(2,1) -1- e̲DBJ̲Cover̲2016̲160907.indd 16/09/13 13:13

Annual Report & CSR Report

2016

Applying Financial Expertiseto Design the Future

Development Bank of Japan Inc.

Annual Report & CSR Report2016
16/09/13 13:13

(1,1) -2- e̲DBJ̲Cover̲2016̲160907.indd 16/09/13 13:13

Profile (As of July 1, 2016)

Established:

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

Legal basis:

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

President:

Masanori Yanagi

Number of employees:

1,187 (As of March 31, 2016)

Capital:¥1,000,424 million (100% owned by the Japanese government)

Address:

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

URL:

http://www.dbj.jp/en

Number of offices:

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

Subsidiaries andaffiliated companies: Consolidated subsidiaries, 25; non-consolidated subsidiaries, 33; and affiliated companies, 25(As of March 31, 2016)
Main business:

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

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

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







Total assets:¥15,808.9 billion (As of March 31, 2016)

Loans:¥13,119.3 billion (As of March 31, 2016)

Capital adequacy ratio:

16.85% (Basel 3, BIS standard) (As of March 31, 2016)

Issuer ratings:

A1 (Moody’s Investors Service, Inc.), A (Standard & Poor’s Corp.),
AA (Rating and Investment Information, Inc.),
AAA (Japan Credit Rating Agency, Ltd.)
Note: Information above is on a non-consolidated basis.

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

e̲DBJ̲Cover̲2016̲160907.indd 2

Contents

Message from the President and CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

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

4Corporate Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Logo and Corporate Color . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
DBJ’s Target Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Overview of DBJ’s Third Medium-term Management Plan . . . . . . . . . . . . . . . . . . . . . . . . 18
DBJ's History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Background for Revisions to the DBJ Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Overview of Operations in Fiscal 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Operating Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Overview of Consolidated Operating Performance . . . . . . . . . . . . . . . . . . . . . . . . . 26
Overseas Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Group Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
DBJ’s Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Integrated Investment and Loan Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Investments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Consulting/Advisory Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Special Investment Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Crisis Response Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Initiatives Related to the Great East Japan Earthquake . . . . . . . . . . . . . . . . . . . . . . 55
Regional Revitalization Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Making Use of Information Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
CSR Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Implementing CSR Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
CSR through Investment, Loan and Other Businesses . . . . . . . . . . . . . . . . . . . . . . . 72
Environmental Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Business Continuity Plan (BCP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Fostering Human Resources and Creating a Comfortable Work Environment . . . . 98
Intellectual Asset Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Intellectual Asset Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Financial Platform That Enables DBJ to Meet the Needs of the Times . . . . . . . . . . 106
Management Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Responding to Japan’s Stewardship Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Client Protection Management Basic Policy/Declaration on Personal Information
Protection/Policy for Managing Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . 118
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Corporate Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

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

Annual Report & CSR Report 20161

Message from the President and CEO

2

Annual Report & CSR Report 2016

Issues Japan Faces and DBJ’s Role in
Resolving Them
The Japanese economy continued to benefit from a tone ofgradual recovery in business conditions, as higher corporate
earnings in fiscal 2015 offset signs that the purchasing moodof consumers had stalled. However, a number of challenges
remain. The country continues to face increasingly intense
global competition and must deal with issues related to
the renewal of aging domestic public infrastructure andto energy, regional revitalization, a shortage of risk capitaland fund management opportunities, and other concerns.
Against this backdrop, the Act for Partial Amendment of
the Development Bank of Japan Inc. Act came into force lastyear. We maintained our direction toward full-scale privatization under the amended act, while firmly cementing Crisis
Response Operations to deal with any large-scale disasteror economic crisis that occurs and directing efforts toward
new Special Investment Operations, which provide intensive
growth capital designed to revitalize regional economies andincrease corporate competitiveness.
Accordingly, while our three-year Third Medium-termManagement Plan—which moves into its final year in fiscal
2016—is fundamental to the role we must fulfill, we willconsistently engage with diverse financial players to createa smoothly functioning market as a provider of both risk
capital anchored in the real economy (capital funding suchas mezzanine financing and investment, long-term funding
for infrastructure and other projects, and the stable provisionof funds that will drive the growth of Japanese enterprises)
and original knowledge (knowledge services that leverageexperiential knowledge), and strive to resolve the issues
facing Japan from a long-term perspective, in line with theintent of the act and other requirements.

Specific DBJ Initiatives
In our Third Medium-term Management Plan, we identified
four primary areas requiring particular attention: growth support, infrastructure and energy, regional revitalization tailored
to regional needs, and strengthening the safety net.
To start, in the area of growth support, we are offering
even greater assistance to promote initiatives that help
companies hone a sharper competitive edge by providing
risk capital through Special Investment Operations, for which
we made investment and loans decisions valued at approximately ¥100 billion in fiscal 2015. In the infrastructure andenergy area, we are supplying funds for the reconstruction of
the energy supply system to better address the energy issues
that have emerged since the Great East Japan Earthquake.
Regarding regional revitalization tailored to regional needs,
we are taking a fine-tuned approach geared to each region,
including the establishment of funds with regional financial
institutions and other investors to support tourism and local
business growth. In the area of strengthening the safety net,crisis countermeasure loans reached an aggregate level ofabout ¥5,600 billion, as of March 31, 2016, and, in collaboration with regional financial institutions, we also launched asuccessor fund to the Great East Japan Reconstruction Fundthat provides risk capital to fuel reconstruction and growthin the region affected by the Great East Japan Earthquake
and its associated disasters. In addition, in the wake of the
Kumamoto earthquakes in April 2016, we responded withall our effort, quickly setting up the Kumamoto Recovery
Office inside the Kyushu Branch and also working withlocal financial institutions, establishing a restoration andreconstruction fund and pursuing other avenues of support
to stimulate restoration and reconstruction in areas thatsustained damage.
The Third Medium-term Management Plan also lays out
three functions—risk-sharing with banks and other organizations, the provision of opportunities for fund management byinvestors, and extension of knowledge beyond the financial
sphere—that DBJ must demonstrate through initiatives in thefour operation-oriented primary areas of the plan.
In risk-sharing with banks and other organizations, weseek to execute suitable distribution of risk among ourselves
and other financial institutions, businesses and investors andrespond both to the diverse capital needs of enterprises andto other market demands through access to equity, mezzanine and long-term loans and other high-risk capital. In theprovision of opportunities for fund management by investors,
we are keen to contribute to a more robust financial market
environment by providing regional financial institutions,pension funds and other investors with quality fund management opportunities, such as co-investment in syndicatedloans and overseas private equity funds. In extension ofknowledge beyond the financial sphere, we draw on a nonaligned network and industry survey capabilities to provide
reports on specific regions, industry sectors and businesscircles, and other subjects as well as quality knowledge froma long-term perspective, including advice, to support clientsin their efforts to pinpoint and resolve pressing issues.

Meeting Our Corporate Social Responsibilities
We will embark on our Fourth Medium-term Management
Plan next fiscal year. Under the new plan, we will naturally
work to reinforce the initiatives pursued during the Third
Medium-term Management Plan and build on the cooperative relationships we have with private financial institutions
and other organizations. At the same time, we will strive tofurther develop human resources with an enhanced ability
to provide sophisticated financial services and, as a cohesive
corporate group, always listen carefully to our clients andunderstand their needs.
As these activities unfold, we remain committed to ourtrifecta of financial products and services—loans, investments
and advisory services—and will leverage our expertise toachieve both economic value and social value as well as
contribute to sustained growth in Japan.
July 2016
Masanori Yanagi
President and CEO
Development Bank of Japan Inc.

Annual Report & CSR Report 20163

Toward the Future Prosperity of Japan

Our Initiatives to Address the Issues Our Clients Face

EnergyFrontier

Transportation
Urban
Development

Network

Infrastructure

Environment

Resilience

Healthcare
Overseas

4

Annual Report & CSR Report 2016

GrowthInitiatives in the Energy Sector
Going forward, the energy sector is sure to requirelarge-scale funding to replace aging thermal power
plants and construct new facilities, among otherapplications. Meanwhile, the electric power system
reform is providing opportunities for the retail saleof electric power and allowing new entrants into
the field of electric power generation, calling for

finance to play an increasingly diverse role. DBJ willcontinue providing optimal financial solutions tomeet these needs.
As of March 31, 2016, our balance of loans in theelectricity, gas, heat and water totaled ¥3,256.6
billion, accounting for 25.1% of total loans, byindustry.

¥ 3.2
trillion

BalanceBl
off lloans iin ththeelectricity, gas, heat andwater sectors(As of March 31, 2016)

See page

80

Annual Report & CSR Report 20165

Toward the Future Prosperity of Japan

Initiatives in the Transportation Sector
DBJ is involved in a wide range of initiatives in thedevelopment and improvement of transportation
infrastructure (including railroads, airports, airlines,
buses and roads). We also take part in the formation of a wide range of projects from a long-term
perspective to support collaboration among mul-

tiple enterprises from a position of neutrality.
As of March 31, 2016, our balance of loans in thetransportation infrastructure sector (to transportation providers) totaled ¥2,334.2 billion, accountingfor 18.0% of total loans, by industry.

¥ 2.3
trillion

BalanceBl
off loans
l
in
i the
th
transportation infrastructure
sector(As of March 31, 2016)

See pagep
6

Annual Report & CSR Report 201681

Initiatives in the Urban Development (Real Estate) Sector
DBJ’s long-term financing of real estate projects
began in the 1960s. We have participated in Japan’s
real estate securitization market from its early
beginnings and continue striving to invigorate thismarket by leveraging our accumulated expertiseand networks. In fiscal 2011, we introduced the DBJ

Green Building Certification, which is designed toprovide financial support for environmental andsocially considerate initiatives.
As of March 31, 2016, our balance of loans in thereal estate sector totaled ¥1,573.9 billion, accounting for 12.2% of total loans, by industry.

¥ 1.5
trillion

BalanceBl
off loanslinithe real estate sector(As of March 31, 2016)

See pages

38, 43, 82

pAnnual Report & CSR Report 20167

Toward the Future Prosperity of Japan

Initiatives in the Social Infrastructure Sector
Since the era of reconstruction following WorldWar II, DBJ has supported the development andadvancement of Japan’s economy as well as
improved quality of life for the people. We apply
our experience and expertise to support our clientsin their efforts to build and reinforce the social¥ 7.5
trillion

BalanceBl
off loans
l
in
i the
h electriclipower, gas, heating, water,
telecommunications, transportand real estate sector(As of March 31, 2016)

See page

8

Annual Report & CSR Report 2016

83

infrastructure.
As of March 31, 2016, our balance of loans inthe social infrastructure sector (electric power, gas,
heating, water, telecommunications, transport andreal estate) totaled ¥7,546.0 billion.

Initiatives in Crisis Response Operations
As a designated Crisis Response Operations financial
institution, DBJ began such operations on October
1, 2008.
Since March 2011, when the Great East Japan
Earthquake struck, we have poured all our energy
into initiatives to support the restoration andreconstruction of the disaster-stricken region. DBJ

smoothly implements Crisis Response Operations toassist people who were affected directly and indirectly by the disaster.
As of March 31, 2016, our cumulative amount ofloans as crisis countermeasures related to the Great
East Japan Earthquake was ¥2,210.0 billion.

¥ 2.2
trillion

CumulativeC
l i amount off loanslas crisis countermeasuresrelated to the Great East
Japan Earthquake(As of March 31, 2016)

See pages

52-57, 89-90

Annual Report & CSR Report 20169

Toward the Future Prosperity of Japan

Initiatives to Promote Competitiveness
DBJ seeks to promote the competitiveness ofJapanese enterprises and encourage regional revitalization. With this in mind, in May 2015 we established the Growth Co-creation Facility, an independent initiative, to complement statutory activities
under Special Investment Operations—an intensive

but temporary scheme to supply growth capital—
and we have since provided growth capital for
activities that will lead to future growth investment.
As of March 31, 2016, the cumulative amountof investment and lending determined by Special
Investment Operations amounted to ¥103.9 billion.

¥103.9billionCumulativeCl ti amountt off
investment and lending determined by the Special Investment
Operations(As of March 31, 2016)

See pages

10

Annual Report & CSR Report 2016

36, 50-51, 73, 74, 80, 88

Initiatives in Overseas Business
Since its privatization (conversion to a joint-stockcompany) in October 2008, DBJ has pursued overseas operations, paralleling greater globalization of
corporate Japan and the nation’s economy.
We are moving forward with core infrastructure,such as building an overseas risk management structure for investments and loans, preparing operatingbases and training personnel. At the same time, we
are working to expand our network with trustworthy partners and domestic and overseas financial
institutions.
As of March 31, 2016, investments and loans weredirected toward initiatives in more than 40 countries.

More than

40 countries
Numberb off countries
i targetedd forfinvestments and loans(As of March 31, 2016)

See pages

28, 76

Annual Report & CSR Report 201611

Toward the Future Prosperity of Japan

Initiatives in the Healthcare and Welfare Sectors
DBJ is engaged in maintaining and improving
the quality of all aspects of healthcare in Japan,
including access, cost and technological standards,
through finance, consulting and the distribution of
information. As well as providing consulting services
that include the development of business plans to

support improvements in hospital management,
DBJ conducts surveys and research into a variety ofhealthcare issues.
As of March 31, 2016, our balance of loans in thehealthcare and welfare sector stood at ¥62.8 billion.

¥ 62.8billionBalanceBl
off lloans in
i thethhealthcare and welfare sector(As of March 31, 2016)

See pages

12

Annual Report & CSR Report 2016

42, 77, 79

Initiatives in the Environmental Business Sector
Beginning with antipollution measures implemented in thelate 1960s and early 1970s, DBJ has provided more than ¥3trillion in investments and loans for environmental projects
over the past 40 years.
Based on accumulated knowledge, in fiscal 2004 DBJ
began employing a system of environmental ratings in its
financing. This system, developed using our own uniquemethodology, is the world’s first such financing menu.

We are also promoting initiatives from a fund-raising
perspective, exemplified by the issue of an inaugural
DBJ sustainability bond in October 2015 that targets DBJ
Environmentally Rated Loan Program loans and other asset
classes.
As of March 31, 2016, we had provided financing under
the DBJ Environmentally Rated Loan Program to 525 enterprises, reaching an aggregate amount of ¥954.0 billion.

¥ 954.0
billionCumulative total amount of
DBJ Environmentally Rated
Loan Program(As of March 31, 2016)

See pages

41, 78, 92-95

tAnnual Report & CSR Report 201613

Toward the Future Prosperity of Japan

Initiatives in Regional Revitalization
Stepping up its independent initiatives to address
the variety of issues faced by regional communities,
DBJ provides risk capital and pursues other activities through support to formulate comprehensive

regional strategies and through co-investment with
regional banks and other capital-ready participants.
As of March 31, 2016, a total of 107 financial institutions had entered into business alliances with DBJ.

107

institutions
Cumulative total of allied financial institutions(As of March 31, 2016)

See pages

58-59, 84-88

et o
14

Annual Report & CSR Report 2016

Initiatives for Invigorating the Japanese Financial and Capital Markets
DBJ arranges quality opportunities to apply available funds, including provision of risk capital, and,through syndicated loans and asset management,
offers fund management opportunities to regional
financial institutions, domestic and overseas pen-sion funds and other organizations. We invigorate
markets by creating new money flows. We also
participate as a principal investor in the TOKYO PROBOND Market, stimulating it as part of our efforts todevelop Japan’s financial and capital markets.

Syndicated loan arrangement
Co-investment, with pension funds and other participants, in the infrastructure sector
Co-investment, with regional financial institutions, inforeign private equity funds
Stimulation of the TOKYO PRO-BOND Market

See pages

39, 76o eAnnual Report & CSR Report 201615

Corporate Philosophy

CorporatepPhilosophy
p yApplying
p y g financial expertisep
to design the future
We applyl creativetii financing
fii
tto resolve
l clientli t iissues, as we workto earn the trust of our clients and help them achieve their future prosperity.

Commitment to Stakeholders

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

Intention
IntellectIntellectual
cttualtual
Assetss

The Core Competencies
at the Center of DBJ-SpecificFinancial ExpertiseNet
Ne
Network
ks
Networks

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

Action Guidelines Customers First

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

 Commitment to Society
All business will be based on harmony among the threefactors of society, the environment and the economy inorder to contribute to a sustainable, affluent society.

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

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

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

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

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

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

Core Competencies

16

Annual Report & CSR Report 2016

Intention

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

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

Networks

Networks created with clients, regional
municipal bodies and other financial institutions.

Logo and Corporate Color

Our ”Earth” logo consists of four colors that represent four themes and embodies our
corporate philosophy of working with clients to realize their goals.
Each Color Represents Two Aspects of DBJ
Corporate Values:

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

About DBJ

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

DBJ’s Target Business Model

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

Investment

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

Provision of mezzanine andequity financing

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

Annual Report & CSR Report 201617

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

DBJ has formulated the Third Medium-term Management

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

resolve them. The Third Medium-term Management Plan

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

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

Challenges for the Japanese economy
Issues in the macroeconomy
OO

Declining global competitivenessO

Decline in economic growth rateO

Globalization of the economy

O

Aging infrastructure

O

Issues for firms (“semi-macroeconomic”)

Contracting, aging population; fallingbirthrateO

OO

Decline in regional vitality

Global spread of crises

Issues for financial and capital markets
O

Short supply of risk capitalO

Shortage of fund management opportunities

DBJ actions

Role of DBJ

●

●

●

Promotion ofcompetitivenessSupport for growing
fields such as theenvironment,
healthcare, women’s
participation in theworkplace

Elimination of excessive competition in similar
goods and services

O

Creation of strategic markets

O

Innovation and technological development

O

Energy problems arising fromthe Great East Japan Earthquake

Growth supportO

Earthquake reconstruction; response tonatural disasters

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

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

A neutral source of industrial finance
Infrastructure & energy●●●

Renewal & strengtheningof infrastructure

Regional revitalization tailored
to regional needs●

Stronger, moredisaster-resilienttransportation networks
and other infrastructure●

Reconstruction of theenergy supply system●

Response to globalization

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

Risk-sharing with banks
and other organizations●

Risk-sharing finance→ Effective use ofstagnant funds

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

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

Opportunities for fundmanagement byinvestors●

Providing risk capital and knowledge(intellectual services) from a long-term
perspective

O

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

O

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

Knowledge extending
beyond the financial
sphere●18

O

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

O

Wealth of experience O Capital

Annual Report & CSR Report 2016

Market-stimulating
finance

Knowledge bank

→ New value creation

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

Three Functions to Leverage(1) Risk-sharing finance• DBJ will promote the appropriate sharing of risk through many of the approaches it has pursued in the past, by
supplying high-risk capital through long-term, large-volume, mezzanine financing and in collaboration with general
financial institutions, enterprises and other entities, as well as through other forms of cofinancing and coinvestment.

(2) Market-stimulating finance
About DBJ

• DBJ arranges excellent opportunities for managing this capital through means including syndicated loans andasset management. Working with regional banks, pension funds and other entities, DBJ shares fund management
opportunities with them and helps stimulate the financial market.

(3) Knowledge bank
• Utilizing not only high-quality knowledge* provided from a long-term perspective but also its neutral networks andindustrial research skills, DBJ will work on creating new business concepts.
*Knowledge services that leverage structured “experiential knowledge”

Four Primary Areas(1) Growth support• To strengthen Japan’s competitiveness in the global market, DBJ will provide support for the effective use of exploitable
operating resources, business creation, corporate restructuring, mergers and acquisitions or the challenges ofglobalization.
• DBJ will also support growth fields that will play key roles in Japan’s development as a sustainable society, such asenvironmental business, healthcare and opportunities for women.
<Case Studies> See pages 73-79.

(2) Infrastructure & energy• In addition to the safety of the nation’s transportation networks and community development, initiatives will concentrateon the renewal of aging public infrastructure.
• The Great East Japan Earthquake left Japan with serious energy issues. DBJ will address this problem by providing
comprehensive support for the restructuring of the energy system.
<Case Studies> See pages 80–83.

(3) Regional revitalization tailored to regional needs• Regional firms make up approximately half of DBJ’s clients. To ensure that regional revitalization is both sustainable andsuited to regional conditions, DBJ works with regional clients and banks in supporting innovative business development,
community building, infrastructure renewal and other initiatives by which firms create vigorous and healthy communities.
<Case Studies> See pages 84–88.

(4) Strengthening the safety net• DBJ will respond quickly and effectively to crises, whether natural or financial. It will conduct both Japanese governmentmandated Crisis Response Operations and its independent initiatives based on information, expertise and evaluation
skills developed through day-to-day business.
<Case Studies> See pages 89–91.

Annual Report & CSR Report 2016

19

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

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

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

1956–1965
High-growth infrastructure development

Rapid growth

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

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

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

Stable growth
Economic bubble

20

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

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

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

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

Annual Report & CSR Report 2016

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

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

1996–2000
The Japan Development Bank focused on such important areas as ongoing
improvements to social capital, environmental and other measures,and support for venture businesses. In addition, it swiftly implemented
reconstruction loans in the wake of the Great Hanshin-Awaji Earthquake
and loans in response to the financial environment to stabilize the financial
system by functioning as a safety net.

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

Post-bubble

Creation of a vibrant and affluent society and stable economy

2001–2007

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

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

V-Lease Corporation

Global financial crisis precipitated by the
Lehman shock

Disaster and crisis response to the Great East
Japan Earthquake

The Lehman shock in the autumn of 2008 precipitateda global financial crisis. As this situation impaired thefunctioning of the bond markets, corporate cashflow
worsened. DBJ responded promptly with Financial Crisis
Response Operations. Furthermore, in response to falling
functionality in the market for commercial paper DBJ
commenced purchases of commercial paper in January
2009 as part of its Financial Crisis Response Operations.

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

Reinforcing the function of supplying growth
capitalThe 2016 Kumamoto Earthquakes
In response to the 2016 Kumamoto earthquakes, DBJ,
as a designated financial institution for Crisis Response
Operations, opened the Kumamoto Recovery Officeinside the Kyushu Branch on April 28, 2016. In addition,
we established the Kumamoto Reconstruction Support
Fund in cooperation with financial institutions in theaffected area.

The Lehman shock / The Great East Japan Earthquake

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

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

Structural reform

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

About DBJ

Financial solutions that support communities, the environment
and technology

Annual Report & CSR Report 201621

Background for Revisions to the DBJ Act

DBJ’s Activities Since Its Privatization (Conversion to a Joint-Stock Company)
On October 1, 2008, DBJ transitioned from a special public corporation to a joint-stock company. In preparation for full-scale
privatization following the disposal of all Japanese governmentowned shares, DBJ has continued working to enhance its corporate value through integrated investment and loan services. These
activities include providing long-term loans; equity, mezzanine
financing and other types of risk capital; and M&A advisory services.
On the other hand, shortly after DBJ’s conversion to a jointstock company, the Lehman Shock and the Great East Japan
Earthquake occurred. The Japanese government called on
DBJ to steadily mount large-scale Crisis Response Operations.
Due to these crises, the Development Bank of Japan Inc. Act(Act No. 85 of 2007: “DBJ Act”) was revised twice, with DBJ
accepting an additional increase in Japanese government capital. Also, by the end of fiscal 2014 the Japanese government
was to review DBJ’s organization, including its shareholdings
as stipulated by the revision.
As part of this structural revision, deliberations at
the Japanese government’s Study Panel Concerning thePromotion of Expanding Growth Funding covered such topics
as DBJ’s proper implementation of Crisis Response Operations,the importance of initiatives for providing growth capital(equity and mezzanine financing) to address shortages inJapanese financial and capital markets, and an evaluation of
DBJ’s initiatives following its conversion to a joint-stock company. The revised content of the act reflects these evaluations.

About the 2015 Revisions to the DBJ Act
Based on the deliberations of the Japanese government’s
Study Panel Concerning the Promotion of Expanding GrowthFunding, the Act for Partial Amendment of the Development
Bank of Japan Inc. Act, which was enacted on May 20, 2015,
maintains the direction toward full-scale privatization. At thesame time, in order to fully ensure the provision of funding
in response to large-scale disasters and economic crises, therevised act makes DBJ’s Crisis Response Operations obligatory for an indefinite period. From the perspective of promoting the provision of growth capital to revitalize regional

economies and increase the competitiveness of enterprises,
the revised act calls for DBJ to accept a certain amount of
capital from the Japanese government (industrial investment).
This investment is to be used for a new scheme, Special
Investment Operations, to strengthen and develop the Fundfor Japanese Industrial Competitiveness. In addition, withregard to the application of DBJ’s investment and loan functions toward crisis response and the provision of growth capital, measures were introduced obliging the Japanese government to hold at least a certain percentage of DBJ’s shares.

Highlights of 2015 Revisions to the DBJ Act

Before revision
After revision
1. Maintaining direction toward full-scale privatization
Full-scale privatization and disposal of
all Japanese government-heldshares, targeting around five toseven years from April 1, 2015●●

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

2. Measures to ensure appropriate implementation of the Crisis Response Operations
Conducting Crisis Response Operations
as a designated financial institution● Enabling Japanese government
recapitalization in crisis response by
March 31, 2015●

Assuming responsibility for Crisis Response Operations for an indefinite period (atthe same time reflecting this obligation in the Articles of Incorporation)● Extending for an indefinite period the scope of Japanese government
recapitalization securing DBJ’s financial structure, with the Japanese government
having such obligations as holding more than one-third of DBJ’s shares●

3. Establishment of a new Special Investment Operations scheme to provide growth capital in concentrated manner as temporary measure
Reinforcement of the Fund for Japanese Industrial Competitiveness (a portion of thefinancial resources for which are provided through measures for industrial investment);
implementation of Special Investment Operations as a measure for a limited period oftime, through fiscal 2025 (at the same time reflecting this obligation in the Articles ofIncorporation, complementing and encouraging private-sector enterprises, etc.)● Obligation that the Japanese government shall hold one-half or more of shares
until the conclusion of the Special Investment Operations●

Provision of risk capital through theFund for Japanese Industrial
Competitiveness4. Provisions referencing consideration for private financial institutions through ongoing Japanese government involvement
As stated in the Third Medium-termManagement Plan, sustain close
communications, maintaining a
focus on operations in collaboration
with other financial institutions

The Corporation shall, for an indefinite period, pay special attention in
conducting its business so that it will not upset its appropriate competitive
relationships with other business entities● The Japanese government shall hear the opinions of representatives of ordinary financial
institutions and other relevant persons, concerning Japanese government revisions on
an as-needed basis to Crisis Response Operations and Special Investment Operations●

Note: Please refer to pages 128–146 for sections of the DBJ Act.

22

Annual Report & CSR Report 2016

Shares Held by the Japanese Government(It is assumed in the chart below that the obligation to conduct Crisis Response Operations will continue beyond fiscal 2025.)

Japanesegovernment
shareholding
obligation

Taking the following items into consideration, reduction in the amount of shareholdings anddisposal of all shares at the earliest possible date
Taking into consideration(1) Effect on DBJ’s objectives(including appropriate implementation of Special
Investment Operations and Crisis Response
Operations)(2) Market situation

Taking into consideration(1) Effect on DBJ’s objectives(including appropriate implementationof Crisis Response Operations)(2) Market situation

Taking into
consideration(1) Effect on DBJ’s
objectives(2) Market
situation

1/2 or more
(1) Revisions on an as-neededbasis to both operations; and(2) Hearing the opinions ofrepresentatives of ordinary
financial institutions and otherrelevant persons

About DBJ

Japanese government shareholding obligation
to enable the appropriate implementation ofSpecial Investment Operations
More than 1/3

Japanese government shareholding obligation to enable theappropriate implementation of Crisis Response Operations

Revised act enforced(May 2015)

End of fiscal 2020
(Investment period)

End of fiscal 2025
(Conclusion of Special
Investment Operations)Indefinite period

Full-scale
privatization

The Corporation shall, for an indefinite period, pay special attention in conducting its business sothat it will not upset its appropriate competitive relationships with other business entities.

Annual Report & CSR Report 201623

Overview of Operations in Fiscal 2015

Operating Results
Financial and Economic Environment

the loans, investment and consulting/advisory services

During fiscal 2015, the global economy grew at a slower pacedescribed below are on a non-consolidated basis.

than in the previous fiscal year. In the United States, consumer spending was up and business conditions continued

Loans

to improve, and Europe, as well, enjoyed a gradual recovery

In addition to senior loans through traditional corporate

in business conditions. But in China, which is moving forwardloans, we have offered loans that employ advanced finan-

on a structural correction, the pace of growth was sluggish,cial methods, such as non-recourse loans and other types

and with falling prices for natural resources exacerbating theof structured financing, meeting increasingly varying needs

situation, the economies of Asia’s newly emerging markets

for funding. During the year ended March 31, 2016, weand resource-producing nations decelerated.

provided ¥2,861.3 billion in loans, including loans for Crisis

Against this backdrop, Japan’s economy seemed to pause
in gradual recovery mode. For households, the income

Response Operations.
For details regarding loans in Crisis Response Operations,and employment environment was better, but consumer

please refer to the section on page 53 entitled “Results ofsentiment was weak, which caused consumer spending toCrisis Response Operations.”

stall. For the corporate sector, capital investment gradually
increased, thanks to higher earnings. Exports see-sawed but

Investment

imports trended downward when the price of oil dropped,

In investment operations, we took a long-term perspec-

reversing the trade deficit in the second half of fiscal 2015.

tive in forming suitable responses to client issues involving

On the financial front, concerns over the slowing Chinese

business expansion, the formation of growth strategies

economy, falling crude oil prices and other factors rattled

and financial infrastructure, and various other matters. In

global financial markets in the summer and at New Year.

addition, in line with legislative revisions promulgated andLong-term interest rates rose through June 2015, hovering

implemented on May 20, 2015, DBJ took over the Fund foraround the 0.55% mark on expectations of an interest rate

Japanese Industrial Competitiveness, which was establishedincrease in the United States, but given market turmoil, thein March 2015 as an intensive but temporary scheme to

Bank of Japan decided in January 2016 to introduce a nega-

supply growth capital (capital funding, mezzanine financing

tive interest rate policy, and at the end of March 2016, theand other equity and debt sources) from the perspective ofrate fell to around -0.05%. In currency exchange, the yen

sharpening the competitive edge of Japanese companies

appreciated against the U.S. dollar, moving into the ¥112and spurring regional revitalization. This kicked off Special

range by the end of March 2016, owing to a trend toward

Investment Operations. With the inclusion of these activi-

risk aversion caused by chaotic market conditions as well as

ties, we allocated ¥166.3 billion to investing activities dur-

the realization that U.S. interest rates were not going to rise

ing the year.

as initially anticipated. The Nikkei stock average retreated intothe ¥16,700 range as of March 31, 2016, amid major down-

Consulting/Advisory Services

ward stock price movement worldwide.

Consulting and advisory services utilize the networks cre-

Looking at commodity prices, the impact of low oil prices

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

exerted steady downward pressure on energy prices. Given

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

this situation, consumer prices (excluding perishable goods)

tries. We provide consulting on projects that help revitalize

remained more or less on par with the previous year.

regional communities and assign advisors to support these
activities. During the year, investment and loan commissions

Progress and Results of DBJ Group Operations

and fees from M&A and other advisory services amounted

Review of the Year Ended March 31, 2016

to ¥10.1 billion.

Since its establishment on October 1, 2008, the core of
DBJ’s business has remained the same as that conducted by

Subsidiaries

its predecessor. As a highly specialized financial institution,

DBJ Business Investment Co., Ltd., is no longer a consoli-

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

dated subsidiary, following liquidation of the company ingrated investment and loan services.

September 2015.

Below is an overview of these activities during the fiscal year ended March 31, 2016. The figures provided for24

Annual Report & CSR Report 2016

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

For the Year
Ended
March 31,2013

For the Year
Ended
March 31,2014

For the Year
Ended
March 31,2015

For the Year
Ended
March 31,2016

2,927.0

2,652.4

2,943.3

2,544.2

3,027.7

2,849.0

2,524.5

2,805.1

2,262.7

2,861.3

Investment2

78.0

127.8

138.2

281.4

166.3

Funds raised

2,927.0

2,652.4

2,943.3

2,544.2

3,027.7

Fiscal Investment and Loans

801.4

895.1

510.7

661.6

634.4

Of which, borrowings of FILP

500.0

600.0

300.0

300.0

300.0

Of which, governmentguaranteed bonds (domestic)

179.0

160.0

110.0

200.0

200.0

Of which, governmentguaranteed bonds (overseas)3

122.4

135.1

100.7

161.6

134.3

Corporate bonds (FILP bonds)3, 4

263.1

386.6

372.0

374.8

395.3

Long-term debt

1,170.7

868.3

753.1

377.7

358.2

Recovery, etc.

691.7

502.2

1,307.5

1,129.9

1,639.7

Loan and investment balance
1

Loans

5

About DBJ

For the Year
Ended
March 31,2012

Notes: 1. Figures, including those for corporate bonds, are on a management accounting basis.
2. Figures, including those for securities, money held in trust and other assets (funds), are on a management accounting basis.
3. Of government-guaranteed bonds and corporate bonds denominated in foreign currencies, appropriated government-guaranteed bonds and corporate bonds areconverted to yen at market rates at the time conditions are determined.
4. The figure does not include short-term corporate bonds.
5. Long-term debt borrowed from Japan Finance Corporation in conjunction with Crisis Response Operations amounted to ¥959.7 billion in fiscal 2011, ¥590.7
billion in fiscal 2012, ¥500.0 billion in fiscal 2013, ¥113.0 billion in fiscal 2014 and ¥101.2 billion in fiscal 2015.

Annual Report & CSR Report 201625

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

For the Year
Ended
March 31,2012

For the Year
Ended
March 31,2013

For the Year
Ended
March 31,2014

For the Year
Ended
March 31,2015

For the Year
Ended
March 31,2016

Total income

330.2

341.1

362.1

339.9

362.6

Net income attributable toowners of the parent

77.3

71.3

124.3

92.7

128.9

Total assets

15,579.8

16,248.7

16,310.7

16,360.6

15,907.1

Loans

13,645.4

13,918.2

13,838.4

13,261.3

12,952.5

Securities

1,176.6

1,357.0

1,637.5

1,887.9

1,803.0

Total liabilities

13,118.8

13,710.1

13,682.9

13,613.3

13,022.9

Borrowed money

9,170.5

9,448.3

9,182.6

8,598.2

7,892.1

Debentures and corporate bonds

3,671.8

3,924.5

4,237.4

4,569.3

4,727.9

Total equity

2,461.0

2,538.5

2,627.7

2,747.2

2,884.2

Common stock

1,187.7

1,206.9

1,206.9

1,206.9

1,000.4

Total capital ratio (Basel 2, BIS
standard)

18.56%————

Total capital ratio (Basel 3, BIS
standard)—

15.52%

15.83%

16.80%

17.87%

Ratio of risk-monitored loans(Banking Act base)

1.47%

1.23%

0.99%

0.77%

0.64%

Return on equity

3.18%

2.86%

4.83%

3.47%

4.60%

Return on assets

0.51%

0.45%

0.76%

0.57%

0.80%

Number of employees

1,270

1,315

1,391

1,407

1,435

Consolidated operating performance during the year underreview is described below.

Net interest income fell ¥9.4 billion, to ¥108.3 billion,
whereas net fees and commissions increased ¥2.5 billion,to ¥10.5 billion. We posted net other operating income ofConsolidated Income and Expenses¥2.0 billion, down ¥0.2 billion from the preceding fiscal

In fiscal 2015, DBJ posted total income of ¥358.6 bil-year. Net other income soared ¥41.7 billion, to ¥110.2 bil-lion, up ¥19.5 billion from the previous fiscal year. Of thislion, largely owing to higher proceeds from sale of securi-amount, interest income was ¥215.3 billion, down ¥20.3

ties paralleling exits on several investments.

billion, and fees and commissions rose ¥2.6 billion, to¥11.3 billion. Other operating income fell ¥3.5 billion, tointerests came to ¥186.7 billion, up ¥33.0 billion from the¥9.5 billion, while other income increased ¥40.8 billion, toprevious fiscal year.

¥122.4 billion.

After posting current income taxes of ¥51.7 billion,

Total expenses were ¥173.4 billion, down ¥12.5 billion.

¥0.2 billion more than in the previous fiscal year, deferredThis amount included interest expenses of ¥106.9 billion,

income taxes amounted to ¥5.8 billion, down ¥1.5 billion,

down ¥10.9 billion, expenses on fees and commissions

and net income attributable to non-controlling interestsof ¥0.7 billion, increasing ¥85 million, other operating

decreased ¥1.8 billion, to ¥0.1 billion. As a result, consoli-

expenses of ¥7.4 billion, dropping ¥3.2 billion, and general

dated net income attributable to owners of the parent

and administrative expenses of ¥46.0 billion, rising ¥2.4

came to ¥128.9 billion, ¥36.1 billion more than in the previ-

billion, as well as other expenses of ¥12.1 billion, decreas-ous fiscal year.

ing ¥0.9 billion.

26

Consequently, income before income taxes and minority

Annual Report & CSR Report 2016

Overview of Operations in Fiscal 2015

Consolidated Assets, Liabilities and Equity

2015, a resolution was passed to distribute dividends on

As of March 31, 2016, total assets amounted to ¥15,907.1

common stock. This dividend had a record date of Marchbillion, down ¥453.4 billion from one year earlier. Of that31, 2015, and a total amount of ¥22.5 billion, for a dividend

amount, loans were ¥12,952.5 billion, down ¥308.7 billion.

per share of ¥516, resulting in a payout ratio of 24.99%.

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

The unrealized gain on available-for-sale and othertion of crisis countermeasure loans that DBJ had extended

securities that DBJ holds independently, as well as sharesin the past.

in listed companies that DBJ owns through funds, came to¥55.0 billion, down ¥30.7 billion compared with the previ-

Total liabilities as of March 31, 2016, stood at ¥13,022.9
billion, ¥590.3 billion less than a year earlier. Of thisous fiscal year. This amount includes valuation gains onamount, debentures and corporate bonds came to ¥4,727.9

shares in listed companies.

billion, an increase of ¥158.6 billion, and borrowed money

Status of Risk-Monitored Loansin borrowed money mainly reflects the decline in loans,

DBJ is not subject to the provisions of the Banking Act

including the collection of crisis countermeasure loans and,or the Act on Emergency Measures for the Revitalizationaccordingly, lower borrowings (two-step loans) from Japanof Financial Functions (Act No. 132 of 1998), but it car-Finance Corporation.

ries out independent assessments of liability classes andAbout DBJ

was ¥7,892.1 billion, down ¥706.0 billion. The decrease

asset categories based on the Financial Services Agency’s

Also, acceptances and guarantees came to ¥180.1 bil-

Financial Inspection Manual. According to these results, onlion, up ¥12.6 billion.
Total equity at the end of the period was ¥2,884.2 bil-a consolidated basis, DBJ’s holdings of disclosed debt (risk-

lion, up ¥136.9 billion from one year earlier. The primarymonitored loans) as stipulated by the Banking Act totaled

reason for this rise was higher net income attributable to¥82.4 billion (down ¥19.8 billion from one year earlier),

owners of the parent.

accounting for 0.64% of total loans, 0.13 percentage point
less than at the end of the previous fiscal year.

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

Profit and Loss for Past Five Years (Consolidated)(Billions of yen)

For the Year
Ended
March 31,2012

For the Year
Ended
March 31,2013

For the Year
Ended
March 31,2014

For the Year
Ended
March 31,2015

For the Year
Ended
March 31,2016

Gross operating profit

133.6

128.5

145.3

128.1

120.9

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

95.7

74.7

97.8

84.5

74.9

Income before income
taxes and minority
interests

110.2

116.2

166.0

153.6

186.7

Total income taxes(31.9)(44.5)(40.8)(58.9)(57.6)Net income attributable toowners of the parent

77.3

71.3

124.3

92.7

128.9

Total dividend amount*

37.3

35.2

30.8

22.5

29.2

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

Annual Report & CSR Report 201627

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

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

December 2008
S$1,000,000
Investment and loan support andadvisory services
Address:
138 Market Street, #15-02 CapitaGreen,
Singapore 048946
Chairman:Kazunari Sasaki
CEO & Managing Director: Katsushi Kitajo

DBJ Europe Limited
Established:
Capital:Business:
Address:
Executive Chairman:
CEO:

November 2009
€7,500,000
Investment and loan support andadvisory services
Level 20, 125 Old Broad Street, London
EC2N 1AR, U.K.
Haruhisa Kawashita
Mitsutaka Ozaki

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

28

September 2011
¥60 million
Investment and loan support andadvisory services

Annual Report & CSR Report 2016

Address:

Chairman & General
Manager:

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

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

Initiatives toward the Establishment ofInternational Long-term Financial Markets
In line with the increased globalization of economies andfinance, DBJ considers the establishment of efficient and stable international long-term financial markets to be important.
Based on this conviction, DBJ joined the Long-Term Investors
Club (LTIC), an international platform for financial institutions
that conduct long-term financing in various countries, andthe Long-Term Infrastructure Investors Association (LTIIA).
Established in 2009, LTIC is a global platform for cooperation among financial institutions in charge of long-term
investment in various countries, reflecting change in thefinancial environment after the Global Financial Crisis. The
LTIC promotes functions such as information sharing in
long-term financing, academic study and research, and coinvestment. Since 2014, DBJ has actively supported joint projects between the LTIC and the Organisation for Economic
Co-operation and Development.
The LTIIA is a platform established in 2014 as an institution for offering recommendations on practical issues in relation to promoting infrastructure investment. DBJ participatesin this organization as a founding member. A number ofglobally noteworthy infrastructure investors are also taking
part, thereby encouraging practical measures for the promotion of infrastructure investment.

Overview of Operations in Fiscal 2015

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

Japan Economic Research Institute Inc.

Outline of Japan Economic Research Institute Inc.
Established:
December 1989
Capital:¥480 million
Business:
Research, consulting and advisory services
Address:
Chiyoda-ku, Tokyo
President:
Tsuyoshi Inoue

DBJ converted Hitachi Capital Securities Co., Ltd., to a subsidiary in August 2011 in a move to augment the financing
methods available to it to meet increasingly diverse clientneeds. Given DBJ’s increasing involvement with the company,
in October 2011 the company’s name was changed to DBJ
Securities Co., Ltd and conversion to a wholly owned subsidiary in September 2014.
DBJ Securities provides a securities function to complement the DBJ Group’s investment and loan functions,
thereby increasing the number of financial solutions that
the Group can offer its clients.

About DBJ

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

DBJ Securities Co., Ltd.

Outline of DBJ Securities Co., Ltd.
Established:
October 1998
Capital:¥500 million
Business:
Securities business
Address:
Chiyoda-ku, Tokyo
President & CEO:
Hiroshi Sakamaki

DBJ Asset Management Co., Ltd.
DBJ Capital Co., Ltd.
DBJ Capital Co., Ltd. has invested in venture enterprisesthat can be expected to achieve high rates of growth, in aneffort to support corporate growth and the creation of new
industries in Japan. In addition to investing, DBJ Capital
employs DBJ’s and various other networks to provide support on the financing front and arrange solutions to meetthe needs of investee enterprises.
Outline of DBJ Capital Co., Ltd.
Established:
October 2005
(Commenced operations on June 30, 2010)
Capital:¥99.24 million
Business:
Investment in venture enterprises
Address:
Chiyoda-ku, Tokyo
President & CEO:Fumiyuki Kashima

DBJ Investment Advisory Co., Ltd. (DBJ-IA)
DBJ-IA was established to promote added-value creative
equity financing (the “Value for Growth” Investment
Program) to support growth strategies from a medium- tolong-term standpoint emphasizing relationships of mutual
trust with entities receiving investment funds.
DBJ-IA aims to contribute to such entities’ growth anddevelopment by helping them achieve their growth targets
in terms of M&A, capital and overseas strategies by providing funds and utilizing DBJ’s international and domestic
networks as well as assigning human resources.
Outline of DBJ Investment Advisory Co., Ltd.
Established:
December 2009
Capital:¥68 million
Business:
Operations related to DBJ’s value-added
equity investment
Address:
Chiyoda-ku, Tokyo
President & CEO:
Hiroshi Murakami

DBJ Asset Management Co., Ltd., a wholly owned asset
management subsidiary of DBJ, undertakes discretionary
investment management services and advisory services forreal estate fund investments, private equity fund investments
and other alternative investments. The company draws on
the comprehensive financial expertise and public-mindednessof the DBJ Group to provide excellent fund management
opportunities to investors and also strives to meet the diverse
needs of clients for asset management and thereby contribute to sustained growth of the Japanese economy and astronger platform for such growth. Note that in August 2014,
DBJ Asset Management stated its acceptance of Principles
for Responsible Institutional Investors (Japan’s version of the
Stewardship Code).
Outline of DBJ Asset Management Co., Ltd.
Established:
November 2006
Capital:¥100 million
Business:
Management of real estate fund, private
equity fund and other fund investments
Address:
Chiyoda-ku, Tokyo
President & CEO:
Hiroshi Hori

Value Management Institute, Inc.
In April 2013, DBJ converted Value Management Institute, Inc.,
to a wholly owned subsidiary. This company plays researchand consulting roles that target both the private and public
sectors in the DBJ Group. The company provides the solutions
to resolve the problems clients face through independent
knowledge concerning specialization and competitiveness.
Outline of Value Management Institute, Inc.
Established:
June 1993
Capital:¥75 million
Business:
Research, consulting and advisory services
Address:
Chiyoda-ku, Tokyo
President:
Tsuyoshi Inoue
Annual Report & CSR Report 201629

Topics

2015
May

Jun.

Aug.

Oct.

Dec.

 Enactment of the Act for Partial Amendment of the Development Bank of Japan Inc. Act (See pages 22-23.)
 Establishment of the Social Value and Capital Formation M&A Awards
 Receipt of one of the ADFIAP Awards 2015, for DBJ Green Bonds at the ADFIAP annual meeting Holding of the fourth DBJ Women Entrepreneurs New Business Plan Competition award ceremony
 Establishment of position of Chief Investment Officer
 Establishment of Growth Co-creation Facility (See pages 36 and 74.)
 Start of Special Investment Operations (See pages 22-23, 36, 50-51, 73, 74, 80 and 88.)

 Announcement of Capital Investment Planning Survey (nationwide and by region) results (See page 61.) Issuance of DBJ sustainability bonds (See pages 41 and 95.)

 Announcement of Fiscal 2015 Capital Investment Planning Survey follow-up: “Future Investment Proposals:
Shared Goals of Government and Private Sector”
 Participation in and presentation at Japan’s largest environmental exhibition, Eco-Products 2015 (15th consecutiveyear) (See page 70.)

2016
Mar.

Apr.

May

Jun.

30

 Start of handling Beta Version Support Program Jointly opened “Regional Revitalization and Finance Course,” a master’s program in public policy, with National
Graduate Institute for Policy Studies (GRIPS) (See page 59.)
 Establishment of Kumamoto Recovery Office within Kyushu Branch as step toward restoration and reconstructionin the areas affected by the Kumamoto earthquakes in April 2016 (See pages 21, 53 and 124.)

 Toru Hashimoto, former president (now advisor), received the ADFIAP Distinguished Person Award in theindividual category at ADFIAP Awards 2016, which took place at the annual meeting of the Association of
Development Financing Institution in Asia and the Pacific (See page 71.)
 Holding of ceremony to open the Second Social Value and Capital Formation M&A Awards

 Holding of the fifth DBJ Women Entrepreneurs New Business Plan Competition award ceremony (See page 48.)

Annual Report & CSR Report 2016

DBJ’s Businesses
To resolve the various issues that the economy andsociety face and become its clients’ most supportive
financial institution, DBJ supplies long-term funds
and provides risk capital, supports the formationof business and provision of information and takesa host of other approaches to ensure the smooth
operation of businesses and projects serving a
constructive purpose. In recent years, collaboratingwith other financial institutions, businesses andinvestors, we have worked diligently to develop
financial and capital markets that allow funds tobe raised more efficiently by applying our function
as a financial institution with a trifecta of financial
products and services—loans, investments andadvisory services.

Integrated Investment and Loan Services . . . 32
Investments and Loans . . . . . . . . . . . . . . . . . . 34
Consulting/Advisory Services . . . . . . . . . . . . . . 46
Special Investment Operations . . . . . . . . . . . 50
Crisis Response Operations . . . . . . . . . . . . . . 52
Initiatives Related to theGreat East Japan Earthquake . . . . . . . . . . . . . 55
Regional Revitalization Initiatives . . . . . . . . . 58
Making Use of Information Functions . . . . . 60

Annua
Annual
ual
u
a Re
Repor
Reportpo t & CS
por
CSR
RR
Reportep
epo
eport
p rt 201
2016
01
16

31
31

Integrated Investment and Loan Services

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

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

Equityfinancing

Investment

Hybrid Financing

Provision of mezzanineand equity financing

Interest Rate
Subsidy
Programs Asset-Based
Lending
LBOs/MBOs

Integrated Investment and Loan Services
M&A Advisory
Services

Consulting/Advisory
Services
Arrangement of structured

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

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

Support Center
for Technology
Management

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

32

Annual Report & CSR Report 2016

Consulting/
Advisory Services

Investment

DBJ provides financing tomeet the diverse
needs of its clients.

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

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

 Provides medium- and long-term

 We provide investment to assist

 Provides M&A advisory services

loans

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

 Makes proposals that apply its

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

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

M&A Advisory and Consulting Agreements(Non-consolidated) (Cumulative)(Billions of yen)
4,000(Billions of yen)
320

(Agreements)
400

 Offers unique high-value-added

financial services (DBJ Environmentally Rated Loan Program andother loans based on evaluations
and certifications) Responds to diverse needs by offer-

DBJ’s Businesses

Loansexpertise in industry research andability to develop new financial
technologies
 Arranges structured and othertypes of financing

ing non-recourse loans and develops and provides financing offeringcollateral and structural flexibility(debtor-in-possession financing,
inventory collateral, intellectual
property rights as collateral, etc.)

370
281.4

347
318

3,000

2,861.3

2,805.1240

300

2,262.7
166.3
2,000

160

1,000

80

138.2

100

0

0

200

0

Year ended
Year ended
Year ended
March 31, 2014 March 31, 2015 March 31, 2016

Year ended
Year ended
Year ended
March 31, 2014 March 31, 2015 March 31, 2016

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

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

March 31,2014

March 31,2015

March 31,2016

Annual Report & CSR Report 201633

Investments and Loans
DBJ provides medium- and long-term loans, meeting a host of client needs. In addition to senior loans—traditional corporate loans—we offer a range of other loans that employ advanced financial methods, such as project
financing, non-recourse loans and other types of structured financing, meeting diversified needs for funding.
We also work to resolve client issues involving business expansion and support strategies and the formationof financial infrastructure. We achieve these goals by supporting the creation of funds, as well as mezzanine,
equity and other financing methods, providing appropriate risk capital based on a long-term perspective.
The case study section on pages 72 through 91 introduces DBJ’s “CSR through Investment, Loan and Other
Businesses.”

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

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

comprehensive due diligence of the businesses of its client

DBJ can offer, including interest rates and loan maturities.

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

Financing Conditions• Loan Amounts• Interest Rates

Loan amounts are determined through consultation

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

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

rate subsidy programs.

our client enterprises according to factors such as• Collateral/Guarantees

repayment plans, business profitability and theLoans may require collateral and/or guarantees,

expected life of equipment and/or facilities. Gracedepending on due diligence results.

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

Medium- to Long-Term Loans
By leveraging the long-term financing expertise it cultivatedbased on the profitability of the business that requires fund-as a policy-based financial institution, DBJ provides loans

ing. DBJ also works to meet the varied needs of our clients,

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

such as by introducing grace periods.

needs. Medium- to long-term repayment may be proposed

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

34

Annual Report & CSR Report 2016

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

We provide information generated
through our various studies andresearch activities, as well as information from overseas, throughour reports and other publications.

Integrated Investment and Loan Services

Mezzanine Financing
Mezzanine financing is an intermediate financing method

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

in terms of risk.

Such financing also prevents dilution of the voting rights ofexisting shareholders. Redemption and exit methods can be

Although mezzanine financing is comparatively risky

set to be flexible.

because its payment is subordinated to senior loans, it

From a long-term perspective, DBJ helps clients resolve

plays an important role in markets such as the UnitedStates which have a broad range of investors with diverse

their balance sheets issues through total financing solutions

investment appetites. One of a diverse range of fundingthat range from structuring and arrangement to providing

methods, mezzanine financing helps to ensure economicrisk capital.
DBJ’s Businesses

rationality by setting adequate interest rate and dividendlevels to correspond to the investment risk. Depending on
clients’ financing plans and capital policies, flexible mezzanine financing can be set. In recent years, demand formezzanine financing has grown in association with business

Types of Mezzanine Financing• Subordinated loans, subordinated bonds• Preferred shares, classified shares• Hybrid financing, etc.

acquisitions, spinoffs of subsidiaries and business units,business succession and listed companies that are delisting.

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

After capital expansion

Objective
Debt

Debt
AssetsAssetsPreferred shares

CapitalCapital

A company in a state of undercapitalization,
resulting from posting extraordinary losses
caused by past restructuring, could resolve
the issue by issuing preferred stock.

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

Recipient company

Debt

CapitalTargetbusiness

Acquisition of
non-core business
(MBO)

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

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

New company (recipient)Objective
Debt

Note: Successor acquiresNcommon stock

AssetsCapitalDebt

Business succession

AssetsPreferred shares

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

CapitalAnnual Report & CSR Report 201635

Equity
Along with heightened need for growth through such initia-

clients’ issues, helping them maximize their long-term corpo-

tives as new business creation, business restructuring, M&A

rate value. In fiscal 2010, DBJ initiated the Value for Growth

activity and responses to globalization comes demand forInvestment Program to enhance added-value creative equity

stronger corporate governance. Consequently, equity has

investment supporting the growth strategies of enterprises inbecome increasingly important to corporate management.

its client portfolio. This program aims to realize the corporate

Through equity investment, DBJ helps clients address thegrowth strategies (M&A, capital and overseas) of the Japaneseissues they face and supports their long-term development.

enterprises receiving equity investment and thereby supports

After making equity investments, DBJ draws upon its net-

improvement in corporate value over the medium to long term.
Through equity investment, DBJ shares in its clients’ growthworks and strengths in information, industry research andfinancing technologies to provide total solutions fine-tuned to
Client Needs• Initiatives targeting new
business creation, businessrestructuring and M&A
activity• Response to globalization• Meeting corporate
governance requests

and successes and contributes to a more prosperous future.

DBJ’s Solutions

Results• Injection of growth capital
Inject capital into individual enterprises, specialpurpose companies, various funds, etc.
• Globalization measures
Support Japanese enterprises’ efforts to expand
overseas; help non-Japanese enterprises toexpand in Japan’s markets• Post-investment provision of solutions
Provide total solutions involving DBJ’s networks
and strengths in information, industry research
and financing technologies• Resolve clients’ issues• Help clients grow over thelong term and maximize
corporate value

Providing Growth Capital
As DBJ is expected to cultivate providers of growth capi-

businesses, financial institutions and investors.

tal for Japan and accelerate the creation of markets for
growth capital*, in addition to focusing on such statutory
operations as Special Investment Operations, we havetaken the independent initiative of establishing the Growth
Co-creation Facility. This facility promotes shared risk-taking
in a wide range of growth investments among Japanese*According to the Japanese government’s Study Panel Concerning
the Promotion of Expanding Growth Funding, for the foreseeable
future DBJ is expected to serve a pump-priming function to attract
private-sector investment by cultivating new capital providers,markets and investors, fostering the development of an investment
cycle led by the private sector.

DBJ’s Provision of Risk Capital
Promoting shared risk-taking among Japanese businesses, financial institutions and investors

Statutory operations◆ Special Investment Operations▶ Effective use of management resources tocultivate new business▶ New business development by forging links

with other sectors
Also, with regard to growth investment:● Initiatives that help to reinforce corporate
competitiveness● Initiatives that contribute to regional
revitalization● Initiatives that contribute to the supply of
capital by financial and other institutions
Provision of risk capital for growthinvestment initiatives that arecommencing

Independent initiatives◆ Growth Co-creation Facility▶ Forward-looking initiatives to prepare for

future growth investment
Capitalization strategy▶ Initiatives for accumulating investor
capital● Formation of collaborative funds withfinancial institutions● Asset liquidation●

Provision of risk capital as part ofinitiatives for future growth investment

Cultivation of providers of Japanese growth capital,creation of markets for growth capital

36

Annual Report & CSR Report 2016

Further acceleration

DBJ provisioning of
seamlessly integrated
investment and loan
services, focused inparticular on the provisionof risk capital■ Support for efforts that
resolve issues from along-term perspective■

Integrated Investment and Loan Services

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

 Object Financing

these beginnings, our accumulated expertise in this area,

DBJ helps clients determine optimal financing methods

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

project financing, including private finance initiatives (PFIs).

airplanes and railcars, as well as supporting their efforts

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

characteristics to meet Japanese enterprises’ increasingly

DBJ’s Businessespany) in October 2008, DBJ has maximized its unique Securitization

diverse and global needs. We provide all-around support by

Through finance methods such as liquidation and securi-offering project finance, PFIs, object finance, securitization

tization of receivables focusing on their future cash flows,

and various other financial products and optimal financing

and through whole business securitization in which debts

methods (senior loans, mezzanine loans, equity, etc.) to ourare repaid through future cash flows generated by a par-clients both in Japan and overseas.

ticular business, DBJ supports its clients’ finance strategies and helps optimize their funding.

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

the energy and infrastructure sectors find project financ-Since the Japanese government’s enactment of the PFI

ing—primarily with regard to large-scale projects—that

Act* in 1999, DBJ has taken advantage of its strong rela-they can repay through project cash flow, without relying

tions with public-sector entities to accumulate expertiseon specific corporate creditworthiness or collateral value.

and become an industry leader in such schemes, provid-

The finance solutions we provide underpin these enter-

ing PFI support to numerous clients. Expectations for PFIs

prises’ efforts to raise funds and control risks. In recent

are growing, and amendment to the PFI Act in recent

years, in addition to project financing arrangements andyears marked the introduction of concession-type PFIs. In

financing services related to domestic renewable energy

this environment, we provide numerous types of support

power generating facilities and new power generating

to help clients in Japan and overseas to resolve the issues

facilities set up by independent power producers parallel-they face.

ing deregulation of the electric power business, DBJ has
been proactive in its financing of energy and infrastruc-*Act on Promotion of Private Finance Initiative

ture projects overseas.
Project Financing Example: Electric Power Generation Project
Electric power supply
contract (15 years)

Sponsor A

FundingSponsor B
Banking Syndicate

Electric powercompanies andpower producers
and suppliersElectric Power
Generation Company
Special-Purpose
Company (SPC)

Financing

Trading companies
Fuel (coal, gas)
supply contract

Construction contract

Operational repair and maintenance contract

Joint ventures (construction companies,
electrical equipment manufacturers)

Operations and maintenance service
providersAnnual Report & CSR Report 201637

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

Our track record, expertise and networks in this arena

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

solutions.

beginnings and continue striving to invigorate this market.
Liquidization Financing

Development Financing

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

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

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

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

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

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

parties realize profits

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

require that funds be raised to acquire an operation. For

businesses using borrowed money. If the enterprise or busi-

this reason, an MBO may take the form of an LBO. In theness that is being acquired generates fixed cash flows, theevent that borrowed funds alone are insufficient, the man-acquirer (typically, the sponsor providing equity) can pur-agement team may look to and partner up with a buyoutchase the business or enterprise for relatively little cash. For

fund for equity as a joint sponsor. In recent years, MBOs

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

have been used more frequently by listed companies thatthat multiplies the return on the purchaser’s funds. As LBOs

are delisting and by owner-operated enterprises.

typically involve large amounts of borrowings, the underlying business needs to generate steady cash flows.
Management buyouts (MBOs) involve the acquisition bydetails, arranges investment and mezzanine financing, andworks out joint equity financing with sponsors. The ability

the existing corporate management of a company’s shares

to handle this range of activities allows DBJ to offer

or operations. As the existing management team typically

LBO/MBO solutions.

has a limited amount of cash available, MBOs generally38

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

Annual Report & CSR Report 2016

Integrated Investment and Loan Services

Syndicated Loans
This type of loan involves multiple financial institutions

expeditiously. The number of financial institutions involvedthat are combined into a syndicate under a lead-managing

in the transaction can be increased by the arranger’s

financial institution (an arranger). The agreement withappointment, and clarity of borrowing terms is ensured.

the client is based on a single contractual document, andAs part of its services, DBJ actively structures loans,financing is provided cooperatively according to a single set

centering on term loans. DBJ invites a wide range of finan-of terms. There are a number of clear advantages on the cli-cial institutions to participate, making use of its neutral

ent side in this type of loan. Having a single arranger in thestandpoint. Structuring loans to include some items frompoint negotiating position with financial institutions reduces

its own lending menu, such as the DBJ Environmentally
Rated Loan Program, helps raise the value-added level oftions through that agent. Large amounts can be raised

the services it provides.

