends on

billion from the preceding fiscal year, to ¥1,637.5 billion. Callcommon stock. This dividend had a record date of Marchloans and bills bought amounted to ¥87.0 billion at the end of31, 2013, and a total amount of ¥35.2 billion, for dividends

the term, an increase of ¥3.0 billion, and reverse repurchaseper share of ¥808, resulting in a payout ratio of 49.98%.

agreements were ¥0 billion, down ¥165.9 billion from the

The unrealized gain on available-for-sale securities that

previous year. DBJ conducted expeditious short-term invest-

DBJ holds independently, as well as shares in listed compa-

ments to fill the gap between fund-raising and investments.

nies that DBJ owns through funds, came to ¥37.7 billion, up

Total liabilities as of March 31, 2014, stood at ¥13,682.9¥0.8 billion compared with the preceding term. This amountbillion, ¥27.1 billion less than a year earlier. Of this amount,

includes valuation gains on shares in listed companies.

debentures and corporate bonds came to ¥4,237.4 billion, an increase of ¥312.8 billion, and borrowed money

Status of Risk-Monitored Loanswas ¥9,182.6 billion, down ¥265.7 billion. The decrease

DBJ is not subject to the provisions of the Banking Act orin borrowed money mainly reflects the collection of crisis-

the Act on Emergency Measures for the Revitalization ofcountermeasure loans and, accordingly, lower borrowings

the Financial Functions (Act No. 132 of 1998), but it car-(two-step loans) from the Japan Finance Corporation.

ries out independent assessments of liability classes andAlso, acceptances and guarantees came to ¥107.1 billion,
down ¥48.5 billion.

asset categories based on the Financial Services Agency’s
Financial Inspection Manual. According to these results, on

Total equity at the end of the period was ¥2,627.7 bil-a consolidated basis, DBJ’s holdings of disclosed debt (risk-

lion, up ¥89.1 billion from one year earlier. The primary rea-monitored loans) as prescribed by the Banking Act total

son for this rise was higher net income.

¥137.3 billion (down ¥34.0 billion from one year earlier),
accounting for 0.99% of total loans, 0.24 percentage point
less than at the end of the preceding fiscal year.

Profit and Loss Surrounding the Conversion to a Joint-Stock Company (Consolidated)(Billions of yen)

For theSix-Month
PeriodEnded
March 31,2009

For theYear Ended
March 31,2010

For theYear Ended
March 31,2011

For theYear Ended
March 31,2012

For theYear Ended
March 31,2013

For theYear Ended
March 31,2014

Gross operating profit

45.8

121.8

136.7

133.6

128.5

145.3

Net operating profit (after
addition to the generalprovision for loan losses)(75.6)

86.7

100.0

95.7

74.7

97.8

Income before income
taxes and minority
interests(118.1)

51.1

104.3

110.2

116.2

166.0

Total income taxes(13.5)(10.8)(1.3)(31.9)(44.5)(40.8)Net income(128.3)

39.8

101.5

77.3

71.3

124.3

—

10.0

50.0

37.3

35.2

30.8

Total dividend amount** Record dates correspond to the total amounts of dividends for those respective fiscal years.

Annual Report & CSR Report 201425

Overseas Business
Since its conversion to a joint-stock company in October
2008, DBJ has worked to make entry into international
business, creating an overseas risk management structure
for investment and loans, preparing operating bases, training personnel and moving forward with core infrastructure.
At the same time, we are working to expand our networkwith trustworthy partners. Through these efforts we arepromoting domestic and overseas financial institutions.
As one aspect of its efforts to build bases overseas,
DBJ established DBJ Singapore Limited in December
2008, and DBJ Europe Limited commenced operationsin November 2009. Furthermore, DBJ converted DBJ
Investment Consulting (Beijing) Co., Ltd. (formerly Japan
Asia Investment Consulting (Beijing) Co., Ltd.) to a wholly
owned subsidiary in June 2014.
By maintaining intensive collaboration with its overseas
offices, DBJ is able to provide global financial services thatmeet broad-ranging client needs, as well as support for clients’ overseas operations.

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

DBJ Investment Consulting (Beijing) Co., Ltd.
Established:

September 2011

Capital:¥60 million

Business:

Investment and loan support andadvisory services

Address:

Beijing Fortune Building, Suite 814-815,
No. 5, Dong San Huan Bei Lu, Chaoyang
District, Beijing, 100004, P.R.C

Chairman & General
Manager:

Yoshihisa Tsuruoka

Business Tie-Ups with Overseas Institutions
To enhance its financial services, DBJ leverages its businessalliances with the following overseas institutions.
International Finance Corporation (IFC)
A member of the World Bank Group and an international
financial institution, conducting investment and loan operations primarily in developing countries
China Development Bank
Policy-based financial institution (converted to joint-stockcompany in 2008) handling financing for infrastructure andcore industries in China
China International Investment Company (the CITIC Group)
Corporate group with a wide-ranging financial service
network throughout Asia, including China
IE Singapore
Government institution that supports internationalizationand provides overseas investment for Singaporean companies
Bangkok Bank
A major Thai bank that works with Japanese regional banks
to provide lending denominated in local currency to small
and medium-sized regional Japanese companies

DBJ Singapore Limited
Established:

December 2008

Capital:

S$1,000,000

Business:

Investment and loan support andadvisory services

Address:

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

CEO & Managing Director: Katsushi Kitajo

DBJ Europe Limited

26

Established:

November 2009

Capital:€7,500,000

Business:

Investment and loan support andadvisory services

Address:

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

Executive Chairman:

Haruhisa Kawashita

CEO:

Hiroyuki Kato

Annual Report & CSR Report 2014

Initiatives toward the Establishment ofInternational Long-term Financial Markets
In line with the increased globalization of economics andfinance, DBJ considers the establishment of efficient andstable international long-term financial markets to be important. Based on this conviction, in July 2012 DBJ joined theLong-Term Investors Club (LTIC), an international platform forfinancial institutions that conduct long-term financing, thereby becoming the first Japanese financial institution among
the club’s members.
Established in 2009, LTIC is a global platform for cooperation among financial institutions (including DBJ) in charge oflong-term investment in various countries, reflecting change inthe financial environment after the Global Financial Crisis. LTIC
promotes in areas such as information sharing in long-term
financing, academic studies and research and co-investments.
Going forward, we will deepen relations with othermember institutions, employing global financial networks toinvigorate long-term financial markets.

About DBJ

Group Companies
The DBJ Group, comprising DBJ and its subsidiaries and affiliates, provides a variety of services to meet its clients’ needs.

Japan Economic Research Institute Inc.
The Japan Economic Research Institute primarily conducts
surveys and provides consulting services.
Operating with a long-term perspective and from astandpoint of fairness and neutrality, the institute generates
synergies from its three fields of research—the public, solutions and international arenas—and targets both the public
and the private sectors. The company meets clients’ researchand consulting needs from a comprehensive viewpoint.

DBJ Securities Co., Ltd.
DBJ converted Hitachi Capital Securities Co., Ltd., to a subsidiary in August 2011 in a move to augment the financing
methods available to it to meet increasingly diverse clientneeds. Given DBJ’s increasing involvement with the company, in October 2011 the company’s name was changed to
DBJ Securities Co., Ltd.
DBJ Securities provides a securities function to complement the DBJ Group’s investment and loan functions,
thereby increasing the number of financial solutions that
the Group can offer its clients.
Outline of DBJ Securities Co., Ltd.

Outline of Japan Economic Research Institute Inc.

Established:

Established:

December 1989

Capital:¥500 million

Capital:¥480 million

Business:

Securities businessBusiness:

Research, consulting and advisory services

Address:

Chiyoda-ku, Tokyo

Address:

Chiyoda-ku, Tokyo

President & CEO:

Hiroshi Sakamaki

President:

Takashi Ando

October 1998

DBJ Asset Management Co., Ltd.
DBJ Capital Co., Ltd.
DBJ Capital Co., Ltd. has invested in venture companies
that can be expected to achieve high rates of growth, in aneffort to support corporate growth and the creation of new
industries in Japan. In addition to investing, DBJ Capital
employs DBJ’s and various other networks to provide support on the financing front and arrange solutions to meetthe needs of investee companies.
Outline of DBJ Capital Co., Ltd.
Established:

October 2005
(Commenced operations on June 30, 2010)

Capital:¥99 million

Business:

Investment in venture companies

Address:

Chiyoda-ku, Tokyo

President & CEO:Fumiyuki Kashima

DBJ Investment Advisory Co., Ltd. (DBJ-IA)
DBJ-IA was established to promote added-value creative
equity financing (the “Value for Growth” Investment
Program) to support growth strategies from a medium- tolong-term standpoint emphasizing relationships of mutual
trust with entities receiving investment funds.
DBJ-IA aims to contribute to such entities’ growth anddevelopment by helping them achieve their growth targets
in terms of M&A, capital and domestic and overseas strategies by providing funds and utilizing DBJ’s international anddomestic networks as well as assigning human resources.
Outline of DBJ Investment Advisory Co., Ltd.
Established:

December 2009

Capital:¥68 million

Business:

Operations related to DBJ’s value-added
equity investment

Address:

Chiyoda-ku, Tokyo

President & CEO:

Hiroshi Murakami

Established as a real estate fund investment company inNovember 2006, in July 2012 DBJ Asset Management Co.,
Ltd., made a new start as an asset management company
wholly owned by DBJ.
Going forward, the company will operate as a quality
and highly trusted asset management company serving theneeds of long-term investors. In addition to the real estatebusiness, the company will respond to diverse risk capitalrequirements as it contributes to the development andincreasing sophistication of Japan’s financing functions.
Outline of DBJ Asset Management Co., Ltd.
Established:

November 2006

Capital:¥100 million

Business:

Real estate fund investments, etc.

Address:

Chiyoda-ku, Tokyo

President & CEO:

Masutami Ohno

Value Management Institute, Inc.
In April 2013, DBJ converted Value Management Institute,Inc., to a subsidiary. This research and consulting company,
which has maintained a business alliance with DBJ, provides high-quality, reliable services to resolve the problems
customers face. Going forward, the company will continue
to disseminate information and address diverse customer
needs.
Outline of Value Management Institute, Inc.
Established:

June 1993

Capital:¥75 million

Business:

Research, consulting and advisory
services

Address:

Chiyoda-ku, Tokyo

President:

Tsuyoshi Inoue

Annual Report & CSR Report 201427

Topics

Apr.

May

Jun.
2013

Aug.

Oct.

Dec.

 Opening of the Otemachi Innovation Hub (iHub) (See page 44.)
 Conversion of Value Management Institute, Inc., to a subsidiary (See pages 23 and 27.)

 Receipt of the CSR division award for operation of the DBJ Women Entrepreneurs Center at the ADFIAP
annual meeting Holding of the second DBJ Women Entrepreneurs New Business Plan Competition award ceremony
 Establishment of the PPP/PFI Promotion Center Announcement of report by the Study Council on Strengthening Competitiveness Announcement of Capital Investment Planning Survey (nationwide and by region) results (See page 55.)

 Signing of a business cooperation agreement related to asset-based lending with Shinkin Central Bankand Gordon Brothers Japan Co., Ltd.
 Founding investment in the Private Finance Initiative Promotion Corporation of Japan (See page 81.)
 “Environment/Reconstruction Support Syndicated Loans” win the Grand Prize and Minister of theEnvironment Prize in the Green Purchasing Awards (See page 91.)

 Commencement of regional development at iHub (See page 44.)
 Establishment of a healthcare strategy team
 Exhibition and presentation at Japan’s largest environmental exhibition, Eco-Products 2013 (13thconsecutive year) (See page 64.)Feb.
 Naming as a designated financial institution based on the Industrial Competitiveness Enhancement Act

Mar.

 Commencement of joint operation of DBJ Green Building Certification with the Japan Real Estate Institute(See page 40.)

2014

Apr.
 Expansion of the Regional Areas Genki Program (See page 41.)

May
 Formulation of DBJ’s Third Medium-term Management Plan (See pages 16–17.)
 Receipt of the ADFIAP Awards 2014 for DBJ Enterprise Disaster Resilience Rated Loan Program at the
ADFIAP annual meeting (See pages 64–65.)

Jun.

28

 Holding of the third DBJ Women Entrepreneurs New Business Plan
Competition award ceremony (See page 45.)
 Conversion of DBJ Investment Consulting (Beijing) Co., Ltd. (formerly
Japan Asia Investment Consulting (Beijing) Co., Ltd.) to a wholly
owned subsidiary (See pages 26 and 118.)

Annual Report & CSR Report 2014

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

Integrated Investment and Loan Services  . . . 30
Investments and Loans  . . . . . . . . . . . . . . . . . . . 32
Consulting/Advisory Services  . . . . . . . . . . . . . . 43
Crisis Response Operations  . . . . . . . . . . . . . . . 47
Initiatives Related to the Great East Japan
Earthquake  . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Addressing Energy Issues  . . . . . . . . . . . . . . . . 53
Making Use of Information Functions  . . . . . . 54

Annual Report & CSR Report 201429

Integrated Investment and Loan Services

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

DBJ
DBJ Green
Environmentally Building
Debtor-inRated Loan Certification
Possession(DIP)
ProgramFinancing
Structured
DBJ Enterprise
Financing
Disaster
Resilience Rated
Loan Program
Syndicated
Loans
Loans
DBJ Visionary
Provision of medium- andHospital
long-term financing, as well as
Programstructured financing and otherMezzanine Financing
forms of structured subordinated
DBJ Employee’s
Health Management
Rated Loan Program

Equityfinancing

Investment

Hybrid Financing

Provision of mezzanineand equity financing

Asset Financing(Real Estate)
Interest Rate
Subsidy
Programs Asset-Based
Lending

LBOs/MBOs

Integrated Investment and Loan Services
M&A Advisory
Services

Consulting/Advisory
Services
Arrangement of structured

Publicfinancing, provision of M&A
Assetadvisory services, applying DBJ’s
Management industry research function andexpertise in environmental andtechnology evaluations

The Otemachi
Innovation Hub(iHub)DBJ Asia
Financial
Practical Application
Support The DBJ Women
Support Center
CenterEntrepreneurs
for Technology
Center(DBJ-WEC)

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

30

Annual Report & CSR Report 2014

Investment

DBJ provides financing tomeet the diverse
needs of its clients.

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

Through its advisory support
services, DBJ helps clients
become more competitiveand invigorate regional
economies.

 Provides medium- and long-termloans

 We provide investment to assist
businesses in terms of growthstrategies, business restructuring,international competitiveness andinfrastructure operations. We provide such funding through mezzanine financing, as well as throughequity and other funding.

 Provides M&A advisory services

Loan Amounts Provided(Non-consolidated) (Flow base)

Investment Amount Provided(Non-consolidated) (Flow base)

M&A Advisory and Consulting Agreements(Non-consolidated) (Cumulative)(Billions of yen)
4,000(Billions of yen)160

(Agreements)
400

 Offers unique high-value-added
financial services (environmentallyand socially responsible investment, disaster countermeasuresand safety measures and ratinglinked financing for technology
commercialization)

DBJ’s Businesses

Consulting/
Advisory Services

Loans Makes proposals that apply its
expertise in industry research andability to develop new financial
technologies
 Arranges structured and othertypes of financing

 Responds to diverse needs by offering non-recourse loans and develops and provides financing offeringcollateral and structural flexibility(debtor-in-possession financing,
inventory collateral, intellectual
property rights as collateral, etc.)

138.2
127.8
3,000

2,849.02,805.1

318
292

300

120

269

2,524.5

2,000

80

1,000

40

0

78.0

200

100

0

0
Year ended
Year ended
Year ended
March 31, 2012 March 31, 2013 March 31, 2014

Year ended
Year ended
Year ended
March 31, 2012 March 31, 2013 March 31, 2014

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

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

March 31,2012

March 31,2013

March 31,2014

Annual Report & CSR Report 201431

Investments and Loans
DBJ provides medium- and long-term loans, meeting a range of funding requirements. In addition to seniorfinancing through traditional corporate loans, we offer project financing, non-recourse loans and other types ofstructured financing, as well as a variety of other loans that employ advanced financial methods.
We provide investment funding to meet specific needs, based on a long-term perspective, to resolve the myriad issues that clients face. For example, DBJ provides investment to help clients expand their operational bases,
meet long-term growth strategies and shore up their financial structures. We offer funding support, mezzanine
financing and financing that employs equity and other methods.
The case study section on pages 66 through 87 introduces DBJ’s “CSR through Investment, Loan and Other
Businesses.”

Loan Procedures
DBJ is ready at all times to discuss with its clients optimal

Financing terms are discussed after DBJ has conductedfinancial solutions, as well as the specific terms and conditions

comprehensive due diligence of the businesses of its client

DBJ can offer, including interest rates and loan maturities.

companies, including assessment of their present businessstatus, project plans and profitabilities.

Financing Conditions• Loan Amounts• Interest Rates

Loan amounts are determined through consultation

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

risk. Fixed- and floating-rate loans are both available.
DBJ also considers the application of various interest• Loan Terms
Appropriate loan maturities are set in consultation

rate subsidy programs.

with our client companies according to factors such

• Collateral/Guarantees

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

expected life of equipment or facilities.

ing on due diligence results.

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

Medium- to Long-Term Loans
By leveraging the long-term financing expertise it cultivatedon the profitability of the business that requires funding.

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

DBJ also works to meet the varied needs of our clients, suchclients to match their medium- to long-term financing needs.

as by introducing grace periods.

Medium- to long-term repayment plans are proposed based

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

32

Annual Report & CSR Report 2014

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

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

DBJ’s Businesses

Mezzanine Financing
Mezzanine financing is an intermediate financing method

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

in terms of risk.

Such financing also prevents dilution of the voting rights of

Although mezzanine financing is riskier because its payment is subordinated to senior loans, it plays an important

existing shareholders. Redemption and exit methods can be
set to be flexible.
From a long-term perspective, DBJ helps clients resolverole in markets such as the United States, which have abroad range of investors with diverse investment appetites.

their balance sheets issues through total financing solutions

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

investment by setting adequate interest rate and dividend

risk capital.

levels to correspond to the intermediate risk. Depending on
Types of Mezzanine Financing• Subordinated loans, subordinate bonds

clients’ financing plans and capital policies, flexible mezzanine financing can be set. In recent years, demand formezzanine financing has grown in association with businessacquisitions, spinoffs of subsidiaries and business units,• Preferred shares, classified shares• Hybrid securities, hybrid loans, etc.

business succession and listed companies that are delisting.

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

After capital expansion

Objective
Debt

Debt
AssetsAssetsPreferred shares

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

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

Recipient company

Debt

CapitalTargetbusiness

Acquisition of
non-core business
(MBO)

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

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

New company (recipient)Objective
Debt

Business succession
Note: Successor acquiresNcommon stock

AssetsCapitalDebt
AssetsPreferred shares

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

CapitalAnnual Report & CSR Report 201433

Equity
In an environment characterized by new business creation,

maximize their long-term corporate value. In fiscal 2010,

business restructuring and M&A activity, growth throughDBJ enhanced its “added-value creative equity financing to

globalization is an increasing emphasis. Against this back-support corporate growth strategies (“Value for Growth”

drop, along with the current formulation of growth strate-

Investment Program).” This approach aims to realize thegies and heightening of corporate governance, equity has

corporate growth strategies (M&A, capital and overseas)

become more important than ever before.

of the Japanese entities receiving the equity investment. Its

Through equity investment, DBJ helps clients address theissues they face and supports their long-term development.

aim is to support corporate value enhancement over the
medium to long term.

After making equity investments, DBJ provides total solu-

Through equity investment, DBJ shares in its clients’tions involving its networks and strengths in information,

growth and successes, contributing to a more prosperous

industry research and financing technologies, helping clients

future.

Client Needs• Initiatives targeting new
business creation, businessrestructuring and M&A
activity• Response to globalization• Meeting corporate
governance requests

DBJ’s Solutions

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

Structured Financing, Financial Technologies
Syndicated Loans
This type of loan involves multiple arrangers that are com-

institutions involved in the transaction to be increased, andbined into a syndicate. The agreement with the client isclarity of borrowing terms is ensured.
As part of its services, DBJ actively structures loans, cen-

based on a single contractual document, and financing isprovided cooperatively according to a single set of terms.

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

Having a single arranger in the point negotiating posi-

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

point. Structuring loans to include some items from its own

ment operations through an agent reduces the administra-

lending menu, such as the DBJ Environmentally Rated Loantive burden. Large amounts can be raised expeditiously.

Program, helps raise the value-added level of services it

Appointing an arranger allows the number of financial

provides.

Annual Report & CSR Report 2014

Arrangers

Financial
Institutions

Financial
Institutions

Financial
Institutions

Financial
Institutions

Financial
Institutions

Market34

Arrangement

Appointment

Clients

Financial
Institutions

DBJ’s Businesses

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

 Object Financing

these beginnings, our accumulated expertise in this area,

DBJ helps clients determine optimal financing methods

centering on energy and infrastructure projects, has pro-that take advantage of the cashflow-generating char-pelled us to our current position as one of Japan’s leaders inacteristics of assets with special features, such as ships,

project financing, including private finance initiatives (PFIs).

airplanes and railcars, as well as supporting their efforts

Since its privatization (conversion to a joint-stock com-to control risks.

pany) in 2008, DBJ has maximized its unique characteristics
 Securitization

to meet Japanese companies’ increasingly diverse andglobal needs. We provide all-around support by offering cli-

Through finance methods such as liquidation and secu-

ents in Japan and overseas with project finance, PFIs, object

ritization of receivables focusing on their future cash

finance, securitization and various other financial products

flows, and through whole business securitization in

and optimal financing methods (senior loans, mezzanine

which debts are repaid through future cash flows gener-

loans, equity, etc.).

ated by a particular business, DBJ supports its clients’finance strategies and helps optimize their funding.

 Project Financing
We have a wealth of expertise in helping companies in PFIs and PPPs

the energy and infrastructure sectors—primarily withSince the facilitation of the PFI Act* in 1999, DBJ has

regard to large-scale projects—find project financing that

accumulated expertise by taking advantage of its strong

they can repay through project cashflow, without relying

relations with public-sector entities. The support we haveon specific corporate creditworthiness or collateral value.

provided to numerous clients in this category has turned

Such finance solutions we provide help them raise funds

us into an industry leader in PFIs. Expectations for PFIs areand support their efforts to control risks. In recent years,

growing, and amendment to the PFI Act in 2011 marked

in addition to arranging project financing and providing

the introduction of concession-type PFIs. In this environ-

financing for domestic solar and wind power generation

ment, we provide numerous types of support to help cli-

projects, DBJ has been proactive in its financing of energy

ents in Japan and overseas to resolve the issues they face.

and infrastructure projects overseas.
* Act on Promotion of Private Finance Initiative

Project Financing Example: Electric Power Generation ProjectSponsor A

FundingSponsor B
Banking Syndicate

Electric Power
Generation Company
Special-Purpose
Company (SPC)

FinancingConstruction contract

Plant CElectric power supply
contract (15 years)

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

Operational repair and maintenance contract

Factory E

Plant D
Plant delivery contract

Technical guidance contract

Annual Report & CSR Report 201435

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

Our track record, expertise and networks in this arena

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

solutions.

beginnings and continue striving to invigorate this market.
Liquidization Financing

Development Financing

Example 1: Sell rental real estate that a client owns toa special-purpose company, raising capitalefficiency
Example 2: After selling owned real estate that a client isusing to a special-purpose company, conclude
new rental agreements and continue using
the property in this manner

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

1. Allows diversification of financing methods• Enables funds to be raised based on the property’s capacity
to generate revenue and cash flow
• Preserves the credit availability of the originator (the original
owner of the asset)
2. Moves property off the balance sheet for better financial
efficiency• Improves ROA• Allows planned recognition of unrealized gains or losses• Improves financial picture by reducing interest-bearing debt
• Eliminates risk of fluctuations in real estate values

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

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

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

parties realize profits

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

require that funds be raised to acquire an operation. For

businesses using borrowed money. If the company or busi-

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

chase the business or company for relatively little cash. For

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

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

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

are delisting and by owner-operated companies.

are constrained.

36

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

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

works out joint equity financing with sponsors. The ability

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

has a limited amount of cash available, MBOs generally

LBO/MBO solutions.

Annual Report & CSR Report 2014

DBJ’s Businesses

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

DBJ has gained abundant experience in the area of devel-

gate movable property, inventory collateral and receivables.

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

same time securing their debt. Going forward, we plan tofund-raising, debt restructuring and the sale of surplus inven-apply this expertise to develop ABL schemes that provide

tories also enhance the robustness of internal control systems.

companies with growth capital.

ABL

ClientDBJ

Collateral Transfer

Inventory(Buyer)Third-Party
Borrower

Sale

Accounts Receivable

Liquidate Inventory
Sell inventories, primarily throughexisting wholesale routes

Collateral Transfer
PledgeCash and Equivalents

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

Debtor-in-Possession Financing
Later-stage DIP financing provides the funding that is

Non-performing loans emerged as a major problem beleaguering the Japanese financial system in the late 1990s.

needed to implement restructuring plans. By providing

Against this backdrop, DBJ has developed a host of tools

medium- to long-term financing to fund capital investment

to help underperforming companies sustain or develop

under different conditions than those for revitalization plansprofitable areas of operation. One method of which DBJ isthat are being implemented, an organization that is undera proponent is early debtor-in-possession (DIP) financing.

rehabilitation can refinance its debt, providing exit financing

This temporary financing method provides working capital

more quickly than is possible via the legal liquidation process.
In 2001, DBJ provided the first DIP financing in Japan.

that allows a company in bankruptcy to continue operations
during the period between a request for the application ofSince that time, DBJ has worked to broaden the range

the Civil Rehabilitation Act and the approval of rehabilitationof entities eligible for this financing and the methods ofplans, thereby sustaining the valuable parts of its operations.

employing it in response to varied needs.

Capital requirements

Bankruptcy( priority obligation)
Common debts

Working
capitalRestructured
assetsBankruptcy( priority obligation)

Funding forequipment andother items

Exitfinancing

DIP financing
Proceduralapplication

Decision to start

Early stage

Approval of plan

Conclusion of plan

Later stage

Annual Report & CSR Report 201437

Certification and Unique Programs
DBJ Environmentally Rated Loan Program
Beginning with the antipollution measures implemented in
the late 1960s and early 1970s, DBJ has provided more than
¥3 trillion in investments and loans for environmental measures over the past 40 years.
In fiscal 2004, DBJ began its DBJ Environmentally Rated
Loan Program based on knowledge cultivated for over four
decades. DBJ developed a screening (rating) system thatscores companies on the level of their environmental management and then applies one of three different interest rates
reflecting that effort. This was the world’s first incorporation

Program logo

of environmental ratings in financing menus. In fiscal 2007,
we launched an interest rate subsidy programs for the promotion of environmentally conscious management ratings toadvance global warming countermeasures.
Employing the experience we gained through the DBJ
Environmentally Rated Loan Program, in fiscal 2009 we beganoffering a service to help regional banks develop evaluation
tools to use in performing their own environmental ratings.
Through such initiatives, we aim to augment environmental
financing and encourage its proliferation in Japan.
Features• Varying interest rate levels based on environmental ratings• Screening sheet containing approximately 120 questions
derived from the United Nations Environment Programme
Finance Initiative (UNEP FI) evaluation of fair and neutral
global environmental trends and an exchange of information
with the Ministry of the Environment
Convening of the Environmental Ratings Advisory
Committee, seeking advice from outside experts andrenewing annual visits• Ratings determined through interviews with clients• Applicability to a wide range of clients

DBJ Enterprise Disaster Resilience Rated Loan Program
DBJ’s financing track record includes schemes to supporting
the recovery of disaster-stricken areas through anti-disastermeasures and financing related to disaster recovery. In addition, from the standpoint of business continuity management(BCM) DBJ assists clients’ total enterprise risk management
efforts, including the formulation of business continuity plans(BCPs), the earthquake-proofing of facilities and the preparation of IT backup systems. At the same time, DBJ provides
new financing methods to assist disaster recovery, including
recovery finance and alternative risk transfer finance. In fiscal 2006, we introduced Financing Employing DBJ Disaster
Preparedness Ratings, which evaluate companies and selectthose engaged in high-level initiatives and anti-disaster andbusiness continuity measures and provide them with preferential interest rate financing as a reward for their excellent
disaster preparedness. Financing conditions are set on the

DBJ BCM格付
2 014
Program logo

38

Annual Report & CSR Report 2014

basis of the assessment. In this manner, we introduced theworld’s first disaster preparedness-based financing method.
We revised our financing menus substantially in 2011 as aresult of the Great East Japan Earthquake. Enterprise business
continuity activities are assessed comprehensively, including
resilient strategies and systems for recovering in the event acrisis materializes.
The DBJ Disaster Preparedness Rating (1) is an expressionof the evaluation results and (2) promotes broad awarenessof the concept of BCM. Aiming to realize the goal of a “resilient Japanese society through disaster preparedness ratings,”
in 2012 we changed the name of these ratings to the “DBJEnterprise Disaster Resilience Rated Loan Program.”
We will promote enterprise risk management andbusiness continuity through the DBJ Enterprise Disaster
Resilience Rated Loan Program.
Features• Varying interest rate levels based on BCM ratings• Fair and neutral assessment of global crisis management trends
Based on information exchanges with the Japanese Cabinet
Office, the World Economic Forum, NPOs and other experts,
DBJ developed a screening sheet containing approximately
100 questions.
DBJ convenes a BCM Rating Advisory Committee that seeks
advice from outside experts and require annual renewal visits.
• Ratings determined through interviews with clients• Applicability to a wide range of clientsDBJ’s Businesses

DBJ Employee’s Health Management Rated Loan Program
In April 2008, the Ministry of Health, Labour and Welfare

social conditions as a backdrop, the DBJ Employee’s Healthintroduced a special health checkup system, and the JapaneseManagement Rated Loan Program aims to popularize and pro-

Diet is discussing making it mandatory for businesses tomote the concept of health management. DBJ has applied toprovide mental health checks. This is one example of thetake on Ministry of Economy, Trade and Industry (METI) survey

growing importance being placed on maintaining the healthoperations. As part of this effort, we use an evaluation systemof corporate employees. As Japan’s working population isthat we have developed to assess companies and select those

expected to shrink, achieving higher levels of human produc-that are superior in terms of their consideration for employee

tivity has become an issue of growing importance. With these

health and offer them financing terms in line with their assessment levels. We have used a specialized method for introducing an “employee’s health management rating,” making DBJ
the first in the world to offer such a financing menu.

Program logo

Features• Varying interest rate levels based on employee’s healthmanagement ratings• Formation of “health management consortium” withinstitutions focused on preventive healthcare anddevelopment of screening sheet to promote the HealthManagement Project as an ancillary activity for METI
• Ratings determined through interviews with clients• Applicability to a wide range of clients

DBJ Visionary Hospital Program
In recent years, hospitals have been the source of increas-

environmental assessment and BCM evaluation system it

ing attention for the role they play as bases for safety

developed to certify hospitals as DBJ Visionary Hospitals

and security in regional societies. In May 2012, we intro-(namely, those that have in place superior environmental

duced the DBJ Visionary Hospital Program to support theconsciousness, disaster prevention and business continuity

advancement of medical functions, as well as to encour-measures), offering them a financing menu with financ-age proactive environmental consciousness, disastering terms set according to their assessments. Through thisprevention and business continuity measures. For institu-

measure, DBJ supports hospitals’ efforts to continue pro-tions that have had their hospital functions certified byviding good healthcare in regional societies.

the Japan Council for Quality Health Care, DBJ uses theAssessment of a
Medical Institution’s
Hospital Functions

Hospital functions certified by
the Japan Council for Quality
Health Care (JCQHC)

Certified as a
DBJ
DBJ
Visionary
Hospital
Environmentally
Rated Loan
Program
DBJ Enterprise
Financial screening
Disasterby DBJ
Resilience Rated
Loan Program
Evaluation of medical
Assessment of medical
institution’s CSR
institution’s finances andresponses
management

Annual Report & CSR Report 2014

39

DBJ Green Building Certification
Applying the expertise and networks accumulated overmany years of real estate financing, DBJ inaugurated DBJ

businesses.
In August 2012, we introduced a logistics edition of DBJ

Green Building Certification in fiscal 2011. This certifica-

Green Building Certification for distribution facilities. Totion program provides investment and loan support for real

bolster the sustainability of logistics companies, in March

estate development, refurbishment and other activities of2013 we commenced the joint operation of this certificationclients that own or manage real estate that evinces envi-

system with the Japan Real Estate Institute (JREI). Goingronmental and societal considerations (green buildings).

forward, we aim to foster a correlation between a build-

Through this program for evaluating and certifying the

ing’s certification ratings and its economic value, creating asustainability of real estate, we contribute to the broad-market in which green buildings are valued appropriately.

ranging IR, PR and CSR aspects of our clients’ real estate

Overview of the DBJ Green Building Certification
Evaluation
Items

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

Ecology
Reducing the burden buildings place on
the environmenttBuilding’s energy-saving performance
initiatives toward the conservation of
resourcestConstruction and use of renewableenergy systems

Amenity & Risk Management

Community & Partnership

Comfort, safety and security+tConfortable facility specifications andequipment that is convenient forpeople who use buildingstBuilding disaster performance andsecurity+

Relationships for and communication
with stakeholderst3FMBUJPOTIJQTXJUISFHJPOBOE
universal designt5FOBOUBXBSFOFTT JOGPSNBUJPO
sharing and disclosure

Certification Clients scoring above a certain level are certified in one of five categories (platinum, gold, silver, bronze, certified), depending
Results
on the status of their initiatives.

40

Annual Report & CSR Report 2014

DBJ’s Businesses

Regional Areas Genki Program
Facing the challenges of population constraints, financial

To further promote these initiatives, DBJ has partiallylimitations, environmental restrictions and global competi-

revised the content of programs set by each of its branchtion, Japan’s regions must coordinate with one another andoffices and has adopted as a nationwide theme the concept

implement diverse regional development schemes that capi-of “companies that contribute to the region.”*2 By encour-talize on their respective strengths, competitive advantages

aging further regional contributions from companies on theand latent potential.

financial and information fronts, DBJ is helping to foster a

In 2010, DBJ arranged a unique initiative, the Regional

virtuous circle of genki between regions and companies.

Areas Genki*1 Program, to support regional growth that
capitalizes on each region’s respective strengths and information and funding potential. We have enhanced our information support service to regions. In addition, each DBJ
branch office focuses on its region’s distinctive fields and*1 The Japanese word genki implies a positive spirit and good health.
*2 Company that Contributes to the Region: A company that creates
employment opportunities and utilizes the region’s personnel andresources, effectively employing people, physical goods and money
for the good of the region.

businesses based on its industrial structure and partners
with regional financial institutions to offer financial support.
 Regional Areas Genki Program
Niigata Area
Promotion of value-added
strategies in food andmanufacturing
Promotion of safety andsecurity in regional
development

Q

Hokkaido Area
Strengthening of the foodvalue chain to drive growth
Development of the tourism
industry by communicating
the area’s attractions
Creation of an environment
and the infrastructure to
support ongoing growth

Tohoku Area

Q

Q

Q

Q

“Creation of new industry in
Tohoku” programQ

Hokuriku Area

Kanto-Koshin Area
Q

Hospitable, technological andphysical support for the
Hokuriku areaQQ

Chugoku AreaQ

“Three arrows” to invigorate
the Chugoku areaQ

Kyushu Area

New market-creation
businesses that fully leverage
population/industry
concentrations
Construction and renovationof infrastructure in responseto regional conditions
Businesses in manufacturing
regions that boost
competitiveness in response
to globalization

Tokai Area

Enhancing the regional
competitiveness of the
Kyushu region as the doorto Asia
Creating a new growthengine for the Kyushu region
Increasing the competitivenessof companies in the area withunique growth strategies

Q

Q

Q

Q

Q

Q

Program to support thecreation of next-generationindustries
Program to support thegrowth of core value chain
companies
Program to support measures
to prepare for a massive
earthquake in the Nankai
TroughKansai Area
Shikoku Area
Program for evolving Shikoku
companies at the top of theirnichesProgram to help strengthen
the shipbuilding cluster
Program to support measures
to prepare for a massive
earthquake in the Nankai
TroughQ

Q

Minami-Kyushu Area
Project to promote
Minami-Kyushu as anadvanced region in food,health and environment/energy

Q

Q

Q

Leading-edge manufacturingindustries
Program to support theinvigoration of commerceand distributionQ

Annual Report & CSR Report 201441

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

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

promote specific industries. Alternatively, they may target

thereby reducing the interest burden on the borrower.

operators of specific businesses. Under these programs, theInterest Rate Subsidy Program Menu
• Interest rate subsidy programs that support therevitalization of regional communities
These interest rate subsidy programs are provided tobusinesses recommended by the national government
in line with the regional revitalization plans of regional
municipal bodies certified by the national government.
• Interest rate subsidy programs for the development ofregional telecommunications and broadcasting businesses
These interest rate subsidy programs can be used by clients
pursuing regional telecommunications or broadcasting businesses in accordance with legally prescribed guidelines.
• Interest rate subsidy system for internationallystrategic comprehensive special zones, interest rate
subsidy system for comprehensive special zones
targeting community revitalization
These interest subsidy systems target operations endorsed by
the national government in line with government plans forcomprehensive special zones of regional municipal bodies.
• Interest rate subsidy system for special zones for reconstruction
This interest rate subsidy system targets operations
endorsed by the national government in accordance withthe reconstruction plans of regional municipal bodies designated by the national government in the areas identified
in the Law for Special Zones for Reconstruction (227 towns
and cities).
• Interest rate subsidy programs for crisis response operations
These interest rate subsidy programs can be used by clients
who have sustained damage during a crisis certified assuch by the government and who meet program requirements. At present, such subsidies are being provided toclients affected by the Great East Japan Earthquake.

• Interest rate subsidy programs for the promotion ofenvironmentally conscious management ratings
These interest rate subsidies are for fixed investment
and the promotion of research and development toprevent global warming, and target companies involvedin businesses working toward the reduction of energyderived CO2 emissions, thus qualifying for the DBJ
Environmentally Rated Loan Program, and that havepledged to improve unit CO2 emissions or reduce overall
CO2 emissions within a certain period of time.
• Interest rate subsidy programs to fund domestic
oil and natural gas development (continental shelfinterest rate subsidy)
These interest rate subsidy programs can be used by companies
involved in oil or natural gas development businesses in Japan.
• Interest rate subsidy programs to fund fixed investment for using natural gas and other resources (natural gas and other resources interest rate subsidy)
These interest rate subsidy programs can be used bycompanies that are making fixed investment involving theuse of natural gas and other resources.
• Interest rate subsidy programs to fund specific andother facilities related to the rationalization of energy
use and to promote the introduction of special equipment (energy conservation interest rate subsidy)
These interest rate subsidy programs can be used by companies that are promoting the conservation of energy.
• Interest rate subsidy programs to fund effective
resource use and other activities
These interest rate subsidy programs can be used bycompanies that are using resources effectively.

Crisis Response Operations
Crisis response operations on the basis of the Japan FinanceIn the fiscal 2011 supplementary budget (passed on

Corporation Act (Act No. 57 of 2007, later updated) con-

May 2, 2011), ¥2.5 trillion was earmarked for JFC Greatsist of the provision of necessary funds during such crises

East Japan Earthquake crisis response operations targetingas disruptions in domestic or overseas financial markets or

medium-sized and large companies.

large-scale natural disasters. The Japan Finance Corporation

42

This supplementary budget having been passed, as a des-

(JFC) provides risk and other support from the Japanese

ignated financial institution for the crisis response operations

government via designated financial institutions as funds for

DBJ set up a full-fledged structure to facilitate implementa-

responding to crisis-related damage.

tion of crisis response operations for clients affected bothAt the time of its establishment, DBJ was designateddirectly and indirectly by the disaster. In addition, DBJ is mak-as such a financial institution, as was Shoko Chukin Banking a proactive effort to support increases in the production

Limited. In accordance with this designation, DBJ com-of materials needed for restoration and reconstruction in themenced its crisis response operations in October 2008.

aftermath of the recent disaster. (See pages 47–53.)

Annual Report & CSR Report 2014

DBJ’s Businesses

Consulting/Advisory Services
We offer consulting and advisory services and make use of networks with allied financial institutions. Throughour consulting and advisory support services, we help clients become more competitive and contribute to thevigor of regional economies.
Our consulting and advisory services are backed by the know-how we have built up through our structured
and other types of financing, our M&A advisory services and our provision of expertise on industry researchand environmental and technical evaluations. We apply this accumulated expertise to help clients resolve theissues they face.
The advisory services case studies on page 69 introduce DBJ’s “CSR through Investment, Loan and Other
Businesses” approach.

M&A Advisory Services
As corporate development options diversify, M&A activity

better employment stability and a stronger competitive posi-

is growing more prevalent amid the expansion of businesstion. Amid growing interest in M&A activities in Japan andoverseas, both for businesses restructuring operationally andoverseas, DBJ provides advisory services through its own

for industry restructuring overall. Mergers and acquisitions

networks. We offer comprehensive M&A solutions thatcan be a method for achieving higher business efficiency,

match clients’ varied needs and management strategies.

M&A Advisory Service Characteristics• Partners
DBJ is thoroughly client-focused and takes a long-term
perspective, working with clients to help them realize
the visions they have set for themselves.
• Brand
DBJ is a unique and trusted financial institution thathas built up its brand over many years of financing andexperience in providing project support and maintaining relations over the long term.

• Knowledge
DBJ has developed deep insights into a broad range
of industries by virtue of its provision of financing overmany years, as well as analytical capabilities and theability to maintain strategy that is unaffected by shortterm movements.
• Network
DBJ maintains close relationships with overseas
financial institutions, domestic financial institutions,accounting and legal firms, and government institutions both in Japan and overseas. Such relationships
enable us to build networks to accumulate accurate
information.

M&A Advisory Services
Consulting
Formulation of
acquisition andselling strategies

Buy Side

Buy Side

Select and analyze
acquisition
candidateConnect andnegotiate withacquisition
candidateMarket analysis

Data gathering

Sell Side

Sell Side

Select and analyze
potential acquirer

Connect andnegotiate withpotential acquirer

Execution

Analyze finances, businessrisks and other factors
Assess corporate value
Consider optimal structure
Arrange for due diligence
Support preparation ofcontractual and othernecessary documents

Advise oncontract
negotiations
Process
management

CLOSING

Performance
analysis

Matchmaking

Annual Report & CSR Report 201443

The Otemachi Innovation Hub (iHub)
In addition to providing funding, in April 2013 we opened

and resolution of societal issues, encourage movements to

the Otemachi Innovation Hub (iHub) within DBJ’s headquar-

break down a range of barriers that are holding companies

ters building. This organization is designed to leverage DBJ’s

back and aim to provide a place to conceptualize new col-neutrality and extensive network to serve as a place to cre-laboratively creative business concepts.

ate new value through open innovation.

The iHub also aims to promote regional development

Through open innovation, iHub will seek to foster

by encouraging open collaboration among diverse regional

broad-based cooperation between corporations, govern-

partners that possess superior management resources andment offices and society (including universities, citizens andtechnologies to create new value together and address

government bodies), forge links between the determination

region-specific issues and conditions.

=Examples of iHub Regional Developments
RegionKanto/Tokyo
Hokuriku
Hamamatsu
Kansai
Hiroshima
KyushuDate
May 2014
From December 2013
February 2014
From December 2013
February 2014
June–October 2014 (four times)
From December 2013

Theme
Workshop for employees of regional government bodies
Participation in the Hokuriku regional alliances platform
Opportunity to introduce new businesses generated by the region
Healthcare
Workshop on creating new businesses
Opportunity to jointly consider new business ideas
Participation in “Future of Kyushu 2030”

iHub a dream

Practical Application Support Center for Technology
DBJ established the Practical Application Support Center forTechnology in February 2004 to help manufacturers realize their potential for the commercialization of successfully
developed technologies. The role of this center is to planand operate iHub, as well as to diagnose whether companies have the management strength (technology management expertise) to create value in technology. Aiming tocreate value from a new perspective, the center will engage
in survey analysis and the proposal of future business models from the perspective of technology management, recommendations and technology management training.

For clients and other companies across a broad spectrum
in the manufacturing sector, we support ecosystems (relations between companies) from the viewpoint of innovations (new combinations) that include the consideration oftechnology management strategies to resolve social issues
and the creation of business models. We provide additional
evaluations based on our expertise in operational screening
and, through consultations on business and financial strategies, help clients consider their optimal long-term strategies
and business plans.

Changes in the Manufacturing Business Environment
Past

FutureWays to create value

Values of products themselves

Technical expertise to take a global lead
Combination of diverse elements, including products and services

Desired capabilities

Increasing performance and functionality
Raising efficiency, lowering costs

Valuable design expertise and ability to communicate with society
Overwhelming expertise in manufacturing technologies and quality
management capabilities

The background of
the times

Mass production
Catching up with Europe and the UnitedStatesIncreasing uncertainty due to more-global and flatter markets
Advances by companies from emerging markets
Dramatic advancement in ICT

Support for new value creation

Practical Application Support Center for Technology
Conduct surveys and provide recommendations ontechnology and industry vision for the future
Analyze business models and support creation of ecosystems
Help train and develop managerial level human resources

44

DBJ’s expertise

DBJ’s networks• Screening• Industrial research• Finance• Independent network with technology advisors• Network with business partners throughout Japan• National, regional and research institute networks

Annual Report & CSR Report 2014

DBJ’s Businesses

The DBJ Women Entrepreneurs Center (DBJ-WEC)
Japan faces a number of issues, including protracted economic sluggishness, a falling birthrate and aging society, andreconstruction following the Great East Japan Earthquake.
Amid these conditions, Japan aims to introduce a new
growth model, wherein women are expected to play anincreasing role in business. Businesses created from a newfemale perspective are considered likely to provide a driving
force for new economic growth and social transformation.
Anticipating such developments, DBJ launched the DBJ
Women Entrepreneurs Center (DBJ-WEC). Through thiscenter, we aim to provide comprehensive support, including funding and business startup expertise, to new businessgrowth led by women.
As part of its initiative to cultivate and foster new businesses, DBJ-WEC annually holds a business plan competition targeting women entrepreneurs. The winner of thecompetition is awarded an incentive payment of up to ¥10
million. Additionally, DBJ-WEC offers all participants a variety of support on the planning front, such as by connecting
them with experienced entrepreneurs and experts in various

fields, providing startup expertise and advice and introducing
them to networks after the competition.
In the future, the center will continue to work withfemale managers to meet the challenges of developing
businesses with unique perspectives, fostering collaboration
with regions and specialists.

Award ceremony of the third DBJ Women Entrepreneurs New
Business Plan Competition

Grand prize winner of the third annual competition: Ms. Rie Yano

Renewed growth,
led by women
Fostering ofgrowth indisaster-affected
areas

Renewedbusinesscreation

DBJ
WEC

The DBJ Women Entrepreneurs Center

DBJ Asia Financial Support Center
DBJ opened the DBJ Asia Financial Support Center in June
2011 to reinforce its ability to provide local information andconsulting services to regional banks supporting efforts bysmall and medium-sized companies and other entities intheir regions to promote business in other parts of Asia.
The center’s role is as a liaison to help regional banks
throughout Japan, meet their various needs and help
other entities develop their operations in Asia. In addition
to leveraging DBJ Group resources, such as its overseas
representative office, its overseas subsidiaries and Japan
Economic Research Institute Inc., this center provides consulting services that take advantage of a comprehensive
agreement on collaboration with Hitotsubashi University(entered into in June 2011) and of networks of overseas
development finance organizations, private financial institutions and legal and accounting firms.
As of June 30, 2014, the center has a membership of 66
regional banks and has fielded a total of 1,462 inquiries.
Breaking down inquiries by country, the majority were in
relation to China, Thailand, Vietnam or Indonesia. Inquiries
concentrated on such topics as industry trends and funding.
In 2014, we expect to begin playing a part in the “fastpass” system to provide consistent support for overseas
development, in keeping with the Japanese government’s
growth strategy. DBJ will continue augmenting its ability todisseminate information related to Asia.

Annual Report & CSR Report 201445

Public Asset Management
Public asset management describes the method of looking
at the public assets owned by government bodies from amanagement perspective for the purposes of overall planning, control, use and disposal.
The public assets owned by government bodies aremany and varied. They include buildings, such as schools,
public offices and community centers, as well as waterworks, sewerage, roads and other infrastructure. Two major
issues have come to the fore in this category in recent years.
The first is that facilities that were built in a concentrated
period during Japan’s era of high economic growth are now
deteriorating rapidly. Because many public assets were built
at around the same time, their deterioration is also simultaneous. The second issue is a mismatch between the population—which is shrinking and changing in its makeup—andthe supply of facilities needed to serve the needs of residents. Going forward, as the overall population shrinks andthe average age rises, government bodies will face majorchanges in the amount and types of public assets that arenecessary.
However, long-term economic malaise and a decrease in
the percentage of the population in their productive years
means that tax revenues are down and welfare budgets are
increasing. Owing to factors such as these, it is difficult tosecure the budgets necessary to renovate or reallocate public assets that have deteriorated.
For this reason, government bodies must quickly embark
on the management of public assets and conduct sustainable urban management.
DBJ is working with the Japan Economic ResearchInstitute Inc. to determine the status of owned assets andcalculate their future cost, among other activities. Public
asset management advisory services are just one of the initiatives we offer.

Issues Faced by Government Bodies

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

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

1VCMJD"TTFU.BOBHFNFOU

Determine population trendst'PSFDBTUQPQVMBUJPOTPGTFOJPSTBOEQFPQMFJOUIFJSQSPEVDUJWFZFBSTt.BLFGVMMZWJTJCMFQPQVMBUJPOTPGTFOJPSTBOEQFPQMFJOUIFJSQSPEVDUJWFZFBST%FUFSNJOFNJTNBUDIFTJOSFHJPOBMBMMPDBUJPOTPGGBDJMJUJFT

Determine financial conditions
t$POåSNQBDFPGEFUFSJPSBUJPOJOUBYSFWFOVFt$POåSNFTUJNBUFEDPTUTUPTVTUBJOBOEGPSTPDJFUBMQSPUFDUJPOt$POåSNDBQJUBMFYQFOEJUVSFTJOSFQBJSTBOESFOPWBUJPOT

%FUFSNJOFQPMJDZNFBTVSFTGSPNBNBOBHFNFOUQFSTQFDUJWF FRVBMJ[FBOEQSJPSJUJ[FUIFSFOPWBUJPOJOWFTUNFOU
4IJGUUPTQFDJåDNBOBHFNFOUPGJOEJWJEVBMBTTFUT'JSTU QFSGPSNNBJOUFOBODFUPFYUFOEMJGFPGBHJOHBTTFUT1'*BOE111BSFJNQPSUBOUUPUIJTQSPDFTT BTUIFZFODPVSBHFDPOTPMJEBUJPOBOEEJTQPTBMBOEEFQMPZVOEFSVUJMJ[FEBTTFUT

46

Annual Report & CSR Report 2014

DBJ’s Businesses

Crisis Response Operations

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

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

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

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

quickly and flexibly.

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

responding to crisis-related damage.

Limited. In accordance with this designation, DBJ com-

These funds are earmarked for use in the event of suchmenced its crisis response operations on October 1, 2008.

crises as disruptions in the domestic or overseas financial
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UIFBQQSPWBMPGUIFDPNQFUFOUNJOJTUFST-FOEJOHPGTQFDJGJDGVOET PUIFSTFSWJDFT$MJFOUTThe Great East Japan Earthquake
In response to the Great East Japan Earthquake, whichcrisis response operations for clients affected both directly

occurred on March 11, 2011, as a designated financial

and indirectly by the disaster.

institution for crisis response operations DBJ set up a fullfledged structure to facilitate the all-around operation ofPlease see pages 50–52 for “Initiatives Related to theGreat East Japan Earthquake.”

Annual Report & CSR Report 201447

Results of Crisis Response Operations
On October 30, 2008, Shoko Chukin and DBJ established(Meanwhile, the implementation period for certain projects,“lifestyle measures” in response to the worsening corporatesuch as those involving “incidents related to confusion in the

cashflow conditions resulting from the global financial andinternational financial order” concluded on March 31, 2011.)
As of March 31, 2014, DBJ’s loan performance and com-economic crisis that commenced in the autumn of 2008.
On December 11, these measures were granted crisis des-mercial paper acquisitions of crisis countermeasure loans

ignation under the category of “incidents related to confu-

were as follows.

sion in the international financial order.” On December 19,• Cumulative loans: ¥5,387.7 billion (1,123 projects)

these measures were augmented by economic measures, or• Cumulative loans executed with loss guarantee agree-“emergency lifestyle defense measures,” funded throughments: ¥268.3 billion (47 projects, including those slated

an expanded budget and the commencement of the com-

for application to JFC)

mercial paper acquisition business, and labeled Cashflow• Cumulative commercial paper acquisitions: ¥361.0 billion

Countermeasures for Medium-Sized and Large Companies(68 projects)

Employing the Crisis Response Operations of the Japan
Finance Corporation. On January 27, 2009, government*1 Of the ¥67.0 billion in loans executed with loss guarantee agreements to Japan Airlines in relation to crisis response operations,¥47.0 billion (amount confirmed in April 2011 owing to DBJ’s
completion of corporate rehabilitation procedures) in compensation was ultimately provided by the Japan Finance Corporation on
the basis of this agreement.
*2 A portion of the loans provided by DBJ to Elpida Memory, Inc.,
were covered by a Japan Finance Corporation guarantee on losses. The agreement between DBJ and Japan Finance Corporation
involves loss guarantees on loans of ¥10.0 billion, executed ascrisis response operations, as well as investment of ¥28.4 billion,
as a designated operator set forth in the Law on Special Measuresfor Industrial Revitalization and Innovation. DBJ requested, andhas already received, a total of ¥27.7 billion in loss guarantee
compensation on the loans. In the event that in the future DBJ
is able to collect on the principal of the loans for which it hasreceived compensatory payment, DBJ will return to Japan FinanceCorporation a portion of the compensation received that corresponds to the percentage of the loans recovered.

regulations were amended, incorporating these items into
the second supplementary budget for fiscal 2008, augmented with funds generated by DBJ’s commercial paper
acquisition business on January 30.
Additional economic crisis countermeasures wereannounced on April 10, 2009, outlining specific measuresfor large-scale crisis response operations and earmarking a
total of ¥15 trillion for crisis response for medium-sized andlarge companies. In line with these measures, authorizationof a supplementary budget for fiscal 2009 was announced
on May 29, 2009. This budget received Diet authorization
on June 26, and the amendment to the New DBJ Act went
into force and was promulgated on July 3, 2009. These
measures paved the way to reinforce DBJ’s financial structure and facilitate crisis response operations.
For projects following the Great East Japan Earthquake,
which occurred on March 11, 2011, the Japanese government began conducting crisis certifications on March 12,
2011. Upon notification of such certifications, the implementation period for crisis response operations was re-extended.

