Annual Report & CSR Report 2008

The shape and coloring of DBJ’s logo seeks to convey the sense of creativity, energy and youthful vigor with which the Bank strives tomeet continuously changing socio-economic needs. The emerging egg shape illustrates our efforts to shape a continuously unfolding future.

Annual Report & CSR Report

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Printed in Japan

Development Bank of Japan

http://www.dbj.go.jp/english/

The Development Bank of Japan (DBJ) is making
preparations for its shift to independent management in
anticipation of its conversion to a joint-stock company(privatization) on October 1, 2008, andthe ensuing full privatization.

DBJ is taking on new challenges as it works
to achieve future prosperity, resolve the various issues
that its customers face and contribute to the creation ofboth social and economic value.

Contents◆ Profile2◆ Financial Condition

79

Accounts Based on Corporate Accounting◆ Financial Highlights

3◆ Message from the Governor

4◆ Privatizing DBJ

6◆ The Three Faces of DBJ

14

Outline of Fiscal 2008 Operations Evaluation

Core Competencies (the “Three Ws”)

16

ReportProblem-Solving Support

18

Excerpt from the Development Bank of Japan

Financial Services

20Standards
Accounts Based on Accounting Standards
for Special Agencies, etc.
◆ Appendices◆ DBJ’s Management Functions

22

81

Law (Law No. 73 of 1999)

135
145

146

149

Excerpt from the New DBJ Law(Law No. 85 of 2007)

151

Management System

23

Corporate Governance

23Internal Audits

25

Board of Directors and Auditors

154

Compliance26

Organization Chart

155

Risk Management

27

Timeline

156

Disclosure

31◆ Corporate Data

◆ Locations and Directory◆ Overview of Investment and Loan Activities

154

157

32

DBJ’s Investments and Loans

33

Fiscal 2009 Investment and Loan Plans

36◆ Providing Financial Services to Resolve
the Issues Society Faces

37

DBJ’s Three Priority Areas for Investments and Loans

38

Revitalization Assistance for Regional Economies

40

Environment Conservation and Building
Social Infrastructure

46

Technology: A Creative Force that Drives
Economic Growth52

Promoting Foreign Direct Investment in Japanand Supporting the Internationalization of
Local Communities

56

Providing a Safety Net

57

Case Studies of Other Initiatives

58

Making Use of Information Functions

60◆ Responsibilities as a Member of Society

63

Communicating with the Public

64

Fostering Human Resources and Creatinga Comfortable Work Environment

66

DBJ’s Environmental Management

68◆ Intellectual Asset ReportIntellectual Assets Management

71
72

Financial Platform that Enables DBJ to
Meet the Needs of the Times

75

1

Profile (As of March 31, 2008)

Established:

October 1, 1999 (Former Japan Development Bank: 1951,
Former Hokkaido-Tohoku Development Finance Public Corporation: 1956)

Governor:

Minoru Murofushi

Number of employees:

1,347 (Fiscal 2009)

Capital:¥1,272.2 billion (All capital is funded by the government of Japan)

Address:

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

URL:

http://www.dbj.go.jp/

Number of offices:

Branch offices, 10; representative offices, 8; and overseas representative offices, 5

Total assets:¥12,524.8 billion

Loans:¥11,512.9 billion

Net earnings:¥53.9 billion

Capital adequacy ratio:

20.71%

Ratings on FILP agency bond: Aaa (Moody’s Investors Service, Inc), AA- (Standard & Poor’s Corp.),
AA (Rating and Investment Information, Inc.),
AAA (Japan Credit Rating Agency, Ltd.)
Note: Total assets, loans, net earnings and the capital adequacy ratio are calculated on a non-consolidated basis.

2 ProfileFinancial Highlights
Financial Highlights (Non-consolidated)(Billions of yen)
For the years ended March 31 or as of March 31(Millions of U.S. dollars)

FY 2008

FY 2007

FY 2006

FY 2008

Total income

374.8

398.9

411.6

3,741.0

Net income

53.9

75.1

92.6

538.1

Capital1,272.2

1,272.2

1,272.2

12,698.7

Total equity

2,074.1

1,981.5

2,010.6

20,702.4

Total assets

12,524.8

13,073.9

13,682.1

125,011.2

Loans

11,512.9

12,146.4

12,873.2

114,910.7

Securities

532.1

366.4

429.5

5,311.2

Capital adequacy ratio (BIS standard) (%)

20.71

19.19

16.07

Ratio of risk monitored loan (Banking Law base) (%)

1.0

1.2

1.6

Return on equity (%)

2.66

3.90

4.77

Return on assets (%)

0.42

0.57

0.67

Overhead ratio (%)

31.93

26.53

26.38

Number of employees

1,347

1,352

1,357

Notes: 1. The “Total equity” figure for FY 2006 was previously referred to as “total net assets”.
2. The capital adequacy ratios given for March 31, 2006 is calculated according to former BIS standards; the March 31, 2007 and 2008, figures arecalculated according to the new BIS standards.
3. Return on equity and return on assets are based on net earnings.
4. Overhead ratio = General and administrative expenses/Gross operating profit
5. Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥100.19=$1.00, the effective exchange
rate prevailing as of March 31, 2008, has been used in the conversion.

Total Equity

Overhead Ratio(Billions of yen)

(%)
50.00

2,500.0

2,000.0

2,010.6

1,981.5

2,074.1
40.00

31.93
1,500.0

30.00

1,000.0

20.00

500.0

10.00

0

Fiscal 2006

Fiscal 2007

0.00

Fiscal 2008

Capital Adequacy Ratio(BIS standard)
(%)

(%)
5.0

19.19

26.51

Fiscal 2006

Fiscal 2007

Fiscal 2008

Ratio of Risk Monitored Loan
(Banking Law base)

25.00

20.00

26.38

20.71
4.0

16.07
15.00

3.0

10.00

2.0

5.00

1.0

0.00

1.6

1.2

1.0

Fiscal 2007

Fiscal 2008

0.0

Fiscal 2006

Fiscal 2007

Fiscal 2008

Fiscal 2006

Financial Highlights 3

Message from the Governor

As a policy-based financial institution, the Development Bank of Japan (DBJ)
has been involved continuously in activities that contribute from a financial perspective
to the development of the Japanese economy and society. In October 2008,
we will privatize (convert to a joint-stock company as a special stock corporation).
With only two months remaining until privatization, we are striving
to raise our level of management independence and taking a variety of steps
to ensure that we are highly valued by society post-privatization.

We are endeavoring to become an entity that willmeet society’s expectations once we privatize.
To achieve this goal, we will augment the knowledge,
experience and expertise we have built up asa policy-based financial institution withthe full-scale customer orientation befitting
a private-sector company.

4 Message from the GovernorOur Aims
As we move toward privatization, DBJ aspires to live up to the objectives of its corporate
philosophy: “Applying financial expertise to design the future.” In our view, creative financing
is the key to solving problems, building the trust of our clients and achieving future prosperity.
Our corporate philosophy addresses this resolve.
Following on from this corporate philosophy, we have coined the “Three Ws” to express
DBJ-specific characteristics.
The first “W,” for “Will,” expresses our ongoing dedication to a long-term perspective,
neutrality, public-mindedness and reliability. The second “W” is for “Wisdom,” which refers
to our intellectual assets—the experience and know-how we have developed to date, ourforward-thinking capacity and judiciousness, and our involvement in financial technologies.
The third “W,” for “With,” indicates the relationships of trust that we have with our customers,
regional government bodies, cooperating companies and financial institutions. Each of our
executives and regular employees will apply these “Three Ws” in concert to deliver our issueresolution capabilities and financial expertise to our customers.
As in the past, rather than concentrating solely on short-term profit we remain dedicatedto helping our customers shape the future through our long-term and neutral perspective.
Our Corporate Ethics
As a member of society, DBJ recognizes that it has social responsibilities, and that alongsideits efforts to raise corporate value each and every action the Bank takes must be appropriate.
This recognition forms the basis for our corporate social responsibility (CSR) outlook, as weseek to realize a sustainable society.
As its business activities have direct social, environmental and economic implications, DBJ
believes it fulfills its corporate social responsibility by conducting its core businesses. For thisreason, in our Annual Report & CSR Report 2008 we have adopted “disclosure from a CSR
perspective” as a core concept, a springboard from which to introduce our activities.
Becoming a Unique Financial Institution
Through privatization, we aim to establish ourselves with the business model of a highly
specialized financial institution that provides integrated investment and loan services.
In the past, DBJ’s operations have centered on long-term senior loans. To meet a morediverse range of customer needs, in recent years we have begun applying our expertisein screening long-term projects and increasing our percentage involvement in structured
financing and fund investment.
After privatization, we will enhance our investment and financing functions, providing awide range of services that contain facets of both. In addition to providing M&A advisory
services, consulting and other information services, we intend to mold ourselves into afinancial institution that is unique both in Japan and overseas for conducting integrated
investment and loan activities.
Our primary aim is to be the financial institution of choice for our customers, as well as one
they find useful. To achieve this standing, we will redouble our efforts to address thoroughly
the broad range of issues our clients face. We want our customers to be pleased that wehave privatized. Accordingly, each of the Bank’s executives and regular employees is taking
upon themselves the challenge of transforming DBJ.
I ask for the continued support of our stakeholders as we move along this new path.
July 2008

Minoru Murofushi
GovernorDevelopment Bank of Japan

Message from the Governor 5

Privatizing DBJ

Leveraging its greater degree of freedom to conduct leadingedge financial activities, DBJ will endeavor to resolve theissues its clients face, build their trust and work to achieve
their future prosperity.

Applying finan
to design

6 Privatizing DBJ

The new DBJ corporate philosophy is “Applying financial expertise to design
the future.” The word “design” is deliberate, evincing our willingness to work intandem with clients to help them reach their goals. DBJ is taking privatization
as an opportunity to inculcate in its executives and regular employees an evenmore thorough “client-first” orientation. We will work assiduously to makethe most of our newfound freedom to apply leading-edge initiatives to theresolution of client issues.

cial expertisethe future

Privatizing DBJ 7

Formulation of the Development Bank of Japan Inc. Law

and the Privatization Process
On June 6, 2007, the Development Bank of Japan Inc. Law (New DBJ Law) was passed by the 166th
regular Diet Upper House plenary session and enacted. This law provides for the Development Bank ofJapan’s privatization (conversion to a joint-stock company) in October 2008, leading to full privatization
five to seven years thereafter, the exact timing to be determined by taking market trends into account.

Overview of the Development Bank of Japan Inc. Law
Provisions❖Scheduled conversion to joint-stock company: October 2008
❖Target for disposing of government-owned shares: Five to seven years after October 2008
(Immediately after disposing of the stock, measures are to be implemented that repeal special legislation passed during the transition period.)(Stock disposition methods that will enable DBJ to continue its core investment and loan functions, which involve long-term business funding,
are under consideration, and necessary measures are to be implemented.)• The Development Bank of Japan Inc. (hereinafter referred to as the “Corporation”) shallbe a joint stock company (kabushiki-kaisha) whose object is to maintain the foundations ofinvestment and financing functions of long-term business funds as the Development Bank ofJapan by conducting business activities utilizing the methods of combining investments andfinancing and other sophisticated financial methodologies, while maintaining the autonomy ofmanagement with the goal of realizing full-scale privatization, thereby contributing to smoothsupply of funds to those who need long-term business funds, as well as to the sophisticationof financial functions.
• Centering on current businesses (including loans, debt guarantees, Fiscal Investment and Loan
■Scope of Operations
Program (FILP) agency bonds and government-guaranteed bonds), DBJ will employ methods thatare complementary from a fund-raising perspective (such as accepting negotiable deposits andissuing financial debentures), and develop new financial technologies as business needs dictate.
• Eliminate budgetary controls, remove umbrella authorization of corporate bonds and loans and■Minimization ofGovernment Involvement discontinue regulation of subsidiaries owned for investment purposes.
• Measures are designed for a smooth shift to independent funding through though the issuance■Financingof FILP agency bonds and government-guaranteed bonds during the transition.
• DBJ may also take out long-term loans from private-sector financial institutions.
• Legislation will be considered for the transition period that will put DBJ on the same footing as■Other Topics
the current systems provide.
• Formulate progressive measures.
• Create measures stipulating responses by designated financial institutions at crisis-response
times.
Note: Please refer to page 151 for details of the New DBJ Law.
■Purpose

The Privatization Process
FY2006

FY2007

FY2008Preparation Period(government-afﬁliatedﬁnancial institution)

June 2007
New DBJ Law
goes into effect

FY2009FY2010FY2011FY2012 FY2013–FY2015

Transition Period(Five to seven years, with the exact timing determined by taking
market trends into account)(Special stock corporation with shares held by the government)

October 2008
Privatization(conversion toa joint-stock company)

Shareholders

100% government

Company
form

Government-afﬁliated ﬁnancial
institution (special public corporation)

FY2016After full privatization

Full privatization

Private sector

Government

Joint-stock company (special stock corporation)

Business

Based on current DBJ Law

Based on new DBJ Law

Financing

Government-guaranteed bonds, FILP
agency bonds, independent ﬁnancing

Independent funding, government-guaranteedbonds and FILP agency bonds

100% private
Joint-stock
corporation
Based on generalﬁnancial legislation
Independent ﬁnancing

Note: Business categories following full privatization will be selected by taking into consideration operations during the transition period.

8 Privatizing DBJ

Privatizing DBJ

Management Philosophy

Creating
Economic
Value

Creating
SocialValue

Building on the base of the “Three Ws” that we have cultivated as a government-affiliated financial institution,
we apply financial technologies suffused with our creative
financing to resolve client issues and raise economic and social value.

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.

The “Three Ws” and Four Corporate Values at the Core of DBJ’s Financial Expertise

The “Three Ws” Cultivated through Policy-Based Financing

Will

WisdomrStems from the industry research,
screening capabilities and otherknow-how we have developedrApplied financial technologiesr5IFDPSFPGUIFGPVSDPSQPSBUF
values DBJ developed as agovernment-affiliated financial
institutionWithrNetworks we have built withcompanies, public institutions,financial institutions and otherentities

DBJ’s Four Corporate Values (Values DBJ Shares with Its Clients)
1. A long-term perspective Using our capital effectively, we work to earn the trust of customers in Japan andoverseas by accepting risk and contributing to their long-term development. Our
focus is on the long-term growth of entities to which we provide investment andfinancing.

2. Neutrality

We adopt a neutral stance and are not beholden to any specific corporate group.

3. Public-mindedness

Applying the policy-oriented expertise that we have accumulated as a public
institution, we maintain a focus on public-sector and environmentally oriented
initiatives.

4. Reliability

We consider reliability important, based on the three corporate values indicatedabove.

Privatizing DBJ 9

Business Model of the New DBJ
We will work to resolve the issues customers face by providing specialized financial services involving integrated
investment and loans.

Financing

Investing

Provision of medium- andlong-term ﬁnancing, as well as
project ﬁnancing and otherforms of structured
subordinated 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 research functionand expertise in environmental andtechnical evaluations

Resolving Client Issues through DBJ’s Financial Expertise
By remaining closely in tune with the changing times, we aim to apply financial expertise to resolve the issues facedby our clients (private companies, public entities and financial institutions), create new economic and social value
and contribute to future prosperity.

Issues That Companies Face
Business Expansion
Helping clients grow andexpand their operational bases

Time-speciﬁc
issues

New/additional plant and equipment
Mergers, acquisitions and businesstie-ups
Technical development andtransformation
New business development
Real estate development

Strengthening the
Financial Base
Helping clients strengthen andstabilize their financial bases
Business restructuring
Capital restructuring
Debt restructuring
Corporate revitalization
Crisis management andresponse

Region-speciﬁc
issuesA Sustainable Social Structure
Helping clients raise corporate brand value through social
contributions and by building a social infrastructure baseEnvironmental measures
Resources and energy
Public sector
Health care

10 Privatizing DBJ

Social infrastructure
Local community invigoration
Disaster recovery

Privatizing DBJ

Our Asset Model as We Move toward Privatization
Throughthe seamless developmentof investment and financing, we will endeavor to shift from an asset structure●収益基盤確立のため、投融資をシームレスに展開することで徐々に資産内容を入れ替えながら、
that株式会社化から５〜７年目時点の投融資想定残高：
centers on loans to one that emphasizes investment,概ね８〜１０兆円
aiming to raise profitability.

Raising Proﬁtability While Sustaining Management Soundness
Funds, others:¥160.0 billion

An investment balance ofapproximately ¥500.0 billion

A loan balance ofapproximately¥3 trillion before
converting toa joint-stockcompany

Investments and ﬁnancing:
Approximately ¥12.3 trillion

A loan balance of approximately¥5–6 trillion after converting
to a joint-stock company

Investments and loans as of March 31, 2007

How we envision our balance of investments
and ﬁnancing ﬁve to seven years after privatization

Organization Structure to Create Our Business Model(Transition period)
We are considering the governance structure outlined below as one that is appropriate for a joint-stock company.
Build a structure that will ensurecompliance with financial
regulations, suchas the Companies Act andthe Financial Instruments
and Exchange Law, and avoid
potential conflicts of interest.

Create a structure thatstrikes a balance between
the profit-generation andmonitoring functions.

Put in place a risk management
system commensuratewith the risk profile we adopt.

(After full privatization)
After full privatization, we will strengthen our integrated investment and loan business in line with creating our new
business model. We will select a form of organization that fits these functions.
In line with existing financial regulations, we will strive to become an integrated financial group that
conducts business in the banking, investment and securities arenas.

Privatizing DBJ 11

FAQs on DBJ’s Privatization

Question

AnswerWhat is New DBJ’s corporate philosophy?

Occasioned by privatization, DBJ has created the new corporate philosophy of “Applying financial
expertise to design the future” and established new goals. This philosophy expresses ourconviction that creative financing is the key to solving problems, building the trust of our clientsand achieving future prosperity.
While retaining the identity that DBJ has built for itself, this corporate philosophy clearly
outlines the qualities that we will develop as a private-sector company. Our enthusiasm for the new

Question

Answervistas that will open to us as a private-sector company is inherent in the phrase “design the future.”

Can you be more specific about DBJ’s business model?

Upon privatization, DBJ aims to operate on the business model of a highly specialized financial
institution that provides integrated investment and loan services.
In the past, long-term lending operations have been the core of DBJ’s business. In responseto the increasingly diverse customer needs that have arisen in recent years, we plan to increase ourinvolvement in business that takes advantage of our screening expertise on long-term projects,
as well as structured financing and fund investment. After privatization, we will enhance ourinvestment and financing functions, providing a wide range of services that contain facets of both.
In addition to providing new M&A advisory services, consulting and other information services,

Question

Answer

we intend to mold ourselves into a financial institution that provides specific value to its customers.

Tell us about your community initiatives.

Along with the environment and technology, DBJ positions community initiatives as one of its threepillars of business. After privatization as well, we will respond to the business succession needsof medium-sized local companies, conduct M&A activities employing our networks that cover abroad range of key industries, and respond to customer needs through business revitalization

Question

Answerinitiatives that leverage our relationships with local financial institutions.

Will the new DBJ conduct business overseas?

Given that many of our customers have global operations, we believe that taking a multifaceted
approach to their needs will make overseas business an inevitable development for us. As weare not legally restricted from conducting business overseas, we consider international businesswithin our scope.

12 Privatizing DBJ

Privatizing DBJ

Question

Answer

As a designated financial institution, what will become of your crisis response(safety net) business?

Under the Japan Public Finance Corporation Law, certain financial institutions are designated toprovide credit in the event of natural disaster and other crises, and DBJ is so designated. Such
institutions receive credit from the Japan Public Finance Corporation, which they employ toprovide loans. As a designated financial institution, we plan to continue providing such loans as

Question

Answer

we apply our expertise in this area to crisis response operations.

How do you expect government-owned shares in DBJ will be sold?

The process for selling government-owned shares is stipulated in the Administrative Reform
Promotion Law. Article 2 of the Supplementary Provisions to the New DBJ Law states that “TheGovernment shall from time to time review matters, such as matters regarding the method inwhich the Government-Owned Shares should be disposed of and take the required measures
based on the result of such review, so that the foundation of the Corporation’s investment andfinancing functions for long-term business funds will be maintained.” Basically, the government will
determine the specific method and schedule for the disposal of shares, as well as the parties to

Question

Answer

Question

Answerwhich they will be sold.

Please describe your future fund-raising efforts.

We will develop a medium- to long-term fund-raising platform concentrating on corporate bonds.
We will round out these efforts with diverse methods to raise funds in a stable and efficientmanner, such as by borrowing from other financial institutions.

What will be your business categories?

In the immediate future, we will operate as a special stock corporation under the New DBJ Law. In
the interval until we are fully privatized, we will study ways to meet customers’ needs. Ultimately,
we and other DBJ Group companies will determine our business categories on this basis.

Privatizing DBJ 13

The Three Faces of DBJ

Applying the financial strength stemming from the capabilities andexpertise it has accumulated over the years, DBJ maintains unwavering“client-first” orientation as it addresses the issues clients face andprovides them with distinctive services.

WisdomWill

With

Resolvingclient issues

Resolvingclient issues

Resolvingclient issues

Contemporary
issuesCorporateissuesCommunity
challenges

Loans

Investment

Consulting
and advisory
services

14 The Three Faces of DBJ

Core Competencies (the “Three Ws”)

P.16

Three specific characteristics that form the foundationof DBJ’s strength—financial expertise

Problem-Solving Support

P.18

Contributing to the future prosperity of Japanese society
by creating economic and social value stemming fromcontemporary and community characteristics

Financial Services

P.20

Resolving client issues through distinctive financial
services—integrated investments and loans

The Three Faces of DBJ 15

Core Competencies (the “Three Ws”)

The Characteristic “Three Ws” at
the Core of DBJ-Specific Financial Expertise• Intangible assets we have nurtured/values to pass on(the “Three Ws” and the “Four corporate values”)• The wherewithal to solve clients’ problems by applying strong financial technologies andinformation capabilities plus robust provisioning for capital investment

DBJ’ s Financial Expertise
Ma

na

r

me

nt’

t%FMJWFSJOHWBMVFUPDMJFOUT
and society as a whole

live

ge

sa

bil

ity

to

s’

e
ye

de

live

r

ity
bil

a

plo

Em

e
od

t

t%FNPOTUSBUJOH
the attitudes and actions of
a “client-ﬁrst” orientation

With

Will
• The fundamental stanceat the core of the four
corporate values (a longterm perspective, neutrality,
public-mindedness andreliability) we have cultivatedas a government-affiliatedfinancial institution

Wisdom• Expertise that DBJ has fosteredthrough its industry research andscreening capabilities• Applied financial technologies

16 The Three Faces of DBJ• Networks that DBJ has
created with companies,
public institutions andfinancial institutions

Will

DBJ’s Four Corporate Values

DBJ’s fundamental stance is based on sharing with
Long-term
perspective

its clients a long-term perspective, neutrality, publicmindedness and reliability.
● We have built our financial expertise by providing social value,

Reliability

thereby earning the trust of our clients and society as a whole.

Publicmindness

Neutrality

Rather than being constrained by an over-emphasis on shortterm profit, all DBJ executives and regular employees work tomaintain a long-term and neutral perspective, approaching new
business with a spirit of innovation and challenge.

Wisdom
Wisdom is a catch-all that refers to the intellectual

Investment and Loans Employing
New Financial Methods(Billions of yen)800

assets—the ability to think ahead, make discerning
judgments and introduce new financial technologies—

600

that we have built through our experience in applying
our industry research and screening expertise.
● “Financial expertise” is a broad-ranging phrase that includes
DBJ’s screening expertise, stemming from its highly valued

400

200

0

March 31, 2007

research capabilities and predilection toward thinking ahead.

March 31, 2008■■ Fund-related investments■■ Structured ﬁnancing■■ Corporate mezzanine loans

In addition to advanced financial methods, the integration of
investing and financing enables DBJ to offer a host of services tomeet diverse client needs.

With
DBJ enjoys trust-based relationships with clients, aswell as partners among public-sector and financial
institutions.
● DBJ’s strength derives from its liaisons with the industrial sector,

Total Operating Agreements withFinancial Institutions(Institutions)
120
100
80

40

define the “With,” the third of the “Three Ws,” and support the20

designed to ensure the functioning of our financial platforms.

93

106

106

60

government bodies and financial institutions. These relationships

other two—“Will” and “Wisdom.” Our broad-ranging activities are

82

103

0

7
Fiscal 2003 Fiscal 2004 Fiscal 2005 Fiscal 2006 Fiscal 2007 Fiscal 2008

The Three Faces of DBJ 17

Problem-Solving Support

Providing the solutions that serve as the backbone forsustained social growth

Resolving Client Issues
Corporate Issues• Business and industry revitalization• Business restructuring• Smooth business succession (making
successors aware of problems andpassing on technical expertise)• Creating new industries(Converting innovation and technology
into businesses)• Formulating capital policies andbuilding a sound financial base
• Strengthening CSR and governance• Others

Contemporary Issues

Community Challenges• Environmental measures• Environmentally responsible energy
investment• Global warming countermeasures• Measures to ensure safety, security
and disaster preparedness• Responding to globalization• Introducing information technology
and other responses to sudden
market changes• Others• Creating regional infrastructures for the
railway business and safety measures• Building vigorous communities(Such as providing infrastructure
equipment for areas in need of urgent
urban renewal)• Creating employment in the community• Building attractive tourist destinations• Formulating measures for medical care,social welfare and measures befitting
an aging society• Others

18 The Three Faces of DBJ

Resolving Client Issues
Resolving Contemporary Issues
Throughout its history, DBJ has played a variety of roles
to meet the needs of the times. Making the most ourexpertise and abilities, we provide financing services thatsuit changing social and economic conditions.

Effectiveness of Investments and Loans(Fiscal 2008)■Construction of waste-processing facilities
in terms of annual waste-processing
capacity:

724,000 tons

■Reduction in greenhouse gas emissions:
35,000 tons

Resolving Community Challenges
In the interest of creating prosperous lifestyles, we take along-term perspective in providing appropriate solutions
to the challenges communities face, such as stimulating
regional economies, building local infrastructure andbuilding wide-ranging networks.

Effectiveness of Investments and Loans(Fiscal 2008)■Area served by newly introduced
district heating and cooling systems:
375,000 m2■Number of locations where railway
crossings eliminated:

355

Resolving Corporate Issues
DBJ takes a multifaceted approach to resolving corporate

Effectiveness of Investments and Loans(Fiscal 2008)

issues. We aim to help clients become more competitive,
grow further, expand their operational bases, strengthenand stabilize their financial bases and raise brand value
by supporting social sustainability.

■Patents received by venture companies:
55■Annual revenues of companies
undergoing reconstruction or recovery:¥2.6 trillion

The Three Faces of DBJ 19

Financial Services

Resolving client issues through integrated investment
and loan services

Financing● Medium- and long-term investments
and loans, project financing andother types of structured financing,
subordinated financing

Resolving
Client Issues

Investment● Mezzanine finance, equity and otherfinancingConsulting andAdvisory Services● Arrangement of structured financing,
M&A advisory services, provision ofexpertise on industry research and otherenvironmental and technical evaluations

20 The Three Faces of DBJ

Loans
DBJ provides medium- and long-term loans that meetthe needs of the times, as well as clients’ requirements,
meeting a range of funding needs. In addition to seniorfinancing through traditional corporate loans, we offer
project financing, non-recourse loans and other typesof structured financing as well as a variety of otherloans that employ advanced financial methods.

Loan Amounts Provided (Non-consolidated)(Billions of yen)
1,600.0
1,278.0

Debt Area

Equity Area

(Financing)(Investment)

Common stock

Convertible
preferred stock

Redeemablepreferred stock● Make proposals that apply our expertise in industry research
and ability to develop new financial technologies● Arrange structured and other types of financing

Fiscal 2008

Overview of Mezzanine Financing

Loans refundable
as shares

Consulting and Advisory Services
We also offer consulting and advisory services andmake use of networks with allied financial institutions.
Though our consulting and advisory support services,
we help clients become more competitive andcontribute to the vigor of regional economies.

Fiscal 2007

Refundable
subordinated loans● We provide investment to assist with business revitalization,
restructuring, growth strategies, raising international
competitiveness and infrastructure operations. We provide
such funding through mezzanine financing, as well as
through equity and other funding.

Fiscal 2006

400.0

Senior loans

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

1,080.4800.0

0● Provide medium- and long-term loans● Offer unique high-value-added financial services(environmentally and socially responsible investment,
disaster countermeasures and safety measures, ratinglinked financing for technology commercialization)● Respond to diverse needs by offering non-recourse loans;develop and provide financing offering collateral andstructural flexibility (debtor-in-possession financing, inventory
collateral, intellectual property rights as collateral, etc.)

1,092.6

1,200.0

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

138.0

120.0
80.0

72.0

65.3

40.0
0

Fiscal 2006

Fiscal 2007

Fiscal 2008

M&A Advisory and Consulting Agreements(Cumulative)(Agreements)
200
159
150

129
98

100
66
50
0

36

Fiscal 2004 Fiscal 2005 Fiscal 2006 Fiscal 2007 Fiscal 2008

The Three Faces of DBJ 21

DBJ’s Management Functions

As a financial institution, DBJ’s most important public social responsibility is to maintainthe trust of society. We employ an operations
management cycle that reflects the voice ofsociety, particularly in terms of addressing
the issues society faces from a long-term
perspective, at the appropriate time and in theappropriate manner. We undertake projects
that are meaningful from both economic andsocial perspectives and work to offer superior
investment and loan solutions. DBJ considers
sincerity and fairness in its investments andloans, as well as all of its other operations,a part of its CSR efforts.

22◆ Management System
A fundamental principal of DBJ’s management is thoroughand regulations, and operates fairly in good faith and incompliance with the current DBJ Law and various corpo-

accordance with social standards.

rate laws. The Bank complies strictly with all laws, rules◆ Corporate Governance
DBJ carries out its activities in accordance with three-year
policies prepared by the competent ministers (the Minister(1) Complementing and Encouraging Private-Sector
Financial Institutionsof Finance and the Minister of Land, Infrastructure and

DBJ Law prohibits the Bank from competing withTransport). Based on these Medium-Term Policy Principles,

private-sector financial institutions. Rather, our aim is
to complement and encourage these institutions.

DBJ prepares and publishes Investment and Finance(2) Ensuring Sound Finance

Guidelines for each fiscal year. We have also establishedthe Management Council, which consists of experts from

DBJ maintains a strong risk management capacity andoutside the Bank. These entities consider and publicize theconducts asset/liability management to ensure

implementation status of the Bank’s operations as

a balance between revenues and expenditures andrecorded in its Medium-Term Policy Principles.

enhance the certainty of repayment from our client.

The characteristics of DBJ’s business management are

As a policy-based financial institution, we strive toward
sound and efficient operations.

described below.

(3) Evaluating Policy Effectiveness
DBJ endeavors to evaluate the policy effectiveness of
its financing and maintain its accountability as a financial institution.

Management Councilors

Operations Management Cycle Based on the DBJ Law(As of March 31, 2008)
Yoichi Kaya
Director General, Research Institute of Innovative
Technology for the Earth (RITE)

Yoshio Matsui
Chairman, The Yomiuri Shimbun
Shigeru Morichi
Professor, National Graduate Institute for Policy
Studies
Yasuko Niimura
Advisor, Niimura Law Office
Shinobu Shimizu
Chairman of the Board and Representative Director,
Tokyu Corp.
Former Chairman, The Association of Japanese
Private Railways

Shoichiro Toyoda*
Honorary Chairman and Director, Toyota Motor Corp.
Honorary Chairman, Nippon Keidanren

Medium-Term
Policy Principles(every three years)

Reviews and reports on
implementation ofMedium-Term Policy Principles

Investment and Finance Guidelines(annual)DBJ

Evaluation results
reﬂected in Investment
and Finance Guidelines

Management Council

Policy-based
ﬁnancing evaluation

External evaluation

Internal evaluationSee=

Yasuo Shingu
Honorary Chairman, Sumitomo Metal Industries, Ltd.
Former Chairman of the Board of Directors, Kansai
Economic Federation

Plan
Competent Ministers

Publication

Satoru Kishi
Senior Advisor, The Bank of Tokyo-Mitsubishi UFJ,Ltd.

Society

Execution of
investments
and loansDo*Indicates the chairman.

DBJ’s Management Functions 23

DBJ follows the Plan, Do, See, Feedback management

We also strive to manage effectively the wide range ofcycle to boost accountability for the appropriateness of its

risks we face as a financial institution, and to earn the trust

operations and their results. This cycle encourages ongo-of our clients and society as a whole.

ing improvement.

The “Plan” Process
The “plan” process consists of two steps: preparing andpublicizing Investment and Finance Guidelines based on(2) Create Investment and Finance Guidelines
DBJ establishes Investment and Finance Guidelines forgovernmental Medium-Term Policy Principles.

each fiscal year based on the Medium-Term Policy
Principles. The guidelines describe DBJ’s basic investment(1) Prepare Medium-Term Policy Principles
The competent ministers formulate three-year policies.

and loan directions and include details of DBJ’s investment
and loan systems as well as target areas.

These policies form the basis for economic and social
measures that clarify the basic stance for DBJ’s operations.

The “Do” Process
The “do” process corresponds to the execution of invest-

mechanically, DBJ takes a broader and more tailoredments and loans in line with the Investment and Financeapproach toward individual project evaluation that includes

Guidelines formulated during the “plan” process.

the provision of business structures and information, as

Rather than simply applying guidelines and systems

well as monitoring.

The “See” and “Feedback” Processes
The “see” process takes place in two stages. First, DBJ

Evaluation Office. This office conducts special sessions

conducts internal evaluations, and then the Management

on in-house evaluations and confirms that evaluation

Council conducts external evaluations.

systems are employed properly. The office has also
formed a committee of academic experts with a view(1) Internal Evaluation (Operations Evaluation)
DBJ’s internal evaluations evaluate the individual policy
effectiveness of all investments and loans, the effectiveness of investment and loan systems and include

toward improving DBJ’s evaluation system.

(2) External Evaluation (Management Council)
DBJ’s Management Council, which consists of outside

detailed evaluations of individual projects, taking intoexperts, evaluates operations stated in the Medium-account specific project categories, fields and themes.

Term Policy Principles. To improve transparency, we

The Bank combines the results obtained through thesepublicize the findings of the Council.

evaluations into operations evaluation documents. DBJ
submits its overall evaluations, which include the evalu-

The DBJ budget also is submitted to the Japanese Diet

ation documents and financial statements that describe

for approval each year. Diet approval is also required forthe financial soundness of projects, to the Management

the Bank’s financial statements. Overall operations are

Council and publicizes its internal evaluation results.

reviewed by the Board of Audit, the Ministry of Finance,

To protect its internal evaluation results from arbitrariness, DBJ has established the Operations

24 DBJ’s Management Functions

and the Financial Services Agency.

Internal Evaluation System
Management Council
External evaluation
Internal evaluation

ReportingCorporate Coordination
Department

Overall evaluation

Summary of the evaluation results
obtained, as described below
Operations Evaluation
OfficeRe-evaluation
Evaluation of individual
investment, plus checking
of balance and logicalconsistency with theinvestment and loan system
individual project evaluation

Supervisory departments(Note)

Investment andloan system evaluation

Compilation of individual project
evaluations for each investment andloan system, to improve the systems.

Operations Evaluation
OfficeInvestment and loan
departments/offices

Project evaluation

Evaluation ofindividual investments

Detailed evaluation for projects
with diverse policy results, where
DBJ plays various roles.

Corporate Planning &Coordination Department

Individual project evaluation
Preliminary evaluation:
Investment and loan stage
Follow-up evaluation:
After the start of operation andmanagement of the target business

Evaluation of
Financial Soundness: Sections performing internal evaluations within DBJ
Note: Supervisory departments are sections in charge of drafting policies and plans for investment and loans for each investment
and loan system. For example, the Department for Urban Development supervises the investment and loan system dealing
with urban development (see the organization chart on page 155).

Factors Evaluated
1 Policy aspects of target business: Whether the target business for an investment and loan can realize the policy objectives; whatkind of validity it has for the people of Japan and local residents; and what level of results can be achieved

2 Role of investment and loans: Whether DBJ investment and loans continue to be based on the principles of supplementing andencouraging private-sector investments, and what kind of role they play at the time of a target business’ s implementation◆ Internal Audits
Internal Audits
Internal audits are carried out independently from othermanagement and operational departments, and comprisea series of processes involving not only a comprehensive
and objective evaluation of the organization’s internal management conditions but proposals and follow-up measures
to improve the issues identified.

DBJ must fulfill its mission as a policy-based financial
institution of the Japanese government, while maintaining
its fiscal soundness. Therefore, internal audits are essential
if the Bank is to secure proper internal management anddeal with the increasing diversity and sophistication of its
operations.

Internal Audit Systems
To facilitate audits, DBJ has established an Operations
Audit Committee and an Internal Audit and Inspection
Department, which serve as internal audit departments
under the direct supervision of the DBJ governor and are
independent from other departments. The Internal Audit
Department, as its name suggests, performs internal auditing and inspections to ensure effective and efficient risk
management, reliable financial reports, and compliancewith laws and regulations.
Under the Bank’s fair and appropriate internal audit
system, the governor determines the basic policy for auditing and inspection upon on consultation with the Board of
Directors. Important matters relating to audits and inspections results are reported to the governor after discussion
with the Operations Audit Committee.

Overview of Internal Audit Systems
Governor

Board of Directors

Operations Audit
Committee

Internal Audit Department
Internal Audit andInspection Department
Risk management; investment andloan departments/offices

DBJ’s Management Functions 25

◆ Compliance
Basic Stance
DBJ’s compliance policies are outlined below.

need to always conduct activities appropriately and in(a) DBJ’s executives and employees are keenly aware

compliance with the law.

of the Bank’s social mission and responsibilities as a(b) DBJ’s executives and employees are well aware thatpublicsector bank and recognize that illegal acts or

the DBJ must conduct its businesses legally andimproper business operations harm the reputation of

appropriately and be responsible for explaining its

the Bank and interfere significantly with the Bank’s

actions to the general public.

ability to fulfill its objectives. We also realize the Bank’sCompliance System
DBJ has established the Legal and Complianceimprovements to the Bank’s internal system. In addition,

Department to take overall responsibility for planning,

all departments of each individual branch have compliancepreparing and adjusting compliance activities.

officers responsible for verifying their section’s legal

In addition, DBJ has established the General Risk
Management Committee to reflect on legal compliancecompliance, reporting on compliance-related mattersand serving as liaisons.

matters, determine the extent of compliance, and discuss

Compliance Activities
DBJ has prepared a Compliance Manual, which contains

In addition, DBJ formulates detailed compliancespecific behavioral guidelines that ensure legal compli-

programs for each fiscal year. After discussion in theance. The manual includes related laws and regulations

General Risk Management Committee the “action plans”

and is distributed to all executives and employees. To

are officially approved by the governor.

thoroughly educate all executives and employees on basic
legal matters, the Bank also holds training seminars andbriefings.

Declaration on Personal Information Protection
When handling personal information from business partners, DBJ
complies with laws concerning the protection of personal information
by independent administrative institutions, handling this information as
described below.
DBJ requests that any opinions or complaints concerning its
handling of personal information be directed to the Development Bankof Japan Personal Information Desk.
1. Purpose of Using Personal Information
DBJ is entrusted by its business partners with necessary information, and the Bank uses this information to perform properly theoperations defined by the DBJ Law.
2. Limiting the Purpose of Use for Personal Information
DBJ uses the personal information of its business partners only forthe purposes described above. The specific purposes for such information are published on the Bank’s website. Use for any other purpose will be clearly indicated at the time that information is obtained.
3. Obtaining Personal Information Appropriately
When entrusted with personal information from its business partners, DBJ does not obtain it under false pretenses or throughimproper methods.
4. Managing Personal Information Content
DBJ endeavors to verify the validity of personal information from its
business partners and requests that the partners cooperate.

26 DBJ’s Management Functions

5. Storing Personal Information Safely
To prevent leakage of the information received from its business
partners, the Bank has established measures to manage this information safely and will continue to improve these measures. DBJ
endeavors to maintain strict information-handling procedures,
supervising and training its executives and regular employees on
the handling of personal information and concluding non-disclosureagreements with subcontractors.
6. Providing Personal Information to Third Parties
The Bank releases personal information to outside parties only if theproviders, its business partners, agree, or it can be inferred to haveagreed to such use. However, such information is provided to third
parties in certain legally defined situations deemed to be in an
individual’s own or the public’s interest.
7. Disclosing Personal Information
If an individual requests the disclosure of personal information entrusted
to the Bank by its business partners, the procedures for such disclosure are as specified in relevant laws concerning the protection of
personal information held by independent administrative institutions.
8. Revising or Discontinuing the Use of Personal Information
If an individual requests the discontinuation of the use of personal
information, the procedures employed for such a request are as
specified in laws concerning the protection of personal information
held by independent administrative institutions.

◆ Risk Management
Continuing financial liberalization and advances in com-

To ensure management soundness and safety, as wellputer technology drive the computerization of finance, andas raise corporate value, DBJ works to manage risk

innovation in financial technologies creates an increasingly

appropriately in line with specific business and risk charac-

diverse and complex risk environment for financial institu-

teristics. Controlling risk is an issue of utmost importance,

tions. Therefore, we expect risk management to become

and we have established risk management processes andan increasingly important theme.

methods accordingly.

Asset/Liability and Risk Management System
DBJ conducts asset/liability and risk management from

Asset/Liability and Risk Management System Overview

the perspectives of maintaining financial soundness andAudit and Inspection

improving operational efficiency-prerequisites to ongoing
operational viability. To ensure appropriate management

Auditorsof individual risk categories, DBJ has developed an asset/

Board ofDirectors

liability and risk management system that clarifies which
department is responsible for each type of risk. The ALM

Governor

Operations
Audit Committee

ALM and Risk
Management Committee

Internal
Audit Department
Internal Audit
and Inspection
Department

and Risk Management Department oversees comprehensive asset/liability and risk management activities. The
ALM and Risk Management Committee, consisting ofexecutives and the DBJ governor, determines basic

ALM and Risk Management
Department

policies related to comprehensive asset/liability and risk
management, and conducts regular monitoring.