Arranger

Financial
Institution

Financial
Institution

Financial
Institution

Financial
Institution

Financial
Institution

MarketArrangement

Appointment

ClientFinancial
Institution

DBJ’s Businesses

the burden for client, as does conducting settlement opera-

Asset-Based Lending
Asset-based lending (ABL) is a method of financing thatAs a front-runner, DBJ has gained abundant experi-

uses as collateral an enterprise’s liquid assets, such asence in corporate revitalization financing. In order to bothaggregate movable property, inventory collateral andachieve the goals of supporting enterprises and secureaccounts receivable. Clients can take advantage of thislender’s claims, DBJ has developed and put into use ABL

method to diversify financing methods and carry out expe-

schemes. Going forward, we plan to apply this expertise

ditious fund-raising, debt restructuring and the sale of

to develop ABL schemes that provide enterprises withsurplus inventories, as well as to enhance the robustness ofgrowth capital.

internal control systems.

ABL

ClientInventory
Sale

Accounts Receivable

Cash and Equivalents

Collateral Transfer(Buyer)Third-Party
Borrower

Liquidate Inventory
Sell inventories, primarily throughexisting wholesale routes

Collateral Transfer
PledgeDBJ
Valuation(Inventory) Provisional valuation of
inventory, taking into account suchfactors as the gross margin calculated
according to past sales performance(Accounts Receivable) Valuation basedon the diversity and reliability of
individual receivables
Management
Monthly valuation of inventories andaccounts receivable

Annual Report & CSR Report 2016

39

Debtor-in-Possession Financing
Non-performing loans emerged as a major problem belea-

Later-stage DIP financing provides the funding that isguering the Japanese financial system in the late 1990s.

needed to implement restructuring plans. By providing

Against this backdrop, DBJ has developed a host of tools to

medium- to long-term financing to fund capital investment

help underperforming enterprises sustain or develop profit-

under different conditions than those for revitalization plansable areas of operations. One method of which DBJ is a pro-that are being implemented, an organization that is underponent is early-stage debtor-in-possession (DIP) financing.

rehabilitation can refinance its debt, providing exit financing

This temporary financing method provides working capital

more quickly than is possible via the legal liquidation process.

that allows a company in bankruptcy to continue operations

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

during the period between a request for the application ofSince that time, DBJ has worked to broaden the range

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

employing it in response to varied needs.

Capital requirements

Bankruptcy( priority obligation)
Common debts

Working
capitalFunding for
restructuring

Funding forequipment andother items

Exitfinancing

DIP financing
Proceduralapplication

Decision to start

Early stage

40

Annual Report & CSR Report 2016

Approval of plan

Conclusion of plan

Later stage

Integrated Investment and Loan Services

Certification and Unique Programs
DBJ Environmentally Rated Loan Program

Program logo

non-financial information as elements of corporate value.
Also, employing the experience we gained through the
DBJ Environmentally Rated Loan Program, in fiscal 2009 webegan offering a service to help regional banks develop evaluation tools to use in performing their own environmental
ratings. Through such initiatives, we aim to augment environmental financing and encourage its proliferation in Japan.
In October 2015, DBJ issued Japan’s first sustainability
bond, with funds raised through the bond to be applied to
the DBJ Environmentally Rated Loan Program and other lending initiatives.

DBJ’s Businesses

Beginning with the antipollution measures implemented in
the late 1960s and early 1970s, DBJ has provided more than
¥3 trillion in investments and loans for environmental measures over the past 40 years.
In fiscal 2004, DBJ began its DBJ Environmentally Rated
Loan Program based on knowledge cultivated for nearlyfour decades. DBJ developed a screening (rating) system thatscores enterprises on the level of their environmental management and then sets financial conditions based on these evaluations. This was the world’s first incorporation of environmental ratings in financing menus. In fiscal 2014, we substantiallyrevised the evaluation items based on our 10-year track recordin these evaluations and a growing interest in incorporating

Features• Varying interest rate levels based on environmental ratings• Fair and neutral evaluation based on global environmental trends
Based on information exchanges with the United Nations
Environment Programme Finance Initiative (UNEP FI) andthe Ministry of the Environment, DBJ developed a screening
sheet containing approximately 120 questions.
DBJ convenes an Environmental Ratings Advisory
Committee after seeking advice from outside experts;
screening questions are renewed annually.
• Ratings determined through interviews with clients• Applicability to a wide range of clients

DBJ Enterprise Disaster Resilience Rated Loan Program
DBJ’s financing track record includes schemes supporting
disaster-resilient city planning and the recovery of disasterstricken areas through anti-disaster measures and financing
related to disaster recovery. In addition, from the standpointof business continuity management (BCM) DBJ assists clients’total enterprise risk management efforts, including the formulation of business continuity plans, the earthquake-proofing of facilities and the preparation of IT backup systems.
At the same time, DBJ offers financing methods to provide
restoration funds needed in time of disaster. DBJ Enterprise
Disaster Resilience Rated Loan Program is employed in evaluations to identify enterprises engaged in high-level initiatives
and anti-disaster and business continuity measures and provide them with preferential interest rate financing as a reward
for their excellent disaster preparedness. Financing conditions
are set on the basis of the evaluations. In this manner, we
introduced the world’s first BCM-based financing method.
We revised our evaluation contents substantially in fis-cal 2011 as a result of the Great East Japan Earthquake.
Enterprise business continuity activities are assessed comprehensively, including in terms of strategies for resiliency andsystems for recovering in the event a crisis materializes.
The DBJ Disaster Preparedness Ratings since fiscal 2006
both (1) are expressions of evaluation results and (2) promotebroad awareness of the concept of BCM. Aiming to realize
the goal of a “resilient Japanese society through BCM ratings,” in fiscal 2012 we changed the name of these ratings to
the “DBJ Enterprise Disaster Resilience Rated Loan Program.”
We will continue to promote enterprise risk management
and business continuity through the DBJ Enterprise Disaster
Resilience Rated Loan Program.
Features• Varying interest rate levels based on BCM ratings• Fair and neutral evaluation based on global crisis management trends
Based on information exchanges with the Japanese
government’s Cabinet Office, the World Economic Forum, theUN World Conference on Disaster Risk Reduction, NPOs andother experts, DBJ developed a screening sheet containing
approximately 100 questions.
DBJ convenes a BCM Rating Advisory Committee after seeking advice
from outside experts; screening questions are renewed annually.
• Ratings determined through interviews with clients• Applicability to a wide range of clients

Program logo
Annual Report & CSR Report 2016

41

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

mote the concept of health management. DBJ has applied to

introduced a special health checkup system, and in December

take on Ministry of Economy, Trade and Industry (METI) survey

2015 it will become obligatory for businesses to evaluate

operations. As part of this effort, we use an evaluation system

employee stress levels. This is one example of the growingthat we have developed to assess enterprises and select thoseimportance being placed on maintaining the health of corpo-that are superior in terms of their consideration for employee

rate employees. As Japan’s working population is expected

health and offer them financing terms in line with their assess-to shrink, achieving higher levels of human productivity

ment levels. DBJ is the first institution in the world to offer a

has become an issue of growing importance. With thesefinancing menu incorporating employee health managementsocial conditions as a backdrop, the DBJ Employees’ Healthratings.

Management Rated Loan Program aims to popularize and pro-

Program logo

Features• Varying interest rate levels based on Employee HealthManagement Ratings• Formation of the Health Management Consortium,
consisting of institutions focused on preventive healthcare
and development of screening sheets to promote the HealthManagement Project as an ancillary activity for METI
• Ratings determined through interviews with clients• Applicability to a wide range of clients

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

consciousness, disaster prevention and business continuity

ing attention for the role they play as bases for safetymeasures), offering them a financing menu with financ-and security in regional societies. In May 2012, we intro-

ing terms set according to their assessments. Through thisduced the DBJ Visionary Hospital Program to support themeasure, DBJ supports hospitals’ efforts to continue pro-advancement of medical functions, as well as to encour-viding good healthcare in regional societies.

age proactive environmental consciousness, disasterprevention and business continuity measures. For institutions that have had their hospital functions certified by
the Japan Council for Quality Health Care, DBJ uses theenvironmental assessment and BCM evaluation system it
developed to certify hospitals as DBJ Visionary Hospitals(namely, those that have in place superior environmental

Evaluation of a
Medical Institution’s
Hospital Functions

Features• Interest rate levels that vary based on the DBJ
Environmentally Rated Loan Program and DBJ Enterprise
Disaster Resilience Rated Loan Program• Certified hospital’s environmentally conscious initiatives anddisaster-preparedness measures that are expected to create
broad appeal for regional societies

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

Certified as a
DBJ
DBJ Visionary Hospital
Environmental
Ratings
DBJ Enterprise

Evaluation of medical
institution’s CSR
responses

42

Annual Report & CSR Report 2016

Disaster
Resilience
Ratings

Financial screening
by DBJ
Evaluation of medical
institution’s finances andmanagement

Integrated Investment and Loan Services

DBJ Green Building Certification
Applying the expertise and networks accumulated overand logistics, in November 2014 we added an edition formany years of real estate financing, DBJ inaugurated DBJ

commercial facilities, followed by the January 2015 addition

Green Building Certification in fiscal 2011. This certifica-of a residence edition. These changes increased to four thetion program provides investment and loan support for realtype of properties eligible for certification. Going forward,

estate development, refurbishment and other activities of

we aim to foster a correlation between a building’s certifi-clients that own or manage real estate that evinces envi-

cation ratings and its economic value, creating a market inronmental and societal considerations (green buildings).

which green buildings are valued appropriately.

Through this program for evaluating and certifying thesustainability of real estate, we contribute to the broadbusinesses.
In March 2013, we commenced the joint operation ofthis certification system with Japan Real Estate Institute

DBJ’s Businesses

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

Features• Takes into account initiatives requested by a variety of
stakeholders in addition to environmental performance• Provides five levels of certification based on scoring results• Allows a lineup based on facility upgrades, operational
improvements and various other proactive client measures(JREI). In addition to existing editions for office buildings

Overview of the DBJ Green Building Certification
Evaluation
Items

Real estate evincing environmental and societal considerations, evaluated in terms of the following three characteristics

Amenity, Diversity &Risk Management

Ecology
Reducing the burden buildings place on
the environmenttBuilding’s energy-saving performance
initiatives toward the conservation of
resourcestProduction and use of renewableenergy, etc.

+

Diversity in supply of comfort/Safety
and securitytComfortable facility specifications;equipment that is convenient forpeople who use the buildingtBuilding disaster performance,
security, etc.

Community & Partnership+

Relationships with stakeholders andsurrounding communitytRelationships with the surrounding
environment and regiontCommunication between owners,
stakeholders, etc.

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

Properties with thehighest level
environmental & social
awareness

Properties withexceptionally highenvironmental & social
awareness

Properties withexcellent environmental& social awareness

Properties with highenvironmental & social
awareness

Properties with
sufficientenvironmental & social
awareness

Annual Report & CSR Report 201643

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

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

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

implement diverse regional development schemes that capi-of “enterprises that contribute to the region.”*2 By further

talize on their respective strengths, competitive advantages

bolstering activities on the financial and information fronts

and latent potential.

for enterprises that contribute to their regions, DBJ is help-

In 2010, DBJ arranged a unique initiative, the Regional
Areas Genki*1 Program, to support regional growth thating to foster a virtuous circle of genki between regions andenterprises.

capitalizes on each region’s respective strengths and potential from information and funding aspects. In addition,
each DBJ branch office focuses on its region’s distinctive
fields and businesses, based on its industrial structure, andpartners with regional financial institutions to offer financial
support.

*1 The Japanese word genki implies a positive spirit and good health.
*2 Enterprises that contribute to the region: Enterprises that create
employment opportunities and utilize the region’s personnel
and resources, effectively employing people, physical goods andmoney for the good of the region, including increasing its productivity.

 Regional Areas Genki Program
Niigata Area
Promotion of value-added
strategies in food andmanufacturing
Promotion of safety andsecurity in regional
development

Q

Hokkaido Area

Tohoku Area

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

Q

“Creation of new industry in
Tohoku” programQ

Q

Kanto-Koshin Area

QQ

Hokuriku Area
Hospitable, technological andphysical support for the
Hokuriku area

Q

Q

Q

Chugoku Area
“Three arrows” to invigorate
the Chugoku area

QQ

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

New market-creation
businesses that fully leverage
population/industry
concentrations
Construction and renovationof infrastructure in responseto regional conditions
Businesses in manufacturing
regions that boost
competitiveness in response
to globalization
Initiatives that contribute tohigher labor productivity andan improved labor
participation rateQ

Tokai Area
Q

Q

Q

Q

Q

Program to support thecreation of next-generationindustries
Program that supports efforts
to make the Tokai region
more appealing
Program to support measures
to prepare for a massive
earthquake in the Nankai
TroughShikoku Area
QQMinami-Kyushu Area
Project to promote
Minami-Kyushu as anadvanced region in food,health and environment/energyQ44

Annual Report & CSR Report 2016

Q

Program for evolving Shikoku
enterprises at the top of theirnichesProgram that supports efforts
to reinforce industrial
clusters
Program to support measures
to prepare for a massive
earthquake in the Nankai
TroughKansai Area
Q

Q

Q

Leading-edge manufacturingindustries
Program to support theinvigoration of commerceand distribution
Program that supports efforts
to help the tourism industry
thriveIntegrated Investment and Loan Services

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

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

promote specific industries. Alternatively, they may target

thereby reducing the interest burden on the borrower.

operators of specific businesses. Under these programs, theInterest Rate Subsidy Program Menu
prevent global warming, and target enterprises involvedin businesses working toward the reduction of energyderived CO2 emissions, thus qualifying for the DBJ
Environmentally Rated Loan Program, and that havepledged to improve unit CO2 emissions or reduce overall
CO2 emissions within a certain period of time.
• Interest rate subsidy programs to fund domestic
oil and natural gas development (continental shelfinterest rate subsidy)
These interest rate subsidy programs can be used by enterprises
involved in oil or natural gas development businesses in Japan.
• Interest rate subsidy programs to fund fixed investment for using natural gas and other resources (natural gas and other resources interest rate subsidy)
These interest rate subsidy programs can be used byenterprises that are making fixed investment involving
the use of natural gas and other resources.
• Interest rate subsidy programs to fund specific andother facilities related to the rationalization of energy
use and to promote the introduction of special equipment (energy conservation interest rate subsidy)
These interest rate subsidy programs can be used by enterprises that are promoting the conservation of energy by acertain amount.
• Interest rate subsidy programs to fund effective
resource use and other activities
These interest rate subsidy programs can be used by enterprises that are using resources at highly effective levels.

DBJ’s Businesses• Interest rate subsidy programs that support therevitalization of regional communities
These interest rate subsidy programs are provided tobusinesses endorsed by the Japanese government in linewith the regional revitalization plans of regional municipal bodies certified by the Japanese government.
• Interest rate subsidy system for internationallystrategic comprehensive special zones; interest rate
subsidy system for comprehensive special zones
targeting regional revitalization
These interest subsidy systems target operations endorsedby the Japanese government in line with plans for comprehensive special zones of regional municipal bodies certified
by the Japanese government.
• Interest rate subsidy system for special zones for reconstruction
This interest rate subsidy system targets operations
endorsed by the Japanese government in accordance withthe reconstruction plans of regional municipal bodies certified by the Japanese government in the areas identified in
the Law for Special Zones for Reconstruction (227 towns
and cities).
• Interest rate subsidy programs for Crisis Response Operations
These interest rate subsidy programs can be used by clients
who have sustained damage during a crisis certified assuch by the Japanese government and who meet program
requirements. At present, such subsidies are being provided to clients affected by the Great East Japan Earthquake.
• Interest rate subsidy programs for the promotion ofenvironmentally conscious management ratings
These interest rate subsidies are for fixed investment
and the promotion of research and development toCrisis Response Operations
Crisis Response Operations, on the basis of the Japan Finance

Thereafter, the Lehman Shock and the Great East

Corporation Act (Act No. 57 of 2007, including later revisions)Japan Earthquake occurred, and the Japanese government

consist of the provision of necessary funds during such crises

called on DBJ to steadily mount large-scale Crisis Response

as disruptions in domestic or overseas financial markets or

Operations. Due to these crises, the DBJ Act was revised

large-scale disasters. In response to crisis-related damage,

twice. By accepting an additional capital increase from theJapan Finance Corporation provides two-step loans as com-

Japanese government, DBJ was able to create sufficient prep-

plementary risk and other measures to government-designat-

arations and smoothly conduct Crisis Response Operations.

ed financial institutions (designated financial institutions) that

The 2015 revisions to the DBJ Act evaluated the role

supply necessary funds to address crisis damage.

DBJ has played through its Crisis Response Operations andAt the time of its establishment, DBJ was designated asabsence of private-sector financial institutions following thesuch a financial institution, as was Shoko Chukin Bank Ltd.

Lehman Shock and the Great East Japan Earthquake. DBJ

In accordance with this designation, DBJ commenced its

became obliged to implement Crisis Response Operations

Crisis Response Operations in October 2008.

for an indefinite period. (See also pages 52–57.)
Annual Report & CSR Report 201645

Consulting/Advisory Services
We offer consulting and advisory services and make use of networks with allied financial institutions. Throughour consulting and advisory support services, we help clients in various industries and of various sizes become
more competitive and contribute to the vigor of regional economies.
Our consulting and advisory services are backed by the know-how we have built up through our structured
and other types of financing, our M&A advisory services and our provision of expertise on industry researchand environmental and technical evaluations. We apply this accumulated expertise to help clients resolve theissues they face.
The advisory services case studies on page 75 introduce DBJ’s “CSR through Investment, Loan and Other
Businesses” approach.

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

better employment stability and a stronger competitive posi-

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

for industry restructuring overall. Mergers and acquisitions

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

match clients’ varied needs and management strategies.

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

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

M&A Advisory Services
Consulting
Formulation of
acquisition andselling strategies

Buy Side

Buy Side

Select and analyze
acquisition
candidateContact andnegotiate withacquisition
candidateMarket analysis

Sell Side

Sell Side

Select and analyze
potential acquirer

Contact andnegotiate withpotential acquirer

Data gathering46

Annual Report & CSR Report 2016

Execution

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

Advise oncontract
negotiations
Process
management

CLOSING

Performance
analysis

Matchmaking

Integrated Investment and Loan Services

The Otemachi Innovation Hub (iHub), Beta Version Support Program
In April 2013, we opened the Otemachi Innovation Hub (iHub)(Okayama Prefecture) and enterprises in Tokyo and other places

within our headquarters building, as a new opportunity foroutside these three cities, as well as local governments, finan-value creation, with an eye toward finding solutions to social

cial institutions and other participants, we tackled the design ofissues through business that leverages DBJ’s neutrality andsustainable business models based on underlying issues specificextensive network and combines these features with dormant

to the regions surrounding Sapporo, Himi and Setouchi.

corporate expertise. In addition, to contribute to the regional

DBJ also launched a new initiative—the Beta Version

revitalization espoused by the Japanese government, we have

Support Program—in December 2015 to assist in raising somepromoted the regional development of iHub matched to theof the funds needed by enterprises to verify business models atchallenges and problems specific to each region.

the development stage of the business they are pursuing andto encourage progress toward viable operations. This programis expected to contribute nicely to the formation of solutions to

Sapporo (Hokkaido), Himi (Toyama Prefecture) and Setouchisocial issues and to regional revitalization through technologicalinnovation, market creation andTypical Examples of iHub Regional Development (Last Two Years)
RegionSapporoHokuriku
ToyamaHimi
Tokai
Kansai
SetouchiFukuyama
Hiroshima
Kochi
KyushuDate
January-March 2016
From December 2013
November 2014, May 2015
July-December 2015
June–October 2015
From December 2013
From October 2015
July-December 2015
June–October 2014,
June–September 2015,
June 2016
May–September 2015
From December 2013

DBJ’s Businesses

In fiscal 2015, we shone a bright spotlight on joint creation
between enterprises and regions, and with local enterprises inother positive developments.

Theme
Addressing issues in Sapporo, world city
Participation in the Hokuriku regional alliances platform
Workshop entitled “Eliciting Dormant Expertise in Toyama”
Creating solutions to issues in Himi
Opportunity for new value creation by Tokai B2B enterprises
Healthcare
Initiatives to establish a Setouchi brandInnovation seminars

Moreover, it targets businessdevelopment projects in which
DBJ is proactively involved
from a knowledge perspective,
including the iHub connection.
For the first project under thisprogram, we have chosen to
support a demonstration proj-

Opportunity to jointly consider new business ideas

ect for new preventative ser-

Opportunity to create new businesses by leveraging regional resources
Participation in “Future of Kyushu 2030”

vices to be offered by Hankyu
Hanshin Holdings, Inc.

Support Center for Technology Management
The Support Center for Technology Management plans andoperates iHub and also undertakes surveys and provides
advice on future business models linked to new value creation from the perspective of technology management—that is, the ability of management to derive value fromtechnology in manufacturing—and conducts seminars andother activities related to technology management.
We consider optimal growth strategies and businessplans along with our clients, a process that includes second
opinions based on our expertise in business screening andadvice on business and financial strategies.

Changes in the Manufacturing Business Environment
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t/BUJPOBM SFHJPOBMBOESFTFBSDIJOTUJUVUFOFUXPSLTAnnual Report & CSR Report 201647

The DBJ Women Entrepreneurs Center
Since the end of 2012, the Japanese government has prioritized “strengthening the utilization of human resources” asa key growth strategy to lead the Japanese economy, which
had shifted into gradual recovery, toward sustained growth.
With women increasingly expected to contribute to the realization of this goal, businesses created from a new, female
perspective are the required element that will drive the creation of new markets and transform society.
In response to such expectations, the DBJ Women
Entrepreneurs Center (DBJ-WEC) provides comprehensive
support, including funding and business startup expertise,that underpins new business growth by women.
As part of its initiative to cultivate and foster new businesses, DBJ-WEC holds an annual business plan competition
for female entrepreneurs. The winner of the competition (i.e.,a business plan presenting excellent potential and innovative
qualities) is awarded an incentive payment of up to ¥10 million.
Additionally, DBJ-WEC offers a variety of support to achievebusiness plans, including cooperation with outside experienced
entrepreneurs and experts in various fields, access to startup
expertise and advice and network introductions after the competition. In the Fifth DBJ Women Entrepreneurs New Business

Plan Competition, we established the Business Encouragement
Award for businesses that have the potential to expand withsubsequent support or other forms of assistance.
The business plan competition has received more than
1,800 ideas in total over the past five events, a testament to
the expanding involvement of women keen to run their own
business.
Going forward, the center will continue to work with
regions and specialists to help female entrepreneurs develop
new ideas into viable businesses.

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

Grand prize winner at the fifth annual competition: Junko Kemi (kayme Ltd.)The woman'ss eye:bringing a fresh
e toperspective
market creation
attionDevelopingping
new venues
nues
for womenmen
in businessness
Encouraging
femalestartups

DBJ Asia Financial Support Center
DBJ opened the DBJ Asia Financial Support Center in June
2011 to reinforce its function as a provider of local information and consulting services to regional banks supporting
the efforts of small and medium-sized enterprises and otherentities in their regions to promote business in other partsof Asia.
The center’s role is as a liaison to help small and medium-sized enterprises with their various needs in developing
business operations in Asia from an information perspective in cooperation with regional banks throughout Japan.
In addition to leveraging DBJ Group resources, such as its
overseas representative office and subsidiaries and its subsidiary Japan Economic Research Institute Inc., this center
provides consulting services that take advantage of a comprehensive agreement on collaboration with Hitotsubashi
48

Annual Report & CSR Report 2016

University (entered into in June 2011) as well as networks ofoverseas development finance organizations, private financial institutions and other sources of financial insight.
As of May 31, 2016, the center has a membership of 67
regional banks and has fielded a total of 1,754 inquiries.
Breaking down inquiries by country, the majority pertained
to China, Thailand, Vietnam or Indonesia, and the content
dealt mainly with market research and business matching.
In 2014, we began playing a part in the “fast-pass” system(currently, the new exporting superpower consortium) to
provide consistent support for overseas development, in
keeping with the Japanese government’s growth strategy.
DBJ will continue augmenting its ability to disseminate
information related to Asia.

Integrated Investment and Loan Services

Public Asset Management
to fall and welfare budgets to increase. Owing to factors
such as these, it may become difficult to secure the budgets
necessary to renovate or reallocate public assets that havedeteriorated.
Given these circumstances, in April 2014, the national
government requested all local governments to map out acomprehensive plan to manage public facilities and otheraging infrastructure. A comprehensive plan of this nature
requires each local government to conduct full and regular
maintenance and management of all public facilities andother infrastructure in its possession, matched to actual
conditions in the region of jurisdiction.
This request from the national government is a catalyst
for action, and local governments must quickly embark on
the management of public assets and conduct sustainableurban management.
DBJ is working with Japan Economic Research Institutein this regard. We help in identifying the status of facilities,
through the preparation of white papers on public facilities and so forth. We also assist in optimizing initiatives bydrawing up a comprehensive plan to manage public facilities and other infrastructure and encouraging the introduction of PPP/PFI for individual model businesses.

Issues Faced by Local Governments

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JOEJWJEVBMGBDJMJUJFT

1VCMJD"TTFU.BOBHFNFOU"MMEFUFSJPSBUJOHBUTBNFUJNF
.BTTJWFCVSEFOPGGVOEJOHUPSFOPWBUF

DBJ’s Businesses

Public asset management is a method of looking at all of
the public assets owned by local governments from a management perspective for the purposes of overall planning,
control, use and disposal.
The public assets owned by local governments are
considerable and varied. They include buildings, such as
schools, public offices and community centers, as well aswaterworks, sewer systems, roads and other infrastructure.
Two major issues have come to the fore in this category inrecent years.
The first is that public assets built at an intensive pacein Japan’s era of high economic growth are now rapidly
deteriorating. Because public assets were constructed on a
massive scale around the same time, they are aging concurrently as well. The second issue is a mismatch between the
population—which is shrinking and changing in composition—and the supply of facilities and functions needed toserve the needs of residents. Going forward, as the overall
population shrinks and the average age rises, local governments will face major changes in the amount and type of
public assets that are necessary.
Additionally, a decrease in the percentage of the population in their productive years is likely to cause tax revenues

Determine population trendst'PSFDBTUQPQVMBUJPOTPGTFOJPSTBOEQFPQMFJOUIFJSQSPEVDUJWFZFBSTt.BLFGVMMZWJTJCMFQPQVMBUJPOTPGTFOJPSTBOEQFPQMFJOUIFJSQSPEVDUJWFZFBST%FUFSNJOFNJTNBUDIFTJOSFHJPOBMBMMPDBUJPOTPGGBDJMJUJFT

Determine financial conditions
t$POåSNQBDFPGEFUFSJPSBUJPOJOUBYSFWFOVFt$POåSNFTUJNBUFEGPSTVTUFOUJPOBOETPDJBMTFDVSJUZ
t$POåSNDBQJUBMFYQFOEJUVSFTJOSFQBJSTBOESFOPWBUJPOT

%FUFSNJOFQPMJDZNFBTVSFTGSPNBNBOBHFNFOUQFSTQFDUJWF FRVBMJ[FBOEQSJPSJUJ[FUIFSFOPWBUJPOJOWFTUNFOU
4IJGUUPTQFDJåDNBOBHFNFOUPGJOEJWJEVBMBTTFUT'JSTU QFSGPSNNBJOUFOBODFUPFYUFOEUIFMJGFPGBHJOHBTTFUT1111'*BSFJNQPSUBOUSFOPWBUJPODPOTPMJEBUJPOBOEEJTQPTBMBOEEFQMPZVOEFSVUJMJ[FEBTTFUTAnnual Report & CSR Report 201649

Special Investment Operations

Special Investment Operations
Special Investment Operations, established as an intensive
but temporary scheme to supply growth capital* from theperspective of promoting the competitiveness of Japaneseenterprises along with regional revitalization, draws only aportion of the investment (industrial investment) from theJapanese government to encourage the private sector to
supply growth capital.
In June 2015, DBJ kicked off Special Investment
Operations with risk capital for the overseas independent
power producer (IPP) business of Shizuoka Gas Company,
Ltd., and by the end of fiscal 2015, a total of ¥103.9 billion
in investments and loans had been extended to 19 projects.
Special Investment Operations follows policy objectives,in accordance with the law, complementing and encouraging private-sector enterprises and ensuring appropriate competitive relationships. To improve the structure ofSpecial Investment Operations and thereby maintain objective evaluation and supervision of activities, an advisory

body to the Board of Directors was established—the Special
Investment Operations Monitoring Board—with participation from outside experts in financial and capital markets,
industry circles and other professional groups.
DBJ will continue to support initiatives to effectively utilize management resources and corporate activities to cultivate new businesses and promote fresh alliances among
different sectors and other groups, and will contributeto the independent development of regional economies,
sharper competitiveness for Japan and enterprises, anddevelopment of markets for growth capital.
*According to the Japanese government’s Study Panel Concerning thePromotion of Expanding Growth Funding, certain financial institutions,
including DBJ, are expected to serve in a pump-priming capacity forthe foreseeable future to attract private-sector investment by cultivating new capital providers, markets and investors, and thereby foster
the development of an investment cycle led by the private sector.

Special Investment Operations Scheme

Other financial
institutions (including
megabanks, regionalbanks and private funds)

Initiatives to Meet
Target Enterprises’
Requirements
Initiatives for effective
use of management
resources
Q Initiatives to promotemanagement innovation‒ Cultivate new business‒ From alliances among
various sectors andgroupsQ

Provision(Fiscal 2016:¥50.0 billion)

Investment(Fiscal 2016:¥50.0 billion)

Japanesegovernment(industrial
investment)

Special Investment
Operations(Managing loans in
special account)(Fiscal 2016:¥100.0 billion)

Loans, etc.

Complement andencourage
private-sector
enterprises (including
pump-priming)

Capital funds(including preferred shares andsubordinated loans)

Policy Objectives toAchieve
Encourage independent
development of regional
economies
Q Increase competitivenessof Japan and domestic
enterprises
Q Develop markets for
growth capital
Q

Evaluate/inspect

Special Investment
Operations
Monitoring Board

50

Annual Report & CSR Report 2016

Enhance risk capital supporting growth

Capital accountResults of Special Investment Operations (Fiscal 2015)

Loan and investment recipients (Co-entities)

Overview of the project
Risk capital provided through investment in preferred shares when Shizuoka Gas got
involved in gas-fired thermal power IPP business in Thailand.

Omori Investment K.K.
(Omori Machinery Co., Ltd.)

Additional shares in Indian packaging machinery manufacturer acquired throughspecial purpose acquisition company in collaboration with Omori Machinery.

SII Semiconductor Corporation(Seiko Instruments Inc.)

Semiconductor business of Seiko Instruments transferred to new company throughjoint investment with DBJ.

Mitsubishi Heavy Industries, Ltd.

Mitsubishi Heavy Industries’ own growth capital complemented to expand facilities
for manufacturing fuselage components for Boeing’s next-generation passenger
aircraft, 777X.

Blue Partners 1 Investment L.P.

Joint fund with Mizuho Bank formed to provide risk capital that addresses growth
capital needs of enterprises.

Tokai Region Core Industry Support Investment
L.P.

Joint fund with The Juroku Bank formed to provide growth capital directed specifically toward aircraft and automobile component industries and other regional coreindustry sectors in the Tokai region.

Mirai Regional Vitalization Investment L.P.

Joint fund with The Bank of Yokohama and Higashi-Nippon Bank formed to provide
risk capital to support growth of regional enterprises and, by extension, revitalize
the region itself.

Iyo Growth Support Inv. L.P.

Joint fund with The Iyo Bank formed to provide risk capital for increasing competitiveness of leading regional enterprises and promote regional revitalization.

Mitsubishi Estate Co., Ltd.

Several redevelopment projects in the Marunouchi and Otemachi districts of central
Tokyo supported through the purchase of subordinated corporate debentures.

Mitsui Sumitomo Insurance Company, Limited

Initiatives to reinforce growth segments aimed at achieving status as the world’s
top insurance and finance group supported through the purchase of subordinatedcorporate debentures.

Jimoto Revitalization Core Business Support
Fund Investment L.P.

Joint fund with Jimoto Holdings, Inc. (Kirayaka Bank, The Sendai Bank) formed toprovide risk capital for strengthening the competitiveness of leading regional enterprises.

SDT Solar Power K.K. (Taiyo Oil Company,
Limited, Solar Frontier K.K.)

Three-company collaboration with Taiyo Oil and Solar Frontier formed to invest inlarge-scale solar power generation project.

Yokkaichi Kasumi Power Co., Ltd.
(Cosmo Oil Co., Ltd.)

Joint company with Cosmo Oil, incorporating Cosmo Oil’s IPP business, established
to contribute to efficient energy supply.

Be Smile Project(Kamichiku Group)With A-FIVE (Agriculture, forestry and fisheries Fund corporation for Innovation,
Value-chain and Expansion Japan) and other participants, including food-relatedcompanies, jointly invested in new company established under the umbrella of
Kamichiku, a livestock operator in Kagoshima Prefecture, to achieve sixth-orderindustrialization of livestock farming.

Kawasaki Heavy Industries, Ltd.

Growth capital provided by Kawasaki Heavy Industries complemented for investment related to an international joint development project on a commercial aircraft
engine.

Setouchi Tourism Revitalization Investment L.P.

Joint fund with seven regional banks in the Setouchi region formed to provide
growth capital for revitalizing tourism in seven prefectures of Setouchi.

Setouchi Brand Corporation

Joint effort with financial institutions and other companies in the Setouchi region
organized to establish a company to provide management and funding support toenergize tourism-related businesses and expand business activities.

BIC Co., Ltd.
(TOKYO FM Broadcasting Co., Ltd.)

Investment in BIC, establishment of which was spearheaded by TOKYO FM
Broadcasting, provided for the development of new businesses utilizing frequency
bands made available for use through digitization of terrestrial television broadcasts.

Idemitsu Kosan Co., Ltd.

With several financial institutions and others, jointly arranged subordinated loans inconnection with realignment of oil industry.

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

Preferred shares in company established by Kikuchi Gear to apply high technological capabilities and pursue supply of parts to major aircraft engine makers overseas
subscribed.

DBJ’s Businesses

SG Bang Bo Power Holding Co., Ltd.
(Shizuoka Gas Company, Ltd.)*AeroEdge Co., Ltd. (Kikuchi Gear Co., Ltd.) is on record under results for fiscal 2016 (as of April 30, 2016).

Annual Report & CSR Report 2016

51

Crisis Response Operations

Crisis Response Operations
crisis damage.

Crisis Response Operations, on the basis of the Japan
Finance Corporation Act (Act No. 57 of 2007, including

During the Lehman Shock and the Great East Japan

later revisions) consist of the provision of necessary funds

Earthquake, DBJ was involved in large-scale Crisis Response

during such crises as disruptions in domestic or overseas

Operations. The 2015 revisions to the DBJ Act evaluated thefinancial markets or large-scale disasters. In response torole DBJ has played through its Crisis Response Operations

crisis-related damage, Japan Finance Corporation provides

and absence of private-sector financial institutions. DBJ

two-step loans as complementary risk and other measures

became obliged to implement Crisis Response Operations

to government-designated financial institutions (designatedfor an indefinite period.

financial institutions) that supply necessary funds to address

Crisis Response Operations Scheme

Japanese Governmentt$BQJUBMDPOUSJCVUJPOt-FOEJOHPGGVOETt*OUFSFTUTVCTJEJFT

t%FTJHOBUFEDesignated financial institutions

Japan Finance Corporation

Private financial institution(Crisis Response Facilitation Account)tPrepares and announces “crisis
response facilitation guidelines”(approved by the competent minister)Private financial institution
Two-step loans, etc.

Private financial institutiontImplements complementary risk and othermeasures on the basis of agreements(approved by the competent minister)with designated financial institutions

Shoko Chukin Bank
Defines a new scope for DBJ’s responsibilities, making Crisis
Response Operations obligatory for an indefinite periodtExtending the scope of Japanese government recapitalization
securing DBJ’s financial structure, etc.
tEstablish a new crisis response reserve account, reflecting thisobligation in the Articles of Incorporation, and indicate
mandatory Japanese government ownership of more than
one-third of shares and other measures

A designated financial institution
conducts its business inaccordance with the Crisis
Response Operations Rules(based on approval of thecompetent ministers)

Note: Capital increases related to Crisis Response Operations before the 2015 revisions to
the DBJ Act were transferred from capital to a crisis response reserve (¥206.5
billion). Capital increases for Crisis Response Operations after the revisions are to
be added directly to the crisis response reserve.

Provision offunds, etc.

Clients

The Great East Japan Earthquake
In response to the March 11, 2011, Great East Japan
Earthquake, DBJ, as a designated financial institution forstruction and growth stage,” we are working with regional

Crisis Response Operations, set up a full-fledged structure

financial institutions and others to provide risk capital

to facilitate the all-around operation of Crisis Response
Operations for clients affected both directly and indirectly by
the disaster.

52

Given the shift from the “restoration stage” to the “recon-

Annual Report & CSR Report 2016

Please see pages 55–57 for “Initiatives Related to theGreat East Japan Earthquake.”

The 2016 Kumamoto Earthquakes
mation related to restoration and reconstruction and, incooperation with local governments, national institutions,
economic organizations and regional financial and otherinstitutions, undertakes surveys and planning services.
Working with regional financial institutions in the area
affected by the 2016 Kumamoto earthquakes, DBJ formed
the Kumamoto Reconstruction Support Fund not only tosupply risk capital through such schemes as lump-sum loans
for repayment and subordinated loans to businesses involved
in disaster restoration and reconstruction efforts but also toquickly support such efforts.

DBJ’s Businesses

In response to the 2016 Kumamoto earthquakes, DBJ,
as a designated financial institution for Crisis Response
Operations, set up a full-fledged structure for anyone affected directly or indirectly by the disaster.
On April 28, 2016, DBJ established the Kumamoto
Recovery Office within Kyushu Branch to better provide
useful companywide knowledge and financial expertise
toward the restoration and reconstruction of disaster-stricken
regions. The Kumamoto Recovery Office has a crossdepartmental structure that spans the Regional Planning
Department, Financial Institution Department, and otherdepartments and branches. The office provides useful infor-

Results of Crisis Response Operations
On October 30, 2008, the Japanese government established “lifestyle measures,” providing financing to set Crisis
Response Operations by Shoko Chukin Bank and DBJ in
motion in response to the worsening corporate cash flow
conditions resulting from the global financial and economiccrisis that began in the autumn of 2008. On December 11,
these measures were granted crisis designation under the
category of “incidents related to confusion in the international financial order.” On December 19, these measures
were augmented by economic measures, or “emergency
lifestyle defense measures,” funded through budget
expansion and the commencement of acquisition of commercial paper, and labeled Cash flow Countermeasures for
Medium-Sized and Large Enterprises Employing the Crisis
Response Operations of the Japan Finance Corporation. On
January 27, 2009, the Japanese government regulations
were amended, and other measures were taken, incorporating these items into the second supplementary budget
for fiscal 2008, augmented with funds generated by DBJ’scommercial paper acquisition business on January 30.
Additional economic crisis countermeasures wereannounced on April 10, 2009, outlining specific measures forlarge-scale Crisis Response Operations and earmarking a totalof ¥15 trillion for crisis response for medium-sized and large
enterprises. In line with these measures, authorization of a
supplementary budget for fiscal 2009 was announced on May
29, 2009. This budget received Diet authorization on June
26, and the amendment to the New DBJ Act went into force
and was promulgated on July 3, 2009. These measures paved
the way to reinforce DBJ’s financial structure and enable thesmooth implementation of Crisis Response Operations.
On March 12, 2011, the Japanese Government decided
to implement Crisis Response Operations related to theGreat East Japan Earthquake one day earlier. Upon notification of such certifications, the implementation period for
Crisis Response Operations was re-extended. (Meanwhile,the implementation period for certain projects, such as

those involving “incidents related to confusion in the international financial order,” concluded on March 31, 2011.)
As of March 31, 2016, DBJ’s cumulative loan performance and commercial paper acquisitions of crisis countermeasure loans were as follows.
• Loans: ¥5,601.9 billion (1,136 projects)• Loans executed with loss guarantee agreements:¥268.3 billion (47 projects, including those slated for
application to JFC)
• Commercial paper acquisitions: ¥361.0 billion (68 projects)
Notes: 1. Of the ¥67.0 billion in loans executed with loss guarantee
agreements to Japan Airlines in relation to Crisis Response
Operations, ¥47.0 billion (amount confirmed in April 2011
owing to DBJ’s completion of corporate rehabilitation
procedures) in compensation was ultimately provided by
Japan Finance Corporation on the basis of the agreements.
2. A portion of the loans provided by DBJ to Micron Memory
Japan Inc. (formerly Elpida Memory Inc.), was covered bya Japan Finance Corporation guarantee on losses. DBJ
requested, and has already received, a total of ¥27.7 billion
in loss guarantee compensation on the loans. In the eventthat in the future DBJ is able to collect on the principal of
the loans for which it has received compensatory payment,
DBJ will return to Japan Finance Corporation a portion of thecompensation received that corresponds to the percentageof the loans recovered.

Loans as Crisis Countermeasures (Cumulative)(Billions of yen)
60,0005,387.7(Number of projects)
1,600
5,601.9
5,500.7

1,123

1,129

4,887.7
45,0004,297.0
1,090

1,200
1,115

1,136

30,000800

15,000400

00Mar. 31,2012

Mar. 31,2013

Mar. 31,2014

Mar. 31,2015

Mar. 31,2016

Annual Report & CSR Report 2016

53

Providing a Safety Net
DBJ acts as a social safety net by providing investments andlopathy (BSE) and other illnesses, as well as terrorist attacks

loans to support the restoration and rebuilding of areas

and other emergency situations that cause widespread

affected by earthquakes, typhoons or other large-scale nat-anxiety about the financial system. In this way, we act as anural disasters and to address the outbreak of severe acuteemergency response unit to fill the gap that emerges when

respiratory syndrome (SARS), bovine spongiform encepha-conventional financial platforms fail to function.

Disaster Recovery Responses
Societal Concerns

Hanshin-Awaji Earthquake in January 1995 and the Chuetsu

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

Offshore Earthquake in October 2004 as well as typhoons

that people who provide information to local communities

and other natural disasters. We have responded to restora-

beset by a natural disaster have sufficient knowledge abouttion projects in various sectors, from electricity, gas, rail,

those communities and take that knowledge into consider-telecommunications, broadcasting, urban development andation and (2) provide rapid responses to help rebuild impor-other infrastructure industries to providers of everyday neces-tant infrastructure that was destroyed. What is required issities, such as foodstuffs and other retail items, as well as

an entity that through its everyday business relationships

to manufacturers who fulfill a major role in revitalizing thehas accumulated know-how on the industries and business-

employment and economic situations of local communities.

es that provide this core infrastructure. This entity also musthave a wealth of expertise in supplying long-term funds.
DBJ Initiatives
DBJ has provided assistance in response to the Great

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

Emergency Financing
Societal Concerns

emergency response support system that provided financ-Society requires institutions whose day-to-day operations

ing to the Japanese airline industry (to maintain transporta-

provide a solid foundation for financing in response totion and logistics systems), which had been immediately

terrorist attacks and other emergency situations. These

affected by downturns in business following both theinstitutions must also have the working capital and funding

September 11, 2001, terrorist attacks on the United States

expertise to respond quickly to these situations.

and the outbreak of SARS.

DBJ Initiatives

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

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

Successful Safety Net Initiatives
1995 Reconstruction following the Great HanshinAwaji Earthquake
1997 Financial climate response (credit crunch)

54

2007 Reconstruction following the Noto Peninsula
Earthquake
Reconstruction following the Chuetsu Offshore
Earthquake

2000 Reconstruction following Mt. Usu eruption
Restoration support following torrential rains in
the Tokai Region

2008 Reconstruction following the Iwate-Miyagi
Earthquake

2001 Terrorist attacks on the United States
SARS countermeasures, BSE countermeasures2010 Yen appreciation and other countermeasures

2004 Reconstruction following the Mid Niigata
Prefecture Earthquake2011 Reconstruction following the Great East Japan
Earthquake

2005 Reconstruction following the Fukuoka
Prefecture Western Offshore Earthquakes

2015 Damage related to torrential rains, mainly associated with tropical storm Etau

2006 Asbestos countermeasures
Response to major rise in crude oil prices

2016 Reconstruction following the Kumamoto earthquakes

Annual Report & CSR Report 2016

Financial crisis response

Initiatives Related to the Great East Japan Earthquake

Crisis Response Operations
In the fiscal 2011 supplementary budget (passed on May
2, 2011), ¥2.5 trillion was earmarked for Japan FinanceCorporation (JFC) for Great East Japan Earthquake Crisis
Response Operations targeting medium-sized and large enterprises.
This supplementary budget having been passed, as a designated financial institution for the Crisis Response Operations
DBJ set up a full-fledged structure to facilitate implementa-tion of Crisis Response Operations for clients affected both
directly and indirectly by the disaster. The 2015 revisions to the
DBJ Act evaluated the role DBJ has played through its Crisis
Response Operations and absence of private-sector financial
institutions following the Lehman Shock and the Great East
Japan Earthquake. DBJ became obliged to implement Crisis
Response Operations for an indefinite period. Accordingly, DBJ
will continue with its earthquake reconstruction initiatives.

Response to Electrical Power Supply Problems
changing, as electric power system reform prompts theentry of new participants into electricity retailing and power
generation. In response, DBJ continues to work with private
financial institutions to ensure access to the necessary capital.
As of March 31, 2016, DBJ’s balance of loans to the energy sector (electricity, gas, heat and water providers) totaled¥3.2 trillion.

DBJ’s Businesses

Since the Great East Japan Earthquake, the stable supply ofelectricity has become an important issue from the standpoint of maintaining and strengthening Japan’s economic
and industrial competitiveness. Going forward, the energy
sector will need large-scale financing to cover capital expenditures, including thermal power plants to replace or upgrade
aging facilities. In addition, the energy supply structure is

Tohoku Reconstruction and Growth Support Office
On April 21, 2011, DBJ established the Tohoku Revival
Reinforcement Office within the Tohoku Branch to consolidate and better provide useful knowledge and financial expertise toward the restoration and reconstructionof the Tohoku region and other disaster-stricken areas.
But after roughly five years in a revival stage, the Tohoku
region is now transitioning to a stage of reconstruction
and new growth. Therefore, on April 1, 2016, the Tohoku
Revival Reinforcement Office was renamed the Tohoku
Reconstruction and Growth Support Office.
The Tohoku Reconstruction and Growth Support Officehas a cross-departmental structure that includes the Regional

Planning Department and Financial Institution Department at
DBJ headquarters as well as other departments and branches. The office provides information related to estimating
damage amounts in stricken areas and cooperates with local
governments, national institutions, economic organizations
and regional financial institutions and other enterprises to
conduct surveys and planning services that support creative
construction.
Going forward, we will apply know-how and structures
already in place to increase our level of support for growthpromoting projects undertaken by national and local governments and the business community.

Funding to Support Reconstruction and Growth Following the Great East Japan Earthquake
DBJ and financial institutions in areas affected by theearthquake formed the Great East Japan Earthquake
Reconstruction Fund to support the restoration andreconstruction of enterprises that sustained damage inthe earthquake. So far, we have provided investment andloans on 46 projects.
In December 2014, in response to the shift of the stageof earthquake reconstruction from the restoration of
production facilities (the “restoration stage”) to efforts toopen up a new enterprise-based market that resumes production, collaborates among multiple enterprises to boost
industry competitiveness, builds infrastructure and rein-

force functions (the “reconstruction and growth stage”),
we have established a new reconstruction and support
growth fund in collaboration with the Regional Economy
Vitalization Corporation of Japan (REVIC).
The new funds are aimed at providing subordinatedloans and preferred shares to enterprises whose businesses are contributing to the reconstruction and growthof the disaster-stricken region. We are promoting forwardlooking initiatives with a nationwide business model, aiming to support regional growth and revitalization.
Note: See page 89 for details.

Five Years after the Great East Japan Earthquake—Applying the Lessons Learned from theGreat Hanshin-Awaji Earthquake to Realize New Growth
In February 2016, DBJ published a report entitled “FiveYears after the Great East Japan Earthquake—Applying
the Lessons Learned from the Great Hanshin-Awaji
Earthquake to Realize New Growth.”
This report, released just prior to the fifth anniversary ofthe devastating earthquake and tsunami, compares and con-firms the impact that the Great Hanshin-Awaji Earthquake
and the Great East Japan Earthquake had on their respective
regional economies and other facets of merit. The report also
looks at initiatives that fueled reconstruction in Kobe andpotential growth industries in Tohoku, and considers new
approaches to growth in Tohoku.
Annual Report & CSR Report 201655

Research Papers Invited for Tohoku Data Index Project
The Sanaburi Foundation—chaired by Seiichi Ohtaki, professor, Graduate School of Economics and Management, Tohoku
University—is a public charity institution that was set up to
create a new channel of funding for community development initiatives. It offers assistance, underpinned throughdonations, in support of projects in the areas devastated by
the Great East Japan Earthquake and also provides statistics
and a variety of information on approaches to reconstruction
following the disaster. In April 2016, the foundation began
accepting research papers focusing primarily on issues in thethree prefectures—Iwate, Miyagi and Fukushima—where theconsequences of the huge earthquake, tsunami and nuclear
accident were most serious, and held an awards ceremony
and commemorative forum.
By printing and publicly announcing the papers selectedunder this project, the foundation seeks to expand awarenessand promote shared understanding of the issues that eacharea needs to address by the 10th anniversary of the Great
East Japan Earthquake.
DBJ is part of the screening committee and also gave out
an award—the DBJ Award—for the best paper in the economy and industry category.

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

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

Collaboration Agreement with Fukushima Prefecture on Industrial Reconstruction
In March 2013, DBJ signed a collaboration agreement with
Fukushima Prefecture on industrial reconstruction. The purpose of this agreement is both to gather information and strategically review it and to develop the skills of human resources
and pursue other measures under a comprehensive approachto promote local industry and tourism and communicate theappealing features of the region, which will ultimately invigorate the local economy in Fukushima Prefecture.
• Study Council on the Fukushima Medical-Related
Industrial Cluster
In June 2013, the Study Council on the Fukushima MedicalRelated Industrial Cluster, chaired by Makoto Kikuchi, president of the Japan Association for the Advancement of Medical
Equipment, was set up with DBJ and the DBJ Group’s ValueManagement Institute serving as the secretariat. The council
offered advice to Fukushima Prefecture and provided support
on collaboration between the prefecture and enterprises,
seeking to achieve a Fukushima-driven Japanese model thatfunctions as a domestic hub for creating new medical instruments.
Since fiscal 2014, the Value Management Institute has
conducted studies on business models for medical equipmentused in emergency and disaster responses, under a project—
Utsukushima Next-Generation Medical Industry Cluster andUpcoming Leading Projects—spearheaded by Fukushima
Prefecture, and has worked with DBJ to present possible business models.

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

The UN World Conference on Disaster Risk Reduction Public ForumThe UN World Conference on Disaster Risk Reduction is aconference sponsored by the United Nations that formulatesinternational strategies on disaster risk mitigation. March 2015
marked the third meeting of this conference, which adopted
the “Sendai Framework for Disaster Risk Reduction” as its
new international disaster risk reduction roadmap for the next
15 years. Side events included more than 350 symposiums,
seminars and exhibits related to restoration and reconstruction, disaster response, and disaster risk prevention and reduc56

Annual Report & CSR Report 2016tion. DBJ held two symposiums, entitled “Financial Initiatives
for Building the Resilient Society: Financial Sector’s Roles forPre- and Post-Disaster Response and Revival of Tohoku” and“Building Disaster Resilience through Alliances and Mutual
Cooperation of Multi-stakeholders in Tohoku and Beyond:Region-wide Initiatives by the Tohoku Alliance.” Through these
symposiums, we sent information about our experience andthe lessons learned from the Great East Japan Earthquake tothe world.

Initiatives Related to the Great East Japan Earthquake

Restoration, Reconstruction and Growth Issues and Responses
The Great East Japan Earthquake was a complex major disaster, an infrequent type even on a global scale. We believethat restoration, reconstruction and growth measures must
be implemented on a step-by-step basis, in chronologicalorder. Also, given the broad expanse of the damaged region,
restoration, reconstruction and growth measures must take
into careful consideration the regions where they are being
introduced and the type of damage they are targeting.

Restoration, Reconstruction and Growth Support through Investment and Loan Activities

Phase C

Phase B

(Emergency responses)(Reconstruction andgrowth stage)(Restoration stage)t First supplementary budget (May 2011)

Crisis Response
Operations

X Amount: Scale increase of ¥2.5 trillion
X Interest rate subsidy programs establishedt Secondt Third supplementaryt Budget compiled forbudget (November
2011)

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

X Increase in amount

O Establishment of Great East Japan

Earthquake Reconstruction FundtJoint funds with regional banks in Iwate, Miyagi,
Fukushima and Ibaraki prefecturestProvision of equity-type funding to support therevitalization of affected enterprises

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

O Establishment of Supply Chain

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

O Business Continuity Plan

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

Initiatives Addressing
Energy Issues

O Support targeting primary damage, in response

to bond market confusion
Loans to electric
power companies

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

Strengthening
the industrial
base through asystem ofspecial zones forreconstruction(interest
subsidies, etc.)
Provision of risk
capital throughthe Funding toSupportReconstruction
and Growth
Following theGreat East Japan
Earthquake
Proactive
involvement inreconstruction
projects (PFIs,
urban
revitalization,
renewableenergy, etc.)

Apr.
1,
2016
Changed name to Tohoku Recovery & Growth
Support Office

factors asrepayment
moratoriums

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

Establishment of Tohoku Revival
Reinforcement Office

Regional Initiatives

Apr. Emergency
21, measures2011 owing to such

X Amount: ¥2.0 trillion
measurePerformance as ofMarch 31, 2016
¥2,210.0 billion (171 projects)

June 30, 2011
Approximately ¥57.1 billion(15 projects)

Performance Recordin Investments andLoans

DBJ’s Businesses

Phase A

Liaison with theReconstruction
Agency Officefor thePromotion ofBusiness
Collaboration

Annual Report & CSR Report 201657

Regional Revitalization Initiatives

DBJ’s Third Medium-term Management Plan prioritizes operations through which it contributes to revitalization in each region as a partner. To further encourage autonomous initiatives by regions to address the various
issues they face, in September 2014 we established the Initiative for Creating Regional Futures. In addition, we
launched the Regional Revitalization Program to support regional initiatives and offer solutions to their problems. In October 2014, we elicited input from managers of more than 170 medium-sized regional enterprises.
Based on this input, we announced our Recommendations on Regional Revitalization, which summarizes measures necessary for regional revitalization and the role that financial institutions are called upon to perform.

Regional Revitalization Program
As a specific Regional Revitalization Program initiative, we

initiatives such as providing DBJ’s expertise and networks

deployed the Innovation Hub across regions to support

with regard to human resources to play a large role as

the launch of cross-industrial creative businesses. Throughpart of the region. Furthermore, we set up the Regional

working to expand PPP/PFI activities centered on the Private

Contribution M&A Program to support M&A projects

Finance Initiative Promotion Corporation of Japan (PFIPCJ),

that contribute to regional growth, such as to strengthen

DBJ also has begun offering programs to members ofregional enterprises’ management foundations.

regional municipal bodies and regional financial institutions
through its PPP/PFI Academy. In addition, we are pursuing

Providing Regions with Risk Capital
To support regional revitalization via the tourism indus-

regional enterprises. In addition, with The Tokyo Tomintry, in April 2014 DBJ formed the Mother Fund Corporate

Bank, Limited and RISA, we formed the Tokyo Revitalization

Mezzanine Limited Partnership for Tourism Vitalization

Fund Limited Investment Partnership and have provided

in collaboration with the Regional Economy Vitalization

risk capital. This partnership aims to supply funds to small

Corporation of Japan (REVIC) and RISA Partners, Inc. (RISA)

and medium-sized enterprises that can help revitalize theand has provided risk capital. Also, in September 2014 we

economy of the Tokyo metropolitan area, supporting themset up the Musubu Setouchi Business Succession Fund within efforts ranging from improving and strengthening busi-

The Hiroshima Bank, Ltd., and two other regional financial

ness foundations to achieving expansion and growth.

institutions to facilitate the smooth business succession of

Setouchi Brand Promotion Initiatives
Along with seven Setouchi-area regional banks (The
Chugoku Bank, The Hiroshima Bank, The Yamaguchi Bank,
The Awa Bank, 114Bank, The Iyo Bank and The Minato
Bank), DBJ contributed capital toward the April 2016
establishment of Setouchi Brand Corporation (“SBC”) andformed the Setouchi Kanko Kasseika Fund (“the Fund”).
SBC will liaise with the Inland Sea, Setouchi Tourism
Authority*1 to create the Setouchi Brand Promotion
Organization*2.
SBC will strive to maximize the value of the Setouchi
region by extending management and funding support totourism-related businesses and develop a DMS*3.
As for the Fund, it carries a growth capital function,
hinging on capital funding, and will provide tourism-related
businesses the financial support they need.

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Annual Report & CSR Report 2016

*1 The Inland Sea, Setouchi Tourism Authority: A general incorporated
institution tasked with establishing the Setouchi Brand. Its representative is a private citizen, and its directors are from the seven
prefectures bordering the Inland Sea (Hyogo, Okayama, Hiroshima,
Yamaguchi, Tokushima, Kagawa and Ehime).
*2 Setouchi Brand Promotion Organization: An organization that links
The Inland Sea, Setouchi Tourism Authority, tourism-related enterprises and SBC to improve the value of the Setouchi region. It is an
example of a Japanese-style DMO*4.
3* DMS: Destination Management System. A framework that supports
DMO activities by integrating various channels and platforms anddelivering a comprehensive array of tourist-oriented content—that
is, services, and other information.
*4 DMO: Destination Management Organization. Primarily seen in the
United States and Europe. Takes integrated approach, including
strategy formation, surveys, marketing, product creation and promotion, and other activities aimed at attracting tourists.

Initiatives for Regional Revitalization Drawing on the Power of Sports
Seeing the potential of sports as a catalyst for community-

Association. These presentations provided motivation tobuilding and regional revitalization, DBJ has announced

spur regional revitalization through sporting events thatthe results of sports sector surveys, including “Using

combine the capabilities of industry, academia, government‘Smart Venues’ as Core Urban Sporting Locations” (August

and the private sector.

2013), “Developing Sports Tourism” (February 2015) and“2020 Presents Development Potential for Domestic Sports
Industry and Corporate Support for Sports” (May 2015).
In addition, twice in 2016—in January and March—DBJ
participated as co-organizer, along with the main orgaDBJ’s Businesses

nizer, the Research Institute for Sport Business at Waseda
University, and sponsors Sasakawa Sports Foundationand the Japan Sports Agency in holding a symposium onregional revitalization utilizing sports. This symposiumfeatured speeches and panel discussions involving people
in different positions and with different perspectives,
including Daichi Suzuki, commissioner of the Japan Sports
Agency, and Takeshi Okada, former head coach of theJapanese national football team and currently the ownerof FC Imabari and vice-president of the Japan Football

Symposium scene“Regional Revitalization and Finance Course” with GRIPSIn April 2016, DBJ joined the National Graduate Instituteto spur regional economic revitalization that is made morefor Policy Studies (GRIPS) in opening a master’s course—

effective through the solidarity of government and the pri-

“Regional Revitalization and Finance Course”—in the publicvate sector.

policy program. The institute specializes in policy studies.

DBJ actively supports regional revitalization by sending

Given the importance of cooperative efforts between

teams of lecturers drawn from within the entire DBJ Group

local government and regional financial institutions in real-to speak at events and by providing various knowledge

izing regional growth strategies, this course is intended

related to the provision of risk capital.

to provide an overview of theory, knowledge and specifictechniques related to concepts in regional promotion,
analysis of regional economies, regional project financing,processes for extending the reach of regional industries
overseas, particularly in Asia, and other topics with aregional focus. Specifically, for local government employees, the course will improve policy-making capabilities fromthe perspective of business and finance, and for employeesof regional financial institutions, the course will help cultivate the ability to judge circumstances and to enhancerisk-taking capabilities to reinforce the competitiveness ofregional industries and enterprises and will address otherissues. Ultimately, the goal is to produce human resources
who can plan and propose projects and support schemes

Opening the Regional Revitalization and Finance Course

Annual Report & CSR Report 2016

59

Making Use of Information Functions

Through its varied activities, centered on investments and loans, DBJ comes into contact with many aspectsof society. In addition to enterprises, DBJ’s information channels and human networks include the Japaneseand overseas governments, governmental institutions, international institutions, regional municipal bodies
and universities. Through these contacts, DBJ extracts a variety of information on economic and societal
issues, boosting its ability to supply neutral information of high quality.