Loans as Crisis Countermeasures
(Cumulative)(Billions of yen)
6,000

4,297.0

4,500
3,338.5
3,111.0
3,000

1,090

Commercial Paper Acquisition as Crisis Countermeasures (Cumulative)(Number of projects) (Billions of yen)
400
1,600
5,387.7361.0
4,887.7
68
300
1,200
1,115

944

817

48

Mar. 31,2010

Mar. 31,2011

Annual Report & CSR Report 2014

Mar. 31,2012

Mar. 31,
2013

361.0

68

68

68

68

60

1,123

1,500

0

361.0

(Number of projects)
80
361.0
361.0

Mar. 31,
2014

800

200

40

400

100

20

0

0
Mar. 31,2010

Mar. 31,2011

Mar. 31,2012

Mar. 31,2013

Mar. 31,
2014

0

DBJ’s Businesses

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

emergency situations that cause widespread anxiety about

affected by earthquakes, typhoons or other large-scale

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

natural disasters, the outbreak of severe acute respiratory

response unit to fill the gap that emerges when peacetime

syndrome (SARS), bovine spongiform encephalopathy (BSE)

financial platforms fail to function.

Disaster Recovery
Societal Concerns

DBJ Initiatives

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

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

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

Chuetsu Offshore Earthquake in October 2004. In addition

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

tant infrastructure that was destroyed. What is required is

assisted providers of everyday necessities such as foodstuffs

an entity that through its everyday business relationships

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

revitalizing the employment and economic situations of local

es that provide this core infrastructure. This entity also must

communities, prompting a revival in many fields.

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

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

Emergency Financing
Societal Concerns

DBJ Initiatives

Society requires institutions whose day-to-day operations

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

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

ing to the Japanese airline industry, which was immedi-

situations. These institutions must also have the working

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

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

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

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

Annual Report & CSR Report 201449

Initiatives Related to the Great East Japan Earthquake

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

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

Response to Electrical Power Supply Problems
Since the Great East Japan Earthquake, the stable supply ofelectricity has become an important issue from the standpoint of maintaining or strengthening Japan’s economic
and industrial competitiveness. The need to secure alternate
forms of fuel has caused electric utilities’ costs to increase
and required them to introduce new safety measures, both ofwhich were expected to deteriorate their balance of revenues

and expenses. Because of the difficulty the utilities would
have in issuing corporate bonds, DBJ responded quickly incollaboration with private financial institutions to secure thefunding needed to ensure a stable supply of electricity.
As of March 31, 2014, DBJ’s balance of loans in the energy (electric power, gas, heat and water) sector totaled ¥3.1
trillion.

Tohoku Revival Reinforcement Office
On April 21, 2011, DBJ established the Tohoku Revival
Reinforcement Office within the Tohoku Branch to consolidate and better provide companywide knowledge andfinancial expertise toward the restoration and reconstruction of the Tohoku and other disaster-stricken regions.
The Tohoku Revival Reinforcement Office has a crossdepartmental structure that spans the Regional Planning

Department, Financial Institution Department, and otherdepartments and branches. The office provides information related to estimating damage amounts in stricken
areas and communicates with government bodies, national
institutions, economic organizations and regional financial
and other institutions to conduct surveys. It also introduces
plans used in “creative reconstruction.”

Great East Japan Earthquake Reconstruction FundDBJ and financial institutions in areas affected by theearthquake formed the Great East Japan Earthquake
Reconstruction Fund to support the restoration and reconstruction of companies that sustained damage in theearthquake.

Name
Scale of fundEstablished
General partnerships(GPs)

The fund is aimed at providing support for the reconstruction of prominent regional companies that were temporarily affected by the disaster. The fund provides suchcompanies with risk capital that makes use of such instruments as subordinated loans and preferred shares, withthe aim of supporting expeditious reconstruction of thedisaster-stricken region.

Iwate Genki Ippai
Investment Limited
Partnership

Fukushima Booster
Fund Investment
Limited Partnership

MiyagiReconstruction
Bridge Investment
Limited Partnership

Ibaraki Kizuna
Investment Limited
Partnership¥5.0 billion (initially)
August 2011¥5.0 billion (initially)
August 2011¥5.0 billion (initially)
August 2011¥5.0 billion (initially)
September 2011

Tohoku Fukko Partners Co., Ltd.

Limited partnerships
DBJ and
DBJ and(LPs)
The Bank of Iwate, Ltd. The Toho Bank, Ltd.

SFG Partners Inc.

DBJ andThe 77 Bank, Ltd.

DBJ and
The Joyo Bank, Ltd.

Investment period of three years, duration of 10 years
PeriodProjects(As of March 31, 2014)50

Annual Report & CSR Report 2014

(If necessary, however, it is possible to extend the investment period by up to two years and theduration by up to five years.)

18 projects

11 projects

7 projects

7 projects

DBJ’s Businesses

Examples of Matching to Enhance Corporate Value Conducted for Investment and Loan
Recipients through the Great East Japan Earthquake Reconstruction Fund
• Aizu Sake Plan Student Contest
Suehiro Sake Co., Ltd., headquartered in the city of
Aizuwakamatsu, Fukushima Prefecture, received a loan
through the Fukushima Booster Fund Investment Limited
Partnership. Following an exchange of opinions, in February
2014 DBJ and the Aizuwakamatsu Distillery Cooperative
Association held the Aizu Sake Plan Student Contest with theaim of cultivating new markets. In this way, DBJ is actively
providing crisis reconstruction support through events and thedissemination of information.

• Collaboration between Kesennuma and Akiu Onsen
DBJ and Murata Co., Ltd., headquartered in the city of
Kesennuma, Miyagi Prefecture, a loan recipient through the
Miyagi Reconstruction Bridge Investment Limited Partnership,
held a Kesennuma design promotion meeting, attended byeight companies in the city of Kesennuma that are involvedin the processing of shark fin and shark meat, and conductedbusiness matching with the Akiu Onsen Ryokan Association.
By leveraging the networks that DBJ has created with its clients, collaboration led to the cultivation of sales routes andregional industry support initiatives.

Tohoku Future Creation Initiative
The Tohoku Future Creation Initiative (founders: Seiichi Ohtaki,
Manager of Graduate School of Economics and Management& Dean of Faculty of Economics, Tohoku University; andKentaro Ohyama, Representative Director of Iris Ohyama,Inc.) commenced in April 2012. Centering on private-sector
volunteers, the initiative aims to support the affected region’s
efforts toward reconstruction, autonomy and future value
creation. The initiative operates a center for personnel training
and cultivates managers and entrepreneurs. To promote urban

development and industry creation, the initiative dispatches
volunteers from among local chief executives to private-sector
support teams. These teams work with local governments to
put reconstruction plans into action and in other ways help
to lay the foundations for autonomous development in theaffected region. At the center for personnel training, DBJ takes
charge of a session themed on “management and finance,”
providing instructors, conducting training programs and cooperating with the project in other ways.

Ishinomaki Urban Revitalization Lecture
To promote the reconstruction of the area centered on the cityof Ishinomaki, which sustained severe damage in the Great
East Japan Earthquake, DBJ joined companies, universities andgovernment institutions to form the Compact City Ishinomaki

Machinaka Sosei Council for urban development by local residents. In March 2013, this council held the Ishinomaki Urban
Revitalization Lecture. DBJ provided overall support for planning and holding the lecture.

Collaboration Agreement on Industrial Reconstruction with Fukushima Prefecture
In March 2013, DBJ signed a collaboration agreement on
industrial reconstruction with Fukushima Prefecture. Under
this agreement, Fukushima Prefecture and DBJ will cooperate
on gathering information, conducting strategic reviews andcultivating personnel, taking an overall approach to invigorating the local economy by promoting local industry and tourism
and communicating the region’s attractions.
• Study Council on Fukushima Medical-Related
Industrial Cluster
DBJ and the DBJ Group’s Value Management Institute, Inc.,
served as the secretariat for the June 2013 Study Council on
the Fukushima Medical-Related Industrial Cluster, chaired by
Makoto Kikuchi, President of the Japan Association for the
Advancement of Medical Equipment (JAAME).
This council advocates a “Fukushima-driven Japanesemodel” of creating a new base for the medical instrumentbusiness in Fukushima Prefecture and supports business collaboration to that end.

• Fukushima Reconstruction Symposium
In May 2014, DBJ held the Fukushima Reconstruction
Symposium in the city of Koriyama, Fukushima Prefecture. The
symposium was jointly hosted by Xebio Co., Ltd., and sponsored by the Reconstruction Agency, Fukushima Prefecture,
and The Toho Bank, Ltd. The symposium provided an opportunity for related organizations, companies and public-sector
entities to discuss businesses aimed at creating a society inwhich the children of Fukushima Prefecture can come into
contact with nature and enjoy sporting and cultural events asthey grow up.
• Creation of a Location for the Rearing of Children That
Makes Use of Lake Inawashiro
To promote PFI initiatives that take advantage of the financial
expertise of private-sector organizations involved in crisis
reconstruction, the Reconstruction Agency and the Cabinet
Office are selecting and supporting crisis reconstruction projects that employ PFI methods. Through this project, DBJ introduces business methods, collaborates with related parties, andplans to provide future support.

The New Tohoku Partnership Promotion Committee
The Reconstruction Agency is working toward the Creation of“a New Tohoku.” To further promote initiatives by diverse bodies that are active in the stricken region, including companies,
universities and NPOs, in December 2013 the agency estab-lished the New Tohoku Partnership Promotion Committee to
conduct ongoing activities in Tohoku. Being in agreement withthe tenor of these activities, DBJ served as a founding memberof the committee and serves as its deputy chair.
Annual Report & CSR Report 201451

Restoration and Reconstruction Issues and Responses
The Great East Japan Earthquake was a complex major disaster, an infrequent type even on a global scale. We believethat restoration and reconstruction measures must be implemented on a step-by-step basis, in chronological order. Also,

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

Restoration and Reconstruction Support through Investment and Loan Activities

Phase B

Phase At First supplementary budget (May 2011)

Crisis response
operations

X Amount: Scale increase of ¥2.5 trillion
X Interest rate subsidy programs establishedt Second(Full-scale reconstruction)t Third supplementaryt Budget compiled forbudget (November
2011)

the fiscal year ended
March 31, 2013supplementarybudget (July 2011)

X Increase in amountJune 30, 2011
Approximately ¥57.1 billion(15 projects)

Performance Recordin Investment andLoans

Apr. Emergency
21, measures2011 owing to such

O Establishment of Great East Japan

Earthquake Reconstruction Fundfactors asrepayment
moratoriumstJoint funds with regional banks in Iwate, Miyagi,
Fukushima and Ibaraki prefecturestProvision of equity-type funding to support therevitalization of affected companies

O Support for formulation of community and other plans
O Surveys and advisory activities, other

O Establishment of Supply Chain

Support FundtJoint fund with Japan Auto Parts
Industries AssociationtProviding long-term, stable funding forrevitalization and restructuring support

O Business Continuity Plan

(BCP) Support for
Proliferation and Increasing
SophisticationtEnhancement throughrenewal of disaster
preparedness system

X Amount: ¥2.0 trillion
measurePerformance as ofMarch 31, 2014
¥1,997.0 billion (160 projects)

Dec.
12,
2011
Opening of the Special Zone for Reconstruction
Support and Counseling CenterIndustry initiatives

Establishment of Tohoku Revival
Reinforcement Office

Regional initiatives
Initiatives addressing
energy problems

52

Phase C

(Early phase ofrestoration works)(Emergency responses)

Strengthening theindustrial base througha system of special
zones for reconstruction(interest subsidies, etc.)
Provision of risk capitalthrough the Great East
Japan Earthquake
Reconstruction Fund

Independent support
through the DBJ Smart
Japan Program

Proactive involvement
in reconstruction
projects (PFIs, urban
regeneration,
renewable energy, etc.)

O Support targeting primary damage, in response

to bond market confusion
Loans to electric
power companies

Annual Report & CSR Report 2014

Responding to funding needs
since the disaster
Power Generation in the United States Using
Renewable Energy, an investigative research report

Liaison with theReconstruction Agency
Office for the Promotionof Business Collaboration

DBJ’s Businesses

Addressing Energy Issues

Responding to the Need to Reconfigure the Energy Supply Structure
Reforms to the electric power system are providing opportunities for the retail sale of electric power and allowing new
entrants into the field of electric power generation. Given suchchanges, over the medium term this sector is likely to requirelarge-scale funding to replace aging thermal power plants andconstruct new facilities. Meanwhile, from the perspective ofglobal warming countermeasures, the energy sector will needto secure diverse new power sources, including such renewable energies as solar and wind power, and build a value chain
to ensure stable fuel supplies.
In response to this situation, DBJ is working closely withother financial institutions and related entities to coordinate
the provision of capital and other funds.

Response to TEPCO Needs
Recognizing that the most important issue for Tokyo ElectricPower Company, Inc. (TEPCO), lies in balancing appropriatecompensation payments to Fukushima power plant accident
victims while simultaneously providing a stable supply of electricity, DBJ began collaborating with major banks immediately
after the accident to provide financing. DBJ has continued toprovide support through a backup commitment line for compensation payments established on the basis of an emergency
special business plan approved by the prime minister and theminister of economy, trade and industry in November 2011.
In May 2012, the prime minister and the minister of
economy, trade and industry approved a comprehensive special business plan supporting the utility’s efforts to become a“new TEPCO.” Under this comprehensive plan, in addition tomaintaining a credit balance DBJ is to provide loans of approximately ¥500.0 billion of the some ¥1 trillion in cooperative
funding requested under the plan, partly by making use of
DBJ’s loans for crisis response operations.
To ensure that the new comprehensive special business plan approved by the prime minister and the ministerof economy, trade and industry in January 2014 proceedssmoothly, DBJ regularly discusses its progress with TEPCO andthe Nuclear Damage Liability Facilitation Fund. Accordingly,
we continue to support victim compensation payments,
Fukushima reconstruction, reactor decommissioning, and accident convergence activities such as water pollution countermeasures, a stable supply of electricity and initiatives to raise
corporate value.

Investing in HEPCO and Kyushu Electric Power Preferred Shares
Since the Great East Japan Earthquake, the environment inwhich electric power companies operate has changed dramatically. Under these new management conditions, electric
power companies are being called upon to reform their powersystems.
In response, Hokkaido Electric Power Co., Inc. (HEPCO),
is planning strategic infrastructure enhancements, such as
augmenting its Hokkaido-Honshu high voltage direct current (HVDC) link and building a new port generation facility
in Ishikari Bay.

Kyushu Electric Power Co., Inc. is working to meet the newstandards on nuclear power generation facilities by enhancing
safety measures on its nuclear reactors.
By investing in preferred shares in these companies, DBJ
helps to ensure the medium-term investment needed to provide a stable supply of electricity. In this way, DBJ is making
use of the integrated investment and loan function, its forte,and helping to the expansion of financial structures.

Initiatives to Expand the Market for Renewable Energy
The introduction of solar power, wind power and otherrenewable energies that do not deplete resources, are repeatable and do not impact the environment are essential to maintaining a steady supply of energy.

DBJ collaborates with regional financial institutions toprovide long-term funds and risk money to support various
initiatives aimed at helping to expand the renewable energy
market.

Annual Report & CSR Report 201453

Making Use of Information Functions

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

Economic and Industrial Research
In a broad range of industrial circles, DBJ researches conditions
in various sectors and among different types of businesses,
conducting surveys and performing research on such topics
as international competitiveness. DBJ also prepares reports
on conditions in individual industries, technical development
trends and new industries and innovation. We provide feedback on these reports to our clients, as well as other parties.
Survey Examples
DBJ Monthly Overview
This report provides a brief commentary on domestic andoverseas economic and industrial trends and monthly business indicators.
The report explains domestic and overseas economic
trends through an analysis of economic and financial indicespublished each month. In recent years, the global economic
and financial markets have grown more closely linked. With
regard to these global markets, the reportaims to further that integration by introducing overseas fiscal and monetary policy andcommenting on current topics.
In addition, the report addresses topics that are timely from the perspective ofindustrial trends.
“Reinforcing Industrial Competitiveness by SupportingCore Value Chain Companies, Fiscal 2013 Edition”(DBJ Monthly Overview, No. 203, December 2013)
DBJ refers to companies that generate value across the supply chain as “core value chain companies.” Since fiscal 2012,
DBJ has been working to identify, analyze and support suchcompanies.
This report considers these companies from numerous
perspectives, in five sections: a survey
overview of core value chain companies;
methods of identifying, analyzing andevaluating core value chain companies;
analysis and evaluation results; initiatives tosupport core value chain companies; andconsiderations and future outlook.

54

Annual Report & CSR Report 2014

“Leveraging Big Data to Enhance Competitiveness—
Issues and Countermeasures”(DBJ Monthly Overview, No. 196, September 2013)
The ongoing march of information technology has led to theconcept “big data,” in which huge volumes of diverse data
are gathered, analyzed and stored in real time as information assets. The growing prevalence of smartphones, tabletsand machine-to-machine (M2M) communications is causing
the volume of data to skyrocket. The types of data available
are growing more diverse as well, encompassing email andTwitter feeds, as well as unstructured information from sensors and cameras providing locational information and dataon the status of equipment. The volume
of such data is expected to expand. This
report looks at the potential for creating
new markets and services that make useof big data, considers potential issues withregard to using such data and discusses
countermeasures.
DBJ Long-Term Interest Rate Weekly Outlook
DBJ provides its clients with weekly long-term interest rate
movement information on the first business day of each week.
Focused on Japan and the United States, we offer a brief summary of market trends during the previous week and introduce
key economic indicators, treasury auctions and other events
scheduled in the current week. DBJ economists comment on
the effects of important economic indicators and monetary
policy announced during the week, providing an outlook formarket trends based on the analysis of economic fundamentals.
“Corporate Governance and Diversified Action—
Verification Analysis Using Japanese Corporate Data”(Economics Today, Vol. 34 No. 5, February 2014)
This report discusses the increasing diversification of corporate
business activity in Japan based on data for listed companies
over the past 20 years. In a verification analysis, the reportfocuses on the relationship between corporate governance anddiversification, examining whether ownership
structure and other company-specific aspectsof corporate governance affect diversification, or whether the degree of diversification
is a dimension of governance variables, aswell as the impact of corporate performance.

DBJ’s Businesses

Activity in the International Intellectual Community—Cooperation with Columbia University
DBJ and the Center on Japanese Economy and Business(CJEB; Director: Professor Hugh Patrick), a research
institution affiliated with the Columbia Business School,
jointly held an international conference in May 2014
entitled “Restoring the Japanese Economy,” inviting eminent scholars and professionals from various fields.
DBJ and CJEB have long been keeping a cooperative
relationship through DBJ’s dispatch of research fellows to
CJEB, CJEB’s utilization of DBJ’s information network for
its research, the holding of joint study meetings and so on.
DBJ takes a proactive role in providing intelligence
regarding the economy and finance to the international
intellectual community by collaborating with internationally prominent academic institutions.

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

Survey Example“Report on June 2013 Survey ofCapital Investment Plans for Years
to March 31, 2013, 2014 and 2015”(Surveys, No. 106, September 2013)
After completing our questionnairebased survey on corporate capital
investment activity, the Survey ofCapital Investment Plans, we publicized
the results, as well as our analysis.

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

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

Disaster Response
Being prepared to respond to an earthquake or other natural
disaster and continue operations is an issue for every company. DBJ conducts surveys covering the corporate business
continuity plans companies have established. In fiscal 2006,
we incorporated survey results to form the basis for Financing
Employing DBJ Disaster Preparedness Ratings, which we use in
our financing considerations. Financing Employing DBJ Disaster
Preparedness Ratings was substantially revised in August 2011.
Thereafter, the name of this system was changed in 2012 to
the DBJ Enterprise Disaster Resilience Rated Loan Program.

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

Annual Report & CSR Report 201455

Providing Information to Local Communities
Supplying Information to Help Local Community
Development
Local communities areexperiencing increasingly
difficult environmental
circumstances, such asa declining birthrate, anaging population, theamalgamation of towns, cities and villages, and financial
crises. Addressing these issues requires a greater degree ofexpertise and more ingenuity than ever. DBJ assists by analyzing the information it accumulates through its networkof offices (19 domestic locations—head office, branches
and representative offices—and four overseas locations—subsidiaries and a representative office (as of July 1, 2014)),
economic agencies of regional governments and local communities, and companies in Japan and abroad. DBJ disseminates this information through reports, publications, lecturesand other formats to encourage public-private partnerships(PPPs), promote tourism, build up local communities, andcontribute to local government financing.

“Fiscal 2014 Regional Handbook: Regional Data and Policy
Information”
This handbook is a collection of data that include fundamental
economic, industrial, lifestyle and policy indicators for regional
blocks, administrative regions and principal cities, as well as acompilation of individual regional policies andprojects to facilitate an overall understandingof regional policies, economies and societies
and the current status of regional projects. In
the Topics section, Yoshiyuki Mano, professor of the Faculty of Sport Sciences, Waseda
University, contributed a special section
entitled “The Tokyo 2020 Olympics andParalympics.”“Issues Faced by Merging Villages, Towns and Cities fromthe Standpoint of Public Finance—Lost Tax Allocations of¥900 Billion and Aging of Public Facilities”
This report explores the various issues faced by merging villages,
towns and cities as part of the so-called
Heisei merger. It looks at the effect that theending of preferential measures on mergers
from a public finance perspective has had
on fiscal administration and the measuresthat these merging entities should introduce
going forward with regard to public facility
management and making proactive use of
the PPP/PFI initiatives that government is currently promoting.

“Regional Trends Regarding the Formation of Medical
Instrument Clusters”
The medical instruments industry is expected to enjoy steady
growth on a global scale. Furthermore, the industry has numerous related sectors, suiting it for cultivation as the core industry
for a region; so, many regions are working to establish their own
clusters in this category. This report covers
the environment surrounding the medical
instruments industry and considers measuresfor promoting regional clusters. The reportintroduces efforts underway in Fukushima
Prefecture, which has made significant headway in the promotion of diverse medical
instrument clusters.
“Using ‘Smart Venues’ as Core Urban Sporting Locations—
Multipurpose Facilities as Interactive Spaces for Regions”
Given that Japanese society is characterized by a shrinking andaging population, the public finance situations of the national
government and government bodies are likely to grow increasingly serious. Against this backdrop, theconsolidation of urban functions is needed
to increase the efficiency of public disbursements. One proposal in this direction calls forthe promotion of the “compact city.” This
report concentrates on stadiums, arenas,
and other sports facilities as core interactive
spaces for the formation of compact cities.

Branch Reports
Hokkaido Branch“Learning from Business Strategies for Kobe Sweets
to Further Promote the Development of Confections
from Hokkaido”(Report, March 2014)
Hokkaido has a solid brand that is wellregarded in Japan and overseas. The
Hokkaido confectionery industry is astrong employer that has chalked up
steady growth in recent years. With
Japan’s population falling and new56

Annual Report & CSR Report 2014

companies entering the market, the confectionery businessis expected to grow increasingly challenging. Hokkaido’sconfectionery industry has developed by making use of foodstuffs produced in the region, addressing the ongoing issue
the region faces of how to add value to its primary-sector
products. Further development of “Hokkaido sweets” is considered one way to bring about a market change.
This report compares “Kobe sweets” with “Hokkaido
sweets,” looking at corporate trends and analyzing the outlook for the future.

“Tourists’ Sentiments about Visiting Japan after theGreat East Japan Earthquake (2013 Edition)”(Report, December 2013)This report is a sequel to “Tourism
Consciousness toward Japan
Following the Great East Japan
Earthquake (Eight Asian Regions),”
published in December 2012. Basedon Internet surveys of potential tourists to Japan from eight Asian regions(South Korea, China, Taiwan, Hong
Kong, Thailand, Singapore, Malaysia,
Indonesia), this survey concentrates on responses related
to the impact of the Great East Japan Earthquake. Survey
results suggested that although potential tourists were notaltogether devoid of concerns about post-disaster Japan
from a safety perspective, some 70% of respondents had apositive outlook toward traveling to Japan.

Niigata Branch“Growth Initiatives and Issues Facing Companies in
Niigata Prefecture” (Report, September 2013)
DBJ conducted its Corporate Behavior
Awareness Survey in tandem with its
Capital Investment Planning Survey,
and the DBJ Niigata Branch summarized survey results pertaining to companies in Niigata Prefecture.
These results suggested the following characteristics among companies
in Niigata Prefecture.
(1) Manufacturers in the prefecture tended to focus on new
product development and design and manufacturing-process
efficiency increases to augment growth and strengthen competitiveness. (2) Issues they faced were related to technological skills and human resources.
(3) More than half cited “concentrate on using internal
resources” as measures to address the issues they faced, suggesting a strong predilection toward products and manufacturing, but with a conservative bent.

Hokuriku Branch“Harnessing the Power of Women in Manufacturing
Industries” (Report, September 2013)
With Japan’s working population
decreasing in line with the overall
population, leveraging the powerof women in the workforce is being
touted as one way to address Japan’s
impending labor shortage.

DBJ’s Businesses

Tohoku BranchThis report examines the current status of women
employed in the manufacturing sector and looks at possibilities for the future. The report also explores the Hokuriku
region, where the rate of female employment is high, looking at harnessing the “power of women” from a female perspective. The study finds examples of companies that generate high-value-added products and introduces government
initiatives to create women-friendly working environments.

Tokai Branch“The Aging of Manufacturing Facilities in Tokai—
Ample Funds on Hand, But a Lack of Strategic
Investment” (Report, December 2013)
With the capital markets unsteady inthe aftermath of the Lehman shock,many companies tended to accumulate funds on hand, such as cash andequivalents and securities holdings.
Manufacturers in the Tokai region
continue to maintain high balancesof funds on hand, even now that thecapital markets have normalized.
This report uses estimated ages of facilities to show clearly
the aging of manufacturing equipment in the region andsuggests that companies could use the abundant funds they
have on hand to make strategic capital investments thatwould lower the age of their fixed capital and boost corporate value.

Kansai Branch“Kansai Manufacturing: ‘Building Fans through
Design Innovation” (Report, April 2014)
Although the Kansai region’s economy
has been upbeat in recent years, major
structural changes continue unabated,
due to commoditization and the overseas shift of manufacturing. Against
this backdrop, it is increasingly important for Kansai companies to augment
their erstwhile strengths in functionality and quality with unique characteristics, generating products and services that are difficult forother companies to emulate.
This report follows on from the thesis of a report issued
in March 2013 entitled “Kansai Companies Using Design
Innovation as a High-Value-Added Strategy—Case Studies ofCompanies Using Design as a New Management Resource.”
This report defines “organizational design capabilities” as animportant element of value creation and introduces examplesof Kansai companies that generated hit products by making
effective use of this element.

Annual Report & CSR Report 201457

Chugoku Branch

Kyushu Branch“Ongoing Development of the Automotive Industry
in the Chugoku Region—Focusing on Trends among
Automotive Parts Suppliers in Hiroshima andOkayama” (Report, December 2013)
The Japanese manufacturing sector
has embarked on a path of globalization in recent years, shifting production to the most appropriate region,and this environment is difficult tochange. Amid these conditions, thisreport looks at the need to clearly
define the division of roles and theimportance of domestic and overseas
bases for automobile production, which is a core industry for
the Chugoku region. Based on a recognition of the importance of the ongoing development of this industry and a
growing sense of urgency, the report summarizes the resultsof interviews with 31 auto parts suppliers that have established their headquarters in the Chugoku region.

“Issues and Expectations for the Growth Industryof Plant Factories and Other Types of High-Tech
Agriculture in Kyushu” (Report, March 2014)
Kyushu, which accounts forapproximately 20% of all agricultural production in Japan,
plays an important role in
the nation’s sourcing of farm
produce. As in other parts ofJapan, however, in Kyushu
the average age of farmers is rising, and the industry faces
potential challenges from trade agreements such as theTrans-Pacific Partnership.
This report looks into the recent phenomenon of factory
farming as a method to convert agriculture into a growthindustry. Looking at the example of advanced farming countries such as the Netherlands and Israel, the report explores
some of the issues of plant factories and looks at the potential for their introduction in Kyushu.

Shikoku Branch

Minami-Kyushu Branch

Trial Calculation of “The Economic Ripple Effect from
‘The Setouchi Triennale 2013’” (Report, December 2013)“The Setouchi Triennale 2013” is amodern art festival held against the
backdrop of Naoshima and otherislands within the Seto Inland Sea.
The 2013 festival was the second so
far, after an inaugural event in 2010.
Sessions were divided into the seasons of spring, summer and autumn.
With its attractiveness augmented
by displays on an increasing number of islands, the festival
attracted numerous visitors from Japan and overseas.
In cooperation with the Art Setouchi Executive Committee,
this report makes a trial calculation of the economic ripple
effect of the Setouchi Triennale 2013 and examines the eventfrom the perspective of community revitalization.

“The Changing Population Structure in the City ofKagoshima—Ongoing Increases in the Average Ageof Residents in Housing Estates” (Report, January 2014)
The average age of the Japanese population is rising, and Kagoshima is no
exception. As of 2010, the city’s seniorcitizens already accounted for 21.2%of the population, putting it within the
category of the “super-aging society.”
Taking the city of Kagoshima as its
subject, this report analyzes the agingof the population. Specifically, it maps
the city using Japan’s national census
mesh statistics, looking in particular at potential aging-related problems in the city’s housing estates, clarifying the severity of the problem going forward. The report also suggests a
number of approaches for addressing the issue.

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

58

Annual Report & CSR Report 2014

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

CSR Report

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

Implementing CSR Management . . . . . . . . . . . . . . . . . .61
CSR through Investment, Loan andOther Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
Environmental Management . . . . . . . . . . . . . . . . . . . . .88
Business Continuity Plan (BCP) . . . . . . . . . . . . . . . . . . . .92
Fostering Human Resources and Creating a
Comfortable Work Environment . . . . . . . . . . . . . . . . . .94

Annual Report & CSR Report 201459

Editorial Policy
To expand communication with all stakeholders, in 2003, DBJ first issued Environmental Report 2003 for a Sustainable
Society. This was followed by annual sustainability reports in 2004 and 2005. In 2006, DBJ published the CSR Report. Since
the fiscal year ended March 31, 2008, DBJ has combined its annual report and CSR report under the concept of ”disclosure
from a CSR perspective.” DBJ will continue publishing CSR information introducing its initiatives to help realize a sustainable
society.
As in previous years, this report explains how DBJ came into being, as well as the services DBJ provides. The report aims
to show that DBJ fulfills its corporate social responsibility through the careful attention it accords to each of its activities,
incorporating this discussion of the status of its recent activities. Furthermore, we have employed the following guidelines inour effort to enhance the report’s readability.


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

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

Head office, 10 branch offices and eight representative offices

Overseas: One overseas representative office
Period covered:

The fiscal year from April 1, 2013, to March 31, 2014
As this report is designed to illustrate ongoing initiatives, some of the case studies for investment,
loan and other business contained herein are the same as in past issues. Furthermore, some of
the information indicated herein will have been updated by the time this report is published.

Publishing Details
Published:

September 2014

Next publication:

September 2015 (previous publication: September 2013; frequency: annual)

Reference Guidelines
The Sustainability Reporting Guidelines (Fourth Edition), issued by the Global Reporting Initiative (GRI), were used as
reference guidelines.

60

Annual Report & CSR Report 2014

CSR Report

Implementing CSR Management

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

Fields of CSR Implementation at DBJ

DBJ’s Two Fields of CSR
CSR through Investment, Loan and Other Businesses
Japanese economy, financial markets, and investments
and loans in response to corporate issues

Challenges for the Japanese economy
Issues in themacroeconomy

Environmental and Social
Contribution Activities
Social organization, voluntary
contributions by employees tothe environment, society andthe community

Issues for firms(“semi-macroeconomic”)

Issues for financial
and capital markets

Environment
Providing anchored risk money and knowledge
from long-term perspective
Four Primary Areas
Growth support

Infrastructure &energyRegional revitalization
tailored to regionalneeds

Community
Revitalization

Strengthening the safety net

Three Functions to Leverage
Risk-sharing
finance

Market-stimulating
Knowledge bankfinanceCommunication inInternational Cooperation

Environmental
Management

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

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

Annual Report & CSR Report 2014

61

DBJ and Its Stakeholders
DBJ comes into contact with a wide variety of organiza-

DBJ strives to increase its dialogue with stakeholders in its

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

effort to realize a sustainable society.

DBJ secures financing through the issuance of Fiscal

DBJ’ s investment and loan services involve clients in

Investment and Loan Program (FILP) agency bonds

numerous regions and across a variety of industries.

and government-guaranteed bonds, through direct

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

corporate bonds and through loans
from private-sector
financial institutions.

Clients

nt

Investors

rnme

As of March 31,
2014, DBJ’ snumbered 1,189.
DBJ employee trainingg

Employees

Society

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

Gove

employees

s/
NPO s
NGO

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

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

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

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

62

Annual Report & CSR Report 2014

Creation ofSocial Sustainability

Environment

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

Even after privatization, DBJ aims to continue contrib-

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

DBJ’s business effectiveness and results, thereby improving

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

society and work to promote the realization of a sustain-

Loan and Other Businesses.

able society.

CSR through Investment, Loan and Other Businesses
Due consideration of compliance issues is a prerequisite for

Accordingly, DBJ considers the application of its intellec-

the sustainable development of enterprises. Accordingly,

tual assets and service platforms for investments and loans

it is important that a corporation’s business activity brings

to be of vital importance.
Specifically, DBJ will apply the distinctive features andnew value to, contributes to problem-solving in, and gains

financial services that it has realized in the past to provide

the trust of society.
Financial institutions can play a specific role in building a

to clients various solutions that address expected changes

harmonious society over the long term by identifying truly

and other issues that are forecast for the economic andmeaningful projects for the economy and society and pro-social environments. In this way, DBJ will proactively lever-viding quality financing and other financial solutions.

age its three functions—risk-sharing finance, market-stim-

We believe that DBJ can gain the trust of society withulating finance and knowledge bank—to take part in four

CSR through investment, loan and other businesses, suchprimary areas: growth support, infrastructure & energy,

as the provision of services that lead to client satisfaction,

regional revitalization tailored to regional needs, andincreases in corporate value, coexistence with regional soci-strengthening the safety net.

eties and the creation of employee-friendly workplaces.

Corporate Philosophy

CSR through Investment, Loan
and Other Businesses

Providing anchored risk money and knowledge from long-term perspective
Four Primary Areas
Growth support

Infrastructure & energy

Regional revitalization
tailored to regional needs
Seepage 66.

Strengthening the safety net

Three Functions to Leverage
Risk-sharing financeMarket-stimulating finance

Knowledge bank

Annual Report & CSR Report 201463

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

symposiums in collaboration with local authorities andproblems can best be resolved by communication and theregional branches of the Japan Chambers of Commerceexchange of opinions. Accordingly, DBJ strives to commu-

and Industry and other economic organizations.

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

Tokai Branch
Messe Nagoya

Communication Focused on the Environment

Messe Nagoya 2013 was held to carry forth the philoso-

Environmental problems such as global warming must bephies of the 2005 World Exposition, Aichi, Japan, (in the

resolved, starting with individual awareness of the severity

areas of the environment, science and technology, andof the issues.

international cooperation).

DBJ promotes understanding of the relationship

DBJ’s initiatives were introduced at this exposition,

between the environment and financial and business activi-

including the environmentally related DBJ Environmentallyties by participating in the Eco-Products Exhibition, Japan’sRated Loan Program, disaster preparedness related DBJ

largest environmental event, and holding seminars andEnterprise Disaster Resilience Rated Loan Program and DBJ

symposiums in conjunction with relevant organizations.

Green Building Certification.

DBJ has had a booth at the Eco-Products Exhibition
every year since fiscal 2001. Through display panels,
we introduce various DBJ activities, such as the DBJ
Environmentally Rated Loan Program and the DBJ Enterprise
Disaster Resilience Rated Loan Program. In fiscal 2012, we
also lectured on the theme of Q&A on Financing Employing
DBJ Environmental Ratings, attracting numerous visitors toour booth.
Messe Nagoya 2013 boothCommunication in International Cooperation
DBJ holds seminars for developing countries’ governmental
and developmental financial institutions, primarily those in
Asia, describing the Bank’s experience in applying policybased financing to support the reconstruction and growthof the industrial economy of postwar Japan. Participants
Eco-Products 2013 boothalso benefit from our accumulated expertise in policy issues
such as energy conservation, environmental measures andprivate infrastructure.
The Development Finance Course, for example, is aseminar that has attracted 346 people from more than
30 countries since it was inaugurated by DBJ in 1967. In
recent years, we have responded to requests from thegovernments of Japan and other countries. Such projects
include one to support credit risk management at Vietnam

Eco Presentation Stage (Eco-Products 2013)

Communication on Community Revitalization
DBJ considers working with local citizens to build communities that suit their unique environments an importantpart of supporting independent community development.
To this end, DBJ sponsors such events as seminars and64

Annual Report & CSR Report 2014

Development Bank, a detailed design project for theDevelopment Bank of Mongolia and a development banksupport project in southern Africa.
DBJ is a member of the Association of Development
Financing Institutions in Asia and the Pacific (ADFIAP),
and since 1976 we have been networking with financial
institutions from China, South Korea, ASEAN countries,

CSR Reporting was held in Moscow, Russia. DBJ received an ADFIAP

Participating in Activities That Contribute toSocietyAward for its efforts through the DBJ Enterprise Disaster

TABLE FOR TWO

Resilience Rated Loan Program, citing their effectiveness

DBJ began participating in the TABLE FOR TWO* program onin addressing large-scale natural disasters, which have

March 29, 2010. Under this program, one of the meals in our

become an increasing point of focus in Asia.

company cafeteria each day is designated as a ”healthy menu”

India and other areas. In 2014, ADFIAP’s annual meet-

option. Through proactive employee participation in this program, as of the end of May 2014, DBJ’s contributions totaled¥1,445,720—enough to provide 72,286 meals.
*TABLE FOR TWO is a program run by the non-profit organization
TABLE FOR TWO International. Under this program, each time a specific food item is purchased, a ¥20 donation (enough money to purchase
one school lunch in a developing country) is donated to purchase aschool lunch for one child.

ADFIAP annual meeting in Moscow, Russia

Other Communication Efforts
Providing Information
Video Introduction to CSR Initiatives

A healthy menu

To make DBJ’s CSR activities more easily understandable, onCampaign

our website we have included video content entitled DBJ’s
CSR: Strengthening Society through Financial Expertise. We
also showed this video at the Eco-Products 2013 exhibition.
http://www.dbj.jp/co/csr/index.html (Japanese only)

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

Issuing CSR Reports
To expand communication with all stakeholders, in 2003,
DBJ issued Environmental Report 2003 for a Sustainable
Society. This was followed by similar reports in 2004 and2005. In 2006, DBJ published the CSR Report.

Marunouchi shuttle bus

DBJ has combined its annual report and CSR reportunder the concept of ”disclosure from a CSR perspective.”
DBJ will continue publishing CSR information introducing
DBJ’s initiatives to help realize a sustainable society.

Annual Report & CSR Report 2014

65

CSR through Investment, Loan and Other Businesses

DBJ promotes CSR through investment, loan and other businesses to solve social problems.
Specifically, DBJ will apply the distinctive features and financial services that it has realized in the past to provide to clients various solutions that address expected changes and other issues that are forecast for the economic
and social environments. In this way, DBJ will proactively leverage its three functions—risk-sharing finance,
market-stimulating finance and knowledge bank services—to take part in four primary areas: growth support,
infrastructure & energy, regional revitalization tailored to regional needs, and strengthening the safety net.

CSR through Investment, Loan and Other Businesses
Japanese economy, financial markets, and investments and loans
in response to corporate issues

Challenges for the Japanese economy
Issues in the macroeconomy

Issues for financial and capital
markets

Issues for firms( “semi-macroeconomic” )Providing anchored risk money and knowledge from long-term perspective
Four Primary Areas
Growth support

Infrastructure & energy

Regional revitalization
tailored to regional needs

Strengthening the safety net

Three Functions to Leverage
Risk-sharing financeMarket-stimulating finance

Knowledge bankCase Studies
Growth Support

DBJ Green Building Certification . . . . . . . . . . . . . 79

Promotion of Competitiveness . . . . . . . . . . . . . . . 67



M&A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69







Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Healthcare and Welfare . . . . . . . . . . . . . . . . . . . . 72



DBJ Environmentally Rated Loan Program . . . . . . 73



DBJ Enterprise Disaster Resilience Rated
Loan Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Public–Private Partnerships/Private FinanceInitiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

DBJ Employee’s Health Management Rated
Loan Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

Regional Revitalization Tailored to Regional Needs

Infrastructure & Energy

Strengthening the Safety Net

Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Transportation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

66

Urban Development . . . . . . . . . . . . . . . . . . . . . . . 78

Annual Report & CSR Report 2014

Community Revitalization . . . . . . . . . . . . . . . . . . . 82

Reconstruction Response . . . . . . . . . . . . . . . . . . . . 86



CSR Report

Growth Support

Promotion of CompetitivenessThe current state of the Japanese economy is characterized by a sense of gradual recovery. At thesame time, however, the government needs to steadily introduce a variety of strategies and measures to ensure this growth, as well as to reinforce the competitiveness of the country’s industries.
Particularly important are efforts to maintain core competitiveness (by ensuring human resources,
supply chains, R&D site functions and other domestic production infrastructure, as well as appropriately updating capital stock) and to strategically enhance competitiveness (by creating new value
through links between different industry sectors and promoting initiatives that span the value chain
from the upstream to the downstream ends).

Case Study

LIXIL/GROHE

LIXIL Corporation, headquartered inbusiness of curtain wall, and by 2013

Consequently, DBJ aims to enhance

Chiyoda-ku, Tokyo, is the core busi-

had also acquired American Standard

the overall corporate value of theness company of the LIXIL Group, theBrands, a U.S. company that is a lead-

LIXIL Group.

largest housing and building materials

ing North American manufacturer of acompany in Japan.

wide range of high quality kitchen and

LIXIL and DBJ are 50–50 partners

bath products. Through these acquisi-

in a special-purpose company that has

tions, LIXIL is increasing the number

acquired 87.5% of the outstandingof home product brands under its

shares in GROHE Group S.à r.l., head-umbrella and proactively expanding its

quartered in Luxembourg, one of the

global business.

leading providers of premium sanitary

The acquisition of shares in thefittings. The LIXIL Group’s Medium-

GROHE Group was one aspect ofTerm Management Vision, announced

LIXIL’s efforts to this end. Through its

in May 2011, expresses its aim as

joint investment, DBJ provides sup-“Becoming a comprehensive housing

port on the financial front, as well as

solutions provider targeting the global

the expertise gained through opera-

market.” In 2011, LIXIL acquired Italy’s

tions in Japan and overseas, human

Permasteelisa, which is involved in the

resources and information networks.

Case StudyGROHE products

Omori Machinery

Since its establishment in 1948, Omori

and expertise. For this reason, DBJ has

Machinery Co., Ltd., headquarteredidentified Omori Machinery as a “corein the city of Koshigaya, Saitama

value chain company.”*

Prefecture, has evolved into an indus-

DBJ provided Omori Machinery

try leader in the development andwith anchored risk money to acquire

provision of various sorts of packag-

Multi Pack Systems Private Limited,ing equipment and systems tailoredheadquartered in Gujarat, India (nowto customers’ needs. The company’s

OMORI India Private Limited). Throughmanagement philosophy expresses its

this acquisition of a local manufac-

aim to “develop packaging systems

turer of packaging equipment, Omori

that satisfy users with their quality

Machinery aims to participate in theand contribute to a more international

rapidly growing Indian market forsociety.” Having succeeded in the

packaging equipment. The acquisition

development of highly challenging

extends Omori Machinery’s global

packaging equipment and systems,

reach and should enhance its overseas

the company has amassed a wealthcompetitiveness.

* A core value chain company is one thatplays a key role in the value chain due toits advanced technological capabilities.

OMORI India Private Limited plantof advanced proprietary technologies

Annual Report & CSR Report 201467

Promotion of Competitiveness
Case Study

Maritime Innovation Japan

Maritime Innovation Japan

Heavy Industries Marine Machinery

Corporation (MIJAC), headquar-& Engine Co., Ltd., and Yanmar Co.,

Industrial Competitiveness to pro-tered in Shinagawa-ku, Tokyo, wasLtd.). These members jointly invest invide anchored risk money to support

established in April 2013 as an R&D

MIJAC and take part in business part-

MIJAC’s initiatives. This involves forg-

platform for the marine transportnerships through the organization.

ing strategic partnerships among mul-sector. Currently, participating mem-

MIJAC was established to raise

tiple shipbuilders and marine shipping

bers are five shipbuilders (Imabari

the level of technologies in Japanesecompanies to consolidate technologi-

Shipbuilding Co., Ltd., Oshima

shipbuilding, ocean transport andcal capabilities and expertise in the

Shipbuilding Co., Ltd., Sanoyas

other marine-related activities. In

aim of creating and commercializing

Shipbuilding Corporation, Shinkeeping with its vision of continuing

the new value needed to enhance

Kurushima Dockyard Co., Ltd., andto enhance Japanese technologies

the international competitiveness of

Tsuneishi Shipbuilding Co., Ltd.), NYK

and taking them to the world, MIJAC

Japanese shipbuilders.

Line, Nippon Kaiji Kyokai (ClassNK)

conducts research and development

and eight manufacturers of marine

activities on ship design and con-equipment (Uzushio Electric Co., Ltd.,

struction, ship-operating technology,

Taiyo Electric Co., Ltd., Daihatsu Diesel

technologies to reduce CO2 and otherMfg. Co., Ltd., Terasaki Electric Co.,noxious emissions from ships, and theLtd., Nakashima Propeller Co., Ltd.,

efficient use of ocean energy.

DBJ utilized the Fund for Japanese

Nabtesco Corporation, Mitsubishi
BulkerMIJAC’s Development Network

National Maritime
Research Institute

MIJAC

O

Ministry of Land,
Infrastructure, Transport
and Tourism

DBJ

Classification Society
Shipyards

ClassNK

Marine Equipment Manufacturers
O

Imabari Shipbuilding

O

Oshima ShipbuildingO

Sanoyas Shipbuilding

O

Maritime Shippers

O
O(Advisors)
Kawasaki Kisen O NYK LineO Mitsui O.S.K. LinesO

O

Shin Kurushima Dockyard

O

Tsuneishi Shipbuilding

O
O
O

O

O

Uzushio ElectricTaiyo ElectricDaihatsu Diesel Mfg.
Terasaki Electric
Nakashima Propeller
Nabtesco
Mitsubishi Heavy
Industries Marine
Machinery & Engine
YanmarUniversities

Cargo Owners
O

O
O

68

Annual Report & CSR Report 2014

(Joint Researchers)
Iknow MachineryOWärtsilä in JapanOMayekawa Mfg.
OMitsubishi Heavy
IndustriesO

The University ofTokyo
Osaka University
Hiroshima
University

O

O

O

Yokohama
National University
Osaka Prefecture
University
Kyushu University

CSR Report

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

Case Study

Kuroda Precision Industries
When Kuroda Precision Industries

manufacturer of parts for precision

headquartered in the city of Kawasaki,

contemplated the acquisition of com-equipment, and provided advisory

Kanagawa Prefecture, manufactures

panies overseas toward its next stage

services. At the same time, we pro-and sells such products as ball screws,of global development, DBJ proposed

vided acquisition financing jointly with

precision press molds, tooling, gauges,

the acquisition of Avingtrans Industrial

Mizuho Bank, Ltd.

surface grinding machines and preci-

Products, Ltd., a medium-sized U.K.

Kuroda Precision Industries, Ltd.,sion measuring systems. Recognized
as a “precision leader” for its expertisein precision processing and measurement technologies, Kuroda Precision
Industries manufactures products
used in mobile phones, hybrid cars,
semiconductor fabrication equipment,
industrial robots and a host of otheritems that are hallmarks of the times
and support industrial development.
Precision ball screws and precision gears

Case Study

SECOM

SECOM Co., Ltd., headquartered in

information safely and functioning as

also fulfills an essential social role andShibuya-ku, Tokyo, and a leadinga service center that uses its core func-

has the ability to create new services

security company, believes that datationality to provide a host of services.

that are safe and offer high added

centers will become an increasingly

Through its data centers, the company

value.

important strategic business. Given
the growing emphasis on informationand security, SECOM believes thatdata centers serve as a vital part of thesocial infrastructure.
DBJ proposed that SECOM acquire
shares in AT TOKYO Corporation andadvised SECOM on the acquisition.
Headquartered in Koto-ku, Tokyo,
this company is one of Japan’s leading data center operators in terms ofscale, electric power supply stability
and security management. We believethat SECOM’s acquisition of a stake in
AT TOKYO enables both companies
to leverage their strengths, managing

Data center

Annual Report & CSR Report 201469

Overseas
Efforts at expansion overseas have become an important factor in Japan’s continued growth.
Emerging markets in particular, with their notable growth in middle income groups, represent
a major business opportunity for Japan, because the region is running up against environmental
issues, urbanization-related difficulties and other developmental constraints and growth challenges
that Japan has already faced and overcome.

Case Study

Government Pension Investment Fund/Canada’s Ontario Municipal
Employees Retirement System

DBJ is taking part in an infrastructure

usage fees in such areas as electricof the co-investment agreement

investment program under a co-invest-

power transmission, gas pipelines

with experienced investors such as

ment agreement with Governmentand railways and its return being less

DBJ and OMERS for more improved

Pension Investment Fund (GPIF),

affected by public market volatility.

investment capabilities and advanced

located in Chiyoda-ku, Tokyo, andCanada’s Ontario Municipal Employees

Understanding this background,risk management.

GPIF has encouraged the signing

Retirement System (OMERS), locatedin the province of Ontario, Canada.
The investment will be made througha unit trust along with other coinvestors as appropriate investment
opportunities are identified.
The investment in infrastructure is
one of the most valuable investmentsfor overseas pension funds and with
its long-term stable revenue from

Case Study

Power transmission lines

Aviation Capital Group

Aviation Capital Group Corp. (ACG),

and other financial institutions. DBJ

the needs of ACG with those ofheadquartered in the U.S. state ofand BNPP have been working for sev-

regional banks, which are highly inter-

California, is one of the world’s lead-eral years to cultivate a better under-

ested in expanding their cross-bordering aircraft leasing companies. ACG

standing of aircraft finance among

financing operations. This was also thehas a fleet of approximately 255

regional banks and other financial

first syndicated loan to an overseas

aircraft worth over US$8 billion andinstitutions by hosting aircraft financeaircraft leasing company involving

offers a wide range of commercial

seminars. The syndicated loan thatnumerous regional banks.

aircraft leasing and asset management

resulted from this initiative connected

services to approximately 90 airlines
around the world.
In response to ACG’s desire to
broaden its relationship with financial
institutions in Japan and diversify its
funding sources, DBJ and BNP Paribas
S.A., Tokyo Branch (BNPP) arranged ayen-denominated syndicated loan for
ACG with 14 of Japan’s regional banks

70

Annual Report & CSR Report 2014

Aircraft finance seminar

Aircraft owned by ACG

CSR Report

Overseas
Case StudyTOKYO PRO-BOND Market

The TOKYO PRO-BOND Market is a

In April 2014, DBJ invested in yen-encouraging participation from promi-

new bond market for professional

denominated bonds issued in thisnent investors and prompting leading

investors that was established in 2011

market by Banco Santander-Chile, acompanies from around the world toand is currently operated by the Tokyo

leading Chilean bank, followed byissue bonds in the financial markets ofStock Exchange. The TOKYO PRO-an investment in May 2014 in bonds

Tokyo. Raising the global profile of the

BOND Market was set up with theissued by a leading Malaysian bank,financial markets of Tokyo should also

aim of creating a global bond market

Malayan Banking Berhad.

provide more investment opportuni-

In this way, DBJ is working to vital-in Japan which would be equal toties for Japan’s professional investors.

the euro market as a core market inize the new market in the interest

DBJ plans to invest a total of ¥100

Asia. The TOKYO PRO-BOND Market

of promoting the development ofbillion in bonds issued in the TOKYO

accepts English-only disclosure, mak-financial markets in Japan. By being a

PRO-BOND Market.

ing it convenient for non-Japaneseprincipal investor in bonds issued oncompanies to issue debt in Japan.

the TOKYO PRO-BOND Market, DBJ isTOKYO PRO-BOND Market logo

Annual Report & CSR Report 201471

Healthcare and Welfare
Society faces a wide range of issues on the healthcare front, including an increasingly elderly population, advances in medical procedures, mergers and acquisitions by medical corporations and a needto rebuild aging facilities. Offering uninterrupted medical services involves solving fiscal and administrative problems and improving the skills of medical and other personnel and the quality of related
facilities and medical equipment.
Case Study

Regional Healthcare FundAs Japan transitions fully toward a

Limited Partnership (Regional

medical institutions and encourage“super-aged” society, cultivation of

Healthcare Fund), with a total invest-

collaboration with regional finan-

the healthcare and medical industries

ment of ¥10.0 billion, to invest in

cial institutions. By leveraging its

is taking on a growing importance, as

medical institutions’ subordinatedfinancial solutions and wealth ofis the cultivation of business founda-

loans and loan claims.

knowledge, through the Regionaltions in these fields. In relation to this,Through this cooperation with

Healthcare Fund, DBJ is providing

the Japanese government is promot-

Mitsubishi UFJ Lease & Finance,risk money for subordinated loans

ing a “Japan Revitalization Strategy.”

DBJ aims to promote initiatives by

and other investments.

As medical facilities are core components of the healthcare and medical
sectors, the country faces a growing
need to rebuild dilapidated hospitals

Regional Healthcare Fund Scheme

and upgrade medical equipment inorder to augment medical functionality. Japan will also need to undertake
initiatives to build healthcare systems
suited to regional environments.
Against this backdrop, DBJ andthe Mitsubishi UFJ Lease & Finance

Mitsubishi UFJ
Lease & Finance

DBJ

Investment(General partnership)
Healthcare Finance, Inc.
GP investment

Healthcare Management
Partners, Inc.
Operational outsourcing(sourcing, monitoring, etc.)

Company, Ltd., headquartered inCase Study

Medicalinstitutions

Medicalinstitutions

Mitsubishi UFJ
Lease & Finance

Saiseikai Niigata Daini HospitalSocial Welfare Organization Saiseikai

promotes disaster preparedness andand the option to use that hospital as

Imperial Gift Foundation, Inc., oper-

operational continuity measures.

an alternate headquarters; andates the Saiseikai Niigata Daini

72

Medicalinstitutions(Limited partnerships)

DBJ
Subordinatedloans, etc.