Credit Analysis
Department

Treasury
Department

Investment and Loan Departments/Offices

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

self-assessment of credit quality based on the Financialfrom a decline in the value of assets due to deterioration in

Services Agency’s Financial Inspection Manual. The results

the financial condition of the borrower. Credit risk manage-of self-assessments are subject to an audit by an auditing

ment requires credit management of individual loans ascorporation and are reported to the ALM and Risk

well as bankwide portfolio management.

Management Committee. Credit risk and amounts aremonitored to confirm they are within the limits established(1) Credit Administration of Individual Loans
When making an investment or loan, DBJ examines thefor individual borrowers.
The sales and credit analysis departments hold sepa-

entity’s project viability and the project’s profitability from arate roles in the screening and administering of credit for

fair and neutral standpoint, in addition to considering theindividual loans and each department keeps the other’s

project’s policy significance and benefits. We also have an

operations in check. The Lending Committee, Loan Fundinternal borrower rating system. DBJ is not subject to theCommittee, and Investing Committee meet as needed to

Banking Law or the Law concerning Emergency Measuresdeliberate important issues concerning the management

for the Revitalization of the Functions of the Financial

and governance of individual loans. These mutual check-

System (Financial Revitalization Law), but carries out inde-

ing functions serve to ensure the appropriateness ofpendent asset assessments in line with internal policies forlending operation and management environment.

DBJ’s Management Functions 27

(a) Borrower rating system

repayment history. By putting the ratings together, the

DBJ’s borrower rating system measures creditworthinesssystem generates a comprehensive assessment of aby combining an evaluation point rating and a borrower

borrower’s repayment capacity.

category rating, with the result efficiently determining a
potential client’s credit circumstances. The evaluation(b) Asset self-assessment system

point rating selects indicator/evaluation categories that are

Assets self-assessments are used to define asset classifi-

common across all industries, scoring the creditworthinesscations that will offset recoverability risk or the degree ofof the potential borrower quantitatively and qualitatively.

risk of value loss, based on the borrower rating, the corre-

On the other hand, the borrower category rating measuressponding borrower category and the collateral or guaran-

specific items related to the borrower, looking at the bor-tee status. Such assessments help DBJ establish timely

rower’s realistic financial condition, cash flows and debt

and appropriate amortization schedules and reserve levels.

Borrower Rating Classiﬁcations
Borrower category

Borrower rating

Definition
Debt history demonstrates an extremely high degree of reliability, withseveral outstanding factors. DBJ accords these borrowers the highest rating.
Debt history demonstrates a very high degree of reliability with outstanding
factors.

1
2
3

Debt history demonstrates high reliability.

4

Normal borrowers

5
6

Borrowers with favorable
business conditions and who
have been conﬁrmed to have noparticular problematic ﬁnancial
circumstances.

7

Under current circumstances, ﬁnancial conditions indicate the need forattention in some aspects but an established capacity for debt has been
conﬁrmed. As the business is in its startup phase, no business conditions
are available for rating, but the debt history indicates no problems.

8
Borrowers requiringcaution A
Borrowers requiringcaution B

9

Debt history demonstrates sufﬁcient reliability, but these borrowers are more
vulnerable to the impact of potential changes in the operating environment
than are borrowers with higher ratings.
Debt history demonstrates no reliability issues, but the impact of thepotential worsening of the operating environment is likely to reduce theirdebt repayment capabilities.
Debt history demonstrates no immediate reliability issues, but the impact ofthe potential worsening of the operating environment is highly likely to
reduce their debt repayment capabilities.
Under current circumstances, ﬁnancial conditions indicate no major
problems, but if the operating environment or ﬁnancial conditions worsen in
the future, debt repayment capability is likely to decline.

No major losses or substantial ﬁnancial issues exist, but these borrowers
should be treated with caution.

Borrowers requiringcaution C

11

Borrowers experiencing weakbusiness conditions, are unstableor have issues with their ﬁnances.
These borrowers are likely torequire management intervention
in the future.

Substandard
borrowers

12

Either some or all of the debts of these borrowers requiring caution are under management.

13

Borrowers in this category are having ﬁnancial difﬁculties but are not bankrupt. Management improvement loans
and the like are progressing poorly, and these borrowers are highly likely to fall into bankruptcy. Although theyremain in business, these borrowers are ﬁnancially overextended. As business conditions are also lackluster,
the likelihood of these borrower’s loans becoming delinquent or of principal or interest becoming ultimately
unrecoverable is high. Consequently, these borrowers are highly likely to continue sustaining signiﬁcant losses.

Effectively
bankrupt
borrowers

14

Although not legally or formally in bankruptcy, these borrowers are experiencing severe ﬁnancial difﬁculties andare realistically falling into bankruptcy, as their lack of potential for restructuring has been conﬁrmed. Theseborrowers remain in business formally, but their ﬁnances reveal large amounts of non-performing assets or they
have excessive long-term borrowings outstanding from the Japanese government. Liabilities have effectively
exceeded assets for a long period of time. There is little hope of a business turnaround, they have suffered amajor loss due to a natural disaster, an accident or a sharp change in economic conditions, or they are in
circumstances similar to these. As there is no potential for restructuring, these borrowers are effectively
substantially delinquent in their principal and interest payments.

Bankrupt
borrowers

15

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

Borrowers indanger ofbankruptcy

10

28 DBJ’s Management Functions

Business conditions are sluggish or ﬁnancial problems are present.
The borrower is arrears to DBJ for less than one year, conditions are likely tochange, or the borrower is in arrears to another ﬁnancial institution or conditions
are currently changing. Financial support is conﬁrmed, although liabilities are
effectively in excess of assets.

(2) Portfolio Management

maximum loss that could incur at a certain rate of proba-

DBJ performs a comprehensive analysis of data from bor-

bility. The EL and UL calculations are reported to the Assetrower ratings and self-assessment such as loan defaults,

and Liability Management (ALM) Committee. Monitoring

and calculates the loan portfolio’s overall exposure to

the situation and considering countermeasures allow DBJ

credit risk. Credit risk exposure can be classified as

to control risk and devise effective measures to improve1) expected loss (EL), the average loss expected duringrisk return.

a specific loan period, and 2) unexpected loss (UL), theMarket and Liquidity Risk Management(1) Market Risk

counterpart in the swap transaction will be unable to fulfill

Market risk can be broadly classified into interest rate risk,

its obligations, by continually monitoring the creditworthi-

exchange risk and stock market risk.

ness of all parties, and by diversifying transactions among

Market risk describes the risk of loss from fluctuations

several institutions.

in the value of assets or liabilities (including off-balancesheet items), owing to changes in interest rates, exchange(2) Liquidity Risk

rates, stock markets and various other markets. DBJ

Liquidity risk is the risk of a mismatch occurring in thedivides these risks broadly into interest rate risk andperiods when funds are used and raised, causing unex-

exchange risk.

pected differences in the flow of funds (cash flow risk).
This situation makes securing funds difficult and creates(a) Interest Rate Risk

situations in which interest rates on borrowed funds are

Interest rate fluctuations can create mismatches on rates

substantially higher than usual rates. At such times,of interest on assets and liabilities or on interest periods,

because of market complexities entities in these circum-

creating the risk of reduced profits or the risk of losses.

stances may become unable to participate in market

Interest rate risk can reduce the economic value of DBJ’stransactions, compelling them to conduct transactions

assets or interest income. DBJ calculates and analyzes

under substantially less favorable terms than otherwise

risk exposure with cash flow ladder analyses (gap analy-

would be the case. The risk of losses for these reasons issis), value at risk (VaR), interest rate sensitivity analyses

known as market liquidity risk.

(basis point value), and other methods. A portion of theWith regard to these risks, As its main method ofinterest rate risk associated with lending operations is

acquiring funds, DBJ relies on the stable procurement ofcovered through interest rate swaps, which are used

long-term funds from the government’s Fiscal Investment

solely for hedging purposes. DBJ does not have any

and Loan Program (FILP), government-guaranteed bonds,

trading-related risk because it does not engage in trading

and FILP agency bonds, rather than on short-term funds(specified transactions).

such as deposits. To meet unexpected short-term funding
requirements, funds on hand are placed primarily in short-(b) Exchange Risk

term investments, taking security and liquidity into consid-

Exchange risk is the risk of loss due to unexpected shifts

eration. Overdraft lines of credit have been establishedin exchange prices, and this risk affects entities holding awith multiple private financial institutions. DBJ also main-

net excess of assets or liabilities denominated in foreign

tains daytime liquidity by using the Bank of Japan’s Realcurrencies. Exchange risk entails the possibility of aTime Gross Settlement (RTGS), whereby settlements

decline in the economic value of DBJ’s assets due to theare made instantly for each transaction. Every effort is

impact of changes in currency exchange rates. DBJ’s

made to ensure that settlement conditions are managed

exchange risk derives from issuing foreign currency bonds

appropriately.

and the extension of foreign currency loans. DBJ uses

In addition to credit risk, the ALM and Risk

currency swaps to hedge this risk. The Bank manages

Management Committee deliberates DBJ’s market risk

counterparty risk in swap transactions, the risk that theand liquidity risk.

DBJ’s Management Functions 29

Operational Risk Management
DBJ defines operational risk as the risk of loss arising from

improper computer usage. To properly manage systems

internal processes, people or systems that are inappropri-risk, DBJ has implemented the following internal pro-ate or non-functioning, or from external events. DBJ works

cesses to optimize systems risk management.

to establish a risk management system to minimize risk
and prevent potential risks from materializing.

DBJ has formulated an Information Security Policy tosafeguard the Bank’s information systems. Additionally,

The General Risk Management Committee has been

the Bank has established a General Risk Management

established to deliberate topics concerning operational

Committee to deliberate on matters related to systems

risk management. Within operational risk management,risk. DBJ also set up the General Security Management

DBJ conducts operational risk management and systems

Division to integrate the maintenance and management ofrisk management as described below.

information security. Information asset officers have been
appointed to take responsibility for security measures in(1) Operational Risk Management

each department and branch office, thus ensuring policy

Operational risk refers to the risk of sustaining losses

compliance.

resulting from employees neglecting to perform their

As part of its effort to promote systems risk manage-

duties correctly or from accidents, fraud, and the like. To

ment, DBJ is taking measures to prevent problems andreduce or prevent operational risk, DBJ prepares manuals,

enhance reliability by standardizing systems development

performs checks on administrative procedures, provides

procedures, forestalling fraudulent access through theeducation and training, and uses systems to reduce themanagement of access privileges and passwords, and byburden of administrative duties.

preventing information leaks with thorough information
asset management. In addition to setting up a two-tier(2) Systems Risk Management

system for hardware and software, DBJ has created a

Systems risk refers to the risk of loss due to a breakdown

backup center and formulated a business continuity planor malfunction of computer systems, system defects, or(BCP) in preparation for a malfunction or natural disaster.

Risk Management System in Preparation for Privatization
Internal Audit Department/Internal Audit andInspection Department

The risks that financial institutions face are growing morediverse and increasingly complex owing to such factors as
financial deregulation, the mechanization of finance throughCorporate Affairs Section*1

the ongoing advancement of computer technology, andinnovation in financial technologies. As DBJ’s operations are
not immune to such risks, we will continue to emphasize
the increasing role of risk management in our operations. To
ensure management stability and soundness while raising
corporate value, we endeavor to manage risks appropriately
to our businesses and their inherent risk characteristics. We
recognize the control of these risks as a top management
priority, and accordingly are introducing a risk management
system.

30 DBJ’s Management Functions

Governor
DeputyGovernor
AuditorSeniorExecutive
Director

Risk Management Section*2
Investment Section*3
Advisory Section*1 The ALM and Risk Management Department was established, and theInvestment and Product Screening Team was established with the Credit
Analysis Department.
*2 This department has been restructured, and its name has changed.
*3 Additional functions were added to the Department for Investment Strategy, andthe former Ofﬁce for Investment Strategy was elevated to a managerial division.

◆ Disclosure
Disclosure System
DBJ has prepared a system for the appropriate disclosure

disclosure of information targeting investors and theinformation based on the Law Concerning the Disclosure

Corporate Planning & Coordination Department, Office forof Information Held by Independent Administrative

Public Relations, discloses news information to the media,

Institutions. DBJ indicates clearly the roles of each depart-

including mass media. We also disclose public relations

ment in disclosing information to specific audiences. In

information to the general public via the Internet andprinciple, the Treasury Department coordinates thevarious publications.

Information Disclosure Materials
As shown below, DBJ offers a wide range of information, using such media as newsletters and its website.
(1) Materials legally required for disclosure
Operation report
Financial statements

DBJ’s Annual Report & CSR
Report 2007 won the Best
Annual Report Award from the
Association of Development
Financing Institutions in Asiaand the Pacific.

Administrative cost report(2) Voluntarily disclosed information
Annual Report & CSR Report
Financial Report, in accordance with the Securities andExchange Law of Japan(3) Others
DBJournal (newsletter)
Website: http://www.dbj.go.jp/english/

Download Center (Japanese only)

Project & Loans

Various information for downloading

Introductions to various DBJ projects

About the Privatization of
DBJ (Japanese only)

Publications
Various information for downloading

Explanation of DBJ’s privatization

Other available information

DBJ’s Management Functions 31

Overview of Investment and
Loan Activities

DBJ meets the needs of the times by focusing
on investment and loan activities in threemain categories: community development,
environmental conservation and sustainable
societies, and the creation of new technologies and industries. We will continue taking
advanced approaches to provide support for
projects that have environmental, and urban
and community revitalization and disaster
response projects, as well as projects thathave economic elements. In this manner, we
will continue to support the ongoing growthof society from a financial perspective.

32◆ DBJ’s Investments and Loans
Our Mission as a Comprehensive Policy-Based Financial Institution
As an integrated policy-based financial institution, DBJ• enhance the quality of life for the people of Japan; andcomplements and encourages lending by ordinary finan-• foster the self-sustaining development of local

cial institutions. We invest in and provide long-term financing for projects that• invigorate and encourage the sustainable development of the Japanese economy and society;economies.
DBJ’s mission is to contribute to the Japanese
economy and society by providing financial support forsuch projects.

Services
As an integrated policy-based financial institution, DBJ

2) Providing project support

supports projects that are desirable from the standpoint of

DBJ applies diverse skills and financing functions toJapan’s economic and social policies through the following

ensure the smooth progress of projects closely linked

functions:to policy objectives, providing detailed support from

1) Supplying long-term financing (investments, loans,

initial conceptualization through the planning anddebt guarantees and other services)
DBJ supports the funding provided by private-sector

commercialization stages.
3) Supplying information

financial institutions by supplying long-term, fixed-rate,

DBJ uses its domestic and overseas networks tohigh-quality financing for projects closely linked toresearch and study important economic, social andpolicy objectives.

industrial themes, supply a host of information on
developments overseas and in Japan, including thosein local communities.

Changing Roles and Functions to Meet the Needs of the Times
In a variety of fields, DBJ meets the needs of the changing

underwriting of private-placement bonds. As part of ourtimes by fulfilling its role and functions as an integratedchanging role, we now provide safety nets to protect

policy-based financial institution. In recent years, we havecommunities in the event of natural disasters or outbreaks

employed leading-edge financing such as setting up fundsof terrorism. In short, we support Japan’s continued

for business revitalization, venture company development

economic and social development in three main areas:

to create markets and project financing. We have intro-

community development, environmental conservation andduced new approaches to provide financing for local

sustainable societies, and the creation of technologies andcommunities, such as community credit and theindustries.

Overview of Investment and Loan Activities 33

Policy Issues and DBJ’s Response
1945

1970

EconomicrecoveryRapid
growth1990
StablegrowthProvide ﬁnancial support foreconomic reconstruction andautonomy

Economic
bubblePost-bubble

Supply social development ﬁnancing to raise
the quality of life of the Japanese people
Put pollution
countermeasures in place

Major Policy
Requirements
to which
DBJ Responds

2000
Structural reform towardsustainable development

Encourage revitalization andinvigoration of companies inlocal communities

Respond to environmental issues toform a sustainable society

Ensure disaster
response

Ensure energy security
Create industries and maintain international
competitiveness to ensure sustainable
development
Respond to ﬁnancial market dysfunctions,such as credit crunches and halt ofbond issuanceCounter lack of preparation anddevelopment of ﬁnancial markets

Build the foundations for rapid growth andsocial development

Support ﬁnancial restructuringof local government bodies;
Support public-sector restructuring

Provide quantitative support for private-sector ﬁnancial institutions

DBJ’ s Rolesand Functions

Complement ﬁnancial and service markets by providing long-term funding and offsetting risk
Provide safety nets (Financial market assistance,
disaster response, severe acute respiratory syndrome)
Create and cultivate new
ﬁnancial and capital markets

Formulation and Publication of Investment and
Finance Guidelines Based on Medium-Term Policy Principles
DBJ’s Medium-Term Policy Principles for fiscal 2006

(3) Form Autonomous Local Communities

through fiscal 2009 1st half call for the Bank to provide

In local communities, help build social infrastructure,long-term financing in line with the following three

support the development of dynamism, collaboration

principles:and self-reliance by emphasizing local communities’
distinctive characteristics, encouraging local commu-(1) Create Economic Vitality

nity reinvigoration and urban renaissance programs,

Reform the economic structure and encourage thecreating social capital and employment opportunities

intellectual foundations to prevent the hollowing out ofand re-energizing communities. To these ends, deepen

industry, and help future industries evolve by cultivating

relations between regional public-sector entities andnew technical development and promoting the smoothregional financial institutions, emphasizing private

restructuring and revitalization of existing industries.

finance initiatives and similar methods.

(2) Build Prosperous Lifestyles

DBJ also responds appropriately and effectively to fill

Promote environmentally friendly management, recy-

the gaps that form when financial and capital markets failcling and the realization of a safe society by supportingto function adequately, as in times of natural disaster orenvironmental measures; energy security measures;

when policy requirements result from domestic or over-measures addressing social welfare and the aging ofseas economic or social emergencies.

society; and measures to create traffic, distribution andcommunication networks.

34 Overview of Investment and Loan Activities

Fund-Raising Structure

FILP agency bonds, long-term debt
Fiscal investment andloan program
Government-guaranteed bonds
Financialmarkets

Specialaccount
bonds

DBJ
Fiscal loan fundspecial accountLoans, etc.

PrivateSociety
sectorServices, etc.
businesses,
etc.

Industrial
investment
special accountResults of Investment and Loan (Fiscal 2008)
Results of Investment and Loan (Fiscal 2008)

Investment and Loan Balances as of March 31, 2008

¥1.4 trillion
Improvement ofSocial Capital
0.4%

Creation ofTechnologies
and Industries
35.6%

Environmental
Conservationand Sustainable
Societies
16.9%¥12 trillion
Improvement ofSocial Capital
3.0%
Creation ofTechnologies
and Industries
15.7%

Community
Development
47.0%

Environmental
Conservationand Sustainable
Societies
28.5%

Community
Development
52.8%

Overview of Investment and Loan Activities 35

◆ Fiscal 2009 Investment and Loan Plans
Major Characteristics of Fiscal 2009 Investment and Loan Plans
In line with policy finance reforms, in fiscal 2009 DBJ will

local communities. We will also provide financing to help

strive to supplement the private sector by employing new

ensure the safety of Japan’s people by supporting fire

financial methods and providing the financing to promote

reduction and disaster relief measures.

growth, enhance competitiveness and revitalize urban andCharacteristics of the Fiscal 2009 Loan Plan
To promote the smooth transition to a new postprivatiza-

private-sector financial institutions and work to diversify its

tion fund-raising structure, in addition to issuing govern-

fund-raising methods. The Bank will also expand the scale

ment-guaranteed and FILP agency bonds, DBJ willof its FILP agency bond issues.

make anticipatory moves to borrow funds from otherFiscal 2009 Investment and Loan Plans

Fiscal 2009 Fund-Raising Plans¥735.0 billion¥735.0 billion
Long-Term
Debt
3%

Creation ofTechnologies
and Industries
28.6%
Community
Development
46.3%
Environmental
Conservationand Sustainable
Societies
25.2%

36 Overview of Investment and Loan Activities

Collected
13%

FILP Borrowing
Segment
24%

Fiscal
SelfInvestment
Financing and Loans
50%
50%
FILP Bond Segment(Corporate Bonds)
34%

Bonds
26%

Providing Financial Services to Resolve
the Issues Society Faces

To resolve the various issues that society
faces, 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 beraised more efficiently, and in recent years wehave developed and introduced new financing
methods to expand the functions of financial
markets.
By linking society, the environment and theeconomy through its activities, DBJ endeavors
to fulfill its corporate social responsibilities
through its mainstay financial business.

37

DBJ’s Three Priority Areas for Investments and Loans

In its three key investment and loan areas—as Community development, Environmental
conservation and sustainable societies, and Creation of new technologies andindustries, DBJ provides long-term funding that supports the creation of new industries,
abundant lifestyles and autonomous local communities. DBJ fulfills its corporate social
responsibility by conducting its core business.

Community development (Society)●Assistance to core regional businesses that

Percentage of Loans forCommunity Development (Fiscal 2008)

hire and employ local youth●Assistance to businesses that work to increase

opportunities for employment in regions withdeclining populations●Promoting regional development that respects
landscapes and other pre-existing land use●Collaborating with local financial institutions
to invest in mid-sized regional businesses inways that promote restructuring and efficiency

Environmental conservation and sustainable
societies (Environment)

47.0%

Percentage of Loans forEnvironmental Conservation andSustainable Societies (Fiscal 2008)●Assistance to Businesses that Respond to

Global Warming●Support for Comprehensive Energy

Conservation Initiatives●Expanding the Range of Areas to Which

Environmental Scoring Systems Are Applied●Ensuring Safety and Security in Citizens

Lives through Promoting Disaster Planning

Creation of new technologies and industries(Economy)

16.9%

Percentage of Loans for
the Creation of New Technologies andIndustries (Fiscal 2008)●Assistance for stimulation of industry throughsuch measures as creation of new industries
and developing new technologies:●Enhancing indirect market financing functions
aimed at fostering economic growth●Assistance for plans to use IT and other hightechnology to make life easier and safer

38 Providing Financial Services to Resolve the Issues Society Faces

35.6%

Three Priority Areas for Investments andSociety

Loans and the Triple Bottom Line

Community development

The triple bottom line is a concept that considers

areas.

shn Crea
olo tiogie n os a f ne
nd w
ind
ust
rie

the economy, which coincide with DBJ’s three priority

Buildinga sustainable
society

Environment
ntt

Economytec

three vital perspectives of society, the environment andnatio
er v es
ons ieti
al c soc
ent blenm inaviro sta
En d suan

DBJ’ s mission

people’s livelihoods and corporate activity from thePromoting industries with local color, as well as businesses

Stimulating
Regional Economies

that contribute to local economic development
Utilizing PFIs/PPPs for municipal/

Building Local
Infrastructure

regional revitalization
Building national transit/transportation/

Building Wide-Ranging
Networks

telecommunications infrastructure

Environmental
Protection
Initiatives

Economic
GrowthSustainable Economy

Disaster
Planning
for
Safe and
Secure Living

Social Welfare
EnergySecurity

Initiatives for
Responding to
Declining Birthrates
and the Increasing
Elderly Population

Using Leading-Edge
Technology to Promote
Economic Growth

Building Socioeconomic
Infrastructure:

DBJ promotes the development oftechnologies that will sustain a newera of economic progress, and serve
as a common global legacy withripple effects spreading from industry
into both public and private spheresof society.

DBJ strives to encourage economic
growth through reorganizing bothindividual businesses and wholeindustries, utilizing such tools as
leading-edge financial instruments
for the task.

Providing Financial Services to Resolve the Issues Society Faces 39

社会的課題

Revitalization Assistance for
Regional Economies
This section presents excerpts of cases that showcase DBJ’s
activities, in partnership with communities and businesses,
to confront such societal issues as reorganizing businesses,
assuring efficient transportation, revitalizing regional
economies and creating business opportunities.

Management Buyouts (MBO): Responding to the Need for Business Reorganization and Succession ......... Page 41
Using Project Finance to Assist the Adoption of Interchangeable IC Card Tickets ......................................... Page 42
Assisting Japan’s First PFI-Structured Prison .................................................................................................. Page 43
Building Attractive Local Communities: Assistance for Businesses in Accordance with
Local Revitalization Projects .......................................................................................................................... Page 44
Using Asset Liquidation Methods to Rebuild Hospitals ................................................................................... Page 45

40 Providing Financial Services to Resolve the Issues Society Faces

Management
Buyouts (MBO):
Responding to the
Need for Business
Reorganization andSuccession

Societal Concerns
Businesses operate in situations where change comes at an everincreasing pace, thanks in large part to globalization. Such changes
spur managerial decision-making and focus at big companies. Manygroup companies that are spun off in the process face hard choices of
their own: liquidate the company or find new shareholders and walk on
their own. Management buyouts, or MBOs, are increasingly consideredan effective measure for helping companies remain in business. MBOs
involve current management entering into a group with an outside
investment fund or other organization, whereupon the group buys thebusiness from the main or parent company.

Case History: Kahoku Lighting Solutions Corp.
When actually executing the MBO, however, manage-

Kahoku Lighting Solutions of Ishinomaki, Miyagi
Prefecture, specializes in industrial lighting. When ament at Kahoku found itself stymied. They could not findchange in strategy pertaining to the lighting business

any buyout funds that were inclined to go along with theirresulted in Philips Electronics spinning off Kahoku invision of building solid growth by investing in technology

August 2006, Kahoku opted for an MBO, the better towith a long-term view, rather than chasing short-term

leverage its world-class technology development know-

growth. They would also have to finance a part of the

how and solid customer base.

buyout on their own.

1. Current Status

DBJ
Corporate
Strategy
Department Advice
andRecommendations

t1IJMJQTTQJOTPGG,BIPLV
which had been a wholly
PXOFETVCTJEJBSZ

2. Establish a Special Purpose Company (SPC),
Acquire Stock in Samet.BOBHFNFOU FNQMPZFFT GVOEUIF41$
t5IF41$BDRVJSFTPG,BIPLVTUPDLGSPN1IJMJQT100%Capital investment
PhilipsCapital investment

100%

SPC
Sharesof stock

Management(Employees)

Capital loans

CashKahokut41$BDRVJSFT,BIPLVJNNFEJBUFMZVQPOTUPDLCVZPVU

Financial
institutions,
DBJ included

Management(Employees)

Philips

3. SPC acquires Kahoku

KahokuFinancial
institutions,
DBJ included
Capital loans

Kahoku(post-Philips)/PUF,BIPLV,BIPLV-JHIUJOH4PMVUJPOT
1IJMJQT1IJMJQT&MFDUSPOJDTThe DBJ Initiative
In this case, DBJ performed a detailed assessment of thebusiness of the spun-off company and recommended an
MBO scheme whereby Kahoku would solicit investment
from employees as well as management, avoiding ill-suitedinvestment funds. DBJ assisted Kahoku in finding suitablefinancing by arranging a loan for a portion of the buyout
capital in association with local financial institutions.
MBOs can ease managerial transitions within companies, a problem that frequently arises with locally owned
and operated businesses.

Kahoku Lighting Solutions reborn as an independent,
technology-driven company.

Providing Financial Services to Resolve the Issues Society Faces 41

Societal Concerns
The Tokyo Metropolitan Area has a public transit network of numerous
bus and train companies and a growing need to simplify transfers
between different lines. PASMO, an IC card ticket system that works
across all participating bus and train lines was introduced to meet thisdemand.

Using Project
Finance to Assist
the Adoption ofInterchangeable IC
Card Tickets

Case History: PASMO Co., Ltd.
The PASMO system, with tickets issued and managed by

PASMO is a very convenient ticketing system, inter-

PASMO Co., Ltd., was formed in February 2004 throughchangeable with the Japan Railways (JR) Suica IC ticket-

joint investment by bus and train companies. Since its

ing system, with an automatic top-up service that allows

establishment, the company has built a common, interop-commuters to top up the value of their PASMO ticket sim-

erable program, with its primary task being to provide aply by passing it over a ticket gate sensor. Commuters cancentralized processing system for computing fares among

also shop with PASMO, using it as a form of electronic

participating vendors, as well as to develop an IC cardmoney. The large amount of data that a PASMO card canthat can be used on both the Suica and the PASMO plat-

store, combined with its strong security, raises hopes that

forms. Some of the program’s features include building

it can be used for an increasingly wide range of lifestyle-the sensor system that reads the tickets, as well as hard-oriented applications, through partnerships with the credit

ware in the various bus and train stations that facilitate thiscards issued by the various conglomerates that operate

service, making the system dramatically more useful tothe bus and train companies, as well as by other busi-

customers. The service commenced operation in Marchnesses and local shopping malls.

2007, allowing people to travel on more than 100 bus andtrain lines with a single ticket.
User
Deposit/Charge/Card Value

Train and Bus Service

101 Participating Businesses
Direct Negotiations

Financial Institutions:
DBJ, etc.

26 Railway
Companies

Payment of Fees andCommissions
Loan Repayment
Loan

Paymentof FaresNote: The number of companies is as ofthe date the service began.

75 BusCompanies

Suica Operators:

Charge/Recharge
Card Value via Bank Deposit

PASMO Co., Ltd.
Issues and Manages
PASMO IC Card Tickets

InterchangeabletEast Japan Railways(Tokyo Metropolitan Suica Zone)tTokyo MonorailtTokyo Waterfront Area
Rapid Transit (TWR)
tSaitama New ShuttletJR Bus Kanto

The DBJ Initiative
In the case of PASMO, the sheer size of the operation andthe large number of participants proved to be a stumbling
block to devising a scheme for distributing costs fairly andequitably among the participants. DBJ assisted in building
a structure capable of stable, sustained operations, aswell as procuring necessary and sufficient development
funds, by drawing on its strategic finance capabilities andparticipating in the establishment of the project as a neutral member.

PASMO interchangeable IC card tickets went into
circulation in March 2007.

42 Providing Financial Services to Resolve the Issues Society Faces

Societal Concerns
Private finance initiatives (PFIs) draw on private-sector capital and managerial
competence, as well as technology, to build, operate and maintain infrastructure that has traditionally been the province of municipal and regional publicsector administrative bodies. First introduced in the United Kingdom, regulations pertaining to PFIs in Japan were enacted in 1999, and their use hasgrown since then. Advantages include reduced operating costs on the part oflocal governments, while taking advantage of private-sector knowledge to
receive high-quality public services, and business opportunities created for
private-sector enterprises. Problems confronting PFIs include such practicaloperating concerns as distributing responsibility and accountability acrossmultiple vendors. Numerous financing problems arise as well, and the ability tonegotiate with, and manage, the various participants is also important.

Assisting Japan’sFirst PFI-Structured
PrisonCase History: Mine Inmate Rehabilitation Center
Located in the city of Mine, Yamaguchi Prefecture, thecall for newly renovating re-education programs and intro-

Mine Inmate Rehabilitation Center is the first new prison

ducing inmate conditions that feel less confining, which

in Japan to be built and operated under PFI. The Mine

contribute to rehabilitation efforts. Promoting the rehabili-

Secom Group founded the Mine Inmate Rehabilitation

tation of inmates through such initiatives cuts down on

Support Co., Ltd., an SPC to operate the facility.

repeat offenses and prison overcrowding.

Efficiencies in building and operation were achieved by

The company operates its facilities in a transparent andtaking advantage of the company’s accumulated knowl-environmentally friendly manner, by using local resources inedge, starting with automating the security systems. Asan effective manner. Its objective is to conduct its businessa result, the company expects to reduce overall costs,

in collaboration with the regional government and econo-

including construction and operating expenses, by somemy, in accordance with its guiding precept of running pris-¥4.8 billion over the life of its 20-year contract. Plans also

ons in a manner accepted and supported by the citizenry.

Mine Inmate Rehabilitation Center Business Scheme
Ministry of JusticeDirect Agreement
Lenders

Operating Contract

DBJ

Repayment

Tokyo Mitsubishi UFJ Bank
Local Area Financial Institutions

Loan

Supervising of
Design andConstruction

Construction

MaintenanceSponsor SPC: Mine Inmate
Rehabilitation Support Co., Ltd.

Administration

IT Systems

Security

Investments andSubordinated Loans
Sponsors
Dividends andRepayments

InmateServices

PrisonOperations

Education/
Classiﬁcation
Support

MedicalFacilities

The DBJ Initiative
DBJ had introduced PFIs to Japan prior to governmental
regulation. The Bank has drawn on its accumulated knowledge of structured finance and its extensive public andprivate-sector networks to assist in a variety of PFIs, including water and sewage, housing, hotels and other lodging,and school lunch programs. DBJ’s project building and business assessments, which derive from its distinctive longterm perspective, are well-suited for the PFI business,because long-term contracts are the foundation of PFIs.
In the case of the Mine Inmate Rehabilitation Center, DBJ
worked with the Social Rehabilitation Support Mine Co.,
Ltd., in association with the Bank of Tokyo–Mitsubishi UFJ,
Ltd., on a series of collaborations and investigations, thatformed the basis for efforts to build an optimal financing
structure. With added participation from local financial institutions, DBJ led the execution of a PFI loan agreement
worth ¥15 billion.

Overview of the finishedinstallation
Mine Inmate Rehabilitation
Center

Providing Financial Services to Resolve the Issues Society Faces 43

Building Attractive
Local Communities:
Assistance for
Businesses in
Accordance with
Local Revitalization
Projects

Societal Concerns
Revitalization of the country as a whole begins with balanced regional development and building upon the qualities that make each region unique.
Circumstances differ by region, however, starting with declining birth rates andincreasing growth of elderly populations, as well as economic differences. Hence,a uniform plan for economic recovery has only limited applicability. For this reason, the Japanese government founded the Regional Reconstruction Center in
October 2003 to revitalize local regions, primarily by rebuilding their economies
and creating local opportunities for employment. The government’s purpose infounding the center is to revitalize the country’s local regions by authorizing andassisting with regional reconstruction plans that various regional administrative
bodies devise. The center’s menu of options includes DBJ loans. As of March 31,
2008, the center had authorized 999 such plans since April 2005, when the
Regional Revitalization Law went into effect.

Case History: Hakodate
The city of Hakodate faces a severe environment for

attracting businesses to the area; encouraging local

employment, owing primarily to downsizing by local busi-

industry; and instigating initiatives to promote its primary

nesses and a withdrawal from the area by major concerns.

industry, namely, tourism. A plan for creating employment

The city has taken a variety of steps to deal with the situa-

opportunities in Hakodate was added to these initiatives

tion, in accordance with the Hakodate Regional Highin July 2005 to spur development. DBJ’s menu of loan

Technology Industry Integration and Promotion Plan andoptions was included in the plan in December 2005, upon

the city’s plans to promote tourism—all authorized by theapproval of the plan by the Regional Reconstruction

Hokkaido prefectural government. Such measures include

Center.

The DBJ Initiative
Investments and Loans Made Under the Auspices ofRegional Reconstruction Plans:

37

Amount Loaned to Businesses in Accordancewith Reconstruction Plans as of March 31, 2008:¥14.9 billion

Goryokaku Tower Co., Ltd., operates Goryokaku Tower, a

The new tower, which offers a much better view than

combination of an observation deck and food and souve-

its predecessor, has attracted more visitors than originally

nir concessions. The company built a new 107-meter

expected. Further plans call for expanding the tourist

tower that affords a view over the Goryokaku grounds toareas, and the city, in anticipation of the 2015 opening

replace the original 60-meter tower, which was falling intoof the Hokkaido Shinkansen (bullet train) line between

disrepair. The new tower incorporates a courtyard, gift

Shin-Hakodate and Shin-Aomori. Further initiatives aimed

shop and a curry shop affiliated with an established local

specifically at Goryokaku include making the courtyard

restaurant that specializes in Western cuisine. With its new

into a full-fledged meeting and conference facility, as wellfacilities, the tower is involved with Hakodate’s tourism

as restoring the Edo-Period Hakodate Magistrate’s Officeindustry and thus promotes regional recovery. For this rea-on the Goryokaku grounds within three years.

son, DBJ made a loan to Goryokaku Tower in cooperation
with Hokuyo Bank and other regional financial institutions.

44 Providing Financial Services to Resolve the Issues Society Faces

Aerial view of Hakodate and Goryokaku Tower

Using Asset
Liquidation Methods
to Rebuild Hospitals

Societal Concerns
Managing and administrating hospitals involves confronting a wide
range of issues, including an increasingly elderly population, advancesin medical procedures, mergers and acquisitions by medical corporations, and rebuilding aging hospitals. Offering uninterrupted medical services involves solving fiscal and administrative problems and improving
the skills of medical personnel and the quality of medical equipment.

Case History: JR Sapporo Railway Hospital
JR Sapporo Railway Hospital is a general hospital owned

response to the increasing age of the building, Lifetimeand operated by the JR Sapporo Railway. The hospitalPartners, Inc., and other members of the Mitsubishi Group

provides primary care to the Sapporo area, with particularhave partnered with the hospital to rebuild the facility andcompetencies in internal medicine; respiratory and circula-manage the hospital once the reconstruction is complete.

tory medicine; and ear, nose and throat medicine. In
Scheme for Rebuilding the JR
Sapporo Railway Hospital

Trust Bank

Building Lease Agreement

Hospital Management:
JR Hokkaido

Assignment of New Hospital Building
Mezzanine
Loan

Construction by
Mitsubishi Corporation
Through LTP
Asset Management Inc.,a Mitsubishi Group Company

GeneralConstruction
Contract

Asset
Management

Banking Group:
DBJ
Consulting

Senior Loan
Two Local Area BanksSPC:
JH Hospital
Asset Holdings Inc.

Land Lease
Supporting Funds for Construction
Anonymous Investment

Lifetime Partners, Inc.,a Mitsubishi Group
Company

The DBJ Initiative
In this case, a method of asset liquidation was used for
procuring capital, namely, project financing, which uses
an SPC to convert the new hospital into cash. As thecoarranger, DBJ executed a mezzanine loan and with local
area financial institutions established senior loans for a
combined total of ¥4 billion.

A conceptual illustration of the completed reconstruction of
JR Sapporo Railway Hospital

Providing Financial Services to Resolve the Issues Society Faces 45

Environmental Conservation and
Building Social InfrastructureThis section presents case histories that showcase DBJ’s efforts indealing with such varied societal concerns as conducting business inenvironmentally responsible ways, assisting companies with business
continuity plans in case of disaster, responding to global warming,
improving traffic conditions, and securing reliable energy supplies.

Promoting Environmentally Responsible Management Based on Environmental Ratings .............................. Page 47
Support for Corporate Disaster Management through Disaster Management Ratings ................................... Page 48
Initiatives for Dealing with Global Warming ...................................................................................................... Page 49
Providing Diverse Financial Services to Support Sustainable Energy ............................................................. Page 50
Railroad Crossing Overpass/Underpass Project .............................................................................................. Page 51
Project to Build a Nuclear Fuel Cycle ............................................................................................................... Page 51

46 Providing Financial Services to Resolve the Issues Society Faces

Promoting
Environmentally
Responsible
Management Basedon Environmental
Ratings

Societal Concerns
The environment is a matter of global concern, and corporations acrossall industrial sectors are responsible for conducting their businesses
in an environmentally responsible manner. Financial institutions are
no exception, being tasked with a mission to assist companies inenvironmentally responsible ways, thereby contributing to a sustainableeconomy.

Case History: Nippon Film Corporation
Founded in 1972 in the city of Oita, Nippon Film manufac-

with safety grips on the top and bottom to improve safety

turers a wide range of plastic products, including garbage

in handling by garbage collectors, a feature that received

bags used in jurisdictions across Japan. Nippon Film is a

the Good Design Award 2003, and “Rabbit Pack,” a plas-

leader in production that duly considers the environment

tic wrapping bag for toilet paper that can be recycled intoand safety, in line with its philosophy, “ingenuity knows no

garbage bags. This product received the Good Design

bounds.” The Company’s products include garbage bags

Award 2005.

The DBJ Initiative
Total Environmental Responsibility Rankings:

120

Total Loans as of March 31, 2008:

Approximately ¥157.3 billion

DBJ made a loan to Nippon Film in February 2007 underplants by effectively managing its use of resources. In

the auspices of its program for promoting environmentally

addition, Nippon Film has assembled its environmental

responsible business management. The program, the firstmanagement team, set medium- and long-term environ-of its kind in the world, is based on a specialized method

mental targets and made plans to raise environmentalof rating environmental responsibility, wherein companies

awareness among its employees through its corporate

are scored on their environmental management policies

governance policies and procedures. After implementing

according to a screening system developed by DBJ. For

these measures, Nippon Film applied for another DBJ

companies with the best scores, interest rates are set on

environmental responsibility ranking assessment, which ita sliding scale according to their scores.

passed.

When first screened by DBJ in January 2005 Nippon

The Nippon Film case is a textbook example of how

Film’s score did not meet DBJ’s cutoff for receiving an

DBJ’s environmental responsibility rankings inspired aenvironmentally responsible rating, as the company wascompany to become more environmentally aware andstill putting together its environmental policies and assem-take steps to manage its operations in an environmentally

bling an environmental management team that would set

responsible manner.

targets and draft plans. Since that time, however, thecompany has reduced its environmental footprint throughmodal shift to partnerships with outside vendors. The
company has achieved essentially zero emissions at its

Nippon film’s primary products:
garbage bags with safety grips (Top)
Rabbit Packs (Bottom)

Providing Financial Services to Resolve the Issues Society Faces 47

Societal Concerns
Such recent disasters as the Kobe Earthquake and the Niigata Earthquake caused tremendous damage to the economy, with many businesses forced to suspend operations for extended periods. In addition toplans for protecting personnel and property, companies face the need todraft business continuity plans (BCPs) to hedge themselves against lost
revenue and protect their customers in the event of disaster. Protecting
their operations from disaster and reinforcing their operations with continuity in mind has grown an increasingly important issue for companies.

Support for
Corporate Disaster
Management
through Disaster
Management
Ratings

Case History: Okuwa Co., Ltd.
Based in Wakayama City, Okuwa develops supermarkets

primary topics: buildings and infrastructure, insurance andand shopping centers in the Kinki Region of Japan. Given

capital, IT and crisis management. As part of its company-that its business is to offer essential products to people

wide initiative, Okuwa conducted a risk assessment on aliving in the region, the company treats contributing to thestore-by-store basis, which allowed it to devise a plan toregion as part of its mission and is thus heavily involved in

maximize cost-effectiveness.

disaster planning. In 2005, the company established a

In addition, the company

project team that answered directly to top management.

rewrote its corporate disas-This team conducted a wholesale investigation of disasterter management manual andplanning in the event of an earthquake in the Nankai and

implemented an action plan

East Nankai regions. The investigation covered fourchecklist for its departments.