Economic and Industrial Research
In addition to analysis of macroeconomic and financial trends
in Japan and overseas, DBJ undertakes various surveys andresearch, including industry-related surveys utilizing an extensive
network of connections to the business community, to track notonly trends at home and abroad but also technology developments, international competition and other industry-related
topics, and for 60 years has been conducting planned capital
investment surveys. DBJ provides reports based on these surveys and research activities to both clients and non-clients.
Survey Examples
DBJ Monthly Overview
This report, a key portal to our survey results, is provided on amonthly basis and is made widely available through our website.
The DBJ Monthly Overview features a brief commentary
on domestic and overseas economic and industrial trends,
with a core assessment of actual business conditions based on
the latest indicators and monetary and fiscal policies in play ineach country. In recent years, we have worked to enrich content related to Asia’s emerging nations andfinancial markets within this region.
We have addressed the following topics, timely from the perspective of industry
trends and macroeconomics, particularly
conditions overseas, and presented detailed
surveys and analysis.
“Industrie 4.0 Initiative in Germany to Promote
Revolution in Manufacturing Through IoT”
(DBJ Monthly Overview, No. 238, August 2015)
The Internet of Things (IoT) is a network of physical things
embedded with sensing devices that facilitates connection
to the Internet. Household appliances as well as automobiles, factory manufacturing equipment and other things
that previously lacked Internet connectivity can now beinterfaced online or through machine-to-machine (M2M)
communication, which heralds the creation of new products
and services leveraging big data.
In Germany, labor inputs continue to fall because of ashrinking population and shorter working hours, and expectations are high thatembracing the IoT revolution will boost productivity in the manufacturing sector.
Issue No. 238 describes initiatives under
Germany’s “Industrie 4.0” and delves into
the potential of the IoT to revolutionize the60

Annual Report & CSR Report 2016

manufacturing floor, as well as into the status of IoT implementation in Japan and issues that need to be addressed forthe IoT to be successful here.
“COP21 and Movement Toward Low-Carbon Future”(DBJ Monthly Overview, No. 244, November 2015)
The 21st Conference of the Parties (COP21) to the United
Nations Framework Convention on Climate Change(UNFCCC) took place in Paris, France, at the end of 2015. The
parties—that is, countries—ratified the UNFCCC in 1992 at
the Earth Summit in Rio de Janeiro, and the signatories to theconvention have met every year since 1995 to discuss climatechange and measures to limit global warming.
Issue No. 244 preceded COP21 and took a multifaceted
look at the establishment of the international framework andemission trends in key signatory countries, the outlook for
COP21, Intended Nationally Determined
Contributions (INDCs) in key signatory
countries and major initiatives in thesecountries, a framework that extends
beyond UNFCCC, investments to realize a
low-carbon future after COP21, and otherrelated topics.
DBJ Long-Term Interest Rate Weekly Outlook
This concise, two-page summary on long-term interest rates is put
together for our clients and released on the first business day ofeach week. It offers commentary by our own economists on longterm interest rates, with a brief review of market trends from theprevious week, particularly in Japan and the United States, andtouches on key economic indicators, financial policy, treasury auctions and other announcements scheduled for the current week.
The outlook also features “This Week’s Topics,” with fine-tuned
observations on economic conditions at home and abroad, as wellas interest rate projections looking six months ahead.
Interest Rate Forecast, Foreign Exchange Rate Forecast
We provide materials in presentation format that clients can use
as long-term interest rate and foreign exchange rate information
tools. The information is updated on a monthly basis. Forecasts
consider trends in interest rates and foreign exchange rates,
based on rate-specific deciding factors, and commentary covers
interest rate and foreign exchange rate predictions through tothe end of the fiscal year as well as upside and downside risks,
points from a longer term perspective and other relevant issues.

“International Infrastructure Seminar (Minutes)”(Economics Today, Vol. 36 No. 8, March 2016)
On December 2, 2015, in cooperation with the Long-Term
Infrastructure Investors Association, DBJ participated in theInternational Infrastructure Seminar, an event highlighting investment in infrastructure. The main themes of the seminar were
benchmarks and environment, social and governance (ESG)
issues, and Yasutoshi Nishimura, former Senior Vice-Ministerof the Cabinet Office, Thierry Déau, CEO of Meridiam SAS,Paul Druckman, CEO of the International Integrated Reporting
Council, and other opinion leaders spoke on benchmarks in facilitating investment in infrastructure, the importance of initiatives
related to ESG issues, integrated reports prepared in conjunction
with ESG-related information disclosure, and other topics. These
speeches provided an outlook on future investment in infrastructure in Japan. The seminar was an excellent opportunity to get
this information out to the world.

DBJ’s Businesses“Japan’s Economic Renewal and Business Chances in’The Asian Century’”(Economics Today, Vol. 36 No. 5, March 2016)
On November 13, 2015, Hitotsubashi University (Center forInternational Joint Research Policies for East Asia) and DBJ(Research Institute of Capital Formation) held their first jointly
sponsored symposium. The purpose of this symposium was tomake the results of joint research on the economic and financial
situation in Asia widely available to the public, based on a comprehensive partnership agreement between the two parties.
The event included keynote lectures by Eiji Ogawa, a professor
at Hitotsubashi University Graduate School of Commerce andManagement, and Makoto Kigawa, representative director andchairman at Yamato Holdings Co., Ltd., as well as a panel discussion with experts, and attracted participation from about 180
people involved in corporate activities.

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

Survey Example“Report on June 2015 Survey of Capital Investment
Plans for Years to March 31, 2015, 2016 and 2017”(Surveys, No. 108, September 2015)
After completing our questionnaire-based survey on corporate capital investment activity, the Survey of Capital
Investment Plans, we publicized the results, as well as ouranalysis.

Combining Surveys, Research and Investment and Loan Activities
In addition to publishing the results of its surveys, researchand other activities, DBJ presents its results at speaking
engagements and seminars. We even go further by applying
these results to our investment and loan functions to provide
clients with fresh financial solutions to support corporatesocial responsibility activities and commercial technologies.

(1) Environment
DBJ divisions in Japan and overseas conduct surveys and prepare reports on such themes as global warming prevention
measures, recycling-oriented society promotion, and sustainable corporate management. DBJ is also engaged in complementary information activities under several formats, including
speaking engagements and contributions to specialty journals,
newspapers and magazines. The results of these various activities culminated in the introduction of the DBJ Environmentally
Rated Loan Program in the fiscal year ended March 31, 2005.
The program has since benefited many enterprises.

(2) Disaster Response and Business Continuity Management
Companies are required to protect the lives of their employees
in the event of a crisis, such as a natural disaster, and have measures in place to prevent disasters and ensure business continuity

so that operations and services are not disrupted in emergency
situations. In fiscal 2006, DBJ introduced Financing Employing
DBJ Disaster Preparedness Ratings. This program’s name waschanged in 2012 to the DBJ Enterprise Disaster Resilience Rated
Loan Program, and the evaluation criteria dramatically revised,
given evolving trends at home and abroad in disaster response,
business continuity and disaster resilience as well as lessons
learned from the Great East Japan Earthquake and floods that
hit Thailand, both 2011 disasters, and other destructive events.
Going forward, DBJ will continue to promote surveys andresearch on such topics as disaster prevention strategies put forth
by the Cabinet Office, in cooperation with the Japanese government, the Science Council of Japan and other academic societies,
the World Economic Forum, the United Nations Office for Disaster
Risk Reduction and other organizations.

(3) Technology
In technology-related fields, DBJ’s Support Center forTechnology Management conducts research into approaches
to enhance competitiveness and also gets involved in technology management training operations and supports companies in their efforts to turn technology into viable businesses.

Annual Report & CSR Report 2016

61

Providing Information to Regional Communities
Supplying Information to Help Regional
Community Development
Local communities face increasingly difficult circumstances,such as shrinking populations, the graying of society, a
reduced workforce for production activities, dwindling local
demand and other issues of concern that weaken the vitality of local industry. These times call for a greater degree ofexpertise and more ingenuity than ever. In response, DBJ
applies an analysis of information collected through a network comprising its own offices (19 domestic locations [headoffice, branches and representative offices] and four overseas
locations [three subsidiaries and a representative office] asof July 1, 2016), economic agencies of local governments
and regional communities, and enterprises in Japan andabroad. The scope of this analysis is extensive, ranging frompublic–private partnerships to tourism promotion, regionaland community development and local government
finance. DBJ distributes
this information throughreports, publications, article
contributions, lectures andother formats.

“Fiscal 2016 Regional Handbook: Regional Data and Policy
Information”
This handbook is a collection of data that includes fundamental
economic, industrial, lifestyle and policy indicators for regional
blocks, administrative regions and principal cities, as well as acompilation of individual regional policies andprojects to facilitate an overall understandingof regional policies, economies and societies
and the current status of regional projects.
In the Topics section, Yoshitsugu Hayashi, aprofessor at Kwansei Gakuin University, contributed a special section entitled “Challenges
in Regional Revitalization.”“Compact City Study Group Report”
This report presents content from the Compact City Study Group,
which was established to discuss such aspects as the meaning of“compact city” and the path jointly taken by public and private
sectors toward realization of such a concept in city planning.
The content of the report shines a spotlight on compact cities—an idea attracting greater interest as a new direction in urban
contexts—to promote awareness of initiatives and facilitate adeeper understanding of approaches for application while providing suggestions on the formation of growth-oriented compact
cities that link compact city initiatives to local characteristics andprosperity.

“2020 Presents Development Potential for Domestic
Sports Industry and Corporate Support for Sports:
Opportunity for Economic and Regional Revitalization in
Japan Through Sports”
In this report, DBJ estimates the size of the domestic sports
industry, including government-controlled competitive sports, atabout ¥11.4 trillion in 2012, and also looks at the economic ripple
effect on other industries as well as the size of the sports industry
by region, concluding that “the sports industry has the power tocontribute to regional economic revitalization.” In addition, thereport introduces progressive examples of companies that havepositioned ownership of a sports team as a corporate activity,
including business development focused on sports, as well as local
governments that get involved in sports as a community revitalization strategy.

“Regional Revitalization Brought About by Economic
Value Creation Associated with the Use of Old JapaneseStyle Houses”
As a follow-up to the interim report “Regional Revitalization Using
Old Japanese-Style Houses to Attract Visitors and Create a Dynamic
Atmosphere,” which was released in October 2014, this reportoffers a collection of suggestions on regionally coordinated activities by local governments, real estate agents, non-profit organizations and other participants to utilize traditional old houses andother structures built in a typical Japanese style to create economic
value that translates into regional revitalization. In addition, thereport looks into the size of the latent market for skilled trades, suchas repair and renovation, to maintain traditional old houses, as wellas the economic benefit gained by the region when travelers fromabroad stay overnight at a traditional old house.

Branch Reports and Seminars
Hokkaido Branch“Survey by DBJ/JTBF on Inbound Travel Trends inEight Asian Nations and Regions—
Opinions on Sightseeing in
Hokkaido (2015 edition)”(Report, October 2015)
DBJ has consistently conducted an
online survey of overseas travelers toJapan from eight Asian nations andregions (South Korea, China, Taiwan,

62

Annual Report & CSR Report 2016

Hong Kong, Thailand, Singapore, Malaysia and Indonesia)
since 2012. The October 2015 survey was a joint effort withJapan Travel Bureau Foundation.
The Hokkaido Branch sifted through the results of the survey and created a mini report on inbound travelers’ perceptions about Hokkaido, including location awareness as wellas the desire to visit, expectations and other topics related
to sightseeing in Hokkaido. The branch found that Hokkaido
continues to enjoy high brand value—a top destination—
among past and potential visitors to Japan.

Making Use of Information Functions

Tohoku Branch

Niigata Branch“Promoting Inbound Tourism in Niigata (July 2015
survey)” (Report, March 2016)
DBJ has conducted this online surveyof overseas travelers to Japan fromeight Asian nations and regions (South
Korea, China, Taiwan, Hong Kong,
Thailand, Singapore, Malaysia andIndonesia) since fiscal 2012. The March
2016 survey was a joint effort withJapan Travel Bureau Foundation.
In this report, in addition to a cross-tabulation of the results
generated through the above survey, the Niigata Branch sorts
out information on the travel objectives of inbound travelers
who visited the Niigata area and also touches on issues thatneed to be addressed to successfully attract visitors to Niigata
and approaches to resolve such issues going forward.

Hokuriku Branch“Women in Management Positions in the Hokuriku
Region: Present and Future” (Report, May 2015)
The government of Japan has set a goal to raise the percentage of women in management positions to 30% by 2020,
which requires companies and other organizations where
women might have roles of responsibility to implement concrete initiatives to promote women to management positions.
However, the percentage of women in positions of section

manager or higher currently sits below
1%, making the road toward the government’s goal a very long one indeed.
This report considers points and possible methods for promoting women to
management positions in the Hokuriku
region in the future, based on the current
status of women in management positions in Japan as well as unique local factors and examples of
initiatives taken by companies in this region.

Tokai Branch

DBJ’s Businesses“Five Years Since the Great East Japan Earthquake—
Applying the Lessons Learned from the Great
Hanshin-Awaji Earthquake to Realize New Growth”(Report, February 2016)
On March 11, 2016, Japan marked thefifth anniversary of the Great East Japan
Earthquake. Despite steady progress inrestoration and reconstruction, operating budgets for reconstruction, whichhave underpinned the regional economy
since disaster struck, are expected toshrink significantly, which raises concerns for the future.
The first chapter of this report delves into the impacts that
the Great Hanshin-Awaji Earthquake and the Great East Japan
Earthquake had on their respective regional economies, andconsiders the issue of transition from reconstruction to growthand other matters of concern to the communities affected by
the Great East Japan Earthquake. The second chapter looks
at the Kobe Biomedical Innovation Cluster, an industry development strategy representative of the initiatives that fueledreconstruction activity in Hyogo Prefecture, and the thirdchapter examines four growth industries in the Tohoku region.
Based on the resulting analyses, the report considered new
approaches to growth in Tohoku over the next five years.

“Survey on Medical Equipment Industry in the TokaiRegion” (Report, October 2015)
Demographically, Japan is characterized
by fewer children and more seniors. In
this environment, the market for medical equipment is expanding, and the
medical equipment industry is viewed
as a sector with future growth potential. After the chaos caused by the2008 Lehman bankruptcy, more companies are keen to get into the medical
equipment business, with automobile parts manufacturers inparticular the leading the way.
This survey pulls together results collected from companies in
the Tokai region that plan to enter—or already have entered—the medical equipment business, and selects key points of interest
and provides suggestions for companies in pursuing market entry.

Kansai Branch“Reinforcing the Image of Kansai as a Tourist
Destination—Overcoming the Crisis of a Population
Decrease by Increasing the Nonresident Population”(Report, July 2015)
The “Tourism Report Series,” releasedby the Kansai Branch since May 2010,
whenever the situation warrants an
update, stresses the importance ofdrawing the attention of tourists on
circuit tours that take them through not
only one city and prefecture but also themega-region extending beyond Kansai and also the importance of distributing appealing information that raises recognition of Kansai as an area brand and thereby brings inboundvisitors back again on another trip.
This report takes the view that the Kansai region, which
is more likely than the Tokyo metropolitan area or the Tokai
region to experience a severe population decrease, could offset
the drop in permanent residents by welcoming more temporary residents. The report highlights the need to raise the standard of each sightseeing destination and accelerate initiatives
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63

tors and also estimates future conditions for tourism in Kansai
based on tight accommodation capacity caused essentially bya sudden increase in the number of inbound tourists.

this seminar.” Other participants shared similar impressions.
*Please refer to page 47.

Kyushu Branch
Chugoku Branch“Inbound Tourist Trends in Hiroshima Prefecture”(Report, September 2015)
In recent years, the rising numberof inbound tourists to Hiroshima
Prefecture has mirrored the trend seen
nationwide. In 2014, the number oftravelers to Japan reached 13.41 million,of which about 80% came from Asiaand just under 20% came from theWest, namely, North America and Europe, and other regions,
including Oceania. In the same year, Hiroshima Prefecture
welcomed 1.04 million inbound tourists, of which about 60%
came from the West and other regions, while about 30%
came from Asia. This is opposite to the national trend.
In this report, the Chugoku Branch builds on the prefecture’s inbound tourist statistics in breaking down the movement of visitors to Japan, from not only Asia but also theWest, Oceania and other regions, and organizing the information in line with its importance to the inbound tourist industry.

Shikoku Branch
Opened Kochi Innovation Hub (iHub)(Seminar, May-September 2015)
DBJ holds iHub* events in all
regions. In cooperation with
Kochi Prefecture and through our
Shikoku Branch, we opened the
Kochi Innovation Hub a total of
five times between May and September 2015, drawing morethan 30 participants from industry, academia, government
and the private sector.
Except for the first seminar, the theme was “addressing issues
for women raising children,” and participants explored solution
techniques through interviews and group work. One participant
commented, “I’d like to apply the group work technique to
product development at my company and integrate my own
business into the network I’ve formed through participation in“Estimated Economic Effect in Kyushu from Rugby
World Cup Japan 2019 Games”(Report, March 2015)
Of the 12 host cities for the Rugby
World Cup scheduled to take place inJapan in 2019, three—Fukuoka, Oita
and Kumamoto—are in Kyushu. In thisreport, the Kyushu Branch endeavored
to define the economic ripple effect of
the Rugby World Cup on the Kyushu region. The results indicated a value of ¥35 billion.
The report references the importance of preparing for apotential influx of inbound tourists, particularly from Europe
and Oceania, which is sure to accompany the hosting of the
Rugby World Cup games in Kyushu.

Minami-Kyushu Branch“Survey Report on Livestock Industry—Minami-Kyushu
Growth Strategy II: ‘Livestock Kingdom’”(Report, May 2015)
Minami-Kyushu is a major center of
production in Japan’s livestock industry.
However, the industry is likely to be
exposed to huge changes in the business environment, notably, a shrinking
domestic market paralleling a shift in
the nation’s demographic structure and heightened competition from overseas producers due to the impact of the TransPacific Partnership and other international developments.
For this report, the Minami-Kyushu Branch followed up
a 2014 survey on wagyu (Japanese beef) with a survey onpork and chicken. The branch picked out information about
the current status of the livestock industry in Minami-Kyushu
and then proceeded to analyze the competitive environmentthat domestic producers face and pinpoint issues that farmers must address to hone a sharper competitive edge in thisenvironment. The branch also presented possible growthstrategies for pork and chicken farmers.

The Japan Economic Research Institute
The Japan Economic Research Institute (JERI) is a foundation
established for the purpose of contributing to the improvement of welfare and further development of the Japanese
economy through investigative research into importanteconomic problems in Japan as well as overseas and funding
the promotion of scholarship. JERI’s investigation into issues
that effect the Japanese economic structure in the areas ofurban and regional development, social capital infrastructure,energy, economy and industry are supported by a broad net64

Annual Report & CSR Report 2016

work that includes DBJ’s investigative research department,
universities, research institutions and other experts, as wellas national and regional municipal bodies and the patronage of approximately
500 enterprises. DBJ
works in conjunction
with JERI to disseminate the results of
its research.

CSR Report

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

Implementing CSR Management . . . . . . . . . . . . . . . . . .67
CSR through Investment, Loan andOther Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
Environmental Management . . . . . . . . . . . . . . . . . . . . .92
Business Continuity Plan (BCP) . . . . . . . . . . . . . . . . . . . .96
Fostering Human Resources and Creating a
Comfortable Work Environment . . . . . . . . . . . . . . . . . .98

Annual Report & CSR Report 2016

65

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

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

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

Head office, 10 branch offices and eight representative offices

Overseas: One overseas representative office
Period covered:

The fiscal year from April 1, 2015, to March 31, 2016
As this report is designed to illustrate ongoing initiatives, some of the case studies for investment,
loan and other business contained herein are the same as in past issues. Furthermore, some of
the information indicated herein will have been updated by the time this report is published.

Publishing Details
Published:

September 2016

Next publication:

September 2017 (previous publication: September 2015; frequency: annual)

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

66

Annual Report & CSR Report 2016

Implementing CSR Management

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

Fields of CSR Implementation at DBJ

DBJ’s Two Fields of CSR

Investments and loans in response to the Japanese economy,
financial and capital markets, and corporate issues

Challenges for the Japanese economy
Issues in themacroeconomy

Issues for firms(“semi-macroeconomic”)

Issues for financial
and capital markets

CSR Report

CSR through Investment, Loan and Other Businesses

Environmental and Social
Contribution Activities
Voluntarycontributions by companies
and employees tothe environment, society andthe community

Environment
Providing risk capital and knowledge from along-term perspective
Four Primary Areas
Growth support

Infrastructure &energyRegional revitalization
tailored to regional
needs

Regional
Revitalization

Strengthening the safety net

Three Functions to Leverage
Risk-sharing
finance

Market-stimulating
Knowledge bankfinanceCommunication inInternational Cooperation

Environmental
Management

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

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

Annual Report & CSR Report 2016

67

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

DBJ strives to increase its dialogue with stakeholders in its

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

effort to realize a sustainable society.

DBJ secures financing through the issuance of Fiscal

DBJ’ s investment and loan services involve clients in

Investment and Loan Program (FILP) agency bonds

numerous regions and across a variety of industries.

and government-guaranteed bonds, through direct

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

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

As of March 31,
2016, DBJ’ semployees
numbered 1,187.
DBJ employee trainingg

Employees

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

Clients

DBJ seeks to contributeto the realization of anincreasingly prosperous
and sustainable society.
aJapanese Government:
JasCurrently,Cur100% of DBJ’sleca itishares are held by the
Lo unmJapanese government.
om/Cs
Local Comm
Communities: DBJ supports theOPNsautonomous dedevelopment of local
O
G
N
communities through its affiliations with
regional municipal bodies and regional financial
institutions that are deeply rooted in the local communities.
NPOs/NGOs: DBJ maintains alliances with these organizations
as a part of its community and environmental preservation
efforts, to realize a sustainable society.

JapanGove esernme
nt

Investors

Society

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

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

68

Annual Report & CSR Report 2016

Creation ofSocial Sustainability

Environment

EconomyImplementing CSR Management

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

Even after privatization (conversion to a joint-stock

institution, evaluations of DBJ’s annual operations raised

company), DBJ aims to continue contributing to building

DBJ’s business effectiveness and results, thereby improving

an affluent future by solving problems through creative

its responses to socioeconomic changes and policy issues

financial activities. We determine from our own perspective

facing Japan. These measures were a way to evaluate CSR

those businesses that are truly useful to society and workthrough Investment, Loan and Other Businesses.

to promote the realization of a sustainable society.

CSR through Investment, Loan and Other Businesses
Accordingly, DBJ considers the application of its intellec-

the sustainable development of enterprises. Accordingly,

tual assets and service platforms for investments and loans

it is important that a corporation’s business activity brings

to be of vital importance, as well as its business of working

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

with clients in a variety of fields.

CSR Report

Due consideration of compliance issues is a prerequisite forSpecifically, DBJ will apply the distinctive features andthe trust of society.
Financial institutions can play a specific role in building afinancial services that it has realized in the past to provide

harmonious society over the long term by identifying truly

to clients various solutions that address expected changes

meaningful projects for the economy and society, con-and other issues that are forecast for the economic andducting appropriate risk assessment and providing quality

social environments. In this way, DBJ will proactively lever-financing and other financial solutions.

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

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

CSR through investment, loan and other businesses, such as

primary areas: growth support, infrastructure & energy,

the provision of services that lead to client satisfaction andregional revitalization tailored to regional needs, andincreases in corporate value.

strengthening the safety net.

Corporate Philosophy

CSR through Investment, Loan
and Other Businesses

Providing risk capital and knowledge from a long-term perspective
Four Primary Areas
Growth support

Infrastructure & energy

Regional revitalization
tailored to regional needs
Seepage 72.

Strengthening the safety net

Three Functions to Leverage
Risk-sharing financeMarket-stimulating finance

Knowledge bank

Annual Report & CSR Report 201669

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

Communication on Regional Revitalization

problems can best be resolved by communication and the

DBJ considers it important to work with local citizens in

exchange of opinions across industries. Accordingly, DBJ

building communities matched to the characteristics of the

strives to communicate with as many people as possible

region to support independent regional development. To

through seminars, symposiums and lectures.

this end, DBJ holds and sponsors such events as seminars
and symposiums in collaboration with local authorities,

Communication Focused on the Environment

regional financial institutions, regional branches of the Japan

Environmental problems such as global warming must be

Chambers of Commerce and Industry, and other economic

resolved, starting with individual awareness of the severity

organizations.

of the issues.
DBJ promotes understanding of the relationshipbetween the environment and financial and business activi-• Held seminars on theme of women entrepreneurs, incollaboration with local government

ties by participating in the Eco-Products Exhibition, Japan’slargest environmental event, and holding seminars andsymposiums in conjunction with relevant organizations.
DBJ has had a booth at the Eco-Products Exhibition every
year since fiscal 2001. Through display panels, we introduce
various DBJ activities, such as the DBJ Environmentally Rated
Loan Program, the DBJ Enterprise Disaster Resilience Rated
Loan Program, the DBJ Employees’ Health Management
Rated Loan Program and DBJ sustainability bonds.
Hiroshima Women Entrepreneurship Seminar• Held symposiums in collaboration with regional financial
institutions

Eco-Products 2015 booth
Forestry and wood materials symposium in Tohoku• Held economic lectures in collaboration with regional
chambers of commerce

Eco-Products 2015 booth

16th Economic Lecture Forum “Kumamoto Mirai
Society”

70

Annual Report & CSR Report 2016

Implementing CSR Management

DBJ has combined its annual report and CSR report

Communication Through International
Cooperation

under the concept of “disclosure from a CSR perspective.”

In cooperation with Japan Economic Research Institute Inc.,

DBJ will continue publishing CSR information introducing

its Group think tank, DBJ offers its experience in applying

DBJ’s initiatives to help realize a sustainable society.

policy-based financing to support the reconstruction andgrowth of the industrial economy of postwar Japan and its
accumulated expertise in recent policy issues, such as energy• Participating in Activities That

Contribute to Society
TABLE FOR TWO

ture development, to governmental and development financ-

DBJ began participating in the TABLE FOR TWO* program on

ing institutions in developing countries, primarily in Asia.

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

The Development Finance Course has been held 39

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

times and has attracted 346 people from more than 30

option. Through proactive employee participation in this pro-countries, tracking back to the first training session atgram, as of the end of May 2016, DBJ’s contributions totaled

the DBJ headquarters in 1967. In recent years, we have

¥2,154,860—enough to provide 107,743 meals.

responded to requests from the government of Japan and*TABLE FOR TWO is a program run by the non-profit organization
TABLE FOR TWO International. Under this program, each time a
specific food item is purchased, a ¥20 donation (enough money topurchase one school lunch in a developing country) is donated topurchase a school lunch for one child.

from other participating countries to engage in specificprojects, including assistance to a state-run financial institution in the Philippines on a survey related to improved

CSR Reportconservation, environmental measures and private infrastruc-disaster resiliency, support for credit risk management at
Vietnam Development Bank, and a development bank support project in southern Africa.
DBJ is a member of the Association of Development
Financing Institutions in Asia and the Pacific. Since 1976, wehave been networking with development financing institutions in China, South Korea, ASEAN member countries, India

A healthy menu

Campaign

and other areas. At the annual meeting held in Samoa in
2016, on the theme of climate change and disasters, Toru
Hashimoto, former DBJ president (now advisor), received the
ADFIAP Distinguished Person Award. Mr. Hashimoto oversaw
the privatization of DBJ but still fervently promoted support for reconstruction in the wake of the Great East Japan
Earthquake. The ADFIAP award recognizes his national andinternational achievements in economic development, especially the area of development finance.
ADFIAP annual meeting in Samoa• Participating in Local Community Activities
Support for the Operation of the Environmentally
Friendly Marunouchi Shuttle Bus
Since the fiscal year ended March 31, 2004, DBJ has
co-sponsored the operation of environmentally friendly
buses carrying passengers free of charge on a route in the
Otemachi, Marunouchi and Yurakucho area of Tokyo’s business district. These buses help raise awareness about environmental issues. Not only do the buses reduce environmental effect and noise but also they are barrier-free with a
low-floor design, ensuring easy access for disabled users.

ADFIAP annual meeting in Samoa

Other Communication Efforts• Providing Information
Issuing CSR Reports
To expand communication with all stakeholders, in 2003,
DBJ issued Environmental Report 2003 for a Sustainable
Society. This was followed by similar reports in 2004 andMarunouchi shuttle bus

2005. In 2006, DBJ published CSR Report.

Annual Report & CSR Report 2016

71

CSR through Investment, Loan and Other Businesses

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

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

Challenges for the Japanese economy
Issues in the macroeconomy

Issues for financial and capital
markets

Issues for firms(“semi-macroeconomic”)

Providing risk capital and knowledge from a long-term perspective
Four Primary Areas
Growth support

Infrastructure & energy

Regional revitalization
tailored to regional needs

Strengthening the safety net

Three Functions to Leverage
Risk-sharing financeMarket-stimulating finance

Knowledge bankCase Studies
Growth Support
M&A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Urban Development . . . . . . . . . . . . . . . . . . . . . . . 82
Public–Private Partnerships/Private FinanceInitiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Regional Revitalization Tailored to Regional Needs

Healthcare and Welfare . . . . . . . . . . . . . . . . . . . . 77



DBJ Environmentally Rated Loan Program . . . . . . 78

Strengthening the Safety Net

Promotion of Competitiveness . . . . . . . . . . . . . . . 73











DBJ Employees’ Health Management Rated
Loan Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Infrastructure & Energy
Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Transportation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

72

Annual Report & CSR Report 2016

Regional Revitalization . . . . . . . . . . . . . . . . . . . . . 84
Reconstruction Response . . . . . . . . . . . . . . . . . . . . 88



DBJ Enterprise Disaster Resilience Rated
Loan Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Growth Support
Promotion of CompetitivenessTo grow, the domestic economy requires an improvement in the competitiveness of industries overall.
Particularly important are efforts to maintain core competitiveness by securing human resources,
supply chains, R&D site functions and other domestic production and development platforms, aswell as appropriately updating capital stock, and efforts to strategically enhance competitiveness bycreating new value through links between different industry sectors and promoting initiatives thatspan the value chain—from the upstream to the downstream ends. Access to risk capital is essential
to foster such progress.

Dexerials

Dexerials Corporation, headquartered

rate value, DBJ decided to support thean organizational structure for inde-in Shinagawa-ku, Tokyo, was known

company’s efforts to realize sustain-

pendent operations and to restructure

previously by the name Sony Chemical

able growth and independence andthe portfolio, as well as support the& Information Device Corporation. The

acquired a stake (investment ratio ofexpansion of operations. This culmi-

company is active in Japan and over-60%) in 2012, with an initial publicnated in Dexerials’ listing on the Firstseas, manufacturing and selling bond-offering in mind. In addition, DBJ pro-

Section of the Tokyo Stock Exchange

ing materials and optics materials forvided management resources, includ-in July 2015.

use in displays mounted into smart-ing human resources, to help establish

CSR Report

Case Study

phones and other consumer electronics. The company also has world-caliber technological capabilities in functional materials, and is keen to expand
its business activities and pursue its
independence.
With the underlying intention to
help Dexerials fully demonstrate its
excellent capabilities in development
and technology and improve corpoFunctional materials product group

Case Study

Kawasaki Heavy Industries

Kawasaki Heavy Industries, Ltd., head-

typically get together on these kinds

ny’s international competitiveness but

quartered in the city of Kobe, Hyogo

of international joint development

also energizes regional economies, andPrefecture, is a prominent generalprojects in the interest of sharing tech-

therefore applies its Special Investment

engineering company with operations

nologies and reducing the burden of

Operations* to support activities con-in seven business segments: Ship &massive development costs, Kawasaki

nected to the company’s participation.

Offshore Structure, Rolling Stock,

Heavy Industries’ components for

Aerospace, Gas Turbine & Machinery,commercial aircraft are mainly pro-

Plant & Infrastructure, Motorcycle &duced in-house or at the domestic

Engine, and Precision Machinery.

facilities of the company’s businessIn its pursuits, the company isassociates.

involved in the development and pro-

DBJ deems that Kawasaki Heavy

duction of engines for commercial air-Industries’ involvement in a project

craft, a market with considerable

related to an international joint devel-

growth potential in the future. Whileopment of a commercial aircraft

manufacturers from several countries

engine not only sharpens the compa-*Special Investment Operations: These operations are part of an effort to concentrateon supplying growth capital to contributeto regional economic vitalization andcorporate competitiveness based on thePartial Amendment of the Development
Bank of Japan Inc. Act, which was promulgated and went into effect on May 20,
2015. (See pages 50-51 for details.)

Annual Report & CSR Report 201673

Promotion of Competitiveness
Case Study

AeroEdge

Since its establishment in 1940,

also headquartered in Ashikaga,

DBJ will offer advice based on insights

Kikuchi Gear Co., Ltd., headquartered

Tochigi Prefecture. DBJ invested inaccumulated through ongoing sup-in Ashikaga, Tochigi Prefecture, has

AeroEdge through its Special

port for Japan’s aircraft industry, andfocused mainly on precision gears for

Investment Operations* and seeks tothereby contribute to the formation of

automotive, construction equipment

promote the development of this busi-

an operating structure primed for theand hydraulic machinery applications.

ness as a collaborative effort among

further growth of this business.

The company marked a huge mile-

the three companies.

stone in 2015 when its turbine blades,

In addition to providing risk capital,*See page 73.

made from a difficult-to-machine titanium-aluminide alloy utilizing precision
fabrication technology, were selected
for use in a new type of commercial
aircraft engine built by an overseas
manufacturer. This led to a long-term
supply agreement. Following full entry
into the aerospace business, Kikuchi
Gear transferred its aircraft engine
components business to wholly

AeroEdge head office plant

owned subsidiary AeroEdge Co., Ltd.,

Case Study

Jointly Operated Fund with Hoshino Resorts

Hoshino Resorts Inc., headquarteredin the town of Karuizawa, Nagano

facility operators in Japan.
DBJ will draw on its accumulated

Prefecture, operates 34 facilities, as offinancial know-how and expertise in

April 2016, mainly onsen ryokan

industry research to underpin solu-(Japanese-style inns at a hot spring)tions that address the challenges

and resort hotels, in Japan and over-

faced by lodging facility operators inseas, and conveys the appeal ofJapan and thereby contribute toJapan’s omotenashi—a level of cus-

regional revitalization by increasing

tomer-oriented politeness and genu-

the nonresident—that is, tourist or

ine warmth that makes customers feel

temporary visitor—population.

welcome, valued and respected—

DBJ supplied funds to this project

under its “Hospitality Innovator”

under its Growth Co-creation Facility*,

vision. Hoshino Resorts has supported

an independent initiative to accelerate

the restructuring of struggling accommodations, including ryokan, by leveraging its expertise in the operation,
branding and marketing of ryokan,
resort hotels and other lodging facilities. To reinforce the support structure, DBJ and Hoshino Resorts formeda jointly operated fund—Hoshino
Resorts Ryokan and Hotel Operations
Support Fund Limited Investment
Partnership, nicknamed “Hotel and
Ryokan Renewal Fund”—for lodging

74

Annual Report & CSR Report 2016

Hoshino Resorts’ KAI Izumo

the creation and expansion of markets
for growth capital.

*Growth Co-creation Facility: An approachto supply funds for initiatives that willtranslate into future creation and expansionof markets for growth capital, including
forward-looking capital policy that business operators apply to prepare for future
growth investment, as well as the formationof collaborative funds wherein interested
parties, mainly financial institutions andinvestors, team up in advance to provide
funds for future growth investment.

CSR through Investment, Loan and Other Businesses

M&A
Amid increasing globalization of the economy, a trend is rolling briskly toward heightened international competitiveness through overseas expansion, business restructuring, industry restructuring
and other approaches. The number of mergers and acquisitions are rising as well.
M&As are considered effective and essential for proactive business restructuring and for overhauling and revitalizing underperforming businesses.

Case Study

NYK LINE
Terminal operator NYT exports

charting a stable upward path, thanks

LINE), headquartered in Chiyoda-ku,

Thailand’s largest number of automo-

to growth in the local automobile man-Tokyo, is one of the largest shippingbiles. Revenue at Laem Chabang Port isufacturing value chain.

CSR Report

Nippon Yusen Kabushiki Kaisha (NYK

companies in the industry and is primarily involved in the global logistics
business as a provider of integrated
logistics services. DBJ provided comprehensive advisory services to NYK LINE
when the company was preparing toacquire shares in Namyong Terminal
Public Company Limited (NYT), which
had a terminal operation concessionagreement with Laem Chabang Port incentral Thailand.
Laem Chabang Port

Case StudyIZUMIIZUMI Co., Ltd., headquartered in thecity of Hiroshima, Hiroshima

sidiary.

market areas. The compound effect,

Both companies are involved in thetherefore, should lead to streamlined

Prefecture, has since its establishment

supermarket business, but IZUMI

operations through the integration of

in 1961 promoted the development of

directs its attention toward mall-type,

information systems as well as syner-

shopping centers and supermarkets,large-format shopping centers whilegies for both IZUMI and Yours in their

including the operation of “You Me

Yours focuses on stores for smaller

respective market areas.

Town” mall-type large-format shopping centers, primarily in the
Chugoku, Kyushu and Shikoku
regions. DBJ provided IZUMI withcomprehensive advisory services related to share acquisition, leading to the
October 2015 acquisition of shares inYours Co., Ltd., headquartered in the
district of Aki, Hiroshima Prefecture,
and a buildup of IZUMI’s presence,
mainly through the opening of supermarkets in the same area. IZUMI thenturned Yours into a consolidated sub-Signing ceremony for basic agreement on capital and business alliance

Annual Report & CSR Report 201675

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

Case Study

Foreign Private Equity Fund Co-investment Program

Private equity funds (PE funds) invest

a solid network established over manywith The Chiba Bank, Ltd., The

in the stock of unlisted companies,

years to present excellent fund man-Shizuoka Bank, Ltd. and four otherseeking exit returns through initial

agement opportunities to investors inregional financial institutions, DBJ

public offerings or sale to other com-

Japan. Beginning in 2016, DBJ will

hopes to cultivate business opportuni-

panies after the enterprise value of theembark on a co-investment programties for members of this sector of thetarget company has been enhanced bywith regional financial institutions, tar-banking industry and, by extension,

helping it grow or restructure, andgeting foreign PE funds. Under a newunderpin the sustainability of local

thereby achieving revenue. PE funds

framework, forged in cooperation

economies and communities.

represent a field of investment attracting greater notice from regional finan-

Foreign PE Fund Scheme

cial institutions in recent years as a

DBJ Asset Managementmeans of diversifying their asset portfolios and delivering effective solutions
to their clients. Such solutions include

Provide investment Provide investment
Discretionary
Provide investment
opportunities
opportunities
investment contract
opportunities

alliances between clients and investee
companies and support for clients’

Chiba Bank

Shizuoka Bank

DBJ

Four other regional
financial institutions

ForeignPE funds

ForeignPE funds

overseas expansion efforts.
Within the DBJ Group, investment

Investment

in domestic and foreign PE funds has
been an ongoing pursuit since 2002,
and starting in 2015, DBJ AssetManagement Co., Ltd., has drawn on
accumulated investment expertise andCase Study

ForeignPE funds

ForeignPE funds

Turkish Airlines

Turkish Airlines, headquartered in

ed EETC issued in Japan’s capital mar-Istanbul, is the national flag carrier of

ket and was sold to domestic investors

the Republic of Turkey and boasts thethrough Mizuho Securities, Co., Ltd.,world’s largest network. Paralleling

headquartered in Chiyoda-ku, Tokyo,

aviation demand, which is growing

and DBJ Securities Co., Ltd. Turkish

worldwide, the airline made plans to

Airlines earmarked the proceeds frompurchase additional airframes andthe EETC deal for purchasing three

diversify its associated fund-procure-

Airbus A321-200 aircraft, which werement methods.

delivered between September andIn arranging the Enhanced

allows an airline to raise funds from a wide
spectrum of investors because flexible,
innovative structuring, such as liquidity
enhancement and multiple tranches, creates beneficiary certificates with a higher
rating than the corporate rating of theairline itself.

November 2015.

Equipment Trust Certificate* for
Turkish Airlines, DBJ enhanced liquidity as a liquidity provider and also provided asset-based lending. This was
the world’s first-ever yen-denominat76

Annual Report & CSR Report 2016

*Enhanced Equipment Trust Certificate:
A securitized product typically issued in
the U.S. capital market to raise funds forairlines to purchase airframes. An EETC

Airbus A321-200 aircraft

CSR through Investment, Loan and Other Businesses

Healthcare and Welfare
Various issues characterize healthcare, including an increasing elderly population, medical system
reforms, and a need to rebuild aging facilities. Offering uninterrupted healthcare services involves
solving the fiscal and administrative problems that burden medical corporations, as well as improving the skills of physicians and other medical personnel and the quality of related facilities and medical equipment.
Case Study

Regional Healthcare Fund
Partnership (Regional Healthcare Fund),institutions and encourage collabora-“super-aged” society, cultivation ofwith a total investment of ¥10.0 billion,

tion with regional financial institutions.

the healthcare and medical industries

to invest in medical institutions’ subor-

By leveraging its financial solutions

is taking on a growing importance, as

dinated loans and loan claims.

and wealth of knowledge, throughis the cultivation of business founda-

Through this cooperation with

the Regional Healthcare Fund, DBJ istions in these fields. In relation to this,Mitsubishi UFJ Lease & Finance, DBJ

providing risk capital for subordinatedthe Japanese government is promoting

aims to promote initiatives by medicalloans and other investments.

a “Japan Revitalization Strategy.” As
medical facilities are core componentsof the healthcare and medical sectors, the country faces a growing need

Regional Healthcare Fund Scheme

augment medical functionality. Japan
will also need to undertake initiatives
to build healthcare systems suited to

Mitsubishi UFJ
Lease & Finance

DBJ

to rebuild dilapidated hospitals andupgrade medical equipment in order toInvestment(General partnership)
Healthcare Finance, Inc.
GP investment

regional environments.

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

Regional Healthcare
Investment Limited
Partnership

Against this backdrop, DBJ andSubordinatedloans, etc.

Company, Ltd., headquartered in
Regional Healthcare Investment LimitedCase Study

Medicalinstitution

Medicalinstitution(Limited partnerships)

DBJ

the Mitsubishi UFJ Lease & Finance
Chiyoda-ku, Tokyo, formed the

CSR Report

As Japan transitions fully toward a

Medicalinstitution

Mitsubishi UFJ
Lease & FinanceMusashinosha (Ageo Medical Group)Musashinosha K.K., headquartered inties that evince care about people andmedical care and regional medical

Ageo, Saitama Prefecture, and a mem-

are, in return, appreciated by patients/

care—under a basic concept highlight-

ber of the Ageo Medical Group (AMG),

residents and their families for the high-ing extended capabilities, a richer learn-owns and rents hospital real estate andlevel medical care offered.

ing environment and a higher level ofoperates as a medical products whole-

In July 2015, DBJ provided

saler. AMG, with the Ageo Central

Musashinosha with financing for a new

General Hospital at its core, operates 27

building in the city of Saitama, Saitama

hospitals and 21 nursing home andPrefecture, where the former Higashi

senior care facilities in seven prefec-

Omiya General Hospital, one of thetures—Saitama, Tokyo, Chiba,

medical facilities under the AMG

Kanagawa, Ibaraki, Yamanashi andumbrella, was relocated and renamed

Gunma. AMG seeks to provide com-

Sainokuni Higashiomiya Medical

munity-based, high-level total care—

Center. With 337 beds, this facility

that is, health maintenance, medical

seeks to provide excellent medical care

care and welfare—under a groupwide

services as a core hospital in Saitama,philosophy emphasizing hospitals/facili-

fulfilling two functions—emergency

emergency medical care capabilities asa designated cancer care hospital.

Sainokuni Higashiomiya Medical Center

Annual Report & CSR Report 2016

77

DBJ Environmentally Rated Loan Program
Environmental issues are a perpetual matter of concern for the whole world, and enterprises are required now
more than ever before to conduct business in an environmentally responsible manner. Financial institutions are
no exception, being tasked with the mission of contributing to a sustainable society by encouraging enterprises toembrace initiatives through environmentally considerate investment and financing activities.
Case Study

Daiwa House Industry

As a general homebuilder, Daiwa

House Industry was awarded highestablishment of independent guide-

House Industry Co., Ltd., headquarteredmarks for (1) formulating an environ-lines on wood procurement and thein the city of Osaka, seeks to contributemental action plan that meshes with

control of chemical substances and exe-

to the realization of a society wherebusiness strategies, based on the 2020

cuting subsequent assessments, andpeople live with a sense of enrichment

Medium- to Long-Term Environmental

endeavoring to build a supply chainin harmony with their environment. The

Vision, while also promoting the realiza-

that takes the environment and CSR

company works toward this end by pro-tion of systems to create, save and store

into account; and (4) identifying key

moting environmental management

energy and encouraging widespread

issues in 2011 from a spectrum of CSR

from several approaches, including

use of “Smart & Eco Products” as partissues at shareholder meetings and“ECO Process,” which targets reducedof energy-management system installa-

reviewing self-assessed CSR indicators,

environmental impact through efficienttions, to bring the environmental

along with continuous disclosure of tar-business processes, and “ECO

impact generated through the lifecycle

gets and results according to estab-

Products,” which emphasize the devel-of homes and buildings down to zero;

lished KPIs (eight themes/18 issues/40

opment and widespread acceptance of(2) working to expand the stock-type

indicators).

homes and buildings with environment-

home business, which includes activities

conscious features.

to lengthen the useful life of buildings

DBJ has given Daiwa House Industry
its highest rating under the DBJ

as businesses that contribute to a better

Environmentally Rated Loan Program,environment, such as greening activities

and provided financing to the company

that consider biodiversity in urban land-

based on this rating program.

scapes; (3) drafting comprehensive CSR
procurement guidelines along with theDREAM Solar, in Wakayama

Aleph Inc., headquartered in the city ofcess, Aleph received high marks for (1)made from this compost, to restaurants

Sapporo, Hokkaido, was established insetting in-house standards that exceed

for use in the preparation of restaurant

1976. The company operates a growing

legal requirements through suchdishes; and (3) actively engaging in con-network of restaurants throughout

approaches as restricting the use of

sumer environmental awareness cam-Japan, including the Bikkuri Donkey

agrochemicals, and conducting ecosys-

paigns on the reapplication of usedhamburger steak restaurant chain.

tem surveys, which not only ensure thecooking oil collected from households

Guided by a corporate mission high-safety and quality of ingredients but

as a resource for fuel and environment-

lighting three goals—“Develop a busi-

also underpin procurement of ingredi-

themed educational programs such asness that preserves and creates healthents with due consideration to the envi-

special learning opportunities for chil-and safety”; “Create a business thatronment and biodiversity; (2) achieving

dren at Ecorin Village, which highlights

improves the welfare of the people”;

a high recycling rate through, for exam-

environmental issues and food safety.

and “Develop a business that cares forple, the formation of a food recycling

nature”—the company seeks to deliver

loop that starts with the installation ofhigh added value through its business

Zero Wonder—a processing machine

activities and contribute to the realiza-

that pulverizes and dries food waste, totion of a sustainable society.

promote composting of leftover food at

In the evaluation process, Daiwa
Case Study78

and to resell pre-owned homes, as well

Aleph

DBJ provided financing to Alepheach restaurant—and circles around tounder the DBJ Environmentally Rated

the delivery of agricultural products,

Loan Program. In the evaluation pro-which have been grown with fertilizer

Annual Report & CSR Report 2016

Reduced-agrochemical rice supplied to all
Bikkuri Donkey restaurants

CSR through Investment, Loan and Other Businesses

DBJ Employees’ Health Management Rated Loan Program
The promotion of employees’ health management is linked to improved employee satisfaction andcorporate productivity, the retention of talented human resources and the financial betterment ofhealth insurance organizations. As the critical issue of a declining population of future workers
becomes a more critical problem, the strategic implementation of employee’s health managementfrom a managerial perspective is an important issue for the realization of a sustainable society.
Case Study

Morinaga Milk Industry
Morinaga Milk Industry Healthconcrete measures to resolve issues,

employees approach work with energy

Declaration, hammered out by the pres-and also the company’s farsightedness

and vitality, Morinaga Milk Industry Co.,

ident himself, as basic policy for healthwith regard to a good work/life balanceLtd., headquartered in Minato-ku,

management, and diligent efforts tofor employees through such opportuni-

Tokyo, looks first to the health ofachieve the medium- to long-termties as childcare support programs uti-

employees, in line with a corporate phi-objectives of Health Morinaga 21 and alizing accumulated annual leave.

losophy “to create a new food culture

data health plan* through a PDCA

based on the excellent power of milk,cycle, guided by the Health Promotion

making a difference in people’s healthCommittee, which hinges on Morinaga

and society in general” as a maker ofMilk Industry and the corporate healthmilk and dairy products. The company

insurance society; (2) the pursuit ofis engaged in various efforts to achieve

multifaceted analysis (not only entailingthis goal, including the establishment of

the scope of medical costs from several

in-house structures.

perspectives but also engaging industry

DBJ provided financing to Morinaga

peers in the discussion to pinpoint

Milk Industry under the DBJ Employees’

health topics of concern); and (3) the

Health Management Rated Loan

introduction of quite a number of origi-

Program and also accorded the compa-

nal initiatives, such as promoting choic-

ny the highest ranking in this program.

es for better lifestyles and taking men-In the evaluation process, we gave
the company high marks for (1) the
Case Studytal health and hours worked into
account at regularly held meetings, as

CSR Report

To shape a corporate culture in which*Data health plan: Business plan to maintainand improve the health of corporate healthinsurance society members, based on an
analysis of data, such as health insurance
claims.

Certification presentation ceremony

EBARA

EBARA CORPORATION, headquarteredManagement Rated Loan Program.

in Ota-ku, Tokyo, is a global manufac-

EBARA received a high rating for

ysis, that lifestyle-related diseases are

turer of industrial machinery involved inthree reasons: (1) The company has

serious health issues and has imple-

the production of fluid machinery andpositioned its Central Safety and Healthmented health directives and lifestylesystems such as pumps and compres-Committee as a lateral structure cutting

improvement programs run by industri-sors, the construction and operation ofacross the organization and, through its

al physicians and industrial healthcare

solid waste incineration facilities, andsophisticated Occupational Health andstaff and has also introduced various

the production of semiconductor man-

Safety Management System, whichmeasures in cooperation with its healthufacturing equipment. The company’s

includes regular and continuous risk

insurance society to encourage employ-

CSR policy emphasizes the commitment

assessment, strives to stop accidents

ees to take better care of themselves.

“We sustain a safe workplace and striveand disasters from happening andfor a stimulating work environment,”

endeavors to prevent reoccurrence

and the company maintains a corporate

should such situations arise; (2) The

health management system that hinges

company conducts multifaceted analy-

on its Central Safety and Healthsis of not only medical check data but

Committee.

also the results of stress checks andDBJ provided financing to EBARA

employee satisfaction surveys to ascer-

based on the DBJ Employees’ Healthtain in-house health issues; and (3) The

company recognizes, through this anal-

Certification presentation ceremony
Annual Report & CSR Report 201679

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

Case Study

Aoyama-kogen Wind Farm

Aoyama-kogen Wind Farm Co., Ltd,The project plans to construct 40

tors into operation.
This project is expected to contribute

headquartered in Tsu, Mie Prefecture, iswind power generators, each boastinga third-sector company jointly funded

2,000kW output, for maximum output

to efforts aimed at preventing global

by the cities of Tsu and Iga and C-TECH

of 80,000kW, and associated facilities.

warming through wider access to

CORPORATION, a subsidiary of Chubu

In combination with the 20 existing

renewable energy, and will also presentElectric Power Co., Inc. The company isgenerators, delivering maximum output

employment opportunities in the com-

engaged in the wind power generationof 15,000kW, the project is poised tomunity for construction, maintenancebusiness and supplies electricity in the

become the largest wind farm in Japan.

and management and revitalize the

Aoyama Plateau, a highland area that

As of March 2016, the company had

regional economy, including local tour-

stretches from the western quarter ofalready put 18 of the 40 new genera-ism, through an increase in visitors.

Tsu to the eastern quarter of Iga. DBJ
arranged syndicated loans totaling¥18.0 billion, in collaboration with five
regional financial institutions, for a project to expand wind power generation
facilities operated by Aoyama-kogen
Wind Farm.
Wind power generation facility expansion project

Case Study

Yokkaichi Kasumi Power
DBJ will draw on insights accumulat-

nities. The investment in Yokkaichi

headquartered in Minato-ku, Tokyo, ised through financing power generation

Kasumi Power makes use of Special

a power generation company jointly

businesses, including support for proj-

Investment Operations*.

established by Cosmo Energy Holdings

ect finance origination, to contribute toCo., Ltd., headquartered in Minato-ku,

the creation of new financing opportu-

Yokkaichi Kasumi Power Co., Ltd.,Tokyo, and DBJ. By taking over the
Yokkaichi Kasumi Power Plant from
Cosmo Oil Co., Ltd. and modifying andoperating it, Yokkaichi Kasumi Powerwill ensure greater stability and efficiency in the supply of energy, making useof both power generation know-how
acquired by the Cosmo Energy Group in
independent power producer businessand in-house resources, such as petroleum coke produced at Cosmo Oil’s
Sakai Refinery.

80

Annual Report & CSR Report 2016

Yokkaichi Kasumi Power Plant*See page 73.

CSR through Investment, Loan and Other Businesses

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

Case Study

Tobu Railway
Against this backdrop, Tobu Railway

were applied primarily toward repairingin Sumida-ku, Tokyo, operates the Tobu

was impacted by the torrential rains

damaged railway bridge girders, per-Isesaki Line (between Asakusa andthat hit the Kanto and Tohoku areas informing ground fortification and rein-

Isesaki stations), the Tobu Tojo Line

September 2015, as water washed out

stalling downed power lines.

(between Ikebukuro and Yorii stations)embankments, brought down power

and other lines, particularly across thelines and utility poles and swept away

company’s established territory—thebridge girders, among other damage.

Kanto region. These lines form part ofThe company was, however, quick to

the largest rail network of any private

rebuild damaged installations and get

railway operator. Tobu Railway is

trains rolling again.

*See page 52.

involved in real estate leasing and hous-

When a large-scale disaster occurs,

ing subdivision development as well as

and normal financing platforms will not

hotel and leisure businesses, especiallywork, DBJ actively extends emergency

in areas along its railway lines. The

financing. As a designated financial

company is also engaged in the Tokyo

institution for Crisis Response

Skytree Town® project, which opened

Operations*, DBJ provided Tobu

in May 2012.

Railway with restoration funds, whichSPACIA for Nikko Moude (SPACIA for
Pilgrimage to Nikko) and Tokyo Skytree®

Kanto Railway Co., Ltd., headquartered

get operations quite literally back on

Tropical Storm Etau and associatedin Tsuchiura, Ibaraki Prefecture, is a pri-

track, guided by a business philosophy

events as part of its Crisis Response

vate railway operator providing bus andof “contributing to the region throughOperations* and extended funds toreal estate services along with the run-safe transportation and high-quality

Kanto Railway to rebuild its electricning of two train lines—the Joso Lineservices.”

power transmission system.

Case StudyCSR Report

Tobu Railway Co., Ltd., headquarteredKanto Railway(between Toride and Shimodate sta-

DBJ actively supported affectedtions) and the Ryugasaki Line (between

enterprises’ efforts to get operations

Sanuki and Ryugasaki stations)—cover-rolling again following damage from*See page 52.

ing the area from central Ibaraki
Prefecture through the southwesternsection of the prefecture.
Events, notably, Tropical Storm Etau,
which caused the Kinu River to burst its
embankments in September 2015,
damaged the company’s civil engineering equipment and facilities and theelectric power transmission system fortrains. But the company was quick to

Railway damaged by Tropical Storm Etau
(2015) and associated events

Annual Report & CSR Report 201681

Urban Development
Efforts to develop and upgrade urban infrastructure and functions and the creation of new urban
culture and a comfortable environment for the lifestyles of working people through urban development are the driving forces behind the revitalization of economies and communities at the regionaland national levels. In addition, the development and reemergence of cities conscious of environmental issues and prepared for possible disasters is essential to the realization of a sustainable society.
Recent years have seen progress in the initiatives of real estate providers to highlight to stakeholders
surrounding the real estate industry, properties imbued with a sense of the environment and society.

Case Study

Tachihi Holdings

Tachihi Holdings Co., Ltd., headquar-

Tachihi under the category of best-in-users, such as children and the disabled;

tered in the city of Tachikawa, Tokyo,

class domestic properties for environ-(2) excellent community considerations,owns Mitsui Shopping Park LaLaPort

mental and social awareness. Topsuch as a spacious, open-type garden

Tachikawa Tachihi, a multi-purpose

marks were given for (1) provision ofwith a huge, glass-walled terrarium

shopping complex jointly developed

various places to gain first-hand experi-

built around a symbolic tree; and (3)with Mitsui Fudosan Co., Ltd., head-ence through the establishment both ofrobust efforts to reduce environmental

quartered in Chuo-ku, Tokyo, as part ofhands-on cultural facilities and of an

impact through such approaches as thea development plan using company-

excellent perspective on diversity,

installation of LED lighting in designat-

owned property in the vicinity ofincluding toilets designed for specificed areas.

Tachihi Station on the Tama Monorail,
which runs north-to-south and connects at Tachikawa with the JR Chuo
Line, which runs east-to-west throughTokyo.
DBJ has conferred its DBJ Green
Building Certification to Mitsui
Shopping Park LaLaPort Tachikawa
Case Study

Mitsui Shopping Park LaLaPort Tachikawa Tachihi

Hankyu Corporation/Hankyu REIT

Hankyu Corporation, headquartered inbest-in-class properties for environmen-

with the surrounding ecosystem inOsaka, is a core company under thetal and social awareness. High marks

mind to create spaces for recreation

Hankyu Hanshin Holdings Group

were given for (1) environmental con-and relaxation where events such as

umbrella and is engaged in urban trans-

sciousness exemplified through energy-

fruit harvests and concerts can be held,

portation, real estate, and entertain-

saving initiatives put into place through-which contribute to the community;

ment and communication businesses.

out the facility, such as the installationand (3) utilization of the Hankyu

The company pursues real estate devel-of LED lighting in common areas, andNishinomiya Gallery to highlight local

opment, mainly along its railway tracks

also for taking a robust approach

history and culture by providing infor-

in Osaka, Kobe, Takarazuka and Kyoto.

toward the creation of energy utilizing

mation on the Hankyu Nishinomiya

The company jointly owns HANKYU

photovoltaic and wind-generated

Stadium, which once stood on this site,

NISHINOMIYA GARDENS, a commercial

power; (2) establishment of a rooftop

and the installation of a diorama model

facility near the Hankyu Nishinomiya-garden—Sky Garden—and engage-of the stadium and the station area

Kitaguchi Station, with Hankyu REIT,

ment in large-scale greening activities

along with a home plate monument.

Inc., also headquartered in Osaka. Thisfacility contributes to revitalization of
the area along the tracks.
DBJ awarded DBJ Green Building
Certification to HANKYUNISHINOMIYA GARDENS, given to
HANKYU NISHINOMIYA GARDENS (Sky Garden)

82

Annual Report & CSR Report 2016

CSR through Investment, Loan and Other Businesses

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

Case Study

Kansai Airports
Therefore, DBJ worked alongside 12

city of Osaka, was established inprecedent for the anticipated increaseother financial institutions to arrange

December 2015 by a consortium of 32

in airport privatization initiatives andsyndicated loans for this project. This

companies, including ORIX

felt the project would refresh andarrangement marked a first, as project

Corporation, France’s VINCI Airports

enhance the function of these airports

financing for a concession in Japan, and

S.A.S., and prominent businesses in theas international hubs in the Kansai

also broke previous records in terms of

Kansai region. Currently, the company

region and, by extension, contribute toamount, as the highest ever executed inoperates Japan’s largest airport conces-

revitalization of the Kansai economy.

Japan.

CSR Report

DBJ saw this project as setting a

Kansai Airports, headquartered in thesion project—“Qualified Project Etc. for
Airport Operation of KansaiInternational Airport and Osaka
International Airport” (integrated operation of both airports)—based on anagreement with New KansaiInternational Airport Company, Ltd.,
that grants it the right to operate public
facilities.

Case Study

Kansai International Airport

Photo courtesy of Kansai Airports

Various Initiatives to Encourage Greater Utilization of PPP/PFIIn June 2013, DBJ set up PPP/PFI

been held 51 times, as of the end of fis-

tivate and support the formation of

Promotion Centers in the Regionalcal 2015, in various areas, and we arediverse PPP/PFI projects, provide risk

Planning Department of its head office,working to organize a regional platform

capital and actively engage in regional

branches and offices to implement

for PPP/PFI appropriate to each region.

revitalization through greater PPP/PFI

broad-ranging initiatives from theAlso, since October 2014, we have cre-utilization on our good relations with

upstream stages. We aim to resolve

ated opportunities for PPP/PFI

the Japanese government, PFIPCJ, local

such issues as rebuilding public infra-

Academy, which utilizes the videocon-

governments, enterprises, regional

structure under the current environ-

ferencing and other systems at our

financial institutions and other organi-ment of fiscal constraints and a dwin-

head office to facilitate participation.

zations.

dling population and to encourage

PPP/PFI Academy is aimed primarily at

greater PPP/PFI utilization.

members of regional municipal bodies

A fine example of our PPP/PFI efforts

and regional financial institutions. The

is our PPP/PFI Promotion Seminar,

program is available across the country

which in collaboration with regionaland has attracted participation from afinancial institutions, the Japanese

total of about 900 people.