Chiyoda-ku, Tokyo, formed theRegional Healthcare Investment

LP investment(New fund) Regional
Healthcare Investment
Limited Partnership

For the current round of financing,(3) the securing of redundant power

Hospital, located in the city of Niigata,

DBJ rated the hospital highly for:supply sources and fuel storage, theNiigata Prefecture. Operating as a(1) its registration with the Emergency

ongoing confirmation of the status ofregional medical support hospital andMedical Information System (EMIS),

pharmaceutical companies’ and medi-a regional affiliated base hospital for

its signing of an accord with Niigata

cal equipment suppliers’ inventories

cancer diagnosis, the hospital handles

Prefecture in relation to disasters, andand maintenance systems, and otheracute medical care for the region andother examples of efforts to maintainsuch efforts to remove bottlenecks toliaises with regional medical facilities

close relations with government bod-

operational continuity.

to deliver medical services of consis-

ies even in normal times to heighten

tently high quality. At the same time,

the functioning of medical operations

the facility serves as a hospital desig-

in times of disaster; (2) its signing ofnated for clinical training, providing

an agreement establishing a second-training for resident clinicians. Serving

ary health maintenance zone to coor-

also as a disaster response hospital

dinate mutually with a hospital out-

for Niigata Prefecture, the hospitalside its group during times of disaster

Annual Report & CSR Report 2014

Saiseikai Niigata Daini HospitalCSR Report

DBJ Environmentally Rated Loan Program
The environment is a matter of global concern, and corporations are responsible for conducting business in an environmentally responsible manner. Financial institutions are no exception, being tasked
with the mission of contributing to a sustainable society.
Case Study

Mitsubishi Chemical Holdings

Mitsubishi Chemical Holdings

environment and has measured theircalculations. (3) While incorporating

Corporation, headquartered indirect effects in terms of resource and

MOS as a key performance indica-

Chiyoda-ku, Tokyo, and its Group haveenergy savings. Mitsubishi Chemical

tor, to promote disclosure the com-

introduced CSR management at a highHoldings is working to quantify thepany has integrated its financial andlevel that aims to achieve “KAITEKI”*

contribution of such products tonon-financial reporting in a single

by helping to resolve various societal

sustainability over their lifecycle by“KAITEKI Report.”

issues through its business activities.

determining their CO2 reduction and

The Mitsubishi Chemical Holdings

water resource preservation effects.

Group is also working together on

The company has also adopted man-environmental activities based on aagement of sustainability (MOS) as acorporate charter for action.

financial target, and is constructing

DBJ has provided Mitsubishi

a system to promote development

Chemical Holdings with financing

and sales on this basis. (2) Mitsubishi

based on its DBJ Environmentally

Chemical Holdings is working to mini-

Rated Loan Program.

mize the impact of its business activi-

We accorded Mitsubishi Chemicalties on the environment by utilizing its

Holdings a high rating and provided it

own “global environmental impact”

financing for three reasons. (1) The com-indicator. The company is taking apany traditionally provides a wide vari-principal role in formulating industry

ety of products, backed by advanced

guidelines for risk assessments oftechnologies, that contribute to thechemical substances and Scope 3

Case Study* KAITEKI is a concept devised by the
Mitsubishi Chemical Holdings Group andintended to describe an ongoing state ofcongeniality among people, society andthe planet that goes beyond time andgeneration.

Certificate presentation ceremony

Sumitomo Rubber Industries

Sumitomo Rubber Industries, Ltd.,

50% reduced rolling resistance tire

headquartered in the city of Kobe,

and bring it to the market by the

Hyogo Prefecture, has formulatedend of 2014. (2) The company has

the “SRI WAY,” as a shared basis forachieved zero emissions in terms of

employees’ values and its principles

landfill waste at its principal produc-

for action. The company positions

tion bases located in Japan and over-environmental initiatives, symbolized

seas. (3) As a part of the “green initia-

and abbreviated as “GENKI,”* as a key

tives” that form one pillar of its CSR

management priority in its CSR guide-

guidelines, the company has set thelines. By utilizing GENKI, the company

target of planting 1 million seedlings

enables itself to conduct environmen-

by fiscal 2029 at and around its offices

tal management with excellence.

in Japan and overseas. The company

Key considerations for DBJ's rat-

is now well ahead of the plan, hav-

ing assessment for Sumitomo Rubber

ing planted a cumulative 1.39 million

Industries are based on the following

seedlings as of fiscal 2013.

three features. (1) The company has* “GENKI” stands for five basic CSR categories: green initiatives (tree planting), ecology (reducing the environmental impact ofbusiness activities), next (developing nextgeneration technologies and products),
kindness (measures towards employees
and communities) and integrity (honesty
and reliability toward stakeholders).

DBJ has provided financing based

publicly committed itself to efforts toon the DBJ Environmentally Rated

reduce its environmental footprint by

Loan Program and arranged a syn-offering a 100% fossil resource-freedicated loan for Sumitomo Rubber

tire from 2013. The company has also

Industries totaling ¥10.0 billion.

ENASAVE 100

set the specific goal of developing a
Annual Report & CSR Report 2014

73

DBJ Employee’s Health Management Rated Loan Program
The promotion of employee’s health management is linked to improved employee satisfaction andcorporate productivity, the retention of talented human resources and the financial betterment ofhealth insurance organizations. Amid a declining population of future workers, the strategic implementation of employee’s health management from a managerial perspective is an important issue forthe realization of a sustainable society.
Case Study

TonenGeneral Sekiyu

TonenGeneral Sekiyu K.K., headquar-

DBJ provided TonenGeneral Sekiyu

and environmental management

tered in Minato-ku, Tokyo, is the corewith financing based on the DBJ

system that is completely consistentof the TonenGeneral Group, whose

Employee’s Health Management Rated

throughout the company. At each of

missions are to “maintain a stable sup-Loan Program, making this the first

its offices, the company also conducts

ply of high-quality products,” “offer

such instance in the oil industry.

regular checks of health measures andhigh-value-added services” and “con-We gave the company a highaddresses matters of occupational

tribute to customers, shareholders,

evaluation for three reasons. (1) As

health and safety. (3) In addition toemployees and local communities.”

a basis for its health management

medium- to long-term numerical tar-TonenGeneral Sekiyu is an integrated

initiatives, TonenGeneral Sekiyu has

gets based on its current conditions,energy company, with operations

set up a health management depart-the group sets targets for outputs/

ranging from refining to sales. The

ment as an independent organization

outcomes in a variety of areas, such ascompany accords top operational pri-

to focus on the occupational healthlifestyle diseases and mental health.

ority to safety, health and the environ-and safety function. This department

ment, and accordingly has a lower rate

brings together industrial physicians,of lost work time due to employee

nurses and industrial hygienists andaccidents than other companies.

drafts comprehensive health measures

The Ministry of Economy, Trade andfor the group as a whole, including

Industry (METI) has recognized themeasures to address the risk of petro-company as the only member of thechemical explosions. (2) TonenGeneral

oil and petrochemicals industry to

Sekiyu has introduced the Operations

have reached its energy conservation

Integrity Management System (OIMS)

benchmarks.

as an independent safety, health

Case Study

Medical Treatment Corporate Foundation Group Hakuaikai

Medical Treatment Corporate
Foundation Group Hakuaikai, locatedManagement Rated Loan Program.
DBJ gave Hakuaikai high ratings for

Certificate presentation ceremony

to long-term perspective. (3) Hakuaikai
has set up a specialized health man-in the city of Fukuoka, Fukuoka

three reasons. (1) Top management

agement promotion office to spear-

Prefecture, follows an ideology thathas set forth policies emphasizing thehead these initiatives. Roles are clearlystresses close ties with the community,

importance of health initiatives. These

defined, with this office at the center,being trusted by local residents, andpolicies are broadly disseminated bothresulting in a system befitting an orga-

the provision of health maintenance,

inside and outside the organization.

nization that is working to maintainhealthcare and welfare services. As

Hakuaikai also recognizes employee

health.

a medical organization that provides

health as a management objective andquality healthcare and welfare services

makes it a clear resolve. (2) Hakuaikaiwith close community ties, the organi-determines and recognizes various

zation operates a number of healthcare

health-related indices and sets targets

and nursing care facilities in the city ofbased on its analysis of the indices.

Fukuoka, including Hakuaikai Hospital.

Rather than being for a single fiscal

Hakuaikai became the first entity

year, the organization sets multiple

in Kyushu to receive DBJ financing

three-year targets, operating accord-

based on the DBJ Employee’s Healthing to a PDCA cycle with a mediumHakuaikai Hospital

74

Annual Report & CSR Report 2014

CSR Report

Infrastructure & Energy

EnergyVaried energy usage is essential to ensure the long-term, stable supply of energy. Also, international
interest in using solar power, wind power, biomass and other forms of renewable energy is mounting
amid ongoing concerns about global warming. Utilization of renewable energy is essential for curbing greenhouse gas emissions and realizing a low-carbon society.

Case Study

Kashima Kyodo Electric Power

Kashima Kyodo Electric Power Co.,

In November 2013, the company

the Interest Rate Subsidy System forheadquartered in the city of Kashima,commenced operations with its fifthSpecial Zones for Reconstruction, con-

Ibaraki Prefecture, was establishedgenerator, on which construction had

tributes to a core business identified inin 1969 through joint investment

begun in January 2011. The fifth unit

the city of Kashima’s plan to promoteby Tokyo Electric Power Company,

generates power more efficiently thanreconstruction. This plan emphasizes

Inc., and Sumitomo Metal Industries,

previous models, and therefore deliv-

the need to address issues that existed

Ltd. (now Nippon Steel & Sumitomoers excellent economic performanceprior to the earthquake, including

Metal Corporation). Kashima Kyodo

and reduces environmental impact.

global warming countermeasures, pro-Electric Power uses byproduct gases

DBJ provided financing to support

from Nippon Steel & Sumitomo Metal

the construction of this fifth genera-

Kashima Works as its main fuel to eco-

tor. This financing, provided throughmotion of recycling and environmental
preservation in other communities.

nomically generate electricity, which itsupplies to its two investors.
Kashima Kyodo Electric Power’s
power generation facilities (generators one through four) were damaged
in the Great East Japan Earthquake,halting operations. In keeping with its
responsibilities as an electric power
supplier, the company and its subcontractors all worked together torestore generation capacity and succeeded in getting back on line quickly.

Case Study

Kashima Kyodo Electric Power’s generation facility

SF Solar PowerSF Solar Power K.K., headquartered

Solar Frontier has been expanding its

market, DBJ has provided investment

in Chiyoda-ku, Tokyo, is a joint invest-

business in CIS thin-film solar modules

and loans to SF Solar Power’s project,ment company set up by a subsidiarywith high economic efficiency andwhere their solar modules are utilized,of Showa Shell Sekiyu K.K., Solar

environmental friendliness.

as the first project of the Fund for

Frontier K.K., headquartered in
Minato-ku, Tokyo, and DBJ.

Under its aim of promoting renew-

Japanese Industrial Competitiveness.

able energy in the Japanese domestic

To make effective use of idle landthroughout Japan, SF Solar Power has
been developing megasolar power
plants such as an approximately 11,600
kilowatt megasolar facility constructedwithin Kansai International Airport.
Solar power is characterized as a
type of sustainable and low-environmental-load renewable energy, andKansai International Airport generation facility
Photo courtesy of Solar Frontier K.K.
Annual Report & CSR Report 201475

Energy
Case Study

Kyuden Mirai Energy (formerly Kyuden Ecosol)

Kyuden Mirai Energy Co., Inc., head-

concentrated on the development

operator (including in the city ofquartered in the city of Fukuoka,

and operation of solar power plants in

Sasebo, Nagasaki Prefecture; the city

Fukuoka Prefecture, is a wholly owned

various Kyushu locations.

of Munakata, Fukuoka Prefecture; thesubsidiary of Kyushu Electric Power

DBJ, along with regional financial

Co., Inc., that develops solar andinstitutions, structured a syndicatedand the town of Aya, Miyazakiother sources of renewable energy.

loan totaling ¥4.2 billion for Kyuden

Prefecture). Together, these sites rep-

The company also provides related

Mirai Energy’s solar power generation

resent around 21 megawatts of gener-

services to industries and public-sectorbusiness.

ating capacity.

entities within Kyushu. Recently, in its

The business covered by the loan

mainstay business of megasolar powerspans nine sites in Kyushu for which

generation Kyuden Mirai Energy has

Kyuden Mirai Energy is the primary

Sasebo megasolar generation facility

76

city of Kikuchi, Kumamoto Prefecture;

Annual Report & CSR Report 2014

CSR Report

Transportation
Transportation infrastructure supports economic activity and is the foundation of a rich and abundant lifestyle. The promotion of investment is necessary for the maintenance and renovation oftransportation infrastructure in accordance with degradation due to aging and the requirements
of increased transport capacity and efficiency, as well as in response to an aging population andenvironmental issues. As transportation infrastructure involves large investment amounts and long
investment periods, the procurement of long-term funding is increasingly important.

Case Study

Skynet Asia Airways

Skynet Asia Airways Co., Ltd.

Solaseed Air has begun implement-

To support the company’s efforts,(Solaseed Air), headquartered in theing one aspect of its strategy, namely

DBJ worked with local financial institu-

city of Miyazaki, Miyazaki Prefecture,

to own the (Boeing 737-800) aircraft

tions in Solaseed Air’s service area tointroduced its new brand, Solaseed

it operates.

structure a syndicated loan employing

Air, in July 2011. Based on a new

aircraft financing methods.

medium-term management plan introduced in fiscal 2013, Solaseed Air aims
to provide service that delivers highcustomer satisfaction under the brandconcept of “planting the seeds of asmile from the air.” While aiming to
be one of the most cost-competitiveof Japan’s new airlines, Solaseed Air is
expanding its route network in Kyushu
and Okinawa.
Solaseed Air aircraft

Case Study

Keisei Electric Railway

Keisei Electric Railway Co., Ltd., head-completed in August 2013, and thelives of the citizens who live alongquartered in the city of Ichikawa,

company has begun construction to

its routes through the transportation

Chiba Prefecture, operates the Keisei

elevate the next section.

services it provides and contributes to

Main Line and the Narita SKY ACCESS

DBJ provided financing to KeiseiLine, which connect Ueno and Narita

Electric Railway, which supports thecommunity development.

Airport, as well as the Keisei Oshiage
Line and the Keisei Chiba Line. In addition to operating a route network that
extends a total of 152.3 kilometers,
the Keisei Group is involved in distribution and hotel operations.
To alleviate traffic congestion andprevent accidents at railway crossings,
Keisei Electric Railway is undertaking
a project involving continuous grade
separation on the Keisei Oshiage Line.
A portion of this project that commenced in August 2008 to elevatea section of track between Oshiage
Station and Yahiro Station wasContinuous grade separation project

Annual Report & CSR Report 201477

Urban Development
Efforts to develop and upgrade urban infrastructure and functions and the creation of urban culture
and a comfortable environment for the lifestyles of working people through urban development
are the driving forces behind the revitalization of economies and communities at the regional andnational levels.

Case Study

Kintetsu/Abeno Harukas

Kintetsu Corporation, headquartered

Harukas serves as an excellent urban

to other parts of Asia, as well as thein the city of Osaka, has constructedtransport hub offering good access torest of the world.

Abeno Harukas, the tallest multi-

Kansai International Airport and Osakapurpose skyscraper in Japan, in theInternational Airport. In addition to

Harukas, applying DBJ Green Building

Abeno Tennoji area of the city. Thisfunctioning as a southern entry to

Certification and ranking the building

300-meter edifice opened for full-

Osaka, the building facilitates access“Platinum (plan) 2013.”

DBJ provided financing for Abeno

scale business in March 2014.
In addition to the highest available
level of aseismic performance, Abeno
Harukas employs leading-edge environmental technologies. This “threedimensional city” houses department
stores, large-scale office spaces, aninternationally known hotel brand,
and an urban museum—a host of
facilities and functions that contributeto the richness of urban living.
Directly linked to one of Osaka’s
best terminal buildings, providing
access to seven train lines, Abeno

Case Study

Abeno Harukas, completed in March 2014

Tokyo Prime Stage

Tokyo Prime Stage Co., Ltd., is an SPC

and a luxury hotel, with the premises

established jointly for the purpose

providing around 3,600 square metersof developing a prime site located inof “Otemachi Forest.” Construction

Chiyoda-ku, Tokyo—currently occu-

was completed in April 2014.

pied by Mizuho Bank’s Otemachi head

The project, which is being funded

office building and the Otemachi

through real estate loans provided

Financial Center building—into a

via an SPC, is one of the largest inlarge-scale multipurpose building, ten-Japan. DBJ began working as the lead

tatively named the Otemachi 1-6 Plan.

arranger on this project in 2004. In

The current plan is for a standard

March 2014, we structured the proj-

floor area of approximately 2,970

ect’s fourth syndicated loan, totalingsquare meters. The high-rise building¥190 billion.

will house state-of-the-art office space

The Otemachi Tower

78

Annual Report & CSR Report 2014

CSR Report

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

Case Study

IshiyaIshiya Co., Ltd., headquartered inbuilding embodies environmental

the city of Sapporo, Hokkaido, wasconsciousness, being equipped withfounded in 1947 as a manufacturer

LED lighting in common areas, water-and seller of confectioneries with asaving toilets and other equipment

Hokkaido character.

that deliver high energy savings.

DBJ provided DBJ Green Building(2) In addition to advanced office

Certification to Ishiya’s Sapporo

building specifications, the building

Odori Nishi 4 Building, according

offers extensive amenities, such as

the building the first “Gold 2013”

the ISHIYA CAFÉ operating on the B2

certification in Hokkaido, provided

floor. (3) The outer walls of the build-for “properties exhibiting exception-

ing are decorated with a Hokkaido

ally high environmental and social

flora-and-fauna motif, with carvings

awareness.” DBJ gave the building aand stained glass that take regional

high rating for three reasons. (1) The

culture into consideration.
Sapporo Odori Nishi 4 Building

Case Study

Nippon Life Insurance

DBJ and Japan Real Estate Institutethe city of Osaka. We have accorded(JREI), headquartered in Minato-ku,

the architectural plan a “Platinum

Tokyo, have begun joint operation of(plan) 2013” certification for “proper-

the DBJ Green Building Certificationties with the best class environmental

program.

& social awareness.”

Under the new jointly operated

Reasons for the high rating were

program, DBJ and JREI intend to

twofold. (1) The building achieves

elaborate the assessment systemsuperb environmental performance. It

and analyze the relevance between a

employs LED lighting throughout, uses

building’s sustainability and its eco-

solar power generation panels andnomic value. Furthermore, by creating

has a building energy managementa market that evaluates green build-system to optimize and lower energy

ings properly, we contribute to form a

consumption. (2) The building utilizes

real estate financing market conducive

vibration damping construction, andto such social demand.

construction specifications call for an

The first building to be certified

extensive backup power supply system

under the joint operation is thethat takes its own disaster prevention

Marunouchi 1-chome Project (ten-and tenants’ business continuity plans

tative name) of the Nippon Life

(BCPs) into consideration.

Insurance Company, headquartered in

Marunouchi 1-chome Project (tentative name)

Annual Report & CSR Report 2014

79

DBJ Enterprise Disaster Resilience Rated Loan Program
Such recent disasters as the Great Hanshin-Awaji Earthquake, the Chuetsu Offshore Earthquake,the Iwate-Miyagi Inland Earthquake and the 2011 Great East Japan Earthquake caused tremendous
damage to the economy, with many organizations forced to suspend operations for extended periods.
In addition to measures for protecting personnel and property, companies face the need to draft
business continuity plans (BCPs) to protect themselves against lost revenue and retain their clients inthe event of disaster.
Case Study

Tokai Rubber Industries

Tokai Rubber Industries, Ltd., head-rubber products industry, as well as insuppliers, the stockpiling of invento-

quartered in the city of Komaki, Aichi

the Tokai region. The disaster restora-ries, and the securing of substitutePrefecture (name to be changed totion fund provision stipulates that inraw materials; and (3) the company

Sumitomo Riko Company Limited on

the event of a major earthquake thattakes a proactive approach to regional

October 1, 2014) is a manufacturer

meets specific conditions at observa-

disaster response, including the layingof high-performance rubber products

tion points near that company’s head-in of emergency provisions for local

that boasts the top share of the global

quarters or the Komaki plant, DBJ willresidents and the conclusion of agree-

market for anti-vibration rubber, a key

provide a specified amount of financing

ments with local authorities.

automotive material. The company is

as restoration funds.

engaged in building an advanced

Rubber Industries is based on our hightinuity to enable it to meet its global

appraisal in the following areas: (1) the

supply responsibilities.

core product workflow is visible, with

DBJ provided Tokai Rubberbottlenecks identified and measures

Industries with financing under the DBJ

to eliminate them implemented;

Enterprise Disaster Resilience Rated(2) the company is promoting theLoan Program, established as a restora-

construction of a resilient supply chain

tion fund provision for times of disas-through the examination of disaster/ter. This is the first such provision in thebusiness continuity frameworks at

Case Study

Automotive anti-vibration rubber

Japan Motor Terminal

Japan Motor Terminal Co., Ltd.,

using the Earthquake Early Warning

region-wide transport base under anheadquartered in Chiyoda-ku, Tokyo,

System and creating an emergency

emergency response agreement withservices and administers four public

communications system that employs

the Tokyo metropolitan government,

truck terminals connected to express

satellite communications, the compa-

the company established a system for

highway networks in the Tokyo area.

ny is engaged in systematic, proactive

coordination with the metropolitan

These terminals serve as bases for thestrengthening of its disaster counter-government and the Tokyo Routenationwide logistics network, easing

measures by establishing emergency-

Truck Conference Association, andtraffic congestion and improving theuse, non-utility generators and build-conducts joint training exercises tofunctioning of cities to rationalize

ing logistics facilities with seismicallyensure its reliability.

growing logistics activity.

isolated structures. (2) In addition to

DBJ has made the DBJ Enterprise80

Our rating evaluation of Tokaimanagement system for business con-taking the number of other-company

Disaster Resilience Rated Loan

employees on premises into consid-

Program available to Japan Motoreration in storing a sufficient level ofTerminal. Our rating of Japan Motoremergency provisions, Japan Motor

Terminal is based on our high apprais-

Terminal regularly conducts assembly

al of the following items. (1) In addi-

drills for its own employees as well astion to making intensive users of theinitial response training for mainte-

highway system thoroughly aware ofnance contractors and other contract

initial emergency countermeasures

employees. (3) When setting up a

Annual Report & CSR Report 2014

Keihin Truck Terminal

CSR Report

Public–Private Partnerships/Private Finance Initiatives
Public–private partnerships (PPPs) describe a variety of schemes for the provision of public services
through partnerships between government and private-sector companies. They involve harnessing private capital and expertise for use in the delivery of public facilities traditionally provided bynational or local governments, with private finance initiatives (PFIs) being representative of such
schemes for the provision or management, supervision and support of public facilities. At a time
when national and local governments are in difficult financial straits, the use of PPPs, and particularly PFIs, in restoring aging public infrastructure and similar projects represents a promising field.
Case Study

Artificial Satellite PFI Business

DSN Corporation, headquartered incontract, DSN will manufacture andSumitomo Mitsui Banking Corporation

Minato-ku, Tokyo, is a special-purpose

launch two communications satellites

to provide a total of ¥77.5 billion incompany (SPC) established throughand upgrade ground facilities, includ-

syndicated loans. This is the first arti-

investment by three companies:

ing satellite control equipment. The

ficial satellite project in Japan based

SKY Perfect JSAT Corporation, NEC

company is to operate, maintain andon the Act on Promotion of Private

Corporation and NTT Communications

manage these facilities and equip-

Finance Initiative (revised), which went

Corporation. DSN has received a con-ment.

into effect in November 2011. The

tract from the Ministry of Defense for

DBJ was the lead arranger, work-

program contract is also one of thea “Program to Upgrade and Operate

ing with Mizuho Corporate Bank,

largest on record for a PFI project in

X-Band Satellite Communications

Ltd. (now Mizuho Bank, Ltd.), BankJapan, at ¥122.1 billion.

Functions, etc.” Based on the programof Tokyo-Mitsubishi UFJ, Ltd., andScheme for Execution of a Program to Upgrade and Operate X-Band Satellite Communications Functions, etc.
Ministry of Defense
Program Contract
DSN (Special-Purpose Company)
Commission Contract
Consortium
65% of shares

SKY Perfect JSAT

17.5% of shares

NEC(Representative Company)

Case Study

17.5% of shares

NTT Communications
Shareholders

Maeda Corporation
Partner Company (No Investment)

Investment in the Private Finance Initiative Promotion Corporation of Japan

DBJ is a founding investor in the

sector through investment and financ-promotion seminars. Our investment

Private Finance Initiative Promotion

ing in PFI business, such as conces-in the PFIPC also represents an oppor-

Corporation of Japan (PFIPC), head-sions, and will cultivate the infrastruc-tunity to take our efforts to the next

quartered in Chiyoda-ku, Tokyo.

ture investment market by dispatchinglevel, using the appropriate ties cre-experts and providing advice to publicated with the PFIPC and its affiliates toorganizations.

conduct a variety of surveys, provide

The PFIPC was established basedon the PFI Act (of June 2013, sincerevised) as an important measure

DBJ has recently proceeded withinformation and offer proposals con-within the Japan Revitalization

efforts to expand the use of PPP/PFI,

cerning PPP/PFI, as well as to support

Strategy (Cabinet decision of June 14,

such as establishing the PPP/PFI

the creation and formation of a variety2013). The PFIPC is expected to reduce

Promotion Center and working withof PPP/PFI businesses and provide risk

the nation’s fiscal burden and provide

regional financial institutions andmoney.

business opportunities for the private

the Cabinet Office in holding PPP/PFIAnnual Report & CSR Report 201481

Regional Revitalization Tailored to Regional Needs

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

Mother Fund Corporate Mezzanine Limited Partnership for Tourism Vitalization

DBJ has joined with the Regional

the tourism industry.

regional financial institutions and help

Economy Vitalization Corporation

The tourism industry covers ainvigorate the regional tourism indus-of Japan (REVIC), headquartered inbroad range of businesses and is very

try by providing the investment neces-

Chiyoda-ku, Tokyo, and Risa Partners,

important to regional economies, withsary for growth and development, as

Inc., headquartered in Minato-ku, Tokyo,

support for its growth contributing

well as by forming ties with companies

in forming the Mother Fund Corporate

to their invigoration. DBJ is teamingin communities and regions and assist-

Mezzanine Limited Partnership forup with REVIC and Risa, employing

ing in restructuring.

Tourism Vitalization to support the invig-

the networks and expertise of all

oration of regional economies throughthree organizations to cooperate with

Mother Fund Scheme for Tourism Vitalization

DBJ

Risa
Investment

Investment
LP investment

REVIC
Joint management
structure

RD Tourism Solutions

LP investment

Investment

REVIC Capital

GP investment
Fund management and control
Mother Fund Corporate Mezzanine Limited Partnership for Tourism Vitalization (MF)LP investment GP investment
Regional financial
institutions(regional banks,
credit unions, etc.)

Sub-fund

LP investment
LP investment

Company

Company

Direct investment and lending
from MF also possible
Company

Company

Hokkaido Gas

Hokkaido Gas Co., Ltd., headquar-

LNG Terminal, where Japan’s largest

natural gas in Hokkaido. DBJ is pro-tered in the city of Sapporo, Hokkaido,

gas storage tanks are located. The

viding financing in support of theseviews increasing the use of naturalcompany has secured stable sources

efforts.

gas—which is superior in terms ofof natural gas, building a natural gas

supply stability and low environmen-

value chain enabling it to supply all of

tal impact—to be one of its social

Hokkaido with natural gas stably over

responsibilities in Hokkaido, where

the long term.

energy consumption and demand foroil are high.

82

・・・・・

Investment and lending, etc.

Other LP investors

Case Study

Sub-fund management
and control also
anticipatedHokkaido Gas is proceeding withthe construction of a second LNG tank

Working from its strong creed ofsite to achieve more stable operation“supporting the regional economyof the Ishikari LNG Terminal and diver-and the lives of our customers,”sify LNG supplies, as well as to meet

Hokkaido Gas operates the Ishikari

the forecast increase in demand for

Annual Report & CSR Report 2014

Hokkaido Gas, Ishikari LNG Terminal

CSR Report

Community Revitalization
Case Study

KanbunKanbun Co., Ltd., headquartered in

population.

the city of Ninohe, Iwate Prefecture,

Kanbun’s experience in the Great

operates 10 home centers and three

East Japan Earthquake prompted thegasoline stations in Iwate and Aomori

company to install solar power equip-

prefectures and conducts building

ment on the roof of its Ninohe Home

materials and remodeling businessCenter, making it possible to continue

with deep regional ties. Kanbun seeks

operating in the aftermath of disasterto offer solutions to a variety of hous-and promoting the use of renewable

ing needs that improve housing andenergy.

life in local communities, and recently

DBJ provided financing support

has begun offering delivery services

for this effort through the DBJ Smartand residential convenience services inJapan Program.

response to the aging of the regional

Case Study

Solar power equipment at a Ninohe Home
CenterKashimaya

Kashimaya Co., Ltd., headquartered in

is “Today’s meals build tomorrow’s

the city of Niigata, Niigata Prefecture,

life,” and while protecting the culi-

was founded at the end of the Edonary lifestyle of Niigata, the company

period, and is engaged mainly in thecontinues to come up with new tech-production and sale of processedniques and diverse flavors, promoting

marine products for use as gifts.

the spread of Niigata cuisine through-Kashimaya developed its signature

out Japan and contributing to regional“powdered salmon rice topping” invitalization.

the 1950s. The product’s homemade

DBJ provides financing toflavor has been prized since that

Kashimaya through the Regionaltime in the cultural and culinary life

Areas Genki Program to promote thatof Niigata as one of the “flavors ofcompany’s strategic efforts to create

home.” The Kashimaya brand is syn-products with value added throughonymous with high-quality Niigata gift

flavorings and craftsmanship.

Kashimaya headquarters

and souvenir items. Kashimaya’s creed
Case Study

KagayaKagaya Co., Ltd., headquartered insionals” for 34 consecutive years.

the city of Nanao, Ishikawa Prefecture,

Hokuriku Shinkansen service tooperates three ryokan (Japanese-style

Kanazawa is scheduled to commenceinns) at the Wakura Hot Spring on thein spring of 2015. To continue provid-

Noto Peninsula: Kagaya, Aeno Kaze

ing high-quality service to a greaterand Niji to Umi. Kagaya’s painstak-number of expected visitors, Kagaya

ing attention to detail in ensuring

is increasing its number of employees

customer satisfaction and tirelessand building worker dormitories.

efforts toward improving service to

DBJ provided Kagaya with financ-the 20,000 visitors it receives every

ing through the Regional Areas Genki

year have honed its hospitality to such

Program to help the group extend its

a degree that the Group has been

hospitality to a wider customer basenamed among the “top 100 Japaneseand enhance the Hokuriku region’s

hotels and ryokan selected by profes-

attractiveness as a tourist destination.

Hospitality at Kagaya

Annual Report & CSR Report 201483Community Revitalization
Case Study

YagamiYagami Co., Ltd., headquartered in the

Office,” Yagami is working steadily tocity of Nagoya, Aichi Prefecture, wasprovide the sophisticated levels of sup-founded in 1871 as a trading company

port needed to utilize these systems

specializing in medical devices andand meet society’s expectations forassistive products. With the Japanesedealers in medical devices.

population aging at a rapid pace,

DBJ has provided financing throughthe country’s medical and nursing

the Regional Areas Genki Program toinsurance systems are being revised

Yagami, which is strengthening ties

in various ways, as is the system forwith medical institutions by opening

providing healthcare. Through suchnew offices and expanding groupprograms as the “Plan to Transition

sales bases, thereby contributing toto Centers” and “Nearby Businessthe Tokai region’s healthcare industry.

Sales activities under way and the Home
Health Center

Morimoto Soko K.K., headquarteredfinancing for Morimoto Soko andcertified under “Gold (plan) 2013” forin the city of Kobe, Hyogo Prefecture,

Kobe’s reconstruction, and at the“buildings that are extremely superior

is one of the city’s leading ware-same time implemented DBJ Greenin consideration for the environment

housing and real estate companies.

Building Certification.

and society.”

Case Study

Morimoto Soko

Morimoto Soko reconstructed its

This certification gave high ratings

Sannomiya Building North Annex on

to the following areas: (1) the installa-

the site of the former annex, whichtion of solar panels, LED lighting andwas destroyed in the Great Hanshin-motion sensors in all tenant spaces to

Awaji Earthquake. This rebuilding wasprovide superior environmental per-one of the final projects in the overall

formance; (2) a strong structure seis-reconstruction of the area facing

mically isolated to resist earthquakes;

Sannomiya Station.

and (3) roomy specs for business offic-

DBJ joined Sumitomo Mitsui Trust

es and the inclusion of desiccant spac-

Bank, Ltd., to provide a syndicatedes to control humidity levels for tenantloan totaling ¥3.5 billion to support

comfort. As a result, the building was

Case Study

Sannomiya Building North Annex

Chugoku Lumber

Chugoku Lumber Co., Ltd., headquar-

the industry’s largest.

DBJ provided the company withIn the city of Hyuga, Miyazaki

financing under the Regional Areas

Prefecture, is Japan’s leading processor

Prefecture, Chugoku Lumber oper-

Genki Program, according it high rat-of lumber for use in housing construc-ates a new lumber mill and processing

ings for its initiatives to reduce thetion. The company is involved mainly

plant and has erected a wood biomass

region’s environmental impact and pro-in the manufacture and sale of sea-

and solar power generation facility tomote the growth of regional industry.

soned and laminated wood products

promote the use of forestry resources

made of Douglas fir. With a policyin the mountains of Kyushu andfocusing on wide variety, prompt

reduce environmental impact throughdelivery and maintenance of stock, thethe use of next-generation energy. The

company supports Japan’s housing

company aims to invigorate the region

industry by providing a stable supply

by bringing processes ranging fromof high-quality construction materials

the accumulation of raw wood to saw-

through its lumber drying facilities andmilling together at one location.

tered in the city of Kure, Hiroshimalogistics network, which are among
Chugoku Lumber’s Hyuga factory

84

Annual Report & CSR Report 2014

CSR Report

Community Revitalization
Case Study

Imabari Shipbuilding

Imabari Shipbuilding Co., Ltd., head-the company has been working toquartered in the city of Imabari, Ehime

differentiate itself further by applying

Prefecture, is a specialized shipbuilder

leading-edge technological develop-that carries out construction andment to the construction of sophisti-

repairs on various types of vessels andcated ships that reduce environmental

operates under a management phi-

impact through fuel efficiency.

losophy of “Growing Together with

DBJ provided Imabari Shipbuilding

Shipowners.” The Imabari Group oper-with financing through the Regional

ates eight shipyards along the coast

Areas Genki Program at its Shikoku

of the Seto Inland Sea, making it one

Branch to assist the company in its ini-of the largest shipbuilders in Japan in

tiatives to boost international competi-

terms of market share. In recent years,

tiveness in the shipbuilding industry.

Case Study

Saijo Shipyard

Fundokin Shoyu

Fundokin Shoyu Co., Ltd., head-company acquired ISO 9001 certifica-these initiatives highly, as well as thequartered in the city of Usuki, Oitation for its ingredient selection, pro-company’s growth strategies that are

Prefecture, was founded in 1861 toduction processes and product man-unique to a company based in north-produce and sell soy sauce and miso

agement and has established a quality

ern Kyushu, DBJ provided Fundokinpaste. In the 1960s, the company

management system based on thisShoyu with financing via the Regional

pioneered the industry’s development

system. The company also undertakes

Areas Genki Program.

of preservative-free miso, and in 1985

initiatives to encourage local produc-began producing dressing in the citytion for local consumption and works

of Usuki. Through such moves, theto invigorate its community by dis-company has established itself as

seminating information and conducting

one of Kyushu’s foremost condimentpromotions relating to food culture

producers, responding to emerging

from its base in the city of Usuki.

consumer needs and growing in pace

Over a history spanning more than
150 years, Fundokin Shoyu has con-with its region.
Fundokin Shoyu aims to provide

tributed to the evolution of a food cul-

high-quality products that are safe andture unique to Kyushu through ongo-

offer peace of mind. To this end, theing product development. Evaluating

Case Study

Fundokin Shoyu soy sauce crock

Kyushu Power Development

Kyushu Power Development Co.,

the Funama Low Head Hydro Power

Ltd., headquartered in the city ofPlant, located in the town of Kimotsuki,

Kagoshima, Kagoshima Prefecture,

Kagoshima Prefecture, in cooperation

benefits from the prefecture’s strong

with The Kagoshima Bank, Ltd. We

natural potential for the introduction

evaluated the company highly for fourof low head hydro power generation

reasons: (1) the initiative it has taken in

facilities. Backed by investment frombringing together prominent companies

prominent local companies, Kyushu

in the prefecture to support new busi-

Power Development is leading theness; (2) its great potential to generate

nation in the operation of low head

abundant hydro power in the region;hydro power facilities.

(3) its contribution to the development

DBJ provided construction financing for the company’s first project,power companies, local municipalities
and residents; and (4) its role in promoting renewable energy to reduce theregion’s environmental impact.

of a supportive relationship with manufacturers of generation equipment,
Funama power plant, under construction
Annual Report & CSR Report 201485

Strengthening the Safety Net

Reconstruction Response
Earthquake, tsunami, nuclear power plant crisis—the Great East Japan Earthquake unleashedunprecedented damage, a major compound disaster the likes of which the world has never seen, seriously impacting the economy of Japan. It is essential that disaster recovery measures be implemented
on a step-by-step basis according to each stage towards recovery and tailored to meet specific needs ofvarying regions and different disaster categories.
Case Study

Ibarakisuisan

Ibarakisuisan K.K., headquartered in

Ibarakisuisan completed construction

Partnership, in which DBJ and The

the city of Mito, Ibaraki Prefecture,and began operations at an alternative

Joyo Bank, Ltd., are joint inves-wholesales marine products,

Hitachinaka plant similar in scale to thetors, and provides financing forchiefly through the Mito City PublicNakaminato plant, restoring sales to

Ibarakisuisan. This financing aims

Wholesale Market. The company oper-

approximately pre-crisis levels.

to ensure ongoing support for theates a plant in the city of Hitachinaka,

The Ibaraki-related part of theearly restoration and construction ofwhere it processes smoked salmon

Great East Japan Earthquake

marine product wholesaling and otherand packages these and other marine

Reconstruction Fund is administeredindustries central to the economy andproducts for sale by volume retailers.

by Ibaraki Kizuna Investment Limited

employment of the affected region.

Ibarakisuisan’s Nakaminato plant
was damaged by the tsunami andliquefaction accompanying the Great
East Japan Earthquake. Even after
operations were restored soon after
the disaster, the company was only
able to return to partial production,
resuscitating its packing and smokedsalmon slicing operations. In May 2013,

Case Study

Hitachinaka plant

Senkon Logistics

Senkon Logistics Co., Ltd., head-

The company earned high ratingsa broad-ranging network to support

quartered in the cities of Natori andfor (1) its establishment of a company-

business continuity throughout the

Sendai, Miyagi Prefecture, provides

wide structure to promote disaster

Tohoku region—the viability of which

integrated logistics services in the

countermeasures and safety measures,

was confirmed during the Great East

Tohoku region, particularly transporta-

as well as a system to conduct regularJapan Earthquake and (3) its efforts totion and warehousing. As such, thedisaster-prevention initiatives such

identify and conduct impact analysis

company serves a role as part of theas performing regular checks, audits

for all the risks it faces, to evaluate thesocial infrastructure. Senkon Logistics’and corrective actions, (2) its estab-risks to its information assets based ongroup companies also take part inlishment of multiple headquarters to

the customer information it holds assuch businesses as passenger car sales

permit alternative operations in emer-

part of its business and to implement

and solar power generation.

gency situations, thereby providing

exhaustive overall management.

DBJ provided financing based on the
DBJ Enterprise Disaster Resilience Rated
Loan Program to Senkon Logistics,
which suffered damage from the Great
East Japan Earthquake. This financing
went toward expanding the company’slogistics warehouse as part of its efforts
to rebuild its logistics network.
New Fukushima warehouse86

Annual Report & CSR Report 2014

CSR Report

Reconstruction Response
Case StudyNPR Fukushima WorksNPR Fukushima Works Co., Ltd., head-

the Great East Japan Earthquake.

new employment; promote new cor-quartered in the town of Kawamata,This financing was provided underporate sitings and investment; attract

Fukushima Prefecture, is a group com-

the Interest Rate Subsidy System forand invigorate industry; and provide

pany of Nippon Piston Ring Co., Ltd.

Special Zones for Reconstruction.*

support that reinforces companies in

NPR Fukushima Works produces cylin-

The business of manufacturing

der liners and is one of Japan’s leading

devices for transportation equipment

manufacturers of valve seats and otheris an important industry in the town

parts for automotive engines usedof Kawamata, accounting for aroundon both land and sea. The company

33% of its manufacturing output.

is distinctive for its materials tech-

The financing helped to support a

nologies that involve special steel andcompany in a business identified as

sintered alloys, as well as its surface

key in the town of Kawamata’s plan

treatment and precision processing

to promote reconstruction. This plan

technologies. The company takes aidentifies the need to “provide ongo-

proactive approach to the develop-

ing employment for people affected

ment of innovative technology, as it

by disaster, as well as opportunities forcore industries for the town.”* The Interest Rate Subsidy System forSpecial Zones for Reconstruction is a support measure designed to enable reconstruction to proceed smoothly and quickly
in the region affected by the Great East
Japan Earthquake. Under this measure,regional municipal bodies draft their own
reconstruction plans, given the regional
state of affairs and characteristics, which
are endorsed by the national government.

aims to remain at industry’s leadingedge in the various functional components it manufactures.
DBJ and The Toho Bank, Ltd.,
provided joint financing to NPR
Fukushima Works, providing the capital investment needed to augment
production capacity for engine partsin the town of Kawamata, Fukushima
Prefecture, which was affected byCase Study

Panoramic view of the NPR Fukushima Works

Morishita Suisan

Morishita Suisan K.K., headquar-

The new plant is expected to invigo-

investors, and provides financing fortered in the city of Ofunato, Iwate

rate the local economy, including

Morishita Suisan initiatives targeting

Prefecture, was established in 1982

through employment, and contribute

future business development.

to process marine products. The

to the region’s economic resurgence.

company operates the only plant in

The Great East Japan Earthquake

the city of Ofunato to have received

Reconstruction Fund is administered in

HACCP* certification, attesting to its

Iwate by Iwate Genki Ippai Investment

high quality of hygiene management

Limited Partnership, in which DBJ

and production technology.

and The Bank of Iwate, Ltd., are joint

This plant, which was completely* HACCP (acronym for Hazard Analysis
Critical Control Point) is a sanitation management procedure involving analysis at
critical stages of the ongoing system—
processes from the receipt of food ingredients, through production, and on throughshipment.

demolished in the Great East Japan
Earthquake, quickly recommenced
partial production in July 2011 and has
been gradually recovering production
capacity since that time.
Going forward, Morishita Suisan
plans to build a new plant to provide
highly processed, high-value-added
products made from local seafoods.

Marine product processing plant
Annual Report & CSR Report 201487

Environmental Management

DBJ aims to realize a more prosperous sustainable society byenvironmental problems. In addition, in November 2002,

achieving harmony through the triple bottom line of society,we acquired ISO 14001 certification, and in November 2011,

the environment and the economy. We recognize the resolu-

we signed the Principles for Financial Action towards ation of environmental problems as an issue that is common

Sustainable Society (Principles for Financial Action for the 21stto all humankind. For this reason, DBJ has contributed to theCentury). Such efforts indicate our organizational commit-

formation of an environmentally friendly economic society.

ment to environmental preservation and the realization of a

In June 2001, DBJ became the first Japanese bank tosustainable society.

sign the UNEP Statement by Financial Institutions on the

In line with the Basic Environmental Policy formulated

Environment and Sustainable Development, promising toin October 2008, DBJ is promoting efforts in the regions

strive for harmony between economic development andwhere its branches and offices are located.

environmental conservation and to cooperate in resolving

DBJ’s Basic Environmental Policy
Promulgated and Put into Effect October 1, 2008

Purpose
Article 1. DBJ aims to realize a more prosperous sustainable society
by achieving harmony through the triple bottom line of society,the environment and the economy. We recognize the resolutionof environmental problems as an issue that is common to all
humankind. For this reason, DBJ has established a policy thataims to contribute to the formation of an environmentally friendly
economic society.
Promotion of Environmental Measures through Loan and
Investment Activities
Article 2.
1. Through its investment and loan activities, DBJ supports global
warming prevention measures and the promotion of a recyclingoriented society. In addition, by supporting environmentally
sustainable corporate management by its clients, DBJ contributes
to their creation of environmental measures and to the realizationof a sustainable society.
2. DBJ contributes to clients’ environmental measures throughthe risk evaluations of investment and loan activities from anenvironmental perspective.
Promotion of Environmental Awareness throughEnvironmental Communication
Article 3.
1. Through continuing research and advisory activities relating toenvironmental issues, DBJ seeks to help resolve environmental
issues through enhanced awareness, thereby contributing to therealization of a sustainable society.
2. DBJ seeks to promote environmental awareness throughinternational cooperation, including the distribution of information
about environmental initiatives by Japan.
3. DBJ endeavors to improve its initiatives by sharing information on
its environmental activities and through communication with society.
Promotion of Environmental Awareness Activities in Offices
Article 4. DBJ complies with environmental laws and regulations,and promotes activities to reduce the environmental impact of its
operations. To these ends, DBJ seeks to contribute to the creationof environmentally friendly office environments through theactivities indicated below.
(1) Promotion of resource and energy conservation and recycling
activities(2) Promotion of environmentally friendly sourcing of supplies(3) Prevention of environmental pollution
Promotion of Environmental Awareness Activities in
Communities
Article 5. By cooperating with community environmental
improvement initiatives, such as measures to prevent heat islands,
DBJ works to contribute to the creation of environmentally friendly
regional societies.

Putting into Practice DBJ’s Basic Environmental Policy
Promotion of Environmental Measures throughInvestment and Loan Activities

Promotion of Environmental Awarenessthrough Environmental Communication

DBJ’s investment and loan activities support projects

DBJ addresses environmental problems by conducting

designed to prevent global warming and create a recycling-

ongoing environmental studies and proposals. These efforts

based society. Furthermore, we promote clients’ efforts

help to enhance environmental awareness, support involve-

toward environmentally conscious management. By con-ment in environmental issues and contribute to the realiza-

tributing to clients’ environmental measures, we help totion of a sustainable society.

achieve a sustainable society.





and 73.)

DBJ Green Building Certification (See pages 40 and 79.)



88

Communication Focused on the Environment (See page 64.)

DBJ Environmentally Rated Loan Program (See pages 38Annual Report & CSR Report 2014

Communication on Community Revitalization (See page 64.)

Communication in International Cooperation (See pages
64–65.)

CSR Report

Promotion of Environmental Awareness
Activities in Offices

Promotion of Environmental Awareness
Activities in Communities

DBJ works to reduce the environmental impact of its opera-

By cooperating in community environmental improvement

tions beyond what is required by environmental regulations.

initiatives, such as measures to prevent heat islands, DBJ

As such, we promote the measures described below in anworks to contribute to the creation of environment-friendly

effort to make our offices environment-friendly.

regional societies.

• Promotion of recycling and resource and energy• Head Officeconservation

Uchimizu Project 2013

Resource- and Energy-Saving Efforts
Year Ended
March 31,2012

Year Ended
March 31,2013

Year Ended
March 31,2014

Copy and printing paper usage（kg）

100,494

85,01160,139Waste emissions（kg）

63,53055,68833,976

Energy consumption（kWh）
Water usage（m3）3.53 million
24,1054.01 million 4.05 million
22,667

10,083

Note: Head office building only

DBJ participates in the Uchimizu Project 2013, a campaign
hosted by the Otemachi, Marunouchi and Yurakucho (OMY)
Uchimizu Project District Executive Committee (OtemachiMarunouchi-Yurakucho District Redevelopment ProjectCouncil/Cooperative for the Promotion of the OMY Area
Management Association), Ministry of the Environment,
Tokyo Metropolitan Government and Chiyoda-ku. DBJ iscontinuing with its participation in the Uchimizu Project since• Promotion of environment-friendly sourcing of2008.

supplies
In line with the Law Concerning the Promotion of
Procurement of Eco-Friendly Goods and Services by the Stateand Other Entities (Law on Promoting Green Purchasing),
which went into effect in April 2001, DBJ implemented
initiaves to purchase products and services with lower environmental impacts. We have continued to practice green
purchasing following our privatization.
Achievements of the Green Procurement Program
for Typical Items• Hokuriku Branch
Kanazawa Eco Suishin Jigyousya Network
Since fiscal 2004, the branch has participated in theYear Ended March 31, 2014

Kanazawa Eco Suishin Jigyousya Network, undertaking

Paper

99.7%

initiatives to (1) reduce waste, (2) conserve energy andStationery

97.3%(3) promote green purchasing.

Equipment

100%

Office equipment

98.3%

Lighting

100%

Note: Excludes printing paper, media cases, labels, and other items that were purchasedon the market that do not comply with the prescriptions of the Law Concerning
the Promotion of Procurement of Eco-Friendly Goods and Services by the Stateand Other Entities but that were purchased nevertheless on the basis of certain
characteristics or functional requirements.

• Prevention of environmental pollution
DBJ complies with environmental laws and regulations.

• Kansai Branch
Kansai Eco Office Declaration
Registered since 2008, the ”Eco Office Declaration” callsfor (1) a summer ”eco style,” (2) enforcing energy saving,(3) promoting green purchasing, (4) curbing automobile useand (5) engaging in waste recycling.
• Shikoku Branch
Forest-thinning activities
We continue toparticipate in forestthinning activities
conducted in collaboration with thetown of Inomachi,
Kochi Prefecture, andMitsui & Co., Ltd.

Annual Report & CSR Report 201489

• Kyushu Branch

Earth-Friendly Office
In fiscal 2009, we registered with the “Earth-Friendly

Cleanup/beautification activity—Tenjin Clean Day

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

We participated in themental department. We continued these activities in fiscal

Tenjin Clean Day activity

2013, and are making efforts to (1) curb paper consump-sponsored by the We Lovetion, (2) promote the use of recycled products, (3) raise

Tenjin conference andemployee awareness of resources and waste reduction,

helped to clean up the area(4) save energy and water andand plant flower bulbs.

(5) regulate office air at an appropriate temperature.

• Other Branches
We implement initiatives such as collecting used postage
stamps and PET bottle caps for donation. We also have
employees bring their own chopsticks and cups to work to
reduce waste.

Environmental Management Structure
DBJ has set up the Public Relations & Corporate Social

Environmental Management Officer

Responsibility Office within the Corporate Planning &The Environmental Management Officer is assigned to the

Coordination Department. This office spearheads environ-

Public Relations & Corporate Social Responsibility Office inmental management activities attended by all executives

DBJ’s Corporate Planning & Coordination Department. The

and employees.

officer confirms environmental education and training andauthorizes annual environmental targets.

Environmental Management Conference

Environmental Management Structure

The Environmental Management Conference deliberates

Environmental
Management Officer(Director in charge of Public
Relations & Corporate Social
Responsibility Office,Corporate Planning &Coordination Department)

Vice-Environmental
Management Officer(Corporate Planning &Coordination Department
Manager)

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

Implementation
division
Heads of each department
and officeEnvironmentalGroupmembers

Environmental Group
Promotion Officer
Environmental
Group Promoter
Employees

annual environmental targets and environmental management reviews.

Public Relations & Corporate Social
Responsibility Office, Corporate Planning &Coordination Department
In charge of DBJ’s environmental management activities
is the Public Relations & Corporate Social Responsibility
Office, Corporate Planning & Coordination Department.
In addition to setting environmental targets for each fiscal
year and confirming the degree to which established targets have been achieved, this office manages compliancewith relevant laws and regulations.

Environmental Group Promotion Officer
To promote environmental management activities, theEnvironmental Group Promotion Officer and Environmental
Group Promoter designate a member in each branch anddepartment to be in charge of environmental promotion
and manage the level of achievement of annual environmental targets.

Employees
Employees are responsible for putting environmental management activities into action.
90

Annual Report & CSR Report 2014

CSR Report

DBJ’s Primary Achievements in the Environmental Sector since Its Establishment
1999 October

Designation of sustainable development as an objective by the Development Bank of Japan Act (Act No. 73 of
1999)
2001 April
Start of green procurement and environmental training
JuneFirst Japanese bank to sign the UNEP Statement by Financial Institutions on the Environment and Sustainable
Development
October
Establishment of Social Environment Committee and Social Environment Group; hosting of discussions between
UNEP and Wa no Kuni Financial Institutions on Environmental Considerations for Financial Institutions
2002 March
UNEP FI 2002 Global Roundtable in Rio de Janeiro, Brazil
July
Launch of the Development Bank of Japan Environmental Policy
November ISO 14001 certification
2003 October
Publishing of Environmental Report 2003 for a Sustainable Society (first annual edition)
October
Joint sponsorship of UNEP FI 2003 Global Roundtable in Tokyo, an international conference on finance and theenvironment
2004 April
Start of DBJ Environmentally Rated Loan Program
September Second annual Sustainability Report
November Japan Carbon Finance, Ltd. (JCF) established
December Japan Greenhouse Gas Reduction Fund (JGRF) established2005 January
Assumption of chair of the UNEP FI Asia Pacific Task Force
September Third annual Sustainability Report
October
UNEP FI 2003 Global Roundtable
November Renewal of ISO 14001 certification
2006 May
Press conference to announce DBJ status as a signatory institution to the Principles for Responsible Investment
AugustCSR Report 2006 (fourth annual Sustainability Report)
2007 July
Annual Report & CSR Report (integrated annual report and CSR report)
2008 OctoberFirst Board of Directors and Executive Committee meetings of Development Bank of Japan Inc.; formulation of
Basic Environmental Policy and Environmental Management Regulations
2009 MarchFirst Environmental Club Syndicated Loan ECONOWA
April
Commendation for DBJ Environmentally Rated Loan Program: Environmental Development Award
September Start of cooperation with regional financial institutions to prepare a system to implement Financing Employing
Environmental Ratings
2010 January
Basic cooperative agreement with the International Finance Corporation (World Bank Group financial institution
conducting the world’s largest international investment and loan activities for developing countries)
April
Business cooperation agreement to promote environmental measures with a non-life insurance company
December Selected as a designated financial institution under the Bill on the Promotion of Businesses to Develop andManufacture Energy and Environmentally Friendly Products (“Low Carbon Investment Promotion Act”)
2011 April
Established the DBJ Green Building Certification
November Signed the Principles for Financial Action towards a Sustainable Society (Principles for Financial Action for the 21stCentury)
2013 October“Environment/Reconstruction Support Syndicated Loans” win the Grand Prize and Minister of the Environment
Prize in the Green Purchasing Awards

Annual Report & CSR Report 201491

Business Continuity Plan (BCP)

DBJ is preparing a business continuity plan (BCP) to protect

spells out necessary disaster responses in an easy-to-

the interests of its stakeholders, including its clients, its

understand manner.

shareholder, and its executives and regular employees, as

When formulating policies to ensure the continuity

well as to fulfill its social mission. The BCP aims to ensure

and recovery of core operations, we took the approach of

the continuity and rapid recovery of core operations in theconsidering responses to cases in which important manage-

event of emergencies, such as natural disasters (in particu-

ment resources were damaged due to a large-scale disaster,lar, large-scale earthquakes), influenza pandemics, systemaffecting head office (1) buildings and facilities,

failures and power outages.