The DBJ Initiative
In fiscal 2006, DBJ inaugurated a loan program to pro-At Okuwa, these plans chiefly consisted of earthquake

mote disaster management. The program uses a proprie-

reinforcements to its buildings, as well as building redun-tary DBJ method of rating disaster preparedness that isdancy into its IT system connections. Implementation isbased on a self-assessment of corporate plans for dealing

anticipated to further improve Okuwa’s disaster response,with disasters formulated by the Central Disaster Planningenabling the company to continue supplying needed prod-

Committee of the Japanese Cabinet Office. The ratingucts to customers throughout and ensure customer safety

method—another first of its kind in the world—assesses

in the event of a disaster.

and selects companies with excellent disaster planningand offers loans at preferential interest rates to implement
these plans.
Disaster Preparedness Promotion Loan Program, Based on Disaster Preparedness Ratings
Corporations

Loan

New Initiatives

Operations Eligible for Loans: Disaster Plans Undertaken as Part of the Disaster Plan Assessment, Including Non-Infrastructure Capital:●Planning and Management, i.e., Drafting BCPs
●Reducing Susceptibility to Structural Damage, i.e., Earthquake Reinforcement, Other Renovations●Ensuring against Harm to Life and Limb, i.e., Secondary Disaster Prevention Plans●Creating a Backup Plan for IT and Other Essential Information

DBJ
Excellent Initiatives: Policy Interest Rate I

Up to 50% of Operating
Costs Incurred for the Purpose

Superior Initiatives: Policy Interest Rate II

Disaster Response
Initiatives in Place

Satisfactory
Areas for response centered on core or essential
Items on the self-assessment checklist: One of thesix condition must be satisﬁed as well as the four
essential items

Unsatisfactory
Ineligible for Loan

Satisfactory

Areas for response centered on core or
recommended items on the self-assessment
checklist: Four of the six condition must be satisﬁed

DBJ: Proprietary Assessment System that Complies withJapanese Government Guidelines

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

48 Providing Financial Services to Resolve the Issues Society Faces

Societal Concerns
Some predict that climate change caused by global warming will significantly impact the environment in such areas as ecology, agriculture,human health and social order. International initiatives are thus underway
to devise international frameworks to reduce greenhouse gases. The
Kyoto Protocol, adopted in December 1997, set a target for Japan toreduce its greenhouse gases by an average of 6% compared with 1990
levels by 2012. Japan’s greenhouse gas emissions in fiscal 2006, however, actually exceeded the 1990 baseline by some 6.2%. Excluding theeffects of the Japanese government’s purchase of emissions credits andthe measures to offset emissions through afforestation, Japan must reducegreenhouse gas emissions by an annual average of approximately 4.6%.
Industry accounts for one-third of Japan’s total carbon dioxide emissions. Tireless efforts during the year managed to move this level downaround 6.8% against the fiscal 2006 baseline. However, as the Japaneseindustry is already among the world’s most energy-efficient, there is little
room to reduce emissions further.

Initiatives for
Dealing with
Global Warming

The Kyoto Mechanisms, as Defined by the Kyoto Protocol
The Kyoto mechanisms—the clean development mecha-

highly cost-effective means for developed countries tonism (CDM) and joint implementation (JI)—are supplemen-

meet their goals, while contributing to sustained growth bytary means by which countries can meet their targets

developing countries. For all of its advantages in meeting

under the Kyoto Protocol. The core CDM/JI mechanisms

greenhouse gas emissions, the CDM/JI business is stillallow developed nations to use technology support ornew, and all of the uncertainties about the potential risksloans to reduce greenhouse gas emissions and count theof doing business in the developing world (e.g., sovereign

amount of such reductions as credits toward meeting theirrisk and construction risk) are likely to apply. Hence, indi-

reduction goals. Given the circumstances mentioned

vidual corporations are still uneasy about engaging in such

above, the Kyoto mechanisms are increasingly seen as

operations on their own.

The DBJ Initiative
With reductions in greenhouse gas emissions a matter of

JGRF and JCF have leveraged to the fullest DBJ’s knowl-paramount concern for Japanese corporations, DBJ hasedge and experience of fund operations, as well as its

put forth two possible structures for obtaining large quan-knowledge and experience of private-sector businesses intities of adequate and reliable emissions credits: the Japan

reducing greenhouse gases. To date, these organizations

Greenhouse Gas Reduction Fund (JGRF) and Japan

have assembled an extensive portfolio in China, India andCarbon Finance, Ltd. (JCF). The fund framework identifies

elsewhere in Asia, Latin America and Africa. In August

the most efficient projects and distributes risk by investing

2007, JGRF acquired its first emissions credits on thein dozens of projects at a time.

order of 100,000 tons through the Antonio Moran wind-

In the three years since their inauguration in late 2004

power generation project in Argentina.

as a collaboration between the public and private sectors,
Emissions Credit Transfer Scheme
Developing
Nations
Implement Project for
Dealing with Global Warming

Estimated
Emissionsif Project
Is NotCarriedOut

Japan
Transferred to
Developing
Nations in Form ofEmissions Credits

Amountof Reductions

Emissions

Project Assistance:
JGRF/JCF

Total
Emissions
Frameworkfor Investor
Nations

Amount ofEmissionsCredits Purchased+
Emissions
Reductions
within Japan Proper↓
EmissionsTargets Achieved

Antonio Moran Wind Power
Plant Project in Argentina

Hydro Power Project Kanfeng
in China

Providing Financial Services to Resolve the Issues Society Faces 49

Providing Diverse
Financial Services
to Support
Sustainable
EnergySocietal Concerns
International interest in wind power as a sustainable alternative to carbon-based generation is mounting amid ongoing concerns about global
warming and sharply higher oil prices. However, Japan has lagged
Europe and the United States in aggressively developing wind-power
generation, ranking only 13th in the world in terms of domestic generation capacity (1,490,000 kW as of December 31, 2006). A steady streamof funding is needed to accelerate wind-power generation initiatives,
help developers accumulate technical expertise and meet the needs ofprojects of different scales and at varying stages of development.

Case History: Japan Wind Development Co., Ltd.
Japan Wind Development, with its headquarters in Minato-

construct a wind-power generation plant using a system ofku, Tokyo, is an active developer of wind-power generation

sulfur-sodium storage batteries to store electricity. This proj-

facilities, primarily in Japan. In Rokkasho, Aomori Prefec-

ect was the first in the world to combine wind-power gener-ture, the company has been applying its expertise toation with a storage battery system on such a large scale.

Battery storage system for wind-power generation plant

Wind farm

The DBJ Initiative
In 1999, DBJ became the first entity in Japan to create aLoans Provided by DBJ for Wind-Power Generation Plants

project financing scheme for extending funds for a wind-((Projects
jCompletedp
as of March 31, 2007)

power generation plant. Active in financing wind-power
generation facilities since that time, we now provide financing for some 36% of Japan’s wind-power generation, in
terms of generation output.
In recent years, we have helped Japan Wind
Development secure long-term stable financing for its windpower generation facilities through private-placement
bonds. Another method we use is to help operators expand

Chugoku/
Shikoku/
Kyushu GenerationHokkaido/
capacity30%
合計as of Tohoku
March 31, 2007:
11,307
1,490,000 kW

Hokkaido/Tohoku(342,000 kW)

47%

Chubu/
Kansai 10%
13% Kanto/
Koshinetsu
Source: National Economic
Development Office

Kanto/Koshinetsu(25,000 kW)

their scale of operations by raising capital through third-party allocations. DBJ meets the fund-raising needs of power
generation plant developers in a variety of ways, helping
them secure long-term stable funding according to theirscales of operations.

50 Providing Financial Services to Resolve the Issues Society Faces

Chugoku/Shikoku/
Kyushu(114,000 kW)

Chubu/Kansai(62,000 kW)

Railroad Crossing
Overpass/
Underpass
Project

Societal Concerns
Overpasses and underpasses at railroad crossings would resolve a wide
range of problems that currently plague such intersections, such as
chronic traffic jams and pedestrians pushing through crossing gates due
to prolonged waiting times. Resolving such issues would make foot andautomobile traffic, as well as the railroads themselves, safer, and would
also bring the communities now cut off by the railways closer together.

Case History: Tokyu Corporation
Number of Crossing Gates Removed on Meguro Line Due to Changeover
to Overpasses or Underpasses:

18

Total Construction Cost:¥87.8 billion

The rail lines operated by Tokyu Corporation’s railroad division are a lifeline for residents primarily located in Tokyo
After the underpass, facilitatedin this instance by moving thetrain line and the station

and Kanagawa Prefectures. The company is replacing
ground-level railroad crossings with overpasses andunderpasses, in association with local governments, in aneffort to eliminate accidents at these locations.
Before the overpass/underpass

The DBJ Initiative
Although safety measures and disaster preparedness planssuch as overpasses and underpasses at railroad crossingsrequire significant investment for railroad companies, they
do not boost revenue. DBJ helps such socially useful projects become reality through steady, long-term streams ofcapital.

Project to
Build a Nuclear
Fuel Cycle

Societal Concerns
Japan depends on imports for most of its energy supplies, so ensuring
an energy supply that will be stable over the long term is a crucial policy
issue. Building a nuclear fuel cycle that will allow reuse of plutonium andother materials that are obtained from reprocessed spent nuclear fuelwas therefore hotly anticipated.

Case History: Japan Nuclear Fuel Limited (JNFL)Founded with the objective of creating a commercially viable nuclear fuel cycle, Japan Nuclear Fuel Limited (JNFL),
which is headquartered in Rokkasho, Aomori Prefecture, isengaged in such activities as enriching uranium, reprocessing spent nuclear fuel and processing radioactive waste.

The DBJ Initiative
Building a nuclear fuel cycle demands a tremendous
amount of money and construction time. DBJ is helping toadvance the project by providing a reliable stream of longterm capital, thus contributing to implementing effective

Nuclear fuel reprocessing facility

use of uranium resources, as well as disposing of radioactive waste in an appropriate manner, and supporting theestablishment of an energy source that will be reliable overthe long term.

Providing Financial Services to Resolve the Issues Society Faces 51

Technology: A Creative Force that
Drives Economic GrowthThis section presents examples of initiatives that DBJ is undertaking todeal with such socioeconomic problems as corporate restructuring,rebuilding of finances and the practical application of technology. To
this end, DBJ uses a variety of tools to leverage technology.

Corporate Revitalization Employing Asset-Based Lending ............................................................................. Page 53
Refinancing Plan Results in Successful Theme Park Restructuring ................................................................ Page 54
The Bank that Uses Technology:
Activities of DBJ’s Practical Application Support Center for Technology ...................................................... Page 55

52 Providing Financial Services to Resolve the Issues Society Faces

Corporate
Revitalization
Employing
Asset-Based
Lending

Societal Concerns
Following non-performing loans’ emergence as a major problem inJapan in the late 1990s, many efforts have been made to revitalize corporations. After filing under Japan’s Civil Rehabilitation Law or
Corporate Rehabilitation Law, companies frequently faced difficulties inreceiving financial support, as they found it hard to remain in operationand had few assets as collateral. The rehabilitation of these companies,
even as they face legal liquidation, is an important issue for them, entities supporting their revitalization and financial institutions. Bankruptcy
cases in Japan during fiscal 2008 (from April 1, 2007, to March 31,2008) numbered 14,091, up 6.4% from the same period of fiscal 2007.
Total indebtedness of these companies fell 4.1%, to ¥5,727.9 billion.

Case History: Nakamura Jozo Co., Ltd.
Nakamura Jozo, headquartered in Fujisaki-cho, Aomori

Toshiro Kandagawa. Facing cash flow difficulties createdPrefecture, is a soy sauce producer with 140-year history

by past capital overinvestment, in January 2006 this long-from the late Edo Period. The company’s lineup of popular

standing company applied for assistance under the Civil

products includes Konbu (kelp-flavored soy sauce) that

Rehabilitation Law. Even with a new sponsor, the com-

enjoys favorable sales in Hokkaido and the richly flavoredpany found it difficult to secure working capital.

Kanekame soy sauce, which is a favorite of renowned chef

The DBJ Initiative
DBJ is an active proponent of debtor-in-possession (DIP)

of its value. With the support of DBJ’s financing, thefinancing, which allows the borrower to continue opera-

people involved in the project and the efforts of Nakamura

tions during the period between the request for applicationJozo, the company emerged from civil rehabilitation inunder Civil Rehabilitation Law or Corporate Rehabilitation

November 2006.

Law and the approval of rehabilitation plans or following

In July 2006, DBJ and Goldman Sachs of the United

legal proceedings. The Bank has also actively extended

States jointly established Gordon Brothers Japan Co.,the range of assets used as collateral to include intellectu-

Ltd., which performs inventory valuation and disposal

al property rights, accounts receivable, design rights andservices. In this manner, DBJ is working to expand its

other intangible assets.

asset-based lending.

In Nakamura Jozo’s case, the Bank provided DIP
financing using the company’s inventory of unpasteurized
soy sauce as collateral. Although the use of product inventories as collateral is increasing, inventories are typicallyconsidered supporting collateral for companies in strong
financial condition. However, DBJ accepted the inventory
as primary collateral after obtaining an objective assessment

Nakamura Jozo’s soy sauce
goes through a unique sixstage fermentation process.
The unpasteurized soy
sauce that results is slowly
squeezed to produce thefinal product.

Providing Financial Services to Resolve the Issues Society Faces 53

Refinancing
Plan Results in
Successful Theme
Park Restructuring

Societal Concerns
Hotels, ryokan (Japanese-style inns), theme parks and other tourist infrastructure have a huge economic impact on local communities. Successful
theme parks have a major impact on their communities by attracting customers to local lodging and food and beverage establishments as well as
the theme park. The economic impact on transportation and other industries is substantial, as well. However, such facilities require major initialinvestment, as well as investment for regular maintenance. Forecasting
the ability of a theme park to attract customers over the medium to longterm and introducing measures to counter slumps in business are typicallydifficult.

Case History: USJ Co., Ltd.
The motion picture theme park Universal Studios Japan™,

proceeds generated from its listing, USJ invested in addi-

located in Konohana-ku, Osaka, faced a mismatchtional theme park attractions. Seven years have elapsed

between its cash flow and the scheduling of its loan repay-

since the park opened, and the number of visitors has

ments. To lessen USJ’s dependence on the support of its

stabilized at between 8.5 million and 9.0 million per year.

major shareholders at that time, the city of Osaka andIn addition to the high praise it has earned as a local com-

Universal Studios of the United States, DBJ and Goldman

munity revitalization project, the park has heightened

Sachs helped USJ shore up its financing through the issu-

public awareness of Universal Studios both in Japan andance of preferred stock and refinance its loans. The com-overseas.

pany successfully listed its shares in March 2007. Using

The DBJ Initiative
In this case, DBJ teamed up with Goldman Sachs Group,

shares. The outcome was positive for the company, park

Inc. In addition to strengthening the company’s finances

visitors and shareholders, as well as the myriad people

through a preferred stock issue, we proposed a refinanc-

who are associated with the park’s operation.

ing solution that was instrumental in enabling USJ to list its

UNIVERSAL STUDIOS JAPAN™
Universal Studios Japan™ &© Universal Studios

54 Providing Financial Services to Resolve the Issues Society Faces

The Bank that
Uses Technology:
Activities of DBJ’s
Practical Application
Support Center forTechnology

Societal Concerns
The manufacturing of automobiles, electrical products and other items
is a core activity underpinning the success of the Japanese economy.
However, manufacturers face a staggering number of challenges,
including technical diversification; highly varied small-volume production;international competition with Brazil, Russia, India, China and othercountries; and the problem of passing expertise on to future generations. In today’s economic climate, technical expertise alone is insufficient to ensure a company’s success. Instead, companies need to raise
their overall level of expertise, both technological and managerial.

DBJ’s Manufacturing Management Index®
DBJ developed the Manufacturing Management Index® totechnological responsiveness, and management capability.

make hidden strengths and weaknesses visible and to

The index provides an objective picture of the connection

properly judge the technological and managerial expertise

between a company’s technical operations and its man-essential to the success of a manufacturing company. The

agement structure, as well as unique business model

Manufacturing Management Index consists of approxi-

characteristics and management issues that need to bemately 100 factors, such as quality, cost, delivery times,

resolved.

®

Case History: Itoh Precision Co., Ltd.
Itoh Precision, headquartered in Kaitsu, Gifu Prefecture,small-volume production of widely diverse parts. Althoughspecializes in the precision cutting and processing of suchworking to enhance its production management, starting

metals as brass, aluminum and stainless steel, centeredwith the acquisition of ISO 9001 certification, the company

on parts for communication, electronic and gas equip-

realized the need to reexamine its technical expertise andment. In recent years, the company has begun processing

improvement measures from a management strategy

automotive parts and responding to the need for theperspective to accelerate further corporate growth.

The DBJ Initiative
In this case, DBJ teamed up with Ogaki Kyoritsu Bank,

plans to use the Manufacturing Management Index® toLtd., to conduct a “technical management skills diagnosis”

pursue an avenue of corporate growth that differs fromof Itoh Precision. This diagnosis provided an objective

financial analysis, boosting its ability to provide financing

view of efforts to build a corporate culture, such as thethat is closely linked to local communities.

effective use of development facilities to create process
designs and a management style involving full employee
participation. The diagnosis also reconfirmed Itoh
Precision’s perceived strengths and issues. Based on
this diagnosis, the management of Itoh Precision, Ogaki
Kyoritsu Bank and DBJ held a three-way exchange to
examine Itoh Precision’s improvement goals and targets,management focuses and business diversification initiatives, analyzing and considering these issues fromtechnological, managerial and financial standpoints.
Using the results of our diagnosis as a basis for discussion, Itoh Precision encouraged an internal discussionof its current situation, sharing issues it faced as well as
management goals, including its aim of training employees
to boost technological management and linking its technologies and business activities. Ogaki Kyoritsu Bank

Itoh Precision uses “technical management skills
diagnosis” to enhance technological management
and promote human resource training

Providing Financial Services to Resolve the Issues Society Faces 55

◆ Promoting Foreign Direct Investment in Japan and Supporting theInternationalization of Local
Communities
社会的課題
Societal Concerns
DBJ believes that the investment of foreign capital,
the exchange of technologies and expertise withadvanced nations and the potential to generate
employment work to energize the Japanese economy and foster the development of local economies.
However, foreign capitalized firms encounter various
issues when promoting their operations in Japan.
These include their low level of recognition within

Japan, lack of a local track record, language issues,lack of infrastructure for handling the childcare needsof their local employees, and numerous other nontariff barriers. Securing investment funds in Japan,
and finding necessary information can also provedifficult. Ultimately, such factors act as barriers toforeign direct investment in Japan.

Case History: IKEAThe IKEA Group, founded in Sweden, is one of the world’s

needed to create its own logistics network, requiring alargest furniture retailers, operating 279 stores in 36

substantial investment. The fact that the company had

countries (as of July 2008). Parlaying its expertise inalready once pulled its operations out of Japan became

logistics and innovative design into a solid worldwide

an issue when IKEA sought to raise funds from Japanesebrand, IKEA provides quality products at affordable prices

financial institutions.

to consumers throughout the world. Furthermore, IKEA’s
business model is unlike any other in Japan.
Once before, in the 1970s, IKEA entered the market
with a Japanese partner, but because of the characteristic
difficulties of the market and the need to rely on its
Japanese partner for operations, the company was unable
to cultivate its correct brand image. As a result, IKEA
decided to pull out of Japan in the mid-1980s. Remaining
nevertheless intrigued by the size of the Japanese market,
IKEA continued to study the market carefully and conductdetailed surveys. Some 20 years later, almost to the day,
IKEA returned to Japan in April 2006, this time operating
entirely on its own.
The decision to operate on its own meant that IKEA

IKEA’s Funabashi store

The DBJ Initiative
To promote investment in Japan, DBJ provides the

In this case, DBJ was able to apply an understanding

financial and information support that foreign-capitalizedof foreign companies cultivated over many years, as wellcompanies require to build their operations in Japan.

as its financial acumen, to prime the pump accessing

Centering on its head office Department for International

Japan’s pool of financial market funds and aide IKEA’s

Affairs and overseas representative offices, DBJ contributes

return to Japan. DBJ helped IKEA raise ¥10 billion toto the internationalization of local communities throughconstruct a logistics center in Yatomi, Aichi Prefecture,seminars that provide advice on investment plans andand introduce its unique business model and logistics

other consulting services to foreign companies andexpertise to Japan. In cases such as this in which a large

utilization of its networks with municipal government

amount of funds is required by a foreign company withoutbodies and institutions such as the Japan External Tradea proven track record in Japan, DBJ is a catalyst to enable

Organization, which promotes investment in Japan.

smooth fund-raising.

56 Providing Financial Services to Resolve the Issues Society Faces◆ Providing a Safety Net

Section 0

社会的課題

DBJ acts as a social safety net by providing investments(BSE) and other illnesses, as well as terrorist attacks andand loans to support the rehabilitation and rebuilding ofother emergency situations that cause widespread anxiety

areas affected by earthquakes, typhoons or other large

about the financial system. In this way, we act as an emer-

scale natural disasters, the outbreak of severe acute respi-

gency response unit to fill the gap that emerges whenratory syndrome (SARS), bovine spongiform encephalopathy

peacetime financial platforms fail to function (see page 75).

Responding to Financial Crises
Societal Concerns
Some responses required during financial crises areto (1) put up financial firebreaks to prevent a spreading chain of bankruptcies, (2) prevent damage tolarge and medium-sized companies from spreading

to small companies and (3) provide fair and neutral
screening that prevents companies from capitalizing
on financial crises.

The DBJ Initiative
DBJ provides capital investment funds for industries hit

institutions by helping them raise long-term working

hardest by credit crunches—automotive, iron and steel,capital and redeem corporate bond issues.

energy, commerce, and rail sectors—and assists them in

Factoid: DBJ’s cumulative financing in response to

repaying capital investments to private-sector financial

credit crunches: ¥1,610.6 billion

Disaster Recovery
Societal Concerns
Required responses to natural disaster are to (1)ensure that people who provide information to local
communities beset by a natural disaster have sufficient knowledge about those communities and takethat knowledge into consideration and (2) provide
rapid responses to help rebuild important infrastructurethat was destroyed. What is required is an entitythat through its everyday business relationships has
accumulated know-how on the industries and businesses that provide this core infrastructure. This
entity also must have a wealth of expertise in supplying long-term funds.

The DBJ Initiative
DBJ has provided assistance in response to such disas-

everyday businesses. These efforts played a major role inters as the Kobe Earthquake in January 1995 and therevitalizing the employment and economic situations of

Niigata Chuetsu Earthquake in October 2004. In addition

local communities, prompting a revival in many fields.

to the electrical, gas, rail, communications, broadcasting,

Factoid: DBJ’s cumulative disaster recovery financing

urban development, and other infrastructure industries, DBJ

Kobe Earthquake: ¥184.8 billion

provided assistance to retail sales, food products and other

Niigata Chuetsu Earthquake: ¥20.3 billion

Emergency Financing
Societal Concerns
Society requires institutions whose day-to-day operations provide a solid foundation for financing in
response to terrorist attacks, natural disasters andother emergency situations. These institutions mustalso have the working capital and funding expertiseto respond quickly to these situations.

The DBJ Initiative
In the year ended March 31, 2002, DBJ established an

11, 2001, terrorist attacks on the United States and theemergency response support system that provided financ-

SARS outbreak.

ing to the Japanese airline industry, which was immediately

Factoid: DBJ’s cumulative emergency financing provided

effected by a downturn in business following September

during terrorism and SARS outbreaks: ¥437.0 billion

Providing Financial Services to Resolve the Issues Society Faces 57

◆Case Studies of Other Initiatives

DBJ applies its expertise in forming andevaluating businesses, as well as its development of new financial methods, to provide
detailed assistance at every stage of a project,delivering total solutions, including funding

Community Development◆ Business Revitalization of a Local Company:
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 suppliesof technical expertise and employment opportunities.

from a position of neutrality. In addition to the◆ Business Revitalization of Onsen Ryokan Operators

activities described on pages 40 through 56

Kutsurogi Yado Co., Ltd.
DBJ helped revitalize the business of an onsen ryokan (hotsprings hotel) operator in the middle of the Aizu Higashiyama
onsen area through the integration of three ryokan. We contributed to the substantial renovation of the onsen area andhelped enhance the foundation for the local tourism industry.

of this report, DBJ provides a variety offinancial services throughout Japan.

◆ Local Community Child-Rearing Support Plan
Promotion:
Fukushima Printing Co., Ltd.
The Bank worked with regional financial institutions to establish a collaborative financing scheme to help a local operator
put in place a new child-rearing support plan through cooperation between companies and the local community thatwas formulated by Ishikawa Prefecture.

◆ Effective Utilization of Social Infrastructure Assets:
Hakone Turnpike Co., Ltd.
Working with Macquairie Bank Limited of Australia, DBJ
established Japan’s first fund specializing in infrastructure
investment, injecting capital to transfer operation of the
Hakone Turnpike.

◆ Introducing Barrier-Free Streetcars:
Hiroshima Electric Railway Co., Ltd.
Hiroshima Electric Railway required financing to introduce
barrier-free low-floor streetcars. DBJ provided a wide rangeof support for this community resident welfare project.

58 Providing Financial Services to Resolve the Issues Society Faces

Environmental Conservationand Sustainable Societies

Creation of Technologies
and Industries◆ Building Japan’s Largest Wind-Power
Generation Facility:◆ Developing and Commercializing Carbon Fiber
Composites:

Green Power Koriyama-Nunobiki Co., Ltd.
DBJ provided financing for a project by the ElectricPower Development Co., Ltd., to build Japan’s largest
wind-powered generation facility. This large-scale, cleanenergy project is designed to reduce CO2 emissions.

◆ Introducing an Environmentally Friendly System:
Mazda Motor Corporation
One of DBJ’s objectives is to provide financing for measures that encourage environmentally sound management. Through this project, we helped raise the level ofenvironmental activity within a local community and an
entire industry.

◆ Creating an Intermediate Processing Plant for
Industrial Waste:
Sanko Co., Ltd.
This project involved building an intermediate processing
plant to handle industrial waste in response to restrictions
on dioxin emissions. By financing the project, DBJ enabled
the appropriate processing of industrial waste and areduction of this company’s impact on the environment.

◆Newly Constructed Plant to Recycle Gold, Silver,
Copper and Rare Metals
DOWA GroupDBJ provided funding to DOWA Group company Kosaka
Smelting & Refining Co., Ltd., for the construction of a
new smelting furnace. The new furnace employs
advanced smelting technologies that enable the smeltingof gold, silver, copper and rare metals, thereby supporting
recycling-based business.

◆ Promoting Urban Design that Reduces CO2:
District Cooling and Heating System in East Ikebukuro
The Bank supports the reduced emission of greenhousegases by financing projects designed to help Japan meet
the targets outlined by the Kyoto Protocol. Helping cooling and heating suppliers is one way to support global
warming preventative measures.

Sakai Ovex Co., Ltd.
DBJ supported this company’s joint development projectwith a publicsector research institution that aims to commercialize this project. This project has the dual goals ofenhancing industry competitiveness and promoting Fukui
Prefecture’s local community revitalization plan.

◆ Enhancing High-Value-Added Lens Plant:
Tamron Co., Ltd.
By providing financing for the capital investment earmarked for the introduction of precision fine-processing
technology at a lens plant, DBJ helped cultivate advanced
expertise within the community.

◆ Providing Startup Support for Japan Entity:
Shanghai Newtouch Software Company, Ltd.
The Bank helped this Shanghai-based IT venture establish a presence in Japan by helping it find the funds forthe deposit on an office lease, as well as for softwaredevelopment.

◆ Supporting the Transfer of Advanced Production
Technology through a Management Buyout
YOCASOL, Inc.
By providing loans to fund a management buyout at thiscompany, which specializes in photovoltaic panels, we
supported the succession of advanced manufacturing
technologies and the company’s existing facilities.

◆ Supporting Pharmaceutical Development
NobelPharma Co., Ltd.
DBJ helped this company diversify its funding through athird-party offering of preferred shares to raise capital thatwill be used to develop pharmaceuticals to combat rarediseases.

Providing Financial Services to Resolve the Issues Society Faces 59

◆ Making Use of Information Functions
Information Provision Activities
Through its varied activities, DBJ comes into contact with

regional government bodies and universities. Throughmany aspects of society. In addition to companies, DBJ’s

these contacts, DBJ extracts a variety of information on

information channels and human networks include domes-

economic and societal issues, boosting its ability to supply

tic and overseas governments, international institutions,

quality information from a neutral standpoint.

●Industry Research
In a broad range of industrial circles, DBJ researches con-

Survey Examples

ditions in various sectors and among different types of• Housing Market Trends

businesses, conducting surveys and performing research

DBJ Monthly Overview, No. 120, April 3, 2008

on such topics as international competitiveness. The Bank

This survey examines the Japanese housing market,

also prepares reports on conditions in individual industries,

which is on an ongoing downward trend, from the stand-technical development trends, and new industries andpoints of change in household composition and number ofinnovation. We provide feedback on these reports to ourhomes sold, as well as by region. The report also includes

clients, as well as other parties.

a forecast of future housing demand.
• Recent Trends in Solar Power Generation
DBJ Monthly Overview, No. 122, May 22, 2008
Against the background of global warming and sharply rising oil prices, this report covers such topics as the amountof solar power generation capacity being introduced on aworldwide basis, production volume trends, solar cellmaterial supply and demand trends, the state of technicaldevelopment and various countries’ initiatives in an effort
to define the current state of solar power generation anddetermine future trends.

●Economic Surveys
One of DBJ’s main businesses is the provision of funds for

Survey Examples

long-term capital investment. In the process, the Bank has• “Report on June 2007 Survey of Capital Investment

accumulated a host of information and conducted

Plans for Fiscal Years 2006, 2007 and 2008,” Surveys,

research on corporate capital investment. This information

No. 92, September 2007

concerning domestic and overseas economic conditions

After commencing our questionnaire-based survey on cor-and developments is highly valued by a variety of entities.

porate capital investment activity, the “Survey of Capital

One of these documents, the “Capital Investment Planning

Investment Plans,” we publicized our analysis, as well as

Survey (Questionnaire-Based)” has a history of more thanresearch results.

50 years, back to 1956. This survey looks at communityspecific investing trends and provides analyses of raw
corporate information. This information is used in a host of• Characteristics of Companies That Are Selected forMerger or Acquisition

ways, including the operation of the Japanese economy,

DBJ Monthly Overview, No. 118, March 5, 2008

corporate management and research and training activi-

This overview reports on the state of M&A activity in Japanties at institutions and universities.

and the rest of the world, describes the test results of
empirical models, and looks from a financial standpoint at
performance and the level of future activity by sector.

60 Providing Financial Services to Resolve the Issues Society Faces

●Combining Surveys, Research and Investment and Loan Activities
In addition to publicizing the results of its surveys,(2) Disaster Response

research activities and other materials, DBJ introduces its

In the event of an earthquake or other natural disaster,

information at speaking engagements and seminars. In

responding to the situation and continuing operations is aaddition, by reflecting the results of its investment and loancommon theme for every company. Companies need tofunctions, DBJ provides new financial solutions for corpo-

put disaster response measures in place. DBJ conducts

rate CSR activities and commercial technologies.

surveys covering corporate business continuity plans. In
fiscal 2007, we incorporated the survey results into our(1) Environmental

disaster prevention ratings loan program.

The Bank conducts survey reports on various environmental activities in Japan and overseas, under such themes(3) Technology

as global warming prevention measures, promotion of a

The Bank’s activities in technology-related fields include

recycling-oriented society and sustainable corporate man-

conducting trend surveys on bioethanol and other topics.

agement. DBJ also conducts and contributes to specialty

DBJ’s Practical Application Support Center for Technology

journals, newspapers and magazines. In fiscal 2004, theseprovides technical evaluations and conducts other activi-

activities culminated in an environmental rating system,

ties to help companies realize their potential for technolog-

Promoting Environmentally Conscious Management. We

ical commercialization.

also developed a financing menu for global warming
countermeasures that many companies employ.

●Providing Information to Local Communities(1) Supplying Information to Help Local Community(2) Building Local Communities
One way DBJ puts its expertise to work in building up

Development
Local communities are experiencing increasingly difficult

local communities is by conducting “local community

environmental circumstances, such as a declining birth-building diagnoses.” In this process, a DBJ local commu-

rate; an aging population; the amalgamation of towns,

nity diagnosis team analyzes publicly available data tocities and villages; and financial difficulties. These issues

determine the current state of a local community, and thenrequire a greater degree of expertise and more ingenuity

conducts interviews in that community before preparing anthan ever. DBJ addresses these issues by analyzing theindependent diagnosis that interprets its results. We theninformation it accumulates through its network of 19

discuss the diagnosis results with people in the local com-

domestic and four overseas locations and communicatesmunity, which helps them to understand what issues they

with the economic agencies of regional governments andmay be able to address on their own and provides anlocal communities and companies in Japan and abroad.

opportunity to consider future directions.

DBJ uses this information to encourage public/private
partnerships, promote tourism, build up local communities, and contribute to local government financing by
sharing its analysis results through reports, publications,contributions, lectures, and various other formats.

DBJ publications

Interaction with local communities by conducting seminars

Providing Financial Services to Resolve the Issues Society Faces 61

●Supporting Collaboration among Industry, Academia and the Government
DBJ supported the establishment of the Technology
Licensing Organization, which promotes the transfer ofCollaboration Agreements with Universities andOther Institutions
Cooperating Institutions

technology from universities to the private sector. We also
encourage cooperation among industry, academia and the

Ritsumeikan Asia Paciﬁc University

Date Agreement
Concluded

January

2004
2004

Kanazawa University Technology Licensing Organization

January

ment-related and disaster response areas. As of March

Iwate University, Iwate Prefectural University,
Iwate Medical University, ﬁve other research
institutions and ﬁve ﬁnancial institutions

May
2004
(Contract renewed inAugust2007 )

31, 2008, the Bank had collaboration agreements in place

Hokkaido University

July

2004

with such institutions as 37 national and private universi-

Tohoku Fukushi University, City of Sendai,
Sendai City Industrial Promotion Organization

August2004

ties. These arrangements enable each of us to pool our

Kyushu University

October

2004

Toyo University

December 2004

Urban Land InstituteFebruary2005

Ritsumeikan University Graduate School of Management

April

2005

Niigata University

July

2005

Shinshu University

August2005

Asia University

August2005

Center for Cooperative Research at Kanazawa
University, City of Komatsu

November 2005

Nagoya City University

December 2005

public sector in a broad range of fields, including environ-resources to achieve even greater results.

Hiroshima University

January

2006

Toyama Prefectural University

February

2006

Mie University

March

2006

Kagoshima University

June

2006

Osaka University Center for the Study ofFinance and Industry

June

2006

Utsunomiya University

June

2006

International University of Health and Welfare
Graduate School

February

2007

Nagoya University

June

2007

Liaison with the China International Investment Company (CITIC Group)
In line with ongoing growth in multilateral trade and investment in recent years, China has become an increasing
focus of attention as an Asian economic bellwether. To
encourage more active economic cooperation between
Japan and China, on April 15, 2008, DBJ signed a memo-

China International Investment Company (the CITIC Group)
CITIC is a joint-stock company established by the government ofChina in 1979. Centered on financial services, CITIC Group companies conduct business in such fields as commercial banking,securities, insurance, asset management, investment trusts andleasing. CITIC is chaired by Kong Dan and headquartered in
Beijing.

randum of understanding (MOU) to enter a tie-up with
China’s CITIC Group.
Under this MOU, DBJ will enter a tie-up with groupcompany CITIC Securities Co., Ltd., in providing overseas
M&A advisory services. This cooperation paves the way
for more wide-ranging cooperation and allows the twocompanies to begin building a relationship of trust.
The CITIC Group operates a broad-ranging financial
services network in China and other parts of Asia. This tieup between DBJ and the CITIC Group should help provide
Japanese companies access to the Chinese market.

62 Providing Financial Services to Resolve the Issues Society Faces

Signing ceremony

Responsibilities as
a Member of Society

DBJ considers CSR as not only contributing
to society through the Bank’s principal financial activities, but also taking societal needs
seriously and living up to its responsibilities asa member of society. This requires all of theBank’s executives and regular employees to
conduct their daily activities with a constantawareness of society, the environment andthe economy. We believe our efforts will build
DBJ into a financial institution trusted, favoredand chosen by the public.

63◆ Communicating with the Public
DBJ believes that today’s social and environmental prob-

seminars, symposiums and lectures, and Internet (www.

lems can best be resolved by communication and the

dbj.go.jp/japanese/environment/commu/index.html). DBJ

exchange of opinions. Accordingly, the Bank strives towill continue working with communities to create a sus-

communicate with as many people as possible throughtainable society.

Communication Focused on the Environment
Environmental problems such as global warming must be
resolved, starting with individual awareness of the severityof the issue.
DBJ promotes understanding of the relationshipenvironmental problems.
We also took part in the June 2008 Integrated
Exhibition of the Environment in celebration of the G8
Hokkaido Toyako Summit. As at the Eco-Products exhibit,

between the environment and financial and business activ-

we introduced DBJ’s initiatives and communicated withities by participating in the Eco-Products exhibit—Japan’s

many exhibit-goers to promote deeper understanding oflargest environmental event—and holding seminars andthe interplay between the environment and financing.

symposiums in conjunction with relevant organizations.

DBJ also cooperates with related institutions on semi-

DBJ has exhibited at the Eco-Products exhibit every

nars and symposiums that communicate the role of com-

year since fiscal 2001. Through descriptive panels wepanies in environmental issues. We have held special

introduce various DBJ activities, such as the Program forseminars with the Carbon Disclosure Project (CDP) andPromoting Environmentally Responsible Management, ourthe UNEP Finance Initiative, as well as a joint symposium,

tie-up with the UNEP Finance Initiative (see page 68) and“Principles for Responsible Investment: Toward aemissions credit trading. At our booth, we distribute

Sustainable Society,” held with Social Investment Forum

reports that promote an understanding of our activities.

Japan (SIF-Japan), a non-profit organization. ThroughWe also hold quizzes that tie in with our display panels tosuch efforts, we strive to promote environmentally

help elementary, junior high and high school students

responsible management.

understand the role that financing plays in resolving

Communication with Local Communities for Revitalization
DBJ considers working with local citizens to build commu-

employees interview community stakeholders in advance;

nities that suit each region an important part of supporting

study the region’s resources; and on the final day, hold a

independent community development. To this end, theparticipatory workshop with residents.

Bank holds seminars and symposiums in collaboration
with local authorities and universities.
In DBJ’s Community Diagnosis Program, our employ-

In addition to these activities, DBJ is strengthening its
cooperation with financial institutions in local communities.
These successes feed into the local community develop-

ees use objective indicators and original analyticalment activities described in the Bank’s medium-term

methods to hold discussions with residents and help themvision.

identify their community’s issues and potential. DBJ

64 Responsibilities as a Member of Society

Communication in International Cooperation
In cooperation with Japan Economic Research Institute,

Examples of our activities for individual development

DBJ shares its experience in applying policy-based financ-finance institutions include our cooperation with Japanese

ing to support the industrial economy of post-war Japanand other institutions to provide technical assistance towith developing countries, primarily in Asia. We also offer

the China Development Bank and the Development andthe expertise we have accumulated in recent policy issues,

the Infrastructure Bank of Malaysia. In 2007, we enteredsuch as environmental measures and private infrastruc-into an agreement with the Vietnam Development Bank on

ture. For example, since 1967 DBJ has held its annual

operational cooperation, for which we have already begun

Developmental Finance Course for development financeexchanging opinions. In these ways, DBJ is using theinstitutions. Since its beginning, 346 people from moreexperience and expertise it has gained over the years tothan 30 countries have participated in this course, which

offer intellectual support to development finance institu-

we held for the 40th time in fiscal 2008.

tions overseas. At the same time, DBJ is strengthening its
channels of communication with these institutions.

Other Communication Efforts●Providing Information
Issuing Corporate Social Responsibility (CSR) Reports
To expand communication with all stakeholders, in 2003

In 2007, DBJ merged the CSR Report into this Annual

DBJ issued the Environmental Report 2003 for a

Report & CSR Report following the concept of “disclosure

Sustainable Society, the first report of its kind by afrom a CSR perspective.” DBJ will continue publishing

Japanese policy-based financial institution. This was

CSR information introducing the Bank’s initiatives to help

followed by similar reports in 2004 and 2005. In 2006,

realize a sustainable society.

DBJ published the CSR Report.
●Participating in Local Community Activities
Flower Hospitality Program

Support for the Operation of Environmentally Friendly Buses

DBJ participates in the Flower Hospitality Program, aSince fiscal 2003, DBJ has co-sponsored the operation

beautification effort in central Nagoya. Employing theof environmentally friendly buses carrying passengers freeSponsorship System, a cooperative government andof charge on a route in the Otemachi, Marunouchi andprivate-sector effort, the Bank works with the Chubu

Yurakucho area of Tokyo’s business district. These buses

Association of Corporate Executives to beautify the urban

help raise awareness about environmental issues. Not only

landscape by planting and tending flowers.

do the buses reduce environmental impact and noise but
they are also barrier-free with a low-floor design, ensuring
easy access for disabled users.

Marunouchi shuttle bus

Responsibilities as a Member of Society 65

◆ Fostering Human Resources and Creating a Comfortable Work Environment
Developing Employee Potential
DBJ is proudest of its human resources assets. The Bank

to bring out the best in every employee. The Bank’s supe-actively works to build a systematic human resourcerior employee performance resulting from such efforts isdevelopment system and a comfortable work environment

what drives DBJ to be a pioneer in Japan’s finance sector.

Human Resource Development Vision
DBJ’s role has evolved and developed substantially to

who can be specialists in many fields.” Although gaining

meet the needs of the times. The Bank considers suchspecialist skills is certainly important, responding to theinnovation crucial to maintaining its leadership position inconstantly changing demands of the times requires broad

the constantly advancing financial field. To develop its all-experience, deep knowledge and the ability to see the big

important human resources assets, DBJ encourages

picture. DBJ has therefore created a human resource

autonomous and pioneering behavior in its employees asdevelopment system that incorporates job rotation,

financial professionals through the vision of “generalists

performance evaluation, education, and training.