Cabinet Office and the Private Finance

Going forward, DBJ will continue toInitiative Promotion Corporation ofpromote studies and access to informa-

Japan (PFIPCJ) and other bodies, hastion and advice as well as efforts to cul-

PPP/PFI Academy in progress

Annual Report & CSR Report 201683

Regional Revitalization Tailored to Regional Needs
Regional Revitalization
Problems associated with a shrinking labor force and the graying of society are starting to appear inregional areas of Japan, and a pressing question is how to deal with this situation. Regional revitalization initiatives are beginning to appear, through efforts not only in manufacturing sectors but also
in non-manufacturing sectors to improve productivity and by turning destinations into appealing
brands through efforts to revitalize tourism, drawing inbound visitors and otherwise strengthening
tourist-oriented services. This movement requires a more extensive approach—horizontally and vertically—in collaborative efforts among industry, government, academia and financial institutions.

Case Study

Initiatives Coinciding with Opening of Hokkaido Shinkansen Route:
South Hokkaido Railway/Noguchi Kanko/Tsuruga Kanko Kaihatsu (Tsuruga Group)

Various initiatives are being undertak-Line, an existing parallel railway, andLtd., headquartered in the city ofen in Hokkaido to revitalize thecommenced operations.

Kushiro, Hokkaido, has an early

regional economy, taking advantageof the opportunities afforded by the
March 2016 opening of a shinkansen

High-quality accommodations are
opening, as well.
In April 2016, Noguchi Kanko Co.,(bullet train) route to Hokkaido,Ltd., headquartered in the city ofJapan’s northern island.

Noboribetsu, Hokkaido, renovated theAugust 2016 opening of the Onuma
Tsuruga Auberge EPUY hotel in frontof JR Onuma Koen Station on its calendar.
DBJ sees these initiatives enhancing

east annex of the Yumoto Takubokutei

the quality of the sightseeing experi-

Hokkaido Shinkansen route, Southhotel at Yunokawa Onsen, Hakodate,ence in Hokkaido, and has provided

Hokkaido Railway Company, head-and reopened the facility under thefinancing to the respective companies

quartered in the city of Hakodate,name Hakodate Umi no Kaze.

for their projects.

Coinciding with the opening of the

Hokkaido, took over the JR Esashi

South Hokkaido Railway
Nagamare, presenting locally inspired designand services

Case Study

And Tsuruga Kanko Kaihatsu Co.,

Hakodate Umi no Kaze exterior

Conceptual drawing of Onuma Tsuruga
Auberge EPUY hotel

Niigata Airport Building

Niigata Airport Building Corporation,

capital to fund this work were press-

en its financial base and worked close-

headquartered in the city of Niigata,ing issues for the company.

ly with regional financial institutions to

Niigata Prefecture, is a prefecture-driv-

Regular domestic flights operateen, third-sector company operating

between Niigata and six cities withand managing the terminal building atseven airports. International charter

Niigata Airport, a regional hub airport

flights and regular flights connect

on the Sea of Japan coast. This termi-

Niigata to five cities. It is a key infra-

nal building opened 20 years ago, andstructure facility with annual capacity

upgrades to facilities and equipment

for a million travelers. DBJ was keen toas well as the raising the necessary

help Niigata Airport Building strength-arrange syndicated loans.

Niigata Airport Terminal Building exterior

84

Annual Report & CSR Report 2016

CSR through Investment, Loan and Other Businesses

Regional Revitalization
Case Study

Shelterscale facilities and high-rise buildings

zation of human resources and natural

city of Yamagata, Yamagata Prefecture,

made of wood rather than steel-rein-

resources based on high technologicalfabricates and sells wooden structuralforced concrete. Shelter also utilizes

capabilities in wooden buildings and amaterials and also designs and con-knowledge and technologies integrat-

distinctive network.

structs medium- and large-scale wood-ing various aspects of its building

en buildings and custom-built houses.

expertise, from material development

The company has earned high marks

to design and construction, and con-for earthquake-resistance and fire-

tributes to regional revitalization, nota-

proof features developed first in Japan,

bly the use of locally sourced materials

including the KES System, a joint sys-and support for sixth-sector industrial-

tem for wooden structures using metal

ization of forestry in collaboration withconnectors, and COOL WOOD , woodforestry-related business operators.

®

®

CSR Report

Shelter Co., Ltd., headquartered in thematerials that can withstand fire for

DBJ has provided financing via thetwo hours. Such cutting-edge wooden

Regional Areas Genki Program for ini-

structure technologies present new

tiatives undertaken by Shelter that con-possibilities for construction of large-

tribute to the region through the utili-

Nanyo City Cultural Hall (certified byGuinness World Records as world’s largest
wooden concert hall)

Nakabayashi Co., Ltd., headquarteredum-term business plan carrying thefood supply.

in Osaka, was established in 1923 as acatchphrase “Always onto the next

DBJ ascertained that Nakabayashi

bookbinding business and has sincething” in 2015 and has been working

qualifies under its support program forbecome a major manufacturer with ato provide products and services

leading-edge manufacturing industries

leading share of the domestic statio-

geared to the changing times andand extended loans through its

nery market, underpinned by hit prod-

market needs. The company seeks to

Regional Areas Genki Program.

ucts such as refillable albums, as wellcreate jobs and contribute to local

as notebooks and journals. Not limit-

industry through new business pur-ing itself to paper products, the com-suits, including cultivation of vegeta-pany has expanded its lineup to

bles at its factory sites and power gen-include security-related items such as

eration using woody biomass, and isshredders and key cabinets.

vigorously addressing social issues,

Case StudyNakabayashi

Management formulated a medi-such as concerns about energy andProduct lineup

Case StudyCTB Media

CTB Media Inc., headquartered in therooted in the community. This includes

will enable CTB Media to provide

city of Beppu, Oita Prefecture, is a

programs highlighting local content

high-level services, such as high-speed

community-focused cable TV provider

that the company produces on its own

Internet access and 4K/8K broadcasts

offering triple-play services—TV,for broadcast as well as fine-tuned fol-to customers in its service area.

broadband Internet and landline

low-up services.

phone—over a service area covering

To enable CTB Media to procure

the city of Beppu and the town of Hiji,funds for a fiber-to-the-home (FTTH)

also in Oita Prefecture. The company

project requiring a considerable invest-

maintains a high share of the market

ment, DBJ arranged a syndicated loan

in its coverage area, thanks to the suc-in collaboration with regional financial

cess of a marketing strategy firmly

institutions. The FTTH infrastructure

Exterior view of head office

Annual Report & CSR Report 201685

Regional Revitalization
Case Study

NOUSAKU

NOUSAKU CORPORATION headquar-niques to enter fields such as the med-company’s business, which lends atered in the city of Takaoka, Toyama

ical industry and create new markets

quality of vitality to area-based indus-

Prefecture, is a metal casting manu-

and has been making great efforts intry through cast-metal production andfacturer, which is well known for its

industrial tourism. In 2016, as it marks

development, showcases monozukuri

copperware. Making the best use of

its 100th anniversary, the company is(craftsmanship) manufacturing tech-techniques and materials (e.g., pureplanning a future relocation to aniques, and the company’s approach-tin, which is malleable and bendable),

newly built head office and foundry

es—for example, establishing a venue

NOUSAKU makes and sells stylishlythat will not only increase its produc-that functions both as a tourist infor-

designed items, combining a tradition-

tion capacity but will also enable it tomation center/community space

al casting technique passed down infulfill a role in industrial tourism: offer-

where local citizens and members of

this area for hundreds of years with aning foundry tours and workshops totraditional trades can gather and as ainnovative technique, developed invisitors.

key site taking on a hub role for indus-

collaboration with a government-

DBJ provided financing tosponsored industrial support organiza-

NOUSAKU under its Regional Areastion, which enables the production of

Genki Program, reflecting the fact thetrial tourism—epitomize omotenashi(hospitality).

items with intricate designs and detail.
The company simultaneously collaborates with designers in product planning and development and with local
foundries and studios to jointly meetgrowing demand, and this has made
NOUSAKU representative of the
Takaoka copperware industry.
NOUSAKU is using its advanced tech-

Green-sand casting

The KAGO unique bendable series

Juntendo Co., Ltd., headquartered inmaterials, home hardware, tools andfinancing to Juntendo through its

Masuda, Shimane Prefecture, wasworkwear. In addition, Juntendo con-

Regional Areas Genki Program primarily

established in 1894 as a pharmaceuti-

tributes to local communities from an

to finance construction of the Juntendo

cals sales business. Today, the company

emergency perspective by signing

Oba Store, which opened in July 2015

develops chain stores in four businessemergency agreements with local gov-

in Matsue, Shimane Prefecture.

formats: drugstores, stores catering toernments in areas where it operates

car drivers, book centers and home

stores and providing support, such as

centers—the core business—in the

supplying goods, in the event of a

Chugoku and Kinki regions. The com-disaster, and extends necessary servic-

pany is guided in these activities by aes, such as the sale of infrastructure

management philosophy “to be a partmaterials and emergency supplies.

Case Study

Juntendoof an infrastructure indispensable to86

DBJ sees the services that Juntendo

rural cities and mountain areas as wellprovides and its connection to local

as remote islands” and adheres to agovernment as contributing to theconcept that sees home centers asregion and by extension to stronger

stores specializing in agricultural-use

emergency capabilities for the entire

products, gardening items, building

Chugoku area, and therefore provided

Annual Report & CSR Report 2016

Juntendo Oba StoreCSR through Investment, Loan and Other Businesses

Regional Revitalization
Case Study

Shikoku Kakoki
Program. In the evaluation process,health status and emerging healthtered in the district of Itano,

top marks were given for (1) promot-

trends among employees. Shikoku

Tokushima Prefecture, was establisheding high-level health and safety man-

Kakoki holds the domestic market’s

in 1961 as a manufacturer of tanks foragement and ensuring thorough labor

top share in filling equipment for liq-

the chemical and food industries, but

management, including efforts to

uid food products, and DBJ also pro-transitioned into a manufacturer ofstrictly regulate overtime and requiring

vided financing to the company

filling equipment for liquid food prod-anyone who works excessive hours tothrough its Regional Areas Genkiucts in 1967. Currently, the company

undergo a medical check; (2) conduct-

Program to help the company main-is a top local niche business with sys-

ing stress checks on all employees andtain and further reinforce its corporate

tem management demonstrating syn-analyzing mental health status in eachfoundation.

ergies derived through the integration

division based on the results, and alsoof three businesses—filling equipment

promoting measures to supportand related machines for liquid food

employee mental health from a pre-products, such as milk; packaging

vention standpoint while inviting

materials for food products; and pro-external specialists to run regular sem-cessed soybean products, such as tofu

inars on such topics as care overseen

and aburaage (deep-fried tofu).

by line managers and self-care pro-

DBJ provided financing to Shikoku

CSR Report

Shikoku Kakoki Co., Ltd., headquar-

Liquid food product fillingand packaging equipment

grams; and (3) breaking health check

Kakoki under the DBJ Employees’

data down according to division and

Health Management Rated Loan

career position attributes to pinpoint“Sato no yuki”
brand tofu

Original packaging
materials

Product lineup

Case StudyBe Smile Project

Be Smile Project (BSP), headquartered

BSP will pursue a range of business-in Kagoshima, Kagoshima Prefecture,es, including the restaurant business, toOperations*. Going forward, DBJ will

was recently established by Kinkoh

provide kuroge wagyu (Japanese-black

utilize its network and strengths in

Farm Co., Ltd., a company under the

category of beef) through an integrat-

information-gathering to support thegroup umbrella of KAMICHIKU Co.,ed structure that starts with feed pro-initiatives of BSP on the underlying

Ltd., headquartered in the city of

duction and runs to breeding and rais-

theme of sixth-order industrialization

Minamisatsuma, also in Kagoshimaing, and will strive to improve the val-of the livestock industry in Minami-

Prefecture. DBJ, along with Kinkoh

ue-added quality of local products in

Kyushu.

Farm and other operating companies,

Minami-Kyushu while promoting

including Agriculture, forestry and fish-

enhanced competitiveness in the live-

eries Fund corporation for Innovation,

stock industry.

Value-chain and Expansion Japan

under its Special Investment*See page 73.

To support revitalization of the live-(A-FIVE), headquartered in Chiyoda-ku,

stock industry through restaurant andTokyo; Itochu Feed Mills Co., Ltd.,other BSP operations that highlightheadquartered in Koto-ku, Tokyo; andlocal products, DBJ joined others, nota-

Kanematsu Corporation, headquar-

bly, A-FIVE, a feedstock producer;

tered in Minato-ku, Tokyo, as well as

food-related companies, including awith four other financial institutions,trading company; and regional financial

provided funding to BSP.

institutions, and provided risk capital

Grazing cattle

Annual Report & CSR Report 2016

87

Strengthening the Safety Net
Reconstruction Response
Earthquake, tsunami, nuclear power plant crisis—the Great East Japan Earthquake unleashed unprecedented damage, a major compound disaster the likes of which the world had never seen and one that
seriously impacted the economy of Japan. Five years has passed since that massive earthquake quite literally
rocked the nation. As disaster recovery shifts from the restoration stage to the reconstruction and growthstage, a different set of issues has beset each area devastated by destruction, and it is against this backdropthat fine-tuned responses are needed to address the situation in each area.
And then, in April 2016, Kumamoto was hit by several large-magnitude quakes, causing major damage
to the manufacturing supply chain, to tourism and to many businesses and industries. Here, too, a quick
response to restoration and reconstruction is needed.
Case Study

Funding to Support Reconstruction and Growth Following theGreat East Japan Earthquake

Since the Great East Japan Earthquake,stage is where enterprises that haveand loan activities progress, this amount

DBJ has supported the restoration andrestarted their production cultivate sales

may be increased to as much as ¥30.0

reconstruction of enterprises affectedroutes, collaborate with other enter-billion.

by the disaster by providing risk capitalprises to reinforce industrial competitive-

through collaboration with The Bank

ness, build infrastructure and reinforce

ducting business that contributes to theof Iwate, Ltd., The 77 Bank, Ltd., andtheir functions. In response to this situ-

reconstruction and growth of the affect-

The Toho Bank, Ltd., to structure eachation, DBJ, the three above-mentioned

ed region (including enterprises enteringof the Great East Japan Earthquakebanks and the Regional Economy

the area from other regions and newly

Reconstruction Funds. As of December

Vitalization Corporation of Japanestablished enterprises). The fund sup-2014, the region was moving from the(REVIC), set up new reconstruction andplies risk capital using such measures as

restoration stage of disaster recovery—

growth support funds. Initially, the total

subordinated loans and preferred shares,

recovering production facilities—to thevalue of the three new funds was set atadvancing a nationwide model that sup-reconstruction and growth stage. This

¥15.0 billion. However, as investment

ports regional growth and invigoration.

The new funds target enterprises con-

 Overview of the Funding to Support Reconstruction and Growth Following the Great East Japan Earthquake

Iwate Reconstruction
Growth Support Investment
L.P.

Name

Miyagi Reconstruction
Regional Vitalization
Support Investment L.P.

Fukushima Reconstruction
Growth Support Fund
Investment L.P.

Established

December 8, 2014
Each fund has ¥5.0 billion (which can be increased to ¥10.0 billion with
Scale of fundagreement by the fund's members).
General partnership (GP)Tohoku Fukko Partners Co., Ltd.
Limited partnerships (LPs) DBJ, The Bank of Iwate and REVIC DBJ ,The 77 Bank and REVIC DBJ, The Toho Bank and REVIC
Investment period of five years, duration of seven years and four months
Period(If necessary, however, it is possible to extend the investment period by up to two years
and the duration by up to one year.)
Case Study

Kumamoto Reconstruction Support FundWorking with The Higo Bank, Ltd.,

area. DBJ, which provides integrated

area and are well-acquainted with theand The Kagoshima Bank, Ltd., DBJ

investments and loans, is working

local state of affairs to execute viable

arranged the Kumamoto Recon-alongside regional financial institutions

and effective support measures. The

struction Support Fund to supply risk

which have extensive networks andscale of this fund started out at ¥10

capital through such schemes ascustomer bases in the disaster-stricken

billion.

lump-sum loans for repayment andsubordinated loans to businesses
involved in disaster restoration andreconstruction efforts following the2016 Kumamoto earthquakes and tosupport quick restoration, reconstruction and revitalization in the affected88

Annual Report & CSR Report 2016

 Overview of the Kumamoto Reconstruction Support Fund

Name
Kumamoto Reconstruction Support Investment L.P.
Scale of fund¥10.0 billion
General partnership (GP)HSK&D Partners Co., Ltd., Higin Capital Co., Ltd.
Limited partnerships (LPs)
DBJ, The Higo Bank, The Kagoshima Bank
Investment period of three years, duration of 10 years
PeriodCSR through Investment, Loan and Other Businesses

Reconstruction Response
Case Study

Micro Top

Micro Top Co., Ltd., headquartered in

to manufacture and sell products other

Vitalization Corporation of Japanthe city of Hachimantai, Iwate

than molds, such as parts for informa-(REVIC) to support reconstruction andPrefecture, was established in 1993 astion equipment-related manufacturing

growth following the Great East Japana manufacturer of precision molds,

equipment and resin components, inEarthquake, provided financing towith those for mobile phones, digital

Japan and overseas.

Micro Top because the company will

Iwate Reconstruction Growth

be better able to contribute to region-

company’s mainstay products. Micro

Support Investment L.P., a fund jointly

al development with support to pro-Top’s highly accurate fabrication tech-capitalized by DBJ, The Bank of Iwate,

mote new business growth andnology has earned the company a stel-Ltd., and the Regional Economy

enhanced operating profitability.

CSR Reportcameras and hard disk drives being thelar reputation from business partners
not only at home but also abroad, andthe company has reinforced its overseas presence, mainly through the
opening of local representative officesin the Philippines and Thailand. In addition, the company is working to
expand its fields of business and reinforce its revenue base in the rapidlychanging electronic component industry by utilizing mold fabrication technology and resin molding technology
Case Study

Precision mold components

Ishinomaki Foods

Ishinomaki Foods Co., Ltd., headquar-ufacture and sell seafood caught off

to support the company’s efforts to set

tered in the city of Ishinomaki, Miyagi

the Sanriku coast.

up a new plant that would factor into

Prefecture, was established in July 2012.

Recently, the Miyagi Reconstruction

reconstruction and revitalization in the

As a wholly owned subsidiary of CELUXRegional Vitalization Support

affected area through local job cre-Holdings, Inc., headquartered in

Investment L.P., a fund jointly capital-

ation, first and foremost, but also

Minato-ku, Tokyo, which is building aized by DBJ, The 77 Bank, Ltd. and thethrough the processing and sale of sea-

business group comprising several res-

Regional Economy Vitalization

food caught off the Sanriku coast. Thistaurant chains, including Red Lobster

Corporation of Japan (REVIC) to sup-was the first instance of financing being

and Kurayamizaka Miyashita, mainly inport reconstruction and growth follow-

provided to a company whose out-of-

the Kanto region but complemented bying the Great East Japan Earthquake,area parent had purposely entered thea presence in Okinawa; Kyushu; theprovided financing to Ishinomaki Foods

disaster-stricken region.

Kansai region, which centers on Osaka;and the Chubu region, which centers
on Nagoya, Ishinomaki Foods commenced joint acquisition of restaurants.
In December 2015, Ishinomaki Foods
welcomed the completion of a foodprocessing plant in Ishinomaki andbegan producing Sanriku Fresh Fried
Oysters. In this and other pursuits, thecompany makes the most of the network and product development capabilities of parent company CELUX
Holdings while striving to process, man-External view of head office factory

Annual Report & CSR Report 201689

Reconstruction Response

Case Study

Ouchi Shinko Chemical Industrial

Since initiating domestic production ofand the company has worked to coexist

rubber additives back in 1931, Ouchi

with the region while emphasizing

Shinko Chemical Industrial Co., Ltd.,

monozukuri (craftsmanship) manufac-

headquartered in Chuo-ku, Tokyo, hasturing with value.

secured a top position in Japan as a

DBJ provided financing to Ouchi

pioneer in the field of organic rubber

Shinko Chemical Industrial under thechemicals. The company pursues activi-Interest Rate Subsidy System for Special

ties in a wide range of business fields,

Zones for Reconstruction* to expand

including organic sulfur chemicals,

production facilities for pharmaceuticalpharmaceutical chemicals and environ-chemicals at the Sukagawa Plant.

mental chemicals, based on technologi-

The medical-related industry has

cal expertise accumulated during 85

been tapped as a key strategic sector inyears of corporate activity.

Fukushima Prefecture, and this project

Although the company sustained

has been certified as “a business related

major damage at two plants—theto improvement of technological stan-

Sukagawa Plant and the Haramachi

dards for medical care and provision of

Plant, in Sukagawa and Minamisoma,

high-level medical care, such as R&D on

respectively—in Fukushima Prefecture

new approaches to treat disease anddue to the devastation that unfolded

disability and the evolution of success-with the Great East Japan Earthquake,

ful results into viable companies.”

both plants quickly resumed operations,

External view of new annex at Sukagawa Plant

90

Annual Report & CSR Report 2016

*Interest Rate Subsidy System for Special
Zones for Reconstruction: Under the business facilitation and support system, theJapanese government provides an interest rate subsidy on financing required bybusinesses central to the advancement ofreconstruction promotion plans created byregional municipal bodies and certified by
the Japanese government to reconstruct
the areas affected by the Great East Japan
Earthquake.

CSR through Investment, Loan and Other Businesses

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

Case Study

Micronics Japan
upstream providers in the supply chain

Micronics Japan Co., Ltd., headquar-

Japan under the DBJ Enterprise Disasterfrom multiple perspectives, including

tered in the city of Musashino, Tokyo,

Resilience Rated Loan Program (DBJ

possible substitutes, and drafting risk-has developed and provided equip-

BCM Ratings). In the evaluation pro-

reducing measures, such as decentral-ment, machines and systems that sup-cess, the company earned high marks

ization of suppliers.

port the quality, performance and reli-for (1) establishing an enhanced disas-ability of ever-evolving IT devices, suchter prevention system through regular

as semiconductor testing units anddisaster drills and safety confirmation

semiconductor/LCD testing systems. Of

drills; (2) forming a corporate risk man-note, the company has captured theagement committee under a matrix

top share worldwide for probe cards,

structure comprising business divisions

which are used to check the electricaland working groups, and vigorously

properties of wafers during the mass

implementing measures to address var-

production of semiconductors.

ious business risks; and (3) evaluating

Case StudyCSR Report

DBJ provided financing to Micronics

Since its establishment in 1970,

External view of the Aomori Plant

Japan Motor Terminal

Japan Motor Terminal Co, Ltd., head-warning system at each terminal as

mutual command with the Bureau ofquartered in Chiyoda-ku, Tokyo, con-part of a facility preparedness initia-

Social Welfare and Public Health andstructed and operates public truck ter-tive, thereby enabling swifter initial

the Tokyo Route Truck Conference

minals in four locations adjacent to

responses by users, and reinforcing

Association, which are members of aexpressway networks in the Tokyo

overall facility safety through suchdisaster response team for regional

metropolitan area. These terminals

approaches as the construction oftransport bases set up in the event ofhelp to streamline logistics andintegrated logistics facilities with seis-an emergency, and predetermining

improve urban functions as bases of

mically isolated structures and thethe division of roles among the par-transport between cities and freight

installation of emergency-use, in-ties, as well as associated administra-collection and delivery inside Tokyo,

house generators; (2) considering thetive duties, and also constantly con-and also as transit points for national

recovery priority of operations in an

ducting drills on emergency supply

logistics activity.

emergency situation and the number

transport operations.

DBJ, based on its business continu-

of employees needed to execute these

ity management ratings (DBJ BCM

recovery works based on the targeted

Ratings), provided financing to Japan

recovery schedule, and conducting

Motor Terminal under the DBJ

assembly drills for employees as wellEnterprise Disaster Resilience Rated

as terminal recovery drills in coopera-

Loan Program. In the evaluation pro-tion with associated facility providers

cess, the company earned high marks

to verify the effectiveness of recoveryfor (1) introducing an earthquake earlyplans; and (3) establishing a chain of

Keihin Truck Terminal

Annual Report & CSR Report 201691

Environmental Management

DBJ aims to realize a more prosperous sustainable society byenvironmental problems. In addition, in November 2002,

achieving harmony through the triple bottom line of society,we acquired ISO 14001 certification, and in November 2011,

the environment and the economy. We recognize the resolu-

we signed the Principles for Financial Action towards ation of environmental problems as an issue that is common

Sustainable Society (Principles for Financial Action for the 21stto all humankind. For this reason, DBJ has contributed to theCentury). Such efforts indicate our organizational commit-

formation of an environmentally friendly economic society.

ment to environmental preservation and the realization of a

In June 2001, DBJ became the first Japanese bank tosustainable society.

sign the UNEP Statement by Financial Institutions on the

In line with the Basic Environmental Policy formulated

Environment and Sustainable Development, promising toin October 2008, DBJ is promoting efforts in the regions

strive for harmony between economic development andwhere its branches and offices are located.

environmental conservation and to cooperate in resolving

DBJ’s Basic Environmental Policy
Promulgated and Put into Effect October 1, 2008

Purpose
Article 1. DBJ aims to realize a more prosperous sustainable society
by achieving harmony through the triple bottom line of society,the environment and the economy. We recognize the resolutionof environmental problems as an issue that is common to all
humankind. For this reason, DBJ has established a policy thataims to contribute to the formation of an environmentally friendly
economic society.
Promotion of Environmental Measures through Investment and
Loan Activities
Article 2.
1. Through its investment and loan activities, DBJ supports global
warming prevention measures and the promotion of a recyclingoriented society. In addition, by supporting environmentally
sustainable corporate management by its clients, DBJ contributes
to their creation of environmental measures and to the realizationof a sustainable society.
2. DBJ contributes to clients’ environmental measures throughthe risk evaluations of investment and loan activities from anenvironmental perspective.
Promotion of Environmental Awareness throughEnvironmental Communication
Article 3.
1. Through continuing research and advisory activities relating toenvironmental issues, DBJ seeks to help resolve environmental
issues through enhanced awareness, thereby contributing to therealization of a sustainable society.
2. DBJ seeks to promote environmental awareness throughinternational cooperation, including the distribution of information
about environmental initiatives by Japan.
3. DBJ endeavors to improve its initiatives by sharing information on
its environmental activities and through communication with society.
Promotion of Environmental Awareness Activities in Offices
Article 4. DBJ complies with environmental laws and regulations,and promotes activities to reduce the environmental effect of its
operations. To these ends, DBJ seeks to contribute to the creationof environmentally friendly office environments through theactivities indicated below.
(1) Promotion of resource and energy conservation and recycling
activities(2) Promotion of environmentally friendly sourcing of supplies(3) Prevention of environmental pollution
Promotion of Environmental Awareness
Activities in Communities
Article 5. By cooperating with community environmental
improvement initiatives, such as measures to prevent heat islands,
DBJ works to contribute to the creation of environmentally friendly
regional societies.

Putting into Practice DBJ’s Basic Environmental Policy
Promotion of Environmental Measures throughInvestment and Loan Activities

Promotion of Environmental Awarenessthrough Environmental Communication

DBJ’s investment and loan activities support projects

DBJ addresses environmental problems by conducting

designed to prevent global warming and create a recycling-

ongoing environmental studies and proposals. These efforts

based society. Furthermore, we promote clients’ efforts

help to enhance environmental awareness, support involve-

toward environmentally conscious management. By con-ment in environmental issues and contribute to the realiza-

tributing to clients’ environmental measures, we help totion of a sustainable society.

achieve a sustainable society.





and 78.)

DBJ Green Building Certification (See pages 43 and 82.)



92

Communication Focused on the Environment (See page 70.)

DBJ Environmentally Rated Loan Program (See pages 41Annual Report & CSR Report 2016

Communication on Regional Revitalization (See page 70.)

Communication Through International Cooperation (Seepage 71.)

Promotion of Environmental Awareness
Activities in Offices

Promotion of Environmental Awareness
Activities in Communities

DBJ works to reduce the environmental effect of its opera-

By cooperating in community environmental improvement

tions beyond what is required by environmental regulations.

initiatives, such as measures to prevent heat islands, DBJ

As such, we promote the measures described below in anworks to contribute to the creation of environment-friendly

effort to make our offices environment-friendly.

regional societies.

• Promotion of recycling and resource andenergy conservation• Head Office
Uchimizu Project 2015

Resource- and Energy-Saving Efforts
Year Ended
March 31,2015

Year Ended
March 31,2016

Copy and printing paper usage（kg）

60,13960,39359,286

Waste emissions（kg）

33,97633,366

31,7354.05 million

4.02 million

4.02 million

10,083

9,633

10,094

Energy consumption（kWh）
Water usage（m3）DBJ participated in the Uchimizu Project 2015, a campaign
hosted by the Uchimizu Project District Executive Committee(the Council for Area Development and Managementof Otemachi, Marunouchi, Yurakucho/the Ecozzeria

CSR Report

Year Ended
March 31,2014

Association/the OMY Area Management Association/
Yuraku-cho Shuhen Machizukuri Kyo-gikai, Ministry of theEnvironment, Tokyo Metropolitan Government and Chiyoda

Note: Head office building onlyCity). DBJ has been participating in the Uchimizu Project• Promotion of environmentally friendly sourcing of
supplies

since 2008.

In line with the Law Concerning the Promotion of
Procurement of Eco-Friendly Goods and Services by the Stateand Other Entities (Law on Promoting Green Purchasing),
which went into effect in April 2001, DBJ implemented initiatives to purchase products and services with lower environmental effects. We have continued to practice green purchasing following our privatization.
Achievements of the Green Procurement Program
for Typical Items
Year Ended March 31, 2016

Paper

100%

Stationery

100%

Equipment

100%

Office equipment

100%

Lighting

100%

Note: Excludes printing paper, media cases, labels, and other items that were purchasedon the market that do not comply with the prescriptions of the Law Concerning
the Promotion of Procurement of Eco-Friendly Goods and Services by the Stateand Other Entities but that were purchased nevertheless on the basis of certain
characteristics or functional requirements.

• Prevention of environmental pollution
DBJ complies with environmental laws and regulations.

• Hokuriku Branch
Kanazawa Eco Suishin Jigyousya Network
Since fiscal 2004, the branch has participated in the
Kanazawa Eco Suishin Jigyousya Network, undertaking
initiatives to (1) reduce waste, (2) conserve energy and(3) promote green purchasing.
• Kansai Branch
Kansai Eco Office Declaration
Registered since 2008, the ”Eco Office Declaration” callsfor (1) a summer ”eco style,” (2) enforcing energy saving,(3) promoting green purchasing, (4) curbing automobile useand (5) engaging in waste recycling.

Annual Report & CSR Report 201693• Shikoku Branch• Kyushu Branch
Cleanup/beautification activity—Tenjin Clean Day

Earth-Friendly Office
In fiscal 2009, we registered with the “Earth-Friendly

We participated in the

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

Tenjin Clean Day activity

mental department. We continued these activities in fiscal

sponsored by the We Love

2015, and made efforts to (1) curb paper consumption, (2)Tenjin conference andpromote the use of recycled prod-

helped to clean up theucts, (3) raise employee awareness ofarea.

waste reduction and recycling activities, (4) save energy and water and• Other Branches(5) regulate office air at an appropri-

We implement initiatives such as collecting used postage

ate temperature.

stamps. We also have employees bring their own chopsticks
and cups to work to reduce waste.

Environmental Management Structure
DBJ has set up the Public Relations & Corporate Social

Environmental Management Officer

Responsibility Office within the Corporate Planning &The Environmental Management Officer is assigned to the

Coordination Department. This office spearheads environ-

Public Relations & Corporate Social Responsibility Office inmental management activities attended by all executives

DBJ’s Corporate Planning & Coordination Department. The

and employees.

officer confirms environmental education and training andauthorizes annual environmental targets.

Environmental Management Conference

Environmental Management Structure

The Environmental Management Conference deliberates

Environmental
Management Officer(Director in charge of Public
Relations & Corporate Social
Responsibility Office,Corporate Planning &Coordination Department)

Vice-Environmental
Management Officer(Corporate Planning &Coordination Department
Manager)

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

Implementation
division
Heads of each department
and officeEnvironmentalGroupmembers

Environmental Group
Promotion Officer
Environmental
Group Promoter
Employees

annual environmental targets and environmental management reviews.

Public Relations & Corporate Social
Responsibility Office, Corporate Planning &Coordination Department
In charge of DBJ’s environmental management activities
is the Public Relations & Corporate Social Responsibility
Office, Corporate Planning & Coordination Department.
In addition to setting environmental targets for each fiscal
year and confirming the degree to which established targets have been achieved, this office manages compliancewith relevant laws and regulations.

Environmental Group Promotion Officer
To promote environmental management activities, an
Environmental Group Promotion Officer and Environmental
Group Promoter are designated in each branch and department. The Environmental Group Promotion Officer appoints
an Environmental Group Promoter and manages the level ofachievement of annual environmental targets.

Employees
Employees are responsible for putting environmental management activities into action.
94

Annual Report & CSR Report 2016

Environmental Management

DBJ’s Primary Achievements in the Environmental Sector since Its Establishment
1999 October

Annual Report & CSR Report 2016

CSR Report

Designation of sustainable development as an objective by the Development Bank of Japan Act(Act No. 73 of 1999)
2001 April
Start of green procurement and environmental training
JuneFirst Japanese bank to sign the UNEP Statement by Financial Institutions on the Environment andSustainable Development
October
Hosting of discussions between UNEP and Wa no Kuni Financial Institutions on Environmental Considerations for
Financial Institutions
2002 March
UNEP 2002 Global Roundtable in Rio de Janeiro, Brazil: keynote speech
July
Launch of the Development Bank of Japan Environmental Policy (partially modified in April 2005)
November ISO 14001 certification
2003 October
Publishing of Environmental Report 2003 for a Sustainable Society (first annual edition)
October
Joint sponsorship of UNEP FI 2003 Global Roundtable in Tokyo, an international conference on finance andthe environment
2004 April
Start of DBJ Environmentally Rated Loan Program
September Second annual Sustainability Report
November Japan Carbon Finance, Ltd. (JCF) established
December Japan Greenhouse Gas Reduction Fund (JGRF) established2005 January
Assumption of chair of the UNEP FI Asia Pacific Task Force
September Third annual Sustainability Report
October
UNEP FI 2003 Global Roundtable
November Renewal of ISO 14001 certification
2006 May
Press conference to announce DBJ status as a signatory institution to the Principles for Responsible Investment
AugustCSR Report 2006 (fourth annual Sustainability Report)
2007 July
Annual Report & CSR Report (integrated annual report and CSR report)
2008 OctoberFirst Board of Directors and Executive Committee meetings of Development Bank of Japan Inc.; formulation of
Basic Environmental Policy and Environmental Management Regulations
2009 MarchFirst Environmental Club Syndicated Loan ECONOWA
April
Commendation for DBJ Environmentally Rated Loan Program: Environmental Development Award by ADFIAP
September Start of cooperation with regional financial institutions to prepare a system to implement Financing Employing
Environmental Ratings
2010 January
Basic cooperative agreement with the International Finance Corporation (World Bank Group financial institution
conducting the world’s largest international investment and loan activities for developing countries)
April
Business cooperation agreement to promote environmental measures with a non-life insurance company
December Selected as a designated financial institution under the Bill on the Promotion of Businesses to Develop andManufacture Energy and Environmentally Friendly Products (“Low Carbon Investment Promotion Act”)
2011 April
Established the DBJ Green Building Certification
November Signed the Principles for Financial Action towards a Sustainable Society (Principles for Financial Action for the
21st Century)
2013 October“Environment/Reconstruction Support Syndicated Loans” win the Grand Prize and Minister of the Environment
Prize in the Green Purchasing Awards
2015 May
Commendation for DBJ Green Bond: ADFIAP Awards 2015
October
Issuance of DBJ sustainability bonds

95

Business Continuity Plan (BCP)

DBJ is preparing a business continuity plan (BCP) to protect

spells out necessary disaster responses in an easy-to-

the interests of its stakeholders, including its clients, its

understand manner.

shareholder, and its executives and regular employees, as

When formulating policies to ensure the continuity

well as to fulfill its social mission. The BCP aims to ensure

and recovery of core operations, we took the approach of

the continuity and rapid recovery of core operations in theconsidering responses to cases in which important manage-

event of emergencies, such as natural disasters (in particu-

ment resources were damaged due to a large-scale disaster,lar, large-scale earthquakes), influenza and other pandem-

affecting head office (1) buildings and facilities,

ics, system failures and power outages.

(2) executives and regular employees, and (3) systems,

In addition to addressing the continuity of core operations and maintaining a plan to recover from disaster,the BCP specifies the initial actions that executives andinstead of considering responses to individual events suchas earthquakes and fires.
An overview of DBJ’s BCP is provided below.

regular employees should take in emergencies. The plan

1. Principles of Action for Executives and Regular Employees
The BCP defines three key goals regarding the fundamental

they must give first priority to the lives and safety of ourstance that executives and regular employees are to take inclients and our executives and regular employees, paying

the event of a large-scale disaster or other emergency. They

attention to television and radio broadcasts, evacuating

are to (1) ensure personal safety, (2) grasp the situation

calmly (without panic) and determining the safety of others.

accurately and (3) remain calm and collected. Specifically,

2. Core DBJ Operations
In the event of a large-scale disaster, DBJ has identified
the following six items as essential to the continuity of its

1) Confirmation and assurance of the safety of executives,
regular employees and visitors

core operations from the standpoint of (1) items that are2) Uninterrupted continuation of settlement-related businessfundamental and prerequisite to business continuity (such3) Reliable formation of the Disaster Response Committee

as facilities, personnel and systems), (2) DBJ’s social mission4) Restoration and maintenance of IT systems

and the public nature of its financing (such as investment

5) Confirmation of the status of clients in afflicted areas

and loan activity) and (3) responsibility to financial markets6) Rapid commencement of Crisis Response Operations(continuity of market settlements).

DBJ has formulated a BCP that prioritizes continuity of
the core operations described above.

3. BCP Operational Structure
When responding to an emergency situation, such as in

BCP Operational Structure Outline

the event of a large-scale disaster, in principle, the Disaster
Response Committee will be established at head office

President

and chaired by the head of the Corporate Planning &Coordination Department, who reports to the president.
This committee gives directions to DBJ’s head office andbranches regarding the continuation of core operations. If
maintaining operations at head office proves problematic,
the Kansai Branch shall serve as the alternative location.

96

Annual Report & CSR Report 2016

Disaster Response
Committee(Head Office)Backup office(Kansai Branch)

Directions

Head office departments, branches

Directions

4. Measures to Ensure Business Continuity
We have prepared a variety of measures to ensure business(3) Chain of Command and Delegation of Authority
To assure that decision-making concerning the continu-

continuity. The primary measures are introduced below.

ity of core operations is prompt and certain, in the eventthat the Disaster Response Committee is established, we(1) Enhanced System Robustness

have put in place a chain of command and an alternative

Ensured advanced security levels at the main center, andhierarchy by which authority can be delegated.

created a backup center to operate in the event that themain center ceases to operate.

(4) Clarification of Initial Response and Procedures forContinuing or Restoring Core Operations(2) Multilayered Communication Procedures

For individual business units, we have established indetermine the whereabouts and status of executives

advance the procedures for the initial response and theand regular employees even at night and on holidays. In

continuation or restoration of core operations so that

addition, distributed satellite telephones to key locations

relevant divisions can respond quickly and with certainty

and personnel to ensure multilayered communicationon core operations even when in a state of confusion.

CSR Report

Introduced a safety-confirmation system to quickly

procedures.

5. Initiatives to Maintain or Improve BCP Viability
DBJ conducts various types of instruction and training ofFurthermore, the BCP is revised to reflect training results

executives and regular employees to maintain or improveand recent information, and is reviewed by the Executive

the viability of its BCP.

Committee regularly and additionally as necessary, employing a Plan-Do-Check-Act (PDCA) cycle.

Annual Report & CSR Report 201697

Fostering Human Resources and Creating a Comfortable Work Environment

DBJ considers its human resources to be its most valuable

environment to bring out the best in every employee. The

assets and thus endeavors to develop its employees’ capa-

superior employee performance resulting from such efforts

bilities. DBJ actively works to build a systematic humanis what drives DBJ ahead on a daily basis and keeps it an

resource development system and a comfortable work

innovator, blazing the trails that Japan needs to follow.

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

specialists in many fields. Responding to society’s constantly

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

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

To develop its human resources, DBJ promotes autono-

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

resource development system that incorporates job rotation,

professionals through the vision of generalists who can be

performance evaluation, formal education and training.

Deploying the Target Management System
DBJ has introduced a Target Management System toPlan-Do-Check-Act (PDCA) cycle. Particularly regarding

encourage employees to work autonomously and proac-goal-setting, DBJ encourages its employees to work hard.

tively to develop their abilities and accurately evaluate such

DBJ does so by offering bonuses and other benefits based

initiatives. DBJ is working to enrich this system by havingon operating performance, with an emphasis on each ofsubordinates meet individually with superiors to set goals

them enhancing their medium- and long-term value bothand receive feedback, autonomously running through theinside and outside the company.

Creating a Comfortable Work Environment and Promoting Opportunities for Women
DBJ actively strives to cultivate a comfortable work environment.
To maintain an environment in which all employees canfeel secure, DBJ has made all employees aware of its policy
to prevent sexual and power harassment and has set up a
hotline to deal with such issues. Furthermore, to support
mental and physical health, DBJ provides its employees andtheir families with regular medical examinations and care
options. These systems include treatment by external spe-

Summary of Key Childbirth and Childcare Systems
Before birth

After birth

Restrictions on overtime
Exemption from duties for health checks
Leave of absence if commuting becomesdifficult
Maternity leave before andafter birthSpecial leave for spouse attime of child’s birth*1
Leave to participate inchildcare*2

cialists and access to counselors.
DBJ also has in place leave programs to give motivatedChildcare leave (up to age 2)

employees better opportunities for long-term employment.
We have enhanced our working and leave systems related to

Use of daycare*3

childcare and nursing care, through the introduction of flex-

Leave to care for a sick child(under primary school age)time and a system of leave for participating in childcare, as

Shortened working hours to facilitate childcare(up to grade three of primary school)

well as a program under which employees who have left DBJ
are eligible for re-employment and a system for continued

Flextime system to facilitate childcare(up to grade three of primary school)

employment options after retiring from full-time work.
Also, in our general business owner action plan, based on

Restrictions on overtime and work on a non-businessdays (up to grade three of primary school)

the Act to Advance Women’s Success in Their Working Life,
we set a target to increase the percentage of female manager by around 50% by the end of fiscal 2018, compared withthe level at the start of fiscal 2014. We aim to achieve thisgoal by running career training sessions designed to develop
managers and management training sessions especially for
women in management positions and by taking steps todeepen awareness of the work-life balance support system.
98

Annual Report & CSR Report 2016

*1 Spouse may take two days of leave just before or just after the birth of a child.
*2 Employee whose wife has given birth may take up to five days of leave, whennecessary, to care for a child under one year of age.
*3 A daycare facility is available nearby in the Yomiuri Shimbun Building.

Nursing Care Systems
Leave tocare forelderly

Shortenedworking hours
to facilitate
care of elderly

Exemptionfrom or
reduction in
overtime

Nursingcare leave

Flextime
system tofacilitate careof elderly

A Solid Human Resource Development System
DBJ’s financial professionals are supported by a well-multiple departments, employees are strategically assigned

developed education and training system. Mandatory train-

to a certain department to acquire highly specialized abili-

ing by level, combined with a host of elective training cours-

ties according to their skills and backgrounds. This systemes according to skills and needs and designed to respondof strategic job rotation not only enables employees to gain

to financial innovations and advancement, enables eachbroad-based practical experience that gives clarity to theiremployee to plan his or her career.

medium- to long-term career goals but also provides an envi-

For young employees, we established the DBJ Financial
Academy, which is designed to help employees acquireronment for quickly and firmly acquiring and improving theirhighly specialized skills.
In step with globalization, DBJ cultivates its employees

standing of finance, assuming they will become involved inable to perform in a variety of fields in domestic and over-advanced financial operations. We are expanding the acad-seas. To achieve this, DBJ enhances its studying-abroad pro-emy, focusing on courses such as Corporate Finance, thegram to overseas graduate schools, as well as actively assigns

Financial Instruments and Exchange Act, and M&A.

employees to domestic and overseas Group companies andRegardless of age, employees undergo on-the-job trainingthat provides hands-on exposure to work involving various

CSR Reportand maintain basic competencies and deepen their under-

related government agencies, thereby supporting skill development and network extension.

levels of responsibility. After experiencing employment in

DBJ’ s Human Resource Development System
Training by Level

Business-Related Training

Business-Related(Self-Training)

Management
training

Careerdevelopment
plan training

Managertraining

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Secondarytraining after
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courses and special courses)t&UD

Cultivation ofmanagement andleadership skills

Planned and continuous
HR development

Rating and asset
assessment
training

Documentation

Systems related
to investments
and loans

Basic
Legal

Mastery of DBJ
procedures andbasic processes

Mastery offinance andlaw'JOBODJBMBOBMZTJTUSBJOJOHtBookkeeping and AccountingtCompany AnalysistCase Studies

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Mastery of knowledge andskills needed for work

Strategic and focus areas,such as financial skills
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Domestic and overseas exchange
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PositionLife plan
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Distance learning, night courses, acquiring public qualifications, external seminars, lectures, etc.

Topmanagement
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External
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Mastery of basic Acquisition andcultivation ofbusiness
Mastery of widebusinessexecution skills related knowledge range of viewand knowledge
Mastery of knowledge andskills needed for work

Annual Report & CSR Report 201699

Seeking Higher Ethical Standards
For half a century, DBJ has led Japan’s economy as a

DBJ has long required its employee to take training courses

comprehensive policy-based financial institution. As DBJ

that address issues of human rights in addition to ensuringtransforms into a private-sector financial institution that stilllegal compliance and maintaining information security throughvalues the long-term perspective, neutrality, public-minded-training to prevent fraudulent access and information leaks.

ness and reliability it has cultivated, each employee is being
held to a higher ethical standard.

DBJ will henceforth devote even more resources toward
such efforts.

DBJ Financial Academy
Since May 2008, the DBJ Financial Academy typically has

addition to basic knowledge, such as fundamental cor-held several courses that meet two or three times a week

porate finance topics and corporate valuation methods

with the medium- to long-term objective of raising thethat can be applied, the academy provides a broad

level of financial expertise of primarily young second-year

range of core training on finance from an academic andemployees throughout the organization by strengthening

scientific perspective. Students from outside DBJ, suchtheir knowledge and understanding of advanced corporate

as employees of regional financial institutions, regional

financial business essential to DBJ’s business model. Duringmunicipal bodies and business partners, have also par-fiscal 2015, courses numbered 24 and covered Introduction

ticipated. Through these courses, we look forward toto Modern Finance, Corporate Finance, the Financial

opportunities for mutual exchange and the creation ofInstruments and Exchange Act, and IFRS Accounting:networks.

Foundations and Practice.
Through the DBJ Financial Academy, each employee
can seek to elevate his or her abilities in finance. In
DBJ Financial Academy Curriculum2015 Courses (run from May 2015 through March 2016)
Core courses (I)Introduction to Modern Finance
Financial Instruments and Exchange Act
Business Statistics
Basic Corporate Finance
M&A
Corporate Finance PracticeCore courses (II)Insolvency and Corporate Reorganization
IFRS Accounting: Foundations and PracticeFinancial System Theory
Financial Policy
Financial Expertise Follow-up PracticeInternational Finance

























100

Annual Report & CSR Report 2016

Elective courses
Behavioral FinanceReal Estate Finance
Macroeconomics and the Modern Japanese Economy
Real Options
Introduction to Integrated Reporting
Investment
Risk Management
Issues and Expectations for Japanese Public FinanceSpecial courses
Securitization
Hedge Fund Industry and Financial Regulation
Family BusinessSpecial Program for Regional Financial Institutions








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Intellectual Asset Report
DBJ’s executives and regular employees continuallytake on new challenges, while remaining firmly
committed to DBJ’s four core values: a long-term
perspective, neutrality, public-mindedness andreliability. The intellectual assets DBJ has built up
over the years help form a financial platform thatcan meet the needs of the times and enable DBJ
to provide services that extend beyond merely
providing funds. Employing these assets, we
endeavor to fulfill our role in enhancing socially
responsible activities among enterprises.

Intellectual Asset Management . . . . . . . . . 102
Financial Platform That Enables DBJ to
Meet the Needs of the Times . . . . . . . . . . 106

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Intellectual Asset Management

Corporate Value and Intellectual Asset Management
Intellectual Assets
Enterprises ensure ongoing prosperity and profit byIntellectual Asset Management Essential toEnhancing Corporate Valueconsistently differentiating themselves from competitors.

Although intellectual assets are intangible in the sense that

Differentiating the products and services they offer is athey are not recorded on a company’s financial statements,

large part of the process. To enhance their operations,they are a core component of corporate value. Clearly recog-

enterprises must identify their important management

nizing and thereby managing intellectual assets effectively is

resources and sources of competitiveness. Specific tech-considered vital to increasing corporate value.

nologies, expertise, human resources and business models

Listed companies are finding that proactively disclosing

are some factors that lead to differentiation but are invisible

intellectual asset information helps markets value them moreto the casual observer. Determining an entity’s true corpo-

appropriately. For this reason, the introduction of regulatory

rate value requires the evaluation of these company-specificframeworks to encourage or require listed companies tostrengths. DBJ’s activities related to intellectual assets aredisclose non-financial information has grown into a global

designed to foster the application of these intangible

trend, centering on Europe.

sources of corporate value that underpin a company’s
future economic performance.

DBJ’s View on Intellectual Assets
Dating back to the time of our predecessor, maintaining the

In the process, we have become a repository of intellec-

trust of our clients and society at large has been our mosttual assets, which when combined represent an extraordi-

important objective. From this standpoint, we have creatednary DBJ asset: our expertise in resolving issues through thea wide variety of networks spanning both the public andapplication of new financial methods, the widespread use ofprivate sectors.

our financial platform and our economic and social contribu-

Based on our core values, our executives and regulartions. This asset has led to our development of the financial

employees have continued working to enhance their ability

methods described below. It enables us to respond quickly toto evaluate enterprises and projects.

changing policy requirements and plays a major role in our

We have accumulated a wealth of expertise in theability to continue adding economic and social value.

screening and evaluation of projects and enterprises from

Since privatization, we have aimed to maintain our eco-

a long-term and objective perspective and a keen ability tonomic and social contributions. We believe that our ability

identify and address issues that are unique in terms of theto clearly identify and make use of intellectual assets will betimes or the local communities that face them.

an increasingly important factor in achieving this goal.

Relationships among Intellectual Assets, Business Model and Corporate Value
Corporate ValueBusiness Model

Financial
AssetsTangible
Fixed Assets(Created by DBJ from Ministry of Economy,
Trade and Industry materials)

102

Annual Report & CSR Report 2016

Relational
AssetsHuman
Resources

Intellectual Assets

Structural
Assets

DBJ’s Utilization of Intellectual Assets
One school of thought defines intellectual assets as theemployees who are professionals in various fields—as they

understanding of and reporting on an entity’s networks

address such issues. All DBJ executives and regular employ-and client bases (relational assets), management team andees work to maintain a long-term and neutral perspective,

employees (human resources) and intellectual assets andapproaching new business with a spirit of innovation andbusiness processes (structural assets). Below, we introduce

challenge.

DBJ’s intellectual assets and activities according to thissegmentation.

To impart various financial skills, DBJ maintains training
menus that include a 2.5-month financial analysis training
Intellectual Asset Reportcourse. This program, for all new employees, helps develop

Relational Assets

screening expertise. Our menus, combined with on-the-job

As our mission prior to privatization was to support projects

training, raise the level of specialist expertise among DBJ

that had policy significance, our system of planning andexecutives and regular employees. We maintain a number ofmaking investments and extending loans involved coopera-

personnel exchange and dispatch programs with domestic

tion with central government agencies and regional munici-

and overseas universities and research institutions, as well as

pal bodies. Now we take advantage of these networks inwith other international institutions, that help form our net-

our loan and Crisis Response Operations, making use ofworks. These programs help DBJ develop and introduce newinterest rate subsidy programs for the promotion of envi-

financial methods, as well as strengthen network ties.

ronmental management, as well as other interest subsidy

DBJ has also established the Research Institute of Capitalsystems put in place by national and regional municipal

Formation, which carries out financial research, as well as

bodies. DBJ also works to create and develop financial

research on global warming countermeasures and otherplatforms. To construct these platforms, we collaborate

efforts to create a sustainable society. The research that thewith public- and private-sector financial institutions in Japan

center produces from a neutral and long-term perspective

and overseas and maximize our networks of professionals,

is highly regarded by the academic community and otherincluding university professors, attorneys, and certified pub-

experts.

lic accountants. This multifaceted combination of networks
consisting of professionals in a host of fields in industry,

Structural Assets

academia and the government constitutes DBJ’s relational

Our introduction of new financial methods to Japan, ourassets.

work with other financial institutions to create financial platforms and our many other contributions to the

Human Resources

Japanese economy and society rely on our organizational

Appropriately executing medium- to long-term invest-

adeptness, that is, our ability to quickly ascertain emerg-

ments and loans requires all of DBJ‘s executives and regular

ing issues and deploy appropriate personnel. This ability,

employees to maintain a long-term perspective and makecombined with the long-term financial data we have accu-

financial decisions from a neutral standpoint. In an era

mulated over 50 years of investment and loan operations

characterized by increasingly complex economic and social

and a corporate culture of always considering projects in anissues and more sophisticated business skills, businesseconomically rational manner, as well as in terms of theirresults are significantly affected by DBJ’s ability to form

broader economic and social significance, constitute DBJ’s

its business and financial structure. Our ability to provide

structural assets, as does the smooth and rapid communi-

solutions that are appropriate for enterprises, as well as forcation process resulting from the common knowledge thatthe economy and society in a broader sense, depends on

has evolved through financial analysis training and otherthe ability of our human resources—executives and regularchannels.

Annual Report & CSR Report 2016

103

Initiatives Involving New Financial Methods That Utilize Intellectual Assets
We are a leader in leveraging our intellectual assets toReorganization Act procedures may be unable to procure

introduce new financial methods to Japan. Our pioneering

working capital or face other challenges as they wait for theefforts come from maximization of our intellectual assets,

viability of their plans to be reviewed but still require funds

cooperation with local communities and extensive cultiva-

for working capital and other applications to continue

tion of in-house human resources and expertise. Operating

operations and maintain value in such operations. We also

within complex financial markets, DBJ has maintained thesecreate business revitalization funds to help enterprises nor-

activities while continuing to control and hedge risk as

malize their operations through a process of business selec-

effectively as possible.

tion and concentration and to totally address issues, such as

The United Kingdom introduced the private finance ini-

debt reduction, as necessary.

tiative (PFI) scheme in 1992 to encourage private enterprises

In recent years, we have become actively involved in

to fund or manage projects that are typically operated bymezzanine financing. (”Mezzanine” literally refers to thethe public sector. As a leader in absorbing and accumu-

partial story between two main stories of a building.) In thelating such expertise, DBJ has participated in numerous

repayment hierarchy, mezzanine financing is lower than the

PFI projects in Japan. By shifting to the private sector thesenior financing* typically provided by financial institutions,

responsibility for constructing, maintaining and operating

so it is a higher investment risk. In the United States andpublic facilities, the country benefits from private-sector

other markets with a broad range of investors, mezzanine

management expertise and technical capabilities. By appro-

financing plays an important role in diversifying the types

priately allocating risks among the private and public sec-of funding that are provided. Mezzanine financing can betors, PFI is an efficient and effective way to provide public

used in a number of situations, such as business or capital

services. With PFI, project financing is the method generally

restructuring. Taking a long-term perspective, DBJ provides

used to raise funds, as project roles are allocated appropri-mezzanine financing as one of its tailor-made financing

ately and long-term business is assured.

solutions.

In the area of business revitalization, DBJ provides
various financing options. These include debtor-in-possession financing for enterprises that, after filing applications according to Civil Rehabilitation Act or Corporate

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Annual Report & CSR Report 2016

*Senior financing involves relatively low risk. In Japan, most corporate bond issues and funds provided by financial institutions aresenior financing.

Intellectual Asset Management

Relationship between Intellectual Assets and CSR at DBJ
The figure below contrasts intellectual assets as viewed

enterprises have cause to reconsider their conformanceby DBJ and DBJ’s role as seen by society. Evaluated in thiswith various laws and regulations, ensure safe and secure

sense, intellectual assets and CSR are two sides of the same

workplace and surrounding environments and provide qual-coin.

ity products and services through fair competition. These

For example, the DBJ Environmentally Rated Loan
Program, the DBJ Enterprise Disaster Resilience Rated

activities reinforce a company’s client base and raise corporate value by fulfilling social responsibilities.
By employing our intellectual assets in these ways, weLoan Program and DBJ Green Building Certification—fully

go beyond merely providing financing: we also play a rolemobilized through intellectual asset networks with central

in promoting increasingly sophisticated corporate CSR man-government bodies, regional municipal bodies, experts andagement.

clients—as well as our human resources, comprising execu-

As can be seen on pages 32 to 49, “Integrated

tives and regular employees, and our accumulation of expe-

Investment and Loan Services,” and on pages 73 to 91,

rience and expertise all serve not only DBJ’s vital CSR role

“CSR through Investment, Loan and Other Businesses,” DBJ

but also as a loan menu that buttresses our clients’ CSR.

is taking advantage of its various accumulated intellectual

At the same time, these same loan programs stronglyIntellectual Asset Report

Loan Program, DBJ Employees’ Health Management Ratedassets.

support the CSR activities of our business partners: these
Relationship between Intellectual Assets and CSRIntellectual Asset
Elements
Relational
AssetsNetworks andClient Base

Human
Resources
Management Teamand Employees

Structural
AssetsIntellectual Assets andBusiness Processes

CSR Elements
Client Satisfaction
Maintaining
Service Quality
Fair Competition

Human Resource Education
Labor Standards
Human Rights
Working Environment

Legal and Regulatory
Conformance
Corporate Ethics(Created by DBJ from Ministry of Economy, Trade and Industry materials)

Annual Report & CSR Report 2016105

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

Defining “Financial Platform”
In DBJ’s definition, ”financial platform” refers to theand a proven track record of transactions, precedents andamount and quality of funds to which corporate and other

other case examples to draw upon for future reference. For

clients have access, the systematic formulation of bases that

instance, approaches highlighting such financial schemes asaffect the diversity of fund-raising methods, financial exper-

PPP/PFI and syndicated loans are quite common these days,

tise and practices, market transparency and the degree

but when first introduced, these financial schemes requiredof market participation. The more complete the financial

specialized know-how and skills in arrangement, coordina-

platforms, which are indispensable to financial systemtion and other facets of financing, with a limited number ofsoundness and macroeconomic vigor, the greater is theireconomic agents participating.

effectiveness at promoting the revitalization of businesses

Furthermore, as financial platforms function inade-and urban and local communities and the creation of newquately if they are used by only a minority of participants, a

industries.

catalyst is needed to encourage participation from a broad

Financial platforms are not formed overnight. For new

range of players.

financial schemes to be effective as frameworks andOwing to our neutral position and advanced-player

systems that support corporate economic activities, it isstatus, we are perfectly suited to serve as the catalyst foressential that the financial institutions and providers offer-developing and maintaining financial platforms in coopera-

ing such schemes have experience and practical know-how

tion with other financial institutions.

Activities Involving Financial Platforms

106

DBJ fulfills a broad range of information functions. In addi-

first executive director. This institute creates the foundation

tion to corporate monitoring, DBJ exchanges information

for creating intellectual assets through collaboration with

with government agencies, regional municipal bodies andoutside experts, centered on university instructors. Taking

private financial institutions and coordinates their interests.

an academic and liberal perspective, the institute promotes

In the investment and loan department, DBJ promotes andresearch activities targeting a sustainable socioeconomic

helps develop financial platforms for structured financing,

structure. (For details, please refer to the Research Institutebusiness restructuring support, financing related to envi-of Capital Formation website, at http://www.dbj.jp/ricf/en/.)ronmental and disaster policies, M&A advisory services,

On pages 32 to 49, “Integrated Investment and Loan

safety nets and other functions. In the research depart-

Services,” and pages 73 to 91, “CSR through Investment,

ment, DBJ established the Research Institute of Capital

Loan and Other Businesses,” DBJ introduces its activities

Formation in July 1964, with Dr. Osamu Shimomura as its

involving financial platforms.

Annual Report & CSR Report 2016

Management Structure
DBJ’s most important public social responsibility is
to instill public confidence as a financial institution
and achieve the highest levels of managementtransparency. We employ an operations management
cycle that reflects the voice of society, particularly interms of addressing the issues society faces from along-term perspective, at the appropriate time andin the appropriate manner. We undertake projects
that are not only profitable but truly meaningfulfrom both economic and social perspectives, conduct
appropriate risk evaluation and work to offer
superior investment and financial solutions.

Corporate Governance . . . . . . . . . . . . . . . . . 108
Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Responding to Japan’s Stewardship Code . . . 113
Risk Management . . . . . . . . . . . . . . . . . . . . 114
Client Protection Management Basic Policy/
Declaration on Personal Information
Protection/Policy for Managing
Conflicts of Interest . . . . . . . . . . . . . . . . . . 118
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

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Corporate Governance

Basic Position on Corporate Governance
DBJ has formulated a corporate philosophy to encapsulate
management’s position regarding DBJ’s integrated investment and loan services. We consider this philosophy thecore of our corporate activities.

financial technology and R&D, based on skills gathered overmany years of experience.
Networks
Networks created with clients, regional municipal bodies
and other financial institutions.