(2) executives and regular employees, and (3) systems,

In addition to addressing the continuity of core operations and maintaining a plan to recover from disaster,the BCP specifies the initial actions that executives andinstead of considering responses to individual events suchas earthquakes and fires.
An overview of DBJ’s BCP is provided below.

regular employees should take in emergencies. The plan

1. Principles of Action for Executives and Regular Employees
The BCP defines three key goals regarding the fundamental

they must give first priority to the lives and safety of ourstance that executives and regular employees are to take inclients and our executives and regular employees, paying

the event of a large-scale disaster or other emergency. They

attention to television and radio broadcasts, evacuating

are to (1) ensure personal safety, (2) grasp the situation

calmly (without panic) and determining the safety of others.

accurately and (3) remain calm and collected. Specifically,

2. Core DBJ Operations
In the event of a large-scale disaster, DBJ has identified
the following six items as essential to the continuity of its

1) Confirmation and assurance of the safety of executives
and regular employees

core operations from the standpoint of (1) items that are2) Uninterrupted continuation of settlement-related businessfundamental and prerequisite to business continuity (such3) Reliable formation of the Disaster Response Committee

as facilities, personnel and systems), (2) DBJ’s social mission4) Restoration and maintenance of IT systems

and the public nature of its financing (such as investment

5) Confirmation of the status of clients in afflicted areas

and loan activity) and (3) responsibility to financial markets6) Rapid commencement of crisis response operations(continuity of market settlements).

DBJ has formulated a BCP that prioritizes continuity of
the core operations described above.

3. BCP Operational Structure
When responding to an emergency situation, such as in

BCP Operational Structure Outline

the event of a large-scale disaster, in principle, the Disaster
Response Committee will be established at head office

President

and chaired by the head of the Corporate Planning &Coordination Department, who reports to the president.
This committee gives directions to DBJ’s branches regarding
the continuation of core operations. If maintaining operations at head office proves problematic, the Kansai Branchshall serve as the alternative location.

92

Annual Report & CSR Report 2014

Disaster Response
Committee(Head Office)Backup office(Kansai Branch)

Directions

Head office departments, branches

Directions

CSR Report

4. Measures to Ensure Business Continuity
We have prepared a variety of measures to ensure business(3) Chain of Command and Delegation of Authority
To assure that decision-making concerning the continu-

continuity. The primary measures are introduced below.

ity of core operations is prompt and certain, in the eventthat the Disaster Response Committee is established, we(1) Enhanced System Robustness

have put in place a chain of command and an alternative

Ensured advanced security levels at the main center, andhierarchy by which authority can be delegated.

created a backup center to operate in the event that themain center ceases to operate.

(4) Clarification of Initial Response and Procedures forContinuing or Restoring Core Operations(2) Multilayered Communication Procedures
Introduced a safety-confirmation system to quickly

For individual business units, we have established indetermine the whereabouts and status of executives

advance the procedures for the initial response and theand regular employees even at night and on holidays. In

continuation or restoration of core operations so that

addition, distributed satellite telephones to key locations

relevant divisions can respond quickly and with certainty

and personnel to ensure multilayered communicationon core operations.

procedures.

5. Initiatives to Maintain or Improve BCP Viability
DBJ conducts various types of instruction and training ofFurthermore, the BCP is revised to reflect training results

executives and regular employees to maintain or improveand recent information, and is reviewed by the Executive

the viability of its BCP.

Committee regularly and additionally as necessary, employing a Plan-Do-Check-Act (PDCA) cycle.

Annual Report & CSR Report 201493

Fostering Human Resources and Creating a Comfortable Work Environment

DBJ considers its human resources to be its most valuable

environment to bring out the best in every employee. The

assets and thus endeavors to develop its employees’ capa-

superior employee performance resulting from such efforts

bilities. DBJ actively works to build a systematic humanis what drives DBJ ahead on a daily basis and keeps it an

resource development system and a comfortable work

innovator, blazing the trails that Japan needs to follow.

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

specialists in many fields. Responding to society’s constantly

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

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

To develop its human resources, DBJ promotes autono-

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

resource development system that incorporates job rotation,

professionals through the vision of generalists who can be

performance evaluation, formal education and training.

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

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

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

initiatives. DBJ is working to enrich this system by having

nally. DBJ also motivates employees by offering bonuses

subordinates meet individually with superiors to set goals

and other benefits based on operating performance.

and receive feedback, autonomously running through theCreating a Comfortable Work Environment and Promoting Opportunities for Women
DBJ actively strives to cultivate a comfortable workthat provides child-rearing support. Specific grounds for thisenvironment.

approval included (1) the promotion of spousal support for

To maintain an environment in which all employees

childbearing through special leave and childcare leave,

can feel secure, DBJ has notified employees of its policy(2) measures to ensure time for child-rearing and (3) mea-

to prevent sexual and power harassment and has set up asures to promote the taking of annual paid vacation.

hotline to deal with such issues. Furthermore, to support

As part of its efforts to promote opportunities formental and physical health, DBJ provides its employees andwomen, DBJ plans to increase its percentage of female

their families with regular medical examinations and caremanagers to around 50% by the end of fiscal 2018.

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

94

Annual Report & CSR Report 2014

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

CSR Report

A Solid Human Resource Development System
DBJ’s financial professionals are supported by a well-devel-in multiple departments, employees are additionally trained

oped education and training system. Mandatory training byfor highly specialized positions according to their skills andlevel, combined with elective training according to skills andbackgrounds. This system of strategic job rotation not only

needs, enables each employee to plan his or her career andenables employees to gain broad-based practical experience

support DBJ’s initiatives in innovative finance.

that gives clarity to their medium- to long-term career goals

For young employees, we established the DBJ Financial
Academy, which is designed to help employees acquire

but also provides an environment for quickly and firmly
acquiring and improving their highly specialized skills.

and maintain basic competencies and deepen their under-

In step with globalization, DBJ cultivates employees able

standing of finance, assuming they will become involved into perform in international as well as domestic settings. To

advanced financial operations. We are expanding the acad-achieve this, DBJ actively assigns employees to a wide vari-emy, focusing on courses such as Corporate Finance, theety of external organizations, including overseas graduate

Financial Instruments and Exchange Act, and M&A.

schools (program currently being expanded), international

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

institutions, domestic and overseas research institutes, com-

ing that provides hands-on exposure to work involving vari-panies and related government agencies, thereby supportingous levels of responsibility. After experiencing employment

skill development and network extension.

DBJ’ s Human Resource Development System
Training by Level

Business-Related Training

Business-Related(Self-Training)

Careerdevelopment
plan training

Managertraining

tCompliancetraining
t5SBJOJOHJO
financial
act
t&UD

tAccounting
t#BTJDTPG
Tax
t&UD

t7BMVBUJPO
t'JOBODJBM.PEFMJOH
t."
t3FBM&TUBUF'JOBODF
t3FMBUJPOTIJQ.BOBHFNFOUt$PSQPSBUF3FPSHBOJ[BUJPOt&OWJSPONFOUBM3BUJOH4FNJOBSTt#$.3BUJOH4FNJOBSTt%#+'JOBODJBM"DBEFNZ &MFDUJWF
courses and special courses)t&UD
%#+'JOBODJBM"DBEFNZ$PSFDPVSTFT **t*'34"DDPVOUJOH'PVOEBUJPOTBOE1SBDUJDFt*OUFSOBUJPOBM'JOBODF
t'JOBODJBM1PMJDZtEtc.

Secondarytraining after
joining DBJ%#+'JOBODJBM"DBEFNZ$PSFDPVSTFT *t#BTJD$PSQPSBUF'JOBODF
t'JOBODJBM*OTUSVNFOUTBOE&YDIBOHF"DUt."tEtc.

Introductory
training
for new
employees

Autonomous
career track

Commonskill areas
t1SPCMFN
solving andcommunication
t-PHJDBM
thinking
t&OHMJTI
conversationt#VTJOFTT
comportment
t&UD

Cultivation ofmanagement andleadership skills

Planned and continuous
HR development

Rating and asset
assessment
training

Documentation

Systems related
to investments
and loans

Basic
Legal

Mastery of DBJ
procedures andbasic processes

Mastery offinance andlaw

Domestic and overseas exchange
students, trainees, etc.

Management
training

t5SBJOJOHJO
middle- andback-office
operations
involving
investments
and loans
t5SBJOJOH
in debt
management
t&UD

External seminars, lectures, etc.

PositionLife plan
training

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

Topmanagement
training

External
Assignments, etc.

'JOBODJBMBOBMZTJTUSBJOJOHtBookkeeping and AccountingtCompany AnalysistCase Studies

Basic finance trainingtInterest Rate BasicstBasic Derivatives
Acquisition offinancialaccounting
knowledge

Mastery of knowledge andskills needed for work

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

Mastery of basic
business
execution skills

Acquisitionof businessrelated
knowledge

Mastery of knowledge andskills needed for work

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

Annual Report & CSR Report 201495

Seeking Higher Ethical Standards
For half a century, DBJ has led Japan’s economy as a gen-

DBJ has long desired that its employee training addresseral policy-based financial institution. As DBJ transforms

issues of human rights in addition to ensuring legal compli-

into a private-sector financial institution that still values theance and maintaining information security through training

long-term perspective, neutrality, public-mindedness andto prevent fraudulent access and information leaks. DBJ

reliability it has cultivated, each employee is being held to awill henceforth devote even more resources toward suchhigher ethical standard.

efforts.

DBJ Financial Academy
Since May 2008, the DBJ Financial Academy typically has

addition to basic knowledge, such as fundamental cor-held several courses that meet two or three times a week

porate finance topics and corporate valuation methods

with the objective of raising the level of financial expertisethat can be applied, the academy provides a broadof primarily young second-year employees throughout

range of core training on finance from an academic andthe organization by strengthening their knowledge andscientific perspective. Students from outside DBJ, such

understanding from a medium- to long-term perspective

as employees of regional financial institutions, gov-of advanced corporate financial business essential to DBJ’s

ernment bodies and business partners, have also par-business model. During fiscal 2013, courses numbered 19

ticipated. Through these courses, we look forward toand covered Introduction to Modern Finance, Corporate

opportunities for mutual

Finance, the Financial Instruments and Exchange Act, andexchange and the cre-IFRS Accounting: Foundations and Practice.

ation of networks.

Through the DBJ Financial Academy, each employee
can seek to elevate his or her abilities in finance. In
DBJ Financial Academy Curriculum2013 Courses (May 2013 through February 2014)
Core courses (I)Introduction to Modern Finance
Financial Instruments and Exchange Act
Business Statistics
Basic Corporate Finance
M&A
Corporate Finance PracticeCore courses (II)IFRS Accounting: Foundations and Practice
Insolvency and Corporate Reorganization
Financial System Theory
International Finance
Financial Expertise Follow-up PracticeFinancial Policy
Elective courses
Real Estate FinanceBehavioral Finance
Investment
Game Theory Approach to Asset Pricing Structure
Concepts
Risk Management and Real Options
Special courses
M&A and Competition Policy
Special Program for Regional Financial Institutions









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

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



















2014 Courses (expected to run from May 2014 throughFebruary 2015)
Core courses (I)Introduction to Modern Finance
Financial Instruments and Exchange Act
Business Statistics
Basic Corporate Finance
M&A
Corporate Finance PracticeCore courses (II)Insolvency and Corporate Reorganization
IFRS Accounting: Foundations and PracticeFinancial System Theory
International Finance
Financial Policy
Financial Expertise Follow-up PracticeElective courses
Real Options
Real Estate Finance
Investment
Macroeconomics and the Modern Japanese Economy
Behavioral FinanceRisk Management
Special courses
Introduction to Integrated Reporting
Securitization: Comparison of Japanese and U.S.
Securitization Markets
Special Program for Regional Financial Institutions


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96

Annual Report & CSR Report 2014

Intellectual Asset Report
DBJ’s executives and regular employees continuallytake on new challenges, while remaining firmly
committed to DBJ’s four core values: a long-term
perspective, neutrality, public-mindedness andreliability. The intellectual assets DBJ has built up
over the years help form the financial platform andenable DBJ to provide services that extend beyond
merely providing funds. Employing these assets,
we endeavor to address the needs of the times andfulfill our role in enhancing socially responsible
activities among companies.

Intellectual Asset Management  . . . . . . . . . .  98
Financial Platform That Enables DBJ to
Meet the Needs of the Times  . . . . . . . . . .  102

Annual Report & CSR Report 201497

Intellectual Asset Management

Corporate Value and Intellectual Asset Management
Intellectual Assets
Companies ensure ongoing prosperity and profit byIntellectual Asset Management Essential toEnhancing Corporate Valueconsistently differentiating themselves from competitors.

Although intellectual assets are intangible in the sense that

Differentiating the products and services they offer is athey are not recorded on a company’s financial statements,

large part of the process. To enhance their operations, com-they are a core component of corporate value. Managing

panies must identify their important management resources

intellectual assets effectively promotes clarity in terms of theand sources of competitiveness. Specific technologies,

corporation’s key competencies and creates opportunities toexpertise, human resources and business models are someincrease corporate value.

factors that lead to differentiation but are invisible to the

Listed companies are finding that aggressively disclos-casual observer. Determining an entity’s true corporate

ing intellectual asset information helps markets value themvalue requires the evaluation of these company-specificmore appropriately. For this reason, the introduction ofstrengths. DBJ’s activities related to intellectual assets are

regulatory frameworks to encourage or require listed com-designed to foster the application of these intangible sourc-

panies to disclose non-financial information has grown into

es of corporate value that underpin a company’s future

a global trend, centering on Europe.

economic performance.

DBJ’s View on Intellectual Assets
Dating back to the time of our predecessor, maintaining theextraordinary DBJ asset: our expertise in resolving issues

trust of our clients and society at large has been our mostthrough the application of new financial methods, theimportant objective. From this standpoint, we have createdwidespread use of our financial platform and our eco-a wide variety of networks spanning both the public andnomic and social contributions. This asset has led to our

private sectors.

development of the financial methods described below. It

Based on our core values, our executives and regularenables us to respond quickly to changing policy require-

employees have continued working to enhance their ability

ments and plays a major role in our ability to continue

to evaluate companies and projects.

adding economic and social value.

We have accumulated a wealth of expertise in the

Since privatization, we have aimed to maintain our eco-screening and evaluation of long-term projects and a keen

nomic and social contributions. We believe that our ability

ability to identify and address issues that are unique into clearly identify and make use of intellectual assets will beterms of the times or the local communities that face them.

an increasingly important factor in achieving this goal.

In the process, we have become a repository of intellectual assets, which when combined represent an

Relationships among Intellectual Assets, Business Model and Corporate Value
Corporate ValueBusiness Model

Financial
AssetsTangible
Fixed Assets(Created by DBJ from Ministry of Economy,
Trade and Industry materials)

98

Annual Report & CSR Report 2014

Relational
AssetsHuman
Resources

Intellectual Assets

Structural
AssetsIntellectual Asset Report

DBJ’s Utilization of Intellectual Assets
One school of thought defines intellectual assets as thevarious fields—as they consider such issues. All DBJ execu-

understanding of and reporting on an entity’s networks

tives and regular employees work to maintain a long-termand client bases (relational assets), management team andand neutral perspective, approaching new business with

employees (human resources) and intellectual assets anda spirit of innovation and challenge.

business processes (structural assets). Below, we introduce

To impart various financial skills, DBJ maintains training

DBJ’s intellectual assets and activities according to thismenus that include a 2.5-month financial analysis training.

segmentation.

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

Relational Assets

ing, raise the level of specialist expertise among DBJ execu-

As our mission prior to privatization was to support projects

tives and regular employees. We maintain a number ofthat had policy significance, our system of planning andpersonnel exchange and dispatch programs with domestic

making investments and extending loans involved coopera-

and overseas universities and research institutions, as welltion with central government agencies and regional govern-

as with other international institutions, that help form ourment bodies. Now we take advantage of these networks

networks. These programs help DBJ develop and introduce

in our interest rate subsidy programs for the promotion

new financial methods, as well as strengthen network ties.

of environmental management, as well as other inter-

DBJ has also established the Research Institute of Capitalest subsidy systems put in place by national and regional

Formation, which carries out financial research, as well as

government bodies. Also, we continue to assist with crisis

research on global warming countermeasures and other

response operations. DBJ also works to create and develop

efforts to create a sustainable society. The research that thefinancial platforms. To construct these platforms, we col-center produces from a neutral and long-term perspective islaborate with public- and private-sector financial institu-

highly regarded by the community and other experts.

tions in Japan and overseas and maximize our networks ofprofessionals including university professors, attorneys, andStructural Assets

certified public accountants. This multifaceted combination

Unlike manufacturing companies, DBJ has no explicit intel-

of networks consisting of professionals in a host of fields in

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

industry, academia and the government constitutes DBJ’s

duction of new financial methods to Japan, our work withrelational assets.

other financial institutions to create financial platforms andour many other contributions to the Japanese economy

Human Resources

and society rely on our organizational adeptness, that is,

Appropriately judging medium- to long-term investments

our ability to quickly ascertain emerging issues and deploy

and loans requires all of DBJ’s executives and regularappropriate personnel. This ability, combined with the long-

employees to maintain a long-term perspective and maketerm financial data we have accumulated over 50 years offinancial decisions from a neutral standpoint. In an era

investment and loan operations and a corporate culture

characterized by increasingly complex economic and socialof always considering projects in an economically rational

issues and more sophisticated business skills, this long-termmanner, as well as in terms of their broader economic andperspective has a major impact on DBJ’s ability to contrib-social significance, constitute DBJ’s structural assets, as

ute to business formation and the financial structure. Our

does the smooth and rapid communication process result-ability to provide solutions that are appropriate for compa-

ing from the common knowledge that has evolved throughnies, as well as for the economy and society in a broader

financial analysis training and other channels.

sense, depends on the ability of our human resources—
executives and regular employees who are professionals in

Annual Report & CSR Report 201499

Advanced Initiatives Involving New Financial Methods That Utilize Intellectual Assets
We are a leader in leveraging our intellectual assets toduring the period when the viability of their plans is being

introduce new financial methods to Japan. Our pioneering

reviewed. To meet this need, DBJ provides debtor-in-

efforts come from maximization of our intellectual assets,

possession (DIP) financing as temporary working capital tocooperation with local communities and extensive cultiva-

enable such companies to continue operating and maintaintion of in-house human resources and expertise. Operating

value in the best portions of their businesses. In addition,

within complex financial markets, DBJ has maintained these

DBJ creates business revitalization funds to help companies

activities while continuing to control and distribute risk asnormalize their operations, through a process of operation-effectively as possible.

al selection and focus, and reduce their debt levels.

The United Kingdom introduced the private finance ini-

In recent years, we have become actively involved in

tiative (PFI) scheme in 1992 to encourage private companies

mezzanine financing. (”Mezzanine” literally refers to theto fund or manage projects that are typically operated bypartial story between two main stories of a building.) In thethe public sector. As a leader in absorbing and accumu-

repayment hierarchy, mezzanine financing is lower than thelating such expertise, DBJ has participated in numerous

senior financing* typically provided by financial institutions,

PFI projects in Japan. By shifting to the private sector theso it is a higher investment risk. In the United States andresponsibility for constructing, maintaining and operatingother markets with a broad range of investors, mezzanine

public facilities, the country benefits from private-sector

financing plays an important role in diversifying the types

management expertise and technical capabilities. By appro-of funding that are provided. Mezzanine financing can be

priately allocating risks among the private and public sec-

used in a number of situations, such as business or capitaltors, PFI is an efficient and effective way to provide public

restructuring. Taking a long-term perspective, DBJ provides

services. With PFI, project financing is the method generally

mezzanine financing as one of its tailor-made financing

used to raise funds, as project roles are allocated appropri-

solutions.

ately and long-term business is assured.
DBJ provides a full range of financing options in the areaof business revitalization. After filing applications according to Civil Rehabilitation Act or Corporate Reorganization
Act procedures, companies typically require working capital

100

Annual Report & CSR Report 2014

*Senior financing involves relatively low risk. In Japan, most corporate bond issues and funds provided by financial institutions aresenior financing.

Intellectual Asset Report

Relationship between Intellectual Assets and CSR at DBJ
The nearby figure contrasts intellectual assets as viewed

companies have cause to reconsider their conformanceby DBJ and DBJ’s role as seen by society. Evaluated in thiswith various laws and regulations, ensure safe and secure

sense, intellectual assets and CSR are two sides of the same

workplace and surrounding environments and provide qual-coin.

ity products and services through fair competition. These

For example, the DBJ Environmentally Rated Loan
Program, the DBJ Enterprise Disaster Resilience Rated

activities reinforce a company’s client base and raise corporate value by fulfilling social responsibilities.

Loan Program, DBJ Employee’s Health Management Rated

By employing our intellectual assets in these ways, weLoan Program and DBJ Green Building Certification—fully

go beyond merely providing financing: we also play a rolemobilized through intellectual asset networks with central

in promoting increasingly sophisticated corporate CSR man-government bodies, regional government bodies, experts

agement.

and clients—as well as our human resources comprising

As can be seen on pages 30 to 46, “Integrated

executives and regular employees and our accumulation of

Investment and Loan Services,” and on pages 66 to 87,

experience and expertise all serve a vital CSR role.

“CSR through Investment, Loan and Other Businesses,” DBJ

At the same time, these same loan programs strongly
support the CSR activities of our business partners: theseis taking advantage of its various accumulated intellectual
assets.

Relationship between Intellectual Assets and CSRIntellectual Asset
Elements
Relational
AssetsNetworks andClient Base

Human
Resources
Management Teamand Employees

Structural
AssetsIntellectual Assets andBusiness Processes

CSR Elements
Client Satisfaction
Maintaining
Service Quality
Fair Competition

Human Resource Education
Labor Standards
Human Rights
Working Environment

Legal and Regulatory
Conformance
Corporate Ethics(Created by DBJ from Ministry of Economy, Trade and Industry materials)

Annual Report & CSR Report 2014101

Financial Platform That Enables DBJ to Meet the Needs of the Times

Defining “Financial Platform”
In DBJ’s definition, ”financial platform” refers to thecorporate economic activity involves the application ofamount and quality of funds to which corporate and otherexperienced and real-world expertise of financial institu-

clients have access, the systematic formulation of bases thattions and businesses, as well as an accumulated body ofaffect the diversity of fund-raising methods, financial exper-

results that can be used for future reference (transaction

tise and practices, market transparency and the degreecases, precedents and the like).

of market participation. The more complete the financial

Furthermore, as financial platforms function inade-platforms, which are indispensable to financial system

quately if they are used by only a minority of participants, asoundness and macroeconomic vigor, the greater is theircatalyst is needed to encourage participation from a broad

effectiveness at promoting the revitalization of businesses

range of players.

and urban and local communities and the creation of new
industries.
However, financial platforms, which are an institutional,
general-access capital good, are not formed overnight.

Owing to our neutral position and advanced-player
status, we are perfectly suited to serve as the catalyst fordeveloping and maintaining financial platforms in cooperation with other financial institutions.

Creating the framework of systems and laws that support

Activities Involving Financial Platforms

102

DBJ fulfills a broad range of information functions. In addi-

first executive director. This institute creates the foundation

tion to corporate monitoring, DBJ exchanges information

for creating intellectual assets through collaboration with

with government agencies, local government bodies andoutside experts, centered on university instructors. Taking

private financial institutions and coordinates their interests.

an academic and liberal perspective, the institute promotes

In the investment and loan department, DBJ promotes andresearch activities targeting a sustainable socioeconomic

helps develop financial platforms for structured financing,

structure. (For details, please refer to the Research Institutebusiness restructuring support, financing related to envi-of Capital Formation website, at http://www.dbj.jp/ricf/en/.)ronmental and disaster policies, M&A advisory services,

On pages 30 to 46, “Integrated Investment and Loan

safety nets and other functions. In the research depart-

Services,” and pages 66 to 87, “CSR through Investment,

ment, DBJ established the Research Institute of Capital

Loan and Other Businesses,” DBJ introduces its activities

Formation in July 1964, with Dr. Osamu Shimomura as its

involving financial platforms.

Annual Report & CSR Report 2014

Management Structure
DBJ’s most important public social responsibility is
to instill public confidence as a financial institution
and achieve the highest levels of managementtransparency. We employ an operations
management cycle that reflects the voice of society,particularly in terms of addressing the issues
society faces from a long-term perspective, at theappropriate time and in the appropriate manner.
We undertake projects that are meaningful fromboth economic and social perspectives and work tooffer superior investment and loan solutions.

Corporate Governance  . . . . . . . . . . . . . . . .  104Compliance  . . . . . . . . . . . . . . . . . . . . . . . . .  109Risk Management  . . . . . . . . . . . . . . . . . . . .  110Client Protection Management System/
Policy on Personal Information
Protection/Policy for Managing
Conflicts of Interest  . . . . . . . . . . . . . . . . . .  114Disclosure  . . . . . . . . . . . . . . . . . . . . . . . . . . .  116

Annual Report & CSR Report 2014103

Corporate Governance

Basic Position on Corporate Governance
DBJ has formulated a corporate philosophy to encapsulate

financial technology and R&D, based on skills gathered overmanagement’s position regarding DBJ’s integrated invest-

many years of experience.

ment and loan services. We consider this philosophy the

Networks

core of our corporate activities.

Networks created with clients, local governments and otherfinancial institutions.

Corporate Philosophy

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

We conduct our business in accordance with the action
guidelines described below as we strive to realize our corporate philosophy.
Customers First
DBJ will operate from our clients’ viewpoints, addressing
their challenges and sharing pleasure in their success.
Professional
With discernment and creative skill, DBJ will be a uniqueCore Competencies

financial platform providing integrated investment and

The core competencies described below support DBJ’sloans both in Japan and abroad.

efforts to realize its corporate philosophy.

Global & Local

Intention

DBJ will maintain a long-term viewpoint, considering the

The fundamental stance at the core of our corporate values:

needs of the times, the world and the region.

long-term perspective, neutrality, public-mindedness andSpeed & Teamwork

reliability.

Relying on skilled teamwork, DBJ will act rapidly and inIntellectual Assets

good faith, building strong foundations for clients’ trust.

Expertise in fields including industry research, credit analysis,

Corporate Governance Measures and Their Implementation Status
Internal Organizations

The following two members are outside directors:

DBJ elects outside directors from the standpoint of

Akio Mimura, Senior Advisor, Honorary Chairman of

ensuring management transparency and enhancing

Nippon Steel & Sumitomo Metal Corporation andcorporate governance.

Kazuo Ueda, Professor, Faculty of Economics, the

The Advisory Board has been established as an Executive

University of Tokyo.

Committee advisory body. This board provides advice on
overall management issues, including DBJ’s management

Audit & Supervisory Board Members, Audit &strategies, from a neutral standpoint.

Supervisory Board

The Compensation Committee, which includes outside

The Audit & Supervisory Board comprises five members.

directors, has been created to deliberate on director

This board convened 14 times during the fiscal year ended

compensation and advise the Board of Directors in thisMarch 31, 2014.

regard. At the same time, DBJ has established a Personnel

As prescribed by the Companies Act, a majority of the five

Evaluation Committee comprising outside experts to

Audit & Supervisory Board members are outside members.

evaluate personnel proposals on the selection and

DBJ has three outside Audit & Supervisory Board members.

resignations, dismissals and term expiries of directors and

The Audit & Supervisory Board Office has been created

Audit & Supervisory Board members.

to assist Audit & Supervisory Board members (including
outside members) in performing their duties. Specialized staff

Board of Directors

members are assigned to the Audit & Supervisory Board

The Board of Directors comprises 10 members. To ensure

Office, which is directed by the Audit & Supervisory Board.

management transparency, two Board members are outside

The three outside Audit & Supervisory Board members

directors. During the fiscal year ended March 31, 2014, theBoard of Directors met 14 times.

are as follows:
Tatsuya Tsuboi, former President, Sumitomo Mitsui Trust
Research Institute Co., Ltd.;104

Annual Report & CSR Report 2014

ALM & Risk Management Committee

Professor, Graduate School of Waseda University;

This committee deliberates and makes decisions pertaining

Shinji Hatta, Professor of Graduate School of Professional

to portfolio risk management and asset/liability management.

Accountancy, Aoyama Gakuin University.

General Risk Management Committee

Management Structure

Makoto Ito, Attorney and Visiting Legal ResearchThis committee deliberates and makes decisions on
Content of Standards and Policies Related toimportant items related to legal compliance, client

Independence in the Selection of Outside Directors

protection management, operational risk management andand Outside Audit & Supervisory Board Members

system risk management.

Not applicable.

Committee on Investment and Loan Decisions
This committee handles, deliberates and makes decisions

Operations Audit Committee

related to investments and loans, as well as the investment

The Board of Directors has established the Operations

and loan management.

Audit Committee, delegating to this body the authority

New Operation Screening Committee

to deliberate important matters related to internal audits.

This committee deliberates and makes decisions on theThis committee met two times during the fiscal year ended

commencement of initiatives involving new businesses.

March 31, 2014.

Advisory Panel on Investments and Loans
This panel handles the advance deliberation on andCompensation Committeemonitoring of investments and loans.

The Compensation Committee, whose members include

Committee on International Operations

outside directors, has been established as an advisory bodyto the Board of Directors from the standpoint of ensuringtransparency and objectivity. The committee considers thetype of executive compensation structure that befits DBJ.
Personnel Evaluation Committee
DBJ has established the Personnel Evaluation Committee,
composed of outside directors and other outside experts, as
an advisory body to the Board of Directors. The committee’srole is to evaluate personnel proposals on the selection of
directors and Audit & Supervisory Board members.

This committee deliberates items related to the overseas
business strategies, operations and management conditions.
Core Business System Restructuring Committee
This committee deliberates items related to policies for
restructuring core business systems.
Advisory Board
The Advisory Board has been created as a body to advise
the Executive Committee, providing advice on DBJ’s overallmanagement.
The Advisory Board is composed of the following outside
experts and outside directors.

Executive Committee
The Board of Directors has vested in the Executive
Committee decision-making authority regarding theexecution of business.
Accordingly, the Executive Committee makes importantmanagement decisions. The committee met 37 times during
the fiscal year ended March 31, 2014.
Committees under the Executive Committee
Various committees have been established under the
Executive Committee and assigned specific decision-making
tasks, excluding decisions made by the Board of Directors or
the Executive Committee within each field of specialization.

Outside Experts
Masayuki Oku, Chairman of the Board, Sumitomo Mitsui
Financial Group, Inc.
Kiyofumi Kamijo, Executive Corporate Advisor, Tokyu
Corporation
Sakie Fukushima-Tachibana, President of G&S Global
Advisors Inc.
Fujio Cho, Honorary Chairman of Toyota Motor
Corporation
Katsunori Nakanishi, President & Chief Executive Officer(Representative Director), The Shizuoka Bank, Ltd.
Outside Directors
Akio Mimura, Senior Advisor, Honorary Chairman of
Nippon Steel & Sumitomo Metal Corporation
Kazuo Ueda, Professor, Faculty of Economics, theUniversity of Tokyo

Annual Report & CSR Report 2014105

Matters Requiring Authorization of Competent• Amendments to Articles of Incorporation

Minister• Disposition of surplus funds

The New DBJ Act prescribes matters for which DBJ requires• Merger, corporate split and dissolution

the permission of the Minister of Finance. Major items• Basic policy on business plans, redemption plans and fundprocurement

requiring such permission are as follows:• Appointment and dismissal of representative directors and

The organization outlined below has been put in place

Audit & Supervisory Board members

to execute and supervise the abovementioned activities.

• Concurrent positions as directors
Executional and Supervisory Structure

General Meeting of
Shareholders
Matters requiring authorization ofcompetent ministert Appointment and dismissal of
representative directors and Audit &Supervisory Board memberst Concurrent positions as directors
t Amendments to Articles of Incorporationt Disposition of surplus fundst Merger, corporate split and dissolutiont Basic policy on business plans,
redemption plans and fund procurement

Audit & Supervisory
Board Members,
Audit & Supervisory
Board

Accounting
auditorOperations Audit
Committee

Board of Directors

Cooperation

Compensation
Committee
Personnel Evaluation
Committee

Executive Committee

Internal Audit
Department
Reporting
AuditsAdvisory Board

Decision-making
bodies

ALM & Risk
Management
Committee

Reporting

Deliberative
bodiesGeneral Risk
Management
Committee

Committee on
Investment and
Loan Decisions

New Operation
Screening
Committee

Advisory Panel on
Investments andLoansCommittee on
International
Operations

Core Business
System Restructuring
Committee

AuditsDepartments
Subsidiaries

Executive Officer System

Status of Internal Control System

DBJ has an executive officer system to clarify responsibility

To ensure operational soundness and in accordance withfor the execution of duties and accelerate decision-making.

the Companies Act, the Board of Directors has established

The Board of Directors has designated eight managing

an internal control system under the Internal Control

executive officers, excluding officers who are concurrently

System Basic Policy.

directors, and eight executive officers.

Specifically, this system is designed to determine thestatus of legal compliance, risk management and internal
audits, as well as other items of management importance.
The internal control system is designed to confirm theformulation of various regulations and the status of theirimplementation in various departments.

106

Annual Report & CSR Report 2014

Management StructureInternal Control System Basic Policy
Purpose
Article 1. This basic policy has been established in accordance with Item
6, Paragraphs 4 and 5, Article 362, of the Companies Act (hereinafter, the”Act”), and Item 1 and 3, Article 100, of the Act’s Enforcement Regulations(hereinafter, ”Enforcement Regulations”) to create a system (internal control
system) to ensure Development Bank of Japan Inc. (hereinafter, ”DBJ”)
conducts operations in an appropriate manner.
System to Ensure Compliance with Laws and the Articles ofIncorporation in the Execution of Duties by Directors and Employees
Article 2. The directors and the Board of Directors recognize legal complianceas one of DBJ’s most important management issues. Accordingly, DBJ has
formulated a basic policy to ensure that the execution of duties by executives
complies with laws and the Articles of Incorporation and establishes thecorporate philosophy and a basic policy on legal compliance.
2. A Compliance Manual, compliance program and internal regulations shallbe created in preparation to ensure compliance by executives with laws andregulations.
3. A committee shall be formed to promote and manage legal compliance,
and an executive and a control division shall be placed in charge of legal
compliance.
4. A compliance hotline system shall be established to enable a response to actsthat contravene laws and regulations and acts of potential concern from theperspective of legal compliance.
5. Preparations shall be made to ensure that DBJ has absolutely no connection
with antisocial forces that threaten social order or safety.
6. The Board of Directors shall formulate an Internal Audit Basic Policy
pertaining to the status of internal control, including legal compliance. This
policy shall establish internal audit departments that are independent of
departments responsible for the execution of business and that report audit
results promptly and appropriately.
System for the Storage and Management of Information Related to the
Execution of Duties by Directors
Article 3. Information pertaining to the execution of duties by directors shall be
stored and managed appropriately, and this information shall be accessible, as
necessary.
Regulations and Other Systems Related to Managing the Risk of Loss
Article 4. To ensure the soundness of management and manage risk properly,
a risk management process that defines, evaluates, monitors and controls risks
with various characteristics encountered in the course of business shall be put
in place.
2. A comprehensive risk management process shall be created. Also, acommittee for risk management shall be created, and an executive and adepartment shall be assigned to take charge of risk management.
3. Risks shall be segmented into the following categories, and risk management
policies shall be established for each:1) credit risk, 2) investment risk, 3) country risk, 4) market credit risk, 5)market risk, 6) market liquidity risk, 7) financial liquidity risk, 8) settlement
risk, 9) operational risk.
4. To the extent possible, the abovementioned risks shall be measured using aconsistent system, risk guidelines shall be established and the risks shall be
managed.
5. The necessary systems shall be put in place to minimize the effects ofeconomic loss and credit collapse in the event of disaster, to ensure business
continuity in crisis situations and to ensure a prompt return to normal
functioning.
6. The Board of Directors shall establish an Internal Audit Basic Policy todetermine the status of internal control, including risk management. The
board shall receive prompt and appropriate reports of the results of internal
audits from internal audit departments.
Systems to Ensure the Efficient Execution of Duties by Directors
Article 5. The Board of Directors shall formulate management plans andperform appropriate management control.
2. The Board of Directors shall establish an Executive Committee and del-egate
decision-making on specific items to this council. In addition to making
decisions on the items with which it has been entrusted, to contribute to
expeditious decision-making the Executive Committee shall deliberate inadvance matters for resolution by the Board of Directors. Furthermore, theExecutive Committee shall establish various committees as advisory institutions

or as bodies to which to delegate decision-making on specific items.
3. To ensure the efficient execution of business based on decisions madeby the Board of Directors, regulations shall be established regarding theorganizational structure and the execution of tasks shall be allocatedappropriately.
4. To enable swift decision-making, an executive officer system shall beestablished. Executive Officer Regulations shall be formulated to define
executive officers’ roles and responsibilities.
System to Ensure the Adequacy of Operations of the Corporate Group,
Comprising DBJ and Its Subsidiaries and Affiliated Companies
Article 6. The Board of Directors shall ensure the adequacy of operations of the
DBJ Group in accordance with the corporate philosophy.
2. The Board of Directors shall manage operations appropriately, in accordancewith the scope and characteristics of operations of its subsidiaries andaffiliated companies. Furthermore, the Board shall introduce appropriate
measures from the perspective of legal compliance, client protection and risk
management.
3. The Board of Directors shall create reporting, guidance, management process
and other systems related to operations management between DBJ and its
subsidiaries and affiliated companies.
4. In accordance with the necessary scope of legal regulations, the Internal
Audit Department shall conduct internal audits of subsidiaries and affiliatedcompanies and report the results of these audits promptly and appropriately
to the Board of Directors.
System Related to Employees Assisting the Audit & Supervisory Board
Members in Their Duties
Article 7. As a specialized organization to assist Audit & Supervisory Board
members with their duties, if so requested by the members, an Audit &Supervisory Board Office shall be established under the direction of the Audit &Supervisory Board.
Matters Concerning Employees Supporting the Audit & Supervisory
Board Members in Their Duties and the Independence of Such
Personnel from Directors
Article 8. Personnel issues related to the employees supporting the duties of
Audit & Supervisory Board members and matters related to the independenceof such personnel shall be left in the control of the Audit & Supervisory Board.
System for Reporting by Directors and Employees to Audit &Supervisory Board Members and Other Systems for Reporting to Them
Article 9. Directors and employees shall report to Audit & Supervisory Board
members on the status of execution of DBJ’s business and other necessary
information.
2. If directors or employees become aware of any major potential damage to
DBJ’s credibility or operating performance, they shall immediately report suchinformation to the Audit & Supervisory Board members.
3. If Audit & Supervisory Board members find that they require certain
information to perform their duties, they may request reports from directors
and employees as needed, and the party to whom the request is addressedshall report appropriately.
Other Systems to Ensure Effective Audits by the Audit & Supervisory
Board Members
Article 10. In addition to attending meetings of the Board of Directors, Audit &Supervisory Board members may attend meetings of the Executive Committee
and other important meetings and offer their opinions as necessary.
2. The Representative Director shall exchange opinions with the Audit &Supervisory Board members regularly, or at their request. The Representative
Director shall also cooperate in the preparation of a reporting environment.
3. The Internal Audit Department works with the Audit & Supervisory Board
members to establish internal audit plans. The department reports theresults of internal audits and exchanges opinions and liaises with the Audit &Supervisory Board members when requested to do so.
4. Directors and employees shall cooperate with the Audit & Supervisory Board
members in their audit activities and shall respect the Audit & Supervisory
Board Regulations, Audit & Supervisory Board members’ audit standards andother regulations.
5. To ensure the adequacy and reliability of accounting audits, directors andemployees shall cooperate in creating a system to ensure the independenceof the accounting auditors.

Annual Report & CSR Report 2014107

Status of Internal Audits and Audits by Audit &Supervisory Board Members
the direct supervision of the DBJ president and independent

Overview of Personal, Equity, Transactionalor Other Special-Interest Relationships
with Outside Directors and Outside Audit &Supervisory Board Members

from other operating departments. The department

Akio Mimura, Senior Advisor, Honorary Chairman of Nippon

conducts inspections to ensure the appropriateness andSteel & Sumitomo Metal Corporation, is an outside director

effectiveness of internal controls, including DBJ’s overallof DBJ. DBJ has no special-interest relationship with Mr.

operational compliance and risk management, andMimura, and its business with Nippon Steel & Sumitomo

performs evaluations and recommends improvements.

Metal Corporation is conducted normally.

DBJ has established the Internal Audit Department under

The Operations Audit Committee deliberates and decides

DBJ has no special-interest relationship with any otheraudit plans, audit reports and other important mattersof its outside directors or outside Audit & Supervisory Board

related to internal audits, and this information is reported tomembers.

the Board of Directors.
As of June 25, 2014, 20 people belonged to the Internal
Audit Department.
The Audit & Supervisory Board and the Audit &DBJ has signed liability limitation agreements with its
outside directors and outside Audit & Supervisory Board
members, based on Paragraph 1, Article 427, of theCompanies Act.

Supervisory Board members audit the execution of duties by

they query the execution of business by directors, peruse

Overview of Agreements with Outside Directors
and Outside Audit & Supervisory Board
Members under Paragraph 1, Article 427, of theCompanies Act (Liability Limitation Agreements)

documents and conduct branch audits.

DBJ’s Articles of Incorporation allow it to establish liability

directors, based on their audit policy and audit plans.
The Audit & Supervisory Board members attend Board of
Directors and other important meetings. When necessary,

limitation agreements with its outside directors andStatus of Accounting Audits

outside Audit & Supervisory Board members, limiting their

DBJ has in place an agreement with Deloitte Touche

responsibility for damages under Paragraph 1, Article 423,

Tohmatsu LLC to conduct accounting audits as itsof the Companies Act, provided their duties are executed

accounting auditor. During the fiscal year ended Marchwith good intent and without gross negligence, to the total

31, 2014, these operations were conducted by designatedamounts specified in each item in Paragraph 1, Article 425,

certified public accountants (designated limited liabilityof the Companies Act.

partners) Tomomitsu Umezu (continuous audit period* of
one year) and Atsuyuki Shimada (same, three years).

Number of Directors* In accordance with the Companies Act, as designated limited
liability partners, the number of years of continuous audit must
be stated. As designated limited liability partners, the number ofcontinuing years of performing audits conducted in accordancewith the Financial Instruments and Exchange Act was one year
for Tomomitsu Umezu and three years for Atsuyuki Shimada. The
number of business periods during which an audit was performedis the standard used to indicate the number of years. Assisting inthis audit were 71 people, including a systems specialist, a licensed
tax accountant, a specialist in determining fair value, a specialist in
pension mathematics and a real estate appraiser.

DBJ’s Articles of Incorporation limit the number of directors
to 13 or fewer.

Requirements for Determination of Director
Appointments
DBJ’s Articles of Incorporation stipulate that shareholders
possessing at least one-third of the shareholder voting
rights exercisable shall attend the meeting and determine
the appointment of directors based on a majority
vote. The Articles of Incorporation further specify that

DBJ’s Audit & Supervisory Board members, Internal
Audit Department and accounting auditor periodicallyand as necessary exchange opinions and information,and communicate in an effort to ensure effective andappropriate audits.

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Annual Report & CSR Report 2014

the appointment of directors shall not be resolved bycumulative voting.

Requirements for Special Resolutions at theGeneral Meeting of Shareholders

To enable them to perform their duties and fulfill the roles

To ensure a smooth General Meeting of Shareholders,that are expected of them, in accordance with Paragraph

DBJ’s Articles of Incorporation stipulate that shareholders

1, Article 426, of the Companies Act, DBJ has establishedpossessing at least one-third of the voting rights exercisable

in its Articles of Incorporation that the liability for damages

shall attend the meeting and determine by a two-thirds

incurred by directors (and former directors) and Audit &majority vote the ”requirements for special resolutions at

Supervisory Board members (and former members) may

general meetings of shareholders” provided in Paragraph 2,

be reduced to the legal limit by resolution of the Board of

Article 309, of the Companies Act.

Management Structure

Limiting the Responsibility of Directors andAudit & Supervisory Board Members

Directors.

Compliance

Specific compliance initiatives are as follows.

2) DBJ’s executives and employees are well aware that DBJ
must conduct its businesses legally and appropriately andDBJ recognizes compliance as one of its most importantmanagement issues. As basic policies to ensure that theexecution of duties by directors complies with laws andbe responsible for explaining its actions to the generalpublic.
3) DBJ refuses all advances from anti-social forces andregulations and the Articles of Incorporation, we havecooperates with security-related institutions to prevent

formulated a corporate philosophy, a Basic Compliance

any sort of relationship with such elements.

Policy and other compliance-related regulations.
In addition to its fundamental regulations on

Compliance Systemcompliance, DBJ has created a Compliance Manual and a

DBJ has established the Legal and Compliance Departmentcompliance program. Via activities in and around DBJ, we

to take overall responsibility for planning, preparing

seek to thoroughly implement the compliance activities

and adjusting compliance activities. In addition, DBJ has

outlined below.

established the General Risk Management Committee toreflect on legal compliance matters, determine the extent

Compliance Principles

of compliance, and deliberate on improvements to DBJ’s

DBJ has formulated the compliance principles indicatedinternal system.

below as part of its creation of compliance regulations.

DBJ also has established a Compliance Hotline. The

1) DBJ’s executives and employees are keenly aware ofobjective of this internal reporting system is to swiftly

DBJ’s social mission and responsibilities as a public-sectorbank and recognize that illegal acts or improper business

identify and resolve any legal violations.
DBJ, in matters relating to managing conflicts ofoperations harm the reputation of DBJ and interfereinterest, formulated as a basic policy “Conflicts of Interest

significantly with DBJ’s ability to fulfill its objectives underManagement Regulations” against undue infringement

the New DBJ Act. We also realize DBJ’s need to alwaysof the interests of its clients, and is preparing a system toconduct activities appropriately and in compliance withmanage conflicts of interest.

the law.

Annual Report & CSR Report 2014

109

Risk Management

To ensure management soundness and safety, as well as

From the standpoint of comprehensive risk manage-

raise corporate value, DBJ works to manage risk appropri-

ment, DBJ has established a Risk Management Department,

ately in line with specific business and risk characteristics.

which is overseen by a director in an official capacity. DBJ

Controlling risk is an issue of utmost importance, and there-

seeks to control its total risk within a specified target range.

fore we have established risk management processes andIn addition, we have set risk guidelines for each risk cat-methods.

egory to help manage total risk.

Risk Management System
DBJ conducts risk management from the perspectives ofAsset/Liability and Risk Management System Overview

maintaining financial soundness and improving operational efficiency, which are the prerequisites to ongoing
operational viability. To ensure appropriate management of
individual risk categories, DBJ has developed a risk manage-

President
Executive
Committee
ALM & Risk Management Committee

ment system that clarifies which department is responsible
for each type of risk. The Risk Management Department
Risk Management Department

oversees comprehensive asset/liability and risk management
activities.
The ALM & Risk Management Committee, consisting ofCredit Analysis Department

Treasury Department

DBJ’s executives, deliberates on important matters concerning risks and conducts regular monitoring, in line with thebasic policy related to comprehensive risk management

Investment and Loan Departments/Offices

approved by the Board of Directors.

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

The sales and credit analysis departments hold separate

from a decline in the value of assets due to deterioration inroles in the screening and administering of credit for

the financial condition of the borrower. Credit risk manage-

individual loans and each department keeps the operations

ment requires credit management of individual loans as wellof the other in check. The Committee on Investment andas bankwide portfolio management.

Loan Decisions meets as needed to deliberate important
issues concerning the management and governance ofCredit Administration of Individual Loansindividual loans. These mutual checking functions serve toWhen making an investment or loan, DBJ examines theensure the appropriateness of the lending operation andentity’s project viability and the project’s profitability from amanagement environment.

fair and neutral standpoint, as well as its benefits. We also

Borrower Rating Systemhave an internal borrower rating system. DBJ is not subject

DBJ’s borrower rating system measures creditworthinessto the Banking Act or the Act on Emergency Measures forby combining an evaluation point rating and a borrower

the Revitalization of the Financial Functions (Act No. 132 ofcategory rating, with the result quantifying a potential

1998) but carries out independent asset assessments in line

client’s credit circumstances. The evaluation point ratingwith internal policies for self-assessment of credit quality

selects indicator/evaluation categories that are common

based on the Financial Services Agency’s Financial Inspection

across all industries, scoring the creditworthiness of theManual. The results of self-assessments are subject to an

potential borrower quantitatively and qualitatively. On theaudit by an auditing corporation and are reported to theother hand, the borrower category rating measures specificmanagement. Credit risk and amounts are monitored toitems related to the borrower, looking at the borrower’s

confirm they are within the limits established for individual

realistic financial condition, cash flows and debt repayment

borrowers.

history. By putting the ratings together, the systemgenerates a comprehensive assessment of a borrower’s
repayment capacity.

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Management Structure

Borrower Rating Classifications
Claims Classified
under the Financial
Revitalization Act

Borrower Category

Borrower
RatingDefinition

Normalborrowers

1-8

Borrowers with favorable business conditions and who have been confirmed
to have no particular problematic financial circumstances

Borrowers
requiring
caution

9-11

Borrowers experiencing weak business conditions, are unstable or have issues
with their finances. These borrowers are likely to require management
intervention in the future.

Substandard
borrowers

12

Either some or all of the debts of these borrowers requiring caution are
under management.

Borrowers indanger ofbankruptcy

13

Borrowers in this category are having financial difficulties but are notbankrupt. Management improvement loans and the like are progressing
poorly, and these borrowers are highly likely to fall into bankruptcy.

Effectively
bankrupt
borrowers

14

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

Bankrupt
borrowers

15

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

NormalclaimsSubstandard claims

Doubtful claims

Claims in bankruptcy,
reorganization claims
and similar claims

Asset Self-Assessment System

Portfolio Management

Asset self-assessments are used to define asset

DBJ performs a comprehensive analysis of data based onclassifications that will offset recoverability risk or the

borrower ratings, and calculates the loan portfolio’s overall

degree of risk of value loss, based on the borrower rating,

exposure to credit risk. Credit risk exposure can be classified

the corresponding borrower category and the collateralas (1) expected loss (EL), the average loss expected during

or guarantee status. Such assessments help DBJ establish

a specific loan period; and (2) unexpected loss (UL), thetimely and appropriate amortization schedules and reserve

maximum loss that could be incurred at a certain rate oflevels.

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

Market and Liquidity Risk Management
Market Risk

creating the risk of reduced profits or the risk of losses.

Market risk can be broadly classified into interest rate risk,

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

exchange risk and stock market risk. Market risk describes

assets or interest income.

the risk of loss from fluctuations in the value of assets or

DBJ calculates and analyzes risk exposure with cash flow

liabilities (including off-balance sheet items), owing toladder analyses (gap analysis), value at risk (VaR), interestchanges in interest rates, exchange rates, stock markets andrate sensitivity analyses (basis point value), and othervarious other markets. DBJ divides these risks broadly into

methods. A portion of the interest rate risk associated withinterest rate risk and exchange risk.

lending operations is covered through interest rate swaps,

Interest Rate Risk

which are used solely for hedging purposes. DBJ does not

Interest rate fluctuations can create mismatches on rates

have any trading-related risk because it does not engage inof interest on assets and liabilities or on interest periods,

trading (specified transactions).

Annual Report & CSR Report 2014111

Exchange Risktimes, because of market complexities, entities in these

Exchange risk is the risk of loss due to unexpected shifts

circumstances may become unable to participate in market

in exchange prices, and this risk affects entities holding atransactions, compelling them to conduct transactions

net excess of assets or liabilities denominated in foreign

under substantially less favorable terms than otherwise

currencies. Exchange risk entails the possibility of a decline

would be the case. The risk of losses for these reasons isin the economic value of DBJ’s assets due to the impact ofknown as market liquidity risk.

changes in currency exchange rates. DBJ’s exchange risk

As its main methods of acquiring funds, in addition toderives from foreign currency investment and financing andissuing corporate bonds and taking out long-term loans,

issuing foreign currency bonds. DBJ uses currency swaps

DBJ relies on the stable procurement of long-term funds

and other instruments to hedge this risk.

from the government’s Fiscal Investment and Loan Program

DBJ manages counterparty risk in swap transactions, the(FILP) and government-guaranteed bonds rather than on

risk that the counterparty in the swap transaction will be

short-term funds such as deposits. To meet unexpected

unable to fulfill its obligations, by continually monitoring

short-term funding requirements, funds on hand are used,the creditworthiness of all parties, and by diversifying

taking security and liquidity into consideration. Overdrafttransactions among several institutions.

lines of credit have been established with multiple otherfinancial institutions.

Liquidity Risk

Additionally, DBJ maintains daytime liquidity by

Liquidity risk is the risk of a mismatch occurring inusing the Bank of Japan’s Real Time Gross Settlement

the periods when funds are used and raised, causing(RTGS), whereby settlements are made instantly for each

unexpected differences in the flow of funds (cash liquidity

transaction. Every effort is made to ensure that settlementrisk). This situation makes securing funds difficult andconditions are managed appropriately.

creates situations in which interest rates on borrowed

In addition to credit risk, the ALM & Risk Management

funds are substantially higher than usual rates. At such

Committee deliberates DBJ’s market risk and liquidity risk.