Introduction of the Target Management System
DBJ is implementing a Target Management System toencourage employees to work autonomously and reformtheir actions and to accurately evaluate such efforts. The
Bank is working to enrich this system by having subordinates meet individually with superiors to set goals andreceive feedback, autonomously running through the PlanDo-Check-Act (PDCA) cycle. Particularly in goalsetting,
DBJ emphasizes enhancing medium- and longterm valueinternally and externally, while motivating employees
by offering bonuses and other benefits based on
performance.

Creating a Comfortable Work Environment
DBJ actively strives to cultivate a comfortable work

training and self-assessment, in addition to regularenvironment.

medical examinations.

To maintain an environment in which all employees can

DBJ has also introduced pioneering programs to givefeel secure, DBJ has notified employees of its campaign tomotivated employees better opportunities for long-term

prevent sexual harassment and has set up a hotline toemployment by allowing leave for childbirth, childcare anddeal with such issues. Furthermore, to support mental

nursing care, as well as a system for continued employ-and physical health, the Bank has created systems withment after retirement.

66 Responsibilities as a Member of Society

A Solid Human Resource Development System
DBJ’s financial professionals are supported by a wellwhich meets weekly throughout the year and is designed

developed education and training system. The Bank’s

to help employees acquire and maintain basic competen-

combination of mandatory training by level and elective

cies and deepen their understanding of finance, assuming

self-training according to skills and interests enables eachthey will become involved in advanced financial operations.

employee to plan his or her career.

In step with globalization, DBJ cultivates employees

In addition to practical on-the-job training (OJT), which

able to perform in domestic and international settings. To

gives employees responsibility regardless of age, DBJ’s

achieve this, the Bank actively assigns employees to ajob rotation system positions employees for the medium-wide variety of external organizations, including graduate

to long-term according to skills and career choices, after

schools in Europe and the United States, overseas

having worked in several departments. This system

research institutes, international institutions, related gov-

enables employees to build practical experience andernment agencies, and domestic research institutes,

develop skills with a medium- to long-term vision.

thereby supporting skill development and network

In 2008, we established the DBJ Financial Academy,

expansion.

DBJ’ s Human Resource Development System
Mandatory Training by Level

Business-Related(Self-Training)

Elective Training

Careerdevelopment
plan training

Secondarytraining after
joining DBJ

Basicknowledge
areast"DDPVOUJOHt'JOBODF 
etc.

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seminars, etc.

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study training
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t1SPCMFN
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DBJ Financial
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training for
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careerdevelopment

Cultivation ofmanagement andleadership skills

Planned and continuous HR development

Accounting
system andrelated training

Legal
training

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procedures and
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new employees"DRVJTJUJPOPG Strategic and focus Focus enhancementﬁnancial
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and focus areas%PNFTUJDBOEPWFSTFBTFYDIBOHF
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Mastery of knowledge andskills needed for work

Cultivation ofwork-related
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Seeking Higher Ethical Standards
For half a century, DBJ has led Japan’s economy as arequiring training to assure legal compliance, ISO training

general policy-based financial institution. As the Bank

to deepen ISO 14001 understanding and promote eco-transforms into a private-sector financial institution thatfriendly conduct, and information security training tovalues the long-term perspective, neutrality, public mind-

address the risk of fraudulent access and information

edness, and reliability it has cultivated, each employee isleaks.

being held to a higher ethical standard. DBJ has longsought to enhance employees’ ethical standards by

DBJ will henceforth devote even more resources
toward such efforts.

Responsibilities as a Member of Society 67

◆ DBJ’s Environmental Management
DBJ not only strives to reduce the environmental impact ofactivities with full member participation in the projects it

its operations but also actively pursues environmental

supports.

Alignment with the UNEP FI
In June 2001, DBJ became the first Japanese bank toNovember 2002, we became Japan’s first government-

sign the UNEP Statement by Financial Institutions on theaffiliated financial institution to received ISO 14001 certifi-

Environment and Sustainable Development. In doing so,

cation. This certification is part of the Bank’s efforts to

DBJ joined other financial institutions in the UNEP FI

protect the environment and work toward a sustainable(Financial Initiatives), a voluntary organization. In

society.

Environmental Management Structure
Environmental
management officer(Director in charge of Corporate Planning &Coordination Department)
Environmental
management officer(Corporate Planning &Coordination Department Manager)

General Risk
Management Committee

CSR Secretariat(Corporate Planning &Coordination Department)

Implementation
division
Heads of each department
and officeEnvironmental
Group members

Environmental Group
promotion officer
Environmental
Group promoter
Employees

The Basic Environmental Policy
DBJ established an environmental policy in July 2002.

the new policy clearly spells out our promotional activities.

Based on our expanded involvement in this area, in April

Categories include investment and loan activities, informa-

2008 we introduced the more extensive DBJ Basiction transmission and environmental activities in local

Environmental Policy. In addition to specifying environmen-

communities. The Program for Promoting Environmentally

tal activities within our offices, such as reducing the use of

Responsible Management (see page 77) is one activity

paper and electricity, and the amount of trash we generate,

based on this environmental policy.

Alignment with the UNEP FI
In June 2001, DBJ became the first Japanese bank to

As part of these efforts, the UNEP FI 2003 Global

sign the UNEP Statement by Financial Institutions on the

Roundtable in Tokyo was held in October 2003. DBJ

Environment and Sustainable Development, promising toco-sponsored the meeting under the theme, “Sustaining

strive for harmony between economic development andValue: Finance’s Roles in a Creating a Sustainable Society

environmental conservation and to cooperate in resolving

and Realizing Value,” as a representative of the Japaneseenvironmental problems. Since joining the UNEP FI, thefinancial institutions that have joined the UNEP FI. The

Bank has continued to work with the UNEP FI and otherTokyo Principles were issued in the form of a conference

institutions to pursue measures in accordance with thestatement for this meeting.

UNEP Statement’s intent.

68 Responsibilities as a Member of Society

The conference served as a good opportunity to raisein May 2006 for the announcement of the Principles forJapanese and other Asian financial institutions’ awarenessResponsible Investment and its signatory institutions andof environmental problems. In January 2005, the Asia

by helping prepare the necessary public relations materials.

Pacific Task Force was founded as a parent organization

Moreover, at the UNEP FI 2005 Global Roundtablefor independent activities at the regional level. DBJ plays

held in New York in October 2005, DBJ presented Japan’sa pivotal role, having served as chairman of the task force

efforts to tackle the issue of global climate change. The

until October 2006 and continuing to serve as the chair-

Bank is striving to actively provide information to theman of its Japan Group. The Bank also displayed its

UNEP FI by participating in the Climate Change Working

proactive stance by hosting a Tokyo press conferenceGroup, representing the Asia region.

The Tokyo Principles
1. Select investment, lending and insurance activities desirable for society
and the environment.
2. Endeavor to develop and sell financial products that contribute to theenvironment and society.
3. Incorporate the most appropriate governance structures, including
management policy.
4. Endeavor to achieve a sustainable society through dialogue withstakeholders.

Principles for Responsible Investment
These principles were established with the goal of ensuring that issues
related to the environment, society and governance are reflected in theinvestment decision-making processes of the world’s institutional investors.
Signatory institutions of these principles are working together for theirimplementation worldwide.
Visit http://www.unpri.org for more details.

Efforts to Conserve Resources and Energy
As part of its environmental management system, DBJ

of remaining single-sided copies and printing only as many

sets numerical targets and uses posters and other meanscopies as needed); reducing energy use (e.g., minimizing

to enlighten employees. This entails reducing paper waste

elevator use); and utilizing recycled boxes (e.g., separating(e.g., making double-sided copies, using the reverse side

recyclables such as plastics and cans).

Green Purchasing
In 2001, DBJ also became the first government-

Following the Green Purchasing Law (official title: Law
Concerning the Promotion of Procurement of Eco-Friendly

affiliated financial institution to join the Green Purchasing

Goods and Services by the State and Other Entities),

Network, which was formed to promote the purchase ofwhich went into effect in April 2001, DBJ has set annual

products with low environmental impact. The Bank has

numerical goals for purchasing products and services

since run voluntary initiatives inspired by the network’s

effective in reducing environmental impacts.

guidelines.

Refer to the following link for DBJ’s procurement policy and past performance.
http://www.dbj.go.jp/japanese/environment/office/enviro01.html

Achievements of the Green Procurement Program for
Typical Items

Resource- and Energy-Saving Efforts

Fiscal 2008
Fiscal 2009
Procurement Procurement
Achievements
Targets

Paper

Copy paper, etc.

99.2~100%

100%

Stationery

Files, ofﬁce envelopes, notebooks, etc.

73.1~100%100%

Equipment

Chairs, desks, shelves, whiteboards, etc. 98.3~100%

100%

Officeequipment

Copiers, printers, fax machines, etc.

96.2~100%

100%

Lighting

Fluorescent lighting, etc.

100%

100%

100%

100%

Interior items Tile carpeting, etc.

Fiscal 2008
TargetResultFiscal 2009
TargetCopy paper usage

2.5% savings

4.8%

1% savings

Printing paper usage

5% savings

23.4% savings

1% savings

Waste emissions

10% savings

24.5% savings

1% savings

Energy consumption

0% decrease

4.0%

1% decrease

Note: Fiscal 2007 ﬁgures are in comparison with ﬁscal 2004. Targets for ﬁscal 2008
are in comparison with ﬁscal 2007.

JQA-EM2770

Responsibilities as a Member of Society 69

DBJ’s Primary Achievements in the Environmental Sector since its Establishment
October
April
June

1999:
2001:
2001:

October

2001:

March
2002:
July
2002:
November 2002:
October
2003:
October
2003:
April
2004:
September 2004:
November 2004:
December 2004:
January
2005:
April
2005:
September 2005:
October2005:
November 2005:
April
2006:
May
2006:
August
April

2006:
2007:

April

2008:

The new Bank’s stipulated objective is explicitly stated as “sustainable development.”
Starts green procurement and environmental training.
Becomes first Japanese bank to sign the UNEP Statement by Financial Institutions on the Environment
and Sustainable Development.
Forms the Social Environment Committee and Social Environment Group; hosts discussions between
UNEP and Wa no Kuni Financial Institutions on Environmental Considerations for Financial Institutions.
Attends UNEP FI 2002 Global Roundtable in Rio de Janeiro, Brazil.
Launches Development Bank of Japan Environmental Policy.
Obtains ISO 14001 certification.
Publishes Environmental Report 2003 for a Sustainable Society (first annual edition).
Jointly sponsors UNEP FI 2003 Global Roundtable in Tokyo, an international conference on finance andthe environment.
Starts Loans for Promoting Environmentally Conscious Management.
Issues the second annual Sustainability Report.
Establishes Japan Carbon Finance, Ltd. (JCF).
Establishes Japan Greenhouse Gas Reduction Fund (JGRF).
Assumes chairmanship of the UNEP FI Asia Pacific Task Force.
Starts program to promote the spread of equipment meeting Top Runner standards in accordance with
the Energy Conservation Law.
Issues the third annual Sustainability Report.
Presents at the UNEP FI 2003 Global Roundtable.
Renews ISO 14001 certification.
Starts program to support projects in line with the Kyoto Protocol Target Achievement Plan.
Holds press conference to announce DBJ status as a signatory institution to the Principles for
Responsible Investment.
Publishes CSR Report 2006 (fourth annual Sustainability Report).
Starts interest subsidy system for the global warming countermeasure portion of the Promoting
Environmentally Conscious Management financing system.
Revises the environmental policy to create the Basic Environmental Policy.

Development Bank of Japan Environmental Policy
Environmental Mission
With a more prosperous sustainable society as our goal, we recognize
solving environmental problems as a topmost imperative. We comply
with environmental laws and regulations and support the UNEP
Statement by Financial Institutions on the Environment andSustainable Development. By conducting our business in accordancewith the environmental principles outlined below, we contribute to thecreation of an environmentally responsible society.
Environmental Principles
Promotion of environmental measures through our investment andlending operations
DBJ supports projects beneficial to the environment in light ofJapan’s environmental policies.
• Provision of funds for projects that do not contribute to global
warming but promote the creation of a recycling-oriented society• Ongoing improvement and quality enhancement of investment
and lending operations addressing environmental measures• Evaluation of risk from an environmental perspective in our investment and lending operations
Promotion of environmental awareness through environmental
communication
DBJ raises environmental awareness and contributes to the

70 Responsibilities as a Member of Society

solution of problems by performing such knowledge accumulation
functions as contributing and sharing information.
• Continuous research and wide-ranging advisory activities relating
to environmental issues• Activities to promote international cooperation, including the distribution of information about environmental initiatives by Japan• Sharing of information about DBJ’s environmental efforts, including the Environment Policy
Promotion of environmental awareness activities in offices
DBJ complies with environmental laws and regulations andpromotes activities to reduce the environmental impact of ouroperations.
• Promotion of resource and energy conservation and recycling
activities• Promotion of environmentally friendly sourcing of supplies under
the Green Purchasing Law and other systems• Prevention of environmental pollution
Promotion of environmental awareness activities in communities
DBJ endeavors to promote environmental awareness activities inindividual communities.
• Cooperation with environmental activities in local communities• Support for environmental improvement initiatives

Intellectual Asset Report

DBJ’s executives and regular employees continually take on new challenges, while remaining firmly committed to the Bank’s four corevalues: a long-term perspective, neutrality,
public-mindedness and reliability. The intellectual assets the Bank has built up over theyears helps form the financial platform andenables DBJ to provide services that extend
beyond merely providing funds.
Employing these assets, we endeavor toaddress the needs of the times and fulfill
our role in enhancing socially responsible
activities among companies.

71Intellectual Asset Management◆Corporate Value and Intellectual Asset Management
Intellectual Assets
Companies ensure ongoing prosperity and profit by con-differentiation but are invisible to the casual observer.

sistently differentiating themselves from competitors. In

Determining an entity’s true corporate value requires thethis process, companies must enhance their operations

evaluation of these company-specific strengths. DBJ’s

and increase the differentiation of the products and servic-

activities related to intellectual assets are designed toes they offer. Identifying their important management

foster the application of these intangible sources ofresources and sources of competitiveness is also essen-

corporate value, which underpin a company’s futuretial. Specific technologies, expertise, human resources

economic performance.

and business models are some factors that lead toIntellectual Asset Management Essential to Enhancing Corporate Value
Although intellectual assets are intangible in the sense that

Listed companies are finding that aggressively disclos-they are not recorded on a company’s financial state-ing intellectual asset information helps markets value themments, they are a core component of corporate value.

more appropriately. For this reason, the introduction ofManaging intellectual assets effectively clarifies corporate

regulatory frameworks to encourage or require listed com-awareness of key areas of effectiveness and encourages

panies to disclose non-financial information has grown into

increases in corporate value.

a global trend, beginning from Europe.

◆ DBJ’s View on Intellectual Assets
Dating back to the time of our predecessor institutions, wethe application of new financial methods, the widespread

have considered maintaining the trust of our clients anduse of our financial platform and our economic and social

society at large to be our most important objective. Fromcontributions have created a new DBJ asset. This asset

this standpoint, we have created a wide variety of net-

has also led to the development of the financial methods

works spanning both the public and private sectors.

described below. This asset enables us to respond quickly

Based on the our four core values, our executives andto changing policy requirements and plays a major role inregular employees have developed the ability to evaluate

our ability to continue adding economic and social value.

companies and projects over the long term. We have

In the future, we aim to maintain our economic andaccumulated a wealth of expertise in long-term screeningsocial contributions as a private-sector financial institution.

and evaluation of such projects and a keen awareness of

We believe that the ability to clearly identify and make use

their ability to address issues that are products of theof intellectual assets will be an increasingly importanttimes and the issues faced by local communities.

factor in achieving this goal.

In the process, we have become a repository of intellectual assets. Our expertise in resolving issues throughRelationships among Intellectual Assets, Business Models and Corporate Value
Corporate ValueBusiness Model

Financial
AssetsTangible
Fixed Assets

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

72 Intellectual Asset Report

Related
Structural
AssetsHuman
Resources

Intellectual Assets

Organizational
Structural
Assets◆DBJ’s Utilization of Intellectual Assets
One school of thought defines intellectual assets as theintellectual assets and business processes (organizational

understanding of and reporting on an entity's networks

structural assets). Below, we introduce DBJ's intellectualand customer bases (related structural assets), manage-

assets and activities according to this segmentation.

ment team and employees (human resources) and

Related Structural Assets
As part of our system of planning and making investments

central government agencies and regional government

and extending loans, we cooperate with central govern-

bodies.

ment agencies and regional government bodies, share

DBJ also works to create and develop financial plat-

their awareness of issues and support projects that haveforms that make use of new financial methods. To con-policy significance. As a financial institution, DBJ dissemi-

struct these platforms, we collaborate with public- and pri-nates various information concerning the screening ofvate-sector financial institutions in Japan and overseas

investments and loans and the provision of funds. Thisand maximize our networks of university professors, attor-

information benefits private-sector companies by distilling

neys, certified public accountants and other professionals.

out the issues that face them directly and serves as feed-

This multifaceted combination of networks consisting ofback to the government. The information helps improve

professionals in a host of fields in industry, academia andand raise the effectiveness of measures introduced by

the government constitute DBJ’s related structural assets.

Human Resources
Appropriately judging medium- to long-term investments

training program. This program, for all new employees,

and loans requires all of DBJ’s executives and regularhelps develop screening expertise. This menu, combined

employees to maintain a long-term perspective and makewith on-the-job training, raises the level of specialist

financial decisions from a neutral, as well as a policy

expertise among DBJ executives and regular employees.

based, standpoint. In an era characterized by increasingly

We maintain a number of personnel exchange and dis-

complex economic and social issues and increasingly

patch programs with domestic and overseas universities

sophisticated business skills, this perspective has a major

and research institutions, as well as other international

impact on DBJ’s ability to contribute to business formation

institutions, that help form our networks. These programsand the financial structure. Our ability to provide solutions

help DBJ develop and introduce new financial methods,that are appropriate for companies, as well as for theas well as strengthen network ties. DBJ has also estab-economy and society in a broader sense, depends on thelished the Research Institute of Capital Formation, which

ability of our human resources-executives and regularcarries out financial research, as well as research on global

employees who are professionals in various fields-to takewarming countermeasures and other efforts to create aa public-minded view as they consider such issues. Theirsustainable society. The research that the center produces

success in these endeavors wins the trust of clients andfrom a neutral and long-term perspective is highly regard-society at large.

ed by the academic community and other experts. ThisTo impart various technical skills, DBJ maintains train-

research is another intangible asset for DBJ.

ing menus that include a 2.5-month corporate finance

Organizational Structural Assets
Unlike manufacturing companies, DBJ has no explicit

have accumulated over 50 years of investment and loan

intellectual assets, such as patent rights. At the same

operations and a corporate culture of always considering

time, we introduce new financial methods to Japan, work

projects in an economically rational manner, as well as inwith private-sector financial institutions to create financial

terms of their broader economic and social significance,

platforms and contribute to the economy and society in aconstitute DBJ's organizational structural assets, as does

number of other unique ways. These activities rely on our

the smooth and rapid communication process resulting

organizational adeptness-our ability to ascertain emerging

from the common language that has evolved throughissues quickly and deploy appropriate personnel quickly.

corporate financing training and other channels.

This ability, combined with the long-term financial data weIntellectual Asset Report 73◆Advanced Initiatives Involving New Financial Methods That UtilizeIntellectual Assets
We are a leader in leveraging our intellectual assets tomethod generally used to raise funds, as project roles are

introduce new financial methods into Japan. Our pioneer-

allocated appropriately and long-term business is assured.

ing efforts come from maximizing our intellectual assets—

DBJ provides a full range of financing options in thecooperation with local communities, in-house humanarea of business revitalization. After filing applications

resources and expertise cultivated through long experi-

according to Civil Rehabilitation Law or Corporate

ence. Operating within complex financial markets, DBJ will

Rehabilitation Law procedures, companies typically require

maintain these activities while continuing to control andworking capital during the period when the viability of theirdistribute risk as effectively as possible.

plans is being reviewed. To meet this need, DBJ provides

The United Kingdom introduced the Private Financedebtor-in-possession (DIP) financing as temporary working

Initiative (PFI) scheme in 1992 to encourage private com-capital to enable such companies to continue operating

panies to fund or manage projects that are typically oper-and maintain value in the best portions of their businesses.

ated by the public sector. As a leader in absorbing and

In addition, the Bank creates business revitalization funds

accumulating this expertise, DBJ has participated into help companies normalize their operations through a

numerous PFI projects in Japan. By shifting to the private

process of operational selection and focus, and reduce

sector the responsibility for constructing, maintaining andtheir debt levels. We also apply our expertise through suchoperating public facilities, the country benefits from pri-financial methods as asset financing to raise the value ofvate-sector management expertise and technical capabili-

operations. Such financing plays an important role in help-

ties. By appropriately allocating risks among the private

ing companies revitalize their businesses and reinvigorates

and public sectors, PFI is an efficient and effective way tothe financial sector.

provide public services. With PFI, project financing is the◆Relationship between Intellectual Assets and CSR at DBJ
The figure at the lower right-hand corner contrasts

By employing our intellectual asset in these ways, we

intellectual assets as viewed by DBJ and DBJ’s role as

go beyond merely providing financing. We also play a role

seen by society. Evaluated in this sense, intellectual assets

in promoting increasingly sophisticated corporate CSR

and CSR are two sides of the same coin.

management.

For example, we fully mobilize our intellectual assets
networks with central government agencies and regional
government bodies, experts and clients; our human

Relationship between Intellectual Assets and CSR

resources comprising executives and regular employees;

Intellectual Asset
Elements

CSR Elements

Related
Structural Assets
Networks andcustomer base

Customer Satisfaction
Maintaining
Service Quality
Fair Competition

Human
Resources
Management teamand employees

Human Resource Education
Labor Standards
Human Rights
Working Environment

Organizational
Structural Assets
Intellectual assets andbusiness processes

Legal and Regulatory
Conformance
Corporate Ethics

and our accumulation of experience and expertise-toserve a vital CSR role through our system for promoting
environmentally conscious management and our loan program for promoting disaster management. At the sametime, our systems provide a strong backup to the CSR
activities of our business partners.
Companies that access these systems via the ourloans based on environmental ratings or our loan programfor promoting disaster prevention have cause to reconsider their conformance with various laws and regulations,ensure safe and secure workplace working and surrounding environments and provide quality products and services through fair competition. These activities reinforce acompany’s customer base and raise corporate value by
fulfilling social responsibilities.

74 Intellectual Asset ReportCreated by DBJ from Ministry of Economy, Trade and Industry materials

Financial Platform that Enables DBJ to Meet the Needs of the Times◆ Defining “Financial Platform”
In DBJ's definition, “financial platform” refers to thethe framework of systems and laws that support corporate

amount and quality of funds to which corporate and othereconomic activity involves the application of experienced

clients have access, the systematic formulation of bases

and real-world expertise of financial institutions and busi-

that affect the diversity of fund-raising methods, financial

nesses, as well as an accumulated body of results thatexpertise and practices, market transparency and degree

can be used for future reference (precedents, transactionof market participation.

cases and the like). Furthermore, as financial platforms

The more complete the financial platforms, which arefunction inadequately if they are used by only a minority

indispensable to financial system soundness and macro-of participants, a catalyst is needed to encourage partici-

economic vigor, the greater is their effectiveness at pro-pation from a broad range of players.

moting the revitalization of businesses and urban and local

Owing to our neutral position and advanced-player

communities and the creation of new industries. However,status, we are perfectly suited to serve as the catalyst

financial platforms, which are an institutional, general-for developing and maintaining financial platforms inaccess capital good, are not formed overnight. Creating

cooperation with private-sector financial institutions.

◆ Activities Involving Financial Platforms
Example 1: Structured Financing
We support the development of Japan’s financial markets

provide advice and arrange structured financing, to which

through our early involvement and building the base forinterwoven interests are key, without being affected bystructured financing. Structured financing includes project

special-interest relationships. Our contributions to thefinancing, such as PFI, in which financing is repaid throughformation of legal systems and regulations, as well as toproject cash flows, as well as real estate liquiditization.

business creation, make us a trustworthy moderator

Given our experience at forming projects and evaluat-

between public and private interests. By applying ouring operational viability from our characteristically long-

distinctive status to structured financing activities andterm perspective, we are ideally situated to participate in

maximizing our wide-ranging network in the industrial,

structured financing based on long-term contracts. We

academic and public communities, we collaborate withplay an important role in ensuring the long-term successother financial institutions to help build and maintain theof projects without being swayed by short-term profitability

financial platform for structured financing.

considerations. DBJ’s position of neutrality enables it to

Project Financing Example: Electric Power Generation ProjectSponsor A

FundingSponsor B
Banking Syndicate

Electric Power
Generation Company

Electric power supply
contract (15 years)

Power Plant G

Special-Purpose
Company (SPC)

Construction contract

Plant C

Plant delivery contract

Trading Company F
Fuel (coal, gas)
supply contract

FinancingOperational repair and maintenance contract

Factory E

Plant D

Technical guidance contract

Financial Platform that Enables DBJ to Meet the Needs of the Times 75

Example 2: Venture Company Support
DBJ has supported venture companies for more than a

ing that used intellectual property rights as collateral.

decade and in a variety of ways. In addition to providing

Responding dexterously to changing economic andfinancing and guarantees, we support financing throughfinancial circumstances, as well as legal reforms, we also

incubation funds and fostered successful technical devel-

introduced the acceptance of bonds with stock transfer

opment through our Practical Application Support Centerrights and loans with new share options.

for Technology. We have also developed a number of risk

Our success in this sector reflects our distinctive ability

evaluation and support measures suited for venture com-

to screen companies and projects from a long-term per-panies. In terms of financing methods, from the time wespective, as well as our wide-ranging networks, whichbegan supporting venture companies we provided financ-include venture capitalists and technical specialists.

DBJ’s Venture Company Support System

Investment via
New Business
Investment Co., Ltd.

Corporate
Value
Financing systems for new
industry creation and invigoration

Exit(IPO, M&A,
other methods)

Financing using intellectual
property rights as collateral
Loans with newshare options

Generalfinancing

Incubation Funds
Business Stage
SeedingStartup

Early

MiddleLater

Collaboration between industry,
academia and the public sector

Example 3: Business Revitalization
Since the late 1990s, which were characterized by anperiod while their revitalization plans are being reviewed.

increasing number of bankruptcies and underperforming

Another tool is business revitalization funds, which support

companies, the bad-debt issue and financial system

capital restructuring by acquiring shares in underperform-

uncertainty have beleaguered the Japanese economy, but

ing companies. We also provide exit financing, which pro-the redistribution of resources has played a key role in its

vides companies that are restructuring with the cash to

reinvigoration. We believe that our creation of a framework

operate as ordinary companies. Serving as our back-to support underperforming companies in developing andground for such endeavors is our accumulation of uniquemaintaining valuable areas of business has helped resolve

knowledge concerning capital policies for structured

these issues, and that our myriad tools have supported

financing, derived through years of experience in policy-

business revitalization. One such tool is early debtor-in-

based financing. By applying our experience and expertisepossession (DIP) financing, which provides funding toin business revitalization, we raise corporate value by using

companies that have filed for bankruptcy protection in thea host of methods.

Using Business Revitalization Funds to Support Restructuring(4)

Company to be Revitalized(Revitalize in line with restructuring plans)

(5)

(2)

(3)
Acquisition of debt,
shares following debt-equity
swap, in-kind funding, etc.

Monetaryfunding

Relisting, M&A,
Other Fund, etc.

Business Revitalization Fund
Operated by managementcompanies, centering on
private-sector specialists

Income from
Disposal of
Shares, Dividends

Restructuring Plan

Restructuring
Support

Disposalof shares

Funding(6)
Current creditors(1) Formulate economically rational restructuring plan
( Guidelines on legal or private liquidation)(2) Investors providing monetary funding

(4)

(3)
(1)

Banking
SyndicateInvestors (including DBJ)

76 Financial Platform that Enables DBJ to Meet the Needs of the Times(3) Debt reduction through ﬁnancial restructuring and funding
Example: Sale of shares (or use of in-kind funding) following
debt-equity swap
( Due diligence on corporate value)(4) Promote business restructuring of corporate revitalization target
through restructuring support (including new funding) and DIP
ﬁnancing through banking syndicate(5) Raise value of assets invested in fund by enhancing corporate
value(6) Distribute fund investment returns

Example 4: Environmental and Disaster Response
From early on, DBJ has supported efforts aimed at achiev-

system in the world. Furthermore, in fiscal 2007 we

ing harmony with the environment and creating a safe andintroduced a loan program for promoting disaster man-secure society. In fiscal 2005, we introduced a system foragement. This financing system is a proprietary ratingpromoting environmentally conscious management. Thissystem based on the Japanese Cabinet Office Central

financing method uses a DBJ-developed screening sys-

Disaster Prevention Council’s Self-Evaluation Indicators of

tem to score companies on their degree of environmentally

Corporate Initiatives on Disaster Prevention. In this new

conscious management. Companies that score particular-

financing method, we use our specialized disaster preven-ly well in these ratings are offered preferential interest rates

tion ratings to evaluate corporate disaster responseat three levels depending on their rating. This environmen-

activities and offer preferential financing to companies

tal rating system is the first such financial certification

involved in disaster response businesses.

Overview of Program for Promoting Environmentally Responsible Business Management

DBJ

Company
Screening

CreditRatingCreditinquiry

Conclusionof Contract,
Extensionof Credit

Creditdecision

Company
Environmental
Screening

126 Items*1(1) General management (corporate
governance, etc.)(2) Operations related (capital investment, etc.)(3) Environmental performance*2(Global warming countermeasures, etc.)
Taking into account industry-speciﬁccharacteristics

Environmental
RatingInterest rate,
reﬂecting resultsof four-stage
evaluation

Four-Stage Evaluationt1BSUJDVMBSMZJNQSFTTJWF 1PMJDZCBTFESBUF**t*NQSFTTJWF1PMJDZCBTFESBUF*t"EFRVBUF3FHVMBSJOUFSFTUSBUF
t*OBEFRVBUF*OFMJHJCMF

Financing andprivately
subscribedbondguarantees

Monitoring,
Exercise of
RightsContractual
covenants

'PSNBOVGBDUVSFST*OBDDPSEBODFXJUI.JOJTUSZPGUIF&OWJSPONFOU
&OWJSPONFOUBM1FSGPSNBODF*OEJDBUPSTGPS#VTJOFTTFT

Example 5: EQ-LINE
As awareness of the need for disaster preparedness

For companies that sign up for such financing before-

grows among Japan’s leading corporations, an increasing

hand, EQ-LINE is designed to provide financing that

number of companies are creating business continuity

enables companies to continue operating even if impacted

plans. In the past, companies had few options in preparing

by an earthquake of a specified magnitude and to rebuild

for the financial impact of earthquakes other than to takein the wake of such an earthquake. In this sense, EQ-LINEout earthquake insurance. As an alternative, DBJ is creat-is a type of risk financing that effectively provides compa-

ing EQ-LINE, which allows companies to reserve financing

nies with a degree of certainty that they will be able toto become available in the event of a large-scalecontinue business.

earthquake.

Financial Platform that Enables DBJ to Meet the Needs of the Times 77

Example 6: M&A Advisory Services
Amid an increasingly diverse range of corporate develop-

overseas companies to develop operations in Japan, we

ment options, business restructuring that involves opera-

have begun offering M&A advisory services that make use

tional selection and focus, as well as industry restructur-of our own information infrastructure. These services utilize

ing, M&A activity is increasingly prevalent. Although M&A

the wide-ranging networks that DBJ has cultivated throughactivity sometimes connotes hostile takeovers, mergers

other operations and include networks involving coopera-

and acquisitions can be a method for achieving bettertion with regional financial institutions, as well as legal andemployment stability and a stronger competitive position.

accounting firms and other organizations. Through ourAs negotiating the value of a target entity is burdensome,M&A advisory services, we provide clients of all sizes in a

in the past large corporations were the main participants

wide range of businesses with strategic consulting, long-in M&A activities. However, to meet a growing interest in

term advice for companies on the buying or selling end of

M&A by regional companies and the increasing desire of

M&A activities, financing and various other services.

Overview of M&A Advisory Services
Regional Bank
M&A Networks."JOGPSNBUJPO

DBJ

JETRO
Investment Banks
Law Firms
Accounting Firms
OthersMatching andAdvisory Services

Commercial
Banks

Financing."JOGPSNBUJPO

DBJ’s Clients
DBJ’s Practical Application
Support Center for Technology

DBJ DIP Financing
DBJ Financing
DBJ Investing

DBJ’s Networkst5SBOTBDUJPOTXJUINPSFUIBO FOUJUJFTt'JOBODJOHPGNPSFUIBOGPSFJHODBQJUBMJ[FEDPNQBOJFTt0QFSBUJPOTBUMPDBUJPOTJO+BQBOBOETJYPWFSTFBTt3FHJPOBMCBOL."TFSWJDFOFUXPSLTXJUImOBODJBMJOTUJUVUJPOT PWFSTFBTOFUXPSLXJUI+&530
t3FMBUJPOTIJQTXJUI+BQBOFTFBOEPWFSTFBTBDDPVOUJOHmSNT MBXmSNT mOBODJBMJOTUJUVUJPOTBOE
JOWFTUNFOUGVOETExample 7: Safety Net Functions
In addition to earthquakes, typhoons and other large-scaleeconomically and socially important services. In prepara-natural disasters, financial system stability can be affectedtion for such eventualities, we play the role of a safety net

by the spread of SARS, BSE and other diseases, the out-

for businesses of economic and social importance bybreak of terrorism or myriad other factors. In such times ofdrawing upon aspects that remain unchanged from ourcrisis, when unexpected financial needs arise peacetime

peacetime persona—the ability to evaluate risk based on

financial platforms may cease to function, resulting ina long-term perspective and substantial intellectual assets.

direct consequences for businesses that provide

Recent Activities
1995 Rebuilding after the Kobe Earthquake

2004 Rebuilding after the Niigata Chuetsu Earthquake

1997 Response to credit crunch2005 Rebuilding after Fukuoka Seiho Oki Earthquake

2000 Rebuilding following Mt. Usu eruption

2006 Asbestos-related measures

Recovery support following flooding in Tokai region
2001 Response to effects of terrorist attacks on UnitedStatesResponses to effects of SARS and BSE outbreaks

78 Financial Platform that Enables DBJ to Meet the Needs of the Times

Measures to counter sharp rise in crude oil prices
2007 Rebuilding after Noto Peninsula Earthquake
Rebuilding after the Niigataken Chuetsu-oki Earthquake
2008 Rebuilding after the Iwate-Miyagi Nairiku Earthquake

Financial Condition79• Compliance with Corporate Accounting Standards
The consolidated financial statements of the preceding
consolidated accounting period (April 1, 2006, to March
31, 2007) have been audited and certified by Misuzu
Audit Corporation, and those for the current consolidated
accounting period (April 1, 2007, to March 31, 2008) havebeen audited and certified by Deloitte Touche Tohmatsu.
The non-consolidated financial statements of the precedingaccounting period (April 1, 2006, to March 31, 2007) havebeen audited and certified by Misuzu Audit Corporation, andthose for the current accounting period (April 1, 2007, to
March 31, 2008) have been audited and certified by Deloitte
Touche Tohmatsu.

80 Financial Condition

Accounts Based on
Corporate Accounting Standards

81

Report of Independent Auditors

82 Accounts Based on Corporate Accounting Standards (Consolidated)

Consolidated Balance Sheets

Millions of yen

At March 31

AssetsCash and Due from banks (Note 2(b) and 25(f))
Reverse Repurchase Agreements (Note 3(3))
Money Held in Trust (Note 25)
Securities (Notes 3, 12 and 25)
Loans (Note 4)
Other Assets (Note 5 and 22)
Tangible Fixed Assets (Note 6)
Intangible Fixed Assets
Customers’ Liabilities for Acceptances andGuarantees
Allowance for Loan Losses (Note 7)
Allowance for Investment Losses
Total Assets

Thousands of U.S. dollars

2008

2007

¥

182,916
136,925
74,469549,117
11,470,456
64,05435,723
1,429¥

40,264
223,82990,805
420,860
12,089,812
53,26235,7781$

1,825,701
1,366,662
743,278
5,480,763
114,487,043
639,331356,561
14,266

126,833(111,828)(3,121)

273,965(146,626)(3,093)

1,265,935(1,116,168)(31,153)¥12,526,978¥13,078,861$125,032,220

Millions of yen

Liabilities and Equity
Liabilities
Bonds and Notes (Note 8)
Borrowings (Note 9)
Other Liabilities (Notes 10 and 22)
Reserve for Employee Retirement Benefits (Note 20)
Acceptances and Guarantees (Note 11)
Total Liabilities

2008

Thousands of U.S. dollars

2008

2007

2008

¥ 3,157,163
6,978,546
156,880
31,432
126,833¥10,450,856¥ 2,671,644
7,923,935
194,093
29,558273,965¥11,093,197$ 31,511,761
69,653,126
1,565,829
313,729
1,265,935$104,310,380

EquityCapitalRetained Earnings (Note 13)
Net Unrealized Gain on Available-for-sale Securities,
Net of Taxes (Note 25(3))
Net Deferred Hedge Losses, Net of Taxes
Total
Minority Interests
Total Equity¥ 1,272,286
860,006¥ 1,272,286
809,898$ 12,698,732
8,583,760

12,300(72,039)2,072,553
3,567¥ 2,076,121

21,539(122,294)
1,981,429
4,234¥ 1,985,663

122,774(719,033)
20,686,233
35,607$ 20,721,840

Total Liabilities and Equity¥12,526,978¥13,078,861$125,032,220

Accompanying notes are an integral part of these financial statements.

Accounts Based on Corporate Accounting Standards (Consolidated) 83

Consolidated Statements of Income

Millions of yen

For the Fiscal Years ended March 31

Thousands of U.S. dollars

2008

2007

2008

¥329,480
325,844
2,450
707
92
385
4,051

IncomeInterest Income
Interest on Loans
Interest and Dividends on Securities
Interest on Reverse Repurchase Agreements
Interest on Due from banks
Other Interest Income
Fees and Commissions (Note 14)
Other Operating Income (Note 15)
Other Ordinary Income (Note 16)
Collection of Written-off Claims
Gains on Sales of Fixed Assets
Total Income
Expenses
Interest Expense
Interest on Bonds and Notes
Interest on Borrowings
Other Interest Expense
Fees and Commissions (Note 17)
Other Operating Expenses (Note 18)
General and Administrative Expenses
Other Ordinary Expenses (Note 19)
Losses on Sales of Fixed Assets
Total Expenses
Income before Income Taxes and Minority Interests
Income Taxes (Note 2(o))
Current
Deferred
Minority Interests in Net Income¥313,618
306,462
4,578
1,577
995
3
4,995
534
53,5051,982
68¥374,705

62,3255,875
0¥401,732$3,130,238
3,058,816
45,69915,7499,934
39
49,8595,330
534,038
19,791687$3,739,945¥209,382
45,130148,962
15,28829
21,721
29,90961,81313¥322,869¥ 51,835
¥
0
13
(13)
(773)

¥236,812
33,973
179,674
23,16465
2,038
25,35461,44556¥325,772¥ 75,960
¥
672
661
10
27

$2,089,853
450,454
1,486,800
152,600
292
216,807
298,526
616,959
136$3,222,572$ 517,373
$
(1)
132
(133)
(7,717)Net Income¥ 52,608¥ 75,260$ 525,090

Accompanying notes are an integral part of these financial statements.

84 Accounts Based on Corporate Accounting Standards (Consolidated)

Consolidated Statements of Cash Flows

Millions of yen

For the Fiscal Years ended March 31

Cash Flows from Operating Activities
Income before Income Taxes and Minority Interests
Depreciation
Amortization of Goodwill
Equity in gains (losses) of affiliates
Increase (Decrease) in Allowance for Loan Losses
Increase (Decrease) in Allowance for Investment
LossesIncrease (Decrease) in Reserve for Employee
Retirement Benefits
Interest Income-Accrual BasisInterest Expense-Accrual Basis
Losses (Gains) on Securities
Losses (Gains) on Money Held in Trust
Foreign Exchanges Losses (Gains)
Losses (Gains) on Sale of Fixed Assets
Compensation for Advance Redemption
Net Decrease (Increase) in Loans
Net Increase (Decrease) in Bonds and Notes
Net Increase (Decrease) in Borrowings
Net Decrease (Increase) in Due from banks
Net Decrease (Increase) in Reverse Repurchase
Agreements
Net Decrease (Increase) in Corporate bonds,
Equities and Other securities
Interest Income—Cash BasisInterest Expense—Cash Basis
Other—net
Sub-total
Refund of (Payments for) Income Taxes
Net Cash provided by (used in) Operating
Activities
Cash Flows from Investing Activities
Payments for Purchases of Securities
Proceeds from Sale of Securities
Proceeds from Redemption of Securities
Payments for Increase Money Held in Trust
Proceeds from Decrease Money Held in Trust
Payments for Purchases of Tangible Fixed Assets
Proceeds from Sale of Tangible Fixed Assets
Payments for Purchases of Intangible Fixed Assets
Payments for Purchases of Subsidiaries(affecting the scope of consolidation)
Net Cash (used in) provided by
Investing Activities
Cash Flows from Financing Activities
Payment to National Treasury
Net Cash provided by Financing Activities
Foreign Currency Translation Adjustments on
Cash and Cash Equivalents
Net Increase (Decrease) in Cash andCash Equivalents
Cash and Cash Equivalents at the Beginning of
the Fiscal Year
Cash and Cash Equivalents at the End of
the Fiscal Year (Note 2(b))

Thousands of U.S. dollars

2008

2007

¥ 51,835
763
91
15,045(34,797)¥

2008

75,960779(20)$(47,168)

517,373
7,624
916
150,167(347,312)

27

(44)

277

1,874
(313,618)
209,382(416)
15,656(0)(55)(12,648)619,356
485,518(945,389)(147,600)(1,329)(329,480)
236,71347,077(1,349)(0)56

18,709(3,130,238)
2,089,853(4,157)156,270(2)(554)(126,246)
6,181,816
4,845,978(9,435,963)(1,473,201)

773,633
410,555(1,080,539)

86,903(73,825)

867,390(129,498)
316,487(209,417)
12,276
21,778(1,241)

334,315(236,130)(80,619)
28,583294(1,292,526)
3,158,869(2,090,204)
122,531217,369(12,391)

20,53628,877

204,978(100,577)
60,901
20,000(8,781)
6,324
(773)
120
(1,373)(314,948)(1,003,865)
607,856
199,621(87,649)
63,121(7,723)
1,200(13,709)357,050(64,674)
3,609
(445)
2

90
(24,160)(19,317)(241,147)(1,320)(1,320)(1,179)(1,179)(13,181)(13,181)0

0

2(4,944)

8,381(49,349)

36,25027,869361,818¥ 31,306¥

36,250$312,470

Accompanying notes are an integral part of these financial statements.