Corporate Philosophy

Applying financial expertise
to design the future
We apply creative financing to resolve
client issues, as we work to earn
the trust of our clients and help themachieve their future prosperity.
Core Competencies
The core competencies described below support DBJ’s
efforts to realize its corporate philosophy.
Intention
The fundamental stance at the core of our corporate values:
long-term perspective, neutrality, public-mindedness andreliability.
Intellectual Assets
Expertise in fields including industry research, credit analysis,

We conduct our business in accordance with the action
guidelines described below as we strive to realize our corporate philosophy.
Customers First
DBJ will operate from our clients’ viewpoints, addressing
their challenges and sharing pleasure in their success.
Professional
With discernment and creative skill, DBJ will be a uniquefinancial platform providing integrated investment andloans both in Japan and abroad.
Global & Local
DBJ will maintain a long-term viewpoint, considering theneeds of the times, the world and the region.
Speed & Teamwork
Relying on skilled teamwork, DBJ will act rapidly and ingood faith, building strong foundations for clients’ trust.

Corporate Governance Measures and Their Implementation Status
Internal Organizations
DBJ elects outside directors from the standpoint of ensuring
management transparency and enhancing corporate
governance.
The Compensation Committee, which includes outside
directors, has been created to deliberate on director
compensation and advise the Board of Directors in thisregard. At the same time, DBJ has established a Personnel
Evaluation Committee comprising outside experts toevaluate personnel proposals on the selection andresignations, dismissals and term expiries of directors andAudit & Supervisory Board members.
In addition, the following committees have been
established.
Board of Directors
The Board of Directors comprises 10 members. To ensure
management transparency, two Board members are outside
directors. During the fiscal year ended March 31, 2016, theBoard of Directors met 13 times.
The following two members are outside directors:
Akio Mimura, Senior Advisor, Honorary Chairman of
Nippon Steel & Sumitomo Metal Corporation andKazuo Ueda, Professor, Faculty of Economics, theUniversity of Tokyo.

Audit & Supervisory Board Members, Audit &Supervisory Board
The Audit & Supervisory Board comprises five members.
This board convened 14 times during the fiscal year ended
March 31, 2016.
The Companies Act prescribes that a majority of Audit& Supervisory Board members be outside members (inDBJ’s case, three of the five). DBJ offices contribute threemembers (two members proper to DBJ and one an outside
member). Also, DBJ has created the Audit & Supervisory
Board Office, which under the Board’s direction, assists theBoard members, including outside members, in performing
their duties.
The three outside Audit & Supervisory Board members
are as follows:
Tatsuya Tsuboi, former President, Sumitomo Mitsui Trust
Research Institute Co., Ltd.
Makoto Ito, Attorney and Visiting Professor, Nihon
University Law School
Shinji Hatta, Professor of Graduate School of Professional
Accountancy, Aoyama Gakuin University
Content of Standards and Policies Related to
Independence in the Selection of Outside Directors
and Outside Audit & Supervisory Board Members
Not applicable.

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Annual Report & CSR Report 2016

Operations Audit Committee
The Board of Directors has established the Operations
Audit Committee, delegating to this body the authority
to deliberate important matters related to internal audits.
This committee met two times during the fiscal year ended
March 31, 2016.
Compensation Committee

Personnel Evaluation Committee
DBJ has established the Personnel Evaluation Committee,
composed of outside directors and other outside experts, as
an advisory body to the Board of Directors. The committee’srole is to evaluate personnel proposals on the selection of
directors and Audit & Supervisory Board members.
Executive Committee
The Board of Directors has vested in the Executive
Committee decision-making authority regarding theexecution of business.
Accordingly, the Executive Committee makes importantmanagement decisions. The committee met 33 times during
the fiscal year ended March 31, 2016.
Committees under the Executive Committee
Various committees have been established under the
Executive Committee and assigned specific decision-making
and deliberation tasks within each field of specialization,
excluding decisions made by the Board of Directors or the
Executive Committee.
ALM & Risk Management Committee
This committee deliberates and makes decisions pertaining
to DBJ’s portfolio risk management and asset/liability
management.
General Risk Management Committee
This committee deliberates and makes decisions onimportant items related to operational risk management,
system risk management, legal compliance, responses toantisocial forces and client protection management andother important items.
Committee on Investment and Loan Decisions
This committee handles, deliberates and makes decisions
related to investments and loans, as well as the investment
and loan management.
New Operation Screening Committee
This committee deliberates and makes decisions on thecommencement of initiatives involving new businesses.

Management Structure

The Compensation Committee, whose members include
outside directors, has been established as an advisory bodyto the Board of Directors from the standpoint of ensuringtransparency and objectivity regarding compensation. The
committee considers the type of executive compensation
structure that befits DBJ.

Advisory Panel on Investments and Loans
This panel handles the advance deliberation on andmonitoring of investments and loans.
Committee on International Operations
This committee deliberates items related to the overseas
business strategies, operations and management
conditions.
Core Business System Restructuring Committee
This committee deliberates items related to policies for
restructuring core business systems.
Advisory Board
Since DBJ’s establishment as a joint-stock company in
October 2008, the Advisory Board has been in place as anadvisory body to advise the Executive Committee, providing
advice on DBJ’s overall management. However, the 2015
revisions to the DBJ Act that went into effect on May 20,
2015, stipulated for an indefinite period obligatory measures
to be considered requiring that DBJ conduct its operations ina manner that would not obstruct appropriate competitive
relations with other entities in particular. Accordingly, thisboard is positioned anew as an advisory body to the Boardof Directors. As one of its roles, even more than before theAdvisory Board is tasked with deliberating and evaluating
important affairs related to ensuring appropriate competitive
relations are maintained with private financial institutions.
This board convened twice (once after the reorganization)
during the fiscal year ended March 31, 2016. This board
is composed of the following outside experts and outside
directors.
Outside Experts
Masayuki Oku, Chairman of the Board, Sumitomo Mitsui
Financial Group, Inc.
Kazuaki Kama, Executive Corporate Advisor, IHI
Corporation
Sakie Fukushima-Tachibana, President of G&S Global
Advisors Inc.
Katsunori Nakanishi, President & CEO, The Shizuoka
Bank Ltd.
Yoshizumi Nezu, President, Tobu Railway Co., Ltd.
Note: Kiyofumi Kamijo (executive corporate advisor of Tokyu
Corporation) and Fujio Cho (honorary chairman of Toyota
Motor Corporation) retired from the Advisory Board, effective
June 29, 2016, and on the same day, Yoshizumi Nezu(president of Tobu Railway Co., Ltd.) and Kazuaki Kama
(executive corporate advisor of IHI Corporation) were appointed
to the Advisory Board.

Outside Directors
Akio Mimura, Senior Advisor, Honorary Chairman of
Nippon Steel & Sumitomo Metal Corporation
Kazuo Ueda, Professor, Faculty of Economics, theUniversity of Tokyo
Special Investment Operations Monitoring Board
One of the measures of the 2015 revisions to the DBJ Act thatwent into effect on May 20, 2015, was in regard to Special
Investment Operations. The act stipulates the establishment of a
Annual Report & CSR Report 2016109

Special Investment Operations Monitoring Board as an advisory
body to the Board of Directors. This monitoring board is tasked
with deliberating projects and evaluating their performancein terms of appropriateness against policy objectives and withemboldening private-sector enterprises and complementing theiroperations while maintaining appropriate competitive relations.
This board convened once during the fiscal year ended
March 31, 2016. This board is composed of the following
outside experts.
Outside Experts
Masayuki Oku, Chairman of the Board, Sumitomo Mitsui
Financial Group Inc.
Shin Takagi, Vice Chairman & Senior Executive Directorof Japanese Bankers Association
Katsunori Nakanishi, President & Chief Executive Officer,
The Shizuoka Bank, Ltd.
Takashi Yamanouchi, Advisor, Mazda Motor Corporation
Keisuke Yokoo, Vice Chairman & President of Japan
Association of Corporate Executives
Fumiaki Watari, Honorary Executive Consultant of JX
Holdings, Inc.

Matters Requiring Authorization ofCompetent Minister
The DBJ Act prescribes matters for which Minister ofFinance authorization is required. Major items requiringsuch authorization are as follows:• Appointment and dismissal of representative directors andAudit & Supervisory Board members• Concurrent positions as directors• Amendments to Articles of Incorporation• Disposition of surplus funds• Merger, corporate split and dissolution• Basic policy on business plans, redemption plans andfund procurement
The organization outlined below has been put in place
to execute and supervise the abovementioned activities.

Executional and Supervisory Structure
General Meeting of
Shareholders
Matters requiring authorization ofcompetent ministert Appointment and dismissal of
representative directors and Audit &Supervisory Board memberst Concurrent positions as directors
t Amendments to Articles of Incorporationt Disposition of surplus fundst Merger, corporate split and dissolutiont Basic policy on business plans,
redemption plans and fund procurement

Board of Directors

Audit & Supervisory
Board Members,
Audit & Supervisory
Board

ReportingOperations Audit
Committee

Accounting
auditorCompensation
Committee

Cooperation

Personnel Evaluation
Committee

Internal Audit
Department
Reporting

Advisory Board

Executive Committee
Decision-making
bodies

ALM & Risk
Management
Committee

AuditsSpecial Investment Operations
Monitoring Board
Deliberative
bodiesGeneral Risk
Management
Committee

Committee on
Investment and
Loan Decisions

New Operation
Screening
Committee

Advisory Panel on
Investments andLoansCommittee on
International
Operations

Core Business
System Restructuring
Committee

AuditsDepartments
Subsidiaries

Executive Officer System
DBJ has an executive officer system to clarify responsibility
for the execution of duties and accelerate decision-making.
The Board of Directors has designated eight managing
executive officers, excluding officers who are concurrently
directors, and seven executive officers.

Status of Internal Control System
To ensure DBJ’s operational soundness, and in accordance

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with the Companies Act, the Board of Directors has
established an internal control system under the Internal
Control System Basic Policy.
Specifically, this system is designed to determine thestatus of legal compliance, risk management and internal
audits, as well as other items of managerial importance. Theinternal control system is designed to confirm applicableregulations and the status of their implementation invarious departments.

Corporate GovernanceInternal Control System Basic Policy
Purpose
Article 1. This basic policy has been established in accordance with Item 6,
Paragraphs 4 and 5, Article 362, of the Companies Act (hereinafter, the “Act”),
and Paragraphs 1 and 3, Article 100, of the Act’s Enforcement Regulations(hereinafter, “Enforcement Regulations”) to create a system (internal control
system) to ensure Development Bank of Japan Inc. (hereinafter, “DBJ”), andthe corporate group comprising DBJ and its subsidiaries (hereinafter, the “DBJGroup” or the “Group”), conducts operations in an appropriate manner.

System for the Storage and Management of Information Related to the
Execution of Duties by Directors
Article 3. Information pertaining to the execution of duties by directors shall be stored
and managed appropriately, and this information shall be accessible, as necessary.
Regulations and Other Systems Related to Managing the Risk of Loss
Article 4. To ensure the DBJ Group’s soundness of management and manage
risk properly, a risk management process that defines, evaluates, monitorsand controls risks with various characteristics encountered in the course ofthat business shall be put in place.
2. Management systems for integrated risk management shall be created. Also,
a committee for risk management shall be formed, and an executive and adepartment shall be assigned to take charge of risk management.
3. Risks shall be segmented into the following categories, and risk management
policies shall be established for each:(1) credit risk, (2) investment risk, (3) country risk, (4) market credit risk, (5)market risk, (6) market liquidity risk, (7) financial liquidity risk, (8) settlement
risk, (9) operational risk.
4. To the extent possible, the abovementioned risks shall be measured using aconsistent system, risk guidelines shall be established and the risks shall be managed.
5. The necessary systems shall be put in place to minimize the effects of economic
loss and credit collapse in the event of disaster, to ensure business continuity incrisis situations and to ensure a prompt return to normal functioning.
6. The Board of Directors shall establish an Internal Audit Basic Policy todetermine the status of internal control, including risk management. The
board shall receive prompt and appropriate reports of the results of internal
audits from internal audit departments.
Systems to Ensure the Efficient Execution of Duties by Directors
Article 5. The Board of Directors shall formulate management plans for the DBJ
Group and perform appropriate Group management control.
2. The Board of Directors shall establish an Executive Committee and delegate
decision-making on specific items to this council. In addition to making
decisions on the items with which it has been entrusted, to contribute to
expeditious decision-making the Executive Committee shall deliberate inadvance matters for resolution by the Board of Directors. Furthermore, theExecutive Committee shall establish various committees as advisory institutions
or as bodies to which to delegate decision-making on specific items.
3. To ensure the efficient execution of business based on decisions made by the
Board of Directors, regulations shall be established regarding the organizational
structure and the execution of tasks shall be allocated appropriately.
4. To enable swift decision-making, an executive officer system shall be

System to Ensure the Adequacy of Operations of the Group, Comprising
DBJ and Its Subsidiaries and Affiliated Companies
Article 6. The Board of Directors shall ensure the adequacy of operations of the
DBJ Group in accordance with the corporate philosophy.
2. The Board of Directors shall manage operations appropriately, in accordancewith the scope and characteristics of operations of its subsidiaries and affiliatedcompanies. Furthermore, the Board shall introduce appropriate measures fromthe perspective of legal compliance, client protection and risk management.
3. The Board of Directors shall create management systems for advance consultation,
reporting requests, guidance and other activities related to operations
management between DBJ and its subsidiaries and affiliated companies.
4. In addition to Paragraph 3 above, the Board of Directors shall establish thefollowing systems as appropriate and introduce necessary measures with regard
to subsidiaries whose operations require particular management based on thescale and characteristics of their activities (hereinafter, “Important Subsidiaries”).
(1) Systems for reporting to DBJ items related to the execution of operations bydirectors and other executives of Important Subsidiaries(2) Regulations and other systems related to managing the risk of loss of Important Subsidiaries(3) Systems for ensuring the efficiency of operations executed by directors andother executives of Important Subsidiaries(4) Systems for ensuring that the execution of operations by directors, otherexecutives and employees of Important Subsidiaries and other entities are inaccordance with the Act and the Articles of Incorporation
5. In accordance with the necessary scope of legal regulations, the Internal Audit
Department shall conduct internal audits of subsidiaries and affiliated companies andreport the results of these audits promptly and appropriately to the Board of Directors.

Management Structure

System to Ensure Compliance with Laws and the Articles ofIncorporation in the Execution of Duties by Directors and Employees
Article 2. The directors and the Board of Directors recognize legal complianceas one of the DBJ Group’s most important management issues. Accordingly,
DBJ has formulated a basic policy to ensure that the execution of duties bydirectors and employees (for companies that are not joint-stock companies,
people in equivalent positions, with the same applying below) complies
with laws and the Articles of Incorporation and establishes the corporate
philosophy and a basic policy on legal compliance.
2. A Compliance Manual, compliance program and internal regulations shall be createdin preparation to ensure compliance by executives with laws and regulations.
3. A committee shall be formed to promote and manage legal compliance, and an
executive and a control division shall be placed in charge of legal compliance.
4. A compliance hotline system shall be established to enable the swift detectionof acts that contravene laws and regulations and acts of potential concern fromthe perspective of legal compliance. In the event the department in chargeof this system receives an internal report, a report containing the content
of the notification shall be sent to an Audit & Supervisory Board member.
Furthermore, assurance shall be provided that the person making an internalreport shall not experience any disadvantage by having made such a report.
5. Preparations shall be made to ensure that DBJ has absolutely no connection
with antisocial forces that threaten social order or safety.
6. The Board of Directors shall formulate an Internal Audit Basic Policy
pertaining to the status of internal control, including legal compliance. This
policy shall establish internal audit departments that are independent of
departments responsible for the execution of business and that report audit
results promptly and appropriately.

established. Executive Officer Regulations shall be formulated to define
executive officers’ roles and responsibilities.

System Related to Employees Assisting the Audit & Supervisory Board
Members in Their Duties
Article 7. As a specialized organization to assist Audit & Supervisory Board memberswith their duties, if so requested by the members, an Audit & Supervisory Board
Office shall be established under the direction of the Audit & Supervisory Board.
Matters Concerning Employees Supporting the Audit & Supervisory
Board Members in Their Duties and the Independence of Such Personnel
from Directors and Ensuring Effective Instruction of Those Employees
Article 8. Employees supporting the duties of Audit & Supervisory Board
members shall perform their duties by working full-time and in accordancewith not only the directions and commands of the Audit & Supervisory Board
members but also personnel issues related to the employees and matters related
to the independence of such employees. Ensuring the effectiveness of directions
to such employees shall be left in the control of the Audit & Supervisory Board.
System for Reporting by DBJ Group Directors and Employees to DBJ’s Audit& Supervisory Board Members and Other Systems for Reporting to Them
Article 9. DBJ Group directors and employees shall report either directly or
indirectly to Audit & Supervisory Board members on the status of execution of
DBJ’s business and other necessary information.
2. If DBJ Group directors and employees become aware of any major potential damage to
the DBJ Group’s credibility or operating performance, they shall immediately report suchinformation, either directly or indirectly, to the Audit & Supervisory Board members.
3. If DBJ’s Audit & Supervisory Board members find that they require certain
information to perform their duties, they may request reports from DBJ
Group directors and employees as needed, and the party to whom therequest is addressed shall report appropriately.
4. Parties reporting to DBJ’s Audit & Supervisory Board members in accordance with Paragraph
3 above shall be ensured against facing any disadvantage as a result of such reporting.
Other Systems to Ensure Effective Audits by the Audit & Supervisory
Board Members
Article 10. In addition to attending meetings of the Board of Directors, Audit &Supervisory Board members may attend meetings of the Executive Committee
and other important meetings and offer their opinions as necessary.
2. The Representative Director shall exchange opinions with the Audit &Supervisory Board members regularly, or at their request. The Representative
Director shall also cooperate in the preparation of a reporting environment.
3. The Internal Audit Department works with the Audit & Supervisory Board
members to establish internal audit plans. The department reports theresults of internal audits and exchanges opinions and liaises with the Audit &Supervisory Board members when requested to do so.
4. Directors and employees shall cooperate with the Audit & Supervisory Board membersin their audit activities and shall respect the Audit & Supervisory Board Regulations,Audit & Supervisory Board members’ audit standards and other regulations.
5. To ensure the adequacy and reliability of accounting audits, directors and employees shallcooperate in creating a system to ensure the independence of the accounting auditors.
6. In the event of a request by Audit & Supervisory Board members for expenses
to execute their duties, these requests shall be handled in a smooth manner.

Annual Report & CSR Report 2016

111

Status of Internal Audits and Audits by Audit &Supervisory Board Members
DBJ has established the Internal Audit Department under
the direct supervision of the DBJ president and independent
from other operating departments. The department
conducts inspections to ensure the appropriateness andeffectiveness of internal controls, including DBJ’s overall
operational compliance and risk management, andperforms evaluations and recommends improvements.
The Operations Audit Committee deliberates and decides
audit plans, audit reports and other important mattersrelated to internal audits, and this information is reported to
the Board of Directors.
As of June 29, 2016, 20 people belonged to the Internal
Audit Department.
The Audit & Supervisory Board and the Audit &Supervisory Board members audit the execution of duties bydirectors, based on their audit policy and audit plans.
The Audit & Supervisory Board members attend Board of
Directors and other important meetings. When necessary,
they query the execution of business by directors, peruse
documents and conduct branch audits.

Status of Accounting Audits
DBJ has in place an agreement whereby Deloitte Touche
Tohmatsu LLC conducts accounting audits as its accounting
auditor. During the fiscal year ended March 31, 2016, these
operations were conducted by designated certified public
accountants (designated limited liability partners) Tomomitsu
Umezu (continuous audit period* of three years), Hayato
Yoshida (same, two years) and Takeshi Ishisaka (same, one year).
*The number of years of continuous audit as designated limited
liability partners is stated in accordance with the Companies Act. As
designated limited liability partners, the number of continuing yearsof audits conducted in accordance with the Financial Instruments
and Exchange Act was three years for Tomomitsu Umezu, twoyears for Hayato Yoshida and one year for Takeshi Ishisaka. The
number of business periods during which an audit was performedis the standard used to indicate the number of years. Assisting inthis audit were 73 people, including a systems specialist, a licensed
tax accountant, a specialist in determining fair value, a specialist in
pension mathematics and a real estate appraiser.

DBJ’s Audit & Supervisory Board members, Internal
Audit Department and accounting auditor periodicallyand as necessary exchange opinions and information,and communicate in an effort to ensure effective andappropriate audits.

Overview of Personal, Equity, Transactionalor Other Special-Interest Relationships
with Outside Directors and Outside Audit &Supervisory Board Members
Akio Mimura, Senior Advisor, Honorary Chairman of Nippon
Steel & Sumitomo Metal Corporation, is an outside directorof DBJ. DBJ has no special-interest relationship with Mr.
Mimura, and its business with Nippon Steel & Sumitomo
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Annual Report & CSR Report 2016

Metal Corporation is conducted normally.
DBJ has no special-interest relationship with any other of its
outside directors or outside Audit & Supervisory Board members.
DBJ has signed liability limitation agreements with its
outside directors and outside Audit & Supervisory Board
members, based on Paragraph 1, Article 427, of theCompanies Act.

Overview of Agreements with Outside Directors
and Outside Audit & Supervisory Board
Members under Paragraph 1, Article 427, of theCompanies Act (Liability Limitation Agreements)
DBJ’s Articles of Incorporation allow it to establish liability
limitation agreements with its outside directors andoutside Audit & Supervisory Board members, limiting their
responsibility for damages under Paragraph 1, Article 423,of the Companies Act, provided their duties are executedwith good intent and without gross negligence, to the total
amounts specified in each item in Paragraph 1, Article 425,of the Companies Act.

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

Requirements for Determination of Director
Appointments
DBJ’s Articles of Incorporation stipulate that shareholders
possessing at least one-third of the shareholder voting
rights exercisable shall attend the meeting and determine
the appointment of directors based on a majority
vote. The Articles of Incorporation further specify thatthe appointment of directors shall not be resolved bycumulative voting.

Limiting the Responsibility of Directors andAudit & Supervisory Board Members
To enable them to perform their duties and fulfill the roles
that are expected of them, in accordance with Paragraph
1, Article 426, of the Companies Act, DBJ has establishedin its Articles of Incorporation that the liability for damages
incurred by directors (and former directors) and Audit &Supervisory Board members (and former members) for theirnegligence of tasks may be reduced within the legal limit byresolution of the Board of Directors.

Requirements for Special Resolutions at theGeneral Meeting of Shareholders
To ensure a smooth General Meeting of Shareholders,
DBJ’s Articles of Incorporation stipulate that shareholders
possessing at least one-third of the voting rights exercisable
shall attend the meeting and determine by a two-thirds
majority vote the ”requirements for special resolutions at
general meetings of shareholders” provided in Paragraph 2,
Article 309, of the Companies Act.

Compliance

Specific compliance initiatives are as follows.
DBJ recognizes compliance as one of its most importantmanagement issues. As basic policies to ensure that theexecution of duties by directors and regular employees complies

2) DBJ’s executives and employees are well aware that DBJ
must conduct its businesses legally and appropriately and be
responsible for explaining its actions to the general public.
3) DBJ refuses all advances from anti-social forces andwith laws and regulations and the Articles of Incorporation, we

cooperates with police and other related institutions tohave formulated a corporate philosophy, a Basic Complianceprevent any sort of relationship with such elements.

Policy and other compliance-related regulations.
In addition to its basic regulations on compliance, DBJ has

Compliance System
DBJ has established the Legal and Compliance Departmentof a Compliance Manual and a compliance program. We seek toto take overall responsibility for planning, preparing andthoroughly implement the compliance activities outlined below.

adjusting compliance activities. In addition, DBJ has establishedManagement Structure

created and provided thorough notice throughout the organization

the General Risk Management Committee to reflect on legal

Compliance Principles

compliance matters, determine the extent of compliance, andDBJ has formulated the compliance principles indicateddeliberate on improvements to DBJ’s internal system.

below as part of its creation of compliance regulations.
1) DBJ’s executives and employees are keenly aware of DBJ’s
social mission and responsibilities as a public-sector bank andrecognize that illegal acts or improper business operations

DBJ also has established a Compliance Hotline. The
objective of this internal reporting system is to swiftly
identify and resolve any legal violations.
DBJ, in matters relating to managing conflicts ofharm the reputation of DBJ and interfere significantly withinterest, formulated as a basic policy “Conflicts of Interest

DBJ’s ability to fulfill its objectives under the New DBJ Act.

Management Regulations” against undue infringement

We also realize DBJ’s need to always conduct activitiesof the interests of its clients, and is preparing a system toappropriately and in compliance with the law.

manage conflicts of interest.

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

understanding of investee enterprises, their businessfor Responsible Institutional Investors (Japan’s Stewardshipenvironments and their management teams’ intentionCode)” (the “Code”).

and to share with investee enterprises in their long-term

Under the Code, stewardship responsibilities refers tostrategies. After investing, we leverage DBJ’s networks andthe responsibilities to enhance the medium- to long-term

strengths in information, industry research and financing

investment return for clients and beneficiaries by improving

technologies to provide total financing solutions thatand fostering investee enterprises’ corporate value andaddress the issues they face. Through dialog with investee

sustainable growth through constructive “purposefulenterprises, we work to realize their long-term development

dialogue” (engagement), based on an in-depth understanding

and maximize their corporate value over the long term.

of the investee enterprises and their business environment.
DBJ recognizes that, in addition to operational selection

DBJ believes that its investment operations have been
conducted in close affinity with the spirit of the Code. In

and focus and the realization of growth strategies, calls

providing risk capital and knowledge, we consider thefor corporate governance are growing. Recognizing

appropriate fulfillment of stewardship responsibilities by

the importance of the meaning of equity, in our equity

institutional investors to be of service from the perspective

investments we support the long-term advancementof working with diverse financial players to ensure theof the investee enterprises that are our clients, taking

smooth formulation of financial and capital markets.

particular note of their social responsibilities. When

Accordingly, we are in agreement with the meaning of the

making investments, we endeavor to gain an in-depth

principles provided in the Code.

Annual Report & CSR Report 2016

113

Risk Management

To ensure management soundness and safety, as well as

From the standpoint of comprehensive risk manage-

raise corporate value, DBJ works to manage risk appropri-

ment, DBJ has established a Risk Management Department,

ately in line with specific business and risk characteristics.

which is overseen by a director in an official capacity. DBJ

Controlling risk is an issue of utmost importance, andseeks to control its total risk within a specified target range.

therefore we have established risk management processes

In addition, we have set risk guidelines for each risk cat-and methods.

egory to help manage total risk.

Risk Management System
DBJ conducts risk management from the perspectives ofAsset/Liability and Risk Management System Overview

ensuring management soundness. To ensure appropriate management of individual risk categories, DBJ has
developed a risk management system that clarifies which
department is responsible for each type of risk. The Risk

President
Executive
Committee
ALM & Risk Management Committee

Management Department oversees comprehensive risk
management activities.
The ALM & Risk Management Committee deliber-

Risk Management Department

ates on important matters concerning risks and conducts
regular monitoring, in line with the basic policy related to

Credit Analysis Department

Treasury Department

comprehensive risk management approved by the Board of
Directors.
Investment and Loan Departments/Offices

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

roles in the screening and administering of credit forfrom a decline in or loss of the value of assets due to dete-

individual loans, and each department keeps the operations

rioration in the financial condition of the borrower. Creditof the other in check. The Committee on Investment andrisk management requires credit management of individual

Loan Decisions meets as needed to deliberate importantloans as well as bankwide portfolio management.

issues concerning the management and operation ofindividual loans. These mutual checking functions serve to

Credit Administration of Individual Loansensure the appropriateness of the lending operation andWhen making an investment or loan, DBJ examines the

management environment.

entity’s project viability and the project’s profitability from

Borrower Rating Systema fair and neutral standpoint. DBJ is not subject to the

DBJ’s borrower rating system measures creditworthinessBanking Act or the Act on Emergency Measures for theby combining an evaluation point rating and a borrower

Revitalization of the Financial Functions (Act No. 132 ofcategory rating, with the result quantifying a potential

1998) but carries out independent asset assessments in line

client’s credit circumstances. The evaluation point ratingwith internal policies for self-assessment of credit quality

selects indicator/evaluation categories that are common

based on the Financial Services Agency’s Financial Inspection

across all industries, scoring the creditworthiness of theManual. The results of self-assessments are subject to an

potential borrower quantitatively and qualitatively. On theaudit by an auditing corporation and are reported to theother hand, the borrower category rating measures specificmanagement. Credit risk and amounts are monitored toitems related to the borrower, looking at the borrower’s

confirm they are within the limits established for individual

realistic financial condition, cash flows and debt repayment

borrowers.

history, generating a comprehensive assessment of a

The sales and credit analysis departments hold separate

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Annual Report & CSR Report 2016

borrower’s repayment capacity.

Borrower Rating Classifications
Claims Classified
under the Financial
Revitalization Act

Borrower
RatingDefinition

Normalborrowers

1-8

Borrowers with favorable business conditions, who have been confirmed tohave no particular problematic financial circumstances

Borrowers
requiring
caution

9-11

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

Substandard
borrowers

12

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

Borrowers indanger ofbankruptcy

13

Borrowers in this category are having financial difficulties but are notbankrupt. Management improvement plans and the like are progressing
poorly, and these borrowers are highly likely to fall into bankruptcy.

Effectively
bankrupt
borrowers

14

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

Bankrupt
borrowers

15

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

NormalclaimsManagement Structure

Borrower Category

Substandard claims

Doubtful claims

Claims in bankruptcy,
reorganization claims
and similar claims

Asset Self-Assessment System

Portfolio Management

Asset self-assessments are used to define asset

DBJ performs a comprehensive analysis of data based onclassifications that will offset recoverability risk or the

borrower ratings, and calculates the loan portfolio’s overall

degree of risk of value loss, based on the borrower rating,

exposure to credit risk. Credit risk exposure can be classified

the corresponding borrower category and the collateralas (1) expected loss (EL), the average loss expected during

or guarantee status. Such assessments help DBJ establish

a specific loan period; and (2) unexpected loss (UL), thetimely and appropriate amortization schedules and reserve

maximum loss that could be incurred at a certain rate oflevels.

probability minus the EL. The EL and UL calculations arereported to the ALM & Risk Management Committee.
Through such monitoring and consideringcountermeasures, DBJ is committed to controlling risk anddevising effective measures to improve risk return.

Market and Liquidity Risk Management
Market Risk

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

Market risk can be broadly classified into interest rate risk,

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

exchange risk and stock market risk. Market risk describes

assets or interest income.

the risk of loss from fluctuations in the value of assets or

DBJ calculates and analyzes risk exposure with cash flow

liabilities (including off-balance sheet items) or the risk ofladder analyses (gap analysis), value at risk (VaR), interest

loss of revenues generated from assets or liabilities, owing

rate sensitivity analyses (basis point value), and otherto changes in interest rates, exchange rates, stock markets

methods. A portion of the interest rate risk associated withand various other risk factors in the markets. DBJ divides

lending operations is covered through interest rate swaps,

these risks broadly into interest rate risk and exchange risk.

which are used solely for hedging purposes. DBJ does not

Interest Rate Risk

have any trading-related risk because it does not engage inInterest rate fluctuations can create mismatches on rates

trading (specified transactions).

of interest on assets and liabilities or on interest periods,

Annual Report & CSR Report 2016115

Exchange Risk

At other times, because of market complexities, entities

Exchange risk is the risk of loss due to unexpected shifts

in these circumstances may become unable to participate

in exchange prices, and this risk affects entities holding a

in market transactions, compelling them to conduct

net excess of assets or liabilities denominated in foreigntransactions under substantially less favorable terms thancurrencies. DBJ’s exchange risk derives from foreign currency

otherwise would be the case. The risk of losses for theseinvestment and financing and issuing foreign currency

reasons is known as market liquidity risk.

bonds. DBJ uses exchange swaps and other instruments tohedge this risk.
DBJ uses swap transactions to manage counterparty risk,

As its main methods of acquiring funds, in addition toissuing corporate bonds and taking out long-term loans,
DBJ relies on the stable procurement of long-term funds

the risk that the counterparty in the swap transaction willfrom the Japanese government’s Fiscal Investment and Loanbe unable to fulfill its obligations, by continually monitoring

Program and government-guaranteed bonds rather than on

the creditworthiness of all parties, and by setting a limit toshort-term funds such as deposits. Contingency plans arefinancing for each counterparty.

established as appropriate to meet unexpected short-term
funding requirements and cash flow shortfalls.

Liquidity Risk

Additionally, DBJ maintains daytime liquidity by

Liquidity risk is the risk of a mismatch occurring in theusing the Bank of Japan’s Real Time Gross Settlement

periods when funds are used and raised or an unexpected(RTGS), whereby settlements are made instantly for each

outflow of funds occurs, causing differences in the flow oftransaction. Every effort is made to ensure that settlement

funds (cash liquidity risk). Such situations make securingconditions are managed appropriately.

funds difficult and create situations in which interest rates

In addition to credit risk, the ALM & Risk Management

on borrowed funds are substantially higher than usual rates.

Committee deliberates DBJ’s market risk and liquidity risk.

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

System Risk Management

internal processes, people or systems that are inappropriate

System risk refers to the risk of loss due to a computeror non-functioning, or from external events. DBJ works tosystem breakdown or malfunction, system defects, or

establish a risk management system to minimize risk andimproper computer usage. DBJ has implemented theprevent potential risks from materializing.

following internal processes to optimize systems risk

The General Risk Management Committee has been

management and properly manage systems risk. The

established to deliberate topics concerning operational risk

Systems Risk Management Division is responsible formanagement.

managing DBJ’s systems risk centrally, based on its systems

Within operational risk management, DBJ conducts

risk management regulations. By determining security

administrative risk management and systems risk

standards from a variety of viewpoints—from information

management as described below.

system planning and development to operation anduse—the department extends the risk management

Administrative Risk Management

system bankwide, and addresses appropriate systems risk

Administrative risk refers to the risk of sustaining losses

management operations.

resulting from employees neglecting to perform their duties
correctly or from accidents, fraud, and the like. To reduce or
prevent administrative risk, DBJ prepares manuals, performs
checks on administrative procedures, provides educationand training and uses systems to reduce the burden of
administrative duties.

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Annual Report & CSR Report 2016

Risk Management

Building a PDCA Cycle
DBJ follows the Plan, Do, Check, Act management cycle to

We also strive to manage effectively the wide range ofboost accountability for the appropriateness of its opera-

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

tions and their results. This cycle encourages ongoingof our clients and society as a whole.

improvement.

Management Structure

DBJ’ s PDCA Cycle
Formulation ofmanagement plan

Competent minister

Budgetary plan
Matters requiring authorization ofcompetent minister

Plan

Appointment and dismissal of representative directors andAudit & Supervisory Board members
Q Concurrent positions as directors
Q Amendments to Articles of Incorporation
Q Disposition of surplus funds
Q Merger, corporate split and dissolution
Q Basic policy on business plans, redemption plans andfund procurement
Q

Conclusions reflected
in planning andbudgetReview of resource
allocation

Act

Board of Directors
Deliberate/
Evaluate

Deliberate/
Evaluate

Do

Advisory Board

SpecialInvestment
Operations
Monitoring
Board

Execution of
investments andloans(Outside experts
andoutside directors)(Outside expert)

Fund-raising
Other activities

Check
Evaluation ofbusiness
performance
Status & results
reportAdvisory Board:

The Advisory Board is positioned as an advisory body to
the Board of Directors. Its role is to deliberate and evaluate
important matters to ensure even more than in the past thatappropriate competitive relations are maintained with private
financial institutions.

Special Investment
Operations Monitoring Board: The Special Investment Operations Monitoring Board
deliberates and evaluates the status of Special Investment
Operations to ensure that each project and its results are inaccordance with policy objectives and to ensure that these
operations embolden private-sector enterprises, complement
their operations and foster appropriate competitive relations.

Annual Report & CSR Report 2016

117

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

their level of convenience. DBJ recognizes the extreme

management system is vital because it protects the people

importance of such a system from the standpoint of

who use the financial institution’s systems and raises

operational soundness and appropriateness.

Client Protection Management Basic Policy, Declaration on Personal Information Protection
and Policy for Managing Conflicts of Interest
DBJ has formulated a Client Protection Management Policy

and appropriate means and manage such information

to ensure strict compliance with laws and regulations,safely. In transactions with clients, in the event that DBJ

protect the interests of its clients and raise the level of client

outsources operations, it ensures appropriate information

convenience. We have also created internal regulations

management and client response.

based on this policy, which we employ in briefings to raise
in-house awareness.

We have incorporated a declaration on our policies

Key content of our Client Protection Management Basic
Policy is outlined below:

related to personal information into our Declaration on
Personal Information Protection.

1) When transacting with clients, we endeavor to provide
and explain information that is accurate and appropriate
in line with laws and regulations.
2) When we receive requests for consultation, other

DBJ is a registered financial institution under the Financial
Instruments and Exchange Act. In accordance with this act
and the Cabinet Office Ordinance on Financial Instruments

requests or complaints, we strive to see the issue from

Business, etc., DBJ has drawn up the following policies

the client’s point of view, listen sincerely and respond in

introduced for the management of conflicts of interest andan operationally appropriate manner.

provides an overview of the publicly announced policy.

3) We acquire information about clients through legal

Declaration on Personal Information Protection
1. Policy
DBJ considers the appropriate protection of personal information
an important social responsibility. DBJ endeavors to use personal
information appropriately in all its activities by conformingwith the requirements of the Act on the Protection of Personal
Information, as well as other related laws and regulations, aswell as its own Declaration.
2. Appropriate Obtainment of Personal Information
DBJ acquires clients’ personal information only within thescope that is required to perform its operations, and employs
appropriate procedures for obtaining such information.
3. Purpose of Using Personal Information
DBJ obtains clients’ personal information only for specificpurposes and uses such information only within the scopenecessary to satisfy such purpose of use. In the event that otherpurposes of use are limited by legal regulations concerning
specified purposes of use, such information is not used for
purposes other than so specified. DBJ discloses on its website
the purposes of use of clients’ personal information. If
information is obtained for other purposes of use, such purposes
are clearly indicated at the time such information is obtained.
4. Providing Personal Information to Third Parties
In principle, DBJ does not provide clients’ personal information
to third parties unless it has received from the client permission
to provide such information or unless it is legally required toprovide such information. However, DBJ may, without obtaining
client approval, provide clients’ personal information to parties
it has commissioned to conduct activities within the scope for

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Annual Report & CSR Report 2016

which the information was obtained or provide such informationin the event of a corporate merger.
5. Provisions for Safe Management of Personal
Information
DBJ seeks to appropriately manage clients’ updated personal
information and prevent the leakage of such information, andaccordingly maintains rationally sound management measures.
Furthermore, DBJ appropriately supervises its directors andregular employees and subcontractors who handle clients’personal information.
6. Continuous Improvements in Handling
Personal Information
DBJ strives to ensure ongoing improvements in its handling ofclients’ personal information and to update the Declaration as
appropriate in accordance with developments in information
technology or changes in social requirements.
7. Procedures for Requesting Personal Information
DBJ endeavors to respond appropriately by notifying clientsof the purpose of use of the personal information it retains;
responding to requests to disclose such information; and in
the event that the content of such information is incorrect,
responding to clients’ requests for revisions, additions
or deletions, discontinuing use, deleting information, ordiscontinuing the provision of such information to third parties.
8. Inquiries
DBJ endeavors to respond in good faith to all opinions orrequests regarding the use of personal information.

Overview of Policy for Managing Conflicts of Interest

2. Types of Transaction That Are Likely to Involve
Conflicts of Interest(1) Subject Transaction
Targets of this Policy, or ”transactions that are likely to involve conflictsof interest,” are those transactions conducted by DBJ or DBJ’s subsidiaryfinancial institutions or others (defined in 3 below; hereinafter, ”theDBJ Group”) that have a likelihood of unduly infringing on the interestsof clients as a result of conflicts of interest (hereinafter, ”Subject
Transactions”).
”Conflicts of interest” are (a) situations of opposing interests
between the DBJ Group and its clients, or (b) situations of opposinginterests between the DBJ Group’s clients and other clients (hereinafter,
together, ”Situations of Opposing Interests”) that unduly infringe on
the interests of clients.
”Clients” are, in the case of ”business operations related to financial
instruments” conducted by the DBJ Group, (a) counterparties in existingtransactional relationships, (b) parties in negotiation with the DBJ Group
with regard to transactions or otherwise having the potential to becomecounterparties in transactional relationships, or (c) parties that have beentransactional counterparties in the past and that currently are also legallycompetent with respect to past transactional relationships.
”Business operations related to financial instruments” are thosebusinesses provided for in Article 70 (3) of the Cabinet Office
Ordinance pertaining to financial instruments business, etc., that are
performed by DBJ or DBJ’s subsidiary financial institutions, etc.
(2) Types of Subject Transaction
Specific individual circumstances determine whether transactions are
judged as Subject Transactions, but below are examples of transactions
that are likely to be considered said Subject Transactions.
Based on a contract of mandate that exists between the DBJ Groupand its clients, notwithstanding that the DBJ Group has a duty of
due care of prudent manager or duty of loyalty to said client, the DBJ
Group is in danger of being unable to fulfill such duties owing to
Situations of Opposing Interests.
Based on a deep trust-based relationship formed between the DBJ
Group and its clients, notwithstanding the client’s expectation that
the Group would act in the client’s interests, the DBJ Group is indanger of being unable to act according to such expectation owing to
Situations of Opposing Interests.
By utilizing undisclosed client information that the DBJ Group has
the duty to protect, the DBJ Group could rationally act in its own selfinterest or the interest of other clients in transactions that exceed thescope of that duty.


Cases in addition to the above in which the danger exists of unduly
infringing on the interests of clients owing to Situations of Opposing
Interests.
Furthermore, Subject Transactions do not include acts that are prohibited
under the Financial Instruments and Exchange Act or other laws and regulations.


3. Scope of Companies Subject to Management ofConflicts of Interest
As stated in 2 (1) above, Subject Transactions are transactions
conducted by DBJ or by DBJ’s subsidiary financial institutions, etc.
”Subsidiary financial institutions, etc.” are those DBJ subsidiaries
or affiliated companies prescribed in Article 36-5 of the Financial
Instruments and Exchange Act.
DBJ’s principal subsidiary financial institutions, etc., are as follows.
DBJ Asset Management Co., Ltd.
DBJ Europe Limited
DBJ Investment Advisory Co., Ltd.
DBJ Securities Co., Ltd.
DBJ Capital Co., Ltd.

Management Structure

1. Purpose
As the services provided by financial institutions grow increasingly
diverse, the potential for multiple competing or opposing interests
within financial institutions or financial groups increases, and thelikelihood increases that conflicts of interest will arise.
Under these conditions, DBJ manages transactions that are likely to
involve conflicts of interest to ensure against undue infringement of theinterests of its clients.
DBJ is a registered financial institution under the Financial
Instruments and Exchange Act. DBJ has drawn up these ”Rules forManagement of Conflicts of Interest” (hereinafter, ”the Policy”) in
accordance with policies introduced for the management of conflicts ofinterest under this act and as prescribed by Cabinet Office Ordinanceon Financial Instruments Business, etc. This document provides an
overview of the Policy.

4. Policy for Managing Transactions That Are Likely to Involve
Conflicts of Interest
In the case of transactions prescribed as Subject Transactions, to theextent that the DBJ Group is not in violation of its legal or contractual
duties (including but not limited to the duty of confidentiality), the DBJ
Group is determined to act properly in the interest of its clients throughthe following or other measures.
(The following are only specific examples of methods. Subject
Transactions are not limited to those indicated below.)
Separation of the department conducting Subject Transactions fromthe department conducting transactions for said client
Amending the conditions or instruments of Subject Transactions or
said client transactions
Cessation of Subject Transactions or said client transactions
Disclosing to said client the risk of Subject Transactions unduly
infringing on the interests of said client
5. Management of Conflicts of Interest—Organization
To ensure the appropriate management of conflicts of interest, theduties of a Conflicts of Interest Management Control Department
are handled within its Legal Affairs & Compliance Department.
In accordance with the Policy, the Conflicts of Interest Management
Control Department appropriately manages prescribed Subject
Transactions and conflicts of interest. Furthermore, as the DBJ Groupis required to manage conflicts of interest in accordance with its status
as a registered financial institution under the Financial Instruments andExchange Act, provided that the DBJ Group does not violate its legal
duty of confidentiality or its duty of confidentiality in relation to its
clients, information pertaining to Subject Transactions, including thoseof transactions handled by DBJ’s subsidiary financial institutions, etc.,
may be managed in a centralized manner.
Records shall be prepared of measures undertaken by the Conflictsof Interest Management Control Department with regard to prescribed
Subject Transactions and their management, and such records shall be
retained for a period of five years following the creation date.
To ensure appropriate management, the Conflicts of Interest Management
Control Department shall periodically verify the content of activities by
DBJ Group executives and regular employees and the content of businessactivities at each branch to ensure the operations are being conducted inaccordance with the Policy and the operational procedures for the policy, andshall periodically verify the management of conflicts of interest.








Annual Report & CSR Report 2016

119

Disclosure

DBJ believes that public relations and investor relations

status and operating policies, which are an essential part

have the important function of bringing management andof being trusted in a wide range of markets and societies.

stakeholders together. In addition, these activities help

Accordingly, we seek to disclose information through our

stakeholders gain an accurate understanding of DBJ’s

public relations and investor relations activities.

Basic PR/IR Philosophy
In its PR and IR activities, DBJ aims to comply with

DBJ maintains personal and client information,

relevant laws and regulations, operate in good faith andwithout disclosing such information in a manner thatin a dignified manner with its stakeholders, and disclose

would encroach upon the rights of individuals or related

information clearly and accurately in a timely andparties. We do not disclose information that would

appropriate manner.

counter the doctrine of good faith.

PR/IR Structure
The Corporate Planning & Coordination Department

DBJ. Through printed materials and over the Internet,

takes overall charge of PR and IR activities and plays athe department uses numerous communication tools tocentral role in the flow of information within and outside

disclose information.

Information Disclosure Materials
DBJ offers a wide range of information, using suchmedia as newsletters and its website:• Materials legally required for disclosure
Securities Report (Japanese)
Stock Exchange Report (Japanese)
Business Report (Japanese)• Voluntarily disclosed information
Annual Report & CSR Report
End-of-Period Financial Reports• Others
DBJ Quarterly Journal (newsletter)
DBJ News Digest (mail magazine; Japanese)
Website:120

http://www.dbj.jp/en

Annual Report & CSR Report 2016

Corporate Data
Timeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .122
Board of Directors, Audit & Supervisory Board
Members and Executive Officers . . . . . . . . . . . . . .123
Organization Chart . . . . . . . . . . . . . . . . . . . . . . . . . .124
Locations and Directory . . . . . . . . . . . . . . . . . . . . . .125
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126
Corporate Data

Stock Information . . . . . . . . . . . . . . . . . . . . . . . . . . .127
Development Bank of Japan Inc. Act. . . . . . . . . . . .128
Act for Partial Amendment of the Development
Bank of Japan Inc. Act . . . . . . . . . . . . . . . . . . . . . .145

Annual Report & CSR Report 2016121

Timeline

The Japan Development Bank, the Hokkaido-Tohoku Development Finance Public Corporation and the Development Bank of Japan
1951 April
1952
1956 June
1957 April

1960
1961
1962
1963
1964
1972
1985

April
July
January
June

1987 September
1989
1995 February
1997 September
1997 December
1999 June
1999 October

2002 May
2005 December
2006 May
2006 June2007 June

Japan Development Bank (JDB) establishedJDB branches opened in Osaka (now the Kansai Branch), Sapporo (now the Hokkaido Branch), Nagoya (nowthe Tokai Branch) and Fukuoka (now the Kyushu Branch)
Hokkaido Development Finance Public Corporation established
Hokkaido Development Finance Public Corporation reorganized as the Hokkaido-Tohoku Development
Finance Public Corporation (HTDFP) branches opened in Sapporo (now the Hokkaido Branch) and Sendai(now the Tohoku Branch)
JDB branch opened in Takamatsu (now the Shikoku Branch)
JDB branches opened in Hiroshima (now the Chugoku Branch) and Kanazawa (now the Hokuriku Branch)
JDB representative office opened in New YorkJDB representative offices opened in Kagoshima (renamed Minami-Kyushu Branch in October 1999) and Matsue
JDB representative office opened in London
HTDFP representative office opened in Niigata (renamed Niigata Branch in July 1989)
Japan Development Bank Law revised
1) Addition of investment function (pertaining to business in such areas as research and development, urban
development and energy use stipulated by government ordinance)2) Addition of R&D fund investment function
JDB and HTDFP creation of low interest rate loan system funded partially by sale of NTT shares
JDB representative offices opened in Oita, Matsuyama, Okayama and Toyama
HTDFP representative offices opened in Hakodate and Aomori
JDB commenced loans to assist disaster recovery
Cabinet approval of bill entitled ”Pertaining to Consolidation and Rationalization of Special-Purpose
Companies, etc.” (decision to dissolve JDB and HTDFP and consolidate them as a new bank)
JDB and HTDFP commenced loans in response to the financial environment (introduction of March 31, 2001,
sunset clause)
The Development Bank of Japan Law (Law No. 73 of 1999) approved
Transfer of approval of all rights and responsibilities of JDB and HTDFP to the Development Bank of Japan (DBJ)
Transfer of financing operations from Japan Regional Development Corporation andJapan Environment Corporation
DBJ representative offices opened in Kushiro and Singapore
The Development Bank of Japan Law revised (introduction of additional spot inspections by the Financial
Services Agency)
Cabinet approval of the Important Policy of Administrative Reform
The Act on Promotion of Administrative Reform for Realization of Small and Efficient Government (Act No.
47 of 2006) approved
Policy-Based Financing Reform Plan decided upon by the Headquarters for the Implementation of Policy Finance Reform
The Development Bank of Japan Inc. Act (Act No. 85 of 2007) approved

Development Bank of Japan Inc.
2008
2008
2009
2009
2009
2010
2011

October
December
June
September
November
March
May

2011
2012
2012
2012
2014

December
March
June
DecemberJune2015 May
2015 August

122

Development Bank of Japan Inc. established (Capital: ¥1 trillion)
DBJ Singapore Limited launched
Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 67 of 2009)
Increase of capital to ¥1,103,232 million
DBJ Europe Limited launched
Increase of capital to ¥1,181,194 million
Partial amendment of the Development Bank of Japan Inc. Act (based on establishment of Act for
Extraordinary Expenditure and Assistance to Cope with the Great East Japan Earthquake (Act No. 40 of 2011))
Increase of capital to ¥1,187,364 million
Increase of capital to ¥1,187,788 million
Increase of capital to ¥1,198,316 million
Increase of capital to ¥1,206,953 million
DBJ Investment Consulting (Beijing) Co., Ltd. (formerly Japan Asia Investment Consulting (Beijing) Co., Ltd.)
converted to wholly owned subsidiary
Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 23 of 2015)
Capital was reduced by ¥206,529 million, with the crisis response reserve increased by this entire amount

Annual Report & CSR Report 2016

Board of Directors, Audit & Supervisory Board Members and Executive Officers (As of July 1, 2016)

Masanori Yanagi
President & CEO

Yasushi Kinoshita
Deputy President

Hajime Watanabe
Deputy President

Shin Kikuchi
Director and Managing Executive Officer
In charge of Corporate Planning & Coordination Department,
Information Resources Department, General Affairs Department

Director and Managing Executive Officer
In charge of Business Planning & Coordination Department, Financial
Institutions Department, International Strategy & Coordination
Department, Research Institute of Capital Formation

Naoki Enomoto
Director and Managing Executive Officer

Managing Executive Officer
In charge of Corporate Finance Department [Division 5]

Kosuke Takahashi
Managing Executive Officer
In charge of Urban Development Department, Real Estate Finance
Department, Corporate Finance Department [Division 3]

Hisanobu Sekine
Managing Executive Officer
In charge of Corporate Finance Department [Division 6], Hokkaido
Branch, Tohoku Branch, Niigata Branch

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

Makoto Anayama
Managing Executive Officer
In charge of Corporate Finance Department [Division 1 and 2],
Economic & Industrial Research Department (Economic Research
Office)In charge of Treasury Department, Syndication & Credit Trading
Department, Environmental Initiative & Corporate Social ResponsibilitySupport Department

Seiji Jige

Satoshi Tomii

In charge of Regional Planning Department, Structured Finance
Department, Hokuriku Branch, Tokai Branch, Kyushu Branch, MinamiKyushu Branch, Special Missions (e.g. Capitalization Strategy)

Director and Managing Executive Officer

Managing Executive Officer

In charge of Strategic Finance Department, Growth & Cross Border
Investment Department

Taketsugu Shinobe

Kenkichi Fukuda

In charge of Corporate Finance Department [Division 4]

Director and Managing Executive Officer

Yoshinao Ikeda

In charge of Credit Analysis Department, Accounting Department,
Economic & Industrial Research Department (excluding Customer
Solution Planning Office)Akio MimuraManaging Executive Officer

Managing Executive Officer, Head of Kansai Branch
In charge of Kansai Branch, Chugoku Branch, Shikoku Branch

Director (Outside)

Masafumi Aizawa

Kazuo Ueda

Takayuki Yamamoto

Director (Outside)

Osamu Koyanagi

Executive Officer (in charge of Financial Institution)
Executive Officer, Head of Business Development
Department

Masayuki Tsuda

Audit & Supervisory Board Member

Executive Officer, Head of Human Resources
Management Department

Mitsue Kurihara

Takeshi Kiriyama

Audit & Supervisory Board Member

Executive Officer, Head of Growth & Cross Border
Investment Department

Tatsuya Tsuboi
Audit & Supervisory Board Member (Outside)

Makoto Ito
Audit & Supervisory Board Member (Outside)

Shinji Hatta
Audit & Supervisory Board Member (Outside)

Corporate Data

Hideo Oishi

Ikuro Hirozane

Kazushi Minakawa
Executive Officer (in charge of Internal Audit)

Norifumi Sugimoto
Executive Officer, Head of Corporate Planning &Coordination Department

Hiroshi Shimizu
Executive Officer, Head of Business Planning &Coordination Department

Notes: 1. Akio Mimura and Kazuo Ueda are outside directors under Article
15 of Section 2 of the Companies Act.
2. Tatsuya Tsuboi, Makoto Ito and Shinji Hatta are outside Audit &Supervisory Board members under Article 16 of Section 2 of theCompanies Act.

Annual Report & CSR Report 2016123

Organization Chart (As of July 1, 2016)

Business Planning & Coordination Department
Financial Institutions Department
Urban Development Department
International Strategy & Coordination Department
Corporate Finance Department, Division 1
Corporate Finance Department, Division 2
Corporate Finance Department, Division 3

Audit & Supervisory Board
Members/
Audit & Supervisory Board

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

Audit & Supervisory
Board Office

Healthcare Industry Office

Hokkaido Branch
Tohoku Recovery &Growth Support Office

Tohoku Branch
Niigata Branch
Hokuriku Branch

GeneralMeeting of
Shareholders

Tokai Branch

Board ofDirectors

Executive
Committee

Kansai Branch
Chugoku Branch
Shikoku Branch
Kumamoto Recovery Office

Kyushu Branch

Advisory Board

Minami-Kyushu Branch
Real Estate Finance Department

Special Investment
Operations
Monitoring Board

Chief
Investment
Officer

Strategic Finance Department
Growth & Cross Border Investment Department
Structured Finance Department
Syndication & Credit Trading Department

Environmental Initiative & Corporate Social Responsibility-Support Department
Business Development Department
Economic & Industrial Research Department
Regional Planning Department
Research Institute of Capital Formation

Economic Research Office
Customer Solution
Planning Office
Corporate Management &Accounting Research Office

Credit Analysis Department
Legal Affairs & Compliance Department
Secretariat Office
Human Resources Management Department
Corporate Planning & Coordination Department

Public Relations & Corporate
Social Responsibility Office

Risk Management Department
Information Resources Department
General Affairs Department
Accounting Department

Settlement & Accounting
Operation OfficeTreasury Department

Operations Audit
Committee

Internal Audit Department

Representative Offices: Hakodate, Kushiro, Aomori, Toyama, Matsue, Okayama, Matsuyama, Oita
Overseas Representative Office: New York
Overseas Subsidiaries: DBJ Singapore Limited, DBJ Europe Limited, DBJ Investment Consulting (Beijing) Co., Ltd.

124

Annual Report & CSR Report 2016

Locations and Directory (As of July 1, 2016)

Domestic Branch Offices,
Representative Offices

Head OfficeSouth Tower, Otemachi
Financial City,
9-6, Otemachi 1-chome,
Chiyoda-ku, Tokyo
100-8178, Japan
Tel: +81-3-3270-3211
http://www.dbj.jp/en

Metropolitan Expressway

To Kanda

Development Bank of Japan (DBJ)
South Tower, Otemachi Financial City

North Tower,
Otemachi Financial City
NTT

KDDI

HOSHINOYATokyo

Entrance
Tokyo
Sankei
Building

Otemachi
Station,Marunouchi Line
(direct passage
from Exit A1)

To Tokyo

Yomiuri
ShimbunBuilding

JR Lines

Otemachi
Station,ChiyodaLine(Exit C1)

Hibiya DoriKeidanren

Grand Cube,
Otemachi Financial City

Otemachi Station,
Hanzomon Line (Exit E1)

Representative Offices:

Hokkaido

Hakodate

TohokuKushiroNiigata

Aomori

Hokuriku

ToyamaTokai

MatsueKansai

Okayama

Chugoku

Matsuyama

Shikoku

Oita

Corporate Data

Otemachi Building

Branch Offices:

KyushuMinami-Kyushu

Overseas Representative Office and Subsidiaries
DBJ Europe Limited

New York Representative Office

New York Representative Office1251 Avenue of the Americas, Suite 830,
New York, NY 10020, U.S.A.
Tel: +1-212-221-0708

Broad

DBJ Investment Consulting(Beijing) Co., Ltd.

Hilton New Yorkway

Sheraton New York Hotel and Towers

52nd St.
51st St.

St.

th

50

th

49

DBJ Singapore Limited

Radio City Music Hall
St.

Rockefeller Center

50th St.
49th St.

1251 Avenue of the Americas (8th floor, Suite 830)
5th Ave.

6th Ave.

7th Ave.

DBJ Singapore Limited

DBJ Europe Limited

DBJ Investment Consulting (Beijing) Co., Ltd.

138 Market Street, #15-02 CapitaGreen,

Level 20, 125 Old Broad Street,

Beijing Fortune Building, Suite 814-815, No. 5,

Singapore 048946

London EC2N 1AR, U.K.

Dong San Huan Bei Lu, Chaoyang District,

Tel: +65-6221-1779

Tel: +44-20-7507-6070

Beijing, 100004, P.R.C
Tel: +86-10-6590-9770

125 Old Broad Street (Level 20)

.
St
er
St

.

Ay

cil

k
Ce

lo

St.
ad
ro

Hotel Kunlun

Agricultural Exhibition Center Sta.

Cornhill

Yansha Bridge

.
Sta

St.

Beijing Fortune Building(8th floor, Suite 814-815)

aoTeHilton Beijing Hotel

aqi
gm

Royal
Exchange

Sanyuan East Bridge

Be

Lian

Bank

ta.
oS

needleThreadS
ijing

Beijing Capital International Airport
Beijing Silver Tower

qia

lk

R

CapitaGreen (15th floor)

Wa

t.

le
ed

sS

Sixty
Threadneedle
Street

St.

St.

os

ns

i
ob

Prince’sMarket

Cr

on

Rd

ne

Republic Plazane

PWC Prudential Tower
Building

Telok Ayer

Bank ofEnglanddrea

Ocean Bldg.

Ex
ort

irp

ay A

ubw

Th

Bharat Bldg.

Golden Shoe Park

La
lomew
BarthoRaffles Place

ss

pre

Throgmorton St.

dB.

Lothbury

uan

St

y
San

ch

Market St.

ur

Ol

Ch

You Yi Shopping City
The Great Wall Sheraton
Hotel Beijing

Annual Report & CSR Report 2016125

Subsidiaries (As of March 31, 2016)

Company

Address

Principal Businesses

Established

Percentage of
Capital(Millions of Total Voting
Rights (%)Yen)

Consolidated Subsidiaries
Japan Economic Research Institute Inc.

Chiyoda-ku,
Tokyo

Research, consulting andadvisory services

December 13,
1989

479

100.0

Value Management Institute, Inc.

Chiyoda-ku,
Tokyo

Research, consulting andadvisory services

June 25, 1993

75

100.0
(8.0)

DBJ Securities Co., Ltd.

Chiyoda-ku,
Tokyo

Securities business

October 22,
1998

500

100.0

DBJ Capital Co., Ltd.

Chiyoda-ku,
TokyoManagement ofinvestment associations

October 14,
2005

99

100.0

DBJ Asset Management Co., Ltd.