Operational Risk Management
DBJ defines operational risk as the risk of loss arising from

System Risk Management

internal processes, people or systems that are inappropriate

System risk refers to the risk of loss due to a computeror non-functioning, or from external events. DBJ works tosystem breakdown or malfunction, system defects, or

establish a risk management system to minimize risk andimproper computer usage. To properly manage systems

prevent potential risks from materializing.

risk, DBJ has implemented the following internal processes

The General Risk Management Committee has been

to optimize system risk management. The Information

established to deliberate topics concerning operational risk

Resources Department is responsible for managing DBJ’s

management.

system risk centrally, based on its system risk management

Within operational risk management, DBJ conducts

regulations. By determining security standards from a

operational risk management and systems risk management

variety of viewpoints, from information system planning

as described below.

and development to operation and use, the department
extends the risk management system bankwide, andOperational Risk Management
Operational risk refers to the risk of sustaining losses
resulting from employees neglecting to perform their duties
correctly or from accidents, fraud, and the like. To reduceor prevent operational risk, DBJ prepares manuals, performs
checks on administrative procedures, provides educationand training and uses systems to reduce the burden of
administrative duties.

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Annual Report & CSR Report 2014

addresses appropriate system risk management operations.

Management Structure

Building a PDCA Cycle
DBJ follows the Plan, Do, Check, Act management cycle to

We also strive to manage effectively the wide range ofboost accountability for the appropriateness of its opera-

risks we face as a financial institution, and to earn the trust

tions and their results. This cycle encourages ongoingof our clients and society as a whole.

improvement.
DBJ’ s PDCA Cycle
Formulation ofmanagement plan

Competent minister

Budgetary plan

Plan

Matters requiring authorization of competent
ministerAppointment and dismissal of representative directors andAudit & Supervisory Board members
Q Concurrent positions as directors
Q Amendments to Articles of Incorporation
Q Disposition of surplus funds
Q Merger, corporate split and dissolution
Q Basic policy on business plans, redemption plans and fundprocurement
Q

Conclusions
reflected inplanning andbudgetReview of resource
allocation

Act

Board of Directors
Executive
Committee

Advisory Board

Advice(Outside experts andoutside directors)

Do
Execution of
investments andloans
Fund-raising
Other activities

Check
Evaluation ofbusiness
performance
Status & results
reportAnnual Report & CSR Report 2014113

Client Protection Management System/Policy on Personal Information
Protection/Policy for Managing Conflicts of Interest
The establishment and maintenance of a client protection

their level of convenience. DBJ recognizes the extreme

management system is vital because it protects the people

importance of such a system from the standpoint of

who use the financial institution’s systems and raises

operational soundness and appropriateness.

Client Protection Management Policy, Declaration on Personal Information Protection and
Policy for Managing Conflicts of Interest
DBJ has formulated a Client Protection Management Policy3) We acquire information about clients through legal

to ensure strict compliance with laws and regulations,and appropriate means and manage such information

protect the interests of its clients and raise the level of client

safely. In transactions with clients, in the event that DBJ

convenience. We have also created internal regulations

outsources operations, it ensures appropriate information

based on this policy, which we employ in briefings to raisemanagement and client response.

in-house awareness.
Our Client Protection Management Policy is outlined

We have incorporated a declaration on our policies

below:

related to personal information into our Declaration on

1) When transacting with clients, we endeavor to provide

Personal Information Protection.

and explain information that is accurate and appropriate
in line with laws and regulations.
2) When we receive requests for consultation, other

DBJ is a registered financial institution under the
Financial Instruments and Exchange Act. DBJ has drawn

requests or complaints, we strive to see the issue fromup policies introduced for the management of conflicts

the client’s point of view, listen sincerely and respond in

of interest under this act and provides an overview of thean operationally appropriate manner.

publicly announced policy.

Declaration on Personal Information Protection
1. Policy
DBJ considers the appropriate protection of personal information
an important social responsibility. DBJ endeavors to use personal
information appropriately in all its activities by conformingwith the requirements of the Act on the Protection of Personal
Information, as well as other related laws and regulations, aswell as its own Declaration.
2. Appropriate Obtainment of Personal Information
DBJ acquires clients’ personal information only within thescope that is required to perform its operations, and employs
appropriate procedures for obtaining such information.
3. Purpose of Using Personal Information
DBJ obtains clients’ personal information only for specificpurposes and uses such information only within the scopenecessary to satisfy such purpose of use. In the event that otherpurposes of use are limited by legal regulations concerning
specified purposes of use, such information is not used for
purposes other than so specified. DBJ discloses on its website
the purposes of use of clients’ personal information. If
information is obtained for other purposes of use, such purposes
are clearly indicated at the time such information is obtained.
4. Providing Personal Information to Third Parties
In principle, DBJ does not provide clients’ personal information
to third parties unless it has received from the client permission
to provide such information or unless it is legally required toprovide such information. However, DBJ may, without obtaining
client approval, provide clients’ personal information to parties
it has commissioned to conduct activities within the scope for

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Annual Report & CSR Report 2014

which the information was obtained or provide such informationin the event of a corporate merger.
5. Provisions for Safe Management of Personal
Information
DBJ seeks to appropriately manage clients’ updated personal
information and prevent the leakage of such information, andaccordingly maintains rationally sound management measures.
Furthermore, DBJ appropriately supervises its directors andregular employees and subcontractors who handle clients’personal information.
6. Continuous Improvements in Handling Personal
Information
DBJ strives to ensure ongoing improvements in its handling ofclients’ personal information and to update the Declaration as
appropriate in accordance with developments in information
technology or changes in social requirements.
7. Procedures for Requesting Personal Information
DBJ endeavors to respond appropriately by notifying clientsof the purpose of use of the personal information it retains;
responding to requests to disclose such information; and in
the event that the content of such information is incorrect,
responding to clients’ requests for revisions, additions
or deletions, discontinuing use, deleting information, ordiscontinuing the provision of such information to third parties.
8. Inquiries
DBJ endeavors to respond in good faith to all opinions orrequests regarding the use of personal information.

Management Structure

Overview of Policy for Managing Conflicts of Interest
1. Purpose
As the services provided by financial institutions grow increasingly
diverse, the potential for multiple competing or opposing interests
within financial institutions or financial groups increases, and thelikelihood increases that conflicts of interest will arise.
Under these conditions, DBJ manages transactions that are likely to
involve conflicts of interest to ensure against undue infringement of theinterests of its clients.
DBJ is a registered financial institution under the Financial
Instruments and Exchange Act. DBJ has drawn up these ”Rules forManagement of Conflicts of Interest” (hereinafter, ”the Policy”) in
accordance with policies introduced for the management of conflicts ofinterest under this act and as prescribed by Cabinet Office Ordinances
pertaining to the financial instruments business. This document
provides an overview of the Policy.
2. Types of Transaction That Are Likely to Involve Conflicts ofInterest(1) Subject Transaction
Targets of this Policy, or ”transactions that are likely to involve conflictsof interest,” are those transactions conducted by DBJ or DBJ’s subsidiaryfinancial institutions or others (defined in 3 below; hereinafter, ”theDBJ Group”) that have a likelihood of unduly infringing on the interestsof clients as a result of conflicts of interest (hereinafter, ”Subject
Transactions”).
”Conflicts of interest” are (a) situations of opposing interests
between the DBJ Group and its clients, or (b) situations of opposinginterests between the DBJ Group’s clients and other clients (hereinafter,
together, ”Situations of Opposing Interests”) that unduly infringe on
the interests of clients.
”Clients” are, in the case of ”business operations related to financial
instruments” conducted by the DBJ Group, (a) counterparties in existingtransactional relationships, (b) parties in negotiation with the DBJ Group
with regard to transactions or otherwise having the potential to becomecounterparties in transactional relationships, or (c) parties that have beentransactional counterparties in the past and that currently are also legallycompetent with respect to past transactional relationships.
”Business operations related to financial instruments” are thosebusinesses provided for in Article 70 (2) of the Cabinet Office
Ordinance pertaining to financial instruments business, etc., that are
performed by DBJ or DBJ’s subsidiary financial institutions, etc.
(2) Types of Subject Transaction
Specific individual circumstances determine whether transactions are
judged as Subject Transactions, but below are examples of transactions
that are likely to be considered said Subject Transactions.
Based on a contract of mandate that exists between the DBJ Groupand its clients, notwithstanding that the DBJ Group has a duty of
due care of prudent manager or duty of loyalty to said client, the DBJ
Group is in danger of being unable to fulfill such duties owing to
Situations of Opposing Interests.
Based on a deep trust-based relationship formed between the DBJ
Group and its clients, notwithstanding the client’s expectation that
the Group would act in the client’s interests, the DBJ Group is indanger of being unable to act according to such expectation owing to
Situations of Opposing Interests.
By utilizing undisclosed client information that the DBJ Group has
the duty to protect, the DBJ Group could rationally act in its own selfinterest or the interest of other clients in transactions that exceed thescope of that duty.
Cases in addition to the above in which the danger exists of unduly
infringing on the interests of clients owing to Situations of Opposing
Interests.








Furthermore, Subject Transactions do not include acts that areprohibited under the Financial Instruments and Exchange Act or otherlaws and regulations.
3. Scope of Companies Subject to Management of Conflicts ofInterest
As stated in 2 (1) above, Subject Transactions are transactions
conducted by DBJ or by DBJ’s subsidiary financial institutions, etc.
”Subsidiary financial institutions, etc.” are those DBJ subsidiaries
or affiliated companies prescribed in Article 36-5 of the Financial
Instruments and Exchange Act.
As of May 27, 2014, DBJ’s subsidiary institutions, etc., were as follows.
DBJ Asset Management Co., Ltd.
Sun Arrows Investment Co., Ltd.
Healthcare Management Partners, Inc.
Milestone Turnaround Management Co., Ltd.
DBJ Europe Limited
DBJ Investment Advisory Co., Ltd.
AD Capital Co., Ltd.
DBJ Securities Co., Ltd.
South East Asia Growth Capital L.L.C
4. Policy for Managing Transactions That Are Likely to Involve
Conflicts of Interest
In the case of transactions prescribed as Subject Transactions, to theextent that the DBJ Group is not in violation of its legal or contractual
duties (including but not limited to the duty of confidentiality), the DBJ
Group is determined to act properly in the interest of its clients throughthe following or other measures.
(The following are only specific examples of methods. Subject
Transactions are not limited to those indicated below. )Separation of the department conducting Subject Transactions fromthe department conducting transactions for said client
Amending the conditions or instruments of Subject Transactions or
said client transactions
Cessation of Subject Transactions or said client transactions
Disclosing to said client the risk of Subject Transactions unduly
infringing on the interests of said client
5. Management of Conflicts of Interest—Organization
To ensure the appropriate management of conflicts of interest, theduties of a Conflicts of Interest Management Control Department
are handled within its Legal Affairs & Compliance Department.
In accordance with the Policy, the Conflicts of Interest Management
Control Department appropriately manages prescribed Subject
Transactions and conflicts of interest. Furthermore, as the DBJ Groupis required to manage conflicts of interest in accordance with its status
as a registered financial institution under the Financial Instruments andExchange Act, provided that the DBJ Group does not violate its legal
duty of confidentiality or its duty of confidentiality in relation to its
clients, information pertaining to Subject Transactions, including thoseof transactions handled by DBJ’s subsidiary financial institutions, etc.,
may be managed in a centralized manner.
Records shall be prepared of measures undertaken by the Conflictsof Interest Management Control Department with regard to prescribed
Subject Transactions and their management, and such records shall be
retained for a period of five years following the creation date.
To ensure appropriate management, the Conflicts of Interest Management
Control Department shall periodically verify the content of activities by
DBJ Group executives and regular employees and the content of businessactivities at each branch to ensure the operations are being conducted inaccordance with the Policy and the operational procedures for the policy,
and shall periodically verify the management of conflicts of interest.








Annual Report & CSR Report 2014115

Disclosure

DBJ believes that public relations and investor relations

status and operating policies, which are an essential part

have the important function of bringing management andof being trusted in a wide range of markets and societies.

stakeholders together. In addition, these activities help

Accordingly, we seek to disclose information through our

stakeholders gain an accurate understanding of DBJ’s

public relations and investor relations activities.

Basic PR/IR Philosophy
In its PR and IR activities, DBJ aims to comply with

DBJ maintains personal and client information,

relevant laws and regulations, operate in good faith andwithout disclosing such information in a manner thatin a dignified manner with its stakeholders, and disclose

would encroach upon the rights of individuals or related

information clearly and accurately in a timely andparties. We do not disclose information that would

appropriate manner.

counter the doctrine of good faith.

PR/IR Structure
The Corporate Planning & Coordination Department

DBJ. Through printed materials and over the Internet,

takes overall charge of PR and IR activities and plays athe department uses numerous communication tools tocentral role in the flow of information within and outside

disclose information.

Information Disclosure Materials
DBJ offers a wide range of information, using suchmedia as newsletters and its website:(1) Materials legally required for disclosure
Securities Report (Japanese)
Stock Exchange Report (Japanese)
Business Report (Japanese)(2) Voluntarily disclosed information
Annual Report & CSR Report
End-of-Period Financial Reports(3) Others
DBJ Quarterly Journal (newsletter)
The DBJ Quarterly Journal is also available in iPhone and iPad
formats.
http://itunes.apple.com/jp/app/id389307222 (Japanese)

DBJ News Digest (mail magazine; Japanese)
Website:116

http://www.dbj.jp/en

Annual Report & CSR Report 2014

Corporate Data

Corporate Data
Timeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118
Board of Directors, Audit & Supervisory Board
Members and Executive Officers . . . . . . . . . . . . . .119
Organization Chart . . . . . . . . . . . . . . . . . . . . . . . . . .120
Locations and Directory . . . . . . . . . . . . . . . . . . . . . .121
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .122
Stock Information . . . . . . . . . . . . . . . . . . . . . . . . . . .123
Excerpt from the Development Bank ofJapan Inc. Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . .124
Act for Partial Amendment of theDevelopment Bank of Japan Inc. Act. . . . . . . . . 127
Act for Extraordinary Expenditure and Assistance toCope with the Great East Japan Earthquake . . . . 129

Annual Report & CSR Report 2014117

Timeline

The Japan Development Bank, the Hokkaido-Tohoku Development Finance Public Corporation and the Development Bank of Japan
1951 April
1952
1956 June
1957 April

1960
1961
1962 April
1963
1964 July
1972 January
1985 June

1987 September
1989
1995 February
1997 September
1997 December
1999 June
1999 October

2002 May
2005 December
2006 May
2006 June2007 June

Japan Development Bank (JDB) establishedJDB branches opened in Osaka (now the Kansai Branch), Sapporo (now the Hokkaido Branch), Nagoya (nowthe Tokai Branch) and Fukuoka (now the Kyushu Branch)
Hokkaido Development Finance Public Corporation established
Hokkaido Development Finance Public Corporation reorganized as the Hokkaido-Tohoku Development
Finance Public Corporation (HTDFP) branches opened in Sapporo (now the Hokkaido Branch) and Sendai(now the Tohoku Branch)
JDB branch opened in Takamatsu (now the Shikoku Branch)
JDB branches opened in Hiroshima (now the Chugoku Branch) and Kanazawa (now the Hokuriku Branch)
JDB representative office opened in New YorkJDB representative offices opened in Kagoshima (renamed Minami-Kyushu Branch in October 1999) andMatsueJDB representative office opened in London
HTDFP representative office opened in Niigata (renamed Niigata Branch in July 1989)
Japan Development Bank Law revised
1) Addition of investment function (pertaining to business in such areas as research and development, urban
development and energy use stipulated by government ordinance)2) Addition of R&D fund investment function
JDB and HTDFP creation of low interest rate loan system funded partially by sale of NTT shares
JDB representative offices opened in Oita, Matsuyama, Okayama and Toyama
HTDFP representative offices opened in Hakodate and Aomori
JDB commenced loans to assist disaster recovery
Cabinet approval of bill entitled ”Pertaining to Consolidation and Rationalization of Special-Purpose
Companies, etc.” (decision to dissolve JDB and HTDFP and consolidate them as a new bank)
JDB and HTDFP commenced loans in response to the financial environment (introduction of March 31, 2001,
sunset clause)
The Development Bank of Japan Law (Law No. 73 of 1999) approved
Transfer of approval of all rights and responsibilities of JDB and HTDFP to the Development Bank of Japan (DBJ)
Transfer of financing operations from Japan Regional Development Corporation and Japan Environment
Corporation
DBJ representative offices opened in Kushiro and Singapore
The Development Bank of Japan Law revised (introduction of additional spot inspections by the Financial
Services Agency)
Cabinet approval of the Important Policy of Administrative Reform
The Act on Promotion of Administrative Reform for Realization of Small and Efficient Government (Act No.
47 of 2006) approved
Policy-Based Financing Reform Plan decided upon by the Headquarters for the Implementation of Policy Finance
ReformThe Development Bank of Japan Inc. Act (Act No. 85 of 2007) approved

Development Bank of Japan Inc.

118

2008
2008
2009
2009
2009
2010
2011

October
December
June
September
November
March
May

2011
2012
2012
2012
2014

December
March
June
December
June

Development Bank of Japan Inc. established (Capital: ¥1 trillion)
DBJ Singapore Limited launched
Act for Partial Amendment of the Development Bank of Japan Inc. Act (New DBJ Act) (Act No. 67 of 2009)
Increase of capital to ¥1,103,232 million
DBJ Europe Limited launched
Increase of capital to ¥1,181,194 million
Partial amendment of the Development Bank of Japan Inc. Act (based on establishment of Act for
Extraordinary Expenditure and Assistance to Cope with the Great East Japan Earthquake (Act No. 40 of 2011))
Increase of capital to ¥1,187,364 million
Increase of capital to ¥1,187,788 million
Increase of capital to ¥1,198,316 million
Increase of capital to ¥1,206,953 million
DBJ Investment Consulting (Beijing) Co., Ltd. (formerly Japan Asia Investment Consulting (Beijing) Co., Ltd.)
converted to wholly owned subsidiary

Annual Report & CSR Report 2014

Corporate Data

Board of Directors, Audit & Supervisory Board Members and Executive Officers(As of July 4, 2014)

Toru Hashimoto
President & CEO

Hideto Fujii
Deputy President

Masanori Yanagi
Deputy President

Hajime Watanabe

Tetsumi Hashimoto
Managing Executive Officer
In charge of Regional Planning Department, Corporate Finance
Department [Division 6], Hokkaido Branch, Tohoku Branch, Niigata
Branch, Hokuriku Branch

Satoshi Tomii
Managing Executive Officer
In charge of Strategic Finance Department, Growth & Cross Border
Investment Department

Director and Managing Executive Officer

Takahiro Suzuki

In charge of Corporate Planning & Coordination Department,
Information Resources Department

Managing Executive Officer

Masaaki Komiya
Director and Managing Executive Officer
IIn charge of Business Planning & Coordination Department,International Strategy & Coordination Department

Toshiaki Ido
Director and Managing Executive Officer
In charge of Treasury Department, Financial Institutions Department,
Syndication & Credit Trading Department

Susumu Kusano
Director and Managing Executive Officer

In charge of Risk Management Department, Legal Affairs &Compliance Department, General Affairs Department

Shin Kikuchi
Managing Executive Officer
In charge of Urban Development Department, Real Estate Finance
Department, Structured Finance Department, Corporate Finance
Department [Division 3]

Hideo Oishi
Managing Executive Officer
In charge of Corporate Finance Department [Division 1 and 2]

Masaaki Kai
Managing Executive Officer

In charge of Credit Analysis Department, Accounting Department

In charge of Corporate Finance Department [Division 4]

Masahiko Ichie

Kenkichi Fukuda

Director and Managing Executive Officer
In charge of Environmental Initiative & Corporate Social ResponsibilitySupport Department, Business Development Department, Economic &Industrial Research Department, Research Institute of Capital
Formation, Tokai Branch, Kyushu Branch, Minami-Kyushu BranchManaging Executive Officer, Head of Kansai Branch
In charge of Kansai Branch, Chugoku Branch, Shikoku Branch

Ikuro Hirozane
Managing Executive Officer
In charge of Corporate Finance Department [Division 5]

Akio Mimura
Director (Outside)

Masafumi Aizawa

Kazuo Ueda

Executive Officer (In charge of Financial Institutions)

Director (Outside)

Seiji Jige

Kosuke Takahashi
Audit & Supervisory Board Member

Osamu Koyanagi
Audit & Supervisory Board Member

Tatsuya Tsuboi
Audit & Supervisory Board Member (Outside)

Executive Officer, Head of Corporate Planning &Coordination Department

Junichiro Kitamura
Executive Officer, Head of International Strategy &Coordination Department

Tomoki Matsuda
Executive Officer, Head of Treasury Department

Makoto Anayama

Makoto Ito

Executive Officer, Head of Business Planning &Coordination Department

Audit & Supervisory Board Member (Outside)

Takayuki Yamamoto

Shinji Hatta

Executive Officer, Head of Business Development
Department

Audit & Supervisory Board Member (Outside)

Masatoshi Kanno
Executive Officer (in charge of Internal Audit)

Masayuki Tsuda
Executive Officer, Head of Human Resources
Management Department
Notes: 1. Akio Mimura and Kazuo Ueda are outside directors under Article
15 of Section 2 of the Companies Act.
2. Tatsuya Tsuboi, Makoto Ito and Shinji Hatta are outside Audit &Supervisory Board members under Article 16 of Section 2 of theCompanies Act.

Annual Report & CSR Report 2014119

Organization Chart (As of July 1, 2014)

Business Planning & Coordination Department
Urban Development Department
International Strategy & Coordination Department
Financial Institutions Department
Corporate Finance Department, Division 1
Corporate Finance Department, Division 2
Corporate Finance Department, Division 3

Audit & Supervisory Board
Members/
Audit & Supervisory Board

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

Audit & Supervisory
Board Office

Healthcare Industry Office

Hokkaido Branch
Tohoku Branch

Tohoku Revival
Reinforcement OfficeNiigata Branch
Hokuriku Branch

GeneralMeeting of
Shareholders

Tokai Branch

Board ofDirectors

Executive
Committee

Kansai Branch
Chugoku Branch
Shikoku Branch
Kyushu Branch
Minami-Kyushu Branch
Real Estate Finance Department
Strategic Finance Department
Growth & Cross Border Investment Department
Structured Finance Department
Syndication & Credit Trading Department
Environmental Initiative & Corporate Social Responsibility-Support Department
Business Development Department
Economic & Industrial Research Department
Regional Planning Department
Research Institute of Capital Formation

Economic Research Office
Customer Solution Planning
OfficeCorporate Management &Accounting Research Office

Credit Analysis Department
Legal Affairs & Compliance Department
Secretariat Office
Human Resources Management Department
Corporate Planning & Coordination Department

Public Relations & Corporate
Social Responsibility Office

Risk Management Department
Information Resources Department
General Affairs Department
Accounting Department

Settlement & Accounting
Operation OfficeTreasury Department

Operations Audit
Committee

Internal Audit Department

Representative Offices: Hakodate, Kushiro, Aomori, Toyama, Matsue, Okayama, Matsuyama, Oita
Overseas Representative Office: New York
Overseas Subsidiaries: DBJ Singapore Limited, DBJ Europe Limited, DBJ Investment Consulting (Beijing) Co., Ltd.

120

Annual Report & CSR Report 2014

Domestic Branch Offices,
Representative Offices

Head OfficeSouth Tower, Otemachi
Financial City,
9-6, Otemachi 1-chome,
Chiyoda-ku, Tokyo
100-8178, Japan
Tel: +81-3-3270-3211
http://www.dbj.jp/en

Metropolitan Expressway

To Kanda

Development Bank of Japan (DBJ)
South Tower, Otemachi Financial City

NTT
KDDI

Entrance

Otemachi
Station,Marunouchi Line
(direct passage
from Exit A1)

To TokyoTokyo Sankei Building

JR Lines

Otemachi
Station,ChiyodaLine(Exit C1)

Hibiya DoriKeidanren

North Tower,
Otemachi Financial City

Area Closed

Corporate Data

Locations and Directory (As of August 30, 2014)

Otemachi Station,
Hanzomon Line (Exit E1)

Otemachi Building

Branch Offices:

Representative Offices:

Hokkaido

Hakodate

TohokuKushiroNiigata

Aomori

Hokuriku

ToyamaTokai

MatsueKansai

Okayama

Chugoku

Matsuyama

Shikoku

Oita

KyushuMinami-Kyushu

Overseas Representative Office and Subsidiaries
DBJ Europe Limited

New York Representative Office

New York Representative Office1251 Avenue of the Americas, Suite 830,
New York, NY 10020, U.S.A.
Tel: +1-212-221-0708

Broad

Hilton New Yorkway

DBJ Investment Consulting(Beijing) Co., Ltd.

Sheraton New York Hotel and Towers

52nd St.
51st St.

St.

th

50

th

49

DBJ Singapore Limited

Radio City Music Hall
St.

Rockefeller Center

50th St.
49th St.

1251 Avenue of the Americas (8th floor, Suite 830)
5th Ave.

6th Ave.

7th Ave.

DBJ Singapore Limited

DBJ Europe Limited

DBJ Investment Consulting (Beijing) Co., Ltd.

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

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

Beijing Fortune Building, Suite 814-815, No. 5,
Dong San Huan Bei Lu, Chaoyang District,

Tel: +65-6221-1779

Tel: +44-20-7507-6070

Beijing, 100004, P.R.C
Tel: +86-10-6590-9770

St.
ad

ta.
oS

Sanyuan East BridgeBeroHilton Beijing Hotel

Ol
St.

Hotel Kunlun

Agricultural Exhibition Center Sta.

Cornhill

Beijing Fortune Building(8th floor, Suite 814-815)

Yansha Bridge

ta.
oS

a
aqi

gm

dB

Lian

Royal
Exchange

qia

St.
Bank

S
ijing

Beijing Capital International Airport
Beijing Silver ToweruanneedleThreadCecil St.

Republic Plaza (30th floor)lkne

Ocean Bldg.

Equity Plaza

Wa

Bharat Bldg.

Prince’s

Golden Shoe Park

Sixty
ThreadNeedleStreet

le
ed

.

ne

Bank ofEngland

Raffles Place

St

d
rea

ch

ay A

ubw

Th

ur

55 Market Street

irp

Ex
ort

y
San

UOB PlazasspreThrogmorton St.

La
lomew
BarthoMarket St.

Ch

125 Old Broad Street (Level 20)
Lothbury

You Yi Shopping City
The Great Wall Sheraton
Hotel Beijing

Annual Report & CSR Report 2014121

Subsidiaries (As of March 31, 2014)

Company

Address

Principal Businesses

Established

Percentage of
Capital(Millions of Total Voting
Rights (%)Yen)

Consolidated Subsidiaries
Japan Economic Research Institute Inc.

Chiyoda-ku,
Tokyo

Research, consulting andadvisory services

December 13,
1989

479

100.00

Value Management Institute, Inc.

Chiyoda-ku,
Tokyo

Research, consulting andadvisory services

June 25, 199375

100.00(8.00)DBJ Securities Co., Ltd.

Chiyoda-ku,
Tokyo

Securities business

October 22,
1998

500

66.65

DBJ Business Investment Co., Ltd.

Chiyoda-ku,
Tokyo

Investment consulting

March 10,2003

40

100.00DBL Capital Co., Ltd.

Chiyoda-ku,
TokyoManagement ofinvestment associations

October 14,
2005

99

100.00DBJ Asset Management Co., Ltd.

Chiyoda-ku,
Tokyo

Investment management,
investment advisory andagency services

November 22,
2006

100

100.00DBJ Singapore Limited

Republic ofSingapore

Investment and loan
support and advisory
services

September
15, 2008

S$1 million

100.00DBJ Europe Limited

London, United
Kingdom

Investment and loan
support and advisory
services

June 5, 2009

€7 million

100.00DBJ Investment Advisory Co., Ltd.

Chiyoda-ku,
Tokyo

Investment advisory andagency services

December 1,
2009

68

50.58

DBJ Real Estate Co., Ltd.

Chiyoda-ku,
TokyoReal estate leasing

February 1,
2010

80

100.0011 other companies(Note 7)

—

—

—

—

—

Affiliated Companies
Beijing,
DBJ Investment Consulting (Beijing) Co., People’s
Ltd.
Republic ofChina
18 other companies(Notes 7, 8)—

Investment consulting—

September
30, 2011—

CNY 4
million—Notes:
1. Only principal subsidiaries are indicated. Subsidiaries are listed in order of their date of establishment.
2. Amounts of less than ¥1 million have been omitted in the figures stated above.
3. DBJ’s percentage of total voting rights in subsidiaries is shown to three decimal places. Percentages less than that amount have been omitted.
4. In the column showing DBJ’s percentage of total voting rights in subsidiaries, figures within parentheses indicate indirect holdings.
5. The DBJ Group acquired additional shares in Value Management Institute, Inc., in April 2013, converting this company to a subsidiary.
6. There are 21 consolidated subsidiaries and 19 affiliated companies.
7. Only principal consolidated subsidiaries and affiliated companies are listed; only the numbers of other consolidated subsidiaries andaffiliated companies are indicated.
8. Of affiliated companies, Air Do Co., Ltd., submits a Securities Report (Japanese).

122

Annual Report & CSR Report 2014

49.00

—

Corporate Data

Stock Information (As of March 31, 2014)

Number of Shares Issued and Paid-in Capital
Changes in
Number of shares
Changes in number ofPaid-in capital
paid-in capitalissuedshares issued(Millions of yen)(Thousands of shares) (Thousands of shares) (Millions of yen)

October 1, 2008
June 26, 2009
September 24, 2009
(Note 4)

March 23, 2010
(Note 4)

December 7, 2011
(Note 5)

March 23, 2012
(Note 4)

June 6, 2012
(Note 6)

December 6, 2012
(Note 7)

Changes incapital surplus(Millions of yen)

Capital surplus(Millions of yen)

(Note 2)

(Note 2)

(97,248)

1,060,466(Note 3)(Note 3)40,00040,0001,000,000

1,000,000—

40,000—1,000,000

2,064

42,064103,232

1,103,232—

1,060,466

1,559

43,623

77,962

1,181,194—

1,060,466—

43,6236,170

1,187,364—

1,060,466

8

43,632424

1,187,788—

1,060,466—

43,632

10,528

1,198,316—

1,060,466—

43,632

8,637

1,206,953—

1,060,466

Notes:
1. All shares issued on October 1, 2008, were to raise capital corresponding to incorporation.
In accordance with Article 9 of the Supplementary Provisions to the New DBJ Act, on October 1, 2008, all assets of the predecessor were transferred to
the new DBJ as an in-kind contribution (except those prescribed for ongoing use by the Japanese government under Paragraph 2, Article 15, of the
Supplementary Provisions to the Act), and these shares were transferred to the Japanese government, the capital investor in the predecessor, through a
gratuitous conveyance.
2. As of October 1, 2008, according to the provisions of Article 2 of the Supplementary Provisions to DBJ’s Articles of Incorporation, the value of the capitalreserve was calculated by evaluation officers as stipulated in Paragraph 1, Article 16, of the Supplementary Provisions to the New DBJ Act to be the value of
assets less the value of liabilities less the ¥1 trillion in capital.
At the third meeting of the Development Bank of Japan, Inc., Asset Evaluation Committee on January 28, 2009, the committee determined the value of
assets (as of October 1, 2008) for transfer authorization. The value of these assets less the value of liabilities less ¥1 trillion in capital amounted to¥1,157,715 million.
3. By resolution of the General Meeting of Shareholders on June 26, 2009, and provisions of the Companies Act (Article No. 448, Paragraph 1, and Article452), the deficit was covered by transfer from capital reserve to other capital surplus and transfer from other capital surplus to retained earnings.
4. By way of a rights offering, all shares of common stock were assigned to the Minister of Finance (for consideration). The issue price (amount paid) is ¥50,000
per share; paid-in capital is ¥50,000 per share.
5. To secure a financial base for crisis response operations, of the ¥1,350 billion in delivery bonds issued under the Act for the Partial Amendment of theDevelopment Bank of Japan Inc. Act and the supplementary budget for fiscal 2009, in accordance with the provisions of Article 2-4, Paragraph 1, of the
Appendix to the New DBJ Act, an amount equivalent to ¥6,170 million was required for redemption on November 24, 2011.
Based on this requirement, these delivery bonds were redeemed effective December 7, 2011. The face value of delivery bonds decreased by this amount,
and at the same time DBJ’s common stock increased by the equivalent of the required redemption amount. The number of shares was not affected byprocedures for this increase in common stock.
6. As is stated above, as of May 18, 2012, delivery bonds in the amount of ¥10,528 million required redemption. Based on this requirement, the delivery bonds
were redeemed on June 6, 2012. The face value of delivery bonds decreased by this amount, and at the same time DBJ’s common stock increased by theequivalent of the required redemption amount. The number of shares was not affected by procedures for this increase in common stock.
7. As is stated above, as of November 20, 2012, delivery bonds in the amount of ¥8,637 million required redemption. Based on this requirement, the delivery
bonds were redeemed on December 6, 2012. The face value of delivery bonds decreased by this amount, and at the same time DBJ’s common stockincreased by the equivalent of the required redemption amount. (The amount of delivery bonds that remained unredeemed following this redemption was¥1,324,665 million.) The number of shares was not affected by procedures for this increase in common stock.

Shareholder
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

Annual Report & CSR Report 2014123

Excerpt from the Development Bank of Japan Inc. Act (Act No. 85 of 2007)(Unofficial translation)

Article 1
PurposeThe Development Bank of Japan Inc. (hereinafter referred to as
the ”Corporation”) shall be a joint stock company(kabushikikaisha) whose object is to maintain the foundations ofinvestment and financing functions of long-term business funds as
the Development Bank of Japan by conducting business activities
utilizing the methods of integrated investment and loan services
and other sophisticated financial methodologies, while
maintaining the autonomy of management with the goal of
realizing full-scale privatization, thereby contributing to smoothsupply of funds to those who need long-term business funds, aswell as to the sophistication of financial functions.
Article 3
Scope of Business Operations
1. The Corporation shall engage in the following business
operations to attain its objectives:(1) To accept deposits (limited to certificates of deposit (CDs)and other deposits stipulated in the Cabinet Order);(2) To lend money;(3) To make capital contributions;(4) To guarantee the due performance of debts andobligations;(5) To sell and purchase Securities (other than those that fallwithin monetary claims represented by certificates set forthin Item (7), Short-term Notes, Etc.; the same in Item (8))(other than those that fall within securities-related
derivatives transactions (which mean the securities-related
derivatives transactions set forth in Article 28, Paragraph 8,
Item (6) of the Financial Instruments and Exchange Act (ActNo. 25 of 1948, as amended); hereinafter in this Item andItem 11 the same), or enter into securities-related derivatives
transactions (limited to those made for investment
purposes), except in cases where these business operations
fall within those operations referred to in Item (3);(6) To lend Securities;(7) To acquire or transfer monetary claims (including claims
represented by certificates stipulated in the Ministry of
Finance Ordinance such as negotiable bank deposit
certificates);(8) To subscribe for Specified Debentures or Preferred
Investment Securities issued by a Specified Purpose
Company (limited to the cases where the Specified Purpose
Company acquires only designated monetary claims or
beneficial interests in trusts with which designatedmonetary claims are entrusted with cash proceeds derived
from issue of those Specified Debentures or Preferred
Investment Securities as set forth in the Asset Liquidation
Plans, and except for, in case of Specified Debentures,
Specified Short-term Notes), and other similar securities
stipulated in the Ministry of Finance Ordinance (hereinafterin this Item referred to as the ”Specified Debentures”)(except in cases where it is intended for secondary
distribution (uridashi)), or to handle primary offering(boshu) of the Specified Debentures so subscribed;(9) To acquire or transfer Short-term Notes, Etc.;(10) To act as an agent or intermediary for execution ofagreements which provides for lending money on behalf ofbanks (the banks set forth in Article 2, Paragraph 1 of the
Banking Act (Act No. 59 of 1981, as amended); hereinafter
the same) and other entities engaged in the financial
business stipulated in the Cabinet Order;(11) To enter into derivatives transactions set forth in Article 2,
Paragraph 20 of the Financial Instruments and Exchange
Act (other than those that fall within the securities-related
derivatives transactions), except in cases where these124

Annual Report & CSR Report 2014business operations fall within those operations referred toin Item (7);(12) To do the activities referred to in Article 2, Paragraph 8,
Item (7) of the Financial Instruments and Exchange Act;
(13) To do the activities referred to in Article 2, Paragraph 8,
Item (9) of the Financial Instruments and Exchange Act(limited, in the case of the handling of primary offering or
secondary distribution, to those to be conducted upon
entrustment by financial instruments business operators
engaged in the type I financial instruments trading businessset forth in Article 28, Paragraph 1 of the Financial
Instruments and Exchange Act (the financial instruments
dealers set forth in Article 2, Paragraph 9 of the Financial
Instruments and Exchange Act; hereinafter the same), andfor such financial instruments business operators);(14) To do the activities referred to in Article 2, Paragraph 8,
Item (11) of the Financial Instruments and Exchange Act;
(15) To do the activities referred to in Article 2, Paragraph 8,
Item (13) of the Financial Instruments and Exchange Act;
(16) To do the activities referred to in Article 2, Paragraph 8,
Item (15) of the Financial Instruments and Exchange Act;
(17) With respect to securities (including, if such securities are
not issued, rights to be represented by such securities) ortransactions referred to in each Item of Paragraph 2 ofArticle 33 of the Financial Instruments and Exchange Act,to do the activities set forth in each Item of said Paragraph(other than those referred to in Items 3, 5, 7 through 9, 11
and 13);(18) To provide other entities with consulting services regarding
business transfer, merger, corporate split, share-for-shareexchange (kabushiki kokan) or share transfer (kabushikiiten), or to act as a broker for these transactions;(19) To provide other entities with consulting services regarding
management, and to conduct investigations or provide
information as required for the business operations of otherentities;(20) To conduct investigations, research or training regarding
financial and other economic issues; and(21) To do activities incidental to each of the foregoing Items.
Article 5
Issue of the Development Bank of Japan Bonds
1. The Corporation may issue the Development Bank of Japan Bonds.
Article 9Special Rules When Starting Acceptance of Deposits, Etc.
1. If the Corporation intends to start acceptance of deposits set
forth in Article 3, Paragraph 1, Item (1) or issue of theDevelopment Bank of Japan Bonds, the Corporation shallobtain the prior approval of the Minister of Finance.
2. If the Minister of Finance intends to give the approval referred
to in the preceding paragraph, the Minister of Finance shall, in
advance, have a discussion with the Prime Minister and obtain
his/her consent.
Article 12
Shares
1. If the Corporation intends to solicit those who will subscribe forshares offered for sale set forth in Article 199, Paragraph 1 of
the Companies Act (Act No. 86 of 2005, as amended)(hereinafter in Article 34, Item (4) referred to as the ”Shares
Offered for Sale”) or stock acquisition rights offered set forth in
Article 238, Paragraph 1 of the Companies Act (hereinafter in
Article 34, Item (4) referred to the ”Stock Acquisition Rights
Offered”), or to deliver shares or stock acquisition rights inconnection with a share-for-share exchange, the Corporation
shall obtain authorization of the Minister of Finance.

Article 15
Resolution for Election of Representative Directors and Other
Officers
Resolutions for appointment and dismissal of the representative
directors or representative executive officers of the Corporation,
appointment and dismissal of statutory auditors, or appointment
and dismissal of audit committee members (kansaiin) shall not
become effective without authorization of the Minister of Finance.
Article 16
Authorization of Concurrent Positions of Directors
1. Except in cases where the provision of Article 4, Paragraph 2
applies, any director (or, if the Corporation is a company
maintaining committees (iinkai secchi kaisha), any executive
officer) who performs the day-to-day business of the
Corporation shall not perform the day-to-day business of any
other corporation without authorization of the Minister ofFinance.
2. The Minister of Finance shall, upon receipt of an application for
the authorization referred to in the preceding Paragraph, grant
his/her authorization, except in cases where it is determinedthat any matter so applied may interfere with sound and proper
management of the Corporation.

Corporate Data

Article 13
Corporate Debentures, Development Bank of Japan Bonds andBorrowings
1. Prior to the beginning of each fiscal year, the Corporation shallprepare its basic policy regarding the issue of corporate
debentures (shasai) (other than the Development Bank of Japan
Bonds, ”Corporate Debentures;” hereinafter the same) and theDevelopment Bank of Japan Bonds (excluding the short-term
notes set forth in Article 66, Item (1) of the Act Concerning theCentral Depositary System of Corporate Debentures (Act No. 75
of 2001, as amended) from both the Corporate Debentures
and the Development Bank of Japan Bonds, respectively;
hereinafter in this Article and Article 18 the same), as well as
regarding the borrowings (limited to those with more than one
year to maturity; hereinafter in this Article and Article 18 thesame), which provides for matters relating to the issue of the
Corporate Debentures and the Development Bank of Japan
Bonds, and the borrowing of money, such as the amounts ofissue and borrowings, denominated currency of the Corporate
Debentures, the Development Bank of Japan Bonds and theborrowings, as stipulated in the Ministry of Finance Ordinance,and obtain authorization of the Minister of Finance. If the
Corporation intends to revise it, the same shall apply.

Subject to Authorization”) its subsidiary (the subsidiary set forthin Article 2, Item (3) of the Companies Act), the Corporation
shall obtain authorization of the Minister of Finance in advance:(1) Banks;(2) Long-term credit banks (the long-term credit banks set forthin Article 2 of the Long-Term Credit Bank Act (Act No. 187
of 1952, as amended));(3) Financial Instruments Dealers (limited to those who engage
in type I financial instruments trading business set forth in
Article 28, Paragraph 1 of the Financial Instruments andExchange Act);(4) Money lenders (the money lenders set forth in Article 2,
Paragraph 2 of the Money Lending Business Act (Act No.
32 of 1983, as amended), and exclude those who
concurrently conduct the business referred to in thepreceding Items or fall within other requirements stipulated
in the Ministry of Finance Ordinance);(5) Trust companies (the trust companies set forth in Article 2,
Paragraph 2 of the Trust Business Act (Act No. 154 of
2004, as amended));(6) Insurance companies (the insurance companies set forthin Article 2, Paragraph 2 of the Insurance Business Act (ActNo. 105 of 1995, as amended)); and(7) Those stipulated by the Ministry of Finance Ordinance as
those who are similar to each of the foregoing.
Article 20
Amendment to the Articles of Incorporation, Etc.
1. Resolutions for amendment to the Articles of Incorporation of
the Corporation, disposition of surplus funds (other thandisposition of losses) such as distribution, merger, corporate
split, and dissolution shall not become effective withoutauthorization of the Minister of Finance.
Article 22Special Exemptions from Management of Fiscal Loan Funds
Notwithstanding the provisions of Article 10, Paragraph 1 of the
Fiscal Loan Funds Act (Act 100 of 1951, as amended), the fiscal
loan funds (which means the fiscal loan funds set forth in Article 2of the Fiscal Loan Funds Act; hereinafter the same) may beappropriated for loans (hereinafter in Article 24 referred to simply
as the ”Loans”) to the Corporation when the Corporation
borrows money for appropriation for expenses required for its
operations set forth in Article 3, Paragraphs 1 and 2.

Article 17
Business Plan
Prior to the beginning of each fiscal year, the Corporation shalldraw out a business plan for the new fiscal year and obtain
authorization of the Minister of Finance, as stipulated in the
Ministry of Finance Ordinance. If the Corporation intends to revise
it, the same shall apply.

Article 23
1. Notwithstanding the provision of Article 10, Paragraph 1 of the
Fiscal Loan Funds Act, the fiscal loan funds may beappropriated for the Corporate Debentures and theDevelopment Bank of Japan Bonds (hereinafter in the following
Paragraph, immediately following Article and Article 25,
Paragraph 1 referred to as the ”Debentures, Etc.”) to be issued
by the Corporation to appropriate the resulting proceeds for
expenses required for its operations set forth in Article 3,
Paragraphs 1 and 2.

Article 18
Redemption Plan
Prior to the beginning of each fiscal year, the Corporation shalldraw out redemption plans for the Corporate Debentures, theDevelopment Bank of Japan Bonds and the borrowings and obtain
authorization of the Minister of Finance, as stipulated in the
Ministry of Finance Ordinance. If the Corporation intends to revise
it, the same shall apply.

Article 25
Guarantee of Obligations
1. Notwithstanding the provision of Article 3 of the Act on
Restrictions on Financial Assistance by the Government to
Corporations (Act No. 24 of 1946, as amended), theGovernment may enter into a guarantee agreement for the
obligations relating to the Debentures, Etc., to the extent of theamount approved by the resolutions of the Diet.

Article 19
Subsidiaries Subject to Authorization
1. If the Corporation intends to make any of the following entities(other than individuals in the cases of those referred to in Items(3), (4) and (7); hereinafter referred to as the ”Subsidiaries

Article 29
Competent Ministers
1. The competent minister under this Act shall be the Minister ofFinance provided, however, that in the case that the
Corporation obtains the approval referred to in Article 9,
Annual Report & CSR Report 2014125Paragraph 1, the competent ministers for the following mattersshall be the Minister of Finance and the Prime Minister.

Supplementary Provisions
Article 2
Disposition of the Government-Owned Shares
1. Pursuant to Article 6, Paragraph 2 of the Act on Promotion of
Administrative Reform for Realization of Small and Efficient
Government (Act No. 47 of 2006), the Government shall intend
to reduce the number of the shares held by it of the
Corporation (hereinafter in the following Paragraph and theimmediately following Article referred to as ”GovernmentOwned Shares”), taking into account the market situation, andshall dispose all of them in approximately five to seven years
from the date set forth in Item (3) of the preceding Article.
2. For a period from the effectuation of this act until theGovernment disposes of all of the Government-Owned Shares,
the Government shall from time to time review matters, such as
matters regarding the method in which the GovernmentOwned Shares should be disposed of and take the required
measures based on the result of such review, so that thefoundation of the Corporation’s investment and financing
functions for long-term business funds will be maintained.
Article 3
Abolition of this Act and Other Measures
If the Government disposes of all of the Government-Owned
Shares, the Government shall immediately take measures toabolish this act, as well as measures necessary to smoothly assign
the business operations, functions, and rights and obligations of
the Corporation to any organization to be formed as a bearer ofthe functions commensurate with the investment and financing
functions held by the Corporation.
Article 4Special Rules for Business Operations during the Preparatory
Period
1. In order for the Corporation to smoothly start the business
operations as soon as it is duly organized, The Development
Bank of Japan (hereinafter referred to as ”DBJ”) may borrow
Long-term Loans, in addition to those set forth in Article 42,
Paragraphs 1 and 2 of the Development Bank of Japan Act (ActNo. 73 of 1999, as amended; hereinafter, except for Article 26of the Supplementary Provisions, referred to as the ”DBJ Act”),
during the Preparatory Period (the period from the date on
which this act comes into force up to September 30, 2008; thesame in Paragraph 5).
Article 9
Capital Contribution
Upon the incorporation of the Corporation, DBJ shall contributeall of its properties, except assets to be assumed by Japanpursuant to Article 15, Paragraph 2 of the Supplementary
Provisions, to the Corporation.
Article 15
Dissolution of DBJ, Etc.
1. DBJ shall be dissolved at the time of establishment of the
Corporation, whereupon any and all rights and obligations of
DBJ shall be taken over by the Corporation, except for thoseassets to be assumed by the Government as set forth in thefollowing Paragraph.
2. Of the rights actually held by DBJ at the time of establishmentof the Corporation, the assets which will be considered nolonger necessary for the Corporation to smoothly perform its
future business operation shall be assumed by Japan at the timeof establishment of the Corporation.

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Article 16
Values of Properties Assumed
The values of assets and liabilities assumed by the Corporationfrom DBJ (in the immediately following Paragraph referred to as
the ”Assumed Properties”) shall be as evaluated by evaluation
officers (hyoka iin).
Article 18
Competent Ministers
The competent ministers under Article 26, Paragraph 2 and Article
27, Paragraph 1 for management of assets to be assumed by the
Corporation pursuant to Article 15, Paragraph 1 of the
Supplementary Provisions (hereinafter in this Article referred to as
the ”Assumed Assets”) shall, notwithstanding the provisions ofArticle 29, Paragraph 1, be as follows:(1) For management of the Assumed Assets set forth in the
Cabinet Order in the Hokkaido or the Tohoku Region (whichmeans the areas of Aomori, Iwate, Miyagi, Akita, Yamagata,
Fukushima and Niigata prefectures): Minister of Finance andMinister of Land, Infrastructure and Transport; and(2) For management of the Assumed Assets other than the
Assumed Assets set forth in the preceding Item: Minister ofFinance.
Article 66
Review
On or prior to the date set forth in Article 1, Item (3) of the
Supplementary Provisions, the Government shall review measures
to secure the equal competitive conditions with other business
entities, with respect to the systems for which the investment andfinancing functions of DBJ are utilized pursuant to the provisions of
relevant acts (including ordinances under those acts), such as the
Act on Security for Loans from the Development Bank of Japan toElectric Utility Corporations (Act No. 145 of 1950, as amended),
the Oil Stockpiling Act (Act No. 96 of 1975, as amended), the Act
on the Promotion of Development and Introduction of Alternative
Energy (Act No. 71 of 1980, as amended), the Act on Special
Measures Concerning the Promotion of Urban Development by
Private Sectors (Act No. 62 of 1987, as amended), the Act on
Temporary Measures to Promote Business Activities for the Rationaluse of Energy and the Utilization of Recycled Resources (Act No. 18
of 1993, as amended) and the Act on Promotion of Private FinanceInitiative (Act No. 117 of 1999, as amended), while considering theconvenience of users of those systems, and take the required
measures based on the results of such review.
Article 67
Utilization of the Corporation’s Investment and Financing
Functions for Long-term Business Funds
If the Government utilizes the Corporation’s investment andfinancing functions for long-term business funds on or after thedate set forth in Article 1, Item (3) of the Supplementary
Provisions, the Government shall take measures necessary tosecure the equal competition conditions, as well as othermeasures necessary for utilization of such investment andfinancing functions, paying attention to the Corporation’s
appropriate competitive relationships with other business entities.

This is an unofficial English translation. Only the original
Japanese texts of the act have legal effect and prevail over thistranslation. This translation has been prepared solely forreference purposes. The reader of this translation should
consult the original Japanese text for the purposes ofinterpreting and applying the act to any legal issues ordisputes.

Corporate Data

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

The Development Bank of Japan Inc. Act (Act No. 85 of 2007)
shall be partially amended as described below.
In Article 2, Paragraph 1 of the Supplementary Provisions,”the following Article” shall be amended to read ”Article 3 of the
Supplementary Provisions” and ”the day stipulated in Item 3 ofthe preceding Article” to read ”April 1, 2012”. The following fivearticles shall be added after Article 2.
Capital Contribution by the Government
Article 2-2
The Government may make capital contributions to the
Corporation, to the extent of the amount approved by thebudget, whenever the Government deems necessary, until March
31, 2012.
Delivery of the Government Bonds
Article 2-3
1 The Government, in implementing the crisis response
operations in Article 2, Item 5 of the Japan Finance Corporation
Act (Act No. 57 of 2007; hereinafter referred to as ”Crisis
Response Operations”) may issue the government bonds inorder to use for securement of the capital required to ensure
the financial strength of the Corporation, until March 31, 2012.
2 The Government, pursuant to the provisions of the preceding
paragraph, to the extent of the amount approved by thebudget, shall issue the government bonds and deliver them to
the Corporation.
3 Government bonds issued under the provisions of Paragraph 1
shall be noninterest-bearing.
4 Government bonds issued under the provisions of Paragraph 1
may not be transferred, attached as security rights, or otherwise
disposed of.
5 Necessary matters concerning government bonds issued under
the provisions of Paragraph 1, other than that provided in
Paragraph 3, shall be determined by Ministry of FinanceOrdinance.
Redemption of the Government Bonds
Article 2-4
1 The Corporation, may request the redemption of thegovernment bonds delivered as set forth in the provisions ofParagraph 2 of the preceding Article, only within the amount of
capital calculated by the Ministry of Finance Ordinance as thenecessary amount of capital in response to the increase of
assets related to its Crisis Response Operations (limited to those

conducted by March 31, 2012).
2 The Government, when requested by the Corporation toredeem all or a part of the government bonds delivered under
the provisions of Paragraph 2 of the preceding Article, mustcomply without delay.
3 When redemption has been made under the provisions of thepreceding paragraph, the amount of the Corporation’s capitalshall be the sum of its capital immediately prior to theredemption and the amount of the money redeemed.
4 When the provisions of Article 445, Paragraph 1 are applied inapplying the provisions of the preceding paragraph, the term”case” shall be deemed to be replaced with ”case, or in cases
where Article 2-4, Paragraph 3 of the Supplementary Provisions
to the Development Bank of Japan Inc. Act (Act No. 85 of
2007) is applied.”
5 Other than the matters stipulated in each of the preceding
paragraphs, necessary matters concerning the redemption of
government bonds delivered by the Government under theprovisions of Paragraph 2 of the preceding Article shall be
determined by Finance Ministry ordinance.
Return of the Government Bonds
Article 2-5
1 In the event that as of July 1, 2012, any government bondsdelivered under the provisions of Article 2-3, Paragraph 2 of the
Supplementary Provisions remain unredeemed, the Corporationmust return such unredeemed bonds to the Government.
2 The Government must immediately retire any government
bonds returned to it under the provisions of the preceding
paragraph.
3 Other than the matters stipulated in the preceding two
paragraphs, necessary matters concerning the return andretirement of government bonds delivered by the Government
under the provisions of Article 2-3, Paragraph 2 shall be
determined by Ministry of Finance Ordinance.
Exception to Imposition of Registration and License Tax
Article 2-6
When capital contributions are made under the provisions ofArticle 2-2 of the Supplementary Provisions or redemptions madeunder the provisions of Article 2-4, Paragraph 2 of the
Supplementary Provisions, a Registration and License Tax shall not
be imposed on the increase in capital received by the Corporation,
provided that registration is obtained as specified by Ministry of
Finance Ordinance.
(Unofficial translation)

Supplementary Provisions
Enforcement Date
Article 1
This act shall take effect on the date of its promulgation.
Review, Etc.
Article 2
1 By the end of fiscal year 2011, the Government shall review
what the appropriate implementation of the Crisis Response
Operations (referring to the Crisis Response Operationsprescribed under the provisions of Article 2, Item 5 of the Japan
Finance Corporation Act (Act No. 57 of 2007); same
hereinafter) implemented by the Development Bank of Japan
Inc. (hereinafter” the Corporation”) and the appropriateorganization of the Corporation based on that including theway of holding its shares by the Government should be, andshall take necessary measures based on these reviews, taking

into account the status of the capital contributions by theGovernment to the Corporation under the provisions of Article
2-2 of the Development Bank of Japan Inc. Act as amended bythis Act; the redemption of the Government bonds under the
Article 2-4, Paragraph 2 of the supplementary provisions of theDevelopment Bank of Japan Inc. Act as amended by this Act;the implementation of the Crisis Response Operations by the
Corporation; and the changes in socioeconomic and othercircumstances from a point of view of maintaining the
involvements with the Corporation by the State such as letting
the Government consistently hold its shares exceeding onethird of the Corporation’s issued shares in the aim of ensuring
the appropriate implementation of the Crisis Response
Operations by the Corporation.
2 Notwithstanding the provisions of Article 6, Paragraph 2 of the
Act on Promotion of Administrative Reform for Realization ofAnnual Report & CSR Report 2014127

Small and Efficient Government (Act No. 47 of 2006) as
amended pursuant to the provisions of the following Article
and the provisions of Article 2, Paragraph 1 of the
Supplementary Provisions of the Development Bank of Japan
Inc. Act as amended pursuant to this Act, the Government shallnot dispose of its holding shares of the Corporation prior to themeasures described in the preceding paragraph shall be taken.
Partial Amendment of the Act on Promotion of
Administrative Reform for Realization of Small and Efficient
Government
Article 3
The Act on Promotion of Administrative Reform for Realization of
Small and Efficient Government shall be partially amended asfollows.
”In the measures described in the preceding paragraph” in Article
6, Paragraph 2 shall be revised to ”from April 1, 2012.”
Adjusted Provisions
Article 4
1 If this Act come into effect prior to the date of enforcement of
the Act for Partial Amendment of the Shoko Chukin Bank
Limited Act and Other Act to Facilitate the Supply of Funds to
Small and Medium-sized Enterprises (Act No. 54 of 2009;
mentioned in the following paragraph as the ”Shoko Chukin

Amendment Act”), in regard to the application of theprovisions of Article 6, Paragraph 2 of the Act on Promotion of
Administrative Reform for Realization of Small and Efficient
Government as amended under the provisions of the preceding
Article up to the day before the said date, ”and” shall bedeemed to be replaced with ”taking into account the market
situation, and shall dispose of all such capital contributions inapproximately five to seven years after implementation of themeasures mentioned in the preceding paragraph, and theGovernment shall make capital contributions in.”2 If this Act come into effect after the date of enforcement of the
Shoko Chukin Amendment Act, the provisions of the preceding
Article shall not apply. In this case, ”the following Article” inArticle 2, Paragraph 2 of the Supplementary Provisions shall bedeemed to be replaced with ”Article 4 of the Supplementary
Provisions to the Act for Partial Amendment of the Shoko
Chukin Bank Limited Act and Other Act to Facilitate the Supply
of Funds to Small and Medium-sized Enterprises (Act No. 54 of2009).”
Delegation to Government Ordinance
Article 5
Transitional measures required for the enforcement of this Act
shall be determined by government ordinance.