Accounts Based on Corporate Accounting Standards (Consolidated) 85

Consolidated Statements of Changes in Equity

Millions of yen

For the Fiscal Year ended March 31, 2007

Balance at March 31, 2006

CapitalRetained
Earnings¥1,272,286¥734,637

Net Income¥3,415¥75,260Net Changes in the year
Balance at March 31, 2007

Net Unrealized
Net
Gain (Loss) on
Deferred
Available-forHedge
sale Securities, Losses,
Net of Taxes
Net of Taxes¥1,272,286¥809,898

Total

Minority
Interests

Total Equity¥2,010,339¥4,111¥2,014,450

75,26075,26018,124(122,294)(104,170)

122(104,047)¥21,539¥(122,294) ¥1,981,429¥4,234¥1,985,663

Minority
Interests

Total Equity¥4,234¥1,985,663

Millions of yen

For the Fiscal Year ended March 31, 2008

Balance at March 31, 2007

CapitalRetained
Earnings¥1,272,286¥809,898

Net Unrealized
Net
Gain (Loss) on
Deferred
Available-forHedge
sale Securities,
Losses,Net of Taxes
Net of Taxes¥21,539

Total¥(122,294) ¥1,981,429

Payment to National Treasury(2,499)(2,499)(2,499)Net Income

52,60852,60852,608Net Changes in the year
Balance at March 31, 2008

(9,239)¥1,272,286¥860,006¥12,300

41,015(667)

40,348¥(72,039) ¥2,072,553

50,254¥3,567¥2,076,121

Minority
Interests

Total Equity$42,267$19,818,982

Thousands of U.S. dollars

For the Fiscal Year ended March 31, 2008

Balance at March 31, 2007

Capital$12,698,732

Net Unrealized
Net
Gain (Loss) on
Deferred
Available-forHedge
Retained sale Securities, Losses,
Earnings Net of Taxes
Net of Taxes$8,083,622$214,990

Total$(1,220,629) $19,776,715

Payment to National Treasury(24,952)(24,952)(24,952)

Net Income

525,090525,090525,090

Net Changes in the year
Balance at March 31, 2008

(92,215)$12,698,732$8,583,760

Accompanying notes are an integral part of these financial statements.

86 Accounts Based on Corporate Accounting Standards (Consolidated)$122,774

501,596409,381(6,660)402,720$(719,033) $20,686,233$35,607$20,721,840

Notes to Consolidated Financial Statements
1. Basis of Presentation
The accompanying consolidated financial statements have been prepared from the accounts maintained by Development Bank ofJapan (“DBJ”), its consolidated subsidiaries and an affiliate accounted for by the equity method in accordance with accounting
principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside
Japan. In addition, certain reclassifications have been made in the 2007 financial statements to conform to the classifications
used in 2008.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million yen. Accordingly, thesum of each amount appearing in the accompanying financial statements and the notes thereto may not be equal to the sum of
the individual account balances. Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The
rate of ¥100.19=$1.00, the effective exchange rate prevailing as of March 31, 2008, has been used in the conversion. The
presentation of such amounts is not intended to imply that Japanese yen amounts have been or could have been readilytranslated, realized or settled in U.S. dollars at that rate or any other rate.

2. Summary of Accounting Significant Policies(a) Principles of Consolidation(1) Scope of Consolidation
Under the control or influence concept, companies in which DBJ, directly or indirectly, is able to exercise control over
operations are fully consolidated. On September 8, 2006, the Accounting Standards Board of Japan issued Practical
Issues Task Force No.20, “Practical Solution on Application of Control Criteria and Influence Criteria to Investment
Associations” which was effective for fiscal years ending on or after September 8, 2006. The practical solution clarifies
how the control and influence concept should be practically applied to the consolidation scope of collective investment
vehicles, such as limited partnerships, Tokumei Kumiai and other entities with similar characteristics. DBJ applied this task
force and consolidated 6 such collective investment vehicles in 2008 (5 in 2007).
(i) consolidated subsidiaries
The number of consolidated subsidiaries as of March 31, 2008 and 2007 is 10 and 9, respectively. The Consolidated
subsidiaries as of March 31, 2008 are as follows:
DBJ Business Investment Co., Ltd.
DBJ Corporate Investment Fund (formerly DBJ Business Restructuring Fund prior to March, 2007)
DBJ Technology and New Business Creation Fund
DBJ Value Up FundDBJ Structured Investment FundDBJ Corporate mezzanine partners Co., Ltd.
DBJ Credit Line, Ltd.
New Business Investment Co., Ltd.
New Business Investment No.1 Investment Limited Liability Partnership (*)
Financial Frontier Fund* tentative name (no official English name is available)
In the fiscal year ended March 31, 2008, Financial Frontier Fund was newly consolidated due to its foundation.
(ii) non-consolidated subsidiaries
The number of non-consolidated subsidiaries as of March 31, 2008 and 2007 is 21 and 8, respectively. Such subsidiaries
as of March 31, 2008 are mainly as follows:
Asuka DBJ Investment LPS
GAD financial Service Limited
CITIC Japan Growth Partners, L.P.
Bridgehead Co., Ltd.
Tomatoh, Inc.

Accounts Based on Corporate Accounting Standards (Consolidated) 87

Non-consolidated subsidiaries are excluded from the scope of consolidation because such exclusion has no material
impact on the consolidated financial statements in terms of total assets, net income, retained earnings or deferred hedge
gains and losses.
(iii) entities not considered to be subsidiaries where DBJ has more than a 50% ownership interest
The number of entities not considered to be subsidiaries where DBJ has more than a 50% ownership interest as of March
31, 2008 and 2007 is 6 and 5, respectively. Such entities as of March 31, 2008 are mainly as follows:
ADS Global Partners Ltd.
Wise Partners Co., Ltd.
These Entities are excluded from the scope of consolidation since DBJ’s intent is to nurture the venture business and not
to exercise control over their operating and financing policies.
(2) Application of the Equity Method
Under the control or influence concept, non-consolidated subsidiaries and affiliates over which DBJ has the ability to
exercise significant influence are accounted for by the equity method.
(i) non-consolidated subsidiaries accounted for by the equity method
There are no non-consolidated subsidiaries accounted for by the equity method as of March 31, 2008 and 2007,
respectively.
(ii) affiliates accounted for by the equity method
The number of affiliates accounted for by the equity method as of March 31, 2008 and 2007 is 1 and 0, respectively. The
affiliate accounted for by the equity method as of March 31, 2008 is as follows:eBANK Corporation
In the fiscal year ended March 31, 2008, eBANK Corporation first became an affiliated company accounted for by theequity method due to the acquisition of its shares.
(iii) non-consolidated subsidiaries not accounted for by the equity method
The number of non-consolidated subsidiaries not accounted for by the equity method as of March 31, 2008 and 2007 is
21 and 8, respectively. Such subsidiaries as of March 31, 2008 are mainly as follows:
Asuka DBJ Investment LPS
GAD financial Service Limited
CITIC Japan Growth Partners, L.P.
Bridgehead Co., Ltd.
Tomatoh, Inc.
(iv) affiliates not accounted for by the equity method
The number of affiliates not accounted for by the equity method as of March 31, 2008 and 2007 is 100 and 15,
respectively. Such affiliates as of March 31, 2008 are mainly as follows:
Technology Alliance Investment, Ltd.
Asuka DBJ Partners Co., Ltd.
Intellectual Properties Development & Investment
Non-consolidated subsidiaries and affiliates that are not accounted for by the equity method have been excluded from thescope of the equity method because their aggregate effect in terms of net income, retained earnings and deferred gains andlosses has no material impact on the consolidated financial statements of DBJ.
(v) entities not considered to be affiliates where DBJ has greater than 20% but less than a majority of voting stock
The number of entities not considered to be affiliates where DBJ has greater than 20% but less than a majority of voting
stock as of March 31, 2008 and 2007 is 10 and 37, respectively. Such entities as of March 31, 2008 are mainly as follows:Global Insurance Corporation
Gordon Brothers Japan Co., Ltd.
Green Power Investment Corporation
These entities are not accounted for by the equity method because DBJ’s intent is to nurture the venture business and not
to exercise significant influence on their operating and financing policies.

88 Accounts Based on Corporate Accounting Standards (Consolidated)

(3) Balance sheet Dates of Consolidated Subsidiaries
Balance sheet dates of consolidated subsidiaries are as follows;
December 31
1 subsidiary
March 31
9 subsidiaries
Consolidated subsidiaries are consolidated based on the financial statements that are prepared as of their balance
sheet dates.
The necessary adjustments are made in the consolidated financial statements to reflect material transactions that
occur between the balance sheet date of the subsidiary and the consolidated balance sheet date.
In this fiscal year, DBJ Corporate mezzanine partners Co., Ltd. changed their balance sheet date from March 31 to
December 31.
(4) Valuation of Consolidated Subsidiaries’ Assets and Liabilities
Assets and liabilities of newly consolidated subsidiaries are measured at fair value at the date of acquisition of control.
(5) Elimination of Intercompany Balances and Transactions
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit
resulting from transactions between DBJ and its consolidated subsidiaries is eliminated.
(6) Amortization of Goodwill
The difference between the fair value of net assets and the cost of the acquired subsidiary is being amortized on astraight-line basis over the estimated beneficial period not exceeding 20 years. Minor differences are charged to income inthe year of acquisition.
(b) Cash and Cash Equivalents“Cash and Cash Equivalents” in the consolidated statements of cash flows consist of cash on hand and due from banks.
The reconciliation between “Cash and Cash Equivalents” and “Cash and Due from Banks” in the consolidated balance
sheet is as follows:
Millions of yen

At March 31

Thousands of U.S. dollars

2008

2007

2008

Cash and Due from BanksTime Deposits with Banks
Trust Money to Financial Agencies¥ 182,916(151,600)(10)¥40,264(4,000)(14)$ 1,825,701(1,513,125)(106)

Cash and Cash Equivalents¥ 31,306¥36,250$

312,470(c) Securities
Held-to-maturity debt securities are stated at amortized cost with amortization computed on a straight-line basis, using theweighted average method. Available-for-sale securities with readily available market quotations are stated at market value(cost is calculated principally using the weighted average method). Other securities without market quotations are stated atcost or amortized cost computed using the weighted average method.
Investments in limited partnerships and other similar partnerships are accounted for at their original cost plus DBJ’s
interest in earnings since acquisition and less any dividends received, based on their most recent financial statements.
Unrealized gain and loss on available-for-sale securities are included in equity, net of income taxes.
Securities which are held as trust assets in money held in trust accounts are valued in the same way as other securities.
(d) Valuation Method for Derivative Financial Instruments
All derivative financial instruments are carried at market value. Except for certain derivatives that are designated as hedging
instruments as discussed below, gains or losses on derivative transactions are recognized in the statements of income.
(e) Hedge Accounting(i) Hedge Accounting
DBJ applies the deferral method of hedge accounting. Foreign currency swaps which are used to hedge foreign currency
fluctuations are not translated at market values but at contractual rates, as the foreign currency swap contracts meet thehedging criteria under the Accounting Standards for Financial Instruments.

Accounts Based on Corporate Accounting Standards (Consolidated) 89

(ii) Hedging Instruments and Hedged Items• Hedging Instruments: Interest Rate Swaps
Hedged Items:
Bonds and Notes, Borrowings, and Loans• Hedging Instruments: Foreign Currency Swaps
Hedged Items:
Foreign currency denominated Loans and Bonds and Notes(iii) Hedging Policy
DBJ utilizes hedging instruments to hedge interest rates and foreign currency fluctuations on its assets and liabilities.
(iv) Evaluation of Hedge Effectiveness
DBJ evaluates the effectiveness of the hedges by testing whether the derivatives are effective in reducing the risks
associated with the hedged items.
In regards to both interest rate swap contracts which meet the hedging requirements of accrual method*1 and foreign
currency swap contracts which meet the hedging requirements of assignment method*2, under the Accounting Standards
for Financial Instruments at the inception date, DBJ is not required to evaluate their hedge effectiveness periodically.
*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 forwhich the swap contract was executed.
*2
In cases where foreign currency swaps are used as hedges and meet certain hedging criteria, forward foreign exchange
contracts and hedged items are accounted for in the following manner;
1) If a foreign currency swap is executed to hedge existing foreign currency assets or liabilities, a) the difference, if any,
between the Japanese yen amount of the hedged foreign currency asset or liability translated using the spot rate at the
inception date of 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.
2) 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 forward foreign exchange
contract are recognized.
(f) Fixed Assets(i) Depreciation of Tangible Fixed Assets
Tangible Fixed Assets are depreciated using the declining-balance method, except for buildings (excluding installedfacilities) that are depreciated on a straight-line basis.
The estimated useful lives are principally as follows:
Buildings:
22 years to 50 years
Equipment:
3 years to 20 years(ii) Amortization of Intangible Fixed Assets
Intangible Fixed Assets are amortized using the straight-line method.
(g) Long-lived Assets
DBJ reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount ofan asset or asset group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset or asset
group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual
disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amountof the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use andeventual disposition of the asset or the net selling price at disposition.
(h) Bonds and Notes Issuance Costs“Bonds and Notes Issuance Costs” are charged to income as incurred.

90 Accounts Based on Corporate Accounting Standards (Consolidated)

(i) Foreign Currency Translation and Revaluation Method
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rates prevailing at
the fiscal year end.
(j) Allowance for Loan Losses
DBJ provides for “Allowance for Loan Losses” as detailed below pursuant to the internal policies for self-assessment of credit
quality and loan losses.
The allowance for claims on debtors who are legally bankrupt, in special liquidation or effectively bankrupt is provided forbased on the amount of claims, after the write-off described below, net of amounts expected to be recovered throughdisposal of collateral or execution of guarantees.
The allowance for claims on debtors who are not legally bankrupt at the moment, but are likely to become bankrupt, andfor which future cash flows cannot reasonably be estimated, is provided for at the amount considered to be necessary basedon an overall solvency assessment performed on the claims, net of amounts expected to be recovered through disposal ofcollateral or execution of guarantees.
With respect to the claims on debtors who are likely to become bankrupt or to be closely monitored, and for which future
cash flows can reasonably be estimated, the allowance is provided for as the difference between the present value of
expected future cash flows discounted at the contracted interest rate and the carrying value of the claims.
The allowance for claims on debtors other than those described above is provided based on the historical default rate,
which is calculated based on the actual defaults over a certain historical period (the average financing period for DBJ).
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 based on the results of the self-assessment.
With respect to the claims on debtors who are legally or substantially bankrupt with collateral or guarantees, the amount ofclaims exceeding the estimated market values of collateral or guarantees which are deemed uncollectible, have been writtenoff, and totaled ¥52,170 million ($520,715 thousand) and ¥56,267 million for the years ended March 31, 2008 and 2007,
respectively.
(k) Allowance for Investment Losses“Allowance for Investment Losses” is provided for based on the estimated losses on investments.
(l) Reserve for Employee Retirement Benefits
DBJ has defined benefit pension plans, which consist of a welfare pension fund plan and a lump-sum severance indemnity
plan.
The “Reserve for Employee Retirement Benefits” represents future payments for pension and retirement benefits toemployees and executive directors and is accrued based on the projected benefit obligations and estimated pension plan
assets at each fiscal year end. The actuarial gain or loss is recognized during the year it arises.
(m) Lease Transactions
Finance leases of DBJ and consolidated subsidiaries that do not involve transfer of ownership to lessees are accounted for as
operating leases.
(n) Consumption taxes
Income and expenses subject to consumption taxes exclude related consumption taxes paid or received.
(o) Income Taxes
DBJ is exempt from taxes based on income, however, DBJ is subject to parity taxes among local taxes. On the other hand,the consolidated subsidiaries are subject to income and local taxes.
Deferred income taxes are recorded based on differences between the tax bases of assets and liabilities and those asreported in the consolidated financial statements, using enacted tax rates which will be in effect when the differences are
expected to reverse. The asset and liability method is used to determine deferred income taxes.

Accounts Based on Corporate Accounting Standards (Consolidated) 91

3. Securities
Securities as of March 31, 2008 and 2007 are as follows:
Millions of yen

At March 31

Japanese Government Bonds
Corporate Bonds
Equities
Other securities

Thousands of U.S. dollars

2008

2007

2008

¥143,530
102,856
183,394
119,335¥120,705
96,374
114,865
88,914$1,432,583
1,026,619
1,830,469
1,191,092¥549,117¥420,860$5,480,763

Notes: 1. Investments in unconsolidated subsidiaries and affiliates included in “Equities” as of March 31, 2008 and 2007 are ¥17,594 million ($175,611 thousand) and¥468 million, respectively. And investments in unconsolidated subsidiaries and affiliates included in “Other securities” as of March 31, 2008 and 2007 are¥40,912 million ($408,345 thousand) and ¥13,498 million, respectively.
2. DBJ has contingent liabilities for guarantees of corporate bonds among Securities which were issued by private placement (Article 2 Paragraph 3 of Financial
Instruments and Exchange Law) and amount to ¥3,280 million ($32,738 thousand) and ¥130 million as of March 31, 2008 and 2007 respectively.
3. There are no securities repledged as of March 31, 2008 and 2007 respectively, although securities accepted under repurchase agreements, can be sold or
repledged. Securities neither sold nor repledged are ¥136,925 million ($1,366,662 thousand) and ¥223,829 million, respectively.
4. Other securities with market value are considered impaired if there is a considerable decline in the market value below the acquisition cost and such decline is
not believed to be recoverable. The difference between the acquisition cost and the market value is the loss for the fiscal year.
The criterion for determining “Considerable decline in market value” is as follows.
Market value is 50% and more lower than acquisition costMarket value is 30% and more lower than acquisition cost, and such decline is not considered as recoverable

4. Non-performing Loans
The amounts of Non-Performing Loans included in “Loans” on the consolidated balance sheets as of March 31, 2008 and 2007
are as follows:
Millions of yen

At March 31

Loans to Bankrupt Debtors
Delinquent Loans
Loans Past Due Three Months or More
Restructured Loans

Thousands of U.S. dollars

2008

¥

1,329
57,42926
60,988¥119,774

2007

¥

7,562
64,06528
73,624¥145,280

2008$

13,273
573,209262
608,728$1,195,472

Notes: 1. The amounts of Loans indicated above are stated at gross amounts, before reduction of the allowance for loan losses.
2. “Loans to Bankrupt Debtors” represent non-accrual loans to debtors who are legally bankrupt as defined in Article 96-1-3 and 4 of the Japanese Tax Law
Enforcement Regulation.
3. “Delinquent Loans” represent non-accrual loans other than (i) Loans to Bankrupt Debtors and (ii) Loans whose interest payments are deferred in order toassist 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 categoryof “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 ofinterest rates, postponement of principal and interest payments, and forgiveness of loans to support or restructure the debtors’ businesses, and do not fallunder the category of “Loans to Bankrupt Debtors”, “Delinquent Loans”, or “Loans Past Due Three Months or More”.

92 Accounts Based on Corporate Accounting Standards (Consolidated)

DBJ provides commitment lines under which it lends, upon the borrowers’ request, funds up to a pre-determined amount thatis within the borrowers’ financing needs for the projects and up to the agreed maximum amount to lend, provided that theirrequests meet terms and conditions for disbursement prescribed in the loan agreements. The total balance of unused
commitment lines as of March 31, 2008 and 2007 are ¥327,665 million ($3,270,442 thousand), including ¥153,869 million($1,535,779 thousand) being financed within one year and ¥331,130 million, including ¥97,695 million being financed within one
year, respectively.

5. Other Assets
Other Assets as of March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

At March 31

2008

2007

2008

Prepaid Expenses
Accrued Income
Derivatives
Guarantee Deposits
Other

¥

145
41,157
20,585
484
1,681

¥

99
48,068
3,316
426
1,350

$

¥64,054¥53,262$639,331

1,451
410,794
205,461
4,840
16,785

6. Tangible Fixed Assets
Tangible Fixed Assets as of March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

At March 31

2008

2007

2008

Tangible Fixed Assets
Land
Buildings
Equipment
Total¥20,340
15,082300¥35,723¥20,386
15,095296¥35,778$203,020
150,5432,998$356,561

Notes: Accumulated Depreciation of Tangible Fixed Assets as of March 31, 2008 and 2007 is ¥ 20,858 million ($208,191 thousand) and ¥20,355 million, respectively.

7. Allowance for Loan Losses
Allowance for Loan Losses as of March 31, 2008 and 2007 are as follows:
Millions of yen

At March 31

General Allowance for Loan Losses
Specific Allowance for Loan Losses

Thousands of U.S. dollars

2008

2007

2008

¥ 86,560
25,268¥111,828¥ 96,933
49,692¥146,626$ 863,962
252,205$1,116,168

Accounts Based on Corporate Accounting Standards (Consolidated) 93

8. Bonds and Notes
Bonds and Notes as of March 31, 2008 and 2007 are as follows:
At March 31
Description of Bonds
and Notes

Thousands ofMillions of yen
Issue date

Interest rate (%)

Japanese Government-

August 2000–

0.80~2.10

guaranteed Bonds 1-21

February 2008

Japanese Government-

September 1998

1.81

Japanese Government-

November1999–

1.05~6.875

guaranteed Foreign

November 2007

Maturity dateAugust 2010–

U.S. dollars

2008

2007

2008

¥ 802,282¥ 612,132$ 8,007,614

25,08325,087250,358

1,035,616

846,906

10,336,524($2,350,000($2,350,000

December 2022
September 2028

guaranteed Foreign
Bond 67*1
June 2010–
November 2027

Bonds 1-14

Japanese Government-

May1997–

underwritten Bonds

December 1998

1.10~2.60

thousand)thousand)(EUR1,450,000(EUR750,000

thousand)thousand)May 2007–

39,55072,766

394,758

December 2008

[39,550][33,250][394,758]

June 2007–

1,254,630

1,114,753

12,522,508

March 2047

[129,997][150,000][1,297,504]¥3,157,163¥2,671,644$31,511,761

196-211*2
FILP Agency Bonds

April 2002–

3-44, 1*3

February 2008

0.40~2.74

Notes: 1. This bond is a government-guaranteed bond issued by the Japan Development Bank prior to the merger with the Hokkaido-Tohoku Development FinancePublic Corporation that formed DBJ.
2. These bonds are government-guaranteed bonds and government-underwritten bonds issued by the Hokkaido-Tohoku Development Finance Public
Corporation prior to the merger with the Japan Development Bank that formed DBJ.
3. Figures indicated in brackets ( ) indicate the amounts of foreign currency bonds.
4. Figures indicated in brackets [ ] indicate the amounts to be redeemed within one year.
5. Fiscal Investment and Loan Program (FILP) Agency Bonds issued in Japanese domestic markets are not government-guaranteed.

Scheduled redemptions of Bonds and Notes for each of the next five years as of March 31, 2008 are as follows:
Fiscal year ending March 31, 2009
2010
2011
2012
2013

94 Accounts Based on Corporate Accounting Standards (Consolidated)¥169,547 million
109,986
369,842463,348344,798$1,692,264 thousand
1,097,775
3,691,407
4,624,697
3,441,443

9. Borrowings
Borrowings as of March 31, 2008 and 2007 are as follows:
Thousands of

At March 31

Average interest
rate (%)

Millions of yen

Due date of
repayment

U.S. dollars

2008

2007

2008

¥6,978,546¥7,923,935$69,653,126¥6,978,546¥7,923,935$69,653,126

Borrowings
Long-term Borrowings

1.78

May 2008–
November 2027

Borrowings with maturities for each of the next five years as of March 31, 2008 are as follows:
Fiscal year ending March 31, 2009
2010
2011
2012
2013

¥1,108,400 million
947,704
840,448
786,430
827,824$11,062,988 thousand
9,459,069
8,388,548
7,849,388
8,262,542

10. Other Liabilities
Other Liabilities as of March 31, 2008 and 2007 are as follows:
Millions of yen

At March 31

Accrued Expenses
Unearned Income
Deposits from Employees
Derivatives
Reserve for Bonus Payments
Other

Thousands of U.S. dollars

2008

2007

2008

¥ 33,365
997
199
115,499
1,653
5,164

¥ 34,031
17,913
153
133,847
1,617
6,529

$ 333,023
9,955
1,993
1,152,805
16,50251,552¥156,880¥194,093$1,565,829

11. Acceptances and Guarantees
Acceptances and Guarantees as of March 31, 2008 and 2007 are as follows:
Millions of yen

At March 31

2008

Guarantees

Thousands of U.S. dollars

2007

2008

¥126,833¥273,965$1,265,935¥126,833¥273,965$1,265,935

Notes: In the year ended March 31, 2008, Credit Derivatives Transaction measured at fair value is reclassified from “Guarantees” to “Derivatives”, as its rational market
value has been confirmed.

Accounts Based on Corporate Accounting Standards (Consolidated) 95

12. Assets Pledged as Collateral
Securities Pledged as Collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are ¥123,155 million($1,229,219 thousand) as of March 31, 2008, and ¥120,705 million as of March 31, 2007.

13. Retained Earnings
A portion of net income of the parent company which has been calculated pursuant to Article 4 of the Development Bank ofJapan Law (“DBJ Law”) was appropriated to a provision of Statutory Reserve and for payment to the National Treasury as
stipulated by Article 41 of the DBJ Law.
On May 31, 2007, DBJ paid ¥2,499 million ($24,952 thousand), attributable to the year ended March 31, 2007, to the
National Treasury.

14. Fees and Commissions (Income)Fees and Commissions (Income) for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

For the fiscal years ended March 31

2008

2007

2008

Commissions¥4,995¥4,051$49,859¥4,995¥4,051$49,859

15. Other Operating Income
Other Operating Income for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

For the fiscal years ended March 31

Foreign Exchange Gains
Other

2008

Thousands of U.S. dollars

2007

2008

¥110
423

¥

$1,105
4,225

¥534

¥

$5,33016. Other Ordinary Income
Other Ordinary Income for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

For the fiscal years ended March 31

2008

2007

2008

Reversal of allowance for Loan Losses
Compensation for Advance Redemption
Gains on Sales of Equities and Other Securities
Gains on Money Held in Trust
Other¥24,307
12,64888
1,281
15,178¥47,133
1,508
1,350
12,333$242,614
126,246886
12,790151,502¥53,505¥62,325$534,038

Notes: 1. In the year ended March 31, 2008, Compensation for Advance Redemption, which was classified in “Unearned Income” and amortized over the term of theloans, is recognized in full as Income.
2. “Other” includes profit of collective investment vehicles, such as limited partnerships, Tokumei Kumiai and other entities with similar characteristics,
attributable to DBJ and its subsidiaries as the equity participants, ¥13,569 million ($135,435 thousand) for the fiscal year ended March 31, 2008.

96 Accounts Based on Corporate Accounting Standards (Consolidated)17. Fees and Commissions (Expenses)
Fees and Commissions (Expenses) for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

For the fiscal years ended March 31

2008

Wire Transfer Service Charges
Commissions

Thousands of U.S. dollars

2007

2008

¥ 6
23

¥ 5
59

$ 62
230

¥29

¥65

$292

18. Other Operating Expenses
Other Operating Expenses for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

For the fiscal years ended March 31

2008

2007

2008

Foreign Exchange Losses
Bonds and Notes Issuance Costs
Losses on Derivative Instruments
Other

¥

¥ 129
1,521
30
356

$

1,827
14,167
5,726¥21,721¥2,038$216,807

18,239141,411
57,157

19. Other Ordinary Expenses
Other Ordinary Expenses for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

For the fiscal years ended March 31

2008

2007

Provision for Investment Losses
Write-off of Loans
Losses on Sales of Equities and Other Securities
Write-off of Equities
Losses on Money Held in Trust
Other¥ 1,392
7,913
706
723
16,93834,137

¥

112
2,982
1
47,7130
10,635$ 13,903
78,9887,053
7,225
169,060
340,730

2008¥61,813¥61,445$616,959

Notes: Losses on sale of loans included in “Other” are ¥198 million ($1,978 thousand) and ¥890 million for the fiscal years ended March 31, 2008 and 2007,
respectively. Investment Losses on Affiliates accounted by the equity method and Costs on Derivative transactions included in “Other” are ¥15,045 million($150,167 thousand) and ¥8,602 million ($85,856 thousand) for the fiscal years ended March 31, 2008, respectively

Accounts Based on Corporate Accounting Standards (Consolidated) 97

20. Employee Retirement Benefits
Employees whose service with DBJ is terminated are, under most circumstances, entitled to retirement and pension benefits
determined by reference to basic rates of pay at the time of termination, length of service and conditions under which thetermination occurs. If the termination is involuntary, caused by retirement at the mandatory retirement age or caused by death, theemployee is entitled to greater payment than in the case of voluntary termination.
Reserve for Employee Retirement Benefits as of March 31, 2008 and 2007 consisted of the following.
(a) The Funded Status of the Pension Plans
Millions of yen

At March 31

Projected Benefit Obligation
Fair Value of Plan Assets
Unfunded Pension Obligation
Net Amount Recognized on the Balance Sheet
Reserve for Employee Retirement Benefits

2008

Thousands of U.S. dollars

2007¥(45,019)
13,586(31,432)(31,432)¥(31,432)

2008¥(44,460)
14,902(29,558)(29,558)¥(29,558)$(449,337)
135,608(313,729)(313,729)$(313,729)

Notes: 1. The above Projected Benefit Obligations include a portion in which the pension fund manages on behalf of the Japanese Government welfare program.
2. Reserve for Employee Retirement Benefits includes the one for executive directors.

(b) Components of Pension Cost
Millions of yen

Thousands of U.S. dollars

At March 31

2008

2007

2008

Service Cost
Interest Cost
Expected Return on Plan Assets
Amortization of Prior Service Cost
Amortization of Net Actuarial Gains/Losses¥1,389887(74)¥1,400897(493)$13,866
8,858
(744)

1,841

(861)

18,379Net Pension Cost

¥4,043¥ 942$40,360(c) Principal Assumptions Used
At March 31

Discount Rate
Expected Rate of Return on Plan Assets
Method of Attributing the Projected Benefits to Periods of Services
Amortization Period of Actuarial Gains/Losses

98 Accounts Based on Corporate Accounting Standards (Consolidated)

2008

2.0%
0.5%
Straight-line basis
Gains/losses are charged toincome immediately

2007

2.0%
3.5%
Straight-line basis
Gains/losses are charged toincome immediately

21. Lease Transactions(a) Finance Lease Transactions(Excluding leases where the ownership of the property is substantially transferred to the lessee)
Millions of yen

2008

2007

At March 31

Equipment

Others

Total

Equipment

Others

Total

Acquisition Cost Equivalents
Less- Accumulated
Depreciation Equivalents¥1,111¥ 484¥1,596

¥ 724

¥ 277

¥1,002

(479)

(181)

(661)

(430)

(151)

(582)

Book Value Equivalents

¥ 631

¥ 302

¥ 934

¥ 294

¥ 125

¥ 419

Thousands of U.S. dollars

2008
At March 31

Equipment

OthersTotal$ 4,834$15,930

Acquisition Cost Equivalents
Less- Accumulated
Depreciation Equivalents$11,097(4,791)(1,815)(6,606)

Book Value Equivalents$ 6,306$ 3,019$ 9,325

Future lease payments subsequent to the end of the fiscal years for finance leases (including the interest portion thereon) aresummarized below:
Millions of yen

At March 31

Due in One Year or Less
Due after One Year

2008

Thousands of U.S. dollars

2007

2008

¥304
634

¥215
210

$3,043
6,337

¥939

¥426

$9,380

Lease expense, depreciation equivalents and interest expense equivalents relating to finance leases for the fiscal year ended
March 31, 2008 amount to ¥292 million ($2,921 thousand), ¥282 million ($2,817 thousand) and ¥9 million ($96 thousand),
respectively. The corresponding amounts for the fiscal year ended March 31, 2007 are ¥246 million, ¥237 million and ¥8 million,
respectively.
Notes: 1. Depreciation equivalents are calculated using the straight-line method, assuming that useful life is equal to the lease term and that the residual value at theend of the lease term is zero.
2. Interest expense equivalents are defined as the difference between total lease payments and acquisition equivalents, and are allocated over the lease termusing the effective interest method.

(b) Operating Lease Transactions
DBJ has no future lease payments subsequent to the end of fiscal year for operating lease transactions as of March 31, 2008
and 2007.

Accounts Based on Corporate Accounting Standards (Consolidated) 99

22. Deferred Tax Assets and Liabilities
Consolidated domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in anormal effective statutory tax rate of approximately 40.6% for the years ended March 31, 2008 and 2007, respectively.
The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities
as of March 31, 2008 and 2007 are as follows:
Millions of yen

At March 31

2008

Thousands of U.S. dollars

2007

2008

Deferred Tax Assets:
Net Losses Carryforwards
Enterprise Tax Payable
Allowance for Investment Losses
Losses on Available-for-sale Securities
Other
Sub Total
Less—Valuation Allowance
Total Deferred Tax Assets

541
0
270
604
3
1,420
(1,420)
¥
0

57
259
406
51
774
(767)
¥ 7

$ 5,407
0
2,705
6,031
36
14,179(14,174)$
5

Deferred Tax Liabilities:
Net Unrealized Gain on
Available-for-sale Securities
Other
Total Deferred Tax Liabilities
Net Deferred Tax Assets (Liabilities)

(105)
(17)
(122)
¥ (122)

(66)
0
(66)
¥ (59)(1,050)(176)(1,225)$ (1,220)¥¥

Notes: A reconciliation between the normal effective statutory tax rates for the years ended March 31, 2008 and 2007 and the actual effective tax rates reflected in theaccompanying consolidated statement of income is not required under Japanese accounting standards due to such differences being immaterial.

23. Segment Information(a) Segment Information by Type of Business
DBJ and its consolidated subsidiaries are engaged in business such as private equity investment and fund management andother activities as well as banking business. Such segment information, however, is not presented, as the percentages of
those activities are insignificant.
(b) Segment Information by Geographic Area
Segment information classified by geographic area is not presented, as there are no consolidated subsidiaries and offices
located in countries or areas other than Japan.
(c) Ordinary Income from Overseas Entities
Ordinary income from overseas entities is omitted because the amount is below 10 percent of the consolidated ordinary
income.

100 Accounts Based on Corporate Accounting Standards (Consolidated)24. Derivative Transactions
1. Details Related to Transactions(a) Details of Transactions
DBJ utilizes derivative financial instruments, which comprise interest rate swaps, currency swaps, forward foreign exchange
contract and credit default swaps.
(b) Policy for Derivative Transactions
DBJ utilizes interest rate swaps, currency swaps and forward foreign exchange contract to reduce its exposure to market risks
from fluctuations in interest rates and foreign currency exchange rates, and to respond to the customers’ financial needs. DBJ
does not hold or issue derivative financial instruments for trading purposes.
DBJ also utilizes credit default swaps as part of its “acceptances and guarantees on customers’ debt” business within thelimit of a certain definite amount of risk.
(c) Risks Involved in Derivatives Transactions
Derivatives involve the following risks:(i) Market Risk
Potential loss from changes in the market value of financial products due to fluctuations in interest rates or exchange rates.
(ii) Credit Risk
Potential loss from the failure of a counterparty to perform its obligations in accordance with the terms and conditions of
the contract governing the transaction due to the counterparty’s bankruptcy or deteriorating business conditions.
With regards to derivative transactions for hedging purpose, the market risk on derivatives is offset against the hedgedtransactions. As for credit risk, DBJ limits the counterparty to financial institutions highly rated by the credit rating agencies,and constantly monitors the cost of restructuring its transactions and creditworthiness of each counterparty. In addition, DBJ
transacts with multiple counterparties to reduce credit risk. With regards to credit derivative transactions, DBJ holds credit riskof target debt itself in the transaction.
(d) Risk Management Policies for Derivatives
The Treasury Department enters into and the ALM and Risk Management Department monitors derivative transactions inaccordance with the internal management policy, which defines the authorization procedures, including pre-approval byauthorized personnel, and limits on derivative transactions. Also, total contract amount, total amount of risk, market value, andtotal amount of counterparties’ credit risk in the derivative transactions are reported to the directors in charge periodically.
(e) Supplementary explanation on Market Value of Derivatives
It should be noted that ‘Contract Value’ represents nominal contract value or notional principal amount used in determining
the value of receipts or payments of interest, but this does not necessarily reflect the risks of derivative transactions
themselves.

Accounts Based on Corporate Accounting Standards (Consolidated) 101

2. Information on Market Value of Derivatives
The market values of derivatives as of March 31, 2008 and 2007 are as follows:(a) Interest Rate-related Transactions
Millions of yen

2008
Contract ValueAt March 31

Over-the-Counter
Swaps
Receive Fixed/ Pay Float
Receive Float/ Pay Fixed

Total

Over one year

Market Value

Unrealized Gain
(Loss)¥2,285,344
2,285,303¥2,155,344
2,155,303¥ 36,658(36,755)¥ 36,658(36,755)

¥

¥

(96)

(96)

Millions of yen

2007
Contract ValueAt March 31

Over-the-Counter
Swaps
Receive Fixed/ Pay Float
Receive Float/ Pay Fixed

Total

Over one year

Market Value

Unrealized Gain
(Loss)¥1,863,361
1,863,361¥1,813,361
1,813,361¥(13,458)
4,219¥(13,458)
4,219¥ (9,239)¥ (9,239)

Thousands of U.S. dollars

2008
Contract ValueAt March 31

Over-the-Counter
Swaps
Receive Fixed/ Pay Float
Receive Float/ Pay Fixed

Total$22,810,101
22,809,700

Over one year

Market Value

Unrealized Gain
(Loss)$21,512,566
21,512,165$ 365,890(366,854)$(964)$ 365,890(366,854)$(964)

Notes: 1. The above transactions are marked to market and changes in unrealized gain (loss) are included in the Consolidated Statements of Income. Derivativetransactions qualifying for hedge accounting are excluded from the tables above.
2. Market values for the over-the-counter transactions are based primarily on discounted present values.

102 Accounts Based on Corporate Accounting Standards (Consolidated)

(b) Currency-related Transactions
Millions of yen

2008
Contract ValueAt March 31

Over-the-Counter
Swaps
Forwards
Sold
Bought

Total

Over one year

Market Value

Unrealized Gain
(Loss)¥¥¥¥¥15,337
100

¥

¥402
(0)

¥402
(0)

¥402

¥402

Millions of yen

2007
Contract ValueAt March 31

Total

Over-the-Counter
Swaps
Forwards
Sold
BoughtOver one year

Market Value

Unrealized Gain
(Loss)

¥

¥

¥

¥

¥
2,410

¥

¥

¥
53

53

¥ 53

¥ 53

Thousands of U.S. dollars

2008
Contract ValueAt March 31

Over-the-Counter
Swaps
Forwards
Sold
Bought

Total

Over one year

Market Value

Unrealized Gain
(Loss)$$$$$153,089
1,004$$4,021(0)$4,021(0)$4,021$4,021

Notes: 1. The above transactions are marked to market and changes in unrealized gain (loss) are included in the Consolidated Statement of Income. Derivativetransactions qualifying for hedge accounting are excluded from the tables above.
2. Market values for the over-the-counter transactions are based primarily on discounted present values.

(c) Equity-related Transactions
Not applicable(d) Bond-related Transactions
Not applicable(e) Commodity-related Transactions
Not applicable

Accounts Based on Corporate Accounting Standards (Consolidated) 103

(f) Credit Derivatives Transactions
Millions of yen

2008
Contract ValueAt March 31

Over-the-Counter
Credit Default Swap
Sold
Bought

Total

Over one year

Market Value

Unrealized Gain
(Loss)¥1,107,506
602,416¥1,107,506
602,416¥(15,705)
868¥(15,705)
868¥(14,836)¥(14,836)

Unrealized Gain
(Loss)

Millions of yen

2007
Contract ValueAt March 31

Over-the-Counter
Credit Default Swap
Sold
Bought

Total

Over one year

Market Value¥697,877
579,827¥697,877
579,827

¥130
130

¥130
130

¥261

¥261

Thousands of U.S. dollars

2008
Contract ValueAt March 31

Over-the-Counter
Credit Default Swap
Sold
Bought

Total

Over one year

Market Value

Unrealized Gain
(Loss)$11,054,066
6,012,744$11,054,066
6,012,744$(156,754)
8,668$(156,754)
8,668$(148,086)$(148,086)

Notes: 1. The above transactions are marked to market and changes in unrealized gain (loss) are included in the Consolidated Statement of Income.
2. Market values are based on the counterparties’ tendered price.
3. ‘Sold’ means the underwriting of credit risk and ‘Bought’ means the transferring of credit risk.

104 Accounts Based on Corporate Accounting Standards (Consolidated)25. Market Value of Securities and Money Held in Trust
Market value of Securities, Money held in Trust and Negotiable Certificate of Deposit classified as “Cash and Due from banks” asof March 31, 2008 and 2007 are summarized below. The information about investments in subsidiaries and affiliates with market
value is reported in the notes to the non-consolidated financial statements.
1. Securities(a) Trading Securities
Not applicable(b) Held-to-maturity Debt Securities with market values
Millions of yen

2008
Unrealized Gain (Loss)
At March 31

Book Value

Market Value

Net

Gain

(Loss)

Japanese Government Bonds
Japanese Local Government Bonds
Short-term Corporate Bonds
Corporate Bonds
Other

¥

¥

¥

¥

¥

46,501

46,663

162

522

(360)

¥46,501¥46,663

¥162

¥522

¥(360)

Millions of yen

2007
Unrealized Gain (Loss)
At March 31

Book Value

Market Value

Net

Gain

(Loss)

Japanese Government Bonds
Japanese Local Government Bonds
Short-term Corporate Bonds
Corporate Bonds
Other

¥

¥

¥

¥

¥

44,28044,458

178

282

(103)

¥44,280¥44,458

¥178

¥282

¥(103)

Thousands of U.S. dollars

2008
Unrealized Gain (Loss)
At March 31

Book Value

Market Value

Net

Japanese Government Bonds
Japanese Local Government Bonds
Short-term Corporate Bonds
Corporate Bonds
Other

$

$

$

$

Gain

$

(Loss)

464,136

465,754

1,618

5,214

(3,597)$464,136$465,754$1,618$5,214$(3,597)

Notes: Market value is based on the closing price at the respective fiscal year ends.