Chiyoda-ku,
Tokyo

Investment management,
investment advisory andagency services

November 22,
2006

100

100.0

DBJ Singapore Limited

Republic ofSingapore

Investment and loan
support and advisory
services

September
15, 2008

S$1 million

100.0

DBJ Europe Limited

London, United
Kingdom

Investment and loan
support and advisory
services

June 5, 2009

€7 million

100.0

DBJ Investment Advisory Co., Ltd.

Chiyoda-ku,
Tokyo

Investment advisory andagency services

December 1,
2009

68

50.6

DBJ Real Estate Co., Ltd.

Chiyoda-ku,
TokyoReal estate leasing

February 1,
2010

80

100.0

Investment and loan
support and advisory
services

September
30, 2011

CNY 4
million

100.0

Beijing,
DBJ Investment Consulting (Beijing) Co., People’s
Ltd.
Republic ofChina
15 other companies(Note 1)

—

—

—

—

—

—

—

—

—

—

Affiliated Companies
25 other companies(Notes 1, 5)

Notes:
1. Only principal consolidated subsidiaries and affiliated companies are listed in order of their date of establishment; only the numbers of other consolidated
subsidiaries and affiliated companies are indicated.
2. Amounts of less than ¥1 million have been omitted in the figures stated above.
3. DBJ’s percentage of total voting rights in subsidiaries is shown rounded to one decimal place.
4. In the column showing DBJ’s percentage of total voting rights in subsidiaries, figures within parentheses indicate indirect holdings.
5. Affiliated companies include AIRDO Co., Ltd., Skymark Airlines Inc. and Solaseed Air Inc., which submit yukashoken hokokusho (annual securities reports).
6. DBJ Business Investment Co., Ltd., a previous consolidated subsidiary, has been excluded from the scope of consolidation, reflecting its liquidation in
September 2015.

126

Annual Report & CSR Report 2016

Stock Information (As of March 31, 2016)

Number of Shares Issued and Paid-in Capital
Changes in
Number of shares
Changes in number ofPaid-in capital
paid-in capitalissuedshares issued(Millions of yen)(Thousands of shares) (Thousands of shares) (Millions of yen)

October 1, 2008
June 26, 2009
September 24, 2009
(Note 4)

March 23, 2010
(Note 4)

December 7, 2011
(Note 5)

March 23, 2012
June 6, 2012
(Note 6)

December 6, 2012
(Note 7)

Capital surplus(Millions of yen)

(Note 2)

(Note 2)

(97,248)

1,060,466(Note 3)(Note 3)40,00040,0001,000,000

1,000,000—

40,000—1,000,000

2,064

42,064103,232

1,103,232—

1,060,466

1,559

43,623

77,962

1,181,194—

1,060,466—

43,6236,170

1,187,364—

1,060,466

8

43,632424

1,187,788—

1,060,466—

43,632

10,528

1,198,316—

1,060,466—

43,632

8,637

1,206,953—

1,060,466

Corporate Data

(Note 4)

Changes incapital surplus(Millions of yen)

Notes:
1. All shares issued on October 1, 2008, were to raise capital corresponding to incorporation.
In accordance with Article 9 of the Supplementary Provisions to the New DBJ Act, on October 1, 2008, all assets of the predecessor were transferred to
the new DBJ as an in-kind contribution (except those prescribed for ongoing use by the Japanese government under Paragraph 2, Article 15, of the
Supplementary Provisions to the Act), and these shares were transferred to the Japanese government, the capital investor in the predecessor, through a
gratuitous conveyance.
2. As of October 1, 2008, according to the provisions of Article 2 of the Supplementary Provisions to DBJ’s Articles of Incorporation, the value of the capitalreserve was calculated by evaluation officers as stipulated in Paragraph 1, Article 16, of the Supplementary Provisions to the New DBJ Act to be the value of
assets less the value of liabilities less the ¥1 trillion in capital.
At the third meeting of the Development Bank of Japan, Inc., Asset Evaluation Committee on January 28, 2009, the committee determined the value of
assets (as of October 1, 2008) for transfer authorization. The value of these assets less the value of liabilities less ¥1 trillion in capital amounted to¥1,157,715 million.
3. By resolution of the General Meeting of Shareholders on June 26, 2009, and provisions of the Companies Act (Article No. 448, Paragraph 1, and Article452), the deficit was covered by transfer from capital reserve to other capital surplus and transfer from other capital surplus to retained earnings.
4. By way of a rights offering, all shares of common stock were assigned to the Minister of Finance (for consideration). The issue price (amount paid) is ¥50,000
per share; paid-in capital is ¥50,000 per share.
5. To secure a financial base for Crisis Response Operations, of the ¥1,350 billion in delivery bonds issued under the Act for the Partial Amendment of theDevelopment Bank of Japan Inc. Act and the supplementary budget for fiscal 2009, in accordance with the provisions of Article 2-4, Paragraph 1, of the
Appendix to the DBJ Act, an amount equivalent to ¥6,170 million was required for redemption on November 24, 2011.
Based on this requirement, these delivery bonds were redeemed effective December 7, 2011. The face value of delivery bonds decreased by this amount,
and at the same time DBJ’s common stock increased by the equivalent of the required redemption amount. The number of shares was not affected byprocedures for this increase in common stock.
6. As is stated above, as of May 18, 2012, delivery bonds in the amount of ¥10,528 million required redemption. Based on this requirement, the delivery bonds
were redeemed on June 6, 2012. The face value of delivery bonds decreased by this amount, and at the same time DBJ’s common stock increased by theequivalent of the required redemption amount. The number of shares was not affected by procedures for this increase in common stock.
7. As is stated above, as of November 20, 2012, delivery bonds in the amount of ¥8,637 million required redemption. Based on this requirement, the delivery
bonds were redeemed on December 6, 2012. The face value of delivery bonds decreased by this amount, and at the same time DBJ’s common stockincreased by the equivalent of the required redemption amount. (The amount of delivery bonds that remained unredeemed following this redemption was¥1,324,665 million.) The number of shares was not affected by procedures for this increase in common stock.

Shareholder
Address

Number of shares held(Thousands of shares)

Percentage of
total equity (%)

Finance Minister

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

43,632100.00Total—

43,632100.00

Annual Report & CSR Report 2016127

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

Promulgated: June 13, 2007 by Act No. 85 of 2007
Enforced:
September 1, 2015
Last Amended: September 12, 2012 by Act No. 86 of 2012
Chapter I General Provisions (Article 1 and Article 2)
Chapter II Business Operations (Article 3 through Article 25)
Chapter III Miscellaneous Provisions (Article 26 throughArticle 29)
Chapter IV Penal Provisions (Article 30 through Article 35)
Supplementary Provisions
Chapter I
General Provisions
Article 1 Purpose
Development Bank of Japan Inc. (hereinafter referred to as
the “Corporation”) shall be a joint stock company (kabushikikaisha) whose object is to maintain the foundations ofinvestment and financing functions of long-term business funds
as the Development Bank of Japan by conducting businessactivities utilizing the methods of combining investments andfinancing and other sophisticated financial methodologies,
while maintaining the autonomy of management with thegoal of realizing full-scale privatization, thereby contributing tosmooth supply of funds to those who need long-term businessfunds, as well as to the sophistication of financial functions.
Article 2 Restriction on Use of Trade Name
1. Any entity other than the Corporation shall not use thecharacters of Development Bank of Japan Inc. (Kabushiki Kaisha
Nippon Seisaku Toshi Ginko), in its trade name.
2. The provision of Article 6, Paragraph 2 of the Banking Act (ActNo. 59 of 1981) shall not apply to the Corporation.
Chapter II
Business Operations
Article 3 Scope of Business Operations
1. The Corporation shall engage in the following business
operations to attain its objectives:(1) To accept deposits (limited to certificates of deposit (CDs)and other deposits stipulated in the Cabinet Order);(2) To lend money;(3) To make capital contributions;(4) To guarantee the due performance of debts andobligations;(5) To sell and purchase Securities (other than those that fallwithin monetary claims represented by certificates set
forth in Item (7), Short-term Notes, Etc.; the same in Item(8)) (other than those that fall within securities-related
derivatives transactions (the securities-related derivatives
transactions set forth in Article 28, Paragraph 8, Item (6) of
the Financial Instruments and Exchange Act (Act No. 25 of
1948); hereinafter in this Item and Item (11) the same), or
enter into securities-related derivatives transactions (limited
to those made for investment purposes), except in cases
where these business operations fall within those operations
referred to in Item (3);(6) To lend Securities;(7) To acquire or transfer monetary claims (including claims
represented by certificates stipulated in the Ministryof Finance Ordinance such as negotiable bank deposit
certificates);(8) To subscribe for Specified Bonds or Preferred Investment
Securities issued by a Specified Purpose Company (limited
to the cases where the Specified Purpose Company

128

Annual Report & CSR Report 2016acquires only designated monetary claims or beneficial
interests in trusts with which designated monetary claims
are entrusted with cash proceeds derived from issue of
those Specified Bonds or Preferred Investment Securities
as set forth in the Asset Liquidation Plans, and except for,in case of Specified Bonds, Specified Short-term Notes),and other similar securities stipulated in the Ministry of
Finance Ordinance (hereinafter in this Item referred to as
the “Specified Bonds”) (except in cases where it is intended
for secondary distribution (uridashi)), or to handle primaryoffering (boshu) of the Specified Bonds so subscribed;(9) To acquire or transfer Short-term Notes, Etc.;(10) To act as an agent or intermediary for execution ofagreements which provides for lending money on behalfof banks (the banks set forth in Article 2, Paragraph 1of the Banking Act (Act No. 59 of 1981); hereinafter thesame) and other entities engaged in the financial businessstipulated in the Cabinet Order;(11) To enter into derivatives transactions set forth in Article 2,
Paragraph 20 of the Financial Instruments and Exchange
Act (other than those that fall within the securities-related
derivatives transactions), except in cases where thesebusiness operations fall within those operations referred toin Item (7);(12) To do the activities referred to in Article 2, Paragraph 8,
Item (7) of the Financial Instruments and Exchange Act;
(13) To do the activities referred to in Article 2, Paragraph 8,
Item (9) of the Financial Instruments and Exchange Act(limited, in the case of the handling of primary offeringor secondary distribution, to those to be conducted upon
entrustment by financial instruments firms engaged in thetype I financial instruments trading business set forth in
Article 28, Paragraph 1 of the Financial Instruments andExchange Act (the financial instruments firms set forth in
Article 2, Paragraph 9 of the Financial Instruments andExchange Act; hereinafter the same), and for such financial
instruments firms);(14) To do the activities referred to in Article 2, Paragraph 8,
Item (11) of the Financial Instruments and Exchange Act;
(15) To do the activities referred to in Article 2, Paragraph 8,
Item (13) of the Financial Instruments and Exchange Act;
(16) To do the activities referred to in Article 2, Paragraph 8,
Item (15) of the Financial Instruments and Exchange Act;
(17) With respect to securities (including, if such securities are
not issued, rights to be represented by such securities)
or transactions referred to in each Item of Paragraph 2
of Article 33 of the Financial Instruments and ExchangeAct, to do the activities set forth in each Item of the saidParagraph (other than those referred to in Items (3), (5), (7)through (9), (11) and (13));(18) To provide other entities with consulting services regarding
business transfer, merger, corporate split, share-for-shareexchange (kabushiki kokan) or share transfer (kabushikiiten), or to act as a broker for these transactions;(19) To provide other entities with consulting services regarding
management, and to conduct investigations or provide
information as required for the business operations ofother entities;(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.
2. In addition to the business operations of the preceding
Paragraph, the Corporation may engage in such businessactivities as necessary to attain its object, subject toauthorization of the Minister of Finance.

Article 4

Application by Changing the Provisions of the
Financial Instruments and Exchange Act to Read
1. For the purpose of application of the provisions of the Financial
Instruments and Exchange Act to the Corporation, the words
and phrases indicated in the center columns of the tablebelow in the provisions of that Act in the left columns shall bechanged to read the words and phrases indicated in the rightcolumn, respectively:
Article 2, Paragraph 8(referred to asthe“Cooperative
Financial
Institutions”)(referred to as the“Cooperative Financial
Institutions”),
Development Bank ofJapan Inc.

Article 2, Paragraph 11; Cooperative
Cooperative Financial
Article 27-28,
Financial
Institutions,Paragraph 3; Article 28, Institutions
Development Bank of
Paragraph 4; Article 33,
Japan Inc.
Paragraph 1; Article
33-5, Paragraph 2;
Article 33-7; Article 58;
Article 60-14,
Paragraph 1; Article 66,
and Article 202,
Paragraph 2, Items (1)and (2)
Article 33-8, Paragraph 1 are the finan- are the financial institucial institutions tions, or if Development
Bank of Japan Inc. conducts the business activity referred to in Article
3, Paragraph 1, Item(16) of The Development
Bank of Japan Inc. Act(Act No. 85 of 2007)

Corporate Data

3. “Securities” in Items (5) and (6) of Paragraph 1 and Paragraph
5 mean the securities set forth in Article 2, Paragraph 1 of the
Financial Instruments and Exchange Act, and the rights which
are deemed as securities as set forth in Article 2, Paragraph 2 of
the Financial Instruments and Exchange Act.
4. “Short-term Notes, Etc.” in Items (5) and (9) of Paragraph 1,
and the next following Paragraph mean:(1) Short-term notes Etc. set forth in Article 66, Item (1) of the
Act on Book-Entry Transfer of Company Bonds, Shares, etc.
(Act No. 75 of 2001);(2) Short-term investment corporation notes set forth in Article
139-12, Paragraph 1 of the Act on Investment Trusts andInvestment Corporations (Act No. 198 of 1951);(3) Specified short-term notes set forth in Article 2, Paragraph 8of the Act on Securitization of Assets (Act No. 105 of 1998);(4) Rights to be indicated on debt securities (other than thosehaving the nature of corporate debentures with stockacquisition rights (shinkabu-yoyaku-ken-tsuki shasai)) tobe issued by foreign corporations, the ownership rights ofwhich shall be determined based on the entries or recordingsin the central depositary account register as prescribed by the
Act on Book-Entry Transfer of Company Bonds, Shares, etc.,
which satisfy all of the following requirements:
a. The amount of each right is not less than JPY100 million;b. It is stipulated that the principal amount of such debt
securities shall be redeemed on a definitely specified
date which occurs a year after the date on which theaggregate amount of such rights is paid, and further
that no payment shall be made in installments; andc. It is stipulated that interest shall become due andpayable on the same date as the maturity date of theprincipal amount in Sub-item b.
5. The business operations referred to in Paragraph 1, Item (7)(in the case of monetary claims represented by the certificates
set forth in the said Item which fall within Securities) and thebusiness operations referred to in Paragraph 1, Item (9) (inthe case of Short-term Notes, Etc.) shall include the business
operations to do the activities referred to in Article 2, Paragraph
8, Items (1) through (6), and (8) through (10) of the Financial
Instruments and Exchange Act.
6. The terms “Specified Purpose Company,” “Asset Liquidation
Plan,” “Specified Bonds,” “Specified Short-term Notes” or“Preferred Investment Securities” referred to in Paragraph 1, Item
(8) mean the specified purpose company, asset liquidation plan,
specified bonds, specified short-term debentures or preferredinvestment securities set forth in Article 2, Paragraphs 3, 4 or 7
through 9 of the Act on Securitization of Assets, respectively.
7. If the Corporation engages in the business activity referred
to Paragraph 1, Item (10), the provision of Article 52-36,
Paragraph 1 of the Banking Act and other provisions equivalent
to that provision of the said Paragraph which apply to those
who engage in the financial business stipulated in the Cabinet
Order set forth in Paragraph 1, Item (10) and are prescribed in
the Cabinet Order, shall not apply.

2. Any directors, accounting counsel (kaikei sanyo) (including, if an
accounting counsel is a firm, its members who should performthe duties as such; hereinafter in this Paragraph the same),
statutory auditors, executive officers (shikkoyaku) or employees
shall notify the Minister of Finance without delay as set forthin the Minister of Finance Ordinance if they take up a positionof director, accounting counsel, statutory auditor or executive
officer of a Financial Instruments Firm (limited to the firms thatengages in the securities-related business set forth in Article
28, Paragraph 8 of the Financial Instruments and ExchangeAct; hereinafter in this Paragraph the same) (including thecases where a director, accounting counsel, statutory auditor
or executive officer of a Financial Instruments Firm come toconcurrently hold a position of director, accounting counsel,
statutory auditor or executive officer of the Corporation), or
they resign a director, accounting counsel, statutory auditor or
executive officer of a Financial Instruments Firm.
Article 5 Issue of the Development Bank of Japan Bonds
1. The Corporation may issue the Development Bank of Japan
Bonds.
2. The provision of Article 702 of the Companies Act (Act No.
86 of 2005) shall not apply where the Corporation issues theDevelopment Bank of Japan Bonds.
3. Only with respect to the Development Bank of Japan Bonds
issued outside of Japan, the Corporation may issue certificates
representing the Development Bank of Japan Bonds (includinginterest coupons appertaining thereto; hereinafter in thisParagraph, and Article 13, Paragraphs 3 and 4, Item (1), thesame), as prescribed in the Cabinet Order, in the event that it isnecessary to deliver replacement certificates to anyone who has
lost those certificates.
Article 6

Method of Issue of the Development Bank ofJapan Bonds
1. If the Corporation issues certificates representing theDevelopment Bank of Japan Bonds, such certificates shall be
in bearer form; provided, however, that the Corporation may
issue those certificates in registered form upon request of a
subscriber or owner of the Bonds.
2. If the Corporation issues the Development Bank of Japan
Bonds, the Corporation shall not enter into a custodyagreement with a subscriber of the Bonds in which mattersset forth in the Ministry of Finance Ordinance and the Cabinet
Office Ordinance are contained.
3. The Corporation may issue certificates representing theDevelopment Bank of Japan Bonds by way of a secondary
distribution (uridashi). In that case, the Corporation shalldetermine the distribution period.

Annual Report & CSR Report 2016129

4. If the Corporation issues certificates representing theDevelopment Bank of Japan Bonds, the Corporation shallindicate the following matters on the face of those certificates:(1) Trade name of the Corporation;(2) Amount of the Bonds represented by the certificate;(3) Interest rates on the Development Bank of Japan Bonds
represented by the certificate;(4) Method of redemption and maturity date of theDevelopment Bank of Japan Bonds represented by thecertificate; and(5) Numbers of the certificate.
5. If the Corporation intends to issue the Development Bankof Japan Bonds by way of a secondary distribution, theCorporation shall give public notice of the following matters:(1) Distribution period;(2) Aggregate amount of the Development Bank of Japan Bonds;(3) If payment for the Development Bank of Japan Bonds ismade in more than one installment, the amount of, andtime schedule for, such payments;(4) Issue price or minimum price of the Development Bank ofJapan Bonds;(5) If the Corporation intends to issue the Development Bankof Japan Bonds, the ownership rights of which shall be
determined based on the entries or recordings in thecentral depositary account register as prescribed by the Act
on Book-Entry Transfer of Company Bonds, Shares, etc.,
description to the effect that the Development Bank ofJapan Bonds are subject to the said Act; and(6) Matters referred to in Items (1) through (4) of theimmediately preceding Paragraph.
6. The Corporation may issue the Development Bank of Japan
Bonds at a discount.
Extinctive Prescription of the Development Bankof Japan Bonds
The extinctive prescription periods of the principal of, andinterest on, the Development Bank of Japan Bonds to be issued
by the Corporation shall be fifteen (15) years and five (5) years,
respectively.

to be conducted by the Corporation in the case that the
Corporation obtains the approval referred to in Paragraph 1.
Article 10 Mutatis Mutandis Application of the Banking Act
1. The provisions of Articles 12-2, 13, 13-2, 13-4, 14, 14-2,
20, 21, 23 and 57-4 (limited to the portions relating to Item(1)) of the Banking Act shall apply mutatis mutandis to the
Corporation when the Corporation obtains the approvalreferred to in Paragraph 1 of the immediately preceding Article.
For this purpose, references to the “Prime Minister” and“Cabinet Office Ordinance” in these provisions (other than thesecond sentence of Article 13-4 and Article 20, Paragraph 7of the Banking Act) shall be changed to read the “Minister ofFinance and the Prime Minister” and the “Ministry of FinanceOrdinance and the Cabinet Office Ordinance,” respectively, andreference to “Article 38, Items (1) and (2), and Article 38-2”
in Article 13-4 of the Banking Act shall be changed to read
“Article 38-2,” and other necessary technical changes to readshall be prescribed in the Cabinet Order.
2. For the purpose of application of the provisions of the Financial
Instruments and Exchange Act which shall be applied mutatis
mutandis after changing to read in Article 13-4 of the Banking
Act which is applied mutatis mutandis after changing to readin the preceding Paragraph, reference to the “Cabinet Office
Ordinance” in those provisions shall be changed to read the“Ministry of Finance Ordinance and Cabinet Office Ordinance.”
3. If the Government stipulates an ordinance pursuant to theprovisions of the Banking Act which shall be applied mutatis
mutandis after changing to read in Paragraph 1, the Government
shall pay attention so that interests of users of business
operations of the Corporation such as money lending, when it
gives the approval referred to in Paragraph 1 of the immediately
preceding Article may not be unreasonably infringed.

Article 7

Article 8

Mutatis Mutandis Application of the Currency
and Securities Counterfeiting Control Act
The Currency and Securities Counterfeiting Control Act (ActNo. 28 of 1895) shall be applied mutatis mutandis to thecounterfeiting of certificates representing the Development
Bank of Japan to be issued by the Corporation.

Article 9Special Rules When Starting Acceptance of
Deposits, Etc.
1. If the Corporation intends to start acceptance of deposits
set forth in Article 3, Paragraph 1, Item (1) or issue of theDevelopment Bank of Japan Bonds, the Corporation shallobtain the prior approval of the Minister of Finance.
2. If the Minister of Finance intends to give the approval referred
to in the preceding Paragraph, the Minister of Finance shall, in
advance, have a discussion with the Prime Minister and obtain
his/her consent.
3. The Prime Minister may request the Minister of Finance to provide
the Prime Minister with the required materials and explanations,whenever the Prime Minister deems necessary after the
discussion referred to in the immediately preceding Paragraph.
4. The Prime Minister may request the Corporation to cooperatewith the Prime Minister such as providing materials andexplanations, to the required extent, whenever the Prime
Minister deems especially necessary after the discussion referred
to in Paragraph 2.
5. The provisions of Article 4, Paragraph 1 of the Banking Act andArticle 4, Paragraph 1 of the Long Term Credit Bank Act (ActNo. 187 of 1952) shall not apply to the business operations

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Article 11 Fiscal YearThe fiscal year of the Corporation shall commence on April 1 ofeach year and end on March 31 of the following year.
Article 12 Shares
1. If the Corporation intends to solicit those who will subscribe
for shares offered for sale set forth in Article 199, Paragraph
1 of the Companies Act (Act No. 86 of 2005) (hereinafter in
Article 34, Item (4) referred to as the “Shares Offered for Sale”)
or stock acquisition rights offered set forth in Article 238,
Paragraph 1 of the Companies Act (hereinafter in Article 34,
Item (4) referred to the “Stock Acquisition Rights Offered”),
or to deliver shares or stock acquisition rights in connection
with a share-for-share exchange, the Corporation shall obtain
authorization of the Minister of Finance.
2. Without delay after the delivery of shares upon exercise ofstock acquisition rights, the Corporation shall submit a report
thereon to the Minister of Finance.
Article 13 Corporate Debentures, Development Bank ofJapan Bonds and Borrowings
1. Prior to the beginning of each fiscal year, the Corporation
shall prepare its basic policy regarding the issue of corporate
debentures (shasai) (other than the Development Bank ofJapan Bonds, “Corporate Debentures”; hereinafter the same)and the Development Bank of Japan Bonds (excluding theshort-term notes set forth in Article 66, Item (1) of the Act
on Book-Entry Transfer of Company Bonds, Shares, etc. (ActNo. 75 of 2001) from both the Corporate Debentures and theDevelopment Bank of Japan Bonds, respectively; hereinafterin this Article and Article 18 the same), as well as regarding
the borrowings (limited to those with more than one year
to maturity; hereinafter in this Article and Article 18 thesame), which provides for matters relating to the issue of the
Corporate Debentures and the Development Bank of Japan

Article 14 Limits on Borrowing and Limitation on Extensionof Credit
1. The aggregate amount of the items identified below shall not
exceed the amount equal to fourteen (14) times the total amountof paid-in capital and reserves (capital reserve and earned surplus
reserve; hereinafter in this Article the same); provided, however,that if it is necessary, to refinance the issued old bank debentures(the bank debentures set forth in Article 43, Paragraph 1 of theDevelopment Bank of Japan Act (Act No. 73 of 1999; hereinafterreferred to as the “Old DBJ Act”) before abolishment as set forthin Article 26 of the Supplementary Provisions which were issued
pursuant to the provision of Article 43, Paragraph 1 or Paragraph
4 of the Old DBJ Act, the “Old Bank Debentures”; hereinafter
the same), the Corporate Debentures or the Development ofBank of Japan Bonds, the Corporation may issue the Corporate
Debentures and the Development Bank of Japan Bonds, in excess
of such amount only within the period of time required for suchrefinancing:(1) Outstanding amount of deposits;(2) Outstanding amount of borrowings;(3) Outstanding amount of funds deposited pursuant to theprovision of Article 42, Paragraph 5 of the Old DBJ Act;
(4) Outstanding amount of the obligations representing theprincipals of the Old Bank Debentures;(5) Outstanding amount of the obligations representing
the principals of the Corporate Debentures and theDevelopment Bank of Japan Bonds issued; and(6) Outstanding amount of those items which have thesame economic nature as those referred to in each of theforegoing, howsoever described.
2. The aggregate amount of the items identified below shallnot exceed the sum of: (i) the amount of paid-in capital andreserves and (ii) the upper limit set forth in the main sentenceof the preceding Paragraph:(1) Outstanding amount of the amounts of loans made andclaims acquired (other than those relating to Securities set
forth in Item (3));(2) Outstanding amount of obligations of guarantee;(3) Outstanding amount of Securities acquired (the Securities
set forth in Article 3, Paragraph 3 and exclude the

Securities referred to in Article 2, Paragraph 1, Items (1)and (2) of the Financial Instruments and Exchange Act(including the rights to be represented on such securities
when such Securities are not issued), and those relating tocapital contributions under the next following Item); and(4) Outstanding amount of capital contributions.
Article 15 Resolution for Election of Representative
Directors and Other Officers
Resolutions for appointment and dismissal of the representative
directors or representative executive officers of the
Corporation, appointment and dismissal of statutory auditors,
or appointment and dismissal of audit committee members(kansaiin) shall not become effective without authorization of
the Minister of Finance.
Article 16 Authorization of Concurrent Positions of Directors
1. 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 shallnot perform the day-to-day business of any other corporation
without authorization of the Minister of Finance.
2. The Minister of Finance shall, upon receipt of an application for
the authorization referred to in the preceding Paragraph, grant
his/her authorization, except in cases where it is determinedthat any matter so applied may interfere with sound and proper
management of the Corporation.

Corporate Data

Bonds, and the borrowing of money, such as the amounts ofissue and borrowings, denominated currency of the Corporate
Debentures, the Development Bank of Japan Bonds and theborrowings, as stipulated in the Ministry of Finance Ordinance,and obtain authorization of the Minister of Finance. If the
Corporation intends to revise it, the same shall apply.
2. If the Corporation issues the Corporate Debentures or theDevelopment Bank of Japan Bonds, or borrows money, theCorporation shall submit a report thereon to the Minister ofFinance without delay, as stipulated in the Minister of FinanceOrdinance.
3. Only with respect to the Corporate Debentures issued outsideof Japan, the Corporation may issue certificates representing
the Corporate Debentures, as prescribed in the Cabinet
Order, in the event that it is necessary to deliver replacement
certificates to anyone who has lost those certificates.
4. The provisions of the second sentence of Paragraph 1, andParagraph 2 shall not apply to the following cases:(1) When the Corporation issues certificates representing
the Corporate Debentures or the Development Bank ofJapan Bonds (hereinafter in the following Item and Article
25, Paragraph 2 referred to as the “Bond Certificates,
Etc.”) upon request for reissue which will be made after adecision of nullification set forth in Article 699, Paragraph 2of the Companies Act; and(2) When the Corporation issues the Bond Certificates Etc.
as set forth in Article 5, Paragraph 3 or the immediately
preceding Paragraph.

Article 17 Business Plan
Prior to the beginning of each fiscal year, the Corporation shalldraw out a business plan for the new fiscal year and obtain
authorization of the Minister of Finance, as stipulated in the
Ministry of Finance Ordinance. If the Corporation intends torevise it, the same shall apply.
Article 18 Redemption Plan
Prior to the beginning of each fiscal year, the Corporation shalldraw out redemption plans for the Corporate Debentures, theDevelopment Bank of Japan Bonds and the borrowings andobtain authorization of the Minister of Finance, as stipulated in
the Ministry of Finance Ordinance. If the Corporation intends torevise 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 to Authorization”) its subsidiary (the subsidiary set forthin Article 2, Item (3) of the Companies Act), the Corporation
shall obtain authorization of the Minister of Finance in advance:(1) Banks;(2) Long-term credit banks (the long-term credit banks set
forth in Article 2 of the Long Term Credit Bank Act (Act No.
187 of 1952));(3) Financial Instruments Firms (limited to those who engage
in type I financial instruments trading business set forth in
Article 28, Paragraph 1 of the Financial Instruments andExchange Act);(4) Money lenders (the money lenders set forth in Article 2,
Paragraph 2 of the Money Lending Business Act (Act No. 32
of 1983), and exclude those who concurrently conduct thebusiness referred to in the preceding Items or fall within otherrequirements stipulated in the Ministry of Finance Ordinance);(5) Trust companies (the trust companies set forth in Article 2,
Paragraph 2 of the Trust Business Act (Act No. 154 of 2004));(6) Insurance companies (the insurance companies set forth in
Article 2, Paragraph 2 of the Insurance Business Act (ActNo. 105 of 1995)); and(7) Those stipulated by the Ministry of Finance Ordinance as
those who are similar to each of the foregoing.

Annual Report & CSR Report 2016131

Article 20 Amendment to the Articles of Incorporation, Etc.
1. Resolutions for amendment to the Articles of Incorporation of
the Corporation, disposition of surplus (other than dispositionof losses) such as distribution, merger, corporate split, anddissolution shall not become effective without authorization of
the Minister of Finance.
2. If the Minister of Finance intends to grant the authorization referred
to in the preceding Paragraph (limited to resolutions for merger,
corporate split and dissolution), the Minister of Finance shall have a
discussion with the Minister of Land, Infrastructure and Transport.
Article 21 Submission of Balance Sheet and Other financial
Statements
For each fiscal year, the Corporation shall submit to the Ministerof Finance, as stipulated in the Ministry of Finance Ordinance,
its balance sheet, profit and loss statement and business reportfor the interim fiscal year (the period from April 1 to September
30 of the current fiscal year) of the current fiscal year, and its
balance sheet, profit and loss statement and business report forthe current fiscal year.
Article 22 Special Exemptions from Management of Fiscal
Loan Funds
Notwithstanding the provision of Article 10, Paragraph 1 of
the Fiscal Loan Funds Act (Act No. 100 of 1951), the fiscal loan
funds (the fiscal loan funds set forth in Article 2 of the Fiscal
Loan Funds Act; hereinafter the same) may be appropriatedfor loans (hereinafter in Article 24 referred to simply as the“Loans”) to the Corporation when the Corporation borrows
money for appropriation for expenses required for its
operations set forth in Article 3, Paragraphs 1 and 2.
Article 23
1. Notwithstanding the provision of Article 10, Paragraph 1 of the
Fiscal Loan Funds Act, the fiscal loan funds may be appropriatedfor the Corporate Debentures and the Development Bank ofJapan 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 toappropriate the resulting proceeds for expenses required for its
operations set forth in Article 3, Paragraphs 1 and 2.
2. If the fiscal loan fund is invested in the Debentures, Etc. or the
Old Bank Debentures, the fiscal loan fund shall not be used
to underwrite, subscribe for or purchase (limited, in the caseof the Old Bank Debentures, to purchase; hereinafter in thisParagraph referred to as the “Subscribe”) the Debentures, Etc.
or the Old Bank Debentures in excess of five-tenths (5/10) of
the outstanding amount of the Debentures, Etc. and the Old
Bank Debentures or six-tenths (6/10) of the total amount of theDebentures, Etc. to be issued by the Corporation at a time. In
this case, the Debentures, Etc. or the Old Bank Debentures tobe Subscribed with the fiscal loan funds shall be the same as
those otherwise Subscribed for with respect to the terms suchas interest rate, collateral, method of redemption and maturity.
Article 24
For the purpose of application of the provisions of the Act
Concerning Special Measures for Long-term Management of
Fiscal Loan Funds (Act No. 7 of 1973) to the fiscal loan funds
to be invested in making loans as set forth in Article 22 or the
fiscal loan funds to be invested in the Debentures, Etc. as set
forth in Paragraph 1 of the immediately preceding Article, theCorporation shall be deemed as the corporation set forth in
Article 10, Paragraph 1, Item (7) of the Fiscal Loan Funds Act.
Article 25 Guarantee of Obligations
1. Notwithstanding the provision of Article 3 of the Act
Concerning Restrictions on Fiscal Assistance by the Government
to Corporations (Act No. 24 of 1946), the Government may
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Annual Report & CSR Report 2016

the Debentures, Etc., to the extent of the amount approved by
the resolutions of the Diet.
2. In addition to the provision of the preceding Paragraph, theGovernment may enter into a guarantee agreement for the
obligations relating to the Bond Certificates, Etc. to be issued
by the Corporation upon request for reissue to be made after
a decision of nullification set forth in Article 699, Paragraph 2of the Companies Act, for delivery to those who have lost theBond Certificates, Etc., or for the obligations relating to theBond Certificates, Etc. to be issued by the Corporation as set
forth in Article 5, Paragraph 3 or Article 13, Paragraph 3.
Chapter III
Miscellaneous Provisions
Article 26 Supervisory Measures
1. The competent minister shall oversee and supervise the
Corporation in accordance with the provisions of this Act.
2. Whenever the competent minister deems necessary to securesound and proper management of the Corporation in lightof the condition of the business operations or properties of
the Corporation, or the properties of the Corporation and its
subsidiaries (which are limited to those subsidiaries set forth in
Article 2, Item (3) of the Companies Act, which fall within theSubsidiaries Subject to Authorization; hereinafter in Paragraphs
2 and 5 of the immediately following Article, and Article 33,
Paragraph 2, the same) or to otherwise effectuate this Act, thecompetent minister may request the Corporation to submit
an improvement plan to secure its sound management by
indicating those matters for which the Corporation shouldtake measures and the deadline for submission or direct the
Corporation to revise the improvement plan once submitted, or
direct, to the extent necessary, the Corporation to suspend its
business operations in whole or in part during the designatedperiod of time or to deposit its properties to the competentdeposit office, or give other orders concerning businessnecessary for supervision.
Article 27 Reports and Inspections
1. If the competent minister deems necessary to secure soundand proper management of the Corporation and otherwise
deems necessary to effectuate this Act, the competent ministermay cause the Corporation to make a report, or have anyof officials of the competent ministry enter into premises of
the Corporation such as its office to inspect the condition ofbusiness or books, documents and other properties required.
2. If the competent minister deems especially necessary to securesound and proper management of the Corporation andotherwise deems especially necessary to effectuate this Act,the competent minister may, to the extent necessary, cause anyof the subsidiaries or entities engaged by the Corporation forany services of the Corporation (hereinafter in this Paragraph,
Paragraph 5 and Article 33, Paragraph 2 referred to as the“Contractors”) to make reports relevant to the conditionof business of the Corporation or have any officials of thecompetent ministry enter into offices or other premises of thesubsidiaries or the Contactors of the Corporation to inspect thecondition of business or books, documents and other properties
required which may serve as reference relating to the conditionof business of the Corporation.
3. When the officials conduct on-site inspection pursuant to theprovisions of the preceding two Paragraphs, those officials shallcarry a certificate showing their identities and present it to theparties concerned.
4. The authority of the officials to conduct on-site inspections
pursuant to the provisions of Paragraphs 1 and 2 shall not beinterpreted as that for a criminal investigation.
5. The subsidiaries and the Contractors of the Corporation may
reject the report or on-site inspection pursuant to the provisionof Paragraph 2, if there is any reasonable cause.

Article 29 Competent Ministers
1. The competent minister under this Act shall be the Ministerof Finance provided, however, that in the case that the
Corporation obtains the approval referred to in Article 9,
Paragraph 1, the competent ministers for the following mattersshall be the Minister of Finance and the Prime Minister:(1) Matters regarding the provisions of the Banking Act which areapplied mutatis mutandis after changing to read in Article 10;(2) Matters regarding the directions and orders under Article 26,
Paragraph 2 (limited to those to be given when it is deemednecessary to secure sound and proper management of the
Corporation set forth in the said Paragraph);(3) Matters regarding the direction for report and on-site
inspections under Article 27, Paragraph 1 (limited to thoseto be made and conducted when it is deemed necessary tosecure sound and proper management of the Corporation
set forth in the said Paragraph); and(4) Matters regarding the direction for report and on-site
inspections under Article 27, Paragraph 2 (limited to thoseto be made and conducted when it is deemed especiallynecessary to secure sound and proper management of the
Corporation set forth in the said Paragraph).
2. The Minister of Finance or the Prime Minister shall not be
precluded from individually exercising the authority relating
to the matters referred to in Item (3) or (4) of the preceding
Paragraph as set forth in the proviso of the preceding Paragraph.
3. If each minister referred to in each of the following Items
exercises his/her authority pursuant to the provision of theimmediately preceding Paragraph, he/she shall promptly informthe results thereof to the minister set forth opposite to him/herin each of the following Items:(1) Minister of Finance: Prime Minister(2) Prime Minister:
Minister of Finance
4. In the cases stipulated in the proviso of Paragraph 1, reference
to the “Minister of Finance” in Article 3, Paragraph 2 shallbe changed to read the “Minister of Finance and the Prime
Minister”; reference to the “Minister of Finance” in Article
13, Paragraph 2 shall be changed to read the “Minister ofFinance (or, in relation to issue of the Development Bankof Japan Bonds, the Minister of Finance and the Prime
Minister)”; reference to the “Minister of Land, Infrastructure
and Transport” in Article 20, Paragraph 2 shall be changed toread the “Minister of Land, Infrastructure and Transport and
the Prime Minister”; reference to the “, as stipulated in the
Ministry of Finance Ordinance, its balance sheet, profit and loss
statement and business report for interim fiscal year (the period

from April 1 to September 30 of the current fiscal year) of thecurrent fiscal year” in Article 21 shall be changed to read the “,
as stipulated in the Ministry of Finance Ordinance (or, in relation
to the fiscal year and interim fiscal year (the period from April
1 to September 30 of the current fiscal year; hereinafter in this
Article the same) in and after the fiscal year in which the dateon which the approval referred to in Article 9, Paragraph 1 isobtained is included, the Minister of Finance Ordinance andthe Cabinet Officer Ordinance), its balance sheet, profit andloss statement and business report for interim fiscal year of thecurrent fiscal year”, and reference to the “Minister of Finance”
in Article 21 shall be changed to read the “Minister of Finance(or, in relation to the fiscal year and interim fiscal year in after
the fiscal year in which the date on which the approval referred
to in the said Paragraph is obtained is included, the Minister ofFinance and the Prime Minister).”
5. In the case of the proviso of Paragraph 1, if the Minister ofFinance intends to amend the Minister of Finance Ordinancereferred to in Article 3, Paragraph 1, Item (7) or (8) he/she shallobtain the prior consent of the Prime Minister.
6. The Prime Minister shall delegate the authorities under thisAct (other than those authorities pursuant to the provisions ofParagraphs 1 through 3 of the immediately preceding Article,
and other authorities set forth in the Cabinet Order) to theCommissioner of the Financial Services Agency.
7. The Commissioner of the Financial Services Agency may
delegate a part of the authorities delegated to him/her pursuant
to the provision of the immediately preceding Paragraph to thedirector of local finance bureau or local finance branch bureau.

Corporate Data

Article 28 Delegation of Authority
1. The Minister of Finance may delegate a part of the authority
to conduct on-site inspections pursuant to the provision of
Paragraphs 1 or 2 of the immediately preceding Article to thePrime Minister, as stipulated in the Cabinet Order.
2. If the Prime Minister has had the on-site inspections conductedpursuant to the provision of Paragraphs 1 or 2 of the immediately
preceding Article based on the delegation of the authority under
the preceding Paragraph, the Prime Minister shall promptly report
the Minister of Finance on results of such inspections.
3. The Prime Minister shall delegate the authority delegatedpursuant to the provision of Paragraph 1 and the authority
pursuant to the provision of the immediately preceding
Paragraph to the Commissioner of the Financial Services Agency.
4. The Commissioner of the Financial Services Agency may
delegate all or a part of the authority delegated pursuant to
the provision of the immediately preceding Paragraph to thedirector of the competent local financial bureau or local financebranch bureau, as stipulated in the Cabinet Order.
5. If the Corporation obtains the approval referred to in Article 9,
Paragraph 1, each provision of the preceding Paragraphs shallnot apply.

Chapter IV
Penal Provisions
Article 30
1. If any directors, executive officers (shikkoyaku), accounting
counsel (kaikei sanyo) (if an accounting counsel is a firm, its
members who should perform the duties as such), statutory
auditors, or employees accept, solicit or promise to accept abribe in connection with their duties, they shall be punishedby imprisonment with work for not exceeding three (3)years. If they conduct improper activities or fail to conduct
proper activities with the bribe, they shall be punished by
imprisonment with work for not exceeding five (5) years.
2. In the case of the immediately preceding Paragraph, the bribe
accepted by the criminal person shall be confiscated. If thebribe in whole or in part cannot be confiscated, such amountshall be collected.
Article 31
1. Any person who gives, offers or promises to give a bribereferred to in Paragraph 1 of the immediately preceding Article
shall be punished with imprisonment for not exceeding three(3) years or a fine not exceeding 1,000,000 yen.
2. If the person who committed the crime referred to in theimmediately preceding Paragraph surrendered to justice, his/her
penalty may be reduced or he/she may be exempted from thepunishment.
Article 32
1. The crime referred to in Article 30, Paragraph 1 shall comply
with Article 4 of the Criminal Code (Act No. 45 of 1907).
2. The crime referred to in Paragraph 1 of the immediately
preceding Article shall comply with Article 2 of the Criminal Code.
Article 33
1. Any directors, executive officers (shikkoyaku), accounting
counsel (kaikei sanyo) (if an accounting counsel is a firm, its
members who should perform the duties as such), statutory
auditors, or employees of the Corporation who fail to makeAnnual Report & CSR Report 2016133

reports, or make false reports on matters to be reported inaccordance with the provision of Article 27, Paragraph 1, or
refuse, interrupt or avoid inspection in accordance with thesame paragraph, shall be punished with a fine not exceeding
300,000 yen.
2. Any directors, executive officers (shikkoyaku), accounting
counsel (kaikei sanyo) (if an accounting counsel is a firm, its
members who should perform the duties as such), statutory
auditors, or employees of the subsidiaries of the Corporation or
the Contactors who fail to make reports, or make false reports
on matters to be reported in accordance with the provision of
Article 27, Paragraph 2, or refuse, interrupt or avoid inspectionin accordance with the same paragraph, shall be punished witha fine not exceeding 300,000 yen.
Article 34
In any of the following cases, any directors, executive officers(shikkoyaku), accounting counsel (kaikei sanyo) or its members
who should perform the duties as such, or statutory auditorsof the Corporation shall be punished with a non-penal fine notexceeding 1,000,000 yen:
(1) When he/she has conducted business activities in violationof the provision of Article 3, Paragraph 2;(2) When he/she has not notified of his/her concurrent positionin violation of the provision of Article 4, Paragraph 2;(3) When he/she has started acceptance of deposits or issue of
the Development Bank of Japan Bonds in violation of theprovision of Article 9, Paragraph 1;(4) When he/she has solicited those who will subscribe for
Shares Offered for Sale or Stock Acquisition Rights Offered,or delivered shares or stock acquisition rights in connection
with a share-for-share exchange in violation of the provisionof Article 12, Paragraph 1;(5) When he/she has not submitted a report on the delivery ofshares in violation of the provision of Article 12, Paragraph 2;(6) When he/she has not obtained authorization for its basic
policy in violation of the provision of Article 13, Paragraph 1;(7) When he/she has not submitted a report on issue of the
Corporate Debentures or the Development Bank of Japan
Bonds, or borrowing money in violation of the provision of
Article 13, Paragraph 2;(8) When he/she has exceeded the limit or the total referred toin Article 14, Paragraph 1 or Paragraph 2 in violation of theprovision thereof;(9) When he/she has not obtained authorization for his/her
concurrent position in violation of the provision of Article
16, Paragraph 1;(10) When he/she has not obtained authorization for its
business plan in violation of the provision of Article 17;(11) When he/she has not obtained authorization for its
redemption plans in violation of the provision of Article 18;(12) When he/she has made Subsidiaries Subject toAuthorization its subsidiary in violation of the provision of
Article 19;(13) When he/she has not submitted its balance sheet, profit
and loss statement or business report, or has submitted theone which includes false statements or records in violationof the provision of Article 21;(14) When he/she has violated the orders referred to in Article
26, Paragraph 2.
Article 35
Any person who violates the provision of Article 2, Paragraph 1 shallbe punished with a non-penal fine not exceeding 100,000 yen.

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Supplementary Provisions
Article 1 Enforcement Date
This Act shall come into force from the date of promulgation;
provided, however, that the provisions set forth in the following
Items shall take effect from the date set forth in each Item:(1) The provisions of Paragraph 1, Items (5), and (11) through(17), Paragraph 3, Paragraph 4, Item (2), Paragraph 5of Article 3, Article 4, Article 10, Article 14, Paragraph2, Item (3), Article 19, Item (3), and Article 21 of the
Supplementary Provisions: Date on which the Act
Concerning Amendment to Parts of the Securities andExchange Act (Act No. 65 of 2006) comes into force or thedate on which this Act comes into force, whichever is later.
(2) Provision of Article 19, Item (4): Date on which the Act
Concerning Amendment to Parts of the Act Concerning
the Regulations on the Money Lending Business (Act No.
115 of 2006) comes into force or the date on which thisAct comes into force, whichever is later.
(3) Provisions of Articles 26 through 60 and 62 through 65 of
the Supplementary Provisions: October 1, 2008.
Article 2 Disposition of Government-Owned Shares
1. Pursuant to the provision of Article 6, Paragraph 2 of the Act
Concerning Promotion of Administrative Reform for Realizing
the Simple and Effective Government (Act No. 47 of 2006),
the Government shall make efforts to reduce the number ofshares held by it in the Corporation (hereinafter in the following
Paragraph and the Article 3 of the Supplementary Provisions
referred to as “Government-Owned Shares”), taking into
account the effect on the attainment of the objectives of the
Corporation, as well as the market situation, and shall dispose
all of them as soon as practicable.
2. For a period from the effectuation of this Act until theGovernment disposes of all of the Government-Owned Shares,
the Government shall from time to time review matters, suchas matters regarding the method in which the GovernmentOwned Shares should be disposed of and take the required
measures based on the result of such review, so that thefoundation of the Corporation’s investment and financing
functions for long-term business funds will be maintained.
Article 2-2 Capital Contribution by the Government
The Government may make capital contributions to the
Corporation, to the extent of the amount approved by thebudget, whenever the Government deems necessary, until
March 31, 2012.
Article 2-3 Issue of the Government Bonds
1. The Government may issue the government bonds to use
for securement of capital that become necessary to securesoundness of financial conditions of the Corporation in
performing crisis response operations set forth in Article 2, Item(5) of the Japan Finance Corporation Act (Act No. 57 of 2007)(hereinafter referred to as the “crisis response operations”),
until March 31, 2012.
2. The Government, as set forth in the immediately preceding
Paragraph, shall issue the government bonds and deliver themto the Corporation, to the extent of the amount approved by
the budget.
3. The government bonds to be issued as set forth in Paragraph 1
shall be non interest-bearing.
4. The government bonds to be issued as set forth in Paragraph 1
may not be transferred, pledged as security, or otherwise disposed.
5. In addition to those set forth in the preceding three Paragraphs,
other matters necessary for the government bonds to be issued
as set forth in Paragraph 1 shall be stipulated by the Ministry of
Finance Ordinance.

Article 2-5 Return of the Government Bonds
1. If there are any government bonds delivered as set forth in
Article 2-3, Paragraph 2 of the Supplementary Provisions, thosewhich are not redeemed as of July 1, 2012, the Corporation
shall return the unredeemed government bonds to theGovernment.
2. The Government shall immediately cancel the government
bonds when the government bonds are returned as set forth in
the immediately preceding Paragraph.
3. In addition to those set forth in the preceding two Paragraphs,
other matters required for the return and the cancellation of thegovernment bonds delivered by the Government as set forth in
Article 2-3, Paragraph 2 of the Supplementary Provisions, shallbe stipulated in the Ministry of Finance Ordinance.
Article 2-6 Special Rules for Taxation of the Registration
License Tax
In case of the investment as set forth in Article 2-2 of the
Supplementary Provisions, or the redemption as set forth in
Article 2-4, Paragraph 2 of the Supplementary Provisions, noregistration license tax shall be assessed on registration of
the increase in the amount of the capital of the Corporation,
limited to only those registered as set forth in the Minister ofFinance Ordinance.
Article 2-7 Corporation’s Obligation to Conduct Crisis
Response Operations
The Corporation shall, in order to attain its objectives, inaccordance with the provisions set forth in Articles 2-10, 2-11,
2-22 and Articles 2-24 to 2-30 of the Supplementary Provisions,be obligated to conduct crisis response operations, for anindefinite period, to secure a smooth supply of funds to those
who need funds to address the damages set forth in Article 2,
Item (4) of the Japan Finance Corporation Act.
Article 2-8 Government’s Holding of Shares with Regard to
Crisis Response Operations
With a view to ensure proper conduct of crisis response
operations by the Corporation, the Government shall, for anindefinite period, hold more than one-third of the total number
of issued shares of the Corporation (excluding shares in respectof which voting rights may not be exercised for all matters that
may be resolved at a general meeting of shareholders; the same
shall apply in Article 2-13 of the Supplementary Provisions).
Article 2-9 Capital Contribution by the Government with
Regard to Crisis Response Operations
The Government may, for an indefinite period, make capital
contributions to the Corporation, to the extent of the amountapproved by the budget, whenever the Government deems
necessary for proper implementation of crisis response
operations by the Corporation.
Article 2-10 Implementation of Crisis Response Operations
1. The Corporation shall conduct crisis response operations at
the head office or any other office designated by the Ministerof Finance (hereinafter in the following Paragraph and Article
2-31, Paragraph 1, Item (1) of the Supplementary Provisions
referred to as the “designated office”).
2. The Corporation shall neither suspend nor cease to conduct
crisis response operations at the designated office, except
in cases where crisis response operations is temporarilysuspended, in whole or in part, at the designated office due toActs of God or other reasons beyond control, as stipulated in
the Ministry of Finance Ordinance.

Corporate Data

Article 2-4 Redemption of the Government Bonds
1. The Corporation may request the redemption of thegovernment bonds delivered as set forth in Paragraph 2 of
the immediately preceding Article, only within the amountcalculated as stipulated by the Ministry of Finance Ordinancethat become necessary as the amount of the capital in responseto the increase of assets related to its crisis response operations(limited to those conducted by March 31, 2012).
2. If the Government is requested by the Corporation to redeem
all or a part of the government bonds delivered pursuant to theprovision of Paragraph 2 of the immediately preceding Article,
the Government shall promptly redeem them.
3. When the redemption has been made pursuant to the provisionof the immediately preceding Paragraph, the amount of thecapital of the Corporation shall be the aggregate sum of theamount of the capital immediately preceding such redemption
and the amount of such redemption.
4. As for application of the provision of Article 445, Paragraph
1 of the Companies Act in the case where the provision of
the immediately preceding Paragraph applies, “Unless it isotherwise provided for in this Act” therein shall be deemed to
be changed to read “Unless it is otherwise provided for in thisAct and in cases where the provision of Article 2-4, Paragraph
3 of the Supplementary Provisions of the Development Bank ofJapan Inc. Act (Act No. 85 of 2007) applies.”
5. In addition to those set forth in each of the preceding
Paragraphs, other matters required for the redemption of thegovernment bonds delivered by the Government as set forthin Paragraph 2 of the immediately preceding Article, shall be
stipulated in the Ministry of Finance Ordinance.

Article 2-11 Special Provisions, Etc. on Business Plan with
Regard to Crisis Response Operations
1. The Corporation shall include an implementation policy for itscrisis response operations in its business plan provided for in
Article 17, as stipulated in the Ministry of Finance Ordinance.
2. The Corporation shall include the implementation status of itscrisis response operations, based on the implementation policy
set forth in the immediately preceding Paragraph, in its business
report provided for in Article 21, as stipulated in the Ministry of
Finance Ordinance.
3. In addition to matters set forth in each of the Items of
Article 27 of the Companies Act, matters regarding proper
implementation of crisis response operations shall be included
or recorded in the Articles of Incorporation of the Corporation.
Article 2-12 Special Investment Operations
1. The Corporation shall, in order to attain its objectives, conduct
special investment operations, in accordance with the provisions
set forth in this Article, Articles 2-15 to 2-20, and Articles 2-23
to 2-30 of the Supplementary Provisions.
2. In this Article and up to Article 2-20 of the Supplementary
Provisions, as well as in Articles 2-23, 2-25, 2-27 and 2-31 of
the Supplementary Provisions, “special investment operations”
means, among the investment businesses in special businessactivities, those that are deemed to particularly contributeto the facilitation of supply of funds by financial institutions
and others, for the revitalization of business activities taking
advantage of regional characteristics that contribute toautonomous development of local economies, or for theenhancement of competitiveness of Japanese companies
that contribute to the improvement of socioeconomic vitality
and sustainable development of Japan, as well as for special
business activities, and those of which the business entities
that will receive funds from the said investment business andthe particulars of such supply are decided during the period
from the date on which the authorization specified in Article
2-17, Paragraph 1 of the Supplementary Provisions is obtained
through March 31, 2021, and any other businesses incidental
thereto (including those conducted on and after April 1, 2021).
3. “Special business activities” set forth in the immediately
preceding Paragraph means the following business activities:(1) Business activities conducted by Japanese business entities
with the aim of improving productivity and profitability

Annual Report & CSR Report 2016135

by cultivating new business through effective use of
insufficiently its management resources not sufficiently
used, or by promoting management innovation mainly
through co-ordinated alignment with business entities indifferent fields and effective combination of management
resources; and(2) Business activities that provide funds to the businessactivities set forth in the preceding Item.
4. “Investment business” set forth in Paragraph 2 means thefollowing businesses concerning supply of funds:(1) To lend money through subordinated loans (which means
loans made under loan agreements with special clauseof subordinated contents with regard to the payment ofprincipal and interest, and stipulated in the Ministry of
Finance Ordinance);(2) To make capital contributions;(3) To acquire subordinated corporate debentures (whichmeans corporate debentures with special clause ofsubordinated contents with regard to the payment ofprincipal and interest, and stipulated in the Ministry of
Finance Ordinance); and(4) In addition to those set forth in the preceding three Items,
to provide funds in the manner approved in advance by the
Minister of Finance.
Article 2-13 Government’s Holding of Shares with Regard toSpecial Investment Operations
With a view to ensure proper implementation of special
investment operations by the Corporation, the Government
shall hold one-half or more of the total number of issued sharesof the Corporation, until the Corporation completes the special
investment operations.
Article 2-14 Capital Contribution, Etc. by the Government
with Regard to Special Investment Operations
1. The Government may make capital contributions to the
Corporation, to the extent of the amount approved by thebudget, whenever the Government deems necessary forproper implementation of special investment operations by the
Corporation, until March 31, 2021.
2. The Corporation shall not appropriate money provided throughcapital contributions provided for in the preceding Paragraph toany funds other than funds for special investment operations.
Article 2-15 Supplement or Encouragement of Financing
Conducted by Financial Institutions, Etc. inSpecial Investment Operations
The purpose of the Corporation in conducting special
investment operations shall be to supplement or encourage
financing conducted by financial institutions and investment
conducted by private sector.
Article 2-16 Special Investment Guidelines
1. Guidelines to be followed by the Corporation in conducting
special investment operations (in the following Paragraph andParagraph 1 of the immediately following Article referred to as
the “special investment guidelines”) shall be established andissued by the Minister of Finance.
2. The special investment guidelines shall provide for the following
matters:(1) Standards to be followed in deciding the business entities
that will receive funds from the special investment
operations and the particulars of such supply of funds;(2) Matters regarding appropriate financial management of thespecial investment operations;(3) Matters regarding securing of appropriate competitive
relationships between the Corporation and other business
entities;(4) Matters regarding the system to be established to evaluate

136

Annual Report & CSR Report 2016

and supervise the implementation status of special
investment operations;(5) Matters regarding reporting to the Minister of Finance on theimplementation status of special investment operations; and(6) Any other matters necessary to ensure proper
implementation of special investment operations.
Article 2-17 Special Investment Operations Rules
1. The Corporation shall set rules regarding special investment
operations (in the following Paragraph referred to as the“special investment operations rules”) in line with the special
investment guidelines, with respect to matters concerning
implementation of special investment operations stipulated
in the Ministry of Finance Ordinance, and shall obtain
authorization therefor from the Minister of Finance. If the
Corporation intends to revise such rules, the same shall apply.
2. The Minister of Finance may order the Corporation to revise thespecial investment operations rules authorized pursuant to theprovision of the preceding Paragraph, if he/she deems that suchrules have become inappropriate for the proper implementationof special investment operations by the Corporation.
Article 2-18 Special Provisions, Etc. on Business Plan with
Regard to Special Investment Operations
1. The Corporation shall include the implementation policy forthe special investment operations in its business plans provided
for under Article 17, as stipulated in the Ministry of FinanceOrdinance, until the completion of the special investment
operations.
2. The Corporation shall include the implementation status of thespecial investment operations based on the implementation
policy provided for under the immediately preceding Paragraph,in its business reports provided for under Article 21 for eachfiscal year up to the fiscal year including the date of completionof the special investment operations, as stipulated in the
Ministry of Finance Ordinance.
3. In addition to matters set forth in each of the Items of Article 27of the Companies Act, matters regarding proper implementationof special investment operations shall be included or recordedin the Articles of Incorporation of the Corporation, until thecompletion of the special investment operations.
Article 2-19 Status of Income and Expenditure with Regard
to Special Investment Operations, Etc.
For each fiscal year, the Corporation shall, as stipulated in
the Ministry of Finance Ordinance, submit to the Minister ofFinance and publish documents stating the status of income
and expenditure of the following businesses by category foreach fiscal year up to the fiscal year including the date ofcompletion of the special investment operations:(1) Special investment operations; and(2) Businesses other than those listed in the preceding Item.
Article 2-20 Completion of Special Investment Operations
1. The Corporation shall, taking into account economic
conditions, the state of business of the business entities thatwill receive funds from special investment operations, andother circumstances, transfer or otherwise dispose of all of
the securities (which means the securities listed in Article 2,
Paragraph 1 of the Financial Instruments and Exchange Act,and the rights which are deemed as securities pursuant to theprovision of Article 2, Paragraph 2 of the Financial Instruments
and Exchange Act) and receivables held by it in the special
investment operations, and seek to complete the special
investment operations, by March 31, 2026.
2. When the special investment operations are completed, theCorporation shall promptly notify the Minister of Finance tothat effect.
3. The Minister of Finance shall, when notified pursuant to theprovision of the immediately preceding Paragraph, give public
notice to that effect.