(Unofficial translation)

Supplementary Resolutions on the Bill for Partial Amendment of the Development Bank of Japan Inc. Act
House of Councilors Committee on Financial Affairs
June 25, 2009

The following matters should receive the Government’s carefulconsideration.
• In implementing Crisis Response Operations based on the recent
measures for additional capital contribution, Development Bankof Japan Inc. shall ensure the measures result in a smoothsupply of funds on the basis of appropriate analysis by drawing
upon its accumulated knowledge and skills.
• With the global monetary crisis having serious economic andfinancial impacts, and the balance of loans to small and medium
enterprises falling steadily, efforts must be made to further
facilitate loans by the Japan Finance Corporation to small andmedium-sized businesses. In implementing Crisis Response
Operations for large and midscale enterprises, Development
Bank of Japan Inc. must be certain to expedite loans to
associated small and medium enterprises as well.

based on its findings. Any such reviews should take into
account the need to ensure that the Corporation acts for thegood of the community, that it has a stable source of the funds
required to fulfill its functions as a provider of long-term
investment and loans, and that it has systems in place to securecompetitive officers and employees. The Government shouldtake appropriate measures to prevent any damage to the
Corporation’s long-term value.
• The Government should reassess the future provision ofpolicy-based finance by Development Bank of Japan Inc. and
the Japan Finance Corporation, reaffirming the importance of
their roles and functions and paying attention to theirrelationships not only with private financial institutions but alsowith the Japanese financial sector as a whole, including
affiliated organizations and the Japan Post Bank.
Resolutions passed.

• The Government should review its holding of shares in
Development Bank of Japan Inc. and take necessary measures

128

Annual Report & CSR Report 2014

Corporate Data

Amendment of the Development Bank of Japan Inc. Act (based on establishment of the Act
for Extraordinary Expenditure and Assistance to Cope with the Great East Japan Earthquake (Act No. 40 of 2011))(Unofficial translation)
Special Rules for the Development Bank of Japan Inc. Act
Article 36
With regard to the capital contribution and the issuance orredemption of Government bonds to facilitate implementation of
the crisis response operations (operations specified in Article 2,
Item (5) of the Japan Finance Corporation Act (Act No. 57 of2007), as well as in Article 133) by the Development Bank ofJapan Inc. to cope with the Great East Japan Earthquake, within
Article 2-2 of the Supplementary Provisions to the Development
Bank of Japan Inc. Act (Act No. 85 of 2007), “March 31, 2012”
shall be deemed to be replaced with “March 31, 2015,” and “asit deems necessary” shall be deemed to be replaced with “as it
deems necessary to facilitate implementation of the crisis response
operations,” and within Article 2-3, Paragraph 1 and Article 2-4,
Paragraph 1 of the same supplementary provisions, “March 31,
2012,” shall be deemed to be replaced with “March 31, 2015,”
and within Article 2-5, Paragraph 1 of the same supplementaryprovisions, “July 1, 2012” shall be deemed to be replaced with
”July 1, 2015.”(Reference 1) The Supplementary Provisions of theDevelopment Bank of Japan Inc. Act (After the amendment
pursuant to the Act for Partial Amendment of theDevelopment Bank of Japan Inc. Act and the Amendment
and Replacement reading pursuant to the Act for
Extraordinary Expenditure and Assistance to Cope with theGreat East Japan Earthquake (hereinafter, referred to as the”Act for Extraordinary Expenditure”.))

Supplementary Provisions

Capital Contribution by the Government
Article 2-2
The Government may make capital contributions to the
Corporation, to the extent of the amount approved by thebudget, whenever the Government deems necessary to facilitate
implementation of the crisis response operations, until March 31,
2015.

Partial Amendment of the Act on Promotion of
Administrative Reform for Realization of Small and Efficient
Government
Article 7
The Act on Promotion of Administrative Reform for Realization of
Small and Efficient Government (Act No. 47 of 2006) shall be
partially amended as follows.
”from April 1, 2012.” in Article 6, Paragraph 2 shall be revised to”from April 1, 2015.”
Partial Amendment of the Development Bank of Japan Inc.
Act
Article 9
The Development Bank of Japan Inc. Act shall be partiallyamended as follows.
”April 1, 2012” in Article 2, Paragraph 1 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act shall berevised to “April 1, 2015”.
Partial Amendment of the Act for Partial Amendment of theDevelopment Bank of Japan Inc. Act
Article 11
The Act for Partial Amendment of the Development Bank of Japan
Inc. Act (Act No. 67 of 2009) shall be partially amended asfollows.
Within Article 2, Paragraph 1 of the Supplementary Provisions of
the Development Bank of Japan Inc. Act, “the end of fiscal year
2011” shall be revised to “the end of fiscal year 2014,” and”(including the cases where it shall be applied by replacing theterm and phrase pursuant to the provisions of Article 36 of the
Act for Extraordinary Expenditure and Assistance to Cope with theGreat East Japan Earthquake (Act No. 40 of 2011))” shall be
added next to “Article 2, Paragraph 2 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act”, and”Article 2-4, Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act” shall be revised to “Article
2-4, Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act after the amendment
pursuant to this Act.”

Disposition of the Government-Owned Shares
Article 2
Pursuant to Article 6, Paragraph 2 of the Act on Promotion of
Administrative Reform for Realization of Small and Efficient
Government (Act No. 47 of 2006), the Government shall intend
to reduce the number of the shares held by it of the Corporation(hereinafter in the following Paragraph and Article 3 of the
Supplementary Provisions, referred to as “Government-Owned
Shares”), taking into account the market situation, and shalldispose all of them in approximately five to seven years from
April 1, 2015.

Delivery of the Government Bonds
Article 2-3
1 The Government, in implementing the crisis response
operations (hereinafter referred to as the “Crisis Response
Operations”) prescribed in Article 2, Item 5 of the Japan
Finance Corporation Act (Act No. 57 of 2007) may issue thegovernment bonds in order to use for securement of the capitalrequired to ensure the financial strength of the Corporation,
until March 31, 2015.
2 The Government, pursuant to the provisions of the preceding
paragraph, to the extent of the amount approved by thebudget, shall issue the government bonds and deliver them to
the Corporation.
Redemption of the Government Bonds
Article 2-4
The Corporation may request the redemption of the government
bonds delivered as set forth in the provisions of Paragraph 2 ofthe preceding Article, only within the amount of capital calculatedby the Ministry of Finance Ordinance as the necessary amount of
capital in response to the increase of assets related to its Crisis
Response Operations (limited to those conducted by March 31,2015).

Annual Report & CSR Report 2014

129

(Reference 2) The Supplementary Provisions of the Act for
Partial Amendment of the Development Bank of Japan Inc.
Act (After the amendment pursuant to the Act for
Extraordinary Expenditure)
Review, Etc.
Article 2
1 By the end of fiscal year 2014, the Government shall review
what the appropriate implementation of the Crisis Response
Operations (referring to the Crisis Response Operationsprescribed under the provisions of Article 2, Item 5 of the Japan
Finance Corporation Act (Act No. 57 of 2007); same
hereinafter) implemented by the Development Bank of Japan
Inc. (hereinafter “the Corporation”) and the appropriateorganization of the Corporation based on that including theway of holding its shares by the Government should be, andshall take necessary measures based on these reviews, taking
into account the status of the capital contributions by theGovernment to the Corporation under the provisions of Article
2-2 of the Supplementary Provisions (including the replacement
readings pursuant to the Act for Extraordinary Expenditure andAssistance to Cope with Great East Japan Earthquake (Act No.

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40 of 2011) Article 36) of the Development Bank of Japan Inc.
Act as amended by this Act; the redemption of the Government
bonds under the Article 2-4, Paragraph 2 of the supplementaryprovisions of the Development Bank of Japan Inc. Act asamended by this Act; the implementation of the Crisis
Response Operations by the Corporation; and the changes insocioeconomic and other circumstances, from a point of viewof maintaining the involvements with the Corporation by theState such as letting the Government consistently hold its
shares exceeding one-third of the Corporation’s issued shares in
the aim of ensuring the appropriate implementation of the
Crisis Response Operations by the Corporation.
2 Notwithstanding the provisions of Article 6, Paragraph 2 of the
Act on Promotion of Administrative Reform for Realization of
Small and Efficient Government (Act No. 47 of 2006) as
amended pursuant to the provisions of the following Article
and the provisions of Article 2, Paragraph 1 of the
Supplementary Provisions of the Development Bank of Japan
Inc. Act as amended pursuant to this Act, the Government shallnot dispose of its holding shares of the Corporation prior to themeasures described in the preceding paragraph shall be taken.

Financial Condition

Financial Condition

Consolidated Financial Statements . . . . . . . . . . 132
Non-Consolidated Financial Statements . . . . . . 174
Capital Adequacy Ratio . . . . . . . . . . . . . . . . . . . 177

Annual Report & CSR Report 2014131

Consolidated Balance Sheet
Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

As of March 31,

2014

2013

2014

AssetsCash and due from banks (Notes 11, 15 and 27)
Call loans and bills bought (Note 27)
Reverse repurchase agreements (Notes 3 and 27)
Money held in trust (Notes 27 and 29)¥

260,185

154,564$ 2,528,034

87,000¥84,000845,317—

165,975—

134,215

175,335

1,304,073

Securities (Notes 3, 15, 27 and 29)

1,637,587

1,357,058

15,911,262

Loans (Notes 4, 5, 15 and 27)

13,838,410

13,918,224

134,457,932

Other assets (Notes 6 and 15)

115,423

133,065

1,121,486

Tangible fixed assets (Notes 7, 11 and 15)

237,610

237,988

2,308,689

6,409

7,927

62,272Intangible fixed assets
Deferred tax assets (Note 23)

153

6,734

1,488

Customers’ liabilities for acceptances and guarantees (Note 14)

107,174

155,753

1,041,335

Allowance for loan losses (Notes 8 and 27)(112,997)(147,414)(1,097,911)

(459)

(501)

(4,465)¥16,310,711¥16,248,712$158,479,513

Allowance for investment losses
Total assets
Liabilities and equity
Liabilities:
Debentures (Notes 9, 15 and 27)¥ 3,085,674¥ 3,053,277$ 29,981,288

Borrowed money (Notes 10, 11, 15 and 27)

9,182,603

9,448,398

89,220,792

Short-term corporate bonds (Notes 9 and 27)—

43,997—

Corporate bonds (Notes 9, 11 and 27)

1,151,746

871,256

11,190,701

Other liabilities (Notes 12 and 13)

131,094

122,416

1,273,749

Accrued bonuses to employees

4,682

4,437

45,492

Accrued bonuses to directors

11

12

115

Liability for retirement benefits (Note 22)

8,727

10,30884,796

Reserve for directors’ retirement benefits

73

64

711

7

135

72

11,202

78

108,843

Reserve for contingent losses
Deferred tax liabilities (Note 23)
Acceptances and guarantees (Note 14)

107,174

155,753

1,041,335

13,682,997

13,710,136

132,947,894

Common stock authorized, 160,000 thousand shares in 2014 and2013; issued, 43,632 thousand shares in 2014 and 2013 (Note 16)

1,206,953

1,206,953

11,727,099

Capital surplus (Note 16)

1,060,466

1,060,466

10,303,793

Retained earnings (Note 16)282,733

193,595

2,747,116

Unrealized gain on available-for-sale securities (Note 29)

37,76736,873366,959

Deferred gain on derivatives under hedge accounting

30,00633,987

291,550

Foreign currency translation adjustments

709

(57)

6,899

Accumulated adjustments for retirement benefits (Note 22)

(944)

—

(9,181)

Total

2,617,691

2,531,817

25,434,234

Minority interests

10,022

6,759

97,385

Total liabilities
Equity:Accumulated other comprehensive income:

Total equity
Total liabilities and equity
See notes to consolidated financial statements.

132

Annual Report & CSR Report 2014

2,627,714

2,538,576

25,531,619¥16,310,711¥16,248,712$158,479,513

Financial Condition

Consolidated Statement of Income
Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

For the year ended March 31,

2014

2013

2014

IncomeInterest income:¥255,329¥267,895$2,480,850

Interest on loans

228,301

242,088

2,218,244

Interest and dividends on securities

18,81318,023

182,794

Interest on call loans and bills bought

98

44

961

Interest on reverse repurchase agreements

282

351

2,749

Interest on due from banks

41

56

402

7,680

7,053

74,627

110

278

1,072

Fees and commissions

13,952

10,293

135,566

Other operating income (Note 18)

15,687

7,880

152,425

Other income (Note 19)

77,22855,039750,376

362,197

341,1093,519,217

132,167

144,274

1,284,179

39,773

43,100386,449

Interest on swaps
Other interest income

Total income
Expenses
Interest expense:
Interest on debentures
Interest on call money and bills soldInterest on borrowed money
Interest on short-term corporate bonds
Interest on corporate bonds
Other interest expense
Fees and commissions

7

19

77

87,844

97,263

853,519

32

57

319

4,488

3,827

43,611

20

5

203

276

1,082

2,685

Other operating expenses (Note 20)

7,224

12,16970,198General and administrative expenses

47,43644,877

460,904

Other expenses (Note 21)

9,077

22,48088,203

Total expenses

196,182

224,884

1,906,168

Income before income taxes and minority interests

166,014116,224

1,613,049

25,102

41,753

243,907

Income taxes (Note 23):
Current

15,765

2,838

153,180

Total income taxes

Deferred

40,86844,592

397,086

Net income before minority interests

125,146

71,632

1,215,962

Minority interests in net income
Net income

843

295

8,198

¥124,303¥ 71,337$1,207,764

Yen

U.S. Dollars (Note 1)

Per share of common stock (Note 17)
Basic net income
Cash dividend applicable to the year

¥2,848.87¥1,634.96

706

808

$

27.68
6.86

See notes to consolidated financial statements.

Annual Report & CSR Report 2014133

Consolidated Statement of Comprehensive Income
Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

For the year ended March 31,

Net income before minority interests

2014

2013

2014

¥125,146¥71,632$1,215,962

Unrealized gain on available-for-sale securities

4,355

16,451

42,318Deferred gain on derivatives under hedge accounting(3,944)

6,260(38,330)

389

86

3,785

Other comprehensive income (Note 25):

Foreign currency translation adjustments
Share of other comprehensive income in affiliates accounted
for by the equity method
Total other comprehensive income
Comprehensive income

385

39

3,747

1,185

22,838

11,520¥126,332¥94,471$1,227,482¥121,983¥95,265$1,185,229

4,348

(794)

42,253

Total comprehensive income attributable to:
Owners of the parent
Minority interests
See notes to consolidated financial statements.

134

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Financial Condition

Consolidated Statement of Change in Equity
Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

For the year ended March 31,

2014

2013

2014

¥1,206,953¥1,187,788$11,727,099—
1,206,953

19,165
1,206,953—
11,727,099

Balance at beginning of year

1,060,466

1,060,466

10,303,793

Balance at end of year

1,060,466

1,060,466

10,303,793

Common stock:
Balance at beginning of year
Capital increase due to redemption of government
compensation bonds
Balance at end of year
Capital surplus:

Retained earnings:
Balance at beginning of year

193,595

159,606

1,881,026

Cash dividends(35,254)(37,349)(342,547)

Net income

124,303

71,3371,207,764

Change in scope of consolidation
Balance at end of year

89

—

874

282,733

193,595

2,747,116

Accumulated other comprehensive income:Unrealized gain on available-for-sale securities:
Balance at beginning of year

36,873

19,313358,271

Net change during the year894

17,5608,689

37,76736,873366,959

Balance at beginning of year

33,987

27,711

330,229

Net change during the year

(3,980)6,276(38,679)

Balance at end of year

30,00633,987

291,550

(57)

(149)

(557)

Balance at end of year
Deferred gain on derivatives under hedge accounting:Foreign currency translation adjustments:
Balance at beginning of year
Net change during the year

767

91

7,456

Balance at end of year

709

(57)

6,899

—

—

—

Accumulated adjustments for retirement benefits:
Balance at beginning of year
Net change during the year

(944)

—

(9,181)

Balance at end of year

(944)

—

(9,181)

Balance at beginning of year

6,759

6,329

65,674

Net change during the year

3,263

430

31,711

Balance at end of year

10,022

6,759

97,3852,538,576

2,461,065

24,665,533—(35,254)

19,165(37,349)—(342,547)

124,303

71,3371,207,764

Minority interests:

Total equity:
Balance at beginning of year
Capital increase due to redemption of government
compensation bonds
Cash dividends
Net income
Change in scope of consolidation

89

—

874

Net change during the year(0)24,358(4)¥2,627,714¥2,538,576$25,531,619

Balance at end of year
See notes to consolidated financial statements.

Annual Report & CSR Report 2014135

Consolidated Statement of Cash Flows
Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

For the year ended March 31,

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation
Amortization of goodwill
Gain on negative goodwill
Losses on impairment of long-lived assets
Equity in gains of affiliates
Interest income
Interest expense
Gain on securities—net
Gain on money held in trust—net
Foreign exchanges gains
Loss (gain) on sales of fixed assets—net
Changes in operating assets and liabilities:
Allowance for loan losses
Allowance for investment losses
Accrued bonuses to employees
Accrued bonuses to directors
Liability for retirement benefits
Reserve for contingent losses
Loans
Debentures
Borrowed money
Short-term corporate bonds
Corporate bonds
Due from banks
Call loans and bills bought
Reverse repurchase agreements
Interest received
Interest paid
Other—net
Sub-total
Payments for income taxes
Net cash provided by operating activities
Cash flows from investing activities:
Payments for purchases of securities
Proceeds from sales of securities
Proceeds from redemption of securities
Payments for increase of money held in trust
Proceeds from decrease of money held in trust
Payments for purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets, etc.
Payments for purchases of intangible fixed assets
Proceeds from purchases of stocks of subsidiaries resulting inchange in scope of consolidation
Net cash used in investing activities
Cash flows from financing activities:
Capital increase due to redemption of government compensation
bonds
Payments for cash dividends
Proceeds from issuance of securities to minority shareholders ofsubsidiaries
Dividends paid to minority shareholders of subsidiaries
Net cash used in financing activities
Foreign currency translation adjustments on cash and cash
equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents due to new consolidation
Cash and cash equivalents at end of year
See notes to consolidated financial statements.

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Annual Report & CSR Report 2014

2014

2013

2014

166,014¥ 116,224$ 1,613,049

5,707
107
(559)
103
(2,252)(255,329)
132,167(33,626)(5,396)(18,385)
219

4,140
203
(151)
236
(2,870)(267,895)
144,274(31,529)(906)(21,898)(547)

55,454
1,046(5,440)1,008(21,890)(2,480,850)
1,284,179(326,724)(52,433)(178,638)
2,133(34,419)
(42)
105
(0)
(3,045)(128)
79,81432,396(265,823)(43,997)
280,490(9,717)(3,000)165,975
264,234(133,370)
68,208386,449(41,463)
344,986(1,566)
(570)
(257)
(0)
(3,176)135(279,867)(77,218)
242,844(7,001)
322,428
20,9305,500(13,085)
273,810(146,684)
32,397
307,897(31,511)276,385(334,431)
(411)
1,021
(3)
(29,593)(1,248)775,499
314,778(2,582,818)(427,497)
2,725,327(94,421)(29,149)
1,612,668
2,567,373(1,295,867)
662,730
3,754,855(402,867)
3,351,988(1,317,120)
196,229860,725(140)
42,498(786)
5,443(1,057)(512,262)
58,995358,806(150,115)
1,434(14,169)
1,840(2,410)(12,797,515)
1,906,625
8,363,054(1,360)412,924(7,645)52,888(10,275)

203(214,004)

1,569(256,310)

1,976(2,079,328)—(35,254)

19,165(37,349)—(342,547)

33(1,118)(36,339)283(2,511)(20,412)328(10,870)(353,088)

687
95,330124,017457
219,805

213(124)
124,141—¥ 124,017

6,683
926,254
1,204,992
4,444$ 2,135,691¥¥

Financial Condition

Notes to Consolidated Financial Statements
Development Bank of Japan Inc. and Consolidated Subsidiaries

1. Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in
the Japanese Financial Instruments and Exchange Act and its related accounting regulations and Ministerial Ordinance for
Accounting of the Development Bank of Japan Inc. (“DBJ Inc.”) and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirementsof International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been madeto the consolidated financial statements issued domestically in order to present them in a form which is more familiar toreaders outside Japan. In addition, certain reclassifications have been made in the 2013 consolidated financial statements toconform to the classifications used in 2014.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million yen.
Accordingly, the sum of each amount appearing in the accompanying financial statements and the notes thereto may not
be equal to the sum of the individual account balances. Amounts in U.S. dollars are presented solely for the convenience ofreaders outside Japan. The rate of ¥102.92=$1.00, the effective exchange rate prevailing as of March 31, 2014, has beenused in the conversion. The presentation of such amounts is not intended to imply that Japanese yen amounts have been or
could have been readily translated, realized or settled in U.S. dollars at that rate or any other rate.

2. Summary of Significant Accounting Policies(a) Principles of Consolidation(1) Scope of Consolidation
Under the control concept, those companies in which DBJ Inc., directly or indirectly, is able to exercise control over
operations are fully consolidated. On September 8, 2006, the Accounting Standards Board of Japan (“ASBJ”) issued
Practical Issues Task Force No. 20, “Practical Solution on Application of Control Criteria and Influence Criteria to
Investment Associations” which was effective for the period and the fiscal years ending on or after September 8,
2006. The practical solution clarifies how the control and influence concept should be practically applied to theconsolidation scope of collective investment vehicles, such as limited partnerships, Tokumei Kumiai and other entities
with similar characteristics.
(i) Consolidated Subsidiaries
The number of consolidated subsidiaries as of March 31, 2014 is 21. The major consolidated subsidiaries as ofMarch 31, 2014 are as follows:
DBJ Business Investment Co., Ltd.
DBJ Singapore Limited
Japan Economic Research Institute Inc.
DBJ Europe Limited
DBJ Real Estate Co., Ltd.
DBJ Investment Advisory Co., Ltd.
DBJ Capital Co., Ltd.
DBJ Securities Co., Ltd.
DBJ Asset Management Co., Ltd.
Value Management Institute, Inc.
In the year ended March 31, 2014, Value Management Institute, Inc. was newly consolidated due to additional
acquisition of its shares and V Lease Ltd. was newly consolidated due to an increase in its materiality, while New
Business Investment Co., Ltd. and DBJ Credit Line, Ltd. were excluded from the scope of consolidation due toliquidation.
(ii) Unconsolidated Subsidiaries
The number of unconsolidated subsidiaries as of March 31, 2014 is 29. The major unconsolidated subsidiary as ofMarch 31, 2014 was UDS II Corporate Mezzanine Limited Partnership.
Unconsolidated subsidiaries are excluded from the scope of consolidation because such exclusion has no material
impact on the consolidated financial statements in terms of total assets, income, net income, retained earnings andaccumulated other comprehensive income.

Annual Report & CSR Report 2014

137

(iii) The majority of voting rights of Dexerials Corporation is owned by DBJ Inc. but it is not treated as a subsidiary, as
the investment in this company was made for the purpose of its development and not for the purpose of obtaining
control over the investee.
(2) Application of the Equity Method
Under the influence concept, unconsolidated subsidiaries and affiliates over which DBJ Inc. has the ability to exercise
significant influence are accounted for by the equity method.
(i) Unconsolidated subsidiaries not accounted for by the equity method
The number of unconsolidated subsidiaries not accounted for by the equity method as of March 31, 2014 was 29.
The major unconsolidated subsidiary not accounted for by the equity method was UDS II Corporate Mezzanine
Limited Partnership.
(ii) Affiliates accounted for by the equity method
The number of affiliates accounted for by the equity method as of March 31, 2014 was 19. One of the majoraffiliates accounted for by the equity method as of March 31, 2014 was:
DBJ-JAIC Investment Consulting (Beijing) Co., Ltd.
Changes in scope of affiliates accounted for by the equity method:
Four companies including GFS Renewable Energy Limited were newly accounted for by the equity method as ofMarch 31, 2014.
Innovation Carve-out Fund No. 1 Limited Partnership and Hokkaido Heat Supply Corporation were excluded
from the scope of affiliates accounted for by the equity method due to liquidation and sales of shares, respectively.
(iii) Affiliates not accounted for by the equity method
The number of affiliates not accounted for by the equity method as of March 31, 2014 was 86. One of the majoraffiliates as of March 31, 2014 was:
New Perspective One LLC
Unconsolidated subsidiaries and affiliates that are not accounted for by the equity method have been excluded
from the scope of the equity method because their aggregate effect in terms of net income, retained earnings andaccumulated other comprehensive income has no material impact on the consolidated financial statements of DBJ Inc.
(iv) Entities not recognized as affiliates where DBJ Inc. owns the voting rights between 20% and 50%
The following companies of which DBJ Inc. owns the voting rights between 20% and 50% were not recognized asaffiliates accounted for by the equity method, since DBJ Inc.’s intent is to nurture the venture business and not toexercise significant influence on their operating and financing policies:
As of March 31, 2014
Narumi Corporation
Shinwa Seiko Corporation
Mediclude Co., Ltd.
Nihon Shoryoku Kikai Co., Ltd.
PRISM Pharma Corporation
Izumi Products Company
OPAL Co., Ltd.
Teibow Co., Ltd.
TES HOLDINGS LIMITEDTHUNIP HOLDINGS
Grace A Co., Ltd.
(3) Balance Sheet Dates of Consolidated Subsidiaries
Balance sheet dates of consolidated subsidiaries are as follows:
Number of subsidiaries

2014

December 31
March 31138

Annual Report & CSR Report 2014129

Financial Condition

Consolidated subsidiaries are consolidated based on the financial statements that are prepared as of their year-end
balance sheet date.
The necessary adjustments are made in the consolidated financial statements to reflect material transactions that
occur between the year-end balance sheet date of the subsidiary and the consolidated balance sheet date.
(4) Elimination of Intercompany Balances and Transactions
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized
profit resulting from transactions between DBJ Inc. and its consolidated subsidiaries is eliminated.
(5) Amortization of Goodwill
The difference between the fair value of net assets and the cost of the acquired subsidiary is being amortized ona straight-line basis over the estimated beneficial period not exceeding 20 years. Minor differences are charged
to income in the year of acquisition. The excess of the fair value over the cost of acquired subsidiaries (negative
goodwill) is recognized as income immediately as incurred.
(b) Cash and Cash Equivalents“Cash and Cash Equivalents” in the consolidated statement of cash flows consist of cash on hand and due from banks.
The reconciliation between “Cash and cash equivalents” and “Cash and due from banks” in the consolidated balance
sheet is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2014

2013

2014

Cash and due from banks¥260,185¥154,564$2,528,034

Time deposits with banks(40,380)(30,546)(392,344)

Cash and cash equivalents¥219,805¥124,017$2,135,691(c) Securities
Held-to-maturity debt securities are stated at amortized cost with amortization computed on a straight-line basis, using
the weighted average method. Available-for-sale securities with readily available market quotations are stated at market
value (cost is calculated principally using the weighted average method). Financial instruments whose fair value cannot
be reliably determined are stated at cost using the weighted average method.
Investments in limited partnerships and other similar partnerships are accounted for at their original cost plus
DBJ Inc.’s interest in earnings since acquisition and less any dividends received, based on their most recent financial
statements.
Unrealized gains and losses on available-for-sale securities are included in equity, net of income taxes, except for theamounts reflected in profit or loss by application of fair value hedges.
Securities which are held as trust assets in money held in trust accounts are valued in the same way as othersecurities.
(d) Valuation Method for Derivative Financial Instruments
All derivative financial instruments are carried at market value. Except for certain derivatives that are designated as
hedging instruments as discussed below, gains or losses on derivative transactions are recognized in the statement ofincome.
(e) Hedge Accounting(1) Hedge Accounting
DBJ Inc. applies the deferral method of hedge accounting or the accrual method (*1). The portfolio hedge isaccounted for by the method stipulated in “Accounting and Auditing Treatments on the Application of AccountingStandards for Financial Instruments in the Banking Industry,” issued by the Japanese Institute of Certified Public
Accountants (the “JICPA Industry Audit Committee Report No. 24”). In addition, foreign currency swaps which
are used to hedge foreign currency fluctuations are not translated at market values but at contractual rates, as theforeign currency swap contracts meet the hedging criteria under the Accounting Standards for Financial Instruments.
In addition, DBJ Inc. applies deferral hedge accounting and fair value hedge accounting as portfolio hedges ofthe foreign currency fluctuations associated with foreign currency denominated investments in subsidiaries andaffiliates and foreign currency denominated available-for-sale securities (other than foreign currency denominatedbonds).
Annual Report & CSR Report 2014139

(2) Hedging Instruments and Hedged Items• Hedging Instruments : Interest rate swaps
Hedged Items: Debentures, Borrowed money, Corporate bonds, Securities and Loans• Hedging Instruments : Foreign currency swaps
Hedged Items: Foreign currency denominated loans, Debentures and Corporate bonds• Hedging Instruments : Forward liability denominated in foreign currency
Hedged Items: Foreign currency denominated investments in subsidiaries and affiliates and foreign
currency denominated available-or-sale securities (other than foreign currency
denominated bonds)(3) Hedging Policy
DBJ Inc. utilizes hedging instruments to hedge interest rates and foreign currency fluctuations on its assets andliabilities. Individual contracts or every constant group are drawn for each hedged item.
(4) Evaluation of Hedge EffectivenessAccording to the risk management policy, DBJ Inc. evaluates the effectiveness of the hedges by testing whether thederivatives are effective in reducing the risks associated with the hedged items.
In addition, as for portfolio hedging activities to fix the cash flows, the effectiveness is assessed based on thecorrelation between the base interest rate index of the hedged cash flow and the hedging instrument.
With respect to hedging activities against foreign exchange risk of foreign currency denominated investments in
subsidiaries and affiliates and foreign currency denominated available-for-sale securities (other than foreign currency
denominated bonds), the effectiveness of the hedge is assessed by confirming the amount of foreign currency
payables of spot and forward foreign exchange contracts exceeding the amount of acquisition cost of the hedged
foreign securities in foreign currency.
With respect to an individual hedge, in regards to both interest rate swap contracts which meet the hedging
requirements of the accrual method (*1) and foreign currency swap contracts which meet the hedging requirementsof the assignment method (*2), under the Accounting Standards for Financial Instruments at the inception date, DBJ
Inc. is not required to periodically evaluate hedge effectiveness.
*1. If interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or received
under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap
contract was executed.
*2. In cases where foreign currency swaps are used as hedges and meet certain hedging criteria, foreign exchange forward
contracts and hedged items are accounted for in the following manner;(i) If a foreign currency swap is executed to hedge existing foreign currency assets or liabilities, a) the difference, if any, between
the Japanese yen amount of the hedged foreign currency asset or liability translated using the spot rate at the inception dateof the contract and the book value of the asset or liability is recognized in the statement of income in the period which
includes the inception date, and b) the discount or premium on the contract (that is, the difference between the Japanese
yen amount of the contract translated using the contracted forward rate and that translated using the spot rate at the
inception date of the contract) is recognized over the term of the contract.
(ii) If a foreign currency swap is executed to hedge a future transaction denominated in a foreign currency, the futuretransaction will be recorded using the contracted forward rate, and no gains or losses on the foreign exchange forward
contract are recognized.

(f) Fixed Assets(1) Depreciation of Tangible Fixed Assets
Tangible Fixed Assets are stated at cost less accumulated depreciation. Tangible Fixed Assets of DBJ Inc. aredepreciated using the declining-balance method, except for buildings (excluding installed facilities) that are
depreciated on a straight-line basis, and depreciation of tangible fixed assets of consolidated subsidiaries iscomputed principally using the straight-line method based on the estimated durability of assets.
The estimated useful lives are principally as follows:
Buildings: 3 years to 50 years
Others: 4 years to 20 years

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Financial Condition(2) Amortization of Intangible Fixed Assets
Intangible Fixed Assets are amortized using the straight-line method. Capitalized software for internal use isamortized using the straight-line method based on the estimated useful lives (mainly from 3 to 5 years).
(3) Lease Assets
Depreciation for lease assets is computed by the straight-line method with zero residual value over the lease term.
(g) Long-lived Assets
DBJ Inc. reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying
amount of an asset or asset group may not be recoverable. Impairment losses are recognized if the carrying amount ofan asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued
use and eventual disposition of the asset or asset group. The impairment losses would be measured as the amount bywhich the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash
flows from the continued use and eventual disposition of the asset or the net selling price at disposition.
(h) Debentures and Corporate Bonds Issuance Costs“Debentures and Corporate Bonds Issuance Costs” are charged to income as incurred.
(i) Foreign Currency Translation and Revaluation Method
Assets and liabilities denominated in foreign currencies held by DBJ Inc. have been translated at the exchange rates
prevailing as of the balance sheet date. Foreign currency accounts held by consolidated foreign subsidiaries aretranslated into the currency of the subsidiaries at the respective year-end exchange rates. The foreign exchange gains
and losses from transactions are recognized in the statement of income to the extent that they are not hedged byforward exchange contracts. The balance sheet accounts of the consolidated foreign subsidiaries are translated into
Japanese yen at the current exchange rate as of the balance sheet date except for equity, which is translated at thehistorical rate. Differences arising from such translation were shown as “Foreign Currency Transaction Adjustments” ina separate component of equity. Revenue and expense accounts of consolidated foreign subsidiaries are translated into
yen at the exchange rate prevailing as of the balance sheet date.
(j) Allowance for Loan Losses
DBJ Inc. provides for “Allowance for Loan Losses” as detailed below pursuant to the internal policies for self-assessmentof credit quality and loan losses. The allowance for claims on debtors who are legally bankrupt, in special liquidation
or effectively bankrupt is provided for based on the amount of claims, after the write-off described below, net ofamounts expected to be recovered through disposal of collateral or execution of guarantees. The allowance for claims
on debtors who are not legally bankrupt, but are likely to become bankrupt, and for which future cash flows cannot
reasonably be estimated (possibly bankrupt), is provided for at the amount considered to be necessary based on an
overall solvency assessment performed on the claims, net of amounts expected to be recovered through disposal ofcollateral or execution of guarantees. With respect to the claims on debtors who are likely to become bankrupt or to beclosely monitored, and for which future cash flows can reasonably be estimated, the allowance is provided for as thedifference between the present value of expected future cash flows discounted at the contracted interest rate and thecarrying value of the claims. The allowance for claims on debtors other than those described above is provided basedon the historical default rate, which is calculated based on the actual defaults over a certain historical period. All claims
are assessed initially by the investment and lending departments and then by the Credit Analysis Department, which is
independent of the investment and lending departments based on internal policies for self-assessment of credit quality.
The allowance is provided for based on the results of the self-assessment.
With respect to the claims on debtors who are legally or substantially bankrupt with collateral or guarantees, theamount of claims exceeding the estimated market values of collateral or guarantees which are deemed uncollectible
were written-off, and totaled ¥39,715 million ($385,888 thousand) and ¥50,187 million for the years ended March 31,
2014 and 2013, respectively. The consolidated subsidiaries calculate the general reserve for “normal” categories basedon the specific actual historical loss ratio, and the specific reserve for the “possibly bankrupt,” “effectively bankrupt”
and “legally bankrupt” categories based on estimated losses, considering the recoverable value.

Annual Report & CSR Report 2014141

(k) Allowance for Investment Losses“Allowance for Investment Losses” is provided for based on the estimated losses on certain investments based on anassessment of the issuers’ financial condition.
(l) Accrued Bonuses to Employees and Directors“Accrued Bonuses to Employees and Directors” are provided for in the amount of the estimated bonuses which are
attributable to the years ended March 31, 2014 and 2013.
(m) Employees’ Retirement Benefits
DBJ Inc. has defined benefit pension plans, which consist of a defined-benefit corporate pension plan and a lump-sum
severance indemnity plan, as well as a defined contribution pension plan. Some domestic consolidated subsidiaries havea lump-sum severance indemnity plan and some overseas consolidated subsidiaries have retirement benefit plan as adefined contribution plan.
The projected benefit obligations are attributed to periods on a straight-line basis. Net actuarial gains and losses areamortized using the straight-line method over the period of ten years within the employees’ average remaining service
period commencing from the following fiscal year after incurrence. Prior service cost is amortized using the straight-line
method over the period of ten years within the employees’ average remaining service period at incurrence.
On May 17, 2012, the ASBJ issued ASBJ Statement No. 26, “Accounting Standard for Retirement Benefits” andASBJ Guidance No. 25, “Guidance on Accounting Standard for Retirement Benefits,” which replaced the accounting
standard for retirement benefits that had been issued by the Business Accounting Council in 1998 with an effective dateof April 1, 2000, and the other related practical guidance, and were followed by partial amendments from time to timethrough 2009.
(1) Under the revised accounting standard, actuarial gains and losses and prior service costs that are yet to berecognized in profit or loss are recognized within equity (accumulated other comprehensive income), after adjustingfor tax effects, and any resulting deficit or surplus is recognized as a liability (liability for retirement benefits) or asset(asset for retirement benefits).
(2) The revised accounting standard does not change how to recognize actuarial gains and losses and prior service costs
in profit or loss. Those amounts are recognized in profit or loss over a certain period no longer than the expected
average remaining service period of the employees. However, actuarial gains and losses and prior service costs that
arose in the current period and have not yet been recognized in profit or loss are included in other comprehensive
income and actuarial gains and losses and prior service costs that were recognized in other comprehensive income
in prior periods and then recognized in profit or loss in the current period shall be treated as reclassification
adjustments (see Note 2.(u)).
(3) The revised accounting standard also made certain amendments relating to the method of attributing expected
benefit to periods and relating to the discount rate and expected future salary increases.
This accounting standard and the guidance for (1) and (2) above are effective for the end of fiscal years beginning on orafter April 1, 2013, and for (3) above are effective for the beginning of fiscal years beginning on or after April 1, 2014,
or for the beginning of fiscal years beginning on or after April 1, 2015, subject to certain disclosure in March 2015, bothwith earlier application being permitted from the beginning of fiscal years beginning on or after April 1, 2013. However,no retrospective application of this accounting standard to consolidated financial statements in prior periods is required.
DBJ Inc. applied the revised accounting standard and guidance for retirement benefits for (1) and (2) above, effective
March 31, 2014. As a result, liability for retirement benefits of ¥8,727 million ($84,796 thousand) was recorded asof March 31, 2014, and deferred tax liabilities and accumulated other comprehensive income as of March 31, 2014
decreased by ¥520 million ($5,055 thousand) and ¥944 million ($9,181 thousand), respectively.
(n) Reserve for Directors’ Retirement Benefits“Reserve for Directors’ Retirement Benefits” is accrued based on the amount that would be required if all directors
retired at the balance sheet date.
(o) Reserve for Contingent Losses
Reserve for contingent losses is provided for possible contingent losses on loan commitment limits based on individuallyestimated losses.
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Financial Condition(p) Asset Retirement Obligations
In March 2008, the ASBJ published the accounting standard for asset retirement obligations, ASBJ Statement No. 18“Accounting Standard for Asset Retirement Obligations” and ASBJ Guidance No. 21 “Guidance on Accounting Standard
for Asset Retirement Obligations”. Under this accounting standard, an asset retirement obligation is defined as a legal
obligation imposed either by law or contract that results from the acquisition, construction, development and thenormal operation of a tangible fixed asset and is associated with the retirement of such tangible fixed asset.
The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset
retirement and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If areasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement obligation
is incurred, the liability should be recognized when a reasonable estimate of asset retirement obligation can be made.
Upon initial recognition of a liability for an asset retirement obligation, an asset retirement cost is capitalized byincreasing the carrying amount of the related fixed asset by the amount of the liability.
The asset retirement cost is subsequently allocated to expense through depreciation over the remaining useful life of
the asset. Over time, the liability is accreted to its present value each period. Any subsequent revisions to the timing or
the amount of the original estimate of undiscounted cash flows are reflected as an increase or a decrease in the carrying
amount of the liability and the capitalized amount of the related asset retirement cost.
(q) Consumption Taxes
Income and expenses subject to consumption taxes exclude related consumption taxes paid or received.
(r) Income Taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statement ofincome. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future
tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities.
Deferred taxes are measured by applying currently enacted tax laws to the temporary differences.
(s) Capitalization of Interest Costs on Real Estate Development Business
Interest costs arising in the normal course of development related to real estate development business of certain
domestic consolidated subsidiaries are capitalized and included in the acquisition cost of assets.
(t) Per Share Information
Basic net income per share is computed by dividing net income available to common stockholders by the weightedaverage number of shares of common stock outstanding for the period, retroactively adjusted for stock splits. Diluted
net income per share for the years ended March 31, 2014 and 2013 is not disclosed because there are no dilutive
securities.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicableto the year including dividends to be paid after the end of the year.
(u) New Accounting Pronouncements
Accounting Standard for Retirement Benefits
On May 17, 2012, the ASBJ issued ASBJ Statement No. 26, “Accounting Standard for Retirement Benefits” andASBJ Guidance No. 25, “Guidance on Accounting Standard for Retirement Benefits,” which replaced the AccountingStandard for Retirement Benefits that had been issued by the Business Accounting Council in 1998 with effective dateof April 1, 2000, and the other related practical guidances, being followed by partial amendments from time to timethrough 2009.
Under the revised accounting standard, taking into the accounts the viewpoints of improvement of financial
reporting and international trends, accounting treatment for actuarial gains and losses and prior service costs that are
yet to be recognized in profit or loss, the calculation method for retirement benefit obligations and service costs andexpansion of the related disclosure requirements have been revised.
As noted in Note 2 (m) (3), DBJ Inc. expects to apply the revised calculation method for retirement benefit
obligations and service costs from the beginning of fiscal years beginning on April 1, 2014.
DBJ Inc. is currently in the process of measuring the effects of applying the revised accounting standard for Note 2(m) (3) in future applicable periods.

Annual Report & CSR Report 2014143

Accounting Standards for Business Combinations and Consolidated Financial Statements
On September 13, 2013, the ASBJ issued revised ASBJ Statement No. 21, “Accounting Standard for Business
Combinations,” revised ASBJ Guidance No. 10, “Guidance on Accounting Standards for Business Combinations
and Business Divestitures,” and revised ASBJ Statement No. 22, “Accounting Standard for Consolidated Financial
Statements.”
These accounting standards were revised principally concerning “Treatment for changes in the parent’s ownershipinterest in a subsidiary as long as the parent retains control over its subsidiary if the parent purchases or sells ownershipinterests in its subsidiary,” “Treatment for acquisition-related costs,” “Provisional accounting treatments for a businesscombination,” and “Presentation of net income and change from minority interest to noncontrolling interest.”
DBJ Inc. expects to apply these standards from the beginning of fiscal years beginning on April 1, 2015, and is in theprocess of measuring the effects of applying the revised accounting standards and guidance in future applicable periods.

3. Securities
Securities as of March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Japanese government bonds

2014

2013

2014

¥ 349,039¥ 321,543$ 3,391,371

Corporate bonds

505,993

386,409

4,916,381

Equities

227,036

175,770

2,205,956

Other securities

555,516

473,334

5,397,553¥1,637,587¥1,357,058$15,911,262

Total*1. Investments in unconsolidated subsidiaries and affiliates included in “Equities” as of March 31, 2014 and 2013, are ¥27,630 million($268,470 thousand) and ¥27,245 million. Investments in unconsolidated subsidiaries and affiliates included in “Other securities” as ofMarch 31, 2014 and 2013, are ¥40,248 million ($391,064 thousand) and ¥38,404 million.
*2. DBJ Inc. has contingent liabilities for guarantees of corporate bonds among securities which were issued by private placement (Article 2,
Paragraph 3 of Financial Instruments and Exchange Act) and amount to ¥1,800 million ($17,489 thousand) as of March 31, 2014.
*3. There are no securities repledged as of March 31, 2014 and 2013. Securities accepted under repurchase agreements can be sold or
repledged. Securities neither sold nor repledged are zero and ¥165,975 million as of March 31, 2014 and 2013, respectively.
*4. Marketable securities available-for-sale are considered impaired if there is a considerable decline in the market value below theacquisition cost and such decline is not believed to be recoverable. The difference between the acquisition cost and the market value isthe impairment loss for the fiscal year.
The criterion for determining “Considerable decline in market value” is as follows:
Market value declined by 50% or more of the acquisition cost.
Market value declined by 30% or more of the acquisition cost, and such decline is not considered as recoverable.

Impairment losses on marketable securities available-for-sale for the years ended March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2014

2013

2014

Equities

¥ 45

¥130

$ 447

Bonds

—

302

—

Other

355

—

3,458

Total

¥401

¥433

$3,904

4. Non-Performing Loans
The amounts of non-performing loans included in “Loans” as of March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2014

Loans to bankrupt debtors
Delinquent loans
Loans past due three months or more
Restructured loans
Total
144

Annual Report & CSR Report 2014

¥

2013

4,927

2014

2,710

¥

$

26,33995,269118,360

925,668—271—

39,36247,870382,461¥137,343¥171,430$1,334,468

Financial Condition*1. The amounts of loans indicated above are stated at gross amounts, before reduction of the allowance for loan losses.
*2. “Loans to bankrupt debtors” represent non-accrual loans to debtors who are legally bankrupt as defined in Article 96-1-3 and 4 of theJapanese Tax Law Enforcement Regulation.
*3. “Delinquent loans” represent non-accrual loans other than (i) Loans to bankrupt debtors and (ii) Loans whose interest payments aredeferred in order to assist or facilitate the restructuring efforts of borrowers in financial difficulty.
*4. “Loans past due three months or more” are loans whose principal or interest payment is three months or more past due and do not
fall under the category of “Loans to bankrupt debtors” or “Delinquent loans.”*5. “Restructured loans” are loans whose repayment terms have been modified to the advantage of debtors through means such as a
reduction or exemption of interest rates, postponement of principal and interest payments, and forgiveness of loans to support or
restructure the debtors’ businesses, and do not fall under the category of “Loans to bankrupt debtors,” “Delinquent loans,” or “Loanspast due three months or more.”

5. Commitments
Loan commitment limits are contracts under which DBJ Inc. lends to customers up to the prescribed limits in response tocustomers’ applications for loans as long as there is no violation of any condition in the contracts. As of March 31, 2014
and 2013, the amounts of unused commitments are ¥496,222 million ($4,821,442 thousand) and ¥786,777 million. As of
March 31, 2014 and 2013, the amounts of unused commitments whose remaining contract term are within one year are¥159,850 million ($1,553,156 thousand) and ¥134,389 million.
Since many of these commitments expire without being drawn down, the unused amount does not necessarily
represent a future cash requirement. Most of these contracts have conditions whereby DBJ Inc. and its subsidiaries canrefuse customers’ applications for loans or decrease the contract limits for proper reason (e.g., changes in financial situation,
deterioration in customers’ credit worthiness). At the inception of contracts, DBJ Inc. and its consolidated subsidiaries
obtain real estate, securities or other assets as collateral if considered necessary. Subsequently, DBJ Inc. and its consolidated
subsidiaries perform periodic reviews of the customers’ business results based on internal rules, and take necessary
measures to reconsider conditions in contracts and/or require additional collateral and guarantees.

6. Other Assets
Other assets as of March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2014

Prepaid expenses
Accrued income

¥

2013

4,930

¥

35,683

2014

6,137
41,652$47,907346,711

Derivatives

54,85464,718532,977

Other

19,95520,556

193,891

Total¥115,423¥133,065$1,121,486

7. Tangible Fixed Assets
Tangible fixed assets as of March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Buildings
Land
Leased assets
Construction in progress

2014

2013

2014

¥ 21,088¥ 21,947$ 204,904

92,617

92,904

899,895

12

23

119

2,257

10,36821,937

Other

121,634

112,744

1,181,834

Total¥237,610¥237,988$2,308,689

Note: Accumulated depreciation of tangible fixed assets as of March 31, 2014 and 2013, is ¥7,433 million ($72,230 thousand) and ¥4,238
million, respectively.

Annual Report & CSR Report 2014145

8. Allowance for Loan Losses
Allowance for loan losses as of March 31, 2014 and 2013 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

General allowance for loan losses
Specific allowance for loan losses
Total

2014

2013

2014

¥ 59,129¥ 67,478$ 574,523

53,86779,935523,388¥112,997¥147,414$1,097,911

9. Debentures and Corporate Bonds
Debentures and corporate bonds as of March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Issue date

Interest rate(%)

Maturity date

2014

2013

2014

(Issuer: DBJ Inc.)
Debentures
Japanese governmentguaranteed bonds 7-23*1

Feb. 2004–
Aug. 2008

1.3–
2.2

Feb. 2014–
Jun. 2023¥ 552,827[49,981]¥ 582,718$ 5,371,430[485,631]

Japanese governmentguaranteed bonds 1-23

Nov. 2008–
Mar. 2014

0.228–
2.1

Jul. 2016–
Mar. 2024

798,624

688,401

7,759,666

Japanese governmentguaranteed foreign bond 67*2

Sep. 1998

1.81

Sep. 2028

25,05825,062

243,478

Japanese governmentguaranteed foreign bonds
5-14*1

Dec. 2002–
Nov. 2007

1.05–
5.125

Jun. 2014–
Nov. 2027

703,230

703,077

6,832,783

Japanese governmentguaranteed Euro MTN bonds
1-9*3

Dec. 2009–
Jan. 2014

0.4661–
2.875

Dec. 2014Sep. 2019

564,020[36,022]442,126

5,480,186[350,000]

FILP agency domestic bonds
9, 11, 13, 16, 19, 20, 24, 27,

Oct. 2003–
Jul. 2008

1.4–
2.74

Jun. 2013–
Mar. 2047

439,912[109,997]

609,890

4,274,312[1,068,771]

Euro MTN bonds 2*4, 5

Sep. 2008

2.032

Sep. 2023

2,000

2,000

19,433

Short-term corporate bonds

Feb. 2013–
Feb. 2014

0.071–
0.1095

Apr. 2013–
Feb. 2014—

43,997—

Corporate bonds
Corporate bonds throughpublic placement 2, 4, 5, 7-42

Dec. 2008–
Jan. 20140.16071– May 2013–
1.745
Sep. 2022

980,000[150,000]

754,000

9,521,959[1,457,443]

Corporate bonds throughprivate placement 1-2

Aug. 2009–
May 2011

0.48–
0.847

Sep. 2014–
Jun. 2015

20,000[10,000]

20,000

194,326[97,163]

Corporate bonds Euro MTN
6-9, 14, 15, 17, 20-47*6

Mar. 2009–
Feb. 2014

0.43785– Apr. 2013–
1.736
Oct. 2023

144,246[24,006]

89,7561,401,544[233,257]

7,500

7,500

72,872¥4,237,421¥3,968,531$41,171,989[74,995][728,682]

29-31, 33-37, 39, 41, 42, 44,
46, 47, 49-51*4(Issuer: Green Asset Investment TMK)
Specified corporate bonds 1
Dec. 2012
Total

5.53

Nov. 2017*1. These bonds are government-guaranteed bonds issued by the Development Bank of Japan.
*2. This bond is a government-guaranteed bond issued by the Japan Development Bank.
*3. These bonds are non-guaranteed bonds issued based on MTN program.
*4. Fiscal Investment and Loan Program (FILP) agency bonds are not government-guaranteed. These bonds are issued by the Development
Bank of Japan.
*5. These bonds are FILP bonds issued based on MTN program.
*6. These bonds are unsecured corporate bonds issued based on MTN program.
*7. Figures indicated in brackets [ ] indicate the amounts to be redeemed within one year.