Accounts Based on Corporate Accounting Standards (Consolidated) 105

(c) Available-for-sale Securities with market values
Millions of yen

2008
Unrealized Gain (Loss)
At March 31

Acquisition Cost

Market/Book Value

Net

Gain

(Loss)

Equities
Bonds
Japanese Government Bonds
Japanese Local Government
Bonds
Short-term Corporate Bonds
Corporate Bonds
Other¥ 34,617
162,181
140,661¥ 41,355
164,639
143,530¥6,7382,457
2,869¥13,412
2,881
2,881

¥(6,674)
(423)
(11)

16,0005,520
5,852

15,834
5,274
5,943

(165)
(245)
91

191

(165)
(245)
(100)

¥202,651¥211,938¥9,287¥16,485¥(7,197)

Millions of yen

2007
Unrealized Gain (Loss)
At March 31

Acquisition Cost

Market/Book ValueNet

Equities
Bonds
Japanese Government Bonds
Japanese Local Government
Bonds
Short-term Corporate Bonds
Corporate Bonds
Other¥ 18,375
128,902120,902¥ 31,936
128,682
120,705¥13,561
(219)
(196)

8,000

7,977

(22)

¥147,277¥160,619¥13,341

Gain¥13,617282
282(Loss)¥ (55)
(502)
(479)

(22)
¥13,899¥(558)

Thousands of U.S. dollars

2008
Unrealized Gain (Loss)
At March 31

Acquisition Cost

Market/Book Value

Net

Gain

(Loss)

Equities
Bonds
Japanese Government Bonds
Japanese Local Government
Bonds
Short-term Corporate Bonds
Corporate Bonds
Other$ 345,519
1,618,738
1,403,946$ 412,774
1,643,269
1,432,583$67,255
24,531
28,637$133,875
28,75628,756$(66,619)(4,226)(119)

159,697
55,09558,413

158,043
52,64359,321(1,654)(2,452)908

1,906(1,654)(2,452)(998)$2,022,670$2,115,364$92,694$164,537$(71,843)

Notes: Book value above represents the market values determined based on the closing price at the respective fiscal year ends.

106 Accounts Based on Corporate Accounting Standards (Consolidated)

(d) Held-to-maturity Debt Securities soldNot applicable(e) Available-for-sale Securities soldMillions of yen

2008
For the Fiscal Year ended March 31

Proceeds from Sales

Available-for-sale Securities

Total amount of Gain on Sales

Total amount of Lossof Sales

¥307

¥105

¥3,049¥307¥105¥3,049Millions of yen

2007
For the Fiscal Year ended March 31

Proceeds from Sales

Total amount of Gain on Sales

Total amount of Lossof SalesAvailable-for-sale Securities¥4,372¥1,543¥34¥4,372¥1,543¥34

Thousands of U.S. dollars

2008
For the Fiscal Year ended March 31

Proceeds from Sales

Available-for-sale Securities

Total amount of Gain on Sales

Total amount of Lossof Sales$3,070$1,052$30,440$3,070$1,052$30,440(f) Held-to-maturity Debt Securities and Available-for-sale Securities whose market values are not readily determinable
Millions of yen

At March 31

Held-to-maturity Debt Securities
Unlisted Corporate Bonds
Available-for-sale Securities
Unlisted Equities
Unlisted Corporate Bonds
Negotiable Certificate of Deposit
Other

Thousands of U.S. dollars

2008

2007

2008

¥ 35,246¥ 15,620$ 351,797

142,0380
149,000
113,392

91,43021,496
98,344

1,417,694
1
1,487,174
1,131,771¥439,677¥226,890$4,388,437

Accounts Based on Corporate Accounting Standards (Consolidated) 107

(g) Change in Classification of Securities
Not applicable(h) Redemption Schedule of Available-for-sale Securities with maturities and Held-to-maturity Debt Securities
Millions of yen

2008
Maturity
At March 31

Within 1 year

1 to 5 years

5 to 10 years

More than 10 years

Bonds
Japanese Government Bonds
Japanese Local Government Bonds
Short-term Corporate Bonds
Corporate Bonds
Other¥ 36,240
20,089¥129,873
71,182¥76,519
52,259¥3,754

15,834317
149,000

58,691

24,260125

3,754¥185,240¥129,873¥76,645¥3,754

Millions of yen

2007
Maturity
At March 31

Within 1 year

1 to 5 years

5 to 10 years

More than 10 years

Bonds
Japanese Government Bonds
Japanese Local Government Bonds
Short-term Corporate Bonds
Corporate Bonds
Other¥43,181
19,995¥93,062
50,575¥69,859
50,134¥4,0002,996
20,18942,486

19,7244,000¥43,181¥93,062¥69,859¥4,000Thousands of U.S. dollars

2008
Maturity
At March 31

Within 1 year

1 to 5 years

5 to 10 years

More than 10 years

Bonds
Japanese Government Bonds
Japanese Local Government Bonds
Short-term Corporate Bonds
Corporate Bonds
Other$ 361,718
200,509$1,296,268
710,470$763,745
521,604$37,472

158,043
3,166
1,487,174

585,798

242,141
1,255

37,472$1,848,892$1,296,268$764,999$37,472108 Accounts Based on Corporate Accounting Standards (Consolidated)2. Money Held in Trust
There is no Money Held in Trust held for the purpose of investment or held to maturity. Market value of Other Money Held in Trust(Money Held in Trust other than that stated above) is summarized below:
Millions of yen

2008
Unrealized Gain (Loss)
At March 31

Other Money Held in Trust

Acquisition Cost

Market/Book Value

Net

Gain

(Loss)¥74,417¥74,454

¥410

¥674

¥(263)

Millions of yen

2007
Unrealized Gain (Loss)
At March 31

Other Money Held in Trust

Acquisition Cost

Market/Book Value

Net

Gain

(Loss)¥90,836¥90,805

¥(31)

¥58

¥(90)

Thousands of U.S. dollars

2008
Unrealized Gain (Loss)
At March 31

Other Money Held in Trust

Acquisition Cost

Market/Book Value

Net

Gain

(Loss)$742,767$743,129$4,099$6,732$(2,633)

3. Net Unrealized Gain on Available-for-sale Securities
The breakdown of net unrealized gain on Available-for-sale Securities is as follows:
Millions of yen

At March 31

Net Unrealized Gain
Available-for-sale Securities
Other Money Held in Trust
Add: Deferred Tax Assets(Less: Deferred Tax Liabilities)
Amount corresponding to Minority Interests
DBJ’s interest in net unrealized gain on
available-for-sale securities held by affiliates
accounted for by the equity method
Net Unrealized Gain on Available-for-sale
Securities, Net of Taxes

Thousands of U.S. dollars

2008

2007

2008

¥13,095(263)¥21,696(62)$130,704(2,633)(105)¥12,726
11(66)¥21,566(26)(1,050)$127,021110¥¥$ (4,356)¥21,539$122,774(436)¥12,300

Notes: Net unrealized gain included foreign currency translation adjustments on non-marketable securities denominated in foreign currency.

26. Subsequent Event
On May 14, 2008, the board meeting resolved to pay out of retained earnings ¥1,026 million ($10,246 thousand), attributable tothe year ended March 31, 2008, to the National Treasury and DBJ paid it on May 30, 2008.

Accounts Based on Corporate Accounting Standards (Consolidated) 109

Report of Independent Auditors

110 Accounts Based on Corporate Accounting Standards (Non-Consolidated)Non-Consolidated Balance Sheets

Millions of yen

At March 31

AssetsCash and Due from banks
Reverse Repurchase Agreements (Note 3(3))
Money Held in Trust
Securities (Notes 3 and 10)
Loans (Note 4)
Other Assets (Note 5)
Tangible Fixed Assets (Note 6)
Intangible Fixed Assets
Customers’ Liabilities for Acceptances andGuarantees
Allowance for Loan Losses (Note 7)
Allowance for Investment Losses
Total Assets

Thousands of U.S. dollars

2008

2007

¥

161,741
136,925
25,720532,137
11,512,906
64,89435,7091,371¥

34,110223,829
27,836366,469
12,146,462
53,74035,7630

2008$

1,614,346
1,366,662
256,715
5,311,281
114,910,738
647,709356,420
13,692

172,833(112,030)(7,329)334,965(146,742)(2,456)

1,725,062(1,118,182)(73,159)¥12,524,880¥13,073,980$125,011,284

Millions of yen

2008

Thousands of U.S. dollars

2007

2008

Liabilities and Equity
Liabilities
Bonds and Notes
Borrowings
Other Liabilities (Note 8)
Reserve for Employee Retirement Benefits
Acceptances and Guarantees (Note 9)
Total Liabilities¥ 3,157,163
6,932,546
156,728
31,432
172,833¥10,450,705¥ 2,671,644
7,862,935
193,300
29,558334,965¥11,092,404$ 31,511,761
69,193,998
1,564,318
313,729
1,725,062$104,308,868

EquityCapitalRetained Earnings (Note 11)
Other Retained Earnings
Statutory Reserve
Accumulated Deficit
Net Unrealized Gain on Available-for-sale Securities
Net Deferred Hedge Losses
Total Equity¥ 1,272,286
861,584
861,584
1,113,186(251,601)
13,084(72,780)¥ 2,074,175¥ 1,272,286
810,163
810,163
1,076,594(266,430)
21,493(122,367)¥ 1,981,575$ 12,698,732
8,599,509
8,599,509
11,110,756(2,511,246)
130,601(726,427)$ 20,702,416

Total Liabilities and Equity¥12,524,880¥13,073,980$125,011,284

Accompanying notes are an integral part of these financial statements.

Accounts Based on Corporate Accounting Standards (Non-Consolidated) 111

Non-Consolidated Statements of Income

Millions of yen

For the Fiscal Years ended March 31

IncomeInterest Income
Interest on Loans
Interest and Dividends on Securities
Interest on Reverse Repurchase Agreements
Interest on Due from banks
Other Interest Income
Fees and Commissions (Note 12)
Other Operating Income (Note 13)
Other Ordinary Income (Note 14)
Collection of Written-off Claims
Gains on Sales of Fixed Assets
Total Income
Expenses
Interest Expense
Interest on Bonds and Notes
Interest on Borrowings
Interest on Swaps (net)Other Interest Expense
Fees and Commissions (Note 15)
Other Operating Expenses (Note 16)
General and Administrative Expenses
Other Ordinary Expenses (Note 17)
Losses on Sales of Fixed Assets
Total Expenses
Net Income

Thousands of U.S. dollars

2008

2007

2008

¥314,084
307,725
3,815
1,577
961
3
4,836
589
53,251
1,982
68¥374,813¥329,710
326,472
2,449
707
80
0
3,405
59,9895,875
0¥398,982$3,134,885
3,071,420
38,08015,7499,597
39
48,274
5,883
531,505
19,791688$3,741,027¥208,866
45,130148,446
15,27315
23
18,811
29,31663,861
13¥320,891¥236,720
33,973
179,674
23,0674
65
2,025
25,01559,93356¥323,815$2,084,703
450,454
1,481,650
152,443155
234
187,754292,608
637,401
135$3,202,834¥ 53,921¥ 75,166$ 538,193

Accompanying notes are an integral part of these financial statements.

112 Accounts Based on Corporate Accounting Standards (Non-Consolidated)Non-Consolidated Statements of Changes in Equity

Millions of yen

CapitalStatutory
Reserve

Accumulated
Deficit

Net Unrealized
Gain (Loss) on
Available-for-sale
Securities¥1,272,286¥1,068,918¥(333,921)¥ 3,401

7,675(7,675)Retained Earnings
For the Fiscal Year ended March 31, 2007

Balance at March 31, 2006

Net Deferred
Hedge Losses¥

Total Equity¥2,010,684

Transfer from net income accounted under
the DBJ Law to Statutory Reserve (Note 11)
Net Income

75,166Net Changes in the year
Balance at March 31, 2007

¥1,272,286¥1,076,594¥(266,430)

75,16618,092(122,367)(104,274)¥21,493¥(122,367)¥1,981,575

Net Deferred
Hedge Losses

Total Equity¥(122,367)¥1,981,575

Millions of yen

CapitalStatutory
Reserve

Accumulated
Deficit

Net Unrealized
Gain (Loss) on
Available-for-sale
Securities¥1,272,286¥1,076,594¥(266,430)¥21,493

36,592(36,592)

Retained Earnings
For the Fiscal Year ended March 31, 2008

Balance at March 31, 2007
Transfer from net income accounted under
the DBJ Law to Statutory Reserve (Note 11)
Payment to National Treasury(2,499)(2,499)Net Income

53,921

53,921Net Changes in the year
Balance at March 31, 2008

¥1,272,286¥1,113,186¥(251,601)(8,408)49,586

41,177¥13,084¥(72,780)¥2,074,175

Thousands of U.S. dollars

CapitalStatutory
Reserve

Accumulated
Deficit

Net Unrealized
Gain (Loss) on
Available-for-sale
Securities$12,698,732$10,745,526$(2,659,257)$214,529

365,229(365,229)

Retained Earnings
For the Fiscal Year ended March 31, 2008

Balance at March 31, 2007

Net Deferred
Hedge Losses

Total Equity$(1,221,350)$19,778,180

Transfer from net income accounted under
the DBJ Law to Statutory Reserve (Note 11)
Payment to National Treasury(24,952)(24,952)

Net Income

538,193538,193

Net Changes in the year
Balance at March 31, 2008

$12,698,732$11,110,756$(2,511,246)(83,927)

494,923

410,996$130,601$(726,427)$20,702,416

Accompanying notes are an integral part of these financial statements.

Accounts Based on Corporate Accounting Standards (Non-Consolidated) 113

Notes to Non-Consolidated Financial Statements

1. Basis of Presentation
The accompanying non-consolidated financial statements have been prepared from the accounts maintained by Development
Bank of Japan (“DBJ”) in accordance with accounting principles generally accepted in Japan, which are different in certain
respects as to the application and disclosure requirements of International Financial Reporting Standards.
As consolidated statements of cash flows and certain disclosures are presented in the consolidated financial statements of
DBJ, non-consolidated statements of cash flows and certain disclosures are not presented herein in accordance with accounting
principles generally accepted in Japan.
In preparing these non-consolidated financial statements, certain reclassifications and rearrangements have been made to
DBJ’s financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan.
In addition, certain reclassifications have been made in the 2007 financial statements to conform to the classifications used in
2008.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million yen. Accordingly, thesum of each amount appearing in the accompanying financial statements and the notes thereto may not be equal to the sum of
the individual account balances.
Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥100.19=$1.00, theeffective exchange rate prevailing as of March 31, 2008, has been used in the conversion. The presentation of such amounts is
not intended to imply that Japanese yen amounts have been or could have been readily translated, realized or settled in U.S.
dollars at that rate or any other rate.

2. Summary of Significant Accounting Policies(a) Securities
Held-to-maturity debt securities are stated at amortized cost with amortization computed, on a straight-line basis, using theweighted average method. Investments in subsidiaries and affiliates are stated at cost computed using the weighted averagemethod. Available-for-sale securities with readily available market quotations are stated at market value (cost is calculated
principally using the weighted average method). Other securities without market quotations are stated at cost or amortizedcost computed using the weighted average method.
Investments in limited partnerships and other similar partnerships are accounted for at their original cost plus DBJ’s
interest in earnings since acquisition and less any dividends received, based on their most recent financial statements.
However, regarding certain investments in limited partnerships, assets and liabilities are recorded in proportion to DBJ’s
underlying interests based on their most recent financial statements.
Unrealized gains and losses on available-for-sale securities are included in equity.
Securities which are held as trust assets in Money Held in Trust accounts are valued in the same way as other securities.
(b) Valuation Method for Derivative Financial Instruments
All derivative financial instruments are carried at market value. Except for certain derivatives that are designated as hedging
instruments as discussed below, gains or losses on derivative transactions are recognized in the statements of income.
(c) Hedge Accounting(i) Hedge Accounting
DBJ applies the deferral method of hedge accounting. Foreign currency swaps which are used to hedge the foreign
currency fluctuations are not translated at market values but at contractual rates, as the foreign currency swap contracts
meet the hedging criteria under the Accounting Standards for Financial Instruments.
(ii) Hedging Instruments and Hedged Items• Hedging Instruments: Interest Rate Swaps
Hedged Items:
Bonds and Notes, Borrowings, and Loans• Hedging Instruments: Foreign Currency Swaps
Hedged Items:
Foreign currency denominated Loans and Bonds and Notes(iii) Hedging Policy
DBJ utilizes hedging instruments to hedge interest rates and foreign currency fluctuations on its assets and liabilities within
the outstanding asset and liability amounts.

114 Accounts Based on Corporate Accounting Standards (Non-Consolidated)

(iv) Evaluation of Hedge Effectiveness
DBJ evaluates the effectiveness of the hedges by testing whether the derivatives are effective in reducing the risks
associated with the hedged items.
In regards to both interest rate swap contracts which meet the hedging requirements of accrual method (*1) and foreign
currency swap contracts which meet the hedging requirements of assignment method (*2) under the Accounting Standards for
Financial Instruments at the inception date, DBJ is not required to evaluate their hedge effectiveness periodically.
*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, forward foreign exchange
contracts and hedged items are accounted for in the following manner;
1) If a foreign currency swap is executed to hedge existing foreign currency assets or liabilities, a) the difference, if any,
between the Japanese yen amount of the hedged foreign currency asset or liability translated using the spot rate at the
inception date of 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.
2) 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 forward foreign exchange
contract are recognized.
(d) Fixed Assets(i) Depreciation of Tangible Fixed Assets
Tangible Fixed Assets are depreciated using the declining-balance method, except for buildings (excluding installedfacilities) that are depreciated on a straight-line basis.
The estimated useful lives are principally as follows:
Buildings:
22 years to 50 years
Equipment:
3 years to 20 years(ii) Amortization of Intangible Fixed Assets
Intangible Fixed Assets are amortized using the straight-line method.
(e) Long-lived assets
DBJ reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount ofan asset or asset group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset or asset
group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual
disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amountof the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use andeventual disposition of the asset or the net selling price at disposition.
(f) Bonds and Notes Issuance Costs“Bonds and Notes Issuance Costs” are charged to income as incurred.
(g) Foreign currency translation and revaluation method
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rates prevailing at
the fiscal year end.

Accounts Based on Corporate Accounting Standards (Non-Consolidated) 115

(h) Allowance for Loan Losses
DBJ provides for “Allowance for Loan Losses” as detailed below pursuant to the internal policies for self-assessment of credit
quality and loan losses.
The allowance for claims on debtors who are legally bankrupt, in special liquidation or effectively bankrupt is provided forbased on the amount of claims, after the write-off described below, net of amounts expected to be recovered throughdisposal of collateral or execution of guarantees.
The allowance for claims on debtors who are not legally bankrupt at the moment, but are likely to become bankrupt for
which future cash flows cannot reasonably be estimated, is provided for at the amount considered to be necessary based onan overall solvency assessment performed on the claims, net of amounts expected to be recovered through disposal ofcollateral or execution of guarantees.
With respect to the claims on debtors who are likely to become bankrupt or to be closely monitored, and for which future
cash flows can reasonably be estimated, the allowance is provided for as the difference between the present value of
expected future cash flows discounted at the contracted interest rate and the carrying value of the claims.
The allowance for claims on debtors other than those described above is provided based on the historical default rate,
which is calculated based on the actual defaults over a certain historical period (the average financing period for DBJ).
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 based on the results of the self-assessment.
With respect to the claims on debtors who are legally or substantially bankrupt with collateral or guarantees, the amount ofclaims exceeding the estimated market values of collateral or guarantees which are deemed uncollectible, have been writtenoff, and totaled ¥52,170 million ($520,715 thousand) and ¥56,267 million for the years ended March 31, 2008 and 2007,
respectively.
(i) Allowance for Investment Losses“Allowance for Investment Losses” is provided for based on the estimated losses on investments.
(j) Reserve for Employee Retirement Benefits
DBJ has defined benefit pension plans, which consist of a welfare pension fund plan and a lump-sum severance indemnity
plan.
The “Reserve for Employee Retirement Benefits” represents future payments for pension and retirement benefits toemployees and executive directors and is accrued based on the projected benefit obligations and estimated pension plan
assets at each fiscal year end. The actuarial gain or loss is recognized during the year it arises.

(k) Lease Transactions
Finance leases that do not involve transfer of ownership to lessees are accounted for as operating leases.

(l) Consumption taxes
Income and expenses subject to consumption taxes exclude related consumption taxes paid or received.
(m) Income taxes
DBJ is exempt from taxes based on income, however, DBJ is subject to parity taxes among local taxes.

116 Accounts Based on Corporate Accounting Standards (Non-Consolidated)3. Securities
Securities as of March 31, 2008 and 2007 are as follows:
Millions of yen

At March 31

Japanese Government Bonds
Corporate Bonds
Equities
Other securities

Thousands of U.S. dollars

2008

2007

2008

¥143,530
87,022
185,767
115,816¥120,705
61,75397,804
86,206$1,432,583
868,576
1,854,148
1,155,974¥532,137¥366,469$5,311,281

Notes: 1. Investments in subsidiaries and affiliates included in “Equities” as of March 31, 2008 and 2007 are ¥86,808 million ($866,436 thousand) and ¥23,809 million,
respectively.
2. DBJ has contingent liabilities for guarantees of corporate bonds among Securities which were issued by private placement (Article 2 Paragraph 3 of the
Financial Instruments and Exchange Law) and amount to ¥3,280 million ($32,738 thousand) and ¥130 million as of March 31, 2008 and 2007 respectively.
3. There are no securities repledged as of March 31, 2008 and 2007 respectively, although securities accepted under repurchase agreements can be sold or
repledged, securities neither sold nor repledged are ¥136,925 million ($1,366,662 thousand) and ¥223,829 million, respectively.
4. Other securities with market value are considered impaired if there is a considerable decline in the market value below the acquisition cost and such decline
is not believed to be recoverable. The difference between the acquisition cost and the market value is the loss for the fiscal year.
The criterion for determining “Considerable decline in market value” is as follows.
Market value is 50% and more lower than acquisition costMarket value is 30% and more lower than acquisition cost, and such decline is not considered as recoverable

4. Non-performing Loans
The amounts of Non-Performing Loans included in “Loans” on the non-consolidated balance sheets as of March 31, 2008 and2007 are as follows:
Millions of yen

At March 31

Loans to Bankrupt Debtors
Delinquent Loans
Loans Past Due Three Months or More
Restructured Loans

Thousands of U.S. dollars

2008

¥

1,329
57,42926
60,988¥119,774

2007

¥

7,562
64,06528
73,624¥145,280

2008$

13,273
573,209262
608,728$1,195,472

Notes: 1. The amounts of Loans indicated above are stated at gross amounts, before reduction of the allowance for loan losses.
2. “Loans to Bankrupt Debtors” represent non-accrual loans to debtors who are legally bankrupt as defined in Article 96-1-3 and 4 of the Japanese Tax Law
Enforcement Regulation.
3. “Delinquent Loans” represent non-accrual loans other than (i) Loans to Bankrupt Debtors and (ii) loans whose interest payments are deferred 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 categoryof “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 ofinterest rates, postponement of principal and interest payments, and forgiveness of loans to support or restructure the debtors’ businesses, and do not fallunder the category of “Loans to Bankrupt Debtors”, “Delinquent Loans”, or “Loans Past Due Three Months or More”.

Accounts Based on Corporate Accounting Standards (Non-Consolidated) 117

DBJ provides commitment lines under which it lends, upon the borrowers’ request, funds up to a pre-determined amount thatis within the borrowers’ financing needs for the projects and up to the agreed maximum amount, provided that their requests
meet terms and conditions for disbursement prescribed in the loan agreements. The total balance of unused commitment lines asof March 31, 2008 and 2007 are ¥268,665 million ($2,681,561 thousand), including ¥153,869 million ($1,535,779 thousand)being financed within one year and ¥331,113 million, including ¥97,695 million being financed within one year, respectively.

5. Other Assets
Other Assets as of March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

At March 31

2008

2007

2008

Prepaid Expenses
Accrued Income
Derivatives
Guarantee Deposits
Other

¥

135
42,766
20,510
441
1,040

¥

92
48,610
3,316
382
1,338

$

¥64,894¥53,740¥647,709

1,356
426,853
204,716
4,403
10,382

6. Tangible Fixed Assets
Tangible Fixed Assets as of March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

At March 31

2008

2007

2008

Tangible Fixed Assets
Land
Buildings
Equipment
Total¥20,340
15,075
293¥35,709¥20,386
15,089287¥35,763$203,020
150,4712,929$356,420

Notes: The Accumulated Depreciation of Tangible Fixed Assets as of March 2008 and 2007 is ¥20,845 million ($208,056 thousand) and ¥20,347 million, respectively.

7. Allowance for Loan Losses
Allowance for Loan Losses as of March 31, 2008 and 2007 are as follows:
Millions of yen

At March 31

General Allowance for Loan Losses
Specific Allowance for Loan Losses

Thousands of U.S. dollars

2008

2007

2008

¥ 86,762
25,268¥ 97,049
49,692$ 865,977
252,205¥112,030¥146,742$1,118,182

118 Accounts Based on Corporate Accounting Standards (Non-Consolidated)

8. Other Liabilities
Other Liabilities as of March 31, 2008 and 2007 are as follows:
Millions of yen

At March 31

Accrued Expenses
Unearned Income
Deposits from Employees
Derivatives
Reserve for Bonus Payments
Other

Thousands of U.S. dollars

2008

2007

2008

¥ 33,346
997
199
115,499
1,653
5,032

¥ 33,346
17,913
153
133,847
1,617
6,421

$ 332,835
9,955
1,993
1,152,805
16,50250,227¥156,728¥193,300$1,564,318

9. Acceptances and Guarantees
Acceptances and Guarantees as of March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

At March 31

2008

2007

2008

Guarantees¥172,833¥334,965$1,725,062¥172,833¥334,965$1,725,062

Notes: In the year ended March 31, 2008, Credit Derivatives Transaction measured at fair value is reclassified from “Guarantees” to “Derivatives”, as its rational market
value has been confirmed.

10. Assets Pledged as Collateral
Securities pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are ¥123,155 million($1,229,219 thousand) as of March 31, 2008 and ¥120,705 million as of March 31, 2007, respectively.

11. Retained Earnings
A portion of net income which has been calculated pursuant to Article 4 of the Development Bank of Japan Law (“DBJ Law”) wasappropriated to a provision of Statutory Reserve and for payment to the National Treasury as stipulated by Article 41 of the DBJ
Law.
On May 31, 2007, DBJ paid ¥2,499 million ($24,952 thousand), attributable to the year ended March 31, 2007, to the
National Treasury.

12. Fees and Commissions (Income)Fees and Commissions (Income) for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

For the fiscal years ended March 31

2008

2007

2008

Commissions¥4,836¥3,405$48,274¥4,836¥3,405$48,274

Accounts Based on Corporate Accounting Standards (Non-Consolidated) 119

13. Other Operating Income
Other Operating Income for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

For the fiscal years ended March 31

2008

Foreign Exchange Gains
Other

Thousands of U.S. dollars

2007

2008

¥166
422

¥

$1,665
4,217

¥589

¥

$5,883

14. Other Ordinary Income
Other Ordinary Income for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

For the fiscal years ended March 31

2008

2007

2008

Reversal of Allowance for Loan Losses
Reversal of Allowance for Investment Losses
Compensation for Advance Redemption
Gains on Sales of Equities and Other Securities
Gains on Money Held in Trust
Other¥24,221¥47,017330$241,757

12,64866
1,281
15,033776
1,350
10,515

126,246666
12,790150,045¥53,251¥59,989$531,505

Notes: 1. In the year ended March 31, 2008, Compensation for Advance Redemption, which was classified in “Unearned Income” and amortized over the term of theloans, is recognized in full as Income.
2. “Other” includes profit of collective investment vehicles, such as limited partnerships, Tokumei Kumiai and other entities with similar characteristics,
attributable to DBJ and its subsidiaries as the equity participants, ¥13,427 million ($134,016 thousand) for the fiscal year ended March 31, 2008.

15. Fees and Commissions (Expenses)
Fees and Commissions (Expenses) for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

For the fiscal years ended March 31

2008

Wire Transfer Service Charges
Commissions

Thousands of U.S. dollars

2007

2008

¥ 6
17

¥ 5
59

$ 62
172

¥23

¥65

$234

16. Other Operating Expenses
Other Operating Expenses for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

For the fiscal years ended March 31

2008

2007

2008

Foreign Exchange Losses
Bonds and Notes Issuance Costs
Losses on derivative instruments
Other

¥

¥ 116
1,521
30
356

$

1,827
14,167
2,815¥18,811¥2,025$187,754

120 Accounts Based on Corporate Accounting Standards (Non-Consolidated)

18,239141,411
28,104

17. Other Ordinary Expenses
Other Ordinary Expenses for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

For the fiscal years ended March 31

2008

2007

Provision for Investment Losses
Write-off of Loans
Losses on Sales of Equities and Other Securities
Write-off of Equities
Losses on Money Held in Trust
Other¥ 5,820
7,913
85
31,200383
18,456¥2,982
147,713
09,235$ 58,090
78,988857
311,418
3,831
184,216

2008¥63,861¥59,933$637,401

Notes: The cost on Derivative transactions included in “Other” are ¥8,602 million ($85,859 thousand) for the fiscal years ended March 31, 2008

18. Lease Transactions(a) Finance Lease Transactions(Excluding leases where the ownership of the property is substantially transferred to the lessee)
Millions of yen

2008

2007

At March 31

Equipment

Others

Total

Equipment

Others

Total

Acquisition Cost Equivalents
Less—Accumulated
Depreciation Equivalents¥1,098¥ 480¥1,579

¥ 716

¥ 273

¥ 990

(474)

(179)

(654)

(427)

(149)

(576)

Book Value Equivalents

¥ 623

¥ 301

¥ 925

¥ 289

¥ 124

¥ 413

Thousands of U.S. dollars

2008
At March 31

Equipment

OthersTotal$ 4,798$15,763

Acquisition Cost Equivalents
Less—Accumulated
Depreciation Equivalents$10,965(4,741)(1,787)(6,528)Book Value Equivalents$ 6,224$ 3,010$ 9,235

Accounts Based on Corporate Accounting Standards (Non-Consolidated) 121

Future lease payments subsequent to the end of the fiscal year for finance leases (including the interest portion thereon) aresummarized below:
Millions of yen

At March 31

2008

Due in One Year or Less
Due after One Year

Thousands of U.S. dollars

2007

2008

¥301
629

¥212
206

$3,006
6,283

¥930

¥419

$9,289Lease expense, depreciation equivalents and interest expense equivalents relating to finance leases for the fiscal year ended
March 31, 2008 amount to ¥289 million ($2,893 thousand), ¥279 million ($2,790 thousand) and ¥9 million ($95 thousand),
respectively. The corresponding amounts for the fiscal year ended March 31, 2007 are ¥243 million, ¥235 million and ¥8 million,
respectively.
Notes: 1. Depreciation equivalents are calculated using the straight-line method, assuming that useful life is equal to the lease term and that the residual value at theend of the lease term is zero.
2. Interest expenses equivalents are defined as the difference between total lease payments and acquisition equivalents, and are allocated over the lease termusing the effective interest method.

(b) Operating Lease Transactions
DBJ has no future lease payments subsequent to the end of fiscal year for operating lease transactions as of March 31, 2008
and 2007.

19. Market Value of Securities
Market value of Securities, excluding investments in subsidiaries and affiliates, are reported in the notes to consolidated financial
statements. DBJ holds no investments in subsidiaries with market value as of March 31, 2008 and 2007.

20. Subsequent Event
On May 14, 2008, the board meeting resolved to pay out of retained earnings ¥1,026 million ($10,246 thousand), attributable tothe year ended March 31, 2008, to the National Treasury and DBJ paid it on May 30, 2008.

122 Accounts Based on Corporate Accounting Standards (Non-Consolidated)

V. Capital Adequacy Status

Capital adequacy ratios were calculated in accordance with the guidelines stipulated by Article 14-2 of the Banking Law of Japan(March 27, 2006, Financial Services Agency Notification No. 19, hereinafter, the “Capital Adequacy Ratio Notification”). Capital
adequacy ratios have been calculated on both a consolidated and non-consolidated basis, and both to uniform international
standards.
As of this disclosure (July 2007), DBJ has not yet applied Article 14-2 of the Banking Law of Japan, but for reference thecapital adequacy ratio has been disclosed in accordance with the Capital Adequacy Ratio Notification.
With regard to the measuring the capital adequacy ratio, credit risk was calculated using the standardized approach, andoperational risk was calculated using the basic indicator approach. Also, as the Bank does not conduct trading (specifictransactions) operations, and as Article 4 and Article 16 of the Capital Adequacy Ratio Notification apply, the market risk
equivalent amount was not calculated.

[1] Capital Adequacy Ratio Status (Consolidated)
Settlement of the consolidated accounts for the 9th business term.

Qualitative Disclosure
1. Scope of Consolidation

The DBJ’s consolidated capital adequacy ratio is calculated for the corporate group, as stipulated in
Article 3 and Article 26 of the Capital Adequacy Ratio Notification (hereinafter, the “Consolidated Group”).
For companies that belong to the Consolidated Group, no differences exist in the wording of theconsolidated financial statements or regulations pertaining to shares and preparation methods (Ministry of
Finance Directive No. 28 of 1976 (hereinafter, the “Consolidated Financial Statement Regulations”) ofcompanies included in the scope of consolidation. The Consolidated Group has nine consolidated
subsidiaries, including New Business Investment Co., Ltd., (invests in unlisted venture companies) andDBJ Credit Line Ltd. (acquires beneficial interests in trust, operates and directs trusts on a commissioned
basis, etc.).
No affiliated companies conduct financial business to which Article 9 or Article 32 of the Capital
Adequacy Ratio Notification applies; no companies are subject to exclusion items under Item 2 (a) to (c),Paragraph 1, Article 8, of this Notification; and no companies conduct business in accordance with Item
11, Paragraph 1, Article 16-2 of the Banking Law of Japan (Law No. 59 of 1981, hereinafter, the “Law”) orin accordance with Item 12 of this Paragraph that do not belong to the Consolidated Group.
No companies in the Consolidated Group are undercapitalized, and at the present no particular
restrictions are in place to limit the movement of assets or capital.

2. Overview of FundRaising Methods

All capital is funded by the government of Japan.

3. Overview of Methods
for Evaluating the
Degree of Capital
Adequacy of theConsolidated GroupRegarding the degree of capital adequacy, the Consolidate Group quantifies credit risk, interest rate risk
and operational risk, compares the total risk amount with total capital and measures the capital surplus.
This surplus enables the Consolidated Group to respond to unquantifiable risks and unforeseen events,
decide whether to take new financing risks and establish the operating directions.

4. Credit Risk(a) Overview of Risk Management Policies and Procedures
Credit risk refers to the risk of loss to the Bank resulting from the decline in or disappearance of thevalue of credit assets, owing to the worsening credit standing of clients for loans or debt guarantees.
These risks include expected losses (UL), or losses that on average can be expected to occur within acertain measurement period; and unexpected losses (UL), which go extend beyond the boundaries oflosses that, on average, are expected within a period of time. The Bank periodically compares UL andcapital to measure the amount of capital in surplus.
(b) Rating Agencies Eligible to Weight Risks
The rating agencies that the Bank uses for weighting risk are among the four that the FSA has named
eligible to perform such weighting. Rating agency eligibility is not selected depending on the type of
exposure.
The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating Agency,
Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

5. Overview of Risk
Management Policies
and Procedures for
Reducing Credit Risk

In principal, credit extended by the Bank requires collateral. If collateral is required, the effectiveness ofcollateral is determined from the perspective of the amount that could be reasonably expected to resolve
the situation through liquidation.
In principal, collateral valuation is performed by the Credit Analysis Department, based on the requestof investment and loan departments/offices. Investment and loan departments/offices and the Credit
Analysis Department manage credit risk based on valuation results. In principle, the valuation of all
collateral property is reviewed once or twice each year to ensure the Bank is aware of the current statusof its collateral property.

Accounts Based on Corporate Accounting Standards (Capital Adequacy Status) 123

6. Overview of Risk
Management Policies
and Procedures Related
to Risk Involving
Counterparties in
Derivative ProductTransactions andTransactions with Long
Settlement Periods

The Bank regularly refers to the ratings and credit amounts of transaction counterparties to determine theadvisability of entering a transaction or to understand the risks of existing transactions.

7. Securitization Exposure(a) Overview of Risk Management Policies and Procedures
Excluding credit derivatives, the majority of DBJ’s securitization exposure falls into the category of
specialized lending (Item 47, Article 1, of the Capital Adequacy Ratio Notification) employing internalrating methods. Different from the internal ratings that are applied to standard corporate credit, thisexposure is given a rating by using a grading system applied to match the characteristics of specialized
lending. The Bank conducts risk management in line with changes in rating level. In addition to rating
its exposure when making new acquisitions, the Bank reviews these ratings periodically.
The Bank’s involvement in securitized transactions is typically that of an investor, and in principle
the exposure acquired through such transactions continues until the instrument’s maturity.
(b) Methods Used to Calculate Credit Risk Asset Amount of Securitization Exposure
DBJ employs the standardized approach for these calculations.
(c) Method of Accounting for Securitization Transactions
Securitized transactions are recognized from an accounting standpoint at the time of inflows or
outflows of cash, such as when selling assets or raising funds.
(d) Rating Agencies Eligible to Weight Risks by Type of Securitization
The rating agencies that DBJ uses for weighting risk are among the four that the FSA has named
eligible to perform such weighting. Eligible rating agencies are not selected according to investment
type.
The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating Agency,
Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

8. Market Risk

In accordance with Article 4 of the Capital Adequacy Ratio Notification, the Bank includes in its
calculation method no market risk equivalent amount. Consequently, this topic is not applicable.

9. Operational risk(a) Overview of Risk Management Policies and Procedures
DBJ defines operational risk as the risk of loss arising from internal processes, people or systems thatare inappropriate or non-functioning, or from extrinsic events. DBJ works to ensure its risk
management preparedness to prevent potential risks from materializing.
The Bank establishes its management structure and basic risk management policy pertaining tomanagement methods after considering the wide range of operational risks that it potentially faces,such as operational risk, systems risk, legal risk, human risk and tangible asset risk.
The Bank designates operational risk officers at each of its offices. These personnel are charged
with establishing data collection procedures, remaining aware of risks and creating risk databases.
In line with the increasing level of sophistication and complexity of the financial business, the Bank
addresses various operational risks by establishing or reinforcing management methods andpreparations to appropriately identify, evaluate, measure, monitor and control these risks.
(b) Method Used to Calculate Operational Risk Equivalent Amount
The Bank uses the basic indicator approach to calculate these risks.

10. Overview of Risk
Management Policies
and Procedures
Regarding Exposure
to Shares and Other
Equity Investments
and Capital Injections
into the Banking Book

The Bank defines investment risk as its risk of sustaining a partial or total loss on the value of aninvestment, owing to such factors as the worsening of an investee’s profitability or financial conditions or
to fluctuations in the market environment. For newly acquired exposure, DBJ considers the balance
between investment risk and potential return in each field of investment. Thereafter, the Bank regularly
conducts performance evaluations on its exposure.

124 Accounts Based on Corporate Accounting Standards (Capital Adequacy Status)11. Interest Rate Risk on
the Banking Book(a) Overview of Risk Management Policies and Procedures
Long-term, fixed-rate funding makes up the majority of the DBJ’s borrowings, and the Bank seeks tominimize its interest rate risk by raising funds featuring similarly long-term, fixed rates. We measureinterest rate risk by simulating future profit-and-loss distributions due to potential interest rate
fluctuations on earnings at risk (EaR). We also employ the value at risk (VaR) and the Basel IIstandardized interest rate shock* method to compute various risks from the standpoint of theireconomic value.
* Measurement methods are described in (ii) and (iii) of (b).
We regularly compare VaR and 200bpValue 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
The Bank calculates interest rate risk based on the following viewpoints.
<Economic Value Viewpoints>(i) VaR: Use a historical method of measurement with a one-year holding period, a five-year time
horizon and a 99.9% confidence level(ii) Measure interest rate fluctuations in the 1st percentile and 99th percentile, using a one-year holding
period and a five-year time horizon(iii) 200bpValue: Use a 2% parallel shift in a standardized interest rate shock to measure the change ineconomic value((ii) and (iii) are methods for measuring the standardized interest rate shock under Basel II.)
<Profit and Loss Viewpoint>
EaR: After setting such parameters as the future asset and liability composition, measure profits andlosses over a specific period assuming future interest rate fluctuations

Quantitative Disclosure
1. Of companies covered under the deductions from capital provided by Article 8, Paragraph 1, Item 2 (a) to (c) or by Article 31,
Paragraph 1, Item 2 (a) to (c) of the Capital Adequacy Ratio Notification, names of companies that fall below legislatively required
capital adequacy and the total amount by which they fail to meet the required capital adequacy.
Not applicable
2. Items Constituting Capital Adequacy(Millions of yen)March 31, 2008

Minority interests
CapitalRetained earnings
Other
Total Tier I capital

March 31, 2007

3,563

4,208

1,272,286

1,272,286

860,006

809,898(1,026)(2,563)

2,134,829

2,083,829

92,152

106,668

133,012

18,897

Total of Tier II stipulated in Article 6 and Article 30 of the Capital Adequacy
Ratio Notification, and Tier III stipulated in Article 7 and Article 30 ofthis same Notification
Total of deductions from capital stipulated in Article 8 and Article 30 of
the Capital Adequacy Ratio Notification

Accounts Based on Corporate Accounting Standards (Capital Adequacy Status) 125

3. Items Related to Capital Adequacy Level(Millions of yen)March 31, 2008(a) Capital requirement to total credit risk
(1) Exposure by portfolio to which standardized approach applied

797,007904,459753,718

859,45500(i) Japanese government and regional municipal entities(ii) Exposure to financial institutions

March 31, 2007

7,120

11,872(iii) Exposure to corporations

602,231712,046(iv) Equity exposure

141,195

130,619(v) Other exposure

3,170

4,917

43,28845,003——(2) Securitization risk exposure(b) Capital requirement to market risk(c) Capital requirement to operational risk

14,228

14,975(d) Consolidated total capital requirement ((a) + (b) + (c))

811,235

919,434(e) Consolidated capital ratio and consolidated Tier I ratio Capital ratio
Tier I ratio

20.65%

18.90%

21.05%

18.13%

4. Items Related to Credit Risk (Excluding Securitization Exposure)(a) Fiscal year-end credit risk exposure and breakdown by principal categories(Millions of yen)March 31, 2008

March 31, 2007

Loans

11,180,486

11,884,802

Equities

348,996

238,364

Commitments and customers’ liabilities for acceptances and guarantees

347,057

560,065

Bonds (JGBs and publicly offered bonds)

261,233

225,676

Other

480,828

417,196

Total

12,618,602

13,326,104(b) Fiscal year-end credit risk exposure, broken down as follows(1) By region(Millions of yen)March 31, 2008

March 31, 2007

Domestic total

12,618,602

13,326,104

Overseas total——

Note: The DBJ Group has no overseas sales locations or overseas consolidated subsidiaries.