Article 2-22 Crisis Response Reserve
1. The Corporation shall establish a crisis response reserve andappropriate to such reserve the amount contributed by theGovernment pursuant to the provision of Article 2-9 of the
Supplementary Provisions.
2. When the capital contributions have been made by theGovernment pursuant to the provision of Article 2-9 of
the Supplementary Provisions, the Corporation shall,
notwithstanding the provisions of Article 445, Paragraph 2 of
the Companies Act, record the whole of the amount contributed
pursuant to the provision of Article 2-9 of the Supplementary
Provisions as the amount of the crisis response reserve. For
this purpose, reference to “this Act” in Article 445, Paragraph
1 of the said Act shall be changed to read “this Act or theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007).”
Article 2-23 Special Investment Reserve and Special
Investment Surplus
1. The Corporation shall establish a special investment reserve
and appropriate to such reserve an amount equal to the totalof the amount contributed by the Government pursuant to theprovision of Article 2-14, Paragraph 1 of the Supplementary
Provisions, the amount by which the amount of paid-in capitalor reserves is reduced pursuant to the provision of Paragraph
3 of this Article and the amount reduced from the amount of
surplus pursuant to the provision of Paragraph 4 of this Article.
2. When the capital contributions have been made pursuant to
the provision of Article 2-14, Paragraph 1 of the Supplementary
Provisions, the Corporation shall, notwithstanding the provisionof Article 445, Paragraph 2 of the Companies Act, record thewhole of the amount contributed pursuant to the provision of
Article 2-14, Paragraph 1 of the Supplementary Provisions as
the amount of the special investment reserve. For this purpose,reference to “this Act” in Article 445, Paragraph 1 of the said
Act shall be changed to read “this Act or the Development
Bank of Japan Inc. Act (Act No. 85 of 2007).”
3. The Corporation may reduce the amount of its paid-in capitalor reserves and increase the amount of its special investment
reserve, whenever the Corporation deems necessary in order toimplement the special investment operations properly. For the
purpose of application of the provisions of Article 447 throughArticle 449 of the Companies Act in this case, reference to“is to be appropriated to reserves” in Article 447, Paragraph
1, Item (2) of the said Act shall be changed to read “is to beappropriated to reserves or to special investment reserve under
Article 2-23, Paragraph 1 of the Supplementary Provisions of
the Development Bank of Japan Inc. Act (Act No. 85 of 2007)(hereinafter referred to as the “special investment reserve” inthis Item, Paragraph 1, Item (2) of the following Article andArticle 449, Paragraph 1),” reference to “the amount to be

Corporate Data

Article 2-21 Securing of Appropriate Competitive
Relationships
1. The Corporation shall, for an indefinite period, pay special
attention in conducting its business so that it will not upset its
appropriate competitive relationships with other business entities.
2. The Corporation shall, for an indefinite period, include, in
its business plans provided for under Article 17, a policy
concerning securing of appropriate competitive relationships
with other business entities as stipulated in the Ministry of
Finance Ordinance.
3. The Corporation shall, for an indefinite period, describe, in
its business reports provided for under Article 21, the state of
implementation of its business based on the policy mentioned
in the immediately preceding Paragraph as stipulated in the
Ministry of Finance Ordinance.

appropriated to reserves” in the same Item shall be changed
to read “the amount to be appropriated to reserves or special
investment reserve,” reference to “the paid-in capital” in Article
448, Paragraph 1, Item (2) of the said Act shall be changed
to read “the paid-in capital or special investment reserve,”
and reference to “is appropriated to paid-in capital” in Article
449, Paragraph 1 of the said Act shall be changed to read “isappropriated to paid-in capital or special investment reserve.”
4. The Corporation may reduce the amount of surplus andincrease the amount of its special investment reserve, whenever
the Corporation deems this necessary in order to implement
the special investment operations properly. For this purpose, thefollowing matters shall be determined:(1) The amount by which the amount of surplus will be
reduced; and(2) The date on which the increase in the amount of thespecial investment reserve will become effective.
5. The determination of the matters referred to in each Item of theimmediately preceding Paragraph shall be made by resolutionof a shareholders’ meeting.
6. The amount provided for under Paragraph 4, Item (1) of this
Article may not exceed the amount of surplus as of the dateprovided for under Item (2) of the said Paragraph.
7. The Corporation shall establish the special investment surplus
and record the amount of profit or loss resulting from thecalculation of profits and losses pertaining to the special
investment operations for each fiscal year as stipulated in the
Ministry of Finance Ordinance.
Article 2-24 Special Provisions on Limits on Borrowing and
Limitation on Extension of Credit
For the purpose of application of the provision of Article 14, when
the amount of the crisis response reserve, the amount of thespecial investment reserve or the amount of the special investment
surplus is recorded, the total of the amounts so recorded shall be
included in the amount of paid-in capital and reserves.
Article 2-25 Amount of Surplus, Etc.
1. For the purpose of calculation of surplus, the Corporation shall
include the aggregate amount of the crisis response reserve, thespecial investment reserve and the special investment surplus
as of the last day of the most recent fiscal year (the most recent
fiscal year set forth in Article 2, Item (24) of the Companies Act;the same in the following Paragraph) in the total amount ofpaid-in capital and reserves.
2. For the purpose of calculation of surplus, the Corporation shall
include the aggregate amount of the amounts set forth in Items(1) though (3) and the aggregate amount of the amounts set
forth in Items (4) through (6), in the aggregate amount of theamounts set forth in Article 446, Items (1) through (4) of theCompanies Act and the aggregate amount of the amounts set
forth in Items (5) through (7) of the said Article, respectively:(1) The amount by which the amount of the crisis response
reserve has been reduced after the last day of the mostrecent fiscal year (excluding the amount of the crisis
response reserve provided for under Article 2-27, Paragraph
4, Item (1) of the Supplementary Provisions), if any;
(2) The amount by which the amount of the special investment
reserve has been reduced after the last day of the mostrecent fiscal year (excluding the amount of the special
investment reserve provided for under Article 2-27,
Paragraph 4, Item (1) of the Supplementary Provisions
which has been paid to the national treasury), if any;
(3) The amount by which the amount of the special investment
surplus has been reduced after the last day of the mostrecent fiscal year (excluding the amount of the special
investment surplus provided for under Article 2-27,
Paragraph 4, Item (1) of the Supplementary Provisions thathave been paid to the national treasury), if any;

Annual Report & CSR Report 2016137

(4) The amount by which the amount of paid-in capital orreserves has been reduced after the last day of the mostrecent fiscal year to increase the amount of the special
investment reserve, if any;(5) The amount by which the amount of surplus has been
reduced after the last day of the most recent fiscal year toincrease the amount of the special investment reserve, ifany; and(6) In addition to those listed in the preceding two Items, thetotal amount of the amounts recorded to each account asprescribed in the Ministry of Finance Ordinance.
3. If the Corporation calculates the distributable amount under
Article 461, Paragraph 2 of the Companies Act (which shall, in
Article 2-27, Paragraph 6 of the Supplementary Provisions, bereferred to as the “Distributable Amount”), the Corporation
shall deduct, from the total of the amounts set forth in Article
461, Paragraph 2, Items (1) and (2) of the said Act, the total of
the amounts recorded to each account as the amount of profit
pertaining to the special investment operations for the period
set forth in Article 441, Paragraph 1, Item (2) of the Companies
Act in the case where the Corporation obtains the approvalreferred to in Paragraph 4 of the said Article (or, in cases set
forth in the proviso to the said Paragraph, the approval underParagraph 3 of the said Article) of the temporary financial
statements referred to in Paragraph 1 of the said Article andany other amounts recorded to each account as prescribed in
the Ministry of Finance Ordinance.
Article 2-26 Reduction in Amount of Crisis Response
Reserve, Etc. When Deficit is Covered
1. If the amount of capital reserve and the amount of earned
surplus reserve have become zero, the Corporation may reduce
the amount of the crisis response reserve, the amount of
the special investment reserve or the amount of the special
investment surplus (limited, as regards the amount of thespecial investment surplus, to the case where such amountexceeds zero). For this purpose, the following matters shall be
determined by resolution of a shareholders’ meeting:(1) The amount by which the amount of the crisis response
reserve, the amount of the special investment reserve or theamount of the special investment surplus will be reduced; and(2) The date on which the reduction of the amount of the crisis
response reserve, the amount of the special investment
reserve or the amount of the special investment surplus will
become effective.
2. The resolution provided for under the preceding Paragraph shallnot become effective without authorization of the Minister ofFinance.
3. The amount of the crisis response reserve, the amount of
the special investment reserve or the amount of the special
investment surplus under Paragraph 1, Item (1) of this Article
may not exceed the amount of the crisis response reserve, theamount of the special investment reserve or the amount of thespecial investment surplus, respectively, as of the date set forthin Item (2) of the said Paragraph.
4. The aggregate of the amount of the crisis response reserve,
the amount of the special investment reserve and the amountof the special investment surplus as referred to in Paragraph 1,
Item (1) of this Article may not exceed the amount calculatedby the method prescribed by the Ministry of Finance Ordinanceas the amount of deficit as of the date of the shareholders’meeting referred to in the said Paragraph.
5. If the amount of the special investment surplus is not exceeding
zero, the amount of the special investment reserve as referred
to in Paragraph 1, Item (1) of this Article may not exceed theamount calculated by the method prescribed by the Ministry of
Finance Ordinance as the amount by which the amount of thespecial investment reserve may be reduced.
6. If the amount of surplus of the Corporation exceeds zero after

138

Annual Report & CSR Report 2016a reduction of the amount of the crisis response reserve, theamount of the special investment reserve or the amount of
the special investment surplus pursuant to the provision of
Paragraph 1 of this Article, the Corporation shall increase, inan amount equivalent to such excess, the amount of the crisis
response reserve, the amount of the special investment reserveor the amount of the special investment surplus until the time
when the cumulative amount of the amounts of the increases
in the amount of the crisis response reserve, the amount of
the special investment reserve or the amount of the special
investment surplus pursuant to the provision of this Paragraphequals the cumulative amount of amounts of reductions, asprescribed by the Minister of Finance Ordinance.
Article 2-27 Payment to National Treasury
1. If it is deemed that the financial basis necessary for proper
implementation of the crisis response operations has been
sufficiently secured, the Corporation shall pay to the nationaltreasury an amount equivalent to all or a part of the amount of
the crisis response reserve. In that case, the Corporation shall
reduce the crisis response reserve by the amount equivalent tosuch amount to be paid to the national treasury.
2. If it is deemed unnecessary to maintain the current level ofthe special investment reserve for the proper implementationof the special investment operations taking into account thestate of implementation and the financial condition of thespecial investment operations, the Corporation may reduce theamount of the special investment reserve in whole or in part.
In that case, the Corporation shall pay to the national treasury
an amount calculated as prescribed by the Ministry of FinanceOrdinance as the amount, out of the amount of such reduction,that should belong to the national treasury on the basis of the
proportion of the amount of the capital contributions madeby the Government pursuant to the provision of Article 2-14,
Paragraph 1 of the Supplementary Provisions to the amount of
the special investment reserve.
3. If, in cases where the amount of the special investment
surplus exceeds zero, it is deemed unnecessary to maintain thecurrent level of the special investment surplus for the proper
implementation of the special investment operations taking
into account the state of implementation and the financial
condition of the special investment operations, the Corporation
may reduce the amount of the special investment surplus inwhole or in part. In that case, the Corporation shall pay to
the national treasury an amount calculated as prescribed by
the Ministry of Finance Ordinance as the amount, out of theamount of such reduction, that should belong to the nationaltreasury on the basis of the proportion of the amount of thecapital contributions made by the Government pursuant to theprovision of Article 2-14, Paragraph 1 of the Supplementary
Provisions to the amount of the special investment reserve.
4. In the case of the preceding three Paragraphs, the following
matters shall be determined by resolution of a shareholders’meeting:(1) The amount by which the amount of the crisis response
reserve, the amount of the special investment reserve or theamount of the special investment surplus is reduced; and(2) The date on which the reduction of the amount of the crisis
response reserve, the amount of the special investment
reserve or the amount of the special investment surplus
becomes effective.
5. The resolution provided for under the preceding Paragraph shallnot become effective without authorization of the Minister ofFinance.
6. The aggregate of the amounts to be paid pursuant to theprovision of Paragraphs 1 through 3 of this Article may notexceed the Distributable Amount as of the date provided forunder Paragraph 4, Item (2) of this Article.

Article 2-29 Special Rules of the Act Concerning Restrictions
on Fiscal Assistance by the Government to
Corporations
Notwithstanding the provision of Article 1 of the Act
Concerning Restrictions on Fiscal Assistance by the Government
to Corporations, the Corporation shall comply with thepreceding two Articles with respect to the dividend or
distribution of profit or surplus to the capital contributions
under Article 2-9 of the Supplementary Provisions or thecapital contributions under Article 2-14, Paragraph 1 of the
Supplementary Provisions.
Article 2-30 Mutatis Mutandis Application of the Companies Act
1. The provisions of Article 449, Paragraph 6 (limited to the portions
relating to Item (1)) and Paragraph 7, and Article 828 (limited tothe portions relating to Paragraph 1, Item (5) and Paragraph 2,
Item (5)) of the Companies Act shall apply mutatis mutandis tocases where the amount of crisis response reserve, the amountof special investment reserve or the amount of special investment
surplus is reduced as set forth in Article 2-26, Paragraph 1 of the
Supplementary Provisions. For this purpose, references to “paid-in
capital” in Article 449, Paragraph 6, Item (1) of the said Act shallbe changed to read the amount of crisis response reserve set forthin Article 2-26, Paragraph 1 of the Supplementary Provisions of

the Development Bank of Japan Inc. Act (Act No. 85 of 2007)(crisis response reserve set forth in Article 2-22, Paragraph 1of the Supplementary Provisions of the said Act; hereinafter in
Article 828, Paragraph 1, Item (5) the same), the amount ofspecial investment reserve (special investment reserve set forthin Article 2-23, Paragraph 1 of the Supplementary Provisionsof the said Act; hereinafter in this Item the same), or special
investment surplus (special investment surplus set forth in Article
2-23, Paragraph 7 of the Supplementary Provisions of the said
Act; hereinafter in this Item the same); “Article 447, Paragraph
1, Item (3)” shall be changed to read “Article 2-26, Paragraph
1, Item (2) of the Supplementary Provisions of the said Act”;
references to “paid-in capital of” in Article 828, Paragraph 1, Item(5) of the said Act shall be changed to read “the amount of crisis
response reserve, the amount of special investment reserve, or
special investment surplus set forth in Article 2-26, Paragraph 1 of
the Supplementary Provisions of the Development Bank of Japan
Inc. Act concerning”; “on which the reduction in the amount ofpaid-in capital” shall be changed to read “on which the reductionin the amount of the said crisis response reserve, the amount ofspecial investment reserve, or the amount of special investment
surplus”; and references to “, the trustee in bankruptcy ora creditor, who did not give approval to the reduction in theamount of paid-in capital” in Paragraph 2, Item (5) of the said
Article shall be changed to read “or the trustee in bankruptcy.”
2. The provisions of Article 449 (other than the proviso of
Paragraph 1 and Paragraph 6, Item (2)) and Article 828 (limited
to the portions relating to Paragraph 1, Item (5) and Paragraph2, Item (5)) of the Companies Act shall apply mutatis mutandis
to cases where the amount of crisis response reserve is reduced
as set forth in Article 2-27, Paragraph 1 of the Supplementary
Provisions. For this purpose, references to “paid-in capitalor reserves (hereinafter in this Article referred to as “Paid-In
Capital, Etc.”)” in the main clause of Article 449, Paragraph 1of the said Act shall be changed to read “crisis response reserve
as set forth in Article 2-27, Paragraph 1 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act (Act No.
85 of 2007) (crisis response reserve set forth in Article 2-22,
Paragraph 1 of the Supplementary Provisions of the said Act;
hereinafter in this Article and Article 828, Paragraph 1, Item(5) and Paragraph 2, Item (5) the same)”; “In cases where...
(excluding cases where the whole of the amount by which thereserves are reduced is appropriated to the paid-in capital)”
shall be changed to read “In cases where…”; “of Paid-In
Capital, Etc.” shall be changed to read “of crisis response
reserve”; references to “Paid-In Capital, Etc.” in Paragraph2, Item (1) of the said Article shall be changed to read “crisis
response reserve”; references to “Ordinance of the Ministryof Justice” in Item (2) of the said Paragraph shall be changed
to read the “Ministry of Finance Ordinance”; references to“Paid-In Capital, Etc.” in Paragraph 4 and the proviso of
Paragraph 5 of the said Article shall be changed to read “crisis
response reserve”; references to “paid-in capital” in Paragraph
6, Item (1) of the said Article shall be changed to read “crisis
response reserve set forth in Article 2-27, Paragraph 1 of the
Supplementary Provisions of the Development Bank of Japan
Inc. Act”; “Article 447, Paragraph 1, Item (3)” shall be changed
to read “Paragraph 4, Item (2) of the said Article”; references
to “paid-in capital of” in Article 828, Paragraph 1, Item (5) of
the said Act shall be changed to read “crisis response reserve
set forth in Article 2-27, Paragraph 1 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act
concerning”; “on which the reduction in the amount of paid-in
capital” shall be changed to read “on which the reduction in
the amount of the said crisis response reserve”; and references
to “paid-in capital” in Paragraph 2, Item (5) of the said Article
shall be changed to read “crisis response reserve set forth in
Article 2-27, Paragraph 1 of the Supplementary Provisions of
the Development Bank of Japan Inc. Act.”
3. The provisions of Article 449 (other than the proviso of

Annual Report & CSR Report 2016

Corporate Data

Article 2-28
1. If the Corporation goes into liquidation and there still remains
any residual property after performance of its obligations,the Corporation shall pay to the national treasury an amountequivalent to the total amount (if the amount of such residual
property is less than the aggregate of the amount of the crisis
response reserve and the amount calculated as described
below, an amount of such residual property) calculated asprescribed by the Ministry of Finance Ordinance as the amount,out of the aggregate of the amount of the crisis response
reserve as of the date of such liquidation (if, after reductionsof the amount of the crisis response reserve pursuant to theprovision of Article 2-26, Paragraph 1 of the Supplementary
Provisions, the cumulative amount of the amounts of increases
in the amount of the crisis response reserve pursuant to theprovision of Paragraph 6 of the said Article is less than the
cumulative amount of the amounts of such reductions, anamount after adding the shortfall) and the amount of thespecial investment reserve and the special investment surplus
as of the same date (if, after reductions of the amount of
the special investment reserve pursuant to the provision of
Paragraph 1 of the said Article, the cumulative amount of theamounts of increases in the amount of the special investment
reserve pursuant to the provision of Paragraph 6 of the said
Article is less than the cumulative amount of such amounts ofreductions, or if, after reductions of the amount of the special
investment surplus pursuant to the provision of Paragraph 1of the said Article, the cumulative amount of the amounts
of increases in the amount of the special investment surplus
pursuant to the provision of Paragraph 6 of the said Article
is less than the cumulative amount of such amounts ofreductions, an amount after adding the respective shortfalls),
that should belong to the national treasury on the basis of the
proportion of the amount of the capital contributions madeby the Government pursuant to the provision of Article 2-14,
Paragraph 1 of the Supplementary Provisions to the amount of
the special investment reserve.
2. The payment under the preceding Paragraph shall be madein advance of the distribution of the residual property toshareholders.
3. The payment procedures or any other matters necessary inconnection with the payments to be made pursuant to theprovisions of Paragraphs 1 through 3 of the immediately
preceding Article and Paragraph 1 of this Article shall beprescribed in the Cabinet Order.

139

Paragraph 1 and Paragraph 6, Item (2)) and Article 828(limited to the portions relating to Paragraph 1, Item (5) andParagraph 2, Item (5)) of the Companies Act shall apply mutatis
mutandis to cases where the amount of special investment
reserve is reduced as set forth in Article 2-27, Paragraph 2 of
the Supplementary Provisions. For this purpose, references to“paid-in capital or reserves (hereinafter in this Article referred
to as “Paid-In Capital, Etc.”)” in the main clause of Article 449,
Paragraph 1 of the said Act shall be changed to read “special
investment reserve as set forth in Article 2-27, Paragraph 2of the Supplementary Provisions of the Development Bank ofJapan Inc. Act (Act No. 85 of 2007) (special investment reserve
set forth in Article 2-23, Paragraph 1 of the Supplementary
Provisions of the said Act; hereinafter in this Article andArticle 828, Paragraph 1, Item (5) and Paragraph 2, Item (5)the same)”; “In cases where... (excluding cases where thewhole of the amount by which the reserves are reduced isappropriated to the paid-in capital)” shall be changed to read“In cases where…”; “of Paid-In Capital, Etc.” shall be changed
to read “of special investment reserve”; references to “Paid-In
Capital, Etc.” in Paragraph 2, Item (1) of the said Article shallbe changed to read “special investment reserve”; references
to “Ordinance of the Ministry of Justice” in Item (2) of the saidParagraph shall be changed to read the “Ministry of FinanceOrdinance”; references to “Paid-In Capital, Etc.” in Paragraph
4 and the proviso of Paragraph 5 of the said Article shall bechanged to read “special investment reserve”; references to“paid-in capital” in Paragraph 6, Item (1) of the said Article
shall be changed to read “special investment reserve set forthin Article 2-27, Paragraph 2 of the Supplementary Provisionsof the Development Bank of Japan Inc. Act”; “Article 447,
Paragraph 1, Item (3)” shall be changed to read “Paragraph
4, Item (2) of the said Article”; references to “paid-in capitalof” in Article 828, Paragraph 1, Item (5) of the said Act shallbe changed to read “special investment reserve set forth in
Article 2-27, Paragraph 2 of the Supplementary Provisions of
the Development Bank of Japan Inc. Act concerning”; “onwhich the reduction in the amount of paid-in capital” shall bechanged to read “on which the reduction in the amount of
the said special investment reserve”; and references to “paidin capital” in Paragraph 2, Item (5) of the said Article shall bechanged to read “special investment reserve set forth in Article
2-27, Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act.”
4. The provisions of Article 449 (other than the proviso of
Paragraph 1 and Paragraph 6, Item (2)) and Article 828(limited to the portions relating to Paragraph 1, Item (5) andParagraph 2, Item (5)) of the Companies Act shall apply mutatis
mutandis to cases where the amount of special investment
surplus is reduced as set forth in Article 2-27, Paragraph 3 of
the Supplementary Provisions. For this purpose, references to“paid-in capital or reserves (hereinafter in this Article referred
to as “Paid-In Capital, Etc.”)” in the main clause of Article 449,
Paragraph 1 of the said Act shall be changed to read “special
investment surplus as set forth in Article 2-27, Paragraph 3of the Supplementary Provisions of the Development Bank ofJapan Inc. Act (Act No. 85 of 2007) (special investment surplus
set forth in Article 2-23, Paragraph 7 of the Supplementary
Provisions of the said Act; hereinafter in this Article andArticle 828, Paragraph 1, Item (5) and Paragraph 2, Item (5)the same)”; “In cases where... (excluding cases where thewhole of the amount by which the reserves are reduced isappropriated to the paid-in capital)” shall be changed to read“In cases where…”; “of Paid-In Capital, Etc.” shall be changed
to read “of special investment surplus”; references to “Paid-In
Capital, Etc.” in Paragraph 2, Item (1) of the said Article shallbe changed to read “special investment surplus”; references
to “Ordinance of the Ministry of Justice” in Item (2) of the saidParagraph shall be changed to read the “Ministry of Finance

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Ordinance”; references to “Paid-In Capital, Etc.” in Paragraph
4 and the proviso of Paragraph 5 of the said Article shall bechanged to read “special investment surplus”; references to“paid-in capital” in Paragraph 6, Item (1) of the said Article
shall be changed to read “special investment surplus set forthin Article 2-27, Paragraph 3 of the Supplementary Provisionsof the Development Bank of Japan Inc. Act”; “Article 447,
Paragraph 1, Item (3)” shall be changed to read “Paragraph
4, Item (2) of the said Article”; references to “paid-in capitalof” in Article 828, Paragraph 1, Item (5) of the said Act shallbe changed to read “special investment surplus set forth in
Article 2-27, Paragraph 3 of the Supplementary Provisions of
the Development Bank of Japan Inc. Act concerning”; “onwhich the reduction in the amount of paid-in capital” shall bechanged to read “on which the reduction in the amount of
the said special investment surplus”; and references to “paidin capital” in Paragraph 2, Item (5) of the said Article shall bechanged to read “special investment surplus set forth in Article
2-27, Paragraph 3 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act.”
Article 2-31 Penal Provisions
1. In any of the following cases, any directors, executive officers(shikkoyaku), accounting counsel (kaikei sanyo) or its members
who should perform duties as such, or statutory auditors of
the Corporation shall be punished with a non-penal fine notexceeding 1,000,000 yen:
(1) When he/she has suspended or abolished crisis response
operations at the designated office in violation of the provisionof Article 2-10, Paragraph 2 of the Supplementary Provisions;(2) When he/she has appropriated money provided throughcapital contributions as set forth in Article 2-14, Paragraph1 to any fund other than the fund for special investment
operations, in violation of the provision of Article 2-14,
Paragraph 2 of the Supplementary Provisions;(3) When he/she has violated the order referred to in Article
2-17, Paragraph 2 of the Supplementary Provisions;(4) When he/she has not submitted or published documents
stating the status of income and expenditures for eachcategory of business operations in each Item of Article
2-19 of the Supplementary Provisions, or has submitted
or published such documents containing false statements,
in violation of the provision of Article 2-19 of the
Supplementary Provisions;(5) When he/she has not submitted a report on the completionof special investment operations in violation of the provisionof Article 2-20, Paragraph 2 of the Supplementary Provisions.
2. With regard to the application of the provision of Article 34,
Item (8) in the case where the provision of Article 2-24 of
the Supplementary Provisions applies, references to “limit”
in the said Item shall be changed to read “limit calculated byincluding the aggregate amount of crisis response reserve,
special investment reserve and special investment surplus in
the amount of paid-in capital and reserves as set forth in theprovisions of Article 2-24 of the Supplementary Provisions.”
3. With regard to the application of the provision of Article 34, Item(10) in the case where the provision of Article 2-11, Paragraph
1, Article 2-18, Paragraph 1 or Article 2-21, Paragraph 2 of the
Supplementary Provisions applies, references to “Article 17” inthe said Item shall be changed to read “Article 17, or Article
2-11, Paragraph 1, Article 2-18, Paragraph 1 or Article 2-21,
Paragraph 2 of the Supplementary Provisions.”
4. With regard to the application of the provision of Article 34,
Item (13) in the case where the provision of Article 2-11,
Paragraph 2, Article 2-18, Paragraph 2 or Article 2-21,
Paragraph 3 of the Supplementary Provisions applies, references
to “Article 21” in the said Item shall be changed to read “Article
21, or Article 2-11, Paragraph 2, Article 2-18, Paragraph 2 or
Article 2-21, Paragraph 3 of the Supplementary Provisions.”

Article 3 Abolition of This Act and Other Measures
If the Government disposes of all of the Government-Owned
Shares, the Government shall immediately take measures toabolish this Act, as well as measures necessary to smoothly
assign the business operations, functions, and rights andobligations of the Corporation to any organization to beformed as a bearer of the functions commensurate with theinvestment and financing functions held by the Corporation.

Article 5 Founding Members
The Minister of Finance shall appoint the founding members toserve as promoters for incorporation of the Corporation.
Article 6 Articles of Incorporation
The founding members shall prepare the Articles of Incorporationand have them authorized by the Minister of Finance.
Article 7

Article 4

Shares to Be Issued upon the Incorporation of
the Corporation
1. The following matters regarding the shares to be issued upon
the incorporation of the Corporation, and total number ofshares which the Corporation can issue shall be determined in
the Articles of Incorporation:(1) Number of shares (or, if the Corporation is to be organized
as a company issuing class shares, classes of those sharesand number of each class of shares);(2) Amount to be paid for shares (the amount of cash to be
paid or amount of non-cash property to be contributed in
exchange for each share); and(3) Matters relating to the amounts of paid-in capital andcapital reserves.
2. Notwithstanding the provision of Article 445, Paragraph 2 of
the Companies Act, with respect to the shares to be issued by
the Corporation upon its incorporation, the Corporation may
elect not to account for the amount in excess of (, as well as
the amount not exceeding,) a half of the amounts of properties
contributed by DBJ upon the incorporation of the Corporationas paid-in capital. For this purpose, reference to “this Act”
in Article 445, Paragraph 1 of the Companies Act shall bechanged to read “this Act or the Development Bank of Japan
Inc. Act (Act No. 85 of 2007).”

Corporate Data

Special Rules for Business Operations during the
Preparatory Period
1. In order for the Corporation to smoothly start the business
operations as soon as it is duly organized, The Development
Bank of Japan (hereinafter referred to as “DBJ”) may borrow
Long-term Loans, in addition to those set forth in Article 42,
Paragraphs 1 and 2 of the Development Bank of Japan Act(Act No. 73 of 1999; hereinafter, except for Article 26 of the
Supplementary Provisions, referred to as the “DBJ Act”), during
the Preparatory Period (the period from the date on which thisAct comes into force up to September 30, 2008; the same in
Paragraph 5).
2. DBJ shall prepare its basic policy regarding the borrowing ofLong-term Loans to be made pursuant to the provision of thepreceding Paragraph which provides for the matters relating
to the borrowing of the Long-term Loans such as the amountsof borrowing and currency in which the Long-term Loans aredenominated, and obtain authorization of the Minister ofFinance, without delay after the date on which this Act comes
into force in the case of the fiscal year during which such dateis included, or prior to April 1, 2008 in the case of the fiscal
year beginning on April 1, 2008. If the Corporation intends torevise it, the same shall apply.
3. If DBJ borrows a Long-term Loan as set forth in Paragraph 1,
DBJ shall notify the Minister of Finance thereof without delay as
set forth in the Minister of Finance Ordinance.
4. The Long-term Loans as set forth in Paragraph 1 shall bedeemed as the borrowed money under Article 42, Paragraph 1of the DBJ Act and the provisions of Article 44 of the DBJ Act
shall apply the said Long-term Loans.
5. If DBJ borrows a short-term borrowing during the Preparatory
Period as set forth in Article 42, Paragraph 2 of the DBJ Act,reference to “within the current fiscal year” in Paragraph 3 ofthe said Article shall be changed to read “within one year.”
6. If DBJ borrows a Long-term Loans as set forth in Paragraph 1,
reference to “this Act, in Article 13, Paragraph 2, Item (1) of the
DBJ Act shall be changed to read “this Act or the Development
Bank of Japan Inc. Act (Act No. 85 of 2007) or order underthese Acts”, and reference to “this Act and the Cabinet Orderunder this Act” in Article 48 of the DBJ Act shall be changed toread “this Act and the Development Bank of Japan Inc. Act, andthe Cabinet Orders under these Acts.” Reference to “this Act”
in Article 49, Article 50, Paragraph 1, and Article 52 of the DBJ
Act shall be changed to read “this Act and the Development
Bank of Japan Inc. Act,” and reference to “this Act” in Article
54, Items (1) and (2) of the DBJ Act shall be changed to read“this Act or the Development Bank of Japan Inc. Act.”
7. “Long-term Loans” set forth in Paragraphs 1 through 4 and theimmediately preceding Paragraph mean the loans from financial
institutions such as banks, other than the short-term borrowings
set forth in Article 42, Paragraph 3 of the DBJ Act which isapplied after changing to read as set forth in Paragraph 5.
8. For the purpose of application of the provision of Article 22,
Paragraph 1 of the DBJ Act to the mid-term government
policy principles set forth in the said Paragraph for the period
commencing on April 1, 2008, reference to the “three-year
mid-term government policy principles” shall be changed toread the “government policy principles for the term beginningon April 1, 2005.”

Article 8
Subscription for Shares
1. DBJ shall subscribe for all shares to be issued by the
Corporation upon its incorporation, and the founding members
shall allocate them to DBJ.
2. The right as the subscriber for shares allocated pursuant to
the provision of the preceding Paragraph in connection with
the incorporation of the Corporation shall be exercised by theGovernment.
Article 9 Capital Contribution
Upon the incorporation of the Corporation, DBJ shall contributeall of its properties, except assets to be assumed by Japanpursuant to the provision of Article 15, Paragraph 2 of the
Supplementary Provisions, to the Corporation.
Article 10 Organizational Meeting
For the purpose of application of the provision of Article 65,
Paragraph 1 of the Companies Act concerning the incorporationof the Corporation, reference to the “on and after either thedate under Article 58, Paragraph 1, Item (3) or the last day ofthe period under such item, whichever comes later,” shall bechanged to read “after allotment of shares set forth in Article 8,
Paragraph 1 of the Supplementary Provisions of the Development
Bank of Japan Inc. Act (Act No. 85 of 2007).”
Article 11 Establishment of the Corporation
Contributions to be made by DBJ pursuant to the provision of
Article 9 of the Supplementary Provisions shall be made when
the provision of Article 26 of the Supplementary Provisions
becomes effective, and the Corporation shall be established,notwithstanding the provision of Article 49 of the Companies Act.
Article 12 Registration of Incorporation
Notwithstanding the provision of Article 911, Paragraph 1 of theCompanies Act, the Corporation shall register its incorporation
without delay after the establishment of the Corporation.

Annual Report & CSR Report 2016141

Article 13 Transfer to the Government without Consideration
The shares to be acquired by DBJ through its capital
contribution shall be transferred to the Government without
consideration at the time of establishment of the Corporation.
Article 14 Exception from Application of the Companies Act
The provisions of Article 30 and Part II, Chapter 1, Section 3 of
the Companies Act shall not apply to the incorporation of the
Corporation.

on which the Corporation is established; provided, however,that if it is deemed inappropriate to use the market prices
taking into account the matters of the Assumed Properties suchas the kinds and purpose of use, their evaluations may be madenot based on the market prices of the Assumed Properties.
3. In addition to those set forth in the preceding two Paragraphs,
evaluation officers and other matters necessary for evaluations
shall be prescribed in the Cabinet Order.
Article 17

Article 15 Dissolution of DBJ, Etc.
1. DBJ shall be dissolved at the time of establishment of the
Corporation, whereupon any and all rights and obligations of
DBJ shall be taken over by the Corporation, except for thoseassets to be assumed by the Government as set forth in thefollowing Paragraph.
2. Of the rights actually held by DBJ at the time of establishmentof the Corporation, the assets which will be considered nolonger necessary for the Corporation to smoothly perform its
future business operation shall be assumed by Japan at the timeof establishment of the Corporation.
3. The scope of assets to be assumed by Japan pursuant to theprovision of the immediately preceding Paragraph, and othermatters required for transfer of those assets to Japan shall beprescribed in the Cabinet Order.
4. The fiscal year of DBJ commencing on April 1, 2008 shall end on
the day immediately preceding the date of dissolution of DBJ.
5. Settlement of accounts, and preparations, Etc. of list of
properties, balance sheets, and profits and loss statements of
DBJ for the fiscal year commencing on April 1, 2008 shall be
conducted by the Corporation as previously conducted, except
for the portions relating to Article 38, Paragraph 1 (limited tothe portions relating to the Auditor’s opinions) and Article 40,
Paragraph 1 (limited to the portions relating to the Auditor’sopinions) of the Old DBJ Act. For this purpose, the reference to“for each half-year from April to September and from October
to March of the following year” and “for each half-year andfor each fiscal year” in Article 38, Paragraph 1 of the Old DBJ
Act shall be deleted, and references to “within two months
after the end of the relevant half-year or three months after theend of the fiscal year” in the said Paragraph shall be changed
to read “on or prior to December 31, 2008.” Reference to“the settlement of accounts for each fiscal year not later thanMay 31 of the following fiscal year” in Article 39 of the Old
DBJ Act shall be changed to read “the settlement of accounts
for the fiscal year commencing on April 1, 2008 not later thanNovember 30, 2008.” Reference to “November 30 of thefollowing fiscal year” in Article 4, Paragraph 3 of the Old DBJ
Act shall be changed to read “November 30, 2009.”
6. Disposition of profits and payment into the national treasury
by DBJ under Article 41 of the Old DBJ Act for the fiscal
year commencing on April 1, 2008 shall be conducted by
the Corporation as previously conducted. For this purpose,references to “each fiscal year” and “May 31 of the following
fiscal year” in Article 41, Paragraph 3 of the Old DBJ Act shallbe changed to read “the fiscal year commencing on April 1,
2008” and “November 30, 2008,” respectively.
7. The matters regarding the registration of the dissolution in
the case that DBJ is dissolved pursuant to the provision of
Paragraph 1, shall be prescribed in the Cabinet Order.
Article 16 Values of Properties Assumed
1. The values of assets and liabilities assumed by the Corporationfrom DBJ (in the immediately following Paragraph referred to as
the “Assumed Properties”) shall be as evaluated by evaluation
officers (hyoka iin).
2. If evaluation officers intend to make evaluations as set forth in
the preceding Paragraph, their evaluations shall be made basedon the market prices of the Assumed Properties as of the date

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Transitional Measures in Connection with
Assumption of Rights and Obligations
1. With respect to the Old Bank Debentures and interest coupons
concerning the obligations to be assumed by the Corporation
pursuant to the provision of Article 15, Paragraph 1 of
the Supplementary Provisions, the provisions of Article 43,
Paragraphs 5 and 6 of the Old DBJ Act shall remain effective
and in force even after the provision of Article 26 of the
Supplementary Provisions becomes effective.
2. With respect to the old Hokuto bonds (the Hokkaido-Tohoku
Development Finance Corporation Bonds issued pursuant to theprovision of Article 27, Paragraph 1 of the Hokkaido-Tohoku
Development Finance Corporation Act (Act No. 97 of 1956;
hereinafter in this Paragraph referred to as the “Old HTDFCAct”) before abolishment under Article 17, Item (2) of the
Supplementary Provisions of the Old DBJ Act) and interest coupons
to be assumed by the Corporation pursuant to the provision of
Article 15, Paragraph 1 of the Supplementary Provisions, theprovisions of Article 27, Paragraphs 3 and 4 of the Old HTDFC
Act shall remain effective and in force even after the provision of
Article 26 of the Supplementary Provisions becomes effective.
3. The guarantee agreements executed by the Government
pursuant to the provision of Article 45, Paragraph 1 or 3 of
the Old DBJ Act with respect to the obligations concerning
the Old Bank Debentures to be assumed by the Corporation
pursuant to the provision of Article 15, Paragraph 1 of the
Supplementary Provisions shall continue to be effective
upon the previous terms and conditions with respect to suchobligations concerning the Old Bank Debentures even after theassumption thereof by the Corporation.
4. The guarantee agreements executed by the Government
pursuant to the provision of Article 37-3, Paragraph 1 or 2 ofthe old Japan Development Bank Act (Act No. 108 of 1951;
hereinafter in this Paragraph referred to as the “Old JDBAct”) before abolishment under Article 17, Item (1) of the
Supplementary Provisions of the Old DBJ Act with respect tothe obligations concerning the foreign currency-denominatedbonds set forth in Article 37-2, Paragraph 1 of the Old JDB
Act issued pursuant to the provision of Article 37-2, Paragraph
1 or 2 of the Old JDB Act to be assumed by the Corporation
pursuant to the provision of Article 15, Paragraph 1 of the
Supplementary Provisions shall continue to be effective
upon the previous terms and conditions with respect to suchobligations concerning the foreign currency-denominatedbonds even after the assumption thereof by the Corporation.
5. The guarantee agreements executed by the Government
pursuant to the provision of Article 2, Paragraph 2 or 3 of the
Act Concerning Special Measures for Acceptance of Foreign
Capitals from the International Bank for Reconstruction andDevelopment and Other Organizations (Act No. 51 of 1953)
with respect to the obligations concerning the Old Bank
Debentures to be assumed by the Corporation pursuant to
the provision of Article 15, Paragraph 1 of the Supplementary
Provisions shall continue to be effective upon the previous terms
and conditions with respect to such obligations constituting the
Old Bank Debentures even after the assumption thereof by the
Corporation, and the public imposts such as taxes on interests
on and profits from redemption of the Old Bank Debenturesconcerning those guarantee agreements shall be the same as ineffect under the previous arrangements.

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 the provision of Article 15, Paragraph 1of the Supplementary Provisions (hereinafter in this Article referred
to as the “Assumed Assets”) shall, notwithstanding the provisionof 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(the areas of Aomori, Iwate, Miyagi, Akita, Yamagata,
Fukushima and Niigata prefectures): Minister of Financeand 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 ofFinance.

Article 20 Transitional Measures for the Basic Policy
1. For the purposes of the basic policy, business plans andredemption plans for the first fiscal year of the Corporation,reference to “prior to the beginning of each fiscal year” inArticle 13, Paragraph 1, Article 17 and Article 18 shall bechanged to read “without delay after the incorporation of the
Corporation.”
2. For the purposes of the balance sheet, profit and loss statement
and business report for the first fiscal year of the Corporation,references to “For each fiscal year” and “the interim businessperiod (the period from April 1 to September 30 of the currentyear) of the current fiscal year, and its balance sheet, profit andloss statement and business report for the current fiscal year” inArticle 21 shall be changed to read “For the fiscal year in which
the date on which the Corporation is established is included”
and “the current fiscal year,” respectively.
3. For the purpose of application of the provision of the preceding
Paragraph when the Corporation obtains the approval under
Article 9, Paragraph 1, the “Ministry of Finance Ordinance” and“Minister of Finance” in Article 21 which are applied mutatis
mutandis after changing to read in the said Paragraph shall bechanged to read the “Ministry of Finance Ordinance and the
Cabinet Office Ordinance” and the “Minister of Finance and
the Prime Minister,” respectively.
Article 21

Special Rules for Operations of Registered
Financial Institution
1. Within three (3) months of the date set forth in Article 1,
Item (3) of the Supplementary Provisions (or, if the registration
under Article 33-5, Paragraph 1 of the Financial Instruments
and Exchange Act is rejected during such period or if abolitionof the operations of the registered financial institution (theoperations of registered financial institution set forth in Article
33-5, Paragraph 1, Item (3) of the Financial Instruments andExchange Act, including the operations referred to in Article
3, Paragraph 1, Item (16) to be conducted pursuant to theprovision of Article 33-8, Paragraph 1 of the same Act which
is applied after changing to read as set forth in Article 4,
Paragraph 1; the same in this Article) is ordered pursuant to
the provision of Article 52-2, Paragraph 1 of the Financial
Instruments and Exchange Act which is applied after thechanging to read as set forth in the immediately following
Paragraph, the period up to the date of such rejection or
the date of order of such abolition), the Corporation may,notwithstanding the provision of Article 33-2 of the Financial
Instruments and Exchange Act which is applied after changing
to read as set forth in Article 4, Paragraph 1, conduct theoperations of the registered financial institutions. If theAnnual Report & CSR Report 2016

Corporate Data

Article 19 Transitional Measures for the Fiscal Year
Notwithstanding the provision of Article 11, the first fiscal yearof the Corporation shall commence on the date on which of the
Corporation is established and end on March 31, 2009.

Corporation applies for registration under the said Article
during such period, the same shall apply until the date ofreceipt of notice of registration or the date of receipt of noticeof no registration after the elapse of such period.
2. If the Corporation conducts the operations of registered financial
institution pursuant to the provision of the preceding Paragraph,the provisions of the Financial Instruments and Exchange Act(except for Article 33-6; Article 37, Paragraph 1, Item (2); Article
37-3, Paragraph 1, Item (2); Article 50-2, Paragraph 2; Article
52-2, Paragraph 1, Item (2) and Paragraph 3; Article 54; andArticle 64, Paragraph 2) shall apply by deeming the Corporation
as the registered financial institution (the Registered Financial
Institution set forth in Article 2, Paragraph 11 of the Financial
Instruments and Exchange Act). For this purpose, reference to“rescind the registration under Article 33-2” in Article 52-2,
Paragraph 1 (except for Item (2)) of the Financial Instruments
and Exchange Act shall be changed to read “order the abolitionof operations of registered financial institution,” reference
to “rescind the registration under Article 29 or 33-2 or theauthorization under Article 30, Paragraph 1 pursuant to theprovision of Article 52, Paragraph 1 or Article 52-2, Paragraph1” in Article 54-2, Item (1) of the same Act shall be changed
to read “order the abolition of operations of the registeredfinancial institution pursuant to the provision of Article 52-2,
Paragraph 1 which is applied after changing to read as set forthin Article 21, Paragraph 2 of the Supplementary Provisions of
the Development Bank of Japan Inc. Act (Act No. 85 of 2007),”reference to “registration under Article 29 or 33-2 is rescindedpursuant to the provision of Article 52, Paragraph 1, Article
52-2, Paragraph 1, Article 53, Paragraph 3 or Article 54” inArticle 56, Paragraph 1 of the same Act shall be changed toread the “abolition of operations of the registered financial
institution is ordered pursuant to the provision of Article 52-2,
Paragraph 1 which is applied after changing to read as set forthin Article 21, Paragraph 2 of the Supplementary Provisions of
the Development Bank of Japan Inc. Act,” and reference to“rescission of registration under Article 33-2 as set forth in Article
52-2, Paragraph 1” in Article 194-3, Item (3) of the same Act
and reference to “rescission of registration under Article 33-2 as
set forth in Article 52-2, Paragraph 1 or 3 or Article 54” in Article
194-4, Paragraph 1, Item (5) of the same Act shall be changed toread “order of abolition of operations of the registered financial
institution pursuant to the provision of Article 52-2, Paragraph 1
which is applied after changing to read as set forth in Article 21,
Paragraph 2 of the Supplementary Provisions of the Development
Bank of Japan Inc. Act” and other required technical changes toread shall be prescribed in the Cabinet Order.
3. For the purpose of application of the provision of Article 33-5,
Paragraph 1, Item (1) of the Financial Instruments and Exchange
Act in the event that the Corporation is ordered to abolish theoperations of the registered financial institution pursuant to theprovision of Article 52-2, Paragraph 1 of the same Act which isapplied after changing to read as set forth in the immediately
preceding Paragraph, the Corporation shall be deemed as theentity whose registration under Article 33-2 of the same Act isrescinded pursuant to the provision of Article 52-2, Paragraph
1 of the same Act, and the date on which such abolition isordered shall be deemed as the date of rescission of registration
under the said Article 33-2 pursuant to the provision of Article
52-2, Paragraph 1 of the same Act.
4. For one year of the date set forth in Article 1, Item (3)of the Supplementary Provisions, the Corporation may,notwithstanding the provision of Article 64, Paragraph 2of the Financial Instruments and Exchange Act, cause any
persons other than those who are registered pursuant to theprovision of Paragraph 1 of the said Article to conduct theduties of sales representatives (gaimu-in). If the Corporation
applies for registration under the said Paragraph during such
period, the same shall apply until the date of receipt of notice143

of registration with respect to such application or the date ofreceipt of notice of no registration after the elapse of such
period with respect to such application.
Article 22Special Rules for Taxation of the Registration
License Tax
1. No registration license tax shall be assessed on registration of
the incorporation of the Corporation pursuant to the provisionof Article 12 of the Supplementary Provisions, and registration
or recordation of the Corporation in connection with provisionsof properties upon the capital contribution by DBJ pursuant to
the provision of Article 9 of the Supplementary Provisions.
2. With respect to the registration license tax for registration orrecordation of origination (hozen), creation (settei) or transfer(iten) of lien (sakidori token), pledge (shichiken) or mortgage(teitoken) to secure the claims concerning business operations
set forth in Article 20, Paragraph 1, Item (1) of the Old DBJ Act
which shall be assumed by the Corporation from DBJ pursuant
to the provision of Article 15, Paragraph 1 of the Supplementary
Provisions, , or registration of transfer of movable properties
or transfer of claims, based on the agreements executed by
DBJ before the provision of Article 48 of the Supplementary
Provisions comes into force, the provision of Schedule III22 of the Registration Tax Act (Act No. 35 of 1967) before
amendment under Article 48 of the Supplementary Provisions
shall still remain effective and in force.
Article 23 Special Rules for Taxation of the Corporation Tax
1. Capital investment in the Corporation to be made by DBJ
pursuant to the provision of Article 9 of the Supplementary
Provisions (hereinafter in this Article referred to as the“Specified In-kind Contribution”) shall be deemed as qualified
in-kind contribution set forth in Article 2, Item (12-14) of the
Corporation Tax Act (Act No. 34 of 1965), and the Corporation
Tax Act and other laws and ordinances relating to thecorporation tax shall be applied on such basis.
2. With respect to assets and liabilities of DBJ to be transferredby the Specified In-kind Contribution which shall be subject
to the Corporation Tax Act and other laws and ordinances
relating to the corporation tax pursuant to the provision of
the immediately preceding Paragraph, the value evaluatedby evaluation officers pursuant to the provision of Article
16, Paragraph 1 of the Supplementary Provisions shall bedeemed as the book value; provided, however, that withrespect to allowance for loan losses, the amount purported to
be assumed by the Corporation pursuant to the provision of
the immediately following Paragraph shall be deemed as thebook value, and the book values of the amounts of allowancesprescribed by the Cabinet Order such as allowance forretirement payments shall be nil.
3. If it is determined to apply the provisions of Article 52 of the
Corporation Tax Act in the fiscal year in which the day prior
to the date of the Specified In-kind Contribution of the DBJ
is included (in the immediately following Paragraph referredto the “Final Fiscal Year”), the amount up to the upper limitof individual allowance for loan losses set forth in Article 52,
Paragraph 1 as calculated in the said Paragraph or the amount
up to the amount calculated as prescribed by the Cabinet
Order as set forth in Paragraph 2 of the said Article shall,
notwithstanding the provisions of Paragraph 7 of the said
Article, be assumed by the Corporation. For this purpose withrespect to calculation of the amount of income for the fiscal
year in which the date of the Specified In-kind Contributionof the Corporation is included, the amount assumed by the
Corporation shall be included in the amount of profits.
4. The Corporation shall submit the financial statements of DBJ for
the Final Fiscal Year set forth in Article 38, Paragraph 1 of the
Old DBJ Act to the director of competent district tax office within
three (3) months of the date of the Specified In-kind Contribution.

144

Annual Report & CSR Report 2016

Article 24 Special Rules for Taxation of Local Taxes
No real estate acquisition tax or vehicle acquisition tax can be
imposed on acquisition of real estate or vehicle in connection withcapital investment to be made by DBJ pursuant to the provision of
Article 9 of the Supplementary Provisions.
Article 25 Delegation to the Cabinet Order
In addition to those set forth in Articles 2 to 24 of the
Supplementary Provisions, matters necessary for incorporation of
the Corporation and dissolution of DBJ, as well as other mattersnecessary for effectuation of these provisions shall be stipulated in
the Cabinet Order.
Article 26 Abolition of the Development Bank of Japan Act
The Development Bank of Japan Act shall be abolished.
Article 27

Transitional Measures for Abolition of theDevelopment Bank of Japan Act
1. Actions such as dispositions and procedures made, taken ordone pursuant to the provisions of the Old DBJ Act (except
Article 10 thereof) before the provision of the immediately
preceding Article becomes effective shall be considered theactions such dispositions and procedures made, taken, or done
pursuant to the corresponding provisions of this Act.
2. The provisions of Article 16, Paragraphs 5 and 6 of the
Supplementary Provisions of the Old DBJ Act shall still remain
effective even after the provisions of the immediately preceding
Article takes effect, with respect to the lending of funds
by the Corporation to the designated entities under Article
2, Paragraph 5 of the Act on Promotion of Private FinanceInitiative (Act No. 117 of 1999). For this purpose, reference
to the “Bank” and reference to “, in accordance with theprovision of Item (1), Paragraph 1, Article 20 hereof, to provide
funds required for businesses deemed under Article 13 of thesaid Act” in Article 16, Paragraph 5 of the Old DBJ Act shall bechanged to read “Development Bank of Japan Inc.” and “toprovide funds required for business deemed under Article 13of the said Act”, respectively. References to “the interest-freeloans made by the Bank in accordance with the provisions of
the preceding paragraph (excluding interest-free loans using
money deposited by the Private Urban Development Promotion
Organization provided in Article 3 of the Special Measure Act
concerning Promotion of Private Urban Development (Act No.
62 of 1987)” and “to the Bank” in Article 16, Paragraph 6 of
the Old DBJ Act shall be changed to read “the interest-freeloans made by Development Bank of Japan Inc. in accordancewith the provisions of the preceding paragraph” and “toDevelopment Bank of Japan Inc.,” respectively.
3. In addition to those set forth in the preceding two Paragraphs,
transitional measures necessary for the abolition of the DBJ Act
shall be prescribed by the Cabinet Order.
Article 28 Transitional Measures for Application of Penal
Provisions
Penal provisions which were applicable to acts conductedprior to the implementation of the provision of Article 26 of
the Supplementary Provisions or acts conducted after the
implementation of the provision of the said Article as to which
the provisions then in force remain applicable pursuant to theprovisions of this Act shall remain applicable even after the
implementation of this Act.
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 to secure the equal competitive conditions with otherbusiness entities, with respect to the systems for which theinvestment and financing functions of DBJ are utilized pursuant
to the provisions of relevant laws (including ordinances underthose laws), such as the Act on Security for Loans from theDevelopment Bank of Japan to Electric Utility Corporations (ActNo. 145 of 1950), the Oil Stockpiling Act (Act No. 96 of 1975),
the Act Concerning Promotion of Development and Promotionof Introduction of Alternative Energy to Oil (Act No. 71 of 1980),
the Special Measures Act Concerning Promotion of Private
Urban Development (Act No. 62 of 1987), the Extraordinary
Measures Act Concerning Promotion of Business Activities for
Rationalization of Usage of Energy and Effective Use of Resources(Act No. 18 of 1993) and the Act on Promotion of Private
Finance Initiative (Act No. 117 of 1999), while considering theconvenience of users of those systems, and take the required

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 andfinancing 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 othermeasures necessary for utilization of such investment andfinancing functions, paying attention to the Corporation’s
appropriate competitive relationships with other business entities.

Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 23 of May 20, 2015)

Article 1 Enforcement Date
This Act shall come into force as from the date of promulgation.
Article 2
Transitional Measures for Crisis Response Reserve
1. Development Bank of Japan Inc. (hereinafter referred to as
the “Corporation”) shall, without delay after this Act takes
effect, reduce the amount of paid-in capital by the aggregate
amount of the following amounts and record such reduced
amount as the amount of a crisis response reserve (the crisis
response reserve set forth in Article 2-22, Paragraph 1 of the
Supplementary Provisions of the Development Bank of Japan
Inc. Act after amendment under this Act (hereinafter referred toas the “New Act”)); the same shall apply in Article 4, Paragraph
2 of these Supplementary Provisions). For the purpose of
application of the provision of Article 2-22, Paragraph 1 of the
Supplementary Provisions of the New Act in this case, reference
to “the amount” in the said Paragraph shall be changed toread “the amount and the amount by which the amount ofpaid-in capital has been reduced pursuant to the provision of
Article 2, Paragraph 1 of the Act for Partial Amendment of theDevelopment Bank of Japan Inc. Act (Act No. 23 of 2015)”:(1) the aggregate amount contributed to the Corporationby the Government with a view to ensuring a proper
conduct of Corporation’s crisis response operations (thecrisis response operations set forth in Article 2, Item (5)of the Japan Finance Corporation Act (Act No. 57 of2007); the same shall apply in Article 4, Paragraph 1 andArticle 9, Paragraphs 1 and 3 of these Supplementary
Provisions) pursuant to the provision of Article 2-2 ofthe Supplementary Provisions of the Development Bankof Japan Inc. Act before amendment under this Act(hereinafter referred to as the “Former Act”) (including
the application thereof under Article 36 of the Act for
Extraordinary Expenditure and Assistance to Cope with theGreat East Japan Earthquake (Act No. 40 of 2011)); and(2) the aggregate amount of the government bonds which
had been redeemed by the Government pursuant to theprovision of Article 2-4, Paragraph 2 of the Supplementary
Provisions of the Former Act up to the previous day of theimplementation date of this Act (hereinafter referred to as
the “Implementation Date”).
2. For the purpose of application of the provision of Article 447of the Companies Act (Act No. 86 of 2005) with regard to
the reduction in the amount of paid-in capital pursuant to theprovision of the preceding Paragraph, reference to “is to beappropriated to reserves” in the said Article, Paragraph 1, Item(2) shall be changed to read “is to be appropriated to reserves
or to crisis response reserve under Article 2-22, Paragraph 1of the Supplementary Provisions of the Development Bank ofCorporate Data

Supplementary Provisions

Japan Inc. Act (Act No. 85 of 2007) (hereinafter referred to as
the “crisis response reserve” in this Item),” and reference to“the amount to be appropriated to reserves” in the same Item
shall be changed to read “the amount to be appropriated toreserves or crisis response reserve,”.
Article 3

Transitional Measures for Return of Government
Bonds
Notwithstanding the provision of Article 2-5, Paragraph 1 of
the Supplementary Provisions of the New Act applied under theprovision of Article 36 of the Act for Extraordinary Expenditure
and Assistance to Cope with the Great East Japan Earthquake,the return of government bonds delivered in accordance withthe provision of Article 2-3, Paragraph 2 of the Supplementary
Provisions of the Former Act shall be set forth separately inanother law.

Article 4

Transitional Measures for Redemption ofGovernment Bonds and others
1. Notwithstanding the provision of Article 2-4, Paragraph 1 of
the Supplementary Provisions of the New Act (including theapplication thereof under Article 36 of the Act for Extraordinary
Expenditure and Assistance to Cope with the Great East Japan
Earthquake), the Corporation may demand, for an indefinite
period, the redemption of government bonds delivered inaccordance with the provision of Article 2-3, Paragraph 2 of the
Supplementary Provisions of the Former Act up to the amountcalculated pursuant to the provisions prescribed by the Ministerof Finance Ordinance as the necessary capital according to theincrease in the asset pertaining to the crisis response operations(in case of business whose implementation date is on or after
April 1, 2015, including the business implemented from April 1,2015 up to the previous day of such an implementation date).
2. Notwithstanding the provision of Article 2-4, Paragraph
3 of the Supplementary Provisions of the New Act, theCorporation shall record the value redeemed in accordancewith the provision of Article 2-4, Paragraph 2 thereof on orafter the above implementation date as the amount of thecrisis response reserve. In this case, for the application of theprovisions of Article 2-22, Paragraph 1 and Article 2-29 of the
Supplementary Provisions of the New Act, “Article 2-9 of the
Supplementary Provisions” in the above Paragraph shall beinterpreted as “the value redeemed in accordance with theprovisions of Article 2-4, Paragraph 2 of the Supplementary
Provisions, and Article 2-9 of the Supplementary Provisions”,
and “Article 2-9 of the Supplementary Provisions” in the above
Article as “the capital contribution by the redemption of thegovernment bonds in accordance with the provisions of Article
2-4, Paragraph 2 of the Supplementary Provisions, and Article
2-9 of the Supplementary Provisions”.

Annual Report & CSR Report 2016145

3. For the application of the provision of Article 2-4, Paragraph
5 of the Supplementary Provisions of the New Act when
the provision of the preceding paragraph is applied, “eachpreceding Paragraph” in the Paragraph 5 shall be interpreted as“Paragraph 2 and Article 4, Paragraphs 1 and 2 of the Act for
Partial Amendment of the Development Bank of Japan Inc. Act(Act No. 23 of 2015)”.
Article 5

Transitional Measures for Rules Regarding
Special Investment Operations and others
1. The Corporation shall, without delay after this Act takes effect,
set rules regarding special investment operations provided in
Article 2-17, Paragraph 1 of the Supplementary Provisions of
the New Act, and obtain authorization from the Minister ofFinance.
2. The Corporation shall, without delay after this Act takes effect,
revise the business plan provided in Article 17 of the New
Act to comply with the provisions of Article 2-11, Paragraph
1, Article 2-18, Paragraph 1 and Article 2-21, Paragraph 2of the Supplementary Provisions of the New Act, and obtain
authorization from the Minister of Finance.
3. The Corporation shall, without delay after this Act takes effect,
revise the Articles of Incorporation thereof to comply withthe provisions of Article 2-11, Paragraph 3 and Article 2-18,
Paragraph 3 of the Supplementary Provisions of the New Act,and obtain authorization from the Minister of Finance.
Article 6 Delegation to Cabinet Order
In addition to the provisions of Article 2 through Article 5 of these
Supplementary Provisions, transitional measures necessary for the
implementation of this Act shall be set forth in the Cabinet Order.
Article 7

Revision of part of the Act Concerning Promotionof Administrative Reform for Realizing the
Simplified and Effective Government
The Act Concerning Promotion of Administrative Reform forRealizing the Simplified and Effective Government (Act No. 47 of2006) shall be partly amended as follows.
In Article 6, Paragraph 2, “the impact in achieving purposesof the agencies which will take over the business of suchinstitutions and” shall be added after “With respect tocapital contributions to The Shoko Chukin Bank, Ltd. andDevelopment Bank of Japan Inc. by the Government, taking
into consideration”, and “for five (5) to seven (7) years
commencing from April 1, 2015,” shall be changed to read“as promptly as possible”.

Article 8 Adjustment Provisions
1. If the Implementation Date is on or prior to the implementation
date of the Act for Partial Revision of the Shoko Chukin Bank
Limited Act and the Act for Partial Revision of the Small andMedium-sized Enterprise Credit Insurance Act (Act No. 29 of2015, referred to as the “Partial Revision Act” in the following
Paragraph), for the purpose of application of the provisionof Article 6, Paragraph 2 of the Act Concerning Promotionof Administrative Reform for Realizing the Simplified andEffective Government after amendment under the immediately
preceding Article up to the previous day of the Implementation
Date, reference to “The Shoko Chukin Bank, Ltd. and” in the146

Annual Report & CSR Report 2016

said Paragraph shall be changed to read “With respect tocapital contributions to The Shoko Chukin Bank, Ltd. by theGovernment, the Government shall make efforts to reduce thenumber of shares held by it in The Shoko Chukin Bank, Ltd.,taking into consideration the market situation, and shall dispose
all of them for five (5) to seven (7) years commencing from
April 1, 2015,” and “such institutions” shall be changed toread “such institution”.
2. If the Implementation Date is after the implementation dateof the Partial Revision Act, the provision of the immediately
preceding Article shall not apply.
Article 9 Examination of Crisis Response Operations
1. The Government shall, at the appropriate time after thisAct takes effect, examine the Corporation’s crisis response
operations and the Government’s involvement in the
Corporation based thereon, taking into consideration theimplementation of systems pertaining to the designatedfinancial institution (designated financial institution asprovided in Article 11, Paragraph 2 of the Japan FinanceCorporation Act), the Corporation’s implementation of crisis
response operations, the change of social and economic
affairs and others, and in the prospective of a smooth financial
supply to those who need capital to respond to such related
damage stipulated in Article 2, Item (4) of the Japan FinanceCorporation Act, and whenever the Government deems
necessary, the Government shall take the required measures
based on the results of such examination.
2. For the examination referenced in the preceding Paragraph, theGovernment shall listen to the opinions of representatives ofordinary financial institutions and other relevant persons.
3. When, as a result of the examination referenced in the above
Paragraph 1, the Government concludes that it does not needto continue measures related to the Government’s obligations
to hold shares of the Corporation nor to take other measuresnecessary to ensure appropriate implementation of crisis
response operations of the Corporation, the Government shallpromptly take the required measures.
Article 10 Examination of Special Investment Operations
1. The Government shall, at the appropriate time after this Act
takes effect, examine the Corporation’s special investment
operations and the Government’s involvement in the
Corporation based thereon, taking into consideration theinvestment in financial and private sectors by ordinary financial
institutions, the Corporation’s implementation of special
investment operations (special investment operations asprovided in Article 2-12, Paragraph 2 of the Supplementary
Provisions of the New Act, hereinafter in this Paragraph thesame), the change of social and economic affairs and others,
and in the perspective of further promoting the long-termand other financial supply for the sustainable growth of theJapanese economy, and whenever the Government deems
necessary, the Government shall take required measures basedon the results of such examination.
2. For the examination referenced in the preceding Paragraph, theGovernment shall listen to the opinions of representatives ofordinary financial institutions and other relevant persons.