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Financial Condition

Scheduled redemptions of debentures and corporate bonds which have been assumed and repaid by DBJ Inc. forsubsequent years as of March 31, 2014 are as follows:
The fiscal year ending March 31, 2015

¥455,003 million$4,420,947 thousand

2016

530,924

5,158,612

2017

812,9887,899,232

2018

554,441

5,387,114

2019542,670

5,272,745

10. Borrowed Money
Borrowed money as of March 31, 2014 and 2013 is as follows:
Thousands of
U.S. Dollars

Millions of Yen
Average interest rate (%)

Due date of repayment

2014

2013

2014

0.91

Apr. 2014–Oct. 2033

¥9,182,603¥9,448,398$89,220,792

Borrowings

Scheduled redemptions of borrowings for subsequent years as of March 31, 2014 are as follows:
The fiscal year ending March 31, 2015

¥1,409,305 million$13,693,211 thousand

2016

1,265,401

12,295,001

2017

1,187,343

11,536,569

2018

1,047,221

10,175,099

2019

963,028

9,357,062

11. Non-Recourse Debts
Non-recourse debts in consolidated special purpose companies as of March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2014

2013

2014

Borrowed money¥32,000¥32,000$310,921

Corporate bonds

7,500

7,500

72,872

Non-recourse debts:

Collateralized assets for above non-recourse debts:
Cash and due from banks

8,117

9,656

78,870

Tangible fixed assets

47,47546,657461,288

12. Other Liabilities
Other liabilities as of March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2014

2013

2014

Accrued expenses¥ 25,198¥ 26,037$ 244,836

Unearned income

614

940

5,968

Accrued income taxes

12,62030,114

122,622

Derivatives

17,32815,655

168,364

Lease obligations
Asset retirement obligations (Note 13)

14

25

141

1,722

2,821

16,736

Other73,59646,820715,081

Total¥131,094¥122,416$1,273,749

Annual Report & CSR Report 2014147

13. Asset Retirement Obligations
DBJ Inc. recognizes asset retirement obligations associated with the recovery obligations provided by the real estate
rental agreements. In addition, asset retirement obligations related to the obligations of pulling down the previous head
office buildings and removing the toxic substances were recognized in connection with the head office relocation due toOtemachi redevelopment project.
The asset retirement obligation is calculated based on the sum of the discounted cash flows using discount rates from
0.1% to 1.1% with the estimated useful lives of 4 to 8 years.
The changes in asset retirement obligations for the years ended March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Balance at beginning of year

2014

2013

2014

¥ 2,821¥1,047$ 27,416—

43—

Increase due to acquisition of tangible fixed assets

Reconciliation associated with passage of time
Decrease due to settlement of asset retirement obligations
Increase due to a change in estimates

0

0

6

(1,902)(131)(18,488)

799

1,859

7,771

3

2

32

¥ 1,722¥2,821$ 16,736

Other
Balance at end of year

14. Acceptances and Guarantees
Acceptances and guarantees as of March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Guarantees

2014

2013

2014

¥107,174¥155,753$1,041,335

15. Assets Pledged as Collateral
Cash and due from banks of ¥3,614 million ($35,115 thousand) and ¥4,553 million and tangible fixed assets of ¥47,475
million ($461,288 thousand) and ¥46,657 million are pledged as collateral for borrowed money of ¥32,000 million($310,921 thousand) and ¥32,000 million as of March 31, 2014 and 2013, respectively.
Loans and securities pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥497,275 million ($4,831,670 thousand) and ¥153,863 million ($1,494,985 thousand), respectively, as of March 31, 2014.
In addition, they are deposited as replacement of margin money for future trading and collateral for transactions, including
exchange settlements as of March 31, 2014. ¥18,909 million ($183,726 thousand) of securities are pledged as collateral forloans of companies which are investees of DBJ Inc. as of March 31, 2014. Additionally, ¥937 million ($9,110 thousand) of
margin deposits for futures transactions and ¥60 million ($584 thousand) of guarantee deposits are included in other assets
as of March 31, 2014. Under the DBJ Inc. Act (Article 17 of the Supplementary Provisions) and the DBJ Act (Article 43),
obligations created by the bonds issued by DBJ Inc. are secured by a statutory preferential right over the property of DBJ
Inc. The denomination value of these debentures amounts to ¥1,723,822 million ($16,749,145 thousand) as of March 31,
2014.
Loans and securities pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥611,175 million and ¥5,539 million, respectively, as of March 31, 2013. In addition, they are deposited as replacementof margin money for future trading and collateral for transactions, including exchange settlements as of March 31, 2013.
¥18,909 million of securities are pledged as collateral for loans of companies which are investees of DBJ Inc. as of March
31, 2013. Additionally, ¥937 million of margin deposits for futures transactions, ¥1,574 million of cash collateral paid forfinancial instruments and ¥48 million of guarantee deposits are included in other assets as of March 31, 2013. Under the
DBJ Inc. Act (Article 17 of the Supplementary Provisions) and the DBJ Act (Article 43), obligations created by the bonds
issued by DBJ Inc. are secured by a statutory preferential right over the property of DBJ Inc. The denomination value of thesedebentures amounts to ¥1,923,822 million as of March 31, 2013.

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Financial Condition

16. Equity
Japanese companies including DBJ Inc. are regulated by the Companies Act. In addition, DBJ Inc. is regulated by the DBJ Inc.
Act. The significant provisions in the Companies Act and the DBJ Inc. Act that affect financial and accounting matters are
summarized as follows:(a) Dividends
Under the Companies Act, companies can distribute dividends at any time during the fiscal year in addition to the yearend dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having
the Board of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the termof service of the directors is prescribed as one year rather than two years of normal term in its articles of incorporation,
the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year, prescribedthat the Board of Directors can declare dividends in its articles of incorporation. DBJ Inc., however, shall not distributesuch dividends based on resolution of the Board of Directors, since its articles of incorporation are not prescribed thatthe Board of Directors can do such an action. The Companies Act provides certain limitations on the amounts available
for dividends or the purchase of treasury stock. Article 20 of the DBJ Inc. Act provides that the timing and amounts for
dividends shall be authorized by the Finance Minister.
(b) Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be set aside as a legal reserve (acomponent of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on theequity account charged upon the dividends until the total aggregate amount of legal reserve and additional paid-in
capital equal 25% of Common stock. Under the Companies Act, the total amount of additional paid-in capital andlegal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve,
additional paid-in capital, other capital surplus and retained earnings can be reclassified among the accounts undercertain conditions upon resolution by the shareholders.
(c) Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of the treasury stock based on
resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the distributable amount tothe shareholders which is determined by specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of equity.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury
stock. The treasury stock acquisition rights are presented as a separate component of equity or deduction of stockacquisition rights.
(d) Solicitation and Delivery of Shares or Stock Acquisition Rights
Article 12 of the DBJ Inc. Act regulates that, if DBJ Inc. intends to solicit those who will subscribe for shares or stockacquisition rights offered, or to deliver shares or stock acquisition rights in connection with a share-for-share exchange,
DBJ Inc. shall obtain an authorization from the Finance Minister.

17. Per Share Information
Basic net income per common share (“EPS”) for the years ended March 31, 2014 and 2013 is as follows:
Millions of Yen

Thousands of Shares

Yen

U.S. Dollars

Year ended March 31, 2014

Net income

Weighted average shares

EPS

EPS

Basic EPS
Net income available to commonshareholders¥124,303

43,632¥2,848.87¥71,337

43,632¥1,634.96$27.68Year ended March 31, 2013

Basic EPS
Net income available to commonshareholders

Note: Diluted net income per share for the years ended March 31, 2014 and 2013 is not disclosed because there are no dilutive securities.

Annual Report & CSR Report 2014149

As noted in Note 2 (m), DBJ Inc. applied the revised accounting standard and guidance for retirement benefits effective
March 31, 2014, except for the provisions stated in Paragraph 35 of ASBJ Statement No. 26 and Paragraph 67 of ASBJ
Guidance No. 25, and follows the transitional treatments prescribed in Paragraph 37 of ASBJ Statement No. 26.
As a result, net assets per share decreased by ¥21.66 ($0.21) as of March 31, 2014.

18. Other Operating Income
Other operating income for the years ended March 31, 2014 and 2013 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Foreign exchange gain

2014

2013

2014

¥ 4,716¥3,548$ 45,831

Gains on sales of bonds

2,373

525

23,059Gains on redemption of bonds

7,385

2,130

71,761

Other

1,211

1,675

11,775

Total¥15,687¥7,880$152,425

19. Other Income
Other income for the years ended March 31, 2014 and 2013 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2014

2013

Reversal of allowance for investment losses¥

Reversal of allowance for loan losses

26,168

Reversal of reserve for contingent losses
Gains on sales of equities and other securities

42

¥

2014

—

$

—

254,262

411

128

—

1,248

5,363

19,42852,116

Gains on money held in trust

5,408

928

52,551Equity in net income of affiliates

2,252

2,870

21,890Gains on sales of fixed assets

25

719

252

Collection of written-off claims

4,636

7,129

45,051

Gains on investments in limited partnerships and other similar
partnerships

26,21820,520254,745

559

151

5,440

Gain on negative goodwill
Other

6,423

3,289

62,412

Total¥77,228¥55,039$750,376

20. Other Operating Expenses
Other operating expenses for the years ended March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2014

2013

Losses on sales of bonds¥1,036¥

4$10,073

Debentures issuance costs

469

642

4,558

Corporate bonds issuance costs

655

723

6,373

Write-off of bonds

—

302

—

Derivatives

150

2014

5,062

10,49549,185

Other

0

—

9

Total

¥7,224¥12,169$70,198

Annual Report & CSR Report 2014

Financial Condition

21. Other Expenses
Other expenses for the years ended March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2014

2013

2014

Provision for allowance for loan losses
Write-off of loans
Losses on sales of equities and other securities
Write-off of equities
Losses on money held in trust
Losses on sales of fixed assets
Impairment losses
Losses on investments in limited partnerships and other similar
partnerships

¥

—
321
661
2,135
12
245
103

¥10,412
50
188
1,996
22
172
236

$

3,881

8,583

37,711

Other
Total

1,717
¥9,077817¥22,480

16,686$88,203

—
3,122
6,423
20,750
118
2,385
1,008

22. Employees’ Retirement Benefits
Employees whose service with DBJ Inc. is terminated are, under most circumstances, entitled to retirement and pension
benefits determined by reference to basic rates of pay at the time of termination, length of service and conditions underwhich the termination occurs. If the termination is involuntary, caused by retirement at the mandatory retirement age or
caused by death, the employee is entitled to greater payment than in the case of voluntary termination.
Year ended March 31, 2014
On May 14, 2013, DBJ Inc. transferred the substitutional portion (minimum policy reserve) and related assets to National
Welfare Pension Fund pursuant to enforcement of the Law concerning Defined Benefit Corporate Pension, and recognized¥26 million ($255 thousand) as other income for the difference between the balance of retirement benefit liabilities brought
forward and the amount actually transferred.
(a) Defined Benefit Pension Plan
(1) The changes in retirement benefit obligation for the year ended March 31, 2014, are as follows:
Millions of Yen

Balance at beginning of year
Service cost
Interest cost
Actuarial losses
Benefits paid
Extinction of retirement benefit obligation due to the return of
substitutional portion of welfare pension fund
Balance at end of year

Thousands of
U.S. Dollars¥39,036
1,381
581
310
(1,911)$379,292
13,4195,653
3,018(18,571)(7,509)¥31,888(72,968)$309,842(2) The changes in plan assets for the year ended March 31, 2014, are as follows:
Millions of Yen

Balance at beginning of year
Expected return on plan assets
Actuarial gains
Contributions from the employer
Benefits paid
Extinction of plan assets due to the return of substitutional portion of
welfare pension fund
Balance at end of year

Thousands of
U.S. Dollars¥26,465
132
831
4,134
(918)

$257,144
1,286
8,084
40,174(8,927)(7,483)¥23,161(72,714)$225,046

Annual Report & CSR Report 2014151

(3) Reconciliation between the liability for retirement benefits recorded in the consolidated balance sheet and thebalances of retirement benefit obligation and plan assets for the year ended March 31, 2014, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Funded retirement benefit obligation¥ 23,535$ 228,679

Plan assets(23,161)(225,046)

373

3,633

8,353

81,163Net liability for retirement benefits recorded in the consolidated balance sheet¥ 8,727$ 84,796

Liability for retirement benefits¥ 8,727$ 84,796

Net liability for retirement benefits recorded in the consolidated balance sheet¥ 8,727$ 84,796

Unfunded retirement benefit obligation(4) The components of net periodic benefit costs for the year ended March 31, 2014, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Service cost

¥1,381$13,419

Interest cost

581

5,653

Expected return on plan assets(132)(1,286)

Amortization of net actuarial losses

264

2,570

Amortization of prior service cost
Net periodic benefit costs

12

123

¥2,107$20,480(5) Accumulated adjustments for retirement benefits (before tax effect) as of March 31, 2014, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Unrecognized prior service cost¥

Unrecognized actuarial (gains) losses(1,377)(82)$(13,383)

(801)

Total

¥(1,459)$(14,184)(6) Plan assets(i) Components of plan assets
Plan assets as of March 31, 2014, consisted of the following:
Debentures

86%

Equity11%Cash and due from banks—

Others

3%

Total

100%

(ii) Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return which are
expected currently and in the future from the various components of the plan assets.
(7) Assumptions used for the year ended March 31, 2014, were set forth as follows:
Discount rate
Expected rate of return on plan assets

1.5%
0.5%

(b) Defined Contribution Plans
The amount of the required contribution to the defined contribution plans of DBJ Inc. and its consolidated subsidiaries is¥203 million ($1,982 thousand).

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Financial Condition

Year ended March 31, 2013
Liability for retirement benefits as of March 31, 2013 consisted of the following:(a) The Funded Status of the Pension Plans
Millions of Yen

Projected benefit obligation¥(39,031)

Fair value of plan assets

26,465

Unfunded pension obligation(12,566)

Unrecognized net actuarial losses

2,163

Unrecognized prior service cost95

Liability for retirement benefits¥(10,308)*1. Certain subsidiaries apply the simplified method for the calculation of liability for employees’ retirement benefits.

(b) Components of Pension Cost
Millions of Yen

Service cost

¥1,265Interest cost

719

Expected return on plan assets(107)

Amortization of prior service cost

12

Amortization of net actuarial losses

138

Other

1

Net pension cost

¥2,030*1. All retirement benefit costs are classified as service cost for the subsidiaries applying the simplified method.
*2. Contribution of pension premiums to the defined contribution pension plans of certain consolidated overseas subsidiaries is
included in “Other”.

(c) Principal Assumptions Used
Discount rate

1.5%

Expected rate of return on plan assets

0.5%

Amortization period of prior service cost

10 Years

Amortization period of actuarial gains/losses

10 Years

23. Income Taxes
DBJ Inc. and its domestic consolidated subsidiaries are subject to Japanese national and local income taxes which, in theaggregate, resulted in a normal effective statutory tax rate of approximately 38.01% for the years ended March 31, 2014
and 2013.
A reconciliation of the normal effective statutory tax rate with the actual effective tax rate for the year ended March 31,
2014 is as follows:
2014

Normal effective statutory tax rate

38.01%

Increase (decrease) in taxes resulting from:
Change in valuation allowance(12.70)Other(0.69)

Actual effective tax rate

24.62%A reconciliation of the statutory tax rate to DBJ Inc.’s effective tax rate for the year ended March 31, 2013 has been omitted
as the effective tax rate in the accompanying consolidated statement of income for the year ended March 31, 2013 differsfrom the normal effective statutory tax rate by less than 5%.

Annual Report & CSR Report 2014

153

The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities
as of March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2014

2013

2014

Deferred tax assets:
Allowance for loan losses¥ 40,428¥ 52,638$ 392,814

Losses from revaluation of securities

14,74725,945

143,288

Excess of fair value over assets of consolidated subsidiaries

4,397

5,035

42,729Liability for retirement benefits

2,563

3,762

24,905

Tax loss carryforwards

1,503

8,534

14,606

Other

6,892

9,339

66,974Sub-total

70,532

105,256

685,316(44,978)(66,250)(437,028)

25,55339,005248,288

Unrealized gain on available-for-sale securities(18,103)(12,951)(175,899)

Deferred gain on derivatives under hedge accounting(16,562)(19,195)(160,928)

Other(1,936)(201)(18,815)

Less-valuation allowance

Total
Deferred tax liabilities:

Total(36,602)

Net deferred tax assets¥(11,048)¥(32,348)(355,642)

6,656$(107,355)

New tax reform laws enacted in 2014 in Japan changed the normal effective statutory tax rate for the fiscal year beginningon or after April 1, 2014, from approximately 38.01% to 35.64%. The effect of this change was to decrease deferred tax
assets in the consolidated balance sheet as of March 31, 2014, by ¥6 million ($62 thousand) and to increase deferred tax
liabilities, deferred gain on derivatives under hedge accounting, unrealized gain on available-for-sale securities and deferredincome taxes in the consolidated statement of income for the year then ended by ¥434 million ($4,222 thousand), ¥150
million ($1,459 thousand), ¥116 million ($1,131 thousand) and ¥707 million ($6,874 thousand), respectively.

24. Lease Transactions(a) Finance leases
DBJ Inc. and its domestic consolidated subsidiaries lease certain equipment and others.
(b) Operating leases(As lessee)
The minimum lease commitments under non-cancelable operating leases as of March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2014

2013

2014

Due within 1 year

¥378

¥310

$3,676

Due after 1 year

482

534

4,688

Total

¥860

¥844

$8,364(As lessor)
The minimum lease commitments under non-cancelable operating leases as of March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

154

2014

2013

Due within 1 year

¥ 2,863¥ 875$ 27,826

Due after 1 year

10,3974,860

101,021

Total¥13,261¥5,735$128,848

Annual Report & CSR Report 20142014

Financial Condition

25. Other Comprehensive Income
The components of other comprehensive income for the years ended March 31, 2014 and 2013 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2014

2013

2014

Gains arising during the year

¥ 33,531¥30,439$ 325,805

Reclassification adjustments to profit or loss

(24,025)(8,088)(233,436)

Amount before income tax effect

9,506

22,351

92,369

Income tax effect(5,151)(5,900)(50,051)

Total

4,355

16,451

42,318

Unrealized gain on available-for-sale securities:

Deferred gain on derivatives under hedge accounting:
Gains arising during the year

1,499

17,097

14,567

Reclassification adjustments to profit or loss

(8,077)(7,436)(78,482)

Amount before income tax effect(6,578)9,660(63,915)

Income tax effect

2,633(3,400)25,585

Total(3,944)

6,260(38,330)

Foreign currency translation adjustments:
Losses arising during the year

389

86

3,785

Reclassification adjustments to profit or loss

—

—

—

Amount before income tax effect

389

86

3,785

Income tax effect

—

—

—

Total

389

86

3,785

Gains arising during the year

631

98

6,137

Reclassification adjustments to profit or loss

(246)

(59)

(2,390)

Amount before income tax effect

385

39

3,747

Share of other comprehensive income in affiliates:

Income tax effect

—

—

—

Total

385

39

3,747

¥ 1,185¥22,838$ 11,520

Total other comprehensive income

26. Segment Information
DBJ Inc. consists of only one business segment of long-term financing and accordingly, the disclosure of the reportablesegment information is omitted.
Related information:
Segment information by service for the years ended March 31, 2014 and 2013 is following:
Millions of Yen
Year ended March 31, 2014

Loan business

Securities investment

Other

Total

Ordinary income from external customers¥259,107¥60,196¥42,307¥361,610

Millions of Yen
Year ended March 31, 2013

Loan business

Securities investment

Other

Total

Ordinary income from external customers¥249,218¥60,629¥30,250¥340,098

Year ended March 31, 2014

Loan business

Securities investment

Other

Total

Ordinary income from external customers$2,517,557$584,885$411,071$3,513,514

Thousands of U.S. Dollars

Annual Report & CSR Report 2014155

27. Financial Instruments and Related Disclosures(a) The Situation of Financial Instruments(1) Policy for Financial Instruments
DBJ Inc. provides investment and loan services that are aimed to provide long-term stable funding. As its main
method of acquiring funds, in addition to issuing corporate bonds and long-term borrowings, DBJ Inc. relies on thestable procurement of long-term funds from the government’s Fiscal Investment and Loan Program (FILP). Since
the majority of its assets are long-term and fixed rates, DBJ Inc. raises its funds mainly with long-term, fixed rate
liabilities.
From both funding and investment aspects, DBJ Inc. implements comprehensive asset/liability management inorder to mitigate the risk of capital shortfall and losses from fluctuations of interest rate and exchange rate. DBJ Inc.
utilizes derivative financial instruments in order to hedge or control the risks related to interest and currency.
(2) Nature and Extent of Risks Arising from Financial Instruments
The financial assets of DBJ Inc. are mainly investments and loans to domestic customers, which are exposed tocredit risk that stems from customers’ default of contracts and decline of their creditworthiness. Main categories ofindustries of debtors are manufacturing, electricity, gas, thermal supply, water supply and others as of March 31,
2014. The changes of economic circumstances surrounding these industries may influence on the fulfillment of their
obligations. DBJ Inc. holds securities such as bonds, equities and investments in limited partnerships and other similar
partnerships, which are exposed to issuer’s credit risk, interest rate risk, price volatility risk and other risks. DBJ Inc.
does not have any trading-related risk because it does not engage in trading (specified transactions).
Although corporate bonds and borrowings are exposed to cash liquidity risk and interest rate risk, these risks arehedged or controlled by matching of financing and investing, interest-rate swap agreements and other transactions.
Foreign currency denominated loans, debentures and corporate bonds are exposed to exchange rate risk. DBJ
Inc. mitigates this risk by matching foreign currency investments and loans with foreign currency corporate bonds
and currency-related transactions.
DBJ Inc. utilizes derivative financial transactions such as interest-rate swap agreements and currency swap
agreements in order to hedge or control the risks related to interest and currency. DBJ applies hedge accounting asnecessary. As for hedging instruments, hedged items, hedging policy and assessment of effectiveness of the hedges,
the details are described in Note 2 (e) “Hedge Accounting.”(3) Risk Management for Financial Instruments(i) Credit Risk Management
In accordance with the internal guidelines, DBJ Inc. utilizes credit exposure management and portfolio
management for investments and loans. When making an investment or loan, DBJ Inc. examines the entity’s
viability and the entity’s project’s profitability. After that, DBJ Inc. sets ratings along with an internal rating
system, grants credit amount, determines collateral and guarantee requirements. The sales and credit analysis
departments hold separate roles in the screening and administering of credit for individual loans and eachdepartment keeps the operations of the other in check. The Committee on Investment and Loan Decisions meetsas needed to deliberate important issues concerning the management and governance of individual loans. DBJ
Inc. performs a comprehensive analysis of data based on borrower ratings, and calculates the loan portfolio’s
overall exposure to credit risk, which is measured regularly to ensure that such risk remains within specified rangeof capital.
The credit risk of securities is managed in the same way as that of loans. In addition, DBJ Inc. regularly
examines total risk which takes into account the market value of securities. As for counterparty risk arisingfrom derivative transactions, DBJ Inc. manages derivative transactions by continually monitoring the cost ofrestructuring its transactions and the creditworthiness of each counterparty. Additionally, DBJ Inc. diversifies
transactions among several counterparties to manage counterparty risk.
(ii) Market Risk Management
1) Interest Rate Risk Management
DBJ Inc. manages interest rate risk by asset/liability management. Details of risk management methods andprocedures are determined on internal rules, and Management Committee and ALM & Risk Management
Committee determine policies related to asset/liability management, monitoring of implementation and156

Annual Report & CSR Report 2014

Financial Condition

future plans. In addition, the risk management department monitors the interest rate and term of financial
assets/liabilities overall. ALM & Risk Management Committee conducts regular monitoring with cash flow
ladder analyses (gap analysis), value at risk (VaR), interest rate sensitivity analyses (basis point value), andother methods. As a part of asset/liability management, interest-rate swaps are executed to hedge interest
rate risk.
2) Foreign Exchange Risk Management
Foreign currency investments, loans and bonds are exposed to the exchange rate risk, therefore those risks
are hedged or controlled not only by offsetting some foreign currency denominated investments and loans
as foreign currency denominated corporate bonds and debentures but also by making currency-relatedtransactions.
3) Price Volatility Risk Management
When DBJ Inc. acquires financial assets entailing price volatility risk such as securities with readily available
market quotations, it follows in-house regulations and policies which have been developed taking into
account market fluctuation risks, and the risk management department is involved in decisions, as necessary.
Through regular monitoring, price volatility risks are reviewed on a timely basis and reported to ALM & Risk
Management Committee periodically.
4) Derivative Transactions
About derivative transactions, the front office, the back office and the risk management department are
separated from each other, and each department keeps the operations of the other in check based on
in-house regulations.
5) Quantitative Information about Market Risk
DBJ Inc. has not been engaged in trading activities, and all the assets and liabilities are financial instruments
other than for trading purposes.
Market risk volume (estimated loss) is based on VaR using the historical simulation method (holding periodof 1 year, observation period of 5 years, and confidence interval of 99.9%). The amount of market risk (risks
pertaining to the changes in interest rates, foreign exchanges and market prices) as of March 31, 2014 and2013 was ¥19,212 million ($186,676 thousand) and ¥20,710 million, respectively. Such measurements are
conducted by the risk management department on a regular basis and reported to ALM & Risk Management
Committee to utilize for establishing ALM operating policies.
DBJ Inc. conducts backtesting to compare the VaR calculated by the model with hypothetical performances
calculated based on the actual market movements and confirms that the measurement models in use
capture the market risk with sufficient accuracy. VaR measures the market risk volume under a definite
probability of incidence calculated statistically based on the historical market movements and accordingly,
and therefore there may be cases where market risk cannot be captured in such situations as when market
conditions are changing dramatically beyond what was experienced historically.
(iii) Liquidity Risk Management on Financing
The risk management department monitors the possession level of cash liquidity and reports it to the ALM & Risk
Management Committee periodically in line with in-house regulations of liquidity risk management on financing.
The ALM & Risk Management Committee manages the liquidity risk by appropriate operations of financing andinvesting depending on the situations of risks.
(4) Supplementary Explanation on Fair Value of Financial Instruments
The fair value of financial instruments is measured at the quoted market price. If the quoted price is not available,
DBJ Inc. measures reasonably assessed price. Because assessed price is computed using certain assumptions, pricecould differ if different assumptions are used.

Annual Report & CSR Report 2014157

(b) Fair Values Information of Financial Instruments
The following are the carrying amount, fair value and differences between them as of March 31, 2014 and 2013.
Unlisted equities and others, whose fair value cannot be reliably determined, are excluded from the table below (see (2)).
Millions of Yen

2014
Carrying amount

Cash and due from banks¥

Call loans and bills bought

260,185

Fair value¥

Difference

260,185¥—

87,00087,000————879,576

901,570

21,993

391,479

391,479—

13,726,786

14,294,225

567,438

Total assets¥15,345,028¥15,934,461¥589,432

Debentures

3,085,674

3,216,736

131,062

Borrowed money

9,082,603

9,164,024

81,421———

Corporate bonds

1,151,746

1,155,979

4,232

Total liabilities¥13,320,024¥13,536,740¥216,715(2,480)(2,480)—

Reverse repurchase agreements
Securities
Held-to-maturity debt securities
Available-for-sale securities
Loans

13,838,410(111,623)

Allowance for loan losses*1

Short-term corporate bonds

Derivative transactions*2
Derivative transactions not qualifying forhedge accounting
Derivative transactions qualifying forhedge accounting
Total derivative transactions

40,00637,526¥40,00637,526¥——¥

Millions of Yen

2013
Carrying amount

Cash and due from banks¥

154,564

Fair value¥

154,564

Difference¥—

Call loans and bills bought

84,00084,000—

Reverse repurchase agreements

165,975

165,975—

761,172

787,816

26,644292,950

292,950—

13,772,462

14,468,156

695,694

Total assets¥15,231,125¥15,953,464¥722,338

Debentures

3,053,277

3,216,468

163,191

Borrowed money

9,348,398

9,515,836

167,438

43,99743,997—

Securities
Held-to-maturity debt securities
Available-for-sale securities
Loans

13,918,224(145,762)

Allowance for loan losses*1

Short-term corporate bonds
Corporate bonds
Total liabilities
Derivative transactions*2
Derivative transactions not qualifying forhedge accounting
Derivative transactions qualifying forhedge accounting
Total derivative transactions

158

Annual Report & CSR Report 2014

871,256

876,726

5,470¥13,316,929¥13,653,030¥336,100

2,610

2,610

—

¥

46,45249,063¥46,45249,063¥——Financial Condition

Thousands of U.S. Dollars

2014
Carrying amount

Cash and due from banks$

Call loans and bills bought

2,528,034$

Fair value

Difference

2,528,034$—

845,317845,317

—

—

—

—

8,546,219

8,759,919

213,699

3,803,728

3,803,728—

133,373,364

138,886,762

5,513,398

Total assets$149,096,663$154,823,760$5,727,098

Debentures

29,981,288

31,254,724

1,273,436

Borrowed money

88,249,163

89,040,274

791,111

Reverse repurchase agreements
Securities
Held-to-maturity debt securities
Available-for-sale securities
Loans

134,457,932(1,084,568)

Allowance for loan losses*1

Short-term corporate bonds

—

—

—

Corporate bonds

11,190,701

11,231,822

41,121

Total liabilities$129,421,152$131,526,820$2,105,668(24,105)(24,105)—

388,718

388,718—

Derivative transactions*2
Derivative transactions not qualifying forhedge accounting
Derivative transactions qualifying forhedge accounting
Total derivative transactions$

364,614$364,614$—*1. General and specific allowances for loan losses are deducted. Allowance for loan losses is set off against the carrying amount directly
due to immateriality.
*2. Assets and liabilities arising from derivative transactions are presented on a net basis.

(1) Following are the methods used to calculate the fair values of financial instruments:
Assets(i) Cash and due from banks
For deposits without maturity, the carrying amount is presented as the fair value, as the fair value approximatessuch carrying amount. For deposits with maturity, the carrying amount is presented as the fair value, as thefair value approximates such carrying amount because the remaining maturity period of the majority of suchdeposits is short (maturity within 1 year).
(ii) Call loans and bills bought and Reverse repurchase agreements
For each of these items, the majority of transactions are short contract terms (1 year or less). Thus, the carrying
amount is presented as the fair value, as the fair value approximates such carrying amount.
(iii) Securities
The fair value of marketable equity securities is measured at the market price. The fair value of bonds ismeasured at the market price or the quoted price from third party. For bonds without such price, the fair value isdetermined by discounting contractual cash flows at the rates that consist of the risk free rate and the credit risk
premium that is based on types of securities, internal ratings and maturity length.
(iv) Loans
The fair value of loans is determined by discounting contractual cash flows at the rates that consist of the risk
free rate and the credit risk premium that is based on types of loans, internal ratings and maturity length.
Foreign currency swap contracts which meet the hedging requirements of the assignment method is qualified
to loans, the contractual cash flows are based on the interest rate swap and foreign currency swap. For loans
which are short contract terms (1 year or less), the carrying amount is presented as the fair value, as the fair value
approximates such carrying amount. With respect to the claims on debtors who are likely to become bankrupt

Annual Report & CSR Report 2014159

or to be closely monitored, and for which future cash flows can reasonably be estimated, the fair values are
determined by discounting expected cash flows that reflect expected loss at the risk free rate. For loans to
obligors “legally bankrupt,” “effectively bankrupt” and “possibly bankrupt,” the reserve is provided basedon the discounted cash flow method, or based on amounts expected to be collected through the disposal ofcollateral or execution of guarantees, carrying value net of the reserve as of the consolidated balance sheet dateis the reasonable estimate of the fair values of those loans.
Liabilities(i) Debentures
For floating rate debentures issued by DBJ Inc., the carrying amount is presented as the fair value, as the fairvalue approximates such carrying amount. This is on the basis that the market interest rate is reflected in the fairvalue of such debentures because the terms of these were set within a short time period and that there has beenno significant change in the creditworthiness of DBJ Inc. before and after the issuance. For fixed rate debentureswith market prices, the fair value is determined based on their market price. For fixed rate debentures withoutmarket prices, the fair value is determined by discounting contractual cash flows based on types of maturity
lengths (when interest rate swap contracts which meet the hedging requirements of the accrual method isqualified to debentures, the contractual cash flows are based on the interest rate swap) at the rates that consistof the risk free rate and the rate of certain costs applicable to DBJ Inc. Certain foreign currency denominateddebentures are translated using the forward contract rates and the present value of the contractual cash flows is
computed regarding them as Japanese yen denominated debentures.
(ii) Borrowed money
For floating rate borrowed money, the carrying amount is presented as the fair value, as the fair value
approximates such carrying amount. This is on the basis that the market interest rate is reflected in the fair valueof such borrowed money because the terms of these were set within a short time period for such variable rateborrowings and that there has been no significant change in the creditworthiness of DBJ Inc. nor consolidated
subsidiaries before and after such borrowings were made. For fixed rate borrowed money, the fair values
are determined by discounting contractual cash flows based on types of maturity lengths (when interest rate
swap contracts which meet the hedging requirements of the accrual method is qualified to borrowings, thecontractual cash flows are based on the interest rate swap) at the rates that consist of the risk free rate and therate of certain costs applicable to DBJ Inc. or consolidated subsidiaries.
(iii) Short-term corporate bonds
The carrying amount is presented as the fair value, as the fair value approximates such carrying amount becauseof the short contract terms (1 year or less).
(iv) Corporate bonds
For floating rate corporate bonds issued by DBJ Inc., the carrying amount is presented as the fair value, as thefair value approximates such carrying amount. This is on the basis that the market interest rate is reflected in theinterest rate set within a short time period and that there has been no significant change in the creditworthinessof us before and after the issuance. For fixed rate corporate bonds with market prices, the fair value isdetermined based on their market price. For fixed rate corporate bonds without market prices, the fair value isdetermined by discounting contractual cash flows based on types of maturity lengths (when interest rate swap
contracts which meet the hedging requirements of the accrual method is qualified to corporate bonds, thecontractual cash flows are based on the interest rate swap) at the rates that consist of the risk free rate and therate of certain costs applicable to DBJ Inc. Certain foreign currency denominated corporate bonds are translatedusing the forward contract rates and the present value of the contractual cash flows is computed regarding themas Japanese yen denominated corporate bonds.
Derivatives
The information of the fair values for derivatives is included in Note 30.

160

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Financial Condition(2) Following are the financial instruments whose fair value cannot be reliably determined as of March 31,
2014 and 2013:
These securities are not included in the amount in the table summarizing fair values of financial
instruments.
Carrying amountThousands of
U.S. Dollars

Millions of Yen

2014

2013

2014

Money held in trust*1¥134,215¥175,335$1,304,073

Unlisted equities*2, 3
Investments in limited partnerships and other similar
partnerships*1
Unlisted other securities*2, 3Industrial investment borrowed money (Special Account for
FILP)*4
Total

176,406

127,873

1,714,017

135,578
54,545

124,053
51,0081,317,320
529,977

100,000¥600,745

100,000¥578,271

971,628$5,837,016*1. Assets in trust and partnership assets which consist of financial instruments, whose fair value cannot be reliably determined,
such as unlisted equities and other securities, are not subject to disclosing of fair values.
*2. Financial instruments for which the quoted price is not available and fair value cannot be reliably determined, are not subject
to disclosing of fair values.
*3. Impairment loss on financial instruments whose fair value cannot be reliably determined for the year ended March 31, 2014
and 2013 was ¥1,731 million ($16,824 thousand) and ¥1,866 million, respectively. The breakdown is: unlisted equities ¥1,269
million ($12,333 thousand) and ¥272 million, unlisted other securities ¥462 million ($4,492 thousand) and ¥1,594 million forthe years ended March 31, 2014 and 2013, respectively.
*4. For the industrial investment borrowed money (Special Account for FILP), the interest rate is not determined at the time ofborrowing, but total amount of interest expense will be determined at the time of final repayment. Accordingly, since thefuture cash flows cannot be reasonably estimated and the fair value is extremely difficult to identify, it is not subject to the fairvalue disclosure requirement.

(3) Maturity analysis for financial assets and securities with contractual maturities as of March 31, 2014 and2013 are as follows:
Millions of Yen

2014
Due in 1
year or lessDue from banks¥ 260,179

Due after 1
year through3 years

Due after 3
years through5 years

Due after 5
years through7 years

Due after 7
years through10 years

Due after
10 years

¥

¥

¥

¥

¥

—

—

—

—

—

Call loans and bills bought

87,000

—

—

—

—

—

Securities
Held-to-maturity debt securities
with market values
Japanese government bonds

72,579406,911

198,855

120,976

49,97030,283—35,783

66,321

20,145

20,38730,283

—

—

—

—

—

—

Japanese local government bonds
Short-term corporate bonds

—

—

—

—

—

—

29,784

199,205

81,97629,98012,500—42,795

171,923

50,55770,851

17,082—

179,074

39,99349,29543,567

21,6993,062

149,994

—

—

5,323

20,801—

Japanese local government bonds

—

—

—

—

—

—

Short-term corporate bonds

—

—

—

—

—

—

Corporate bonds

24,11539,99349,29538,244

898

—

Other

4,965

—

—

—

—

3,062

Corporate bonds
Other
Available-for-sale securities with
contractual maturities
Japanese government bonds

Loans*1

2,173,896

4,203,074

2,901,652

2,209,503

1,512,472

739,830

Total¥2,772,730¥4,649,980¥3,149,803¥2,374,048¥1,584,141¥773,175

Annual Report & CSR Report 2014161

Millions of Yen

2013
Due in 1
year or lessDue from banks¥ 154,560

Due after 1
year through3 years

Due after 3
years through5 years

Due after 5
years through7 years

Due after 7
years through10 years

Due after
10 years

¥

¥

¥

¥

¥

—

—

—

—

—

Call loans and bills bought

84,000

—

—

—

—

—

Securities
Held-to-maturity debt securities
with market values
Japanese government bonds

33,777—

269,897—

217,029
82,447

166,526
40,502

38,575
15,37535,36735,367

—

—

—

—

—

—

Japanese local government bonds
Short-term corporate bonds

—

—

—

—

—

—

28,511

127,000

100,275

39,683

13,200—5,265

142,897

34,306

86,34010,000—85,532
79,992

33,042—25,644—24,4892,143

65,71565,715

2,838—Japanese local government bonds

—

—

—

—

—

—

Short-term corporate bonds

—

—

—

—

—

—

Corporate bonds

1,005

28,74925,63922,345

—

—

Other

4,535

4,293

5

—

—

2,838

Corporate bonds
Other
Available-for-sale securities with
contractual maturities*2
Japanese government bonds

Loans*2

2,136,526

3,993,141

3,070,054

2,148,952

1,670,645

775,614

Total¥2,494,397¥4,296,081¥3,312,728¥2,339,968¥1,774,936¥813,820

Due after
10 yearsThousands of U.S. Dollars

2014
Due in 1
year or lessDue from banks$ 2,527,981

Due after 1
year through3 years

Due after 3
years through5 years

Due after 5
years through7 years

Due after 7
years through10 years

$

$

$

$

—

—

—

—

$

—

Call loans and bills bought

845,317

—

—

—

—

—

Securities
Held-to-maturity debt securities
with market values
Japanese government bonds

705,203—

3,953,671
347,681

1,932,134
644,401

1,175,446
195,744

485,526
198,094294,239294,239

—

—

—

—

—

—

Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Available-for-sale securities with
contractual maturities
Japanese government bonds

—

—

—

—

—

—

289,390

1,935,537

796,506

291,294

121,454—415,813

1,670,454

491,226

688,408

165,978—

1,739,942
1,457,384

388,592—

478,965—

423,318
51,720210,837
202,108

29,752—

Japanese local government bonds

—

—

—

—

—

—

Short-term corporate bonds

—

—

—

—

—

—

Corporate bonds

234,316

388,592

478,965

371,598

8,729

—

Other

48,241————29,752Loans*1

21,122,201

40,838,269

28,193,283

21,468,162

14,695,611

7,188,400

Total$26,940,643$45,180,533$30,604,382$23,066,927$15,391,974$7,512,391*1. Obligations to “Legally Bankrupt,” “Effectively Bankrupt” and “Possibly Bankrupt” amount to ¥97,980 million ($952,007
thousand) are not included as of March 31, 2014.
*2. Obligations to “Legally Bankrupt,” “Effectively Bankrupt” and “Possibly Bankrupt” amount to ¥123,288 million are notincluded as of March 31, 2013. The breakdown is available-for-sale securities with contractual maturities ¥0 million and loans¥123,288 million.

162

Annual Report & CSR Report 2014

Financial Condition(4) Maturity analysis for Debentures, Borrowed money and Other Liability with Interest as of March 31, 2014
and 2013 are as follows:
Millions of Yen

2014

Borrowed money
Debentures and Corporate bonds
Total

Due in 1
year or lessDue after 1
year through3 years

Due after 3
years through5 years

Due after 5
years through7 years

Due after 7
years through10 years

Due after
10 years¥1,409,305¥2,452,745¥2,010,249¥1,086,772¥1,237,236¥ 986,294

455,003

1,343,913

1,097,112

348,951

703,846

288,592¥1,864,309¥3,796,658¥3,107,362¥1,435,724¥1,941,082¥1,274,887

Millions of Yen

2013

Borrowed money

Due in 1
year or lessDue after 1
year through3 years

Due after 3
years through5 years

Due after 5
years through7 years

Due after 7
years through10 years

Due after
10 years¥1,356,147¥2,467,417¥2,051,185¥1,191,488¥1,202,029¥1,180,129

Short-term corporate bonds

43,997

—

—

—

—

—

Debentures and Corporate bonds

297,445945,377

1,185,166

516,516

524,809455,217¥1,697,590¥3,412,794¥3,236,352¥1,708,005¥1,726,839¥1,635,347

Due after 7
years through10 years

Due after
10 years

Total

Thousands of U.S. Dollars

2014
Due in 1
year or less

Borrowed money
Debentures and Corporate bonds
Total

Due after 1
year through3 years

Due after 3
years through5 years

Due after 5
years through7 years$13,693,211 $23,831,570 $19,532,161 $10,559,390 $12,021,340 $ 9,583,120
4,420,947

13,057,844

10,659,859

3,390,515

6,838,773

2,804,052$18,114,158 $36,889,413 $30,192,019 $13,949,905 $18,660,114 $12,387,172

28. Derivative Transactions(a) Derivative Transactions to which Hedge Accounting is not applied(1) Interest Rate-related Transactions
Millions of Yen

2014
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)

Receive fixed/ Pay float¥774,581¥666,807¥ 18,074¥ 18,074

Receive float/ Pay fixed

771,825

664,035(12,971)(12,971)——¥ 5,102¥ 5,102

Over-the-counter
Swaps

Total

Millions of Yen

2013
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)

Receive fixed/ Pay float¥744,028¥671,665¥ 21,658¥ 21,658

Receive float/ Pay fixed

742,336

670,821(16,863)(16,863)——¥ 4,795¥ 4,795

Over-the-counter
Swaps

Total

Annual Report & CSR Report 2014163

Thousands of U.S. Dollars

2014
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)

Receive fixed/ Pay float$7,526,052$6,478,895$ 175,619$ 175,619

Receive float/ Pay fixed

7,499,277

6,451,960(126,037)(126,037)——$ 49,582$ 49,582

Over-the-counter
Swaps

Total

*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statement of income.
*2. Fair values for the over-the-counter transactions are based primarily on discounted present values.

(2) Currency-related Transactions
Millions of Yen

2014
Contract amount
Total

Over-the-counter
Swaps
Forwards
Sold
BoughtTotal

Due after 1 year

Fair value

Unrealized gains(losses)¥ 97,497¥97,497¥(7,331)¥(7,331)

263,016
2,223
—

—
—

(141)
41
¥(7,431)(141)
41¥(7,431)—
Millions of Yen

2013
Contract amount
Total

Over-the-counter
Swaps
Forwards
Sold
BoughtTotal

Due after 1 year

Fair value

Unrealized gains(losses)¥ 97,497¥97,497¥ 1,972¥ 1,972

187,018
5,597
—

—
—

(3,654)(39)¥(1,721)(3,654)(39)¥(1,721)—

Thousands of U.S. Dollars

2014
Contract amount
Fair value

Unrealized gains(losses)Total

Due after 1 year

$ 947,313$947,313$(71,238)$(71,238)

Over-the-counter
Swaps
Forwards
Sold2,555,540—(1,374)(1,374)

Bought21,609

—

408

408

$(72,204)$(72,204)

Total

—

—

*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statement of income.
*2. Fair values are based primarily on discounted present values.

(3) Equity-related Transactions
Not applicable.
(4) Bond-related Transactions
Not applicable.
(5) Commodity-related Transactions
Not applicable.
164

Annual Report & CSR Report 2014

Financial Condition(6) Credit Derivatives Transactions
Millions of Yen

2014
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)Over-the-counter
Credit default options
Sold¥31,035

BoughtTotal¥31,035—¥(152)———¥(152)——¥(152)¥(152)

Millions of Yen

2013
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)Over-the-counter
Credit default options
Sold¥61,673¥56,673¥(462)¥(462)————¥(462)¥(462)

BoughtTotal——

Thousands of U.S. Dollars

2014
Contract amountTotal

Due after 1 year

$301,554$301,554

Fair value

Unrealized gains(losses)Over-the-counter
Credit default options
Sold
BoughtTotal——$(1,482)——$(1,482)——$(1,482)$(1,482)*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statement of income.
*2. Fair values are based on discounted present values or the counterparties’ tendered price.
*3. ‘Sold’ means the underwriting of credit risk and ‘Bought’ means the transferring of credit risk.

(b) Derivative Transactions to which Hedge Accounting is applied(1) Interest Rate-related Transactions
Millions of Yen
2014
Contract amount
Hedged item

Deferral method
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed
Accrual method
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed
Total

Debentures,
Borrowed money andLoans
Debentures,
Borrowed money,
Corporate bonds andLoans

Due after 1 year

Fair value¥404,830¥389,247¥42,239

32,60027,195(1,861)

798,819753,295*3

57,07456,956

—

—

Total

¥40,377

Annual Report & CSR Report 2014165

Millions of Yen
2013
Contract amount
Hedged item

Deferral method
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed
Accrual method
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed

Debentures,
Borrowed money,
Securities andLoans
Debentures,
Borrowed money,
Corporate bonds and
Loans

Total

Due after 1 year

Fair value¥459,741¥453,983¥50,582

104,028

98,125(4,129)654,397

638,047*3

32,32532,207

—

—

Total

¥46,452

Thousands of U.S. Dollars
2014
Contract amount
Hedged item

Deferral method
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed
Accrual method
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed

Debentures,
Borrowed money andLoans
Debentures,
Borrowed money,
Corporate bonds and
Loans

Total

Total

Due after 1 year

Fair value$3,933,450$3,782,038$410,408

316,758

264,240(18,088)7,761,561

7,319,236*3

554,556

553,405——$392,320*1. DBJ Inc. applies the deferral method of hedge accounting primarily stipulated in “Accounting and Auditing Treatments on the
Application of Accounting Standards for Financial Instruments in Banking Industry”(JICPA Industry Audit Committee Report
No. 24).
*2. Fair values for the over-the-counter transactions are based primarily on discounted present values.
*3. The above interest rate swap contracts which qualify for the hedging requirements of the accrual method are not remeasured
at fair value but the differential paid or received under the swap agreements are recognized and included in interest expense or
income. In addition, the fair value of such interest rate swaps in Note 29 “Financial Instruments and Related Disclosures” isincluded in that of hedged items such as debentures, borrowed money, corporate bonds and loans.

(2) Currency-related Transactions
Millions of Yen
2014
Contract amountTranslated at contractual rates
Currency swaps
Forward foreign exchange
contracts
Sold

Hedged item

Total

Due after 1 year

Foreign-currency debentures
and Corporate bonds¥102,302¥102,302*2

39,368—¥(370)

Available-for-salesecurities

BoughtTotal

166

Annual Report & CSR Report 2014

—
—

—
—

Fair value—¥(370)

Financial Condition

Millions of Yen
2013
Contract amountTranslated at contractual rates
Currency swaps

Hedged item

Total

Due after 1 year

Foreign-currency debentures
and Corporate bonds¥102,302¥102,302

—

—

Total

Fair value*2—

Thousands of U.S. Dollars
2014
Contract amountTranslated at contractual rates
Currency swaps
Forward foreign exchange
contracts
Sold

Hedged item

Total

Due after 1 year

Fair value

Foreign-currency debentures
and Corporate bonds$993,997$993,997*2

Available-for-salesecurities

382,512—$(3,602)———

BoughtTotal——$(3,602)*1. Fair values are based primarily on discounted present values.
*2. The above currency swaps which qualify for the hedging requirements of assignment method are not subject to the disclosureof fair value information. In addition, the fair value of such foreign currency swaps in Note 29 “Financial Instruments andRelated Disclosures” is included in that of hedged items such as foreign-currency debentures and corporate bonds.

(3) Equity-related Transactions
Not applicable.
(4) Bond-related Transactions
Not applicable.

29. Fair Value of Securities and Money Held in Trust
Fair value of securities, money held in trust and negotiable certificate of deposit classified as “Cash and due from banks” asof March 31, 2014 and 2013 is summarized below.
(a) Securities(1) Held-to-maturity Debt Securities as of March 31, 2014 and 2013, are as follows:
Millions of Yen

2014

Fair value exceeds
carrying amount

Carrying amount

Fair value

Difference¥172,921¥183,241¥10,319

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

Corporate bonds

293,495

299,025

5,529

Other

234,667

242,233

7,565

701,085

724,500

23,414

—

—

—

—

—

—

—

—

—

Japanese government bonds

Sub-total
Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds
Short-term corporate bonds
Corporate bonds

59,95059,657

(292)

Other

118,541

117,412(1,128)Sub-total

178,491

177,070(1,420)Total¥879,576¥901,570¥21,993

Annual Report & CSR Report 2014167

Millions of Yen

2013

Fair value exceeds
carrying amountJapanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Sub-total
Total

Carrying amount

Fair value

Difference¥173,691——
261,070
187,756
622,519———
47,60091,053
138,653¥761,172¥185,432——
265,930
200,643652,006———
47,332
88,477
135,809¥787,816¥11,740——
4,860
12,88629,487———(267)(2,576)(2,843)¥26,644

Thousands of U.S. Dollars

2014

Fair value exceeds
carrying amountJapanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Sub-total
Total

Carrying amount

Fair value

Difference$1,680,159——
2,851,690
2,280,099
6,811,948———
582,491
1,151,781
1,734,272$8,546,219$1,780,427——
2,905,419
2,353,606
7,039,452———
579,650
1,140,817
1,720,467$8,759,919$100,268——
53,73073,507
227,504———(2,841)(10,964)(13,805)$213,699

Note: Fair value is based on the closing price at the consolidated balance sheet date.

(2) Available-for-sale Securities as of March 31, 2014 and 2013, are as follows:
Millions of Yen

2014

Carrying amountexceeds cost

Sub-total
Carrying amount does
not exceed cost

Sub-total
Total

168

Annual Report & CSR Report 2014

Equities
Bonds
Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Equities
Bonds
Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Carrying amount(Fair value)

Acquisition cost

Difference¥ 50,573
251,628
121,142——
130,486
11,911
314,11356
77,03854,976——22,06240,271
117,366¥431,479¥ 25,305
238,910
121,067——
117,8423,804
268,02175
77,081
54,996——22,08540,280117,437¥385,458¥25,267
12,71774——
12,643
8,106
46,092
(18)
(43)
(20)
—
—
(23)
(9)
(71)
¥46,021

Financial Condition

Millions of Yen

2013

Carrying amountexceeds cost

Carrying amount(Fair value)

Acquisition cost

Difference

Equities¥ 45,197¥ 23,334¥21,862

Bonds

173,702

168,756

4,946

97,85695,556

2,299

—

—

—

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Sub-total
Carrying amount does
not exceed cost

—

—

—

75,846

73,1992,646

19,185

4,640

14,544

238,085

196,731

41,353Equities

2,699

2,873

(174)

Bonds

51,88851,943(54)

49,99549,996(1)

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

Japanese government bonds

Corporate bonds

1,893

1,946

(53)

Other

30,27730,492(215)

Sub-total
Total

84,86585,309(444)¥322,950¥282,040¥40,909

Thousands of U.S. Dollars

2014

Carrying amountexceeds cost

Carrying amount(Fair value)

Acquisition cost

Difference

Equities$ 491,387$ 245,876$245,511

Bonds

2,444,890

2,321,325

123,565

1,177,050

1,176,331

719

—

—

—

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Sub-total
Carrying amount does
not exceed cost

—

—

—

1,267,839

1,144,994

122,845

115,738

36,96978,7693,052,014

2,604,170

447,844

Equities

552

731

(179)

Bonds

748,524

748,948(424)

534,162

534,359(197)

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

214,361

214,588(227)

391,290

391,378(88)

Japanese government bonds

Corporate bonds
Other
Sub-total

1,140,366

1,141,056

(690)

Total

$4,192,380$3,754,226$447,153

Note: Carrying amount above represents the fair values determined based on the closing price at the fiscal year-end.

Annual Report & CSR Report 2014169

(3) Available-for-sale Securities sold during the year ended March 31, 2014 and 2013, are as follows:
Millions of Yen

2014
Proceeds from sales

Total amount ofgains on sales

Total amount oflosses on sales

Equities¥ 17,965¥1,439

¥ 77

Bonds

172,111

1,543

85

161,843

1,389

81Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

Japanese government bonds

10,267

153

4

Other

Corporate bonds

6,162

2,022

530

Total

¥196,238¥5,005¥692

Millions of Yen

2013
Proceeds from sales

Total amount ofgains on sales

Total amount oflosses on sales

Equities¥43,523¥18,006

¥ 91

Bonds

9,862

525

4

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

9,862

525

4

Corporate bonds
Other

6,024

1,409

96

Total

¥59,411¥19,942¥193

Thousands of U.S. Dollars
2014
Proceeds from sales

Total amount ofgains on sales

Total amount oflosses on sales

Equities$ 174,553$13,982

$ 751

Bonds

1,672,282

14,996831

1,572,517

13,504

789

—

—

—

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds

—

—

—

99,765

1,492

42

Other

59,872

19,653

5,150

Total

$1,906,708$48,631$6,732(b) Money Held in Trust(1) Money Held in Trust for the Purpose of Investment
Millions of Yen

2014
Net unrealized gain on
the consolidated statementof incomeCarrying amountMoney held in trust for the purpose of investment¥—¥—
Millions of Yen

2013

Carrying amountMoney held in trust for the purpose of investment

170

Annual Report & CSR Report 2014¥70

Net unrealized loss on
the consolidated statementof income¥12

Financial Condition

Thousands of U.S. Dollars

2014
Net unrealized gain on
the consolidated statementof incomeCarrying amountMoney held in trust for the purpose of investment$—$—(2) Other (other than for the purpose of investment and held to maturity)
Millions of Yen

2014
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost¥134,215¥133,957

Net

Carrying amountexceeds cost

(Carrying amount
does not exceed
cost)

¥258

¥258

¥—

Millions of Yen

2013
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost¥175,265¥170,969

Net

Carrying amountexceeds cost

(Carrying amount
does not exceed
cost)¥4,295¥4,295¥—

Thousands of U.S. Dollars

2014
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost$1,304,073$1,301,566

Net

Carrying amountexceeds cost

(Carrying amount
does not exceed
cost)$2,507$2,507$—(c) Unrealized Gain on Available-for-sale Securities
The breakdown of unrealized gain on available-for-sale securities is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2014

2013

2014

Available-for-sale securities¥ 60,668¥ 47,124$ 589,471

Other money held in trust

258

4,295

2,507

Deferred tax liabilities(18,103)(12,952)(175,899)

Unrealized gain on available-for-sale securities before interest
adjustments

42,822

38,467416,079

Amount corresponding to minority interests(5,110)(1,606)(49,659)

55

11

540

¥ 37,767¥ 36,873$ 366,959

Unrealized gain on

DBJ Inc.’s interest in net unrealized gain on available-for-salesecurities held by affiliates accounted for by the equity method
Unrealized gain on available-for-sale securities, net of taxes*1. The profit of ¥4,496 million ($43,690 thousand) recognized by applying the fair value hedge accounting, which was reflected in profit
or loss, is deducted from above unrealized gain on available-for-sale securities, net of taxes, as of March 31, 2014.
*2. Unrealized gain includes foreign currency translation adjustments on available-for-sale securities denominated in foreign currency
whose fair value cannot be reliably determined as of March 31, 2014 and 2013.