(2) Breakdown by industry and transaction counterparty(Millions of yen)March 31, 2008

Manufacturing

2,306,846

March 31, 2007

2,430,120

Forestry and fisheries

1,210

1,570

Mining24,59329,079Construction

15,437

18,672Wholesale and retail580,550

614,060

Finance and insurance

942,904

753,473

Real estate

1,072,486

1,084,019

Transportation and communications

4,184,234

4,544,855

Electrical, gas and water

2,212,515

2,515,177

Services

923,857

1,009,150

Other353,966

325,924

126 Accounts Based on Corporate Accounting Standards (Capital Adequacy Status)

(3) Breakdown by period to maturity(Millions of yen)March 31, 2008

Five years or less

3,275,639

March 31, 2007

2,913,063

More than five years, up to 10

4,725,787

4,962,861

More than 10 years, up to 15

3,195,201

3,431,991

More than 15 years

1,124,221

1,395,425

No maturity date

297,752

622,763(c) Breakdown of exposure by risk weight (after accounting for credit risk mitigations)(Millions of yen)March 31, 2008

March 31, 2007

Risk weight 0%

146,290

122,473

Risk weight 20%

3,368,620

3,062,781

Risk weight 50%

1,717,763

1,966,766

Risk weight 100%

6,552,762

7,255,393

Risk weight 150%

307,837

503,809

Risk weight, other525,328

418,879

Capital deductions

133,012

18,8975. 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, 2008

Eligible financial collaterals
Guarantees or credit derivatives

March 31, 2007

136,924

218,389

2,096,290

1,908,266

6. Transaction Counterparties’ Risk on Derivative Product Transactions and Transactions with Long Settlement Periods (Millions of yen)

Equivalent credit calculation method
Gross restructuring cost
Reducing credit equivalent amounts through netting
Net restructuring cost
Gross add-on, by transaction typeInterest rate transactions
Foreign exchange transactions
Net equivalent credit
Amounts of hypothetical holdings of credit derivatives for calculated
credit equivalent amount by type of credit derivative, by protection
purchase or provision
Credit default swaps
Hypothetical holdings of credit derivatives taking into accountcredit risk mitigations

March 31, 2008

March 31, 2007

Current exposure method
115,103
51,42863,674
49,16329,683
19,480112,838

Current exposure method
85,69728,43557,26240,27523,006
17,26997,537

941,810

697,777

702,606

732,777

Notes: 1. Collateral is not used to reduce credit risk on derivative product transactions.
2. Credit derivatives used to compute the credit equivalent amount are included in securitization exposure; there is some data overlap with securitization
exposure indicated elsewhere

7. Securitization Exposure(a) Securitization exposure in which the Consolidated Group is the originator
Not applicable.
(b) Securitization exposure in which the Consolidated Group is an investor(1) Retained securitization exposure amount and breakdown by major underlying asset type
March 31, 2008

(Millions of yen)March 31, 2007

Project finance

127,008

114,568

Loans for commercial real estate

132,577

164,092

Other (loans, etc.)

932,160

727,604

Note: Excluding credit derivatives, the majority of DBJ’s securitization exposure falls into the category of specialized lending (Item 47, Article 1, of the Capital
Adequacy Ratio Notification) employing internal rating methods. Therefore, the separation of specialized lending in accordance with the Capital Adequacy
Notification is applied for underlying asset categories from (1) above to (3), mentioned later.

Accounts Based on Corporate Accounting Standards (Capital Adequacy Status) 127

(2) Balance of retained securitization exposure by risk weight and required capital amounts(Millions of yen)March 31, 2008

Risk weight 20% or less
Risk weight 20% up to 100%
Risk weight of more than 100%

Balance

916,006

March 31, 2007

706,777

Capital requirement

14,657

11,308

Balance

252,211

268,510

Capital requirement

19,735

20,531

Balance

23,52830,975

Capital requirement

8,896

13,164

Note: When applying to securitization exposure the transitional measures indicated in Article 15 of the Supplementary Provision to the Capital Adequacy Ratio
Notification, risk weight was calculated for each exposure item as stipulated by the transitional measures.

(3) Breakdown of securitization exposure amounts and underlying asset categories deducted from capital in accordance with Article
247 of the Capital Adequacy Ratio Notification(Millions of yen)March 31, 2008

Project finance
Loans for commercial real estate

March 31, 2007

6,471

4,770

108,188

14,127(4) Amount of credit risk assets calculated with application of Article 15 of the Supplementary Measure (Interim Measure for
Securitization Exposure) to the Capital Adequacy Ratio Notification(Millions of yen)March 31, 2008

Credit risks and assets

66,756

March 31, 2007

88,0838. Items Related to Market Risk
The Bank falls into the category indicated in Article 4 of the Capital Adequacy Ratio Notification. Consequently, calculation of themarket risk equivalent amount indicated in Article 2 was not performed, and this item does not apply.
9. Items Related to Shares and Other Equity Investments and Capital Injections into the Banking Book
(Millions of yen)March 31, 2008

March 31, 2007(a) Market value of below-listed items as included within categories in
the consolidated balance sheets.
(1) Exposure to listed shares
Exposure to other equity investments and capital injections

43,661

28,670344,146

317,486

136,929

89,383(2) Shares in subsidiaries and affiliated companies, andother marketable securities(b) Gains or losses on the sale of equity investments or shares
Gain or loss on amortization of exposure on equity investments or shares

(617)

1,509

723

47,713

12,30021,539(c) Gains or losses from valuation recognized on the consolidated balance sheets
but not recognized on the consolidated statements of income statements

Notes: 1. The Group has no overseas sales locations.
2. The Group has no exposure to shares to which Article 13 of the Supplementary Provisions to the Capital Adequacy Ratio Notification applies.

10. Exposure Applied for the Deemed Calculation of Credit Risk Assets
As the Bank employs the standardised approach for calculating credit risk, this item does not apply.
11. Interest Rate Risk in the Banking Book

Decrease in economic value resulting from interest rate shock

March 31, 2008

March 31, 2007

Decrease in economic value
resulting from an interest
rate shock measuring
interest rate fluctuations in
the 1st percentile and 99th
percentile, using a one-year
holding period and a fiveyear time horizon¥49.6 billion

Decrease in economic value
resulting from an interest
rate shock measuring
interest rate fluctuations in
the 1st percentile and 99th
percentile, using a one-year
holding period and a fiveyear time horizon¥89.4 billion

128 Accounts Based on Corporate Accounting Standards (Capital Adequacy Status)

[2] Capital Adequacy Ratio Status (Non-Consolidated)
Settlement of the non-consolidated accounts for the 9th business term.

Qualitative Disclosure
1. Overview of FundRaising Methods

All capital is funded by the government of Japan.

2. Overview of Methods
for Evaluating the
Degree of Capital
Adequacy of the Bank

Regarding the degree of capital adequacy, the Bank quantifies credit risk, interest rate risk andoperational risk, compares the total risk amount with total capital and measures the capital surplus. This
surplus enables the Bank to respond to unquantifiable risks and unforeseen events, decide whether totake 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 the Bank resulting from the decline in or disappearance of thevalue of credit assets, owing to the worsening credit standing of clients for loans or debt guarantees.
These risks include expected losses (UL), or losses that on average can be expected to occur within acertain measurement period; and unexpected losses (UL), which go extend beyond the boundaries oflosses that, on average, are expected within a period of time. The Bank periodically compares UL andcapital to measure the amount of capital in surplus.
(b) Rating Agencies Eligible to Weight Risks
The rating agencies that the Bank uses for weighting risk are among the four that the FSA has named
eligible to perform such weighting. Rating agency eligibility is not selected depending on the type of
exposure.
The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating Agency,
Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

4. Overview of Risk
Management Policies
and Procedures for
Reducing Credit Risk

In principal, credit extended by the Bank requires collateral. If collateral is required, the effectiveness ofcollateral is determined from the perspective of the amount that could be reasonably expected to resolve
the situation through liquidation.
In principal, collateral valuation is performed by the Credit Analysis Department, based on the requestof investment and loan departments/offices. Investment and loan departments/offices and the Credit
Analysis Department manage credit risk based on valuation results. In principle, the valuation of all
collateral property is reviewed once or twice each year to ensure the Bank is aware of the current statusof 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

The Bank regularly refers to the ratings and credit amounts of transaction counterparties to determine theadvisability of entering a transaction or to understand the risks of existing transactions.

6. Securitization
Exposure(a) Overview of Risk Management Policies and Procedures
Excluding credit derivatives, the majority of DBJ’s securitization exposure falls into the category of
specialised lending (Item 47, Article 1, of the Capital Adequacy Ratio Notification) employing internalrating methods. Different from the internal ratings that are applied to standard corporate credit, thisexposure is given a rating by using a grading system applied to match the characteristics ofspecialised lending. The Bank conducts risk management in line with changes in rating level. In
addition to rating its exposure when making new acquisitions, the Bank reviews these ratings
periodically.
The Bank’s involvement in securitized transactions is typically that of an investor, and in principle
the exposure acquired through such transactions continues until the instrument’s maturity.
(b) Methods Used to Calculate Credit Risk Asset Amount of Securitization Exposure
DBJ employs the standardized approach for these calculations.
(c) Method of Accounting for Securitization Transactions
Securitized transactions are recognized from an accounting standpoint at the time of inflows or
outflows of cash, such as when selling assets or raising funds.
(d) Rating Agencies Eligible to Weight Risks by Type of Securitization
The rating agencies that DBJ uses for weighting risk are among the four that the FSA has named
eligible to perform such weighting. Eligible rating agencies are not selected according to investment
type.
The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating Agency,
Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

Accounts Based on Corporate Accounting Standards (Capital Adequacy Status) 129

7. Market Risk

In accordance with Article 16 of the Capital Adequacy Ratio Notification, the Bank includes in its
calculation method no market risk equivalent amount. Consequently, this topic is not applicable.

8. Operational risk(a) Overview of Risk Management Policies and Procedures
DBJ defines operational risk as the risk of loss arising from internal processes, people or systems thatare inappropriate or non-functioning, or from extrinsic events. DBJ works to ensure its risk
management preparedness to prevent potential risks from materializing.
The Bank establishes its management structure and basic risk management policy pertaining tomanagement methods after considering the wide range of operational risks that it potentially faces,such as operational risk, systems risk, legal risk, human risk and tangible asset risk.
The Bank designates operational risk officers at each of its offices. These personnel are charged
with establishing data collection procedures, remaining aware of risks and creating risk databases.
In line with the increasing level of sophistication and complexity of the financial business, the Bank
addresses various operational risks by establishing or reinforcing management methods andpreparations to appropriately identify, evaluate, measure, monitor and control these risks.
(b) Method Used to Calculate Operational Risk Equivalent Amount
The Bank uses the basic indicator approach to calculate these risks.

9. Overview of Risk
Management Policies
and Procedures
Regarding Exposure
to Shares and Other
Equity Investments andCapital Injections into
the Banking Book

The Bank defines investment risk as its risk of sustaining a partial or total loss on the value of aninvestment, owing to such factors as the worsening of an investee’s profitability or financial conditions or
to fluctuations in the market environment. For newly acquired exposure, DBJ considers the balance
between investment risk and potential return in each field of investment. Thereafter, the Bank regularly
conducts performance evaluations on its exposure.

10. Interest Rate Risk on
the Banking Book(a) Overview of Risk Management Policies and Procedures
Long-term, fixed-rate funding makes up the majority of the DBJ’s borrowings, and the Bank seeks tominimize its interest rate risk by raising funds featuring similarly long-term, fixed rates. We measureinterest rate risk by simulating future profit-and-loss distributions due to potential interest rate
fluctuations on earnings at risk (EaR). We also employ the value at risk (VaR) and the Basel IIstandardized interest rate shock* method to compute various risks from the standpoint of theireconomic value.
* Measurement methods are described in (ii) and (iii) of (b).
We regularly compare VaR and 200bpValue 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
The Bank calculates interest rate risk based on the following viewpoints.
<Economic Value Viewpoints>(i) VaR: Use a historical method of measurement with a one-year holding period, a five-year time
horizon and a 99.9% confidence level(ii) Measure interest rate fluctuations in the 1st percentile and 99th percentile, using a one-year holding
period and a five-year time horizon(iii) 200bpValue: Use a 2% parallel shift in a standardized interest rate shock to measure the change ineconomic value((ii) and (iii) are methods for measuring the standardized interest rate shock under Basel II.)
<Profit and Loss Viewpoint>
EaR: After setting such parameters as the future asset and liability composition, measure profits andlosses over a specific period assuming future interest rate fluctuations

130 Accounts Based on Corporate Accounting Standards (Capital Adequacy Status)

Quantitative Disclosure
1. Items Constituting Capital Adequacy(Millions of yen)March 31, 2008

CapitalOther retained earnings
Other
Total Tier I capital

March 31, 2007

1,272,286

1,272,286

861,584

810,163(1,026)(2,563)

2,132,844

2,079,886

92,650106,721133,012

18,897

Total of Tier I stipulated in Article 18 and Article 41 of the Capital Adequacy
Ratio Notification, and Tier II stipulated in Article 19 and Article 42 of
this same Notification
Total of deduction from capital stipulated in Article 20 and Article 43 of
the Capital Adequacy Ratio Notification
2. Items Related to Capital Adequacy Level(Millions of yen)March 31, 2008(a) Capital requirement to total credit risk
(1) Exposure by portfolio to which standardized method applied

794,005

888,847

754,940

851,00400(i) Japanese government and regional municipal bodies(ii) Exposure to financial institutions

March 31, 2007

5,248

10,866(iii) Exposure to corporations

603,096

724,898(iv) Equity exposure

143,498

110,728(v) Other exposure

3,097

4,510

39,06537,843——(2) Securitization risk exposure(b) Capital requirement to market risk(c) Capital requirement to operational risk

14,268

14,970(d) Non-consolidated total capital requirement ((a) + (b) + (c))

808,273

903,817

Capital ratio

20.71%

19.19%

Tier I ratio

21.11%

18.41%(e) Non-consolidated capital ratio and non-consolidated Tier I ratio

3. Items Related to Credit Risk (Excluding Securitization Exposure)(a) Fiscal year-end credit risk exposure and breakdown by principal categories(Millions of yen)March 31, 2008

March 31, 2007

Loans

11,224,105

11,927,864

Equities

347,197

215,591

Commitments and customers’ liabilities for acceptances and guarantees

334,826

573,002

Bonds (JGBs and publicly offered bonds)

202,184

176,676

Other

465,828

392,896

Total

12,574,143

13,286,031

Accounts Based on Corporate Accounting Standards (Capital Adequacy Status) 131

(b) Fiscal year-end credit risk exposure, broken down as follows(1) By region(Millions of yen)March 31, 2008

March 31, 2007

Domestic total

12,574,143

13,286,031

Overseas total——

Note: DBJ has no overseas sales locations.

(2) Breakdown by industry and transaction counterparty(Millions of yen)March 31, 2008

Manufacturing

2,306,846

March 31, 2007

2,430,120

Forestry and fisheries

1,210

1,570

Mining24,59329,079Construction

15,437

18,672Wholesale and retail580,550

614,060

Finance and insurance

972,697

791,993

Real estate

1,072,486

1,084,019

Transportation and communications

4,184,234

4,544,855

Electrical, gas and water

2,212,515

2,515,177

Services

923,857

1,009,150

Other279,713247,330(3) Breakdown by period to maturity(Millions of yen)March 31, 2008

March 31, 2007

Five years or less

3,306,258

2,928,063

More than five years, up to 10

4,740,893

4,969,460

More than 10 years, up to 15

3,197,762

3,443,391

More than 15 years

1,124,221

1,395,425

No maturity date

205,006

549,690(c) Breakdown of exposure by risk weight (after accounting for credit risk mitigations)(Millions of yen)March 31, 2008

March 31, 2007

Risk weight 0%

146,290

122,473

Risk weight 20%

3,297,974

3,062,781

Risk weight 50%

1,717,763

1,966,766

Risk weight 100%

6,552,762

7,281,455

Risk weight 150%

307,837

503,809

Risk weight, other551,514348,743

Capital deductions

133,012

18,8974. 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, 2008

Eligible financial collaterals
Guarantees or credit derivatives

132 Accounts Based on Corporate Accounting Standards (Capital Adequacy Status)

March 31, 2007

136,924

218,389

2,096,290

1,908,266

5. Transaction Counterparties’ Risk on Derivative Product Transactions and Transactions with Long Settlement Periods (Millions of yen)March 31, 2008

Equivalent credit calculation method
Gross restructuring cost
Reducing credit equivalent amounts through netting
Net restructuring cost
Gross add-on, by transaction typeInterest rate transactions
Foreign exchange transactions
Net equivalent credit
Amounts of hypothetical holdings of credit derivatives for calculated
credit equivalent amount by type of credit derivative, by protection
purchase or provision
Credit default swaps
Hypothetical holdings of credit derivatives taking into accountcredit risk mitigations

Current exposure method
115,103
51,42863,674
49,16329,683
19,480112,838

March 31, 2007

Current exposure method
85,69728,43557,26240,27523,006
17,26997,537

941,810

697,777

702,606

732,777

Notes: 1. Collateral is not used to reduce credit risk on derivative product transactions.
2. Credit derivatives used to compute the credit equivalent amount are included in securitization exposure; there is some data overlap with securitization
exposure indicated elsewhere

6. Securitization Exposure(a) Securitization exposure in which the Bank is the originator
Not applicable.
(b) Securitization exposure in which the Bank is an investor(1) Retained securitization exposure amount and breakdown by major underlying asset type
March 31, 2008

(Millions of yen)March 31, 2007

Project finance

127,008

114,568

Loans for commercial real estate

132,577

164,092

Other (loans, etc.)

916,006

697,777

Note: Excluding credit derivatives, the majority of DBJ’s securitization exposure falls into the category of specialized lending (Item 47, Article 1, of the Capital
Adequacy Ratio Notification) employing internal rating methods. Therefore, the separation of specialized lending in accordance with the Capital Adequacy
Notification is applied for underlying asset categories from (1) above to (3), mentioned later.
(2) Balance of retained securitization exposure by risk weight and required capital amounts(Millions of yen)March 31, 2008

Risk weight 20% or less
Risk weight 20% up to 100%
Risk weight of more than 100%

Balance

916,006

March 31, 2007

706,777

Capital requirement

14,657

11,308

Balance239,713244,900

Capital requirement

19,167

19,587

Balance

19,87224,759

Capital requirement

5,240

6,947

Note: When applying to securitization exposure the transitional measures indicated in Article 15 of the Supplementary Provision to the Capital Adequacy Ratio
Notification, risk weight was calculated for each exposure item as stipulated by the transitional measures.

(3) Breakdown of securitization exposure amounts and underlying asset categories deducted from capital in accordance with Article
247 of the Capital Adequacy Ratio Notification(Millions of yen)March 31, 2008

Project finance
Loans for commercial real estate

March 31, 2007

6,471

4,770

108,188

14,127

Accounts Based on Corporate Accounting Standards (Capital Adequacy Status) 133

(4) Amount of credit risk assets calculated with application of Article 15 of the Supplementary Measure (Interim Measure for
Securitization Exposure) to the Capital Adequacy Ratio Notification(Millions of yen)March 31, 2008

Credit risks and assets

March 31, 2007

66,75688,0837. Items Related to Market Risk
The Bank falls into the category indicated in Article 4 of the Capital Adequacy Ratio Notification. Consequently, calculation of themarket risk equivalent amount indicated in Article 2 was not performed, and this item does not apply.
8. Items Related to Shares and Other Equity Investments and Capital Injections into the Banking Book
(Millions of yen)March 31, 2008

March 31, 2007(a) Market value of below-listed items as included within categories in
the non-consolidated balance sheets.
(1) Exposure to listed shares
Exposure to other equity investments and capital injections

43,55828,670369,838

293,654(2) Shares in subsidiaries and affiliated companies, andother marketable securities(b) Gains or losses on the sale of equity investments or shares
Gain or loss on amortization of exposure on equity investments or shares

(19)

777

31,20047,71313,084

21,493(c) Gains or losses from valuation recognized on the non-consolidated balance sheets
but not recognized on the non-consolidated statements of income statements

Notes: 1. The Group has no overseas sales locations.
2. The Group has no exposure to shares to which Article 13 of the Supplementary Provisions to the Capital Adequacy Ratio Notification Applies

9. Exposure Applied for the Deemed Calculation of Credit Risk Assets
As the Bank employs the standardised approach for calculating credit risk, this item does not apply.
10. Interest Rate Risk in the Banking Book

Decrease in economic value resulting from interest rate shock

March 31, 2008

March 31, 2007

Decrease in economic value
resulting from an interest
rate shock measuring
interest rate fluctuations in
the 1st percentile and 99th
percentile, using a one-year
holding period and a fiveyear time horizon¥49.6 billion

Decrease in economic value
resulting from an interest
rate shock measuring
interest rate fluctuations in
the 1st percentile and 99th
percentile, using a one-year
holding period and a fiveyear time horizon¥89.4 billion

134 Accounts Based on Corporate Accounting Standards (Capital Adequacy Status)

Accounts Based on
Accounting Standards for Special Agencies, etc.

135

Report of Auditors

136 Accounts Based on Accounting Standards for Special Agencies, etc.

Non-Consolidated Balance Sheets

Millions of yen

At March 31

AssetsCash and Due from banks (Note 3)
Securities (Note 4)Loans (Note 5)
Less—Allowance for Loan Losses

Thousands of U.S. dollars

2008

2007

2008

¥

¥

33,979406,533
12,197,441(36,592)
12,160,849
291,470
56,357(20,436)
35,92049,162
1,679
3,951
334,993$

Accrued Income Receivable (Note 7)
Other Assets (Note 8)
Discounts on Bonds and Notes
Customers’ Liabilities for Acceptances and Guarantees

159,906
367,346
11,576,662(34,729)
11,541,932
415,653
56,830(20,936)
35,894
43,468
1,511
4,582
173,456

Total Assets¥12,743,750¥13,318,541$127,195,838

Equity Investments
Premises and Equipment (Note 6)
Less—Accumulated depreciation

Millions of yen

At March 31

Liabilities, Capital and Statutory Reserve
Liabilities
Bonds and Notes
Long-term Borrowings (Note 9)
Accrued Expenses Payable (Note 10)
Other Liabilities (Note 11)
Acceptances and Guarantees
Total Liabilities
Capital and Statutory Reserve
Capital (Note 12)
Statutory Reserve (Note 2 (j))
Total Capital and Statutory Reserve
Total Liabilities, Capital and Statutory Reserve2008

1,596,028
3,666,496
115,547,085(346,641)
115,200,444
4,148,652
567,226(208,965)
358,261433,861
15,08645,734
1,731,276

Thousands of U.S. dollars

2007

2008

¥ 3,160,003
6,932,546
36,247
20,268173,456
10,322,521¥ 2,673,964
7,862,935
37,456
21,219334,993
10,930,569$ 31,540,106
69,193,998
361,784
202,299
1,731,276
103,029,463

1,272,286
1,148,943
2,421,229

1,272,286
1,115,686
2,387,972

12,698,732
11,467,643
24,166,375¥12,743,750¥13,318,541$127,195,838

Accompanying notes are an integral part of these financial statements.

Accounts Based on Accounting Standards for Special Agencies, etc. 137

Non-Consolidated Statements of Income
Millions of yen

For the Fiscal Years ended March 31

Thousands of U.S. dollars

2008

2007

2008

¥304,101
4,597
1,276
309,975¥327,345
2,752
335
330,434$3,035,250
45,88812,7383,093,876

54,999162,662
217,661

43,441
192,697
236,138

548,951
1,623,540
2,172,491

92,313

94,295921,385

4,997
18,211
23,2083,526
15,692
19,21849,882
181,765
231,647

16,681
12,057773
635,481
16,627
81,62816,3519,789
789
14
45,543
4,245
76,733

166,504
120,3477,719
63354,137
165,963814,733

Income before Allowance for Loan Losses
Reversal of Allowance for Loan Losses
Net Income (Note 2(i))

33,894
1,862¥ 35,756

36,7802,311¥ 39,092

338,299
18,588$ 356,887

Appropriation of Net Income (Note 2(j))
Statutory reserve
Payment to National Treasury

34,7291,026

36,592
2,499

346,641
10,246¥ 35,756¥ 39,092$ 356,887

Interest Income
Interest on Loans
Interest on Securities
Other Interest Income

Interest Expenses
Interest on Bonds and Notes
Interest on Borrowings

Net Interest Income
Other Income
Fees and Commissions (Note 13)
Other (Note 14)

Administrative and Other Expenses
Salaries and related expenses
Other administrative expenses
Depreciation
Fees and Commissions (Note 15)
Write-off of Claims (Note 16)
Other (Note 17)

Total Appropriation of Net Income
Accompanying notes are an integral part of these financial statements.

138 Accounts Based on Accounting Standards for Special Agencies, etc.

Non-Consolidated List of Assets
March 31, 2008

Cash and Due from banks
Cash
Due from banks¥

Securities
Japanese Government Bonds

Millions ofThousands ofyen

U.S. dollars

159,906 $1
159,904

1,596,028
16
1,596,012

367,346
277,587

3,666,496
2,770,608

Remarks (Millions of yen/ Thousands of U.S. dollars)

Current deposits: 24 banks,¥8,904$88,875
including Bank of Japan
Ordinary deposits: 2 banks, including¥11,000$109,792
Sumitomo Mitsui Banking Corporation
Certificate of Deposit: 4 banks, including ¥140,000 $1,397,345
Aozora Bank, Ltd.
IssuesFinancing bills: 2 holdings
Coupon-bearing government bonds(2,5,10 years): 28 holdings
Corporate Bonds
Other securities

81,7488,010

815,933
79,955

Face value

42 holdingsBook value

Secured debt obligations: 2 holdings
Equity acquired by excising of
warrants, etc.: 2 holdings
Loans
Yen loans
Direct loans
Agency loans
Foreign currency loans
Allowance for Loan Losses
Equity Investments
Premises and Equipment
Premises and Equipment for
Business

11,576,662 115,547,085
11,517,183 114,953,426
11,516,398 114,945,586
785
7,840
59,478593,659(34,729)(346,641)
415,653
4,148,652
35,894358,261

Book value¥137,100¥136,925$1,368,400 $1,366,662¥140,000¥140,661$1,397,345 $1,403,946¥8,000$79,848¥10$107

13,236 holdings
13,194 holdings
13,189 holdings
5 holdings
42 holdings
1,069 holdingsBook value

35,894358,261(1) Land: 87 properties/ 65% of 44,098m2,
and 128,282m2¥20,368(2) Buildings: 204 buildings/ 95% of 2,242m2,
65% of 846m2, and 105,735m2
15,218(Gross floor area)(3) Equipment: 1,891 items
303(4) Petty sum depreciable assets: 149 items 4(depreciated over three years asprescribed by tax code)(5) Key money and other: 1 holding
0$203,299
151,893
3,024
41

4

* Accumulated depreciation amounted to ¥20,936 million ($208,965 thousand).

Accrued Income Receivable
Accrued Interest on Loans
Accrued Interest on Securities
Accrued Guarantee Fees

43,46842,663703
102

433,861
425,822
7,017
1,022

Interest accrued on loans but not yet received at the end of the fiscal year
Interest accrued on securities but not yet received at the end of the fiscal year
Fees accrued on guarantees but not yet received at the end of the fiscal year

Other Assets
Suspense payments
Guarantee deposits

1,511
1,033
441

15,086
10,317
4,403

23 holdings
73 holdings

Estimated prepayments
Other
Discounts on Bonds and Notes
Customers’ Liabilities for
Acceptances and Guarantees

0
36
4,582

0
366
45,734

173,456

1,731,276

Total Assets

Deposits and guarantees relating to land andbuildings leased for business use
Estimated payment to the National Treasury
94 holdings
Difference between face value and proceeds from bonds
63 cases¥12,743,750 $127,195,838

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥100.19=$1.00, the effective exchange rate prevailing asof March 31, 2008, has been used in 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.

Accounts Based on Accounting Standards for Special Agencies, etc. 139

Notes to Non-Consolidated Financial Statements
1. Basis of Presentation
Development Bank of Japan (“DBJ”) maintains its records and prepares its statutory financial statements in accordance with
Development Bank of Japan Law (“DBJ Law”) and the regulations thereunder and in accordance with accounting principles
generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements from theInternational Financial Reporting Standards. The financial statements are not intended to present the financial position and resultsof operations in accordance with accounting principles and procedures generally accepted in countries and jurisdictions otherthan Japan.
Consolidated financial statements are not prepared because DBJ has no subsidiaries under the DBJ Law.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million yen. Accordingly, thesum of each amount appearing in the accompanying financial statements and the notes thereto may not be equal to the sum of
the individual account balances.
Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥100.19=$1.00, theeffective exchange rate prevailing as of March 31, 2008, has been used in conversion. The presentation of such amounts is notintended 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) Securities
Securities are stated at cost, which is determined by the moving average method.
Under the DBJ Law, DBJ cannot invest surplus funds except in Japanese Government Bonds or other bonds permitted by
the DBJ Law, or in deposits at the Fiscal Loan Fund, Bank of Japan or the financial institutions specified by the Ministry of
Finance.
(b) Derivatives
Derivative transactions are not recorded on the non-consolidated balance sheets. Income and expenses from derivativetransactions are recognized in the non-consolidated statements of income on a cash basis.
(c) Translation of accounts denominated in foreign currencies
DBJ holds foreign currency swaps to hedge exchange rate risks on its loans, bonds and notes that are denominated in foreign
currencies. These foreign currency swaps are not recognized in the non-consolidated balance sheets. The foreign currency
denominated loans, bonds and notes that are being hedged are measured at the contract rates of the respective foreign
currency swaps designated as hedging instruments.
(d) Depreciation method for Premises and Equipment
In accordance with certain provisions set forth in the Corporation Tax Law, depreciation is provided based on the decliningbalance method for all Premises and Equipment except for buildings and key money, which are depreciated based on thestraight-line method.
(e) Discounts on Bonds and Notes
Discounts on bonds and notes are amortized using the straight-line method over the average period of redemption inaccordance with an ordinance defined by the Ministry of Finance.
(f) Bonds and Notes issuance costs
Bonds and Notes issuance costs are recorded as expenses in the period they are incurred in accordance with a provision
defined by the Ministry of Finance.
(g) Allowance for Loan Losses
A provision for loan losses is established in accordance with the requirements set forth by the Ministry of Finance pursuant to
the DBJ Law. Under the provision, the allowance for loan losses is limited to 0.3% of loans outstanding at the end of eachfiscal year.
(h) Employee retirement benefits
In accordance with the DBJ Law and regulations thereunder, employee retirement benefits to employees (including payment toemployees reaching retirement age) are included in DBJ’s budget of revenues and expenditures on the basis of anticipatedpayments to be made during the relevant year and are included in “Salaries and related expenses” in the non-consolidated
statements of income when paid.

140 Accounts Based on Accounting Standards for Special Agencies, etc.

(i) Income taxes
DBJ is exempt from taxes based on income, however DBJ is subject to parity taxes of the inhabitants’ taxes among local
taxes.
(j) Appropriation of Net Income
In accordance with provisions of the DBJ Law and a related law, DBJ is required to set aside out of net income as a statutory
reserve, the larger of (i) an amount equivalent to 20% of net income or (ii) an amount equivalent to 0.3% of loans outstandingat the end of each fiscal year (if this amount is in excess of the amount of net income for the year, then the amount of such net
income). The reserve provided may only be used to cover net losses. The balance of net income remaining each year, after
providing for this reserve, is to be paid to the National Treasury by May 31 of the following fiscal year. Interim payments areprovided for under the Cabinet Order.
As for the fiscal year ended March 31, 2008, the payment to the National Treasury was made, because the amount of net
income was in excess of such required amounts.
(k) Consumption tax
Income and expense subject to consumption tax include related consumption taxes paid or received.

3. Cash and Due from banks
Cash and Due from banks as of March 31, 2008 and 2007 are as follows:
Millions of yen

At March 31

Cash
Due from banks

Thousands of U.S. dollars

2008

2007

2008

¥
1
159,904¥
3
33,975$16
1,596,012¥159,906¥33,979$1,596,028

4. Securities
Securities as of March 31, 2008 and 2007 are as follows:
Millions of yen

At March 31

Japanese Government Bonds
Corporate Bonds
Other Securities

Thousands of U.S. dollars

2008

2007

2008

¥277,587
81,7488,010¥344,731
53,776
8,025$2,770,608
815,933
79,955¥367,346¥406,533$3,666,496

5. Loans
Loans as of March 31, 2008 and 2007 are as follows:
Millions of yen

At March 31

Yen loans
Direct loans
Agency loans
Foreign currency loans

Thousands of U.S. dollars

2008

2007

2008

¥11,517,183
11,516,398
785
59,478¥12,130,302
12,129,386
915
67,138$114,953,426
114,945,586
7,840
593,659¥11,576,662¥12,197,441$115,547,085

Accounts Based on Accounting Standards for Special Agencies, etc. 141

Pursuant to the DBJ Law and regulations thereunder, loans in arrears are defined as the loans for which the principal payments
are overdue by six months or more. This categorization is different from the categorization of non-performing loans as defined
under the Banking Law and the Financial Revitalization Law. The amounts of the loans in arrears included in “Loans” on the nonconsolidated balance sheets as of March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

At March 31

2008

2007

2008

Loan past-due for six months or more as toprincipal payments¥6,590¥17,841$65,781¥6,590¥17,841$65,781

6. Premises and Equipment
Premises and Equipment as of March 31, 2008 and 2007 are as follows:
Millions of yen

At March 31

Premises and Equipment for Business2008

Thousands of U.S. dollars

2007

2008

Less—Accumulated Depreciation¥ 56,830¥ 56,830(20,936)¥ 56,357¥ 56,357(20,436)$ 567,226$ 567,226(208,965)

Net Book Value¥ 35,894¥ 35,920$ 358,261

7. Accrued Income Receivable
Accrued Income Receivable as of March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

At March 31

2008

2007

2008

Accrued Interest on Loans
Accrued Interest on Securities
Accrued Guarantee Fees

¥42,663703
102¥48,569517
75$425,822
7,017
1,022

¥43,468¥49,162$433,861

8. Other Assets
Other Assets as of March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

At March 31

2008

2007

2008

Suspense payments
Guarantee deposits
Estimated Payments
Other¥1,033441$10,317
4,403

36

¥ 100
382
1,179
17

¥1,511¥1,679$15,086366

9. Long-term Borrowings
DBJ borrows funds from the Japanese Government in order to meet funding requirements for the conduct of operations specified
in the DBJ Law. DBJ also accepts other funds received from government sources in order to apply them to the sources of funds
necessary to financially contribute to a particular government policy with respect to the operations provided in the DBJ Law, as
provided in the Cabinet Order.

142 Accounts Based on Accounting Standards for Special Agencies, etc.

Long-term Borrowings as of March 31, 2008 and 2007 are as follows:
Millions of yen

At March 31

Fiscal Loan FundReserve Funds of the Postal Life Insurance
Special AccountIndustrial Investment Special Account
Borrowings from private financial institutions
Funds entrusted

Thousands of U.S. dollars

2008

2007

2008

¥6,559,584¥7,519,403$65,471,450

29,792231,067
100,000
12,10258,900269,342
15,289297,355
2,306,295
998,104
120,794¥6,932,546¥7,862,935$69,193,998

10. Accrued Expenses Payable
Accrued Expenses Payable as of March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

At March 31

2008

2007

2008

Accrued interest on Bonds and Notes
Accrued interest on Long-term Borrowings
Other accrued expenses¥ 7,930
28,3151¥ 6,456
30,9971$ 79,150
282,61915¥36,247¥37,456$361,784

11. Other Liabilities
Other Liabilities as of March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

At March 31

2008

2007

2008

Loan Redemption
Suspense receipts
Unearned income
Other

¥

434
492
19,220
121

¥

517
1,118
19,54637$¥20,268¥21,219$202,299

4,334
4,916
191,838
1,211

12. Capital
The Japanese Government is the sole owner of the equity interest, which is not evidenced by documents such as stock
certificates, but is evidenced at the Registration Office of the Legal Affairs Bureau of Japan.

13. Fees and Commissions (Income)Fees and Commissions (Income) for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

For the fiscal year ended March 31

2008

2007

2008

Commissions received
Guarantee Fees

¥4,322674¥2,713812$43,148
6,734¥4,997¥3,526$49,882

Accounts Based on Accounting Standards for Special Agencies, etc. 143

14. Other (Income)
Other (Income) for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

For the fiscal year ended March 31

2008

2007

Miscellaneous Interest received
Collection of written-off claims
Income from Equity Investments
Other¥ 1,54817
12
16,632¥

15,145$ 15,460
170
127
166,008¥18,211¥15,692$181,765

484
62

2008

* “Other” in above table includes profit of collective investment vehicles, such as limited partnerships, Tokumei Kumiai and other entities with similar characteristic,
which amounts to ¥15,414 million ($153,852 thousand) and ¥14,662 million for the fiscal year ended March 31, 2008 and 2007, respectively.

15. Fees and Commissions (Expenses)
Fees and Commissions (Expenses) for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

For the fiscal year ended March 31

2008

Commissions paid

Thousands of U.S. dollars

2007

2008

¥6

¥14

$63

¥6

¥14

$63

16. Write-off of Claims
DBJ writes-off loans past-due, equity investments and securities which have declined in value drastically, only after exhausting all
available remedies including realization on any collateral and disposal by sale of claims. Write-offs are recorded at fiscal year end
only with the approval of the Ministry of Finance. The amounts of Loans, Equity Investments and Securities written off for the fiscal
years ended March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

For the fiscal year ended March 31

2008

2007

Securities written off
Loans written off
Equity Investments written off¥
6
19,814
15,660¥43,331
2,212

$

2008

¥35,481¥45,543$354,137

61
197,766
156,310

17. Other (Expenses)
Other (Expenses) for the fiscal years ended March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

For the fiscal year ended March 31

2008

2007

2008

Miscellaneous Interest paid
Amortization of Discount on Bonds and Notes
Bonds and Notes issuance cost
Other

¥

509
586
1,827
13,704

¥ 279
456
1,521
1,987

$

¥16,627¥4,245$165,963

5,089
5,851
18,239136,784* “Miscellaneous Interest paid” is mainly composed of payment for credit derivative transactions.

18. Credit Derivative Transactions
DBJ utilizes credit default swaps as part of its “acceptances and guarantees on customers’ debt” business within the limit of acertain definite amount of risk. Contract values as of March 31, 2008 and 2007 are as follows:
Millions of yen

Thousands of U.S. dollars

At March 31

2008

2007

2008

Sold
Bought¥1,107,506
602,416¥697,877
614,827$11,054,066
6,012,744

144 Accounts Based on Accounting Standards for Special Agencies, etc.

Appendices
Outline of Fiscal 2008 Operations Evaluation Report
Excerpt from the Development Bank of Japan Law(Law No. 73 of 1999)
Excerpt from the New DBJ Law (Law No. 85 of 2007)145

Outline of Fiscal 2008 Operations Evaluation Report

Operations evaluations reports are performed to evaluate the individual loan and investment projects of the preceding term andthe investment and loan system during the year under review. This report, which summarizes the status of evaluations performed
during the most recent year, is prepared and publicized each year. The characteristics of DBJ’s evaluation systems and an outlineof the fiscal 2008 report are described below.

1. Overview of DBJ’s Evaluation Systems and Management Cycle
DBJ’s evaluation of operations consists of three elements. Together, these three evaluations form an overall evaluation of financial
soundness and invigorate the management cycle. At the same time, the Bank receives external evaluations from the outside
experts that make up the Management Council, thereby ensuring accountability. External evaluation results are reported to thecompetent ministers (the Minister of Finance and the Minister of Land, Infrastructure and Transport) and publicized for the citizens
of Japan.
1. Evaluation of individual loan and investment projects
Investing and loan departments perform two evaluations of individual loan and investment projects: a preliminary evaluationand follow-up evaluation. The Operations Evaluation Department conducts re-evaluations.
2. Evaluation of the investment and loan system
In line with the evaluation results of individual loan and investment projects, the Planning Section evaluates the overall
investment and loan system and incorporates selected results in its evaluations. The Operations Evaluation Department
performs re-evaluations.
3. Evaluation of projects
The Operations Evaluation Department conducts detailed evaluations of specific projects, operating areas or themes.
These evaluations help in evaluating individual loan and investment projects and the investment and loan system.