Financial Condition

Financial Condition

Consolidated Financial Statements . . . . . . . . . . 148
Non-Consolidated Financial Statements . . . . . . 194
Capital Adequacy Ratio . . . . . . . . . . . . . . . . . . . 198

Annual Report & CSR Report 2016147

Consolidated Balance Sheet
Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

As of March 31,

2016

2015

2016

AssetsCash and due from banks (Notes 11, 15 and 29)
Call loans and bills bought (Note 29)
Reverse repurchase agreements (Notes 3 and 29)
Money held in trust (Notes 29 and 31)¥

461,312—¥317,772
335,000$

4,094,005
—

—

5,299

—

17,78654,853

157,846

Securities (Notes 3, 15, 29 and 31)

1,803,087

1,887,906

16,001,842

Loans (Notes 4, 5, 15 and 29)

12,952,567

13,261,343

114,950,016

Other assets (Notes 6 and 15)

175,076

140,943

1,553,753

Tangible fixed assets (Notes 7, 11 and 15)

368,846

266,196

3,273,402

Intangible fixed assets

7,668

6,180

68,054

Asset for retirement benefits (Note 24)

2,458

2,508

21,817

374

363

3,327

Customers’ liabilities for acceptances and guarantees (Note 14)

180,124

167,482

1,598,553

Allowance for loan losses (Notes 8 and 29)(61,529)(84,717)(546,052)

Deferred tax assets (Note 25)

Allowance for investment losses

(594)

(525)

(5,279)¥15,907,180¥16,360,608$141,171,283¥ 3,221,870¥ 3,220,206$ 28,593,101

Borrowed money (Notes 10, 11, 15 and 29)

7,892,171

8,598,219

70,040,569

Corporate bonds (Notes 9, 11 and 29)

1,506,038

1,349,102

13,365,621

Other liabilities (Notes 12 and 13)

181,043

225,816

1,606,706

Accrued bonuses to employees

4,731

4,658

41,995

Total assets
Liabilities and equity
Liabilities:
Debentures (Notes 9, 15 and 29)

Accrued bonuses to directors

11

11

105

Liability for retirement benefits (Note 24)

7,997

7,959

70,971

Reserve for directors’ retirement benefits

63

72

563

Reserve for contingent losses

16

12

143

Deferred tax liabilities (Note 25)

28,91039,793

256,576

Acceptances and guarantees (Note 14)

180,124

167,482

1,598,553

13,022,979

13,613,334

115,574,902

Total liabilities
Equity:Common stock authorized, 160,000 thousand shares in 2016 and2015; issued, 43,632 thousand shares in 2016 and 2015 (Note 16)

1,000,424

1,206,953

8,878,452

Crisis response reserve (Note 17)

206,529—

1,832,881

Special investment reserve (Note 18)

130,000—

1,153,710

618

—

5,491

Capital surplus (Note 16)995,466

1,060,466

8,834,455

Retained earnings (Note 16)456,591

344,728

4,052,106

Unrealized gain on available-for-sale securities (Note 31)

55,07485,865

488,771

Deferred gain on derivatives under hedge accounting

34,56133,311

306,721

Foreign currency translation adjustments

429

1,617

3,812

Accumulated adjustments for retirement benefits (Note 24)

(83)

(12)

(740)

2,879,611

2,732,929

25,555,659

4,588

14,34440,7222,884,200

2,747,274

25,596,381¥15,907,180¥16,360,608$141,171,283

Special investment surplus (Note 18)

Accumulated other comprehensive income:

Total
Non-controlling interests
Total equity
Total liabilities and equity
See notes to consolidated financial statements.

148

Annual Report & CSR Report 2016

Consolidated Statement of Income
Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

For the year ended March 31,

2016

2015

2016

IncomeInterest income:¥215,315¥235,689$1,910,855

Interest on loans

185,136

204,905

1,643,033

Interest and dividends on securities

22,463

196,337

82

149

735

Interest on reverse repurchase agreements

226

231

2,008

Interest on due from banks

54

51

486

7,549

7,720

66,997

141

167

1,259

11,326

8,696

100,518

Interest on swaps
Other interest income
Fees and commissions
Other operating income (Note 20)
Other income (Note 21)
Total income

9,526

13,08484,545

126,50982,445

1,122,732

362,677

339,915

3,218,650

106,932

117,849

948,992

35,05636,488311,119

Financial Condition

22,123

Interest on call loans and bills bought

Expenses
Interest expense:
Interest on debentures
Interest on call money and bills soldInterest on borrowed money
Interest on short-term corporate bonds
Interest on corporate bonds
Other interest expense
Fees and commissions

0

0

1

66,98176,788594,437

202

12

1,799

4,623

4,497

41,030

68

62

606

798

713

7,089

7,479

10,751

66,378General and administrative expenses

46,041

43,562

408,602

Other expenses (Note 23)

14,692

13,376130,390

Total expenses

175,944

186,252

1,561,450

Income before income taxes

186,733

153,662

1,657,199

51,79551,593459,671

Other operating expenses (Note 22)

Income taxes (Note 25):
Current

5,867

7,381

52,071

Total income taxes

Deferred

57,66358,974

511,743

Net income

129,070

94,687

1,145,457

Net income attributable to non-controlling interests
Net income attributable to owners of the parent

117

1,928

1,045

¥128,952¥ 92,758$1,144,412

Yen

U.S. Dollars (Note 1)

Per share of common stock (Note 19)
Basic net income
Cash dividend applicable to the year

¥2,948.33¥2,125.91

671

516

$

26.17
5.95

See notes to consolidated financial statements.

Annual Report & CSR Report 2016149

Consolidated Statement of Comprehensive Income
Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

For the year ended March 31,

2016

2015

2016

¥129,070¥ 94,687$1,145,457

Unrealized (loss) gain on available-for-sale securities(35,774)

51,094(317,492)

Net income
Other comprehensive (loss) income (Note 27):
Deferred gain on derivatives under hedge accounting

1,533

3,538

13,605

Foreign currency translation adjustments

(592)

692

(5,257)

Adjustments for retirement benefits

(62)

922

(559)

4,086

(93)

36,267

Share of other comprehensive income (loss) in affiliates
accounted for by the equity method
Total other comprehensive (loss) income
Comprehensive income(30,810)

56,155(273,436)¥ 98,259¥150,843$ 872,021¥ 98,152¥146,002$ 871,070

107

4,841

951

Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
See notes to consolidated financial statements.

150

Annual Report & CSR Report 2016

Consolidated Statement of Change in Equity
Development Bank of Japan Inc. and Consolidated Subsidiaries
Millions of Yen

For the year ended March 31, 2016

Balance at beginning of year

Commonstock¥1,206,953

Crisis response
reserve¥

Special investment Special investment
reserve
surplus—¥Investment from government
Transfer from common stock to crisis response
reserve—

Capitalsurplus¥ —Retainedearnings¥1,060,466¥344,728

65,000(206,529)

206,529

Transfer from capital surplus to special
investment reserve

65,000(65,000)

Cash dividends(22,514)

Net income attributable to owners of the parent

128,952618(618)

Change in scope of equity method investments

Financial Condition

Transfer from retained earnings to special
investment surplus

6,043

Net change during the year
Balance at end of year

¥1,000,424¥206,529¥130,000¥618¥ 995,466¥456,591

Millions of Yen
Accumulated other comprehensive income

For the year ended March 31, 2016

Balance at beginning of year

Unrealized
gain onavailable-forsale securities

Deferred gain
on derivatives
under hedge
accounting

Foreigncurrencytranslation
adjustments

Accumulated
adjustments
for retirement
benefits¥ 85,865¥33,311¥ 1,617¥(12)

Investment from government

Total

Noncontrollinginterests

Total equity¥2,732,929¥14,344¥2,747,274

65,00065,000Transfer from common stock to crisis response
reserve
Transfer from capital surplus to special
investment reserve
Cash dividends(22,514)(22,514)

Net income attributable to owners of the parent

128,952

128,952

Transfer from retained earnings to special
investment surplus
Change in scope of equity method investments

6,043

Net change during the year

(30,790)

1,249

Balance at end of year

¥ 55,074¥34,561¥

For the year ended March 31, 2015

Commonstock

Crisis response
reserve

Special investment Special investment
reserve
surplus

6,043(1,188)(70)(30,799)(9,755)(40,555)

429

¥(83)

¥2,879,611¥ 4,588¥2,884,200

Millions of Yen

Balance at beginning of year

CapitalsurplusRetainedearnings¥1,206,953

¥—

¥—

¥—

¥1,060,466¥282,733

1,206,953———

1,060,466

282,774

Cumulative effects of changes in accounting
policies
Restated balance

41

Cash dividends(30,804)

Net income attributable to owners of the parent

92,758Net change during the year
Balance at end of year

¥1,206,953

¥—

¥—

¥—

¥1,060,466¥344,728

Millions of Yen
Accumulated other comprehensive income

For the year ended March 31, 2015

Balance at beginning of year

Total

Noncontrollinginterests

Total equity¥(944)¥2,617,691¥10,022¥2,627,714(944)

2,617,732

10,022

2,627,755

Unrealized
gain onavailable-forsale securities

Deferred gain
on derivatives
under hedge
accounting

Foreigncurrencytranslation
adjustments

Accumulated
adjustments
for retirement
benefits¥37,767¥30,006¥ 709

37,76730,006

709

Cumulative effects of changes in accounting
policies
Restated balance

41

Cash dividends(30,804)

Net income attributable to owners of the parent

92,75841(30,804)
92,758Net change during the year

48,098

3,305

907

932

53,243

4,321

57,564

Balance at end of year

¥85,865¥33,311¥1,617¥ (12)¥2,732,929¥14,344¥2,747,274

Annual Report & CSR Report 2016151

Thousands of U.S. Dollars (Note 1)
Commonstock

For the year ended March 31, 2016

Balance at beginning of year

$10,711,333

Crisis response
reserve$—

Investment from government

Special investment Special investment
reserve
surplus

$

—

$

—

CapitalsurplusRetainedearnings$9,411,310$3,059,359

576,855

Transfer from common stock to crisis response
reserve(1,832,881)

1,832,881

Transfer from capital surplus to special
investment reserve

576,855(576,855)

Cash dividends(199,807)

Net income attributable to owners of the parent

1,144,412

Transfer from retained earnings to special
investment surplus

5,491(5,491)

Change in scope of equity method investments

53,634

Net change during the year
Balance at end of year

$ 8,878,452$1,832,881$1,153,710$5,491$8,834,455$4,052,106

Thousands of U.S. Dollars (Note 1)
Accumulated other comprehensive income

For the year ended March 31, 2016

Unrealized
gain onavailable-forsale securities

Deferred gain
on derivatives
under hedge
accounting

Foreigncurrencytranslation
adjustments

Accumulated
adjustments
for retirement
benefits

Balance at beginning of year

$ 762,029$295,631$ 14,356$(114)

Investment from government

Total

Noncontrollinginterests

Total equity$24,253,904$127,303$24,381,207

576,855

576,855

Transfer from common stock to crisis response
reserve
Transfer from capital surplus to special
investment reserve
Cash dividends(199,807)(199,807)

Net income attributable to owners of the parent

1,144,412

1,144,412

Transfer from retained earnings to special
investment surplus
Change in scope of equity method investments

53,634(273,258)

11,090(10,544)(626)(273,338)(86,581)(359,919)

Balance at end of year

$ 488,771$306,721$ 3,812$(740)$25,555,659$ 40,722$25,596,381

See notes to consolidated financial statements.

152

53,634

Net change during the year

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Consolidated Statement of Cash Flows
Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

For the year ended March 31,

2016

2015

2016

¥ 186,733¥ 153,662$ 1,657,199

5,245
107
(4,000)2,047
347(6,140)(215,315)
106,932(72,107)(251)
41,524
28

5,012
111
(223)
—
120
(2,299)(235,689)
117,849(37,324)(36)(21,006)(519)

46,553
955(35,500)
18,171
3,081(54,496)(1,910,855)
948,992(639,927)(2,230)368,521256(23,188)
69
74
0
50
37
3
308,775
1,664(718,579)
156,686
40,100335,000
5,299
233,286(108,335)(73,119)
202,978(63,023)
139,954(28,279)
65
(23)
(0)
(2,808)(426)
5577,066
134,532(584,383)
197,355(38,120)(248,000)(5,299)247,410(118,959)
35,399145,191(23,112)122,078(205,788)
619
659
2
444
335
33
2,740,290
14,771(6,377,173)
1,390,540
355,875
2,973,021
47,0352,070,348(961,447)(648,911)
1,801,371(559,316)
1,242,055(458,912)
183,113328,233(85,110)123,065(87,124)945(3,805)(755,432)
64,716575,039(1)
79,580(33,682)
1,793(1,715)(4,072,705)
1,625,072
2,912,970(755,325)
1,092,167(773,201)8,390(33,772)

1,660
2,065

23
(69,676)

14,73318,32965,000(22,514)—(30,804)

576,855(199,807)

296
(216)
42,565

1,034(3,632)(33,402)

2,636(1,925)
377,758(316)
184,269
239,272467
19,466
219,805(2,807)
1,635,336
2,123,465(509)¥ 423,032—¥ 239,272(4,520)$ 3,754,281

Financial Condition

Cash flows from operating activities:
Income before income taxes
Adjustments for:
Depreciation
Amortization of goodwill
Gain on bargain purchase
Loss on step acquisitions
Losses on impairment of long-lived assets
Equity in gains of affiliates
Interest income
Interest expense
Gain on securities—net
Gain on money held in trust—net
Foreign exchange losses (gains)
Loss (Gain) on sales of fixed assets—net
Changes in operating assets and liabilities:
Allowance for loan losses
Allowance for investment losses
Accrued bonuses to employees
Accrued bonuses to directors
Asset for retirement benefits
Liability for retirement benefits
Reserve for contingent losses
Loans
Debentures
Borrowed money
Corporate bonds
Due from banks
Call loans and bills bought
Reverse repurchase agreements
Interest received
Interest paid
Other—net
Sub-total
Payments for income taxes
Net cash provided by operating activities
Cash flows from investing activities:
Payments for purchases of securities
Proceeds from sales of securities
Proceeds from redemption of securities
Payments for increase of money held in trust
Proceeds from decrease of money held in trust
Payments for purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets, etc.
Payments for purchases of intangible fixed assets
Proceeds from purchases of stocks of subsidiaries resulting inchange in scope of consolidation
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Proceeds from investment from government
Payments for cash dividends
Proceeds from issuance of securities to non-controllingshareholders of subsidiaries
Dividends paid to non-controlling shareholders of subsidiaries
Net cash provided by (used in) financing activities
Foreign currency translation adjustments on cash and cash
equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Decrease in cash and cash equivalents due to exclusion fromconsolidation
Cash and cash equivalents at end of year
See notes to consolidated financial statements.

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153

Notes to Consolidated Financial Statements
Development Bank of Japan Inc. and Consolidated Subsidiaries

1. Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in
the Japanese Financial Instruments and Exchange Act and its related accounting regulations and Ministerial Ordinance for
Accounting of the Development Bank of Japan Inc. (“DBJ Inc.”) and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirementsof International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been madeto the consolidated financial statements issued domestically in order to present them in a form which is more familiar toreaders outside Japan. In addition, certain reclassifications have been made in the 2015 consolidated financial statements toconform to the classifications used in 2016.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million yen.
Accordingly, the sum of each amount appearing in the accompanying financial statements and the notes thereto may not
be equal to the sum of the individual account balances. Amounts in U.S. dollars are presented solely for the convenience ofreaders outside Japan. The rate of ¥112.68=$1.00, the effective exchange rate prevailing as of March 31, 2016, has beenused in the conversion. The presentation of such amounts is not intended to imply that Japanese yen amounts have been or
could have been readily translated, realized or settled in U.S. dollars at that rate or any other rate.

2. Summary of Significant Accounting Policies(a) Principles of Consolidation(1) Scope of Consolidation
Under the control concept, those companies in which DBJ Inc., directly or indirectly, is able to exercise control over
operations are fully consolidated. On September 8, 2006, the Accounting Standards Board of Japan (“ASBJ”) issued
Practical Issues Task Force No. 20, “Practical Solution on Application of Control Criteria and Influence Criteria to
Investment Associations” which was effective for the period and the fiscal years ending on or after September 8,
2006. The practical solution clarifies how the control and influence concept should be practically applied to theconsolidation scope of collective investment vehicles, such as limited partnerships, Tokumei Kumiai and other entities
with similar characteristics.
(i) Consolidated Subsidiaries
The number of consolidated subsidiaries as of March 31, 2016 is 25. The major consolidated subsidiaries as ofMarch 31, 2016 are as follows:
DBJ Singapore Limited
Japan Economic Research Institute Inc.
DBJ Europe Limited
DBJ Real Estate Co., Ltd.
DBJ Investment Advisory Co., Ltd.
DBJ Capital Co., Ltd.
DBJ Securities Co., Ltd.
DBJ Asset Management Co., Ltd.
Value Management Institute, Inc.
DBJ Investment Consulting (Beijing) Co., Ltd.
In the year ended March 31, 2016, Hiratsuka Holding TMK and Core Investment Japan TMK were newly consolidated
due to acquisition of control and new establishment, respectively. DBJ Business Investment Co., Ltd. and Asuka DBJ
Investment LPS were excluded from the scope of consolidation due to liquidation and a substantial loss of control,
respectively.
(ii) Unconsolidated Subsidiaries
The number of unconsolidated subsidiaries as of March 31, 2016 is 33. The major unconsolidated subsidiary as ofMarch 31, 2016 was UDS II Corporate Mezzanine Limited Partnership.
Unconsolidated subsidiaries are excluded from the scope of consolidation because such exclusion has no material
impact on the consolidated financial statements in terms of total assets, income, net income, retained earnings andaccumulated other comprehensive income.

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(2) Application of the Equity Method
Under the influence concept, unconsolidated subsidiaries and affiliates over which DBJ Inc. has the ability to exercise
significant influence are accounted for by the equity method.
(i) Unconsolidated subsidiaries not accounted for by the equity method
The number of unconsolidated subsidiaries not accounted for by the equity method as of March 31, 2016 was 33.
The major unconsolidated subsidiary not accounted for by the equity method was UDS II Corporate Mezzanine
Limited Partnership.

Financial Condition(ii) Affiliates accounted for by the equity method
The number of affiliates accounted for by the equity method as of March 31, 2016 was 25. One of the majoraffiliates accounted for by the equity method as of March 31, 2016 was AIRDO Co., Ltd.
Changes in the scope of affiliates accounted for by the equity method:
Solaseed Air Inc. (former Skynet Asia Airways Co., Ltd.) and three companies including Skymark Airlines Inc. were
newly accounted for by the equity method due to an increase in its materiality and new investment, respectively,from the year ended March 31, 2016. Asuka DBJ Investment LPS was excluded from the scope of consolidation due
to a substantial loss of control and newly accounted for by the equity method from the year ended March 31, 2016.
Hiratsuka Holding TMK was newly accounted for by the equity method due to an increase in its materiality inthe year ended March 31, 2016, but ceased to be accounted for by the equity method as of March 31, 2016 due toacquisition of control.
(iii) Affiliates not accounted for by the equity method
The number of affiliates not accounted for by the equity method as of March 31, 2016 was 94. One of the majoraffiliates as of March 31, 2016 was New Perspective One LLC.
Unconsolidated subsidiaries and affiliates that are not accounted for by the equity method have been excluded
from the scope of the equity method because their aggregate effect in terms of net income, retained earnings andaccumulated other comprehensive income has no material impact on the consolidated financial statements of DBJ
Inc.
(iv) Entities not classified as affiliates where DBJ Inc. holds voting rights of between 20% and 50%
The following companies of which DBJ Inc. holding voting rights of between 20% and 50% are not affiliates
accounted for by the equity method, since DBJ Inc.’s intent is to develop the venture business and not to exercise
significant influence on their operating and financing policies:
As of March 31, 2016
Shinwa Seiko Corporation
Nihon Shoryoku Kikai Co., Ltd.
PRISM Pharma Corporation
Izumi Products Company
TES HOLDINGS LIMITED
Grace A Co., Ltd.
Socionext Inc.
Sartorius Mechatronics T&H GmbH
KANTO-UNYU Co., Ltd.
SII Semiconductor Corporation
Daisho-gun Co., Ltd.
(3) Balance Sheet Dates of Consolidated Subsidiaries
Balance sheet dates of consolidated subsidiaries are as follows:
Number of subsidiaries

2016

December 31
February 28 or 29
March 3117
1
7

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Consolidated subsidiaries are consolidated based on the financial statements that are prepared as of their year-end
balance sheet date.
The necessary adjustments are made in the consolidated financial statements to reflect material transactions that
occur between the year-end balance sheet date of the subsidiary and the consolidated balance sheet date.
(4) Elimination of Intercompany Balances and Transactions
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized
profit and loss resulting from transactions between DBJ Inc. and its consolidated subsidiaries are eliminated.
(5) Amortization of Goodwill
The difference between the fair value of net assets and the cost of the acquired subsidiary is amortized on astraight-line basis over the estimated useful lives not exceeding 20 years. Minor differences are charged to expensein the year of acquisition. The excess of the fair value over the cost of acquired subsidiaries (negative goodwill) is
recognized as income immediately as incurred.
(b) Business Combinations
In October 2003, the Business Accounting Council issued a Statement of Opinion, “Accounting for Business
Combinations,” and in December 2005, the Accounting Standards Board of Japan (the “ASBJ”) issued ASBJ Statement
No. 7, “Accounting Standard for Business Divestitures” and ASBJ Guidance No. 10, “Guidance for Accounting Standard
for Business Combinations and Business Divestitures.”
In December 2008, the ASBJ issued a revised accounting standard for business combinations, ASBJ Statement
No. 21, “Accounting Standard for Business Combinations.” Major accounting changes under the revised accounting
standard are as follows: (i) The revised standard requires accounting for business combinations only by the purchasemethod. As a result, the pooling-of-interests method of accounting is no longer allowed. (ii) The previous accounting
standard provided for a bargain purchase gain (negative goodwill) to be systematically amortized over a period notexceeding 20 years. Under the revised standard, the acquirer recognizes the bargain purchase gain in profit or loss
immediately on the acquisition date after reassessing and confirming that all of the assets acquired and all of theliabilities assumed have been identified after a review of the procedures used in the purchase price allocation. The
revised standard was applicable to business combinations undertaken on or after April 1, 2010.
In September 2013, the ASBJ issued revised ASBJ Statement No. 21, “Accounting Standard for Business
Combinations,” revised ASBJ Guidance No. 10, “Guidance on Accounting Standards for Business Combinations
and Business Divestitures,” and revised ASBJ Statement No. 22, “Accounting Standard for Consolidated Financial
Statements.” Major accounting changes are as follows:(1) Transactions with noncontrolling interests—A parent’s ownership interest in a subsidiary might change if the parent
purchases or sells ownership interests in its subsidiary. The carrying amount of noncontrolling interests is adjusted toreflect the change in the parent’s ownership interests in its subsidiary while the parent retains its controlling interests
in its subsidiary. Under the previous accounting standard, any difference between the fair value of the consideration
received or paid and the amount by which the noncontrolling interests is adjusted is accounted for as an adjustmentof goodwill or as profit or loss in the consolidated statement of income. Under the revised accounting standard,such difference is accounted for as capital surplus as long as the parent retains control over its subsidiary.
(2) Presentation of the consolidated balance sheet—In the consolidated balance sheet, “minority interests” under theprevious accounting standard is changed to “non-controlling interests” under the revised accounting standard.
(3) Presentation of the consolidated statement of income—In the consolidated statement of income, “income
before minority interests” under the previous accounting standard is changed to “net income” under the revised
accounting standard, and “net income” under the previous accounting standard is changed to “net income
attributable to owners of the parent” under the revised accounting standard.

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(4) Provisional accounting treatments for a business combination—If the initial accounting for a business combination
is incomplete by the end of the reporting period in which the business combination occurs, an acquirer shall reportin its financial statements provisional amounts for the items for which the accounting is incomplete. Under theprevious accounting standard guidance, the effect of adjustments to provisional amounts recorded in a businesscombination on profit or loss is recognized as profit or loss in the year in which the measurement is completed.
Under the revised accounting standard guidance, during the measurement period, which shall not exceed one year
from the acquisition, the acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition
date to reflect new information obtained about facts and circumstances that existed as of the acquisition date andthat would have affected the measurement of the amounts recognized as of that date. Such adjustments shall berecognized as if the accounting for the business combination had been completed at the acquisition date.
Financial Condition(5) Acquisition-related costs—Acquisition-related costs are costs, such as advisory fees or professional fees, which anacquirer incurs to effect a business combination. Under the previous accounting standard, the acquirer accounts foracquisition-related costs by including them in the acquisition costs of the investment. Under the revised accounting
standard, acquisition-related costs shall be accounted for as expenses in the periods in which the costs are incurred.
The above accounting standards and guidance for (1) transactions with noncontrolling interests, (2) presentation of theconsolidated balance sheet, (3) presentation of the consolidated statement of income, and (5) acquisition-related costs
are effective for the beginning of fiscal years beginning on or after April 1, 2015. Earlier application is permitted fromthe beginning of fiscal years beginning on or after April 1, 2014, except for (2) presentation of the consolidated balance
sheet and (3) presentation of the consolidated statement of income. In the case of earlier application, all accounting
standards and guidance above, except for (2) presentation of the consolidated balance sheet and (3) presentation of theconsolidated statement of income, should be applied simultaneously.
Either retrospective or prospective application of the revised accounting standards and guidance for (1) transactions
with noncontrolling interests and (5) acquisition-related costs is permitted. In retrospective application of therevised standards and guidance, the accumulated effects of retrospective adjustments for all (1) transactions with
noncontrolling interests and (5) acquisition-related costs which occurred in the past shall be reflected as adjustments tothe beginning balance of capital surplus and retained earnings for the year of the first-time application. In prospective
application, the new standards and guidance shall be applied prospectively from the beginning of the year of the firsttime application.
The revised accounting standards and guidance for (2) presentation of the consolidated balance sheet and (3)presentation of the consolidated statement of income shall be applied to all periods presented in financial statements
containing the first-time application of the revised standards and guidance.
The revised standards and guidance for (4) provisional accounting treatments for a business combination are
effective for a business combination which occurs on or after the beginning of fiscal years beginning on or after April 1,
2015. Earlier application is permitted for a business combination which occurs on or after the beginning of fiscal years
beginning on or after April 1, 2014.
DBJ Inc. applied the revised accounting standards and guidance for (1), (2), (3) and (5) above, from April 1, 2015,
and (4) above for a business combination which occurred on or after April 1, 2015. The revised accounting standards
and guidance for (1) and (5) were applied retrospectively for all applicable transactions which occurred in the past.
(c) Cash and Cash Equivalents“Cash and Cash Equivalents” in the consolidated statement of cash flows consist of cash on hand and due from banks.
The reconciliation between “Cash and cash equivalents” and “Cash and due from banks” in the consolidated balance
sheet is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Cash and due from banks

2016

2015

2016

¥461,312¥317,772$4,094,005

Time deposits with banks(38,280)(78,500)(339,723)

Cash and cash equivalents¥423,032¥239,272$3,754,281

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(d) Securities
Held-to-maturity debt securities are stated at amortized cost with amortization computed on a straight-line basis, using
the weighted average method. Available-for-sale securities with readily available market quotations are stated at market
value (cost is calculated principally using the weighted average method). Financial instruments whose fair value cannot
be reliably determined are stated at cost using the weighted average method.
Investments in limited partnerships and other similar partnerships are accounted for at their original cost plus DBJ
Inc.’s interest in earnings since acquisition and less any dividends received, based on the investees’ most recent financial
statements.
Unrealized gains and losses on available-for-sale securities are included in equity, net of income taxes, except for theamounts reflected in profit or loss by application of fair value hedge accounting.
Securities which are held as trust assets in money held in trust accounts are valued in the same way as othersecurities.
(e) Valuation Method for Derivative Financial Instruments
All derivative financial instruments are carried at market value. Except for certain derivatives that are designated as
hedging instruments as discussed below, gains or losses on derivative transactions are recognized in the statement ofincome.
(f) Hedge Accounting(1) Hedge Accounting
DBJ Inc. applies the deferral method of hedge accounting or the accrual method (*1). The portfolio hedge isaccounted for by the method stipulated in “Accounting and Auditing Treatments on the Application of AccountingStandards for Financial Instruments in the Banking Industry,” issued by the Japanese Institute of Certified Public
Accountants (the “JICPA Industry Audit Committee Report No. 24” February 13, 2002). In addition, foreign currency
swaps which are used to hedge foreign currency fluctuations are not stated at market values but at contractual
rates, as the foreign currency swap contracts meet the hedging criteria under the Accounting Standards for Financial
Instruments.
In addition, DBJ Inc. applies deferral hedge accounting and fair value hedge accounting as portfolio hedges ofthe foreign currency fluctuations associated with foreign currency denominated investments in subsidiaries andaffiliates and foreign currency denominated available-for-sale securities (other than foreign currency denominatedbonds).
(2) Hedging Instruments and Hedged Items• Hedging Instruments : Interest rate swaps
Hedged Items: Debentures, Borrowed money, Corporate bonds, Securities and Loans• Hedging Instruments : Foreign currency swaps
Hedged Items: Foreign currency denominated loans, Securities, Debentures, Borrowed money andCorporate bonds• Hedging Instruments : Forward liability denominated in foreign currency
Hedged Items: Foreign currency denominated investments in subsidiaries and affiliates and foreign
currency denominated available-or-sale securities (other than foreign currency
denominated bonds)(3) Hedging Policy
DBJ Inc. utilizes hedging instruments to hedge interest rates and foreign currency fluctuations on its assets andliabilities. Individual or certain groups contracts are drawn for each hedged item.
(4) Evaluation of Hedge EffectivenessAccording to the risk management policy, DBJ Inc. evaluates the effectiveness of the hedges by testing whether thederivatives are effective in reducing the risks associated with the hedged items.
In addition, with respect to portfolio hedging activities, for interest rate swaps used to hedge market interest rate
fluctuations, hedge effectiveness is assessed on a specifically identifiable group of hedged items and a corresponding
group of hedging instruments, and for interest rate swaps used to hedge variability in cash flows, hedge
effectiveness is assessed based on the correlation between the base interest rate index of the hedged cash flows andthe hedging instrument.
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With respect to hedging activities against foreign exchange risk of foreign currency denominated investments in
subsidiaries and affiliates and foreign currency denominated available-for-sale securities (other than foreign currency
denominated bonds), the effectiveness is assessed by confirming that the total foreign currency position of thehedged items is equal to or larger than that of hedging instruments.
With respect to an individual hedge, for both interest rate swap contracts which meet the hedging requirementsof the accrual method (*1) and foreign currency swap contracts which meet the hedging requirements of theassignment method (*2), DBJ Inc. is not required to periodically evaluate hedge effectiveness.

Financial Condition*1. If interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or received
under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap
contract was executed.
*2. In cases where foreign currency swaps are used as hedges and meet certain hedging criteria, foreign exchange forward
contracts and hedged items are accounted for in the following manner:(i) If a foreign currency swap is executed to hedge existing foreign currency assets or liabilities, a) the difference, if any, between
the Japanese yen amount of the hedged foreign currency asset or liability translated using the spot rate at the inception dateof the contract and the book value of the asset or liability is recognized in the statement of income in the period since
inception, and b) the discount or premium on the contract (that is, the difference between the Japanese yen amount of thecontract translated using the contracted forward rate and that translated using the spot rate at the inception date of thecontract) is recognized over the term of the contract.
(ii) If a foreign currency swap is executed to hedge a future transaction denominated in a foreign currency, the futuretransaction is recorded using the contracted forward rate, and no gains or losses on the foreign exchange forward contract
are recognized.

(g) Fixed Assets(1) Depreciation of Tangible Fixed Assets
Tangible Fixed Assets are stated at cost less accumulated depreciation. Tangible Fixed Assets of DBJ Inc. aredepreciated using the declining-balance method, except for buildings (excluding installed facilities) that are
depreciated on a straight-line basis, and depreciation of tangible fixed assets of consolidated subsidiaries iscomputed principally using the straight-line method, based on the estimated useful lives of the assets.
The estimated useful lives are principally as follows:
Buildings: 3 years to 50 years
Others: 4 years to 20 years(2) Amortization of Intangible Fixed Assets
Intangible Fixed Assets are amortized using the straight-line method. Capitalized software for internal use isamortized using the straight-line method based on the estimated useful lives (mainly 5 years).
(3) Lease Assets
Depreciation for lease assets is computed by the straight-line method with zero residual value over the lease term.
(h) Long-lived Assets
DBJ Inc. reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying
amount of an asset or asset group may not be recoverable. Impairment losses are recognized if the carrying amount ofan asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued
use and eventual disposition of the asset or asset group. The impairment losses would be measured as the amount bywhich the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash
flows from the continued use and eventual disposition of the asset or the net selling price at disposition.
(i) Debenture and Corporate Bond Issuance Costs“Debenture and Corporate Bond Issuance Costs” are charged to expense as incurred.

Annual Report & CSR Report 2016159

(j) Foreign Currency Translation and Revaluation Method
Assets and liabilities denominated in foreign currencies held by DBJ Inc. have been translated at the exchange rates
prevailing as of the balance sheet date. Foreign currency accounts held by consolidated foreign subsidiaries aretranslated into the currency of the subsidiaries at the respective year-end exchange rates. The foreign exchange gains
and losses from transactions are recognized in the statement of income to the extent that they are not hedged byforward exchange contracts. The balance sheet accounts of the consolidated foreign subsidiaries are translated into
Japanese yen at the current exchange rate as of the balance sheet date except for equity, which is translated at thehistorical rate. Differences arising from such translation are shown as “Foreign Currency Transaction Adjustments” in a
separate component of equity. Revenue and expense accounts of consolidated foreign subsidiaries are translated into
yen at the exchange rate prevailing as of the balance sheet date.
(k) Allowance for Loan Losses
DBJ Inc. provides for “Allowance for Loan Losses” as detailed below pursuant to the internal policies for self-assessmentof credit quality and loan losses. The allowance for claims on debtors who are legally bankrupt, in special liquidation
or effectively bankrupt is provided for based on the amount of claims, after the write-off described below, net ofamounts expected to be recovered through disposal of collateral or execution of guarantees. The allowance for claims
on debtors who are not legally bankrupt, but are likely to become bankrupt, and for which future cash flows cannot
reasonably be estimated (possibly bankrupt), is provided for at the amount considered to be necessary based on an
overall solvency assessment performed on the claims, net of amounts expected to be recovered through disposal ofcollateral or execution of guarantees. With respect to the claims on debtors who are likely to become bankrupt or to beclosely monitored, and for which future cash flows can reasonably be estimated, the allowance is provided for as thedifference between the present value of expected future cash flows discounted at the contracted interest rate and thecarrying value of the claims. The allowance for claims on debtors other than those described above is provided basedon the historical default rate, which is calculated based on the actual defaults over a certain historical period. All claims
are assessed initially by the investment and lending departments and then by the Credit Analysis Department, which is
independent of the investment and lending departments based on internal policies for self-assessment of credit quality.
The allowance is provided for based on the results of the self-assessment.
With respect to the claims on debtors who are legally or substantially bankrupt with collateral or guarantees, theamount of claims exceeding the estimated market values of collateral or guarantees which are deemed uncollectible
were written-off, and totaled ¥22,791 million ($202,271 thousand) and ¥34,371 million for the years ended March 31,
2016 and 2015, respectively. The consolidated subsidiaries calculate the general reserve for “normal” categories basedon the specific actual historical loss ratio, and the specific reserve for the “possibly bankrupt,” “effectively bankrupt”
and “legally bankrupt” categories based on estimated losses, considering the recoverable value.
(l) Allowance for Investment Losses“Allowance for Investment Losses” is provided for based on the estimated losses on certain investments based on anassessment of the issuers’ financial condition.
(m) Accrued Bonuses to Employees and Directors“Accrued Bonuses to Employees and Directors” are provided for in the amount of the estimated bonuses which are
attributable to the years ended March 31, 2016 and 2015.
(n) Employees’ Retirement Benefits
DBJ Inc. has defined benefit pension plans, which consist of a defined benefit corporate pension plan and a lump-sum
severance indemnity plan, as well as a defined contribution pension plan. Some domestic consolidated subsidiaries havea lump-sum severance indemnity plan and defined contribution plans, and some overseas consolidated subsidiaries haveretirement benefit plans which are typically defined contribution plans. The projected benefit obligations are attributed
to periods on a straight-line basis. Net actuarial gains and losses are amortized using the straight-line method over theperiod of ten years within the employees’ average remaining service period commencing from the following fiscal year
after incurrence. Prior service cost is amortized using the straight-line method over the period of ten years within theemployees’ average remaining service period at incurrence.
In May 2012, the ASBJ issued ASBJ Statement No. 26, “Accounting Standard for Retirement Benefits” and ASBJ
Guidance No. 25, “Guidance on Accounting Standard for Retirement Benefits,” which replaced the accounting
standard for retirement benefits that had been issued by the Business Accounting Council in 1998 with an effective date160

Annual Report & CSR Report 2016

of April 1, 2000, and the other related practical guidance, and were followed by partial amendments from time to timethrough 2009.
(1) Under the revised accounting standard, actuarial gains and losses and prior service costs that are yet to berecognized in profit or loss are recognized within equity (accumulated other comprehensive income), after adjustingfor tax effects, and any resulting deficit or surplus is recognized as a liability (liability for retirement benefits) or asset(asset for retirement benefits).

Financial Condition(2) The revised accounting standard does not change how to recognize actuarial gains and losses and prior service costs
in profit or loss. Those amounts are recognized in profit or loss over a certain period no longer than the expected
average remaining service period of the employees. However, actuarial gains and losses and prior service costs that
arose in the current period and have not yet been recognized in profit or loss are included in other comprehensive
income and actuarial gains and losses and prior service costs that were recognized in other comprehensive income
in prior periods and then recognized in profit or loss in the current period, are treated as reclassification adjustments(see Note 27).
(3) The revised accounting standard also made certain amendments relating to the method of attributing expected
benefit to periods, the discount rate, and expected future salary increases.
This accounting standard and the guidance for (1) and (2) above are effective for the end of fiscal years beginning on
or after April 1, 2013, and for (3) above are effective for the beginning of fiscal years beginning on or after April 1,
2014, or for the beginning of fiscal years beginning on or after April 1, 2015, subject to certain disclosure in March
2015, all with earlier application being permitted from the beginning of fiscal years beginning on or after April 1, 2013.
However, no retrospective application of this accounting standard to consolidated financial statements in prior periods isrequired.
DBJ Inc. applied the revised accounting standard and guidance for retirement benefits for (1) and (2) above, effective
March 31, 2014, and for (3) above, effective April 1, 2014.
With respect to (3) above, DBJ Inc. changed the method of attributing the expected benefit to periods from astraight-line basis to a benefit formula basis, the method of determining the discount rate from using the period whichapproximates the expected average remaining service period to using a single weighted average discount rate reflecting
the estimated timing and amount of benefit payment, and recorded the effect of (3) above as of April 1, 2014, inretained earnings. As a result, liability for retirement benefits decreased by ¥41 million and retained earnings increasedby ¥41 million at the beginning of the year ended March 31, 2015. In addition, income before income taxes decreasedby ¥27 million.
(o) Reserve for Directors’ Retirement Benefits“Reserve for Directors’ Retirement Benefits” is accrued based on the amount that would be required if all directors
retired at the balance sheet date.
(p) Reserve for Contingent Losses
Reserve for contingent losses is provided for possible contingent losses on loan commitment limits based on individuallyestimated losses.
(q) Asset Retirement Obligations
In March 2008, the ASBJ published the accounting standard for asset retirement obligations, ASBJ Statement No.
18 “Accounting Standard for Asset Retirement Obligations” and ASBJ Guidance No. 21 “Guidance on AccountingStandard for Asset Retirement Obligations.” Under this accounting standard, an asset retirement obligation is defined asa legal obligation imposed either by law or contract that results from the acquisition, construction, development and thenormal operation of a tangible fixed asset and is associated with the retirement of such tangible fixed asset.
The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset
retirement and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If areasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement obligation
is incurred, the liability should be recognized when a reasonable estimate of asset retirement obligation can be made.
Upon initial recognition of a liability for an asset retirement obligation, an asset retirement cost is capitalized byincreasing the carrying amount of the related fixed asset by the amount of the liability.
Annual Report & CSR Report 2016

161

The asset retirement cost is subsequently charged to expense through depreciation over the remaining useful life of
the asset. Over time, the liability is accreted to its present value each period. Any subsequent revisions to the timing or
the amount of the original estimate of undiscounted cash flows are reflected as an increase or a decrease in the carrying
amount of the liability and the capitalized amount of the related asset retirement cost.
(r) Lease Transactions
In March 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for Lease Transactions,” which revised
the previous accounting standard for lease transactions.
Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased
property to the lessee were capitalized. However, other finance leases were permitted to be accounted for as operatinglease transactions if certain “as if capitalized” information was disclosed in the notes to the lessee’s financial statements.
The revised accounting standard requires that all finance lease transactions be capitalized by recognizing lease assets
and lease obligations in the balance sheet. In addition, the revised accounting standard permits leases that existed at thetransition date and do not transfer ownership of the leased property to the lessee to continue to be accounted for as
operating lease transactions.
DBJ Inc. applied the revised accounting standard on October 1, 2008.
(s) Consumption Taxes
Income and expenses subject to consumption taxes exclude related consumption taxes paid or received.
(t) Income Taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statement ofincome. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future
tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities.
Deferred taxes are measured by applying currently enacted tax laws to the temporary differences.
(u) Capitalization of Interest Costs on Real Estate Development Business
Interest costs arising in the normal course of development related to real estate development business of certain
domestic consolidated subsidiaries are capitalized and included in the acquisition cost of assets.
(v) Per Share Information
Basic net income per share is computed by dividing net income available to owners of the parent related to common
stock by the weighted-average number of shares of common stock outstanding for the period, retroactively adjusted forstock splits. Diluted net income per share for the years ended March 31, 2016 and 2015 is not disclosed because there
are no dilutive securities.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicableto the year including dividends to be paid after the end of the year.
(w) New Accounting Pronouncement
On December 28, 2015, the ASBJ issued ASBJ Guidance No. 26, “Guidance on Recoverability of Deferred Tax Assets,”
which included certain revisions of the previous accounting and auditing guidance issued by the Japanese Instituteof Certified Public Accountants. While the new guidance continues to follow the basic framework of the previous
guidance, it provides new guidance for the application of judgment in assessing the recoverability of deferred tax assets.
The previous guidance provided a basic framework which included certain specific restrictions on recognizing
deferred tax assets depending on the company’s classification in respect of its profitability, taxable profit and temporary
differences, etc.
The new guidance does not change such basic framework but, in limited cases, allows companies to recognize
deferred tax assets even for a deductible temporary difference for which it was specifically prohibited to recognize adeferred tax asset under the previous guidance, if the company can justify, with reasonable grounds, that it is probablethat the deductible temporary difference will be utilized against future taxable profit in some future period.
The new guidance is effective for the beginning of annual periods beginning on or after April 1, 2016. Earlier
application is permitted for annual periods ending on or after March 31, 2016. The new guidance shall not be applied
retrospectively and any adjustments from the application of the new guidance at the beginning of the reporting
period shall be reflected within retained earnings or accumulated other comprehensive income at the beginning of thereporting period.
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DBJ Inc. expects to apply the new guidance on recoverability of deferred tax assets effective April 1, 2016, and is in
the process of measuring the effects of applying the new guidance in future applicable periods.
(x) Additional Information
Special investment operations are statutory operations newly introduced to strengthen the supply of growth capital by
DBJ Inc. pursuant to the Act for partial amendment of the DBJ Inc. Act which was promulgated and enforced on May
20, 2015.
The operation is a new investment scheme utilizing the industrial investment special account of the governmentand DBJ Inc. discloses the related accounts separately from common stock and capital surplus within equity on the
consolidated balance sheet. The details are stated in Notes 17 and 18.
Financial Condition

3. Securities
Securities as of March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

2015

2016

¥ 227,655¥ 253,498$ 2,020,373

Corporate bonds

639,421592,797

5,674,664

Equities

412,370

436,1123,659,665

Japanese government bonds

Other securities
Total

523,639

605,496

4,647,140¥1,803,087¥1,887,906$16,001,842*1. Investments in unconsolidated subsidiaries and affiliates included in “Equities” as of March 31, 2016 and 2015, are ¥33,638 million($298,535 thousand) and ¥30,307 million, respectively. Investments in unconsolidated subsidiaries and affiliates included in “Other
securities” as of March 31, 2016 and 2015, are ¥80,835 million ($717,388 thousand) and ¥44,846 million, respectively.
*2. DBJ Inc. has contingent liabilities for guarantees of corporate bonds among securities which were issued by private placement (Article
2, Paragraph 3 of Financial Instruments and Exchange Act), which amount to ¥3,032 million ($26,908 thousand) and ¥2,616 million asof March 31, 2016 and 2015, respectively.
*3. There are no securities repledged as of March 31, 2016 and 2015. Securities accepted under repurchase agreements can be sold or
repledged. Securities neither sold nor repledged are nil and ¥5,299 as of March 31, 2016 and 2015, respectively.
*4. Marketable securities available-for-sale are considered impaired if there is a considerable decline in the market value below theacquisition cost and such decline is not believed to be recoverable. The difference between the acquisition cost and the market value isthe impairment loss for the fiscal year.
The criterion for determining “Considerable decline in market value” is as follows:
Market value declined by 50% or more of the acquisition cost.
Market value declined by 30% or more of the acquisition cost, and such decline is not considered as recoverable.

Impairment losses on marketable securities available-for-sale for the years ended March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

Equities

2015

¥—

2016

¥ —

$ —

Bonds

—

—

—

Other

14

108

132

Total

¥14

¥108

$132

4. Non-Performing Loans
The amounts of non-performing loans included in “Loans” as of March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

2015

Loans to bankrupt debtors¥

Delinquent loans

53,893Loans past due three months or more

786

¥

2016

—
80,537$

6,982

478,287———

Restructured loans

27,792

21,741

246,652

Total¥82,472¥102,278$731,921

Annual Report & CSR Report 2016163

*1. The amounts of loans indicated above are stated at gross amounts, before reduction of the allowance for loan losses.
*2. “Loans to bankrupt debtors” represent non-accrual loans to debtors who are legally bankrupt as defined in Article 96-1-3 and 4 of theJapanese Tax Law Enforcement Regulation.
*3. “Delinquent loans” represent non-accrual loans other than (i) Loans to bankrupt debtors and (ii) Loans whose interest payments aredeferred in order to assist or facilitate the restructuring efforts of borrowers in financial difficulty.
*4. “Loans past due three months or more” are loans whose principal or interest payment is three months or more past due and do not
fall under the category of “Loans to bankrupt debtors” or “Delinquent loans.”*5. “Restructured loans” are loans whose repayment terms have been modified to the advantage of debtors through means such as a
reduction or exemption of interest rates, postponement of principal and interest payments, and forgiveness of loans to support or
restructure the debtors’ businesses, and do not fall under the category of “Loans to bankrupt debtors,” “Delinquent loans,” or “Loanspast due three months or more.”

5. Commitments
Loan commitment limits are contracts under which DBJ Inc. lends to customers up to the prescribed limits in response tocustomers’ applications for loans as long as there is no violation of any terms and conditions in the contracts. As of March
31, 2016 and 2015, the amounts of unused commitments are ¥841,229 million ($7,465,647 thousand) and ¥598,519
million, respectively. As of March 31, 2016 and 2015, the amounts of unused commitments with remaining contract term
within one year are ¥394,333 million ($3,499,588 thousand) and ¥157,423 million, respectively.
Since many of these commitments expire without being drawn down, the unused amount does not necessarily
represent a future cash requirement. Most of these contracts have terms and conditions whereby DBJ Inc. and its
subsidiaries can reject customers’ applications for loans or decrease the contract limits with proper reason (e.g., changes infinancial situation, deterioration in customers’ credit worthiness). At the inception of contracts, DBJ Inc. and its consolidated
subsidiaries obtain real estate, securities or other assets as collateral as deemed necessary. Subsequently, DBJ Inc. and its
consolidated subsidiaries perform periodic reviews of the customers’ business results based on internal rules, and takenecessary measures to reconsider the terms and conditions of contracts and/or require additional collateral and guarantees.

6. Other Assets
Other assets as of March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

Prepaid expenses

¥

2015

3,986

¥

2016

4,199

$

35,382

Accrued income

29,92531,647

265,576

Derivatives

67,98760,840603,369

Other

73,17744,257649,426

Total¥175,076¥140,943$1,553,753

7. Tangible Fixed Assets
Tangible fixed assets as of March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Buildings
Land
Leased assets
Construction in progress

2016

2015

2016

¥ 19,221¥ 20,362$ 170,583

91,57891,788812,730

4

9

42

4,491

2,353

39,863

Other

253,550

151,6812,250,184

Total¥368,846¥266,196$3,273,402

Note: Accumulated depreciation of tangible fixed assets as of March 31, 2016 and 2015, is ¥13,406 million ($118,983 thousand) and¥10,513 million, respectively.

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8. Allowance for Loan Losses
Allowance for loan losses as of March 31, 2016 and 2015 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

2015

2016

General allowance for loan losses¥38,493¥46,580$341,616

Specific allowance for loan losses

23,035

38,137

204,436

Total¥61,529¥84,717$546,052

Financial Condition

9. Debentures and Corporate Bonds
Debentures and corporate bonds as of March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Issue date

Interest rate(%)

Maturity date

2016

2015

2016

Aug. 2005– 1.4–
Aug. 2008
2.2

Aug. 2015–
Jun. 2023¥ 459,953[99,987]¥ 502,901$ 4,081,944[887,354]

Nov. 2008–
Mar. 2016

0.001–
2.1

Jul. 2016–
Mar. 2026

1,199,121[29,997]

998,847

10,641,832[266,214]

1.81

Sep. 2028

25,05025,054

222,316

Japanese governmentguaranteed foreign bonds
5-7, 9-14*1, 7

Dec. 2002– 1.05–
Nov. 2007 5.125

Jun. 2015–
Nov. 2027

552,700[183,679]

628,362

4,905,047[1,630,098]

Japanese governmentguaranteed Euro MTN bonds
2-12*3Apr. 2010–
Sep. 2015

Apr. 2015–
Sep. 2025

693,100[153,268]

733,109

6,151,049[1,360,214]

FILP agency domestic bonds
11, 20, 24, 27, 29-31, 33-36,
39, 41, 42, 44, 46, 49, 51*4, 7

Dec. 2003– 1.63–
Jul. 2008 2.74

Sep. 2015–
Mar. 2047

289,944[64,997]

329,929

2,573,164[576,828]Euro MTN FILP agency bonds
2*4, 5, 7

Sep. 2008

Sep. 2023

2,000

2,000

17,749

1,095,000

10,339,013(Issuer: DBJ Inc.)
Debentures
Japanese governmentguaranteed bonds 10-23*1, 7Japanese governmentguaranteed bonds 1-33

Japanese governmentSep. 1998
*2,
7
guaranteed foreign bond 67

Corporate bonds
Corporate bonds through0.8611–
2.875

2.032

Apr. 2009– 0.04543– Jun. 2015–

1,165,000

public placement 5, 9, 11, 13,
16, 17, 19, 21, 23-63

Feb. 2016

1.745

Jan. 2031[280,600]

Corporate bonds throughprivate placement 2-15

May 2011–
Mar. 2016

0.02343– Jun. 2015–
0.481
Mar. 2031

61,00025,000541,356

Corporate bonds Euro MTN
24-43, 45-59*6

May 2011–
Feb. 2016

0.014–
2.868

Apr. 2015–
Nov. 2025

275,288[25,164]

221,6022,443,097[223,330](Issuer: Green Asset Investment TMK)
Specified corporate bonds 1
Dec. 2012

5.53

Nov. 2017

4,500

7,500

39,936(Issuer: Hiratsuka Holding TMK)
Specified corporate bonds 40.24091

Sep. 2019

Total

Sep. 2014[2,490,238]

250

—

2,219

¥4,727,908¥4,569,308$41,958,722*1. These bonds are government-guaranteed bonds issued by the Development Bank of Japan.
*2. This bond is a government-guaranteed bond issued by the Japan Development Bank.
*3. These bonds are unsecured guaranteed bonds issued based on Medium Term Note program (“MTN program”).
*4. Fiscal Investment and Loan Program (FILP) agency bonds (“FILP bonds”) are not government-guaranteed. These bonds are issued by theDevelopment Bank of Japan.
*5. These bonds are FILP bonds issued based on MTN program.
*6. These bonds are unsecured corporate bonds issued based on MTN program.
*7 General mortgage under the DBJ Inc. Act (17 of the Supplementary Provisions) and the DBJ Act (Article 43)*8 Figures indicated in brackets [ ] indicate the amounts to be redeemed within one year.
Annual Report & CSR Report 2016165

Scheduled redemptions of above debentures and corporate bonds for the following 5 years subsequent to March 31, 2016
are as follows:
The fiscal year ending March 31, 2017

¥837,694 million$7,434,277 thousand

2018734,325

6,516,906

2019654,752

5,810,722

2020

500,3114,440,109

2021

308,4382,737,295

10. Borrowed Money
Borrowed money as of March 31, 2016 and 2015 is as follows:
Thousands of
U.S. Dollars

Millions of Yen
Average interest rate (%)

Due date of repayment

2016

2015

2016

0.78

Apr. 2015–Oct. 2035

¥7,892,171¥8,598,219$70,040,569

Borrowings

Scheduled repayments of borrowings for the following 5 years subsequent to March 31, 2016 are as follows:
The fiscal year ending March 31, 2017

¥1,242,393 million$11,025,856 thousand

2018

1,073,980

9,531,247

2019

1,078,599

9,572,240

2020

863,182

7,660,480

2021

775,369

6,881,168

11. Non-Recourse Debts
Non-recourse debts in consolidated special purpose companies as of March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

2015

2016

Borrowed money¥51,451¥32,000$456,614

Corporate bonds

4,750

7,500

42,155

Non-recourse debts:

Assets corresponding to non-recourse debts:
Cash and due from banks

4,689

6,586

41,622

Tangible fixed assets

73,51848,640652,452

12. Other Liabilities
Other liabilities as of March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

2015

2016

Accrued expenses¥ 21,914¥ 24,164$ 194,487

Unearned income

1,036

635

9,199

Accrued income taxes

27,49639,444

244,020

Derivatives

44,79931,939397,582

Lease obligations
Asset retirement obligations (Note 13)

166

5

11

48

1,469

1,470

13,038Other

84,322

128,150

748,332

Total¥181,043¥225,816$1,606,706

Annual Report & CSR Report 2016

13. Asset Retirement Obligations
DBJ Inc. recognizes asset retirement obligations associated with the recovery obligations provided in the real estate rental
agreements. In addition, asset retirement obligations related to the obligations of demolishing the previous head officebuildings and removing the toxic substances were recognized in connection with the head office relocation due to the
Otemachi redevelopment project.
The asset retirement obligation is calculated based on the sum of the discounted cash flows using discount rates from
0.1% to 1.1% with the estimated useful lives of 4 to 8 years.
The changes in asset retirement obligations for the years ended March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

2015

2016

¥1,470¥1,722$13,051

22

1

202

Increase due to acquisition of tangible fixed assets

0

0

8

Decrease due to settlement of asset retirement obligations

Reconciliation associated with passage of time

(56)

(347)

(499)

Increase due to a change in estimates

30

94

269

Other

0

(0)

7

¥1,469¥1,470$13,038

Balance at end of year

Financial Condition

Balance at beginning of year

14. Acceptances and Guarantees
Acceptances and guarantees as of March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Guarantees

2016

2015

2016

¥180,124¥167,482$1,598,553

15. Assets Pledged as Collateral
Cash and due from banks of ¥4,689 million ($41,622 thousand) and ¥3,110 million and tangible fixed assets of ¥73,518
million ($652,452 thousand) and ¥48,640 million are pledged as collateral for borrowed money of ¥51,451 million($456,614 thousand) and ¥32,000 million as of March 31, 2016 and 2015, respectively.
Loans and securities pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥461,856 million ($4,098,836 thousand) and ¥115,563 million ($1,025,588 thousand), respectively, as of March 31, 2016,
which are deposited as replacement of margin money for future trading, cash collateral paid for financial instruments,
etc. and collateral for transactions, including exchange settlements as of March 31, 2016. On behalf of the investees
who borrow from third parties, ¥7,400 million ($65,673 thousand) of securities are deposited as security as of March 31,
2016. Additionally, ¥937 million ($8,321 thousand) of margin deposits for futures transactions, ¥12,936 million ($114,804
thousand) of cash collateral paid for financial instruments, etc., ¥21,662 million ($192,246 thousand) of margin deposits
with the central clearing house and ¥73 million ($653 thousand) of guarantee deposits are included in other assets asof March 31, 2016. Under the DBJ Inc. Act (Article 17 of the Supplementary Provisions) and the DBJ Act (Article 43),
obligations created by the bonds issued by DBJ are secured by a statutory preferential right over the property of DBJ Inc. The
face value of these debentures amounts to ¥1,330,054 million ($11,803,816 thousand) as of March 31, 2016.
Loans and securities pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥562,189 million and ¥113,580 million, respectively, as of March 31, 2015, which are deposited as replacement of margin
money for future trading and collateral for transactions, including exchange settlements as of March 31, 2015. Additionally,¥937 million of margin deposits for futures transactions, ¥10,255 million of margin deposits with the central clearing houseand ¥63 million of guarantee deposits are included in other assets as of March 31, 2015. Under the DBJ Inc. Act (Article
17 of the Supplementary Provisions) and the DBJ Act (Article 43), obligations created by the bonds issued by DBJ Inc.
are secured by a statutory preferential right over the property of DBJ Inc. The face value of these debentures amounts to¥1,488,822 million as of March 31, 2015.

Annual Report & CSR Report 2016167

16. Equity
Japanese companies including DBJ Inc. are regulated by the Companies Act. In addition, DBJ Inc. is regulated by the DBJ Inc.
Act. The significant provisions in the Companies Act and the DBJ Inc. Act that affect financial and accounting matters are
summarized as follows:(a) Dividends
Under the Companies Act, companies can distribute dividends at any time during the fiscal year, in addition to theyear-end dividend, upon resolution at the shareholders meeting. Additionally, for companies that meet certain criteriasuch as (1) having a Board of Directors, (2) having independent auditors, (3) having a Board of Corporate Auditors,and (4) the term of service of the directors is prescribed as one year rather than two years of normal term in its articles
of incorporation. With respect to the third condition above, the Board of Directors may declare dividends (except for
dividends in kind) at any time during the fiscal year, if the Board of Directors can declare dividends as prescribed in thecompany’s articles of incorporation. DBJ Inc., however, shall not distribute such dividends based on resolution of theBoard of Directors, since its articles of incorporation do not prescribe that the Board of Directors can take such action.
The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock.
Article 20 of the DBJ Inc. Act provides that the timing and amounts for dividends shall be authorized by the Finance
Minister.
(b) Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be set aside as a legal reserve (acomponent of retained earnings) or as additional paid-in capital (a component of capital surplus), depending on
the equity account charged for dividends, until the total aggregate amount of legal reserve and additional paid-in
capital equal 25% of Common stock. Under the Companies Act, the total amount of additional paid-in capital andlegal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve,
additional paid-in capital, other capital surplus and retained earnings can be reclassified among the accounts undercertain conditions and upon resolution by the shareholders.
(c) Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of the treasury stock based on
resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the distributable amount tothe shareholders which is determined by specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of equity.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury
stock. The treasury stock acquisition rights are presented as a separate component of equity or deduction of stockacquisition rights.
(d) Solicitation and Delivery of Shares or Stock Acquisition Rights
Article 12 of the DBJ Inc. Act regulates that, if DBJ Inc. intends to solicit those who will subscribe for shares or stockacquisition