Annual Report & CSR Report 2014171

30. Related Party Transactions
Related party transactions for the years ended March 31, 2014 and 2013 are as follows:
Amounts of the transactions
Related party

Finance
Minister

Balance at March 31, 2014

Account item

Millions of Yen

Thousands of
U.S. Dollars

Borrowedmoney¥ 300,000$ 2,914,885

Repayments

552,313

5,366,435

Payment forinterest

Accruedexpenses

51,734

Guarantees*2—

2,652,005

Category

Description

Shareholder Borrowings*1

Millions of Yen

Thousands of
U.S. Dollars¥4,213,694$40,941,457

502,667

14,456140,464

25,767,641——*1. DBJ Inc. has borrowed from the fiscal investment and loan program funds, and applied interest rates for fiscal investment and loan. The
last redemption period is October 20, 2033 without putting up collateral.
*2. The guarantees are for debentures issued by DBJ Inc. free of guarantee charge.
*3. According to Article 2, item 5 of the Japan Finance Corporation Act, DBJ Inc. has borrowed ¥3,764,887 million ($36,580,713
thousand) from Japan Finance Corporation relating to the crisis response business.

Related party

Finance
MinisterCategory

Description

Shareholder Subscriptionof capitalincrease*1
Borrowings*2

Amounts of the transactions

Balance at March 31, 2013

Millions of Yen

Millions of Yen¥¥

Account item—

19,165600,000—

Repayments

Borrowed
money

Payment forinterest

Accruedexpenses

59,235

15,633

Guarantees*3—2,450,189—

4,466,008

711,277*1. It consists of subscription due to redemption of government compensation bonds.
*2. DBJ Inc. has borrowed from the fiscal investment and loan program funds, and applied interest rates for fiscal investment and loan. The
last redemption period is January 20, 2033 without putting up collateral.
*3. The guarantees are for debentures issued by DBJ Inc. free of guarantee charge.
*4. According to Article 2, item 5 of the Japan Finance Corporation Act, DBJ Inc. has borrowed ¥3,907,329 million from Japan FinanceCorporation relating to the crisis response business.

31. Subsequent Event
On June 24, 2014, the shareholders meeting resolved the following appropriations of retained earnings. After that, thetiming and amounts for dividends were authorized by the Finance Minister on the same day:Appropriations of Retained earnings as of March 31, 2014

Year-end cash dividends-Common stock (¥706-$6.86 per share)

172

Annual Report & CSR Report 2014

Millions of Yen

Thousands of
U.S. Dollars¥30,804$299,305

Financial Condition

Independent Auditor’s Report

Annual Report & CSR Report 2014173

Non-Consolidated Balance Sheet (Unaudited)
Development Bank of Japan Inc.

Thousands of
U.S. Dollars (Note)

Millions of Yen

As of March 31,

2014

2013

2014

AssetsCash and due from banks
Call loans
Reverse repurchase agreements
Money held in trust¥

240,522¥

128,839$

2,336,985

87,00084,000845,317—

165,975—

134,215

170,236

1,304,073

Securities

1,592,461

1,337,971

15,472,808

Loans

13,963,046

14,015,453

135,668,933

Other assets

113,707

134,469

1,104,817

Tangible fixed assets

116,585

122,363

1,132,777

Intangible fixed assets

5,424

6,848

52,710

Deferred tax assets

—

6,659

—

Customers’ liabilities for acceptances and guarantees

107,174

155,753

1,041,335

Allowance for loan losses(111,716)(144,225)(1,085,468)

(459)

(501)

(4,465)¥16,247,962¥16,183,843$157,869,823

Debentures¥3,085,674¥3,053,277$29,981,288

Borrowed money

9,150,398

9,416,398

88,907,873—

43,997—

Corporate bonds

1,144,246

863,756

11,117,829

Other liabilities

127,069

119,273

1,234,640

Accrued bonuses to employees

4,415

4,340

42,897

Accrued bonuses to directors

11

12

115

Reserve for employees’ retirement benefits

7,118

10,177

69,166

Reserve for directors’ retirement benefits

69

59

672

7

135

72

11,695—

113,638

Allowance for investment losses
Total assets
Liabilities and equity
Liabilities:

Short-term corporate bonds

Reserve for contingent losses
Deferred tax liabilities
Acceptances and guarantees

107,174

155,753

1,041,335

13,637,880

13,667,181

132,509,524

Common stock authorized, 160,000 thousand shares in 2014 and2013; issued, 43,632 thousand shares in 2014 and 2013

1,206,953

1,206,953

11,727,099

Capital surplus

1,060,466

1,060,466

10,303,793

Retained earnings

275,716

187,730

2,678,936

Unrealized gain on available-for-sale securities

37,70327,707366,333

Total liabilities
Equity:Deferred gain on derivatives under hedge accounting
Total equity
Total liabilities and equity

29,24333,803

284,138

2,610,081

2,516,661

25,360,299¥16,247,962¥16,183,843$157,869,823

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥102.92=$1.00, the effective
exchange rate prevailing as of March 31, 2014, has been used in the conversion.

174

Annual Report & CSR Report 2014

Financial Condition

Non-Consolidated Statement of Income (Unaudited)
Development Bank of Japan Inc.

Thousands of
U.S. Dollars (Note)

Millions of Yen

For the year ended March 31,

2014

2013

2014

IncomeInterest income:¥255,448¥268,638$2,482,006

Interest on loans

229,860

243,076

2,233,388

Interest and dividends on securities

17,37817,782

168,856

Interest on call loans

98

44

961

Interest on reverse repurchase agreements

282

351

2,749

Interest on due from banks

36

52

352

7,680

7,053

74,627

110

278

1,072

Fees and commissions

13,087

9,669

127,159

Other operating income

10,899

7,857

105,903

Other income

70,957

48,673

689,445

350,392

334,838

3,404,513

132,090

144,287

1,283,429

39,773

43,100386,449

Interest on swaps
Other interest income

Total income
Expenses
Interest expense:
Interest on debentures
Interest on call money and bills soldInterest on borrowed money
Interest on short-term corporate bonds
Interest on corporate bonds
Other interest expense
Fees and commissions

7

19

77

87,766

97,276

852,769

32

57

319

4,488

3,827

43,611

20

5

203

235

265

2,284

Other operating expenses

7,224

12,16370,198General and administrative expenses

40,32342,431

391,794

Other expenses

6,536

20,72863,513

Total expenses

186,410

219,876

1,811,217

Income before income taxes

163,982

114,962

1,593,296

24,58841,577238,905

Income taxes:
Current
Deferred
Total income taxes
Net income

16,153

2,844

156,952

40,741

44,421

395,857¥123,240¥70,540$1,197,439

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥102.92=$1.00, the effective
exchange rate prevailing as of March 31, 2014, has been used in the conversion.

Annual Report & CSR Report 2014175

Non-Consolidated Statement of Changes in Equity (Unaudited)
Development Bank of Japan Inc.

Thousands of
U.S. Dollars (Note)

Millions of Yen

For the year ended March 31,

2014

2013

2014

¥1,206,953¥1,187,788$11,727,099

Common stock:
Balance at beginning of year
Capital increase due to redemption of government
compensation bonds—

19,165—

1,206,953

1,206,953

11,727,099

Balance at beginning of year

1,060,466

1,060,466

10,303,793

Balance at end of year

1,060,466

1,060,466

10,303,793

187,730

154,539

1,824,044

Cash dividends(35,254)(37,349)(342,547)

Net income

123,240

70,5401,197,439

Balance at end of year

275,716

187,730

2,678,936

Balance at beginning of year

27,707

14,817269,218

Net change during the year

9,995

12,89097,116

Balance at end of year

37,70327,707366,333

Balance at beginning of year

33,80327,519328,445

Net change during the year

(4,560)6,284(44,307)

Balance at end of year

29,24333,803

284,138

2,516,661

2,445,130

24,452,599—

19,165—

Cash dividends(35,254)(37,349)(342,547)

Net income

123,240

70,5401,197,439

Balance at end of year
Capital surplus:

Retained earnings:
Balance at beginning of year

Unrealized gain on available-for-sale securities:

Deferred gain on derivatives under hedge accounting:Total equity:
Balance at beginning of year
Capital increase due to redemption of government
compensation bonds

Net change during the year
Balance at end of year

5,435

19,17452,808¥2,610,081¥2,516,661$25,360,299

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥102.92=$1.00, the effective
exchange rate prevailing as of March 31, 2014, has been used in the conversion.

176

Annual Report & CSR Report 2014

Financial Condition

Capital Adequacy Ratio

Although DBJ is not yet subject to Article 14-2 of the Banking Act of Japan, capital adequacy ratios have been calculated inaccordance with “Criteria for Judging Whether a Financial Institution’s Own Capital Is Sufficient in Light of the Assets Held,etc. under the Provision of Article 14-2 of the Banking Act” (2006, Financial Services Agency Notification No. 19,
hereinafter, the “Capital Adequacy Ratio Notification”), and therefore effectively conform to this act.
(Reference)
In addition to the application of uniform international standards, credit risk assets were calculated using the standardized
approach, and equivalent operational risk was calculated using the basic indicator approach. The DBJ Group has not
introduced procedures in line with market risk regulations.

[1] Capital Structure Information
Capital Structure Information (Consolidated)(Millions of yen)March 31, 2013
Items

Common Equity Tier 1 capital: instruments andreserves
Directly issued qualifying common share capital plus
related capital surplus and retained earningsof which: common stock and capital surplusof which: retained earningsof which: treasury stockof which: planned distribution of incomeof which: other than the above
Rights to acquire new common shares
Accumulated other comprehensive income andother disclosed reserves
Adjusted minority interests, etc. (amount allowed to be
included in group Common Equity Tier 1)
Total of items included in Common Equity Tier 1
capital: instruments and reserves subject totransitional arrangementsof which: items included in minority interests, etc.
subject to transitional arrangements
Common Equity Tier 1 capital: instruments andreserves (A)Common Equity Tier 1 capital: regulatory
adjustments
Total intangible assets (excluding those relating tomortgage servicing rights)
of which: goodwill (including those equivalent)of which: other intangible assets other than goodwill
and mortgage servicing rights
Deferred tax assets that rely on future profitability
excluding those arising from temporary differences(net of related tax liability)
Deferred gains or losses on derivatives under hedge
accounting
Shortfall of eligible reserves to expected losses
Capital increase due to securitization transactions
Gains and losses due to changes in own credit risk onfair valued liabilities
Assets for retirement benefits
Investments in own shares (excluding those reported in
the Equity section)
Reciprocal cross-holdings in common equity

March 31, 2014

Amounts
excluded undertransitionalarrangements

2,425,759
2,267,419
193,595—
35,254———

Amounts
excluded undertransitionalarrangements

2,519,342
2,267,419
282,733—
30,810——70,803

13,507

7

19

1,260

1,150

1,260

1,150

2,427,026

2,534,020

Basel III
Template No.

1a+2-1c-26
1a
2
1c
26
1b
54,031

3
5

6

—

4,287

893

3,574

8+9

—

—

188

753

—

4,287

705

2,820

9

—

—

—

—

10

—
—
—

35,011
—
—

6,001
—
—

24,005 11
— 12
— 13

—
—

—
—

—
—

— 14
— 15

—
—

—
—

—
—

— 16
— 17

8

Annual Report & CSR Report 2014

177

(Millions of yen)March 31, 2013
Items

Investments in the capital of banking, financial andinsurance entities that are outside the scope of
regulatory consolidation (“Other Financial
Institutions”), net of eligible short positions, where
the bank does not own more than 10% of the issued
share capital (amount above the 10% threshold)Amount exceeding the 10% threshold on specified
items
of which: significant investments in the common
stock of Other Financial Institutions, net of eligible
short positionsof which: mortgage servicing rightsof which: deferred tax assets arising from temporary
differences (net of related tax liability)
Amount exceeding the 15% threshold on specified
items
of which: significant investments in the common
stock of Other Financial Institutions, net of eligible
short positionsof which: mortgage servicing rightsof which: deferred tax assets arising from temporary
differences (net of related tax liability)
Regulatory adjustments applied to Common Equity
Tier 1 due to insufficient Additional Tier 1 andTier 2 to cover deductions
Common Equity Tier 1 capital: regulatory adjustments(B)
Common Equity Tier 1 capital (CET1)
Common Equity Tier 1 capital (CET1) ((A)-(B)) (C)Additional Tier 1 capital: instruments
Directly issued qualifying Additional Tier 1 instruments
plus related capital surplus of which: classified as
equity under applicable accounting standards andthe breakdown
Rights to acquire new shares in relation to Additional
Tier 1 instruments
Directly issued qualifying Additional Tier 1 instruments
plus related capital surplus of which: classified asliabilities under applicable accounting standards
Qualifying Additional Tier 1 instruments plus related
capital surplus issued by special purpose vehicles andother equivalent entities
Adjusted minority interests, etc. (amount allowed to be
included in group Additional Tier 1)
Eligible Tier 1 capital instruments subject to transitionalarrangements included in Additional Tier 1 capital:
instrumentsof which: instruments issued by banks and their
special purpose vehiclesof which: instruments issued by subsidiaries(excluding banks’ special purpose vehicles)

178

Annual Report & CSR Report 2014

March 31, 2014

Amounts
excluded undertransitionalarrangements

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

—

—

—

—

18

—

—

—

—

19+20+21

—
—

—
—

—
—

— 19
— 20

—

—

—

—

21

—

—

—

—

22

—
—

—
—

—
—

— 23
— 24

—

—

—

—

25

—

—

27

—

6,894

28

2,427,026

2,527,125

29

—

—

31a

—

—

31b

—

—

32

—

—

5,426

7,495

34-35

—

—

33+35

—

—

33

—

—

35

30

Financial Condition(Millions of yen)March 31, 2013
Items

Total of items included in Additional Tier 1 capital:
items subject to transitional arrangementsof which: foreign currency translation adjustments
Additional Tier 1 capital: instruments (D)Additional Tier 1 capital: regulatory adjustments
Investments in own Additional Tier 1 instruments
Reciprocal cross-holdings in Additional Tier 1
instruments
Investments in the capital of banking, financial andinsurance entities that are outside the scope of
regulatory consolidation, net of eligible shortpositions, where the bank does not own more than
10% of the issued common share capital of the entity(amount above the 10% threshold)
Significant investments in the Additional Tier 1 capitalof Other Financial Institutions (net of eligible shortpositions)
Total of items included in Additional Tier 1 capital:
regulatory adjustments subject to transitionalarrangementsof which: goodwill
Regulatory adjustments applied to Additional Tier 1
due to insufficient Tier 2 to cover deductions
Additional Tier 1 capital: regulatory adjustments (E)Additional Tier 1 capital (AT1)
Additional Tier 1 capital ((D)-(E)) (F)Tier 1 capital (T1 = CET1 + AT1)
Tier 1 capital (T1 = CET1 + AT1) ((C)+(F)) (G)Tier 2 capital: instruments and reserves
Directly issued qualifying Tier 2 instruments plus related
capital surplus of which: classified as equity underapplicable accounting standards and its breakdown
Rights to acquire new shares in relation to Tier 2
instruments
Directly issued qualifying Tier 2 instruments plus related
capital surplus of which: classified as liabilities underapplicable accounting standards
Tier 2 instruments plus related capital surplus issued by
special purpose vehicles and other equivalent entities
Adjusted minority interests, etc. (amount allowed to be
included in group Tier 2)
Eligible Tier 2 capital instruments subject to transitionalarrangements included in Tier 2: instruments andreservesof which: instruments issued by banks and their
special purpose vehiclesof which: instruments issued by subsidiaries(excluding banks’ special purpose vehicles)
Total of general allowance for loan losses and eligible
reserves included in Tier 2of which: general allowance for loan lossesof which: eligible reserves

March 31, 2014

Amounts
excluded undertransitionalarrangements

(57)
(57)
5,368

Amounts
excluded undertransitionalarrangements

567
567
8,063

Basel III
Template No.

36

—

—

—

—

37

—

—

—

—

38

—

—

—

—

39

—

1,059

204

816

40

—
—

753
753

—
—

—
957

42
43

5,368

7,105

44

2,432,395

2,534,231

45

—

—

—

—

—

—

—

—

65

133

48-49

—

—

47+49

—

—

47

—

—

49

67,47867,478—59,12959,129
—

50
50a
50b

46

Annual Report & CSR Report 2014179

(Millions of yen)March 31, 2013
Items

Total of items included in Tier 2 capital: instruments
and reserves subject to transitional arrangementsof which: items included in accumulated othercomprehensive income, etc. subject to transitionalarrangements
Tier 2 capital: instruments and reserves (H)Tier 2 capital: regulatory adjustments
Investments in own Tier 2 instruments
Reciprocal cross-holdings in Tier 2 instruments
Non-significant Investments in the Tier 2 capital of
Other Financial Institutions, net of eligible shortpositions (amount above the 10% threshold)
Significant investments in the Tier 2 capital of Other
Financial Institutions (net of eligible short positions)
Total of items included in Tier 2 capital: regulatory
adjustments subject to transitional arrangements
Tier 2 capital: regulatory adjustments (I)Tier 2 capital (T2)
Tier 2 capital (T2) ((H)-(I)) (J)Total capital (TC = T1 + T2)
Total capital (TC = T1 + T2) ((G) + (J)) (K)Risk weighted assets
Total of items included in risk weighted assets subject
to transitional arrangementsof which: other intangible fixed assets other than
goodwill and mortgage servicing rightsof which, significant investments in the Additional
Tier 1 capital of Other Financial Institutions (net of
eligible short positions)
Risk weighted assets (L)Capital ratio (consolidated)
Common Equity Tier 1 risk-weighted capital ratio(consolidated) ((C)/(L))
Tier 1 risk-weighted capital ratio (consolidated) ((G)/(L))
Total risk-weighted capital ratio (consolidated) ((K)/(L))
Regulatory adjustments
Non-significant Investments in the capital of Other
Financial Institutions that are below the thresholds
for deduction (before risk weighting)Significant investments in the common stock of Other
Financial Institutions that are below the thresholds fordeduction (before risk weighting)Mortgage servicing rights that are below the thresholds
for deduction (before risk weighting)Deferred tax assets arising from temporary differencesthat are below the thresholds for deduction (before
risk weighting)180

Annual Report & CSR Report 2014

March 31, 2014

Amounts
excluded undertransitionalarrangements

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

23,144

21,95323,144
90,68821,953
81,216

51

—
—

—
—

—
—

— 52
— 53

—

—

—

—

54

—

—

—

—

55

—
—

—
—

57

90,68881,21658

2,523,084

2,615,448

59

5,346

3,637

4,287

2,820

1,059
16,255,349

816
16,516,658

60

14.93%
14.96%
15.52%

15.30%
15.34%
15.83%

61
62
63

202,916

136,764

72

6,592

1,059

73

—

—

74

9,325

2,075

75

Financial Condition(Millions of yen)March 31, 2013
Items

Reserves included in Tier 2 capital: instruments
and reserves
General allowance for loan losses
Cap on inclusion of general allowance for loan losses
Eligible reserves for inclusion in Tier 2 in respect of
exposures subject to internal ratings-based approach(prior to application of cap)
Cap for inclusion of reserves in Tier 2 under internalratings-based approach
Capital instruments subject to transitionalarrangements
Current cap on Additional Tier 1 instruments subject totransitional arrangements
Amount excluded from Additional Tier 1 due to cap(excess over cap after redemptions and maturities)
Current cap on Tier 2 instruments subject totransitional arrangements
Amount excluded from Tier 2 due to cap (excess overcap after redemptions and maturities)

March 31, 2014

Amounts
excluded undertransitionalarrangements

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

67,478200,088

59,129202,584

76
77

—

—

78

—

—

79

—

—

82

—

—

83

—

—

84

—

—

85

Note: Figures for deferred gains or losses on derivatives under hedge accounting (amount not included due to transitional arrangements) asof the previous fiscal year-end have been revised retroactively to reflect a revision in the tabulation standards.

Annual Report & CSR Report 2014181

Capital Structure Information (Non-Consolidated)(Millions of yen)March 31, 2013

March 31, 2014

Amounts
excluded undertransitionalarrangements

Items

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

Common Equity Tier 1 capital: instruments andreserves
Directly issued qualifying common share capital plus
related capital surplus and retained earnings

2,419,895

2,512,325

of which: common stock and capital surplus

2,267,419

2,267,419

1a

187,730

275,7162of which: retained earningsof which: treasury stockof which: planned distribution of income

1a+2-1c-26

—

—

1c

35,25430,81026

of which: other than the above——

Rights to acquire new common shares——

Valuation and translation adjustment and otherdisclosed reserves—

Total of items included in Common Equity Tier 1
capital: instruments and reserves subject totransitional arrangements——

Common Equity Tier 1 capital: instruments andreserves (A)2,419,895

2,525,714

61,511

13,3891b53,557

3

6

Common Equity Tier 1 capital: regulatory
adjustments
Total intangible assets (excluding those relating tomortgage servicing rights)

—

4,257

698

2,793

of which: goodwill (including those equivalent)

—

—

—

—

8

of which: other intangible assets other than goodwill
and mortgage servicing rights

—

4,257

698

2,793

9

—

—

—

—

10

Deferred gains or losses on derivatives under hedge
accounting—

34,828

5,848

23,39411

Shortfall of eligible reserves to expected losses

—

—

—

—

12

Capital increase due to securitization transactions

—

—

—

—

13

Gains and losses due to changes in own credit risk onfair valued liabilities

—

—

—

—

14

Prepaid pension cost

—

—

—

—

15

Deferred tax assets that rely on future profitability
excluding those arising from temporary differences(net of related tax liability)

Investments in own shares (excluding those reported in
the Equity section)

—

—

—

—

16

Reciprocal cross-holdings in common equity

—

—

—

—

17

Investments in the capital of banking, financial andinsurance entities that are outside the scope of
regulatory consolidation (“Other Financial
Institutions”), net of eligible short positions, where
the bank does not own more than 10% of the issued
share capital (“Non-significant Investment”) (amountabove the 10% threshold)

—

—

—

—

18

—

—

—

—

19+20+21

of which: mortgage servicing rights

—
—

—
—

—
—

— 19
— 20

of which: deferred tax assets arising from temporary
differences (net of related tax liability)

—

—

—

—

Amount exceeding the 10% threshold on specified
items
of which: significant investments in the common
stock of Other Financial Institutions, net of eligible
short positions

182

8+9

Annual Report & CSR Report 201421

Financial Condition(Millions of yen)March 31, 2013

March 31, 2014

Amounts
excluded undertransitionalarrangements

Items

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

Amount exceeding the 15% threshold on specified
items
of which: significant investments in the common
stock of Other Financial Institutions, net of eligible
short positionsof which: mortgage servicing rights

—

—

—

—

—
—

—
—

—
—

— 23
— 24

of which: deferred tax assets arising from temporary
differences (net of related tax liability)

—

—

—

—

Regulatory adjustments applied to Common Equity
Tier 1 due to insufficient Additional Tier 1 and Tier 2
to cover deductions

—

10

27

Common Equity Tier 1 capital: regulatory adjustments
(B)

—

6,557

28

2,419,895

2,519,15629

Directly issued qualifying Additional Tier 1 instruments
plus related capital surplus of which: classified as
equity under applicable accounting standards andthe breakdown

—

—

31a

Rights to acquire new shares in relation to Additional
Tier 1 instruments

—

—

31b

Directly issued qualifying Additional Tier 1 instruments
plus related capital surplus of which: classified asliabilities under applicable accounting standards

—

—

32

—

—

Eligible Tier 1 capital instruments subject to transitionalarrangements included in Additional Tier 1 capital:
instruments——

Total of items included in Additional Tier 1 capital:
items subject to transitional arrangements——

Additional Tier 1 capital: instruments (D)

—

—

36

Investments in own Additional Tier 1 instruments

—

—

37

Reciprocal cross-holdings in Additional Tier 1
instruments

—

—

38

Investments in the capital of banking, financial andinsurance entities that are outside the scope of
regulatory consolidation, net of eligible shortpositions, where the bank does not own more than
10% of the issued common share capital of the entity(amount above the 10% threshold)

—

—

39

Significant investments in the Additional Tier 1 capitalof Other Financial Institutions (net of eligible shortpositions)—10

Total of items included in Additional Tier 1 capital:
regulatory adjustments subject to transitionalarrangements——

Regulatory adjustments applied to Additional Tier 1
due to insufficient Tier 2 to cover deductions

—

—

42

Additional Tier 1 capital: regulatory adjustments (E)

—

10

43

22

25

Common Equity Tier 1 capital (CET1)
Common Equity Tier 1 capital (CET1) ((A)-(B)) (C)Additional Tier 1 capital: instruments

Qualifying Additional Tier 1 instruments plus related
capital surplus issued by special purpose vehicles andother equivalent entities

30

33+35

Additional Tier 1 capital: regulatory adjustments

43

40

Annual Report & CSR Report 2014

183

(Millions of yen)March 31, 2013

March 31, 2014

Amounts
excluded undertransitionalarrangements

Items

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

Additional Tier 1 capital (AT1)
Additional Tier 1 capital ((D)-(E)) (F)

—

—

44

2,419,895

2,519,15645

Directly issued qualifying Tier 2 instruments plus related
capital surplus of which: classified as equity underapplicable accounting standards and its breakdown——

Rights to acquire new shares in relation to Tier 2
instruments——

Directly issued qualifying Tier 2 instruments plus related
capital surplus of which: classified as liabilities underapplicable accounting standards——

Tier 2 instruments plus related capital surplus issued by
special purpose vehicles and other equivalent entities——

Eligible Tier 2 capital instruments subject to transitionalarrangements included in Tier 2: instruments andreserves——

68,07459,44950

68,07459,44950a
50b

Tier 1 capital (T1 = CET1 + AT1)
Tier 1 capital (T1 = CET1 + AT1) ((C)+(F)) (G)Tier 2 capital: instruments and reserves

Total of general allowance for loan losses and eligible
reserves included in Tier 2of which: general allowance for loan losses——

Total of items included in Tier 2 capital: instruments
and reserves subject to transitional arrangementsof which: eligible reserves

12,46820,088of which: items included valuation and translation
adjustments, etc. subject to transitionalarrangements

12,46820,08880,54379,537

Tier 2 capital: instruments and reserves (H)

46

47+49

51

Tier 2 capital: regulatory adjustments
Investments in own Tier 2 instruments

—

—

—

—

52

Reciprocal cross-holdings in Tier 2 instruments

—

—

—

—

53

Non-significant Investments in the Tier 2 capital of
Other Financial Institutions, net of eligible shortpositions (amount above the 10% threshold)

—

—

—

—

54

Significant investments in the Tier 2 capital of Other
Financial Institutions (net of eligible short positions)

—

—

—

—

55

Total of items included in Tier 2 capital: regulatory
adjustments subject to transitional arrangements——

Tier 2 capital: regulatory adjustments (I)

—

—

57

80,54379,53758

2,500,438

2,598,694

59

Tier 2 capital (T2)
Tier 2 capital (T2) ((H)-(I)) (J)Total capital (TC = T1 + T2)
Total capital (TC = T1 + T2) ((G) + (J)) (K)184

Annual Report & CSR Report 2014

Financial Condition(Millions of yen)March 31, 2013

March 31, 2014

Amounts
excluded undertransitionalarrangements

Items

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

Risk weighted assets
Total of items included in risk weighted assets subject
to transitional arrangements

4,257

2,836

of which: other intangible fixed assets other than
goodwill and mortgage servicing rights

4,257

2,793

of which: significant investments in the Additional
Tier 1 capital of Other Financial Institutions (net of
eligible short positions)—43

16,645,774

17,060,23060

Common Equity Tier 1 risk-weighted capital ratio(consolidated) ((C)/(L))

14.53%

14.76%

61

Tier 1 risk-weighted capital ratio (non-consolidated)((G)/(L))

14.53%

14.76%

62

Total risk-weighted capital ratio (non-consolidated)((K)/(L))

15.02%

15.23%

63

Non-significant Investments in the capital of Other
Financial Institutions that are below the thresholds
for deduction (before risk weighting)

193,026

131,476

72

Significant investments in the common stock of Other
Financial Institutions that are below the thresholds
for deduction (before risk weighting)

6,592

489

73

Mortgage servicing rights that are below the thresholds
for deduction (before risk weighting)

—

—

74

Deferred tax assets arising from temporary differencesthat are below the thresholds for deduction (before
risk weighting)

9,250

1,933

75

Risk weighted assets (L)Capital ratio (non-consolidated)

Regulatory adjustments

Reserves included in Tier 2 capital: instruments
and reserves
General allowance for loan losses

68,07459,44976

Cap on inclusion of general allowance for loan losses

204,993

211,043

77

Eligible reserves for inclusion in Tier 2 in respect of
exposures subject to internal ratings-based approach(prior to application of cap)

—

—

78

Cap for inclusion of reserves in Tier 2 under internalratings-based approach

—

—

79

Current cap on Additional Tier 1 instruments subject
to transitional arrangements

—

—

82

Amount excluded from Additional Tier 1 due to cap(excess over cap after redemptions and maturities)

—

—

83

Current cap on Tier 2 instruments subject totransitional arrangements

—

—

84

Amount excluded from Tier 2 due to cap (excess overcap after redemptions and maturities)

—

—

85

Capital instruments subject to transitionalarrangements

Note: Figures for deferred gains or losses on derivatives under hedge accounting (amount not included due to transitional arrangements) asof the previous fiscal year-end have been revised retroactively to reflect a revision in the tabulation standards.

Annual Report & CSR Report 2014185

[2] Qualitative Disclosure
1. Scope ofConsolidation(1) Differences and the reasons for those differences at companies included in the scope of
consolidation based on the regulation (Ministry of Finance Regulation No. 28, 1976)
related to the companies belonging to the group of companies included in the scope of
calculation of the consolidated capital adequacy ratio as provided in Article 3 of the
Notification (hereinafter, the “Consolidated Group”), and the language, format andpreparation method of their consolidated financial statements (hereinafter, the “Scope of
Accounting Consolidation”)
No differences.
(2) Within the Consolidated Group, the number of consolidated subsidiaries and the names
and main businesses of principal consolidated subsidiaries.
The number of consolidated subsidiaries as of March 31, 2014 is 21.
Principal consolidated subsidiaries
Company

Principal Businesses

Japan Economic Research Institute Inc. Research, consulting and advisory services
Value Management Institute, Inc.

Research, consulting and advisory services

DBJ Securities Co., Ltd.

Securities business

DBJ Business Investment Co., Ltd.

Investment consulting

DBJ Capital Co., Ltd.

Management of investment associations

DBJ Asset Management Co., Ltd.

Investment management, investment advisory
and agency services

DBJ Singapore Limited

Investment and loan support and advisory
services

DBJ Europe Limited

Investment and loan support and advisory

DBJ Investment Advisory Co., Ltd.

Investment advisory and agency services

DBJ Real Estate Co., Ltd.

Real estate leasing(3) Number of affiliated companies that conduct financial business to which Article 9 of the
Notification applies, the names of affiliated companies conducting such related financial
business, the amount of total assets and net assets on their balance sheets, and theirprimary businesses
Not applicable.
(4) Names of companies that belong to the Consolidated Group but are not included in the
Scope of Accounting Consolidation and companies that do not belong to the Consolidated
Group but are included in the Scope of Accounting Consolidation, as well as the amountof total assets and net assets on their balance sheets, and their primary businesses
Not applicable.
(5) Overview of limitations related to the transfer of funds or capital within the ConsolidatedGroup
Not applicable.

186

2. Overview of Methods
for Evaluating the
Degree of Capital
Adequacy

Regarding the degree of capital adequacy, DBJ quantifies credit risk, investment risk, interest raterisk and operational risk, compares the total risk amount with total capital and measures the capitalsurplus. This surplus enables DBJ to respond to unquantifiable risks and unforeseen events, decide
whether to take new financing risks and establish the operating directions.

3. Credit Risk(a) Overview of Risk Management Policies and Procedures
Credit risk refers to the risk of loss to DBJ resulting from the decline in or disappearance of thevalue of credit assets, owing to the worsening credit standing of clients for loans or debt
guarantees. These risks include expected losses (EL), or losses that on average can be expected
to occur within a certain measurement period; and unexpected losses (UL), which go extend
beyond the boundaries of losses that, on average, are expected within a period of time. DBJ
periodically compares UL and capital to measure the amount of capital in surplus.
(b) Rating Agencies Eligible to Weight Risks
The rating agencies that DBJ uses for weighting risk are among the four that the FSA has
named eligible to perform such weighting. Eligible rating agencies are not selected according totype of exposure.
The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating
Agency, Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

Annual Report & CSR Report 2014

DBJ obtains collateral or guarantees as necessary based on changes in the borrower’s
creditworthiness. If required, the effectiveness of collateral is determined from the perspective of
the amount certain to be recovered based on a reasonable evaluation of the collateral.
In principal, collateral valuation is performed by the Credit Analysis Department, based on therequest of investment and loan departments/offices. Investment and loan departments/offices andthe Credit Analysis Department manage credit risk based on valuation results. In principle, thevaluation of all collateral property is reviewed once or twice each year to ensure DBJ is aware of thecurrent status of its collateral property.

5. Overview of Risk
Management Policies
and Procedures
Related to Risk
Involving Counterparties in Derivative
Product Transactions
and Transactions withLong Settlement
Periods

DBJ regularly refers to the ratings and credit amounts of transaction counterparties to determine
the advisability of entering a transaction or to understand the risks of existing transactions.

6. Securitization
Exposure(a) Overview of Risk Management Policies and Risk Characteristics
Excluding credit derivatives, the majority of DBJ’s securitization exposure falls into the categoryof specialised lending (Item 47, Article 1, of the Capital Adequacy Ratio Notification) employing
internal rating methods. Different from the internal ratings that are applied to standard
corporate credit, this exposure is given a rating by using a grading system applied to match thecharacteristics of specialised lending. DBJ conducts risk management in line with changes inrating level. In addition to rating its exposure when making new acquisitions, DBJ reviews theseratings periodically.
DBJ’s involvement in securitized and resecuritized transactions is typically that of an investor,and in principle the exposure acquired through such transactions continues until the
instrument’s maturity.
(b) Overview of status of implementation and operation of systems stipulated in Article
249, Paragraph 4, Items 3-6, of the Capital Adequacy Ratio Notification (including
application with modifications in Capital Adequacy Ratio Notification Article 254,
Paragraph 2, and Article 302-4, Item 1)
DBJ has created the systems necessary for operating within its credit risk management framework.
Specifically, as one aspect of our credit risk management, our sales department endeavors toappropriately collect information related to comprehensive risk characteristics and performance,
and DBJ monitors conditions to determine any changes in the borrower’s creditworthiness.
Related information is also provided to the credit analysis department, which may revise
borrower ratings or make other adjustments on the basis of this related information as necessary.
(c) Methods Used to Calculate Credit Risk Asset Amount of Securitization Exposure
DBJ employs the standardized approach for these calculations.
(d) Method of Accounting for Securitized Transactions
DBJ’s involvement in securitized transactions is that of an investor. DBJ adequately accounts forthese transactions in accordance with the ”Accounting Standard for Financial Instruments.”(e) Rating Agencies Eligible to Weight Risks by Type of Securitization Exposure
The rating agencies that DBJ uses for weighting risk are among the four that the FSA has
named eligible to perform such weighting. Eligible rating agencies are not selected according totype of securitization exposure.
The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating
Agency, Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

Annual Report & CSR Report 2014

Financial Condition

4. Overview of Risk
Management Policies
and Procedures for
Reducing Credit Risk

187

188

7. Market Risk

DBJ includes in its calculation method no market risk equivalent amount.

8. Operational risk(a) Overview of Risk Management Policies and Procedures
DBJ defines operational risk as the risk of loss arising from internal processes, the activities ofofficers and employees or systems that are inappropriate or non-functioning, or from extrinsic
events.
DBJ establishes its management structure and basic risk management policy pertaining tomanagement methods after considering the wide range of operational risks that it potentiallyfaces, such as operational risk, systems risk, legal risk, human risk, tangible asset risk andreputational risk.
DBJ designates operational risk officers at each of its offices. These personnel are charged
with establishing data collection procedures, understanding risks and creating risk databases.
In line with the increasing advancement and diversity of the financial business, DBJ
addresses various operational risks by establishing or improving management methods andpreparations to appropriately identify, evaluate, measure, monitor and control these risks.
(b) Method Used to Calculate Operational Risk Equivalent AmountDBJ uses the basic indicator approach to calculate this risk.

9. Overview of Risk
Management Policies
and Procedures
Regarding Exposure
to Shares and Other
Equity Investments
and Capital Injections
into the Banking Book

DBJ defines investment risk as its risk of sustaining a partial or total loss on the economic value of
assets (including off-balance-sheet assets), owing to such factors as the worsening of an investee’s
financial conditions or to fluctuations in the market environment. For newly acquired exposure, DBJ
considers the balance between investment risk and potential return in each field of investment.
Thereafter, DBJ regularly conducts performance evaluations on its exposure.

10. Interest Rate Risk on
the Banking Book(a) Overview of Risk Management Policies and Procedures
Long-term, fixed-rate loans make up the majority of the DBJ’s lending, and DBJ seeks to reduce
its interest rate risk by raising funds featuring similarly long-term, fixed rates. DBJ also employs
the value at risk (VaR) and Basis Point Value (BPV) to compute various risks from the standpointof their economic value.
DBJ regularly compares VaR and 200 BPV against capital to ensure that interest rate risk
remains within a specified range of capital.
(b) Overview of Methods for Calculating Interest Rate Risk Used by the Bank for Internal
Control of the Banking Book
DBJ calculates interest rate risk based on the following method.
(i) VaR: Use a historical method of measurement with a one-year holding period, a five-yeartime horizon and a 99.9% confidence level(ii) Measure interest rate fluctuations in the 1st percentile and 99th percentile, using a one-year
holding period and a five-year time horizon(iii) 200 BPV: Use a 2% parallel shift in a standardized interest rate shock to measure thechange in economic value

Annual Report & CSR Report 2014

Financial Condition[3] Quantitative Disclosure
Quantitative Disclosure (Consolidated)
1. Items Related to Credit Risk (Excluding Securitization Exposure)(a) Fiscal year-end credit risk exposure and breakdown by principal categories
Loans
Equities, funds(Millions of yen)March 31, 2014

March 31, 2013¥13,224,168¥13,469,872

347,112289,337

303,815502,229

Bonds (JGBs and corporate bonds, etc.)

1,069,281

882,912

Reverse repurchase agreement/call loan

220,287

399,978

Other

670,388492,361

Total¥15,835,053¥16,036,692

Commitments and customers’ liabilities for acceptances and guarantees(b) Fiscal year-end credit risk exposure, broken down as follows:(1) By region(Millions of yen)March 31, 2014

March 31, 2013

Domestic total¥15,833,710¥16,035,626

Overseas total

1,342

1,065

Note: ”Overseas” refers to overseas consolidated subsidiaries. DBJ has no overseas branches.

(2) Breakdown by industry and transaction counterparty
Manufacturing
Agriculture and forestry
Fisheries
Mining, quarrying and gravel extraction
Construction
Electrical, gas, heat supply and water
Information and communications(Millions of yen)March 31, 2014

March 31, 2013

¥ 3,548,818¥ 3,697,647

996

1,238

500

—

61,874

57,63756,410105,982

3,291,787

3,151,595

531,016

512,762

Transportation and postal

2,688,940

2,882,884

Wholesale and retail1,073,824

1,123,637

Finance and insurance

1,683,748

1,622,001

Real estate and leasing of goods

1,846,720

1,918,664

Services

378,905

345,623

Municipal government

15,256

13,220Other656,252

603,797

Total¥15,835,053¥16,036,692

Annual Report & CSR Report 2014189

(3) Breakdown by period to maturity(Millions of yen)March 31, 2014

March 31, 2013

Five years or less

¥7,584,076¥7,344,522

More than five years, up to 10

4,956,140

5,459,439

More than 10 years, up to 15

1,887,631

1,807,426

More than 15 years

866,787

797,721

No maturity date

540,417627,582(c) Breakdown of exposure by risk weight (after accounting for credit risk mitigations)(Millions of yen)March 31, 2014

March 31, 2013

Risk weight 0%¥ 578,089¥ 577,732

Risk weight 10%

19,03856,378Risk weight 20%

1,627,250

2,190,604

Risk weight 50%

6,800,392

6,340,198

Risk weight 100%

6,708,949

6,740,301

Risk weight 150%

1,760

20,313

Risk weight 250%

3,135

15,918Risk weight 1,250%

3,145

388

Other

44,917

31,824

2. Securitization Exposure(a) Securitization exposure in which the Consolidated Group is the originator
Not applicable.
(b) Securitization exposure in which the Consolidated Group is an investor(1) Retained securitization exposure amount and breakdown by major underlying asset type(Millions of yen)March 31, 2014

March 31, 2013

¥896,371¥754,856——

37,10056,673

20,03533,507

222,706

200,342—4,876

Structured finance
Of which, resecuritization exposure
Credit derivatives
Of which, resecuritization exposure
Funds*Of which, resecuritization exposure* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

(2) Balance of retained securitization exposure by risk weight and required capital amounts(Millions of yen)March 31, 2014

Risk weight0%

Balance
Capital requirement

Risk weight
Risk weight

20%
50%

Risk weight
Risk weight
Risk weight

100%
350%
1,250%
Other*¥—

0—

Balance84,487

127,726

Capital requirement

1,351

2,043

Balance

14,454

9,335

578

373

Balance583,202435,358

Capital requirement

46,65634,828

Balance—

3,411

Capital requirement—

955

Capital requirement
Risk weight¥ 51,369

March 31, 2013

Balance

396,278

387,342

Capital requirement396,278

387,342

Balance

6,348

10,313

Capital requirement

4,333

5,955

* Applying to exposure the transitional arrangements indicated in Article 15 of the Supplementary Provisions to the Capital Adequacy Ratio Notification.

190

Annual Report & CSR Report 2014

(Millions of yen)March 31, 2014

March 31, 2013

¥20,035¥33,507

Risk weight

40%

Balance
Capital requirement

641

1,072

Risk weight

100%

Balance—

831

Capital requirement—

66

Risk weight

225%

Balance—

1,602

Capital requirement—

288

Risk weight

650%

Balance—

2,034

Capital requirement

—

1,058

Risk weight

1,250%

Financial Condition

Resecuritization exposure

Balance—

407

Capital requirement—

407(3) A 1,250% risk weight is applied to the breakdown of securitization exposure amounts in accordance with Article 247 of
the Capital Adequacy Ratio Notification(Millions of yen)March 31, 2014

March 31, 2013

Structured finance¥177,889¥195,161

Funds*

218,388

192,589* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

(4) Breakdown of retained resecuritization exposure by application of techniques to mitigate credit risks and guarantors, or byrisk weighting applied to guarantors.
Not applicable.
(5) Amount of credit risk assets calculated with application of Article 15 of the Supplementary Provisions to the Capital
Adequacy Ratio Notification(Millions of yen)March 31, 2014

Credit risk assets¥9,869March 31, 2013¥12,497

3. Interest Rate Risk in the Banking Book
Decrease in economic value resulting from interest rate shock

March 31, 2014

March 31, 2013

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a oneyear holding period anda five-year time horizon:¥7.3 billion

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a oneyear holding period anda five-year time horizon:¥7.1 billion

Annual Report & CSR Report 2014191

Quantitative Disclosure (Non-Consolidated)
1. Items Related to Capital Adequacy Level(a) Capital requirement to total credit risk
(1) Exposure by portfolio to which standardized method applied(i) Japanese government and regional municipal bodies(Millions of yen)March 31, 2014

March 31, 2013

¥1,338,435¥1,303,870

853,084

842,275——(ii) Exposure to financial institutions

13,00012,375(iii) Exposure to corporations

791,333

789,191(iv) Equity exposure

37,316

27,647(v) Other exposure

11,43313,060485,351

461,595——

19,627

19,703

1,358,063

1,323,573

March 31, 2014

March 31, 2013

¥13,400,382¥13,532,021(2) Securitization risk exposure(b) Capital requirement to market risk(c) Capital requirement to operational risk(d) Non-consolidated total capital requirement ((a) + (b) + (c))
2. Items Related to Credit Risk (Excluding Securitization Exposure)(a) Fiscal year-end credit risk exposure and breakdown by principal categories
Loans(Millions of yen)

Equities, funds

394,773

350,949

Commitments and customers’ liabilities for acceptances and guarantees

307,273502,229

Bonds (JGBs and corporate bonds, etc.)

1,069,240

882,870

Reverse repurchase agreement/call loan

220,287

399,978

Other

525,792

404,489

Total¥15,917,750¥16,072,539(b) Fiscal year-end credit risk exposure, broken down as follows:(1) By region(Millions of yen)March 31, 2014

March 31, 2013

Domestic total¥15,917,750¥16,072,539

Overseas total——

Note: DBJ has no overseas branches.

(2) Breakdown by industry and transaction counterparty
March 31, 2014

March 31, 2013

¥ 3,548,818¥ 3,697,647

Agriculture and forestry

996

1,238

Fisheries

500—

Manufacturing

Mining, quarrying and gravel extraction

61,874

57,637

Construction

56,410105,982

3,291,787

3,151,595

Electrical, gas, heat supply and water
Information and communications

531,016

512,762

Transportation and postal

2,688,940

2,882,884

Wholesale and retail1,073,824

1,123,637

Finance and insurance

1,857,527

1,748,163

Real estate and leasing of goods

1,923,384

1,989,172

379,951

346,596

Services

192(Millions of yen)

Municipal government

15,256

13,220Other

487,459442,001

Total¥15,917,750¥16,072,539

Annual Report & CSR Report 2014

Financial Condition(3) Breakdown by period to maturity(Millions of yen)March 31, 2014

March 31, 2013

Five years or less

¥7,633,674¥7,398,217

More than five years, up to 10

5,056,175

5,513,091

More than 10 years, up to 15

1,887,631

1,807,426

More than 15 years

873,243797,721

No maturity date

467,025

556,083(c) Breakdown of exposure by risk weight (after accounting for credit risk mitigations)(Millions of yen)March 31, 2014

March 31, 2013

Risk weight 0%¥ 578,089¥ 577,732

Risk weight 10%

19,03856,378Risk weight 20%

1,607,912

2,168,875

Risk weight 50%

6,800,392

6,340,198

Risk weight 100%

6,806,919

6,797,228

Risk weight 150%

1,760

20,313

Risk weight 250%

2,423

15,843

Risk weight 1,250%

3,145

388

Other

50,844

31,824

3. Items Related to the Effect of Credit Risk Mitigations
Exposure to Items to Which Effect of Credit Risk Mitigations Applied(Millions of yen)March 31, 2014

March 31, 2013

Eligible financial collaterals¥—¥ 165,868

Guarantees or credit derivatives

1,071,025

1,210,719

4. Transaction Counterparties’ Risk on Derivative Product Transactions and Transactions with Long Settlement Periods(Millions of yen)

Equivalent credit calculation method
Gross restructuring cost

March 31, 2014

March 31, 2013

Current exposure
methodCurrent exposure
method¥160,219¥153,842

80,85085,604

Interest rate transactions

39,62848,647

Foreign exchange transactions

41,17436,936

Credit derivative transactions——

Gross add-on, by transaction type48

20

Reducing credit equivalent amounts through netting

86,204

113,462

Net equivalent credit

154,865

125,984

Net restructuring cost
Notional amounts of credit derivatives forcalculated credit equivalent amount by type ofCredit default swaps provisioncredit derivative, by protection purchase or provision

96,97674,32531,03561,673Credit default swaps purchase

—

—

—

—

Other commodity transactions

Notional amounts of credit derivatives taking
into account credit risk mitigations

Notes: 1. Collateral is not used to reduce credit risk on derivative product transactions.
2. Credit derivatives used to compute the credit equivalent amount are included in securitization exposure; there is some data overlap withsecuritization exposure indicated elsewhere and what are known as single-name CDS offerings include the measurement of customers’ liabilities
for acceptances and guarantees as consisting of the legal and other exposure of the company in question.

Annual Report & CSR Report 2014193

5. Securitization Exposure(a) Securitization exposure in which DBJ is the originator
Not applicable.
(b) Securitization exposure in which DBJ is an investor(1) Retained securitization exposure amount and breakdown by major underlying asset type(Millions of yen)March 31, 2014

March 31, 2013

¥898,818¥733,263——

31,03556,673Structured finance
Of which, resecuritization exposure
Credit derivatives
Of which, resecuritization exposure
Funds*Of which, resecuritization exposure

20,03533,507

267,445

255,724—

2,158* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

(2) Balance of retained securitization exposure by risk weight and required capital amounts(Millions of yen)March 31, 2014

Risk weight0%

Balance

Risk weight

20%

Balance
Capital requirement

1,351

2,043

Risk weight

50%

Balance

14,454

9,335

578

373

Risk weight

100%

Balance592,212444,368

Capital requirement

47,37635,549Balance—

3,411

Capital requirement—

955

Capital requirement

Capital requirement

Risk weight
Risk weight
Risk weight350%
1,250%
Other*¥ 51,369

March 31, 2013

¥

—

—

—

84,487

127,726

Balance

418,545414,839

Capital requirement

418,545414,839

Balance

16,193

10,313

Capital requirement

16,858

5,955* Applying to exposure the transitional measures indicated in Article 15 of the Supplementary Provision to the Capital Adequacy Ratio Notification.

Resecuritization exposure
Risk weight

40%(Millions of yen)March 31, 2014

March 31, 2013

¥20,035¥33,507

641

1,072

Balance—

368

Capital requirement—

29

Balance
Capital requirement

Risk weight
Risk weight
Risk weight
Risk weight

194

Annual Report & CSR Report 2014

100%
225%
650%
1,250%

Balance—709

Capital requirement—

127

Balance—

900

Capital requirement—

468

Balance—

180

Capital requirement—

180

Financial Condition(3) A 1,250% risk weight is applied to the breakdown of securitization exposure amounts in accordance with Article 247 of
the Capital Adequacy Ratio Notification(Millions of yen)March 31, 2014

March 31, 2013

Structured finance¥165,262¥169,027

Funds*

253,282

245,992* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

(4) Breakdown of retained resecuritization exposure by application of techniques to mitigate credit risks and guarantors, or byrisk weighting applied to guarantors.
Not applicable.
(5) Amount of credit risk assets calculated with application of Article 15 of the Supplementary Measure (Interim Measure for
Securitization Exposure) to the Capital Adequacy Ratio Notification(Millions of yen)March 31, 2014

Credit risk assets¥9,869March 31, 2013¥12,497

6. Items Related to Market Risk
DBJ falls into the category indicated in Article 16 of the Capital Adequacy Ratio Notification. Consequently, calculation of themarket risk equivalent amount was not performed.
7. Items Related to Shares and Other Equity Investments and Capital Injections into the Banking Book(a) Market value of below-listed items as included within categories in
the non-consolidated balance sheets
Exposure to listed shares
Exposure to other equity investments and capital injections(Millions of yen)March 31, 2014

March 31, 2013

¥ 52,109¥ 50,115

353,764

287,131

2,353

18,336

1,868

1,688

37,70327,707(b) Gains or losses on the sale of equity investments or shares
Gain or loss on write-off of equity exposure(c) Gains or losses from valuation recognized on the non-consolidated balance sheets
but not recognized on the non-consolidated statement of income

Notes: 1. DBJ has no gains or losses from valuation unrecognized on the non-consolidated balance sheets or the non-consolidated statement of income.
2. DBJ has no exposure to shares to which Article 13 of the Supplementary Provisions to the Capital Adequacy Ratio Notification applies.

8. Exposure Applied for the Deemed Calculation of Credit Risk Assets
Not applicable.
9. Interest Rate Risk in the Banking Book
Decrease in economic value resulting from interest rate shock

March 31, 2014

March 31, 2013

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a
one-year holding period
and a five-year time
horizon:¥7.3 billion

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a
one-year holding period
and a five-year time
horizon:¥7.1 billion

Annual Report & CSR Report 2014

195

196

Annual Report & CSR Report 2014

Profile (As of July 1, 2014)

Established:

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

Legal basis:

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

President:

Toru Hashimoto

Number of employees:

1,189 (As of March 31, 2014)

Capital:¥1,206,953 million (100% owned by the Japanese government)

Address:

South Tower, Otemachi Financial City, 9-6, Otemachi 1-chome, Chiyoda-ku, Tokyo
100-8178, Japan

URL:

http://www.dbj.jp/en

Number of offices:

Branch offices, 10; representative offices, 8; overseas representative office, 1; andoverseas subsidiaries, 3

Subsidiaries andaffiliated companies: Consolidated subsidiaries, 21; non-consolidated subsidiaries, 29; and affiliated companies, 19(As of March 31, 2014)
Main business:

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

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

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







Total assets:¥16,247.9 billion (As of March 31, 2014)

Loans:¥13,963.0 billion (As of March 31, 2014)

Capital adequacy ratio:

15.23% (Basel 3, BIS standard) (As of March 31, 2014)

Issuer ratings:

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

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

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Published in September 2014 by the Public Relations & Corporate Social Responsibility Office,Corporate Planning & Coodination Department
URL: http://www.dbj.jp/en

14/09/17 10:17

Annual Report & CSR Report

http://www.dbj.jp/en
Development Bank of Japan Inc.
South Tower, Otemachi Financial City,
9-6, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8178, Japan2014

Applying Financial Expertiseto Design the Future

Development Bank of Japan Inc.

This report is printed on paper certified by the Forest Stewardship Council TM (FSC) as being made from managed forests.

Annual Report & CSR Report

2014

Printed in Japane̲DBJ̲Cover̲2014̲140905.indd 1

14/09/17 10:17