SocietyCompetent Ministers
Medium-Term Policy Principles

Plan
Reviews and reports on
the implementation of
the Medium-Term Policy Principles

Management
Council
External evaluation

Investment and
Finance Guidelines

See

Do

Policy-based
financing evaluation
Internal evaluation

Execution of
investments
and loans

Advice and recommendations

Re-evaluation

Operations Evaluation
Inspection Committee

3. Evaluation of projects
Operations Evaluation
Department

Kanemoto Yoshitsugu, Professor, Tokyo University
Yoshitaka Kurosawa, Professor, Nihon University
Makoto Saito, Professor, Hitotsubashi University
Akira Morita, Professor, Tokyo University
Kiyoshi Yamamoto, Professor, Center for
National University Finance and Management

146 Outline of Fiscal 2008 Operations Evaluation Report

Evaluation ofsound ﬁnanceCorporate Coordination
Department

2. Evaluation of theinvestment and loan system
Planning Section

1. Evaluation of individualloan and investment projects
Investing and loan departments2. Outline of Fiscal 2008 Report(1) Evaluation of Individual Loan and Investment Projects
1. Preliminary evaluation• The Bank reported an aggregate evaluation from the evaluations performed on all fiscal 2007 loan and investment projects atthe time each loan or investment was made.
Projects: 1,007; Loan and investment amount: ¥1,300.0 billion; Overall project spending: ¥10,900.0 billion• Projects included in the fiscal 2007 preliminary evaluation suggested a broad range of potential results.
Increase inrevenues

Employment
created¥2,000.0 billion
The projects in which the Bank isinvolved were expected to result inrevenue increases amounting toapproximately ¥2,000.0 billion.

Promotion ofwaste processing

107,000 jobs
The projects in which the Bank invested
provided employment opportunities for
107,000 people.

724,000 tons
As part of environmental measures toreduce, reuse and recycle materials, theBank participated in projects involving
the construction of waste-processing
facilities capable of handling 724,000
tons of waste per year.

Railway crossing
removal

355 locations
DBJ supported the removal of railway
crossings at 355 additional locations.
These efforts are expected to ease traffic
congestion and improve safety.

• The table below breaks down DBJ’s loan and investment role into eight types of assistance to foster a better understandingof loan and investment projects.
(Percentage figures indicate projects of each type within the total number of projects for which fiscal 2007 preliminary
evaluations were performed. Some projects are included in more than one assistance category.)

Complementary function

Percentage
Fiscal 2001

Financial market
complementaryfunctions
Directassumptionof risk

Information
application
functions
Easingdifficulties inassessing risk

Role in Project Guidance or Promotion
Fiscal 2007

Providing loans withlonger durations

67%

46%

Support projects that require a long period of time to recover
initial investment or entail refinancing or interest rate risk

Taking on business
risks

11%

35%

Support projects that entail risks that private-sector
institutions are unable to carry, such as operational risk thatcannot be easily quantified

Providing a stablesource of funds

36%

33%

Support projects that involve long construction periods andrequire a stable supply of funds

Responding in timesof emergency

14%

2%

Provide funds during downturns in the financial environment
and for emergency evaluation in times of large-scale disaster

Assessing credit risk

14%

12%

Smooth business operators’ ability to raise funds by using
DBJ’ s assessment functions to assess credit risk

Use of advanced
financial methods

3%

14%

Use DBJ’ s accumulated expertise in new and advanced
financing methods to promote efficient project operation
while appropriately controlling risk

Supporting businessformation

3%

7%

Promote smooth operation of projects from planning throughimplementation by arranging and advising from a neutral position

Disseminating
information2%

6%

Promote smooth operation of projects through the use of
information for such purposes as creating screening-based
countermeasures

Outline of Fiscal 2008 Operations Evaluation Report 147

2. Follow-up evaluations• These evaluations are performed to determine whether projects had the policy effectiveness and DBJ fulfilled its loan andinvestment role as initially expected. Projects evaluated in fiscal 2007 were loan and investment projects that had been
evaluated in the past and were in their second year after completion. Three levels of project effectiveness were determined,
ranging from A to C
Projects: 792; Loan and investment amount: ¥1,200.0 billion; Overall project spending: ¥5,700.0 billion• In more than 90% of the projects evaluated, the initially expected level of policy effectiveness was met or exceeded, andDBJ’s expected loan and investment role was fulfilled.
Policy Effect based on
Application System

DBJ’ s Loan and
Investment Role

A

B

C

A

B

C

Total (792 projects)

5%

90%

6%

5%

92%

3%

Of which, community
development
Of which, environmental conservationand sustainable societies
Of which, creation of newtechnologies and industries

3%

94%

3%

1%

97%

2%

2%

94%

4%

6%

94%

0%

14%

70%

17%

15%

74%

11%

Meaning of the Three Levels
A: Projects meeting the B standard that also
demonstrated a particularly favorable policy effect orin which DBJ’ s loan and investment role wasparticularly important
B: Met the level of policy effectiveness and DBJ fulfilled
its loan and investment role as anticipated bypreliminary evaluations
C: Fell below the level of policy effectiveness or DBJ’s
fulfillment of its loan and investment role was lower
than anticipated by preliminary evaluations(2) Evaluation of the Investment and Loan System• In the fiscal 2007 evaluation of the investment and loan system, “some questions about improvements” were raised for 23
systems, and nine systems were indicated as requiring some degree of reconsideration. As a result, budget requests for one
operation were discontinued or consolidated.
• In the fiscal 2008 evaluation of the investment and loan system, one operation were specified as requiring “consideration of
improvements and enhancement,” and six systems were indicated as requiring some degree of reconsideration.
Discontinued or consolidated: 1 operation

Results of Fiscal 2007 Evaluation of
Investment and Loan System
Consideration of improvements andenhancement required
Should be continued
Some questions about improvements

Results of Fiscal 2008 Evaluation of
Investment and Loan System

Should be continued

68

Some questions about improvements

23

Major reconsideration required

6

Thorough reconsideration required

3

Total

Consideration of improvements andenhancement required

2
operations

9

102

1
operation
81
15

Major reconsideration required

2

Thorough reconsideration required

4

Total

Reflection

6

Fiscal 2009budgetrequests103

New additions: 2 operations

3. Evaluation of Projects (Detailed Evaluations of Specific Projects, Operating Areas andThemes)Fiscal 2007 was our seventh year since introducing a system to evaluate individual loan and investment projects and the fifth for
us to systematically evaluate our overall investment and loan system. As the structures and content of our systems have matured,
we have become able to review our accumulated evaluation results through a medium- to long-term perspective, confirming theeffectiveness of our operational evaluations.
Our years of experience in conducting preliminary evaluations on individual investment projects have confirmed our shifting
investment and financing role in line with changing economic and financial conditions. Our number of projects per year has fallen
by around 30% since the 145 we undertook in fiscal 2002, and we have made 39 investment and loan system improvements inoperating design and operation. These results confirm that our evaluation system is functioning effectively.

148 Outline of Fiscal 2008 Operations Evaluation Report

Excerpt from the Development Bank of Japan Law (Law No. 73 of 1999)

Article 1
PurposeThe purpose of the Development Bank of Japan (the “Bank”) is, inprinciple, to supplement or encourage functions such as the credit
operations of commercial financial institutions in order to contribute to
the promotion of energy and the sustainable development of theeconomy and society, the realization of affluent national life andthe independent development of local economies and financial
contributions to Japan’s economic and social policy through the
supply of long-term funds or other operations.
Article 4
Capital1. The capital of the Bank shall be the aggregate of the amounts
deemed invested by the Government in accordance with theprovisions of Paragraph 4, Article 6 and Paragraph 4, Article 7 of
the Supplementary Provisions.
2. The Government may, when it deems necessary, make additional
investments in the Bank in amounts set forth in a budget.
3. In the case of the Government’s investment in accordance with theprovisions of the preceding paragraph, the Bank shall increase its
capital by the amount of such investment.
Article 8
Officers
The Bank shall have as its officers one Governor, two Deputy
Governors, not more than 12 Senior Executive Directors and not morethan two Auditors.
Article 20
Scope of Operations
1. To attain the purpose prescribed in Article 1, the Bank shall conduct
the following operations:(1) To make loans of the funds listed below, which funds shall benecessary for operations that contribute to the promotion ofenergy and the sustainable development of the economy andsociety, the realization of affluent national life and the
independent development of local economies, to provide
guaranties (including any action to incur obligations that is
analogous to guaranties of obligations, hereinafter being thesame) of obligations related to such funds; to acquire corporate
bonds (including bonds issued by corporations establishedunder special statutes that are not private corporations,
hereinafter being the same) issued to procure such funds, by
subscription or otherwise; to acquire by assignment, in entirety
or in part, claims of loans related to such funds; provided,
however, that the term of repayment of such loans, the term of
performance of the obligations so guaranteed (measured fromthe date of guaranty of such obligations), the term of redemptionof the corporate bonds so acquired (measured from the date ofsuch acquisition), and the term of repayment of the loans soacquired (measured from the date of such acquisition) shall not
be less than one year.
(i) Funds necessary for acquisition (including the acquisition ofleasehold rights or other rights of use), improvement or repair(hereinafter referred to as “acquisition, etc.” in this Item) offacilities, funds related to acquisition, etc. of such facilities,
funds necessary for creation of land (including acquisition ofland necessary for such creation), or funds necessary forconstruction or maintenance of facilities related to businesses
that will significantly contribute to maintenance and(Unofficial translation)

improvement of built-up urban areas (excluding those related
to housing construction and specified in a Cabinet Order) or
facilities that will significantly contribute to reinforcing
infrastructures of local economies and societies.
(ii) In addition to those listed in (i) above, funds necessary for theacquisition of intellectual property rights or other similar rights,
procurement of personnel, receipt of service or purchase ofgoods, etc. necessary for the smooth execution of business(such funds being limited to those to be specified by the
Minister of Finance as specifically contributing to thepromotion of energy and the sustainable development of theeconomy and society, the realization of affluent national life
and the independent development of local economies) andfunds necessary for research and development of advanced
and new technology.
(iii)Funds necessary for the repayment of the funds listed in (i) or(ii) above (including the funds necessary for redemption of
corporate bonds issued to procure such funds listed in (i) or (ii)above).
(2) To make investments of funds necessary for businesses that willcontribute to the promotion of energy and the sustainable
development of the economy and society, the realization of
affluent national life and the independent development of local
economies.
(3) In addition to those listed in the preceding two items, to engage
in any operations necessary to smoothly and efficiently conduct
the operations provided in the preceding two items (suchoperations being limited to those specified by a Cabinet Orderas being closely related to operations provided in the preceding
two items).
(4) To engage in operations incidental to the operations specified in
the preceding three items.
2. Making loans of funds, guaranties of obligations, acquisitions ofcorporate bonds, acquisitions of claims by assignment orinvestments (hereinafter referred to as “making loans, etc.”)
provided in the preceding paragraph may be conducted only when
the repayment of funds so loaned, the performance of obligations
so guaranteed, the redemption of corporate bonds so acquired, thecollection of claims so acquired, or the realization of profits that will
enable payment of dividends resulting from businesses so invested
are, in each case, deemed certain.
3. Interest rates on loans and charge rates for guaranties of obligations
undertaken in accordance with the provisions of paragraph 1
above, and interest rates on corporate bonds acquired or claims ofloans acquired by assignment in accordance with the provisions of
the same paragraph shall be determined in consideration ofcustomary terms of loans or guaranties of obligations of commercial
financial institutions or conditions of monetary markets so thatrevenues of the Bank will be sufficient to cover its expenses.
Article 21
Conditions of Operations
1. In conducting its operations the Bank shall supplement or
encourage financing, etc., activities by commercial financial
institutions and shall not compete with them.
2. The Bank may make loans, etc. (excluding acquisition of claims ofloans by assignment), only when the execution of such business isdifficult but only through the acceptance of loans or guaranties ofobligations under customary terms from commercial financial
institutions, the procurement of funds by issue of corporate bonds
to be acquired by subscription or otherwise by any person otherExcerpt from the Development Bank of Japan Law 149

than the Bank, or the acceptance of investment by any person
other than the Bank.
Article 22
Mid-Term Government Policy Principles
1. The Bank shall make loans, etc. in accordance with the three-year
mid-term government policy principles (hereinafter referred to as the“mid-term government policy principles”) to be prepared by thecompetent minister.
2. The Bank may state an opinion to the competent minister in
preparation of the mid-term government policy principles by such
minister.
3. The mid-term government policy principles shall state the mattersconcerning Japan’s economic and social policy to be contributedby the Bank and other important matters concerning its operations.
4. The competent minister shall consult with a chief of the relevant
administrative organization when preparing the mid-term
government policy principles.
Article 23
Investment and Finance Guidelines
1. The Bank shall prepare investment and finance guidelines (theseare, the guidelines for each fiscal year with respect to making loans,etc., which state the Government policy underlying such loans, etc.,
the targeted businesses and other matters, hereinafter being thesame) as prescribed in a Cabinet Order in order to execute thematters stated in the mid-term government policy principles.
2. The Bank shall report the investment and finance guidelines for the
relevant fiscal year to the competent minister by the day to be set
by such minister for each fiscal year and shall publish them.
Article 24
Management Council
1. The Bank shall have a Management Council.
2. The Management Council shall review the status of execution ofoperations with respect to the matters stated in the mid-term
government policy principles and report the results of such review
to the Governor.
3. When the Governor receives a report on the results of the review inaccordance with the provisions of the preceding paragraph, he or
she shall report such results to the competent minister and publish it.
4. The Management Council shall consist of not more than eightcounselors.
5. Such counselors shall be appointed by the Governor withauthorization of the Minister of Finance from among persons
qualified by learning or experience.
6. The term of office of counselors shall be four years.
Article 28
Budget1. The Bank shall, for each fiscal year, prepare a budget of revenues
and expenditures and submit it to the Minister of Finance.
2. The revenues referred to in the preceding paragraph shall consist ofinterest on loans, charges for guaranties of obligations, interest on
corporate bonds, dividends from investments, other income
accruing from the operation of assets, and miscellaneous incidental
income; and the expenditures referred to in the same paragraphshall consist of expenses for operations, expenses for delegation ofoperations, interest on borrowings prescribed in Paragraph 1 orParagraph 2 of Article 42, interest on other funds received from
Government sources prescribed in Paragraph 5 of the same Article,

150 Excerpt from the Development Bank of Japan Law

interest on Bank Bonds issued in accordance with the provisions ofParagraph 1 or Paragraph 4 of Article 43, and miscellaneous
incidental expenses.
3. Upon receipt of the budget submitted in accordance with theprovisions of Paragraph 1, the Minister of Finance shall examine it,
make necessary adjustments thereto, and obtain the Cabinet’s
decision thereon.
4. After a decision has been made under the provisions of thepreceding paragraph, the Cabinet shall submit the budget to theDiet together with the national budget.
Article 41
Disposition of Profits and Payment into The National Treasury
1. If upon the settlement of income and expenses for each fiscal year
a profit is found to exist, the Bank shall set aside as a reserve anamount to be calculated in accordance with the standard
prescribed in a Cabinet Order.
2. The reserve provided for in the preceding paragraph shall not be
disposed of except for the purpose of covering losses.
3. The Bank shall pay the remaining balance after deducting a reservefrom any profit found to exist upon the settlement of income andexpenses for each fiscal year in accordance with the provisions ofParagraph 1, into the National Treasury by May 31 of the following
fiscal year.
4. The Government may, as prescribed by a Cabinet Order, make the
Bank pay a part of the payment specified in the preceding
paragraph into the National Treasury on an estimated basis during
the fiscal year in which the profit is earned.
Article 42
Borrowing of Funds, etc.
1. The Bank may borrow funds from the Government in order to meetfunding requirements for the conduct of operations specified in
Paragraph 1, Article 20.
2. In addition to those provided in the preceding paragraph, the Bank
may borrow short-term funds from banks and other financial
institutions to meet cash flow requirements or in other cases
prescribed by a ministerial ordinance of the Ministry of Finance.
5. The Bank may accept other funds received from Government
sources to apply them to the sources of funds necessary tofinancially contribute to a particular Government policy with respect
to the operations provided in Paragraph 1, Article 20 as provided ina Cabinet Order.
Article 43
Issue of Development Bank of Japan Bonds
1. The Bank may issue Development Bank of Japan Bonds(hereinafter referred to as “Bank Bonds,” except for Paragraph 4,
Article 45) in order to provide funds necessary for operations
provided in Paragraph 1, Article 20.
4. In addition to those provided in Paragraph 1, the Bank may, as
provided in a Cabinet Order, issue Bank Bonds when necessary todeliver substitute bonds to anyone who has lost Bank Bonds.

This is an unofficial English translation. Only the original Japanese
texts of the law have legal effect and prevail over this translation.
This translation has been prepared solely for reference purposes.
The reader of this translation should consult the original Japanese
text for the purposes of interpreting and applying the law to any
legal issues or disputes.

Excerpt from the New DBJ Law (Law No. 85 of 2007)

Article 1
PurposeThe Development Bank of Japan Inc. (hereinafter referred to as the“Corporation”) shall be a joint stock company (kabushiki-kaisha)
whose object is to maintain the foundations of investment andfinancing functions of long-term business funds as the Development
Bank of Japan by conducting business activities utilizing the methodsof combining investments and financing and other sophisticatedfinancial methodologies, while maintaining the autonomy ofmanagement with the goal of realizing full-scale privatization, thereby
contributing to smooth supply of funds to those who need long-termbusiness funds, as well as to the sophistication of financial functions.
Article 3
Scope of Business Operations
1. The Corporation shall engage in the following business operations
to attain its objectives:(1) To accept deposits (limited to certificates of deposit (CDs) andother deposits stipulated in the Cabinet Order);(2) To lend money;(3) To make capital contributions;(4) To guarantee the due performance of debts and obligations;(5) To sell and purchase Securities (other than those that fall withinmonetary claims represented by certificates set forth in Item (7),
Short-term Notes, Etc.; the same in Item (8)) (other than thosethat fall within securities-related derivatives transactions (whichmean the securities-related derivatives transactions set forth in
Article 28, Paragraph 8, Item (6) of the Financial Instruments
and Exchange Law (Law No. 25 of 1948, as amended);hereinafter in this Item and Item 11 the same), or enter into
securities-related derivatives transactions (limited to those madefor investment purposes), except in cases where thesebusiness operations fall within those operations referred to in
Item (3);(6) To lend Securities;(7) To acquire or transfer monetary claims (including claims
represented by certificates stipulated in the Ministry of FinanceOrdinance such as negotiable bank deposit certificates);(8) To subscribe for Specified Debentures or Preferred Investment
Securities issued by a Specified Purpose Company (limited tothe cases where the Specified Purpose Company acquires only
designated monetary claims or beneficial interests in trusts withwhich designated monetary claims are entrusted with cash
proceeds derived from issue of those Specified Debentures orPreferred Investment Securities as set forth in the Asset
Liquidation Plans, and except for, in case of Specified
Debentures, Specified Short-term Notes), and other similar
securities stipulated in the Ministry of Finance (hereinafter in this
Item referred to as the “Specified Debentures”) (except in cases
where it is intended for secondary distribution (uridashi)), or tohandle primary offering (boshu) of the Specified Debentures so
subscribed;(9) To acquire or transfer Short-term Notes, Etc.;(10) To act as an agent or intermediary for execution of agreements
which provides for lending money on behalf of banks (the banks
set forth in Article 2, Paragraph 1 of the Banking Act (Law No.
59 of 1981, as amended); hereinafter the same) and otherentities engaged in the financial business stipulated in the
Cabinet Order;(11) To enter into derivatives transactions set forth in Article 2,
Paragraph 20 of the Financial Instruments and Exchange Law(other than those that fall within the securities-related derivatives
transactions), except in cases where these business operations
fall within those operations referred to in Item (7);(12) To do the activities referred to in Article 2, Paragraph 8, Item (7)of the Financial Instruments and Exchange Law;

(Unofficial translation)(13) To do the activities referred to in Article 2, Paragraph 8, Item (9)of the Financial Instruments and Exchange Law (limited, inthe case of the handling of primary offering or secondary
distribution, to those to be conducted upon entrustment byfinancial instruments dealers engaged in the type I financial
instruments trading business set forth in Article 28, Paragraph 1of the Financial Instruments and Exchange Law (the financial
instruments dealers set forth in Article 2, Paragraph 9 of the
Financial Instruments and Exchange Law; hereinafter the same),and for such financial instruments dealers);(14) To do the activities referred to in Article 2, Paragraph 8, Item
(11) of the Financial Instruments and Exchange Law;
(15) To do the activities referred to in Article 2, Paragraph 8, Item(13) of the Financial Instruments and Exchange Law;
(16) To do the activities referred to in Article 2, Paragraph 8, Item(15) of the Financial Instruments and Exchange Law;
(17) With respect to securities (including, if such securities are notissued, rights to be represented by such securities) ortransactions referred to in each Item of Paragraph 2 of Article
33 of the Financial Instruments and Exchange Law, to do theactivities set forth in each Item of said Paragraph (other thanthose referred to in Items 3, 5, 7 through 9, 11 and 13);(18) To provide other entities with consulting services regarding
business transfer, merger, corporate split, share-for-shareexchange (kabushiki kokan) or share transfer (kabushiki iten), or
to act as a broker for these transactions;(19) To provide other entities with consulting services regarding
management, and to conduct investigations or provide
information as required for the business operations of otherentities;(20) To conduct investigations, research or training regarding
financial and other economic issues; and(21) To do activities incidental to each of the foregoing Items.
Article 5
Issue of the Development Bank of Japan Bonds
1. The Corporation may issue the Development Bank of Japan Bonds.
Article 9Special Rules When Starting Acceptance of Deposits, Etc.
1. If the Corporation intends to start acceptance of deposits set forthin Article 3, Paragraph 1, Item (1) or issue of the Development Bankof Japan Bonds, the Corporation shall obtain the prior approval of
the Minister of Finance.
2. If the Minister of Finance intends to give the approval referred to in
the preceding Paragraph, the Minister of Finance shall, in advance,
have a discussion with the Prime Minister and obtain his/her
consent.
Article 12
Shares
1. If the Corporation intends to solicit those who will subscribe forshares offered for sale set forth in Article 199, Paragraph 1 of theCompanies Act (Law No.86 of 2005, as amended) (hereinafter in
Article 34, Item (4) referred to as the “Shares Offered for Sale”) or
stock acquisition rights offered set forth in Article 238, Paragraph 1of the Companies Act (hereinafter in Article 34, Item (4) referred to
the “Stock Acquisition Rights Offered”), or to deliver shares orstock acquisition rights in connection with a share-for-shareexchange, the Corporation shall obtain authorization of the Ministerof Finance.
Article 13
Corporate Debentures, Development Bank of Japan Bonds and Borrowings
1. Prior to the beginning of each fiscal year, the Corporation shallprepare its basic policy regarding the issue of corporate debentures

Excerpt from the New DBJ Law 151

(shasai) (other than the Development Bank of Japan Bonds,“Corporate Debentures”; hereinafter the same) and the Development
Bank of Japan Bonds (excluding the short-term notes set forth in
Article 66, Item (1) of the Law Concerning the Central Depositary
System of Corporate Debentures (Law No. 75 of 2001, as amended)from both the Corporate Debentures and the Development Bank ofJapan Bonds, respectively; hereinafter in this Article and Article 18
the same), as well as regarding the borrowings (limited to those withmore than one year to maturity; hereinafter in this Article and Article
18 the same), which provides for matters relating to the issue of the
Corporate Debentures and the Development Bank of Japan Bonds,
and the borrowing of money, such as the amounts of issue andborrowings, denominated currency of the Corporate Debentures, theDevelopment Bank of Japan Bonds and the borrowings, as
stipulated in the Ministry of Finance Ordinance, and obtain
authorization of the Minister of Finance. If the Corporation intends torevise it, the same shall apply.
Article 15
Resolution for Election of Representative Directors and Other Officers
Resolutions for appointment and dismissal of the representative
directors or representative executive officers of the Corporation,
appointment and dismissal of statutory auditors, or appointment anddismissal of audit committee members (kansaiin) shall not become
effective without authorization of the Minister of Finance.
Article 16
Authorization of Concurrent Positions of Directors
1. Except in cases where the provision of Article 4, Paragraph 2
applies, any director (or, if the Corporation is a company maintaining
committees (iinkai secchi kaisha), any executive officer) who
performs the day-to-day business of the Corporation shall not
perform the day-to-day business of any other corporation withoutauthorization of the Minister of Finance.
2. The Minister of Finance shall, upon receipt of an application for theauthorization referred to in the preceding Paragraph, grant his/herauthorization, except in cases where it is determined that any
m a t t e r s o a p p l i e d m a y i n t e r f e re w i t h s o u n d a n d p ro p e r
management of the Corporation.
Article 17
Business Plan
Prior to the beginning of each fiscal year, the Corporation shall drawout a business plan for the new fiscal year and obtain authorization of
the Minister of Finance, as stipulated in the Ministry of FinanceOrdinance. If the Corporation intends to revise it, the same shallapply.
Article 18
Redemption Plan
Prior to the beginning of each fiscal year, the Corporation shall drawout redemption plans for the Corporate Debentures, the Development
Bank of Japan Bonds and the borrowings and obtain authorization of
the Minister of Finance, as stipulated in the Ministry of FinanceOrdinance. If the Corporation intends to revise it, the same shall apply.
Article 19
Subsidiaries Subject to Authorization
1. If the Corporation intends to make any of the following entities(other than individuals in the cases of those referred to in Items (3),(4) and (7); hereinafter referred to as the “Subsidiaries Subject toAuthorization”) its subsidiary (the subsidiary set forth in Article 2,
Item (3) of the Companies Act), the Corporation shall obtain
authorization of the Minister of Finance in advance:(1) Banks;(2) Long-term credit banks (the long-term credit banks set forth in

152 Excerpt from the New DBJ Law

(3)

(4)

(5)

(6)

(7)

Article 2 of the Long-Term Credit Bank Law (Law No.187 of1952, as amended));Financial Instruments Dealers (limited to those who engage intype I financial instruments trading business set forth in Article
28, Paragraph 1 of the Financial Instruments and Exchange
Law);
Money lenders (the money lenders set forth in Article 2,
Paragraph 2 of the Money Lending Business Law (Law No. 32
of 1983, as amended), and exclude those who concurrently
conduct the business referred to in the preceding Items or fallwithin other requirements stipulated in the Ministry of FinanceOrdinance);
Trust companies (the trust companies set forth in Article 2,
Paragraph 2 of the Trust Business Law (Law No. 154 of 2004,
as amended));Insurance companies (the insurance companies set forthin Article 2, Paragraph 2 of the Insurance Business Law (Law
No. 105 of 1995, as amended)); andThose stipulated by the Ministry of Finance Ordinance as those
who are similar to each of the foregoing.

Article 20
Amendment to the Articles of Incorporation, Etc.
1. Resolutions for amendment to the Articles of Incorporation of the
Corporation, disposition of surplus funds (other than disposition oflosses) such as distribution, merger, corporate split, and dissolution
shall not become effective without authorization of the Minister ofFinance.
Article 22Special Exemptions from Management of Fiscal Loan Funds
Notwithstanding the provisions of Article 10, Paragraph 1 of the Fiscal
Loan Funds Law (Law 100 of 1951, as amended), the fiscal loan funds(which means the fiscal loan funds set forth in Article 2 of the Fiscal
Loan Funds Law; hereinafter the same) may be appropriated for loans(hereinafter in Article 24 referred to simply as the “Loans”) to the
Corporation when the Corporation borrows money for appropriationfor expenses required for its operations set forth in Article 3,
Paragraphs 1 and 2.
Article 23
1. Notwithstanding the provision of Article 10, Paragraph 1 of the
Fiscal Loan Funds Law, the fiscal loan funds may be appropriatedfor the Corporate Debentures and the Development Bank of Japan
Bonds (hereinafter in the following Paragraph, immediately following
Article and Article 25, Paragraph 1 referred to as the “Debentures,
Etc.”) to be issued by the Corporation to appropriate the resulting
proceeds for expenses required for its operations set forth in Article
3, Paragraphs 1 and 2.
Article 25
Guarantee of Obligations
1. Notwithstanding the provision of Article 3 of the Law Concerning
Restrictions on Fiscal Assistance by the Gover nment to
Corporations (Law No. 24 of 1946, as amended), the Government
may enter into a guarantee agreement for the obligations relating to
the Debentures, Etc., to the extent of the amount approved by the
resolutions of the Diet.
Article 29
Competent Ministers
1. The competent minister under this Law shall be the Minister ofFinance provided, however, that in the case that the Corporation
obtains the approval referred to in Article 9, Paragraph 1, thecompetent ministers for the following matters shall be the Ministerof Finance and the Prime Minister.

Supplementary Provisions
Article 2
Disposition of Government-Owned Shares
1. Pursuant to Article 6, Paragraph 2 of the Law Concerning
Promotion of Administrative Reform for Realizing the Simple andEffective Government (Law No. 47 of 2006, as amended), theGovernment shall make efforts to reduce the number of shares heldby it in the Corporation (hereinafter in the following Paragraph andthe immediately following Article referred to as “Government-Owned
Shares”), taking into account the market situation, and shall 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 law until the Government
disposes of all of the Government-Owned Shares, the Government
shall from time to time review matters, such as matters regarding
the method in which the Government-Owned Shares should be
disposed of and take the required measures based on the result ofsuch review, so that the foundation of the Corporation’s investment
and financing functions for long-term business funds will bemaintained.
Article 3
Abolition of This Law and Other Measures
If the Government disposes of all of the Government-Owned Shares,
the Government shall immediately take measures to abolish this law,as well as measures necessary to smoothly assign the business
operations, functions, and rights and obligations of the Corporation to
any organization to be formed as a bearer of the functionscommensurate with the investment and financing functions held by
the Corporation.
Article 4Special Rules for Business Operations during the Preparatory Period
1. In order for the Corporation to smoothly start the business
operations as soon as it is duly organized, The Development Bankof Japan (hereinafter referred to as “DBJ”) may borrow Long-term
Loans, in addition to those set forth in Article 42, Paragraphs 1 and
2 of the Development Bank of Japan Law (Law No. 73 of 1999, as
amended; hereinafter, except for Article 26 of the Supplementary
Provisions, referred to as the “DBJ Law”), during the Preparatory
Period (the period from the date on which this law comes into force
up to September 30, 2008; the same in Paragraph 5).
Article 9
Capital Contribution
Upon the incorporation of the Corporation, DBJ shall contribute all of
its properties, except assets to be assumed by Japan pursuant to
Article 15, Paragraph 2 of the Supplementary Provisions, to the
Corporation.
Article 15
Dissolution of DBJ, Etc.
1. DBJ shall be dissolved at the time of establishment of the
Corporation, whereupon any and all rights and obligations of DBJ
shall be taken over by the Corporation, except for those assets tobe assumed by the Government as set forth in the following
Paragraph.
2. Of the rights actually held by DBJ at the time of establishment of the
Corporation, the assets which will be considered no longer
necessary for the Corporation to smoothly perform its futurebusiness operation shall be assumed by Japan at the time ofestablishment of the Corporation.

Article 16
Values of Properties Assumed
1. The values of assets and liabilities assumed by the Corporation from
DBJ (in the immediately following Paragraph referred to as the“Assumed Properties”) shall be as evaluated by evaluation officers(hyoka iin).
Article 18
Competent Ministers
The competent ministers under Article 26, Paragraph 2 and Article 27,
Paragraph 1 for management of assets to be assumed by the
Corporation pursuant to Article 15, Paragraph 1 of the Supplementary
Provisions (hereinafter in this Article referred to as the “Assumed
Assets”) shall, notwithstanding the provisions of Article 29, Paragraph
1, be as follows:(1) For management of the Assumed Assets set forth in the Cabinet
Order in the Hokkaido or the Tohoku Region (which means theareas of Aomori, Iwate, Miyagi, Akita, Yamagata, Fukushima andNiigata prefectures): Minister of Finance and Minister of Land,
Infrastructure and Transport; and(2) For management of the Assumed Assets other than the Assumed
Assets set forth in the preceding Item: Minister of Finance.
Article 66
Examinations
On or prior to the date set forth in Article 1, Item (3) of the
Supplementary Provisions, the Government shall examine measures tosecure the equal competitive conditions with other business entities,
with respect to the systems for which the investment and financing
functions of DBJ are utilized pursuant to the provisions of relevant laws(including ordinances under those laws), such as the Law Concerning
Collaterals for Borrowings of Electricity Companies from The
Development Bank of Japan (Law No. 145 of 1950, as amended), the
Law Concerning the Securement of Oil Reserves, Etc. (Law No. 96 of1975, as amended), the Law Concerning Promotion of Development
and Promotion of Introduction of Alternative Energy to Oil (Law No. 71
of 1980, as amended), the Special Measures Law Concerning
Promotion of Private Urban Development (Law No. 62 of 1987, as
amended), the Extraordinary Measures Law Concerning Promotion ofBusiness Activities for Rationalization of Usage of Energy and Effective
Use of Resources (Law No. 18 of 1993, as amended) and the Law
Concerning Facilitation of the Improvement, Etc. of Public Facilities,
Etc. by Private Fund, Etc. (Law No. 117 of 1999, as amended), whileconsidering the convenience of users of those systems, and take therequired measures based on the results of such examination.
Article 67
Utilization of the Corporation’s Investment and Financing Functions
for Long-term Business Funds
If the Government utilizes the Corporation’s investment and financing
functions for long-term business funds on or after the date set forth in
Article 1, Item (3) of the Supplementary Provisions, the Government
shall take measures necessary to secure the equal competition
conditions, as well as other measures necessary for utilization of suchinvestment and financing functions, paying attention to the
Corporation’s appropriate competitive relationships with otherbusiness entities.
This is an unofficial English translation. Only the original Japanese
texts of the law have legal effect and prevail over this translation.
This translation has been prepared solely for reference purposes.
The reader of this translation should consult the original Japanese
text for the purposes of interpreting and applying the law to any
legal issues or disputes.

Excerpt from the New DBJ Law 153

Corporate Data
◆ Board of Directors and Auditors (As of July 1, 2008)

Deputy Governor

Governor

Deputy Governor

Hideto Fujii

Minoru Murofushi

Mikio Araki

Governor

Minoru Murofushi

154 Corporate Data

Deputy Governor

Deputy Governor

Hideto Fujii

Mikio Araki

Senior Executive Director

Senior Executive Director

Keiji Taga

Hisato Nagaoka

Senior Executive Director

Senior Executive Director

Yo Takeuchi

Masanori Yanagi

Senior Executive Director

Senior Executive Director

Tetsuhiko Shindo

Hiroshi Takahashi

Senior Executive Director

Senior Executive Director

Kenichiro Hirata

Yasutoshi Kojima

Senior Executive Director

Senior Executive Director

Kan Ishii

Akiyoshi Horiuchi

Auditor

AuditorTsuyoshi Inoue

Ryo Ishimori

◆ Organization Chart (As of April 1, 2008)

Internal Audit Department

Ofﬁce of the Secretariat
Human Resource Management Department
Corporate Planning & Coordination Department

Operations Evaluation Ofﬁce

ALM and Risk Management Department

Ofﬁce for Public Relations

Information Resources Department

Ofﬁce for Financial Institutions

Accounting Department

Credit Analysis Department
Department of Legal and Compliance Affairs

Treasury Department
Business Planning & Coordination Department
Governor
Deputy Governor
AuditorSeniorExecutive Director

Asset Finance Group

Department for Urban Development

Ofﬁce for Corporate Social Responsibility

Department for Public Sector Solutions
Department for International Affairs
Department for Corporate Finance, Division 1

before reorganization(Manufacturing & Technology Department)

Department for Corporate Finance, Division 2(Information & Telecommunications Department)

Department for Corporate Finance, Division 3(Commerce & Logistics Department)

Department for Corporate Finance, Division 4(Transportation Department)

Department for Corporate Finance, Division 5(Environment & Energy Department)

Department for Corporate Finance, Division 6(Kanto Business Department,
Department for Technology & Growth Business)

Department for Investment Strategy
Planning Department for Investment Banking, Division 1

Growth and Cross Border Investment Group

Planning Department for Investment Banking, Division 2

Strategic Finance Group, Division 1

Planning Department for Investment Banking, Division 3

New Business and Technology Finance Group

Strategic Finance Group, Division 2
Project Finance and Structured Finance Group
Credit Business Group

Department for Business Development
Economic & Industrial Research Department
Department for Regional Development
Research Institute of Capital Formation

Branch offices, representative offices
Branch ofﬁces: Hokkaido, Tohoku, Niigata, Hokuriku, Tokai, Kansai, Chugoku, Shikoku, Kyushu, Minami-kyushu
Representative ofﬁces: Hakodate, Kushiro, Aomori, Toyama, Matsue, Okayama, Matsuyama, Oita
Overseas representative offices
New York, Los Angeles, London, Frankfurt, Singapore

Corporate Data 155◆ Timeline
1951 April

Japan Development Bank established1956 June

Hokkaido Development Finance Public Corporation established1957 April

Hokkaido Development Finance Public Corporation reorganized as the Hokkaido-Tohoku Development
Finance Public Corporation; branches opened in Sapporo and Sendai (currently, the Tohoku Branch)

1964 MarchPartial revision of Hokkaido-Tohoku Development Finance Public Corporation Law (including creation ofcapital provision)

1972 June

Japan Development Bank Law revised
1) Objective revised to “promote both industrial and socio-economic progress”
2) Addition of investment and subdivided facility financing function involving large-scale industrial park
construction business1985 June

Japan Development Bank Law revised
1) Addition of investment function pertaining to business in such areas as research and development, urban
development and energy use stipulated by government ordinance2) Addition of R&D fund investment function

1986 September

Partial revision of Hokkaido-Tohoku Development Finance Public Corporation Law (including stipulation of
zero-interest loans)1991 April

Japan Development Bank Law revised
1) Expansion of scope of operations to include business using the transfer method
2) Issuance of Euroyen bonds3) Creation of low interest rate loan system funded partially by sale of NTT shares1991 April

Partial revision of Hokkaido-Tohoku Development Finance Public Corporation Law (including creation of low
interest rate financing for the improvement of social capital)

1992 December

Japan Development Bank Law revised (creation of facility for additional government investment)

1997 September

Cabinet approval of bill entitled “Pertaining to Consolidation and Rationalization of Special-Purpose
Companies, etc.” (decision to dissolve Japan Development Bank and Hokkaido-Tohoku Development
Finance Public Corporation and consolidate into new bank)1998 December

Japan Development Bank Law revised (establishment of end-of-fiscal-2003 sunset clause on measures forresponding to financial market dysfunctions)
1) Addition to scope of funding of long-term working capital unrelated to facility acquisition
2) Addition to scope of operations of funds from redemption of corporate bonds
3) Addition of such functions as acquisition of publicly offered bonds

1998 December

Partial revision of Hokkaido-Tohoku Development Finance Public Corporation Law (establishment of end-offiscal-2003 sunset clause on measures for responding to financial market dysfunctions)
1) Addition to scope of funding of long-term working capital unrelated to facility acquisition
2) Addition of funds, including those from redemption of corporate bonds, to scope of operations

1999 June

Development Bank of Japan Law established1999 OctoberTransfer of approval of all rights and responsibilities of Japan Development Bank and Hokkaido-Tohoku
Development Finance Public Corporation to the Development Bank of Japan
Transfer of financing operations from Japan Regional Development Corporation and Japan Environment
Corporation

2002 May

Partial revision of Development Bank of Japan Law (introduction of spot inspections by the Financial
Services Agency)

2005 December

Cabinet approval of The Important Policy of Administrative Reform (decisions on such items as our
privatization as an single entity)

2006 May

Establishment of the Law for Advancing Administrative Reform to Realize a Streamlined and Efficient
Government

2006 June

Policy-Based Financing Reform Plan decided upon by the Headquarters for the Implementation of Policy
Finance Reform

2007 June

Establishment of Development Bank of Japan Inc. Law (New DBJ Law)2008 OctoberExpected establishment of Development Bank of Japan Inc.

156 Corporate Data◆ Locations and Directory (As of July 1, 2008)
Head Office9-1, Otemachi 1-chome, Chiyoda-ku,
Tokyo 100-0004, Japan
Tel: +81-3-3270-3211
http://www.dbj.go.jp/english/index.html

Domestic Branch Offices,
Representative Offices

To Kanda

Shuto Expressway

Branch Offices:
Hokkaido
TohokuNiigata
Hokuriku
Tokai
Kansai
Chugoku
Shikoku
KyushuMinami-kyushu

Development Bank of Japan

JR LineNikkei Bldg.

Koko Bldg.

Japan Business
Federation(Keidanren)

Hibiya Dori (St.)

NTT

Chiyoda Line
Otemachi Sta.
(Exit C1)

Marunouchi Line
Otemachi Sta.
(Exit A1)

To TokyoMItsui MutualLife Insurance

JA Bldg.

KDDI

Representative Offices:
Hakodate
KushiroAomoriToyamaMatsueOkayamaMatsuyama
Oita

Overseas Representative Offices
New York Representative OfficeLondon Representative Office

Los Angeles Representative Office

Singapore Representative Office

New York Representative Office1251 Avenue of the Americas, Suite 830,
New York, N.Y. 10020, U.S.A.
Tel: +1-212-221-0708

Los Angeles Representative Office
601 South Figueroa Street, Suite 2190,
Los Angeles, CA 90017-5748, U.S.A.
Tel: +1-213-362-2980
W 4th St.

Broad
way

Development Bank of JapanS Grand Ave

Flower St.

S. Figueroa St.

Pasadena Fwy

Los Angeles
Central Library

Hilton New YorkW 5th St.

W 6th St.

th
50

St

Radio City Music Hallth49

Wilshire Boulevard

Rockefeller Center

50th St
49th St

Development Bank of Japan
5th Ave.

6th Ave.

W 7th St.

London Representative Office
Level 12 City Tower, 40 Basinghall Street,
London, EC2V 5DE, United Kingdom
Tel:+44-20-7638-6210

St

7th Ave.

St ent7th etro cM

52nd St
51st Ster

Wilshire Grand Hotel

Sheraton New York Hotel and Towers

Singapore Representative Office
9 Raffles Place, #30-03 Republic Plaza,
Singapore 048619
Tel: +65-6221-1779

Development Bank of Japan
Market St.

London Wall

Moorgate

Coleman St.

Gresham St.

Basinghall St.

Guildhall

Ch

UOB Plaza

55 Market StreeturchRaffles PlaceSt.

Lothbury St.

PrinceSt.
BankGolden Shoe Park

Bharat Bldg
Ocean Bldg

Equity Plaza
Cecil St.

Development Bank of Japan

Locations and Directory 157

The shape and coloring of DBJ’s logo seeks to convey the sense of creativity, energy and youthful vigor with which the Bank strives tomeet continuously changing socio-economic needs. The emerging egg shape illustrates our efforts to shape a continuously unfolding future.

http://www.dbj.go.jp/english/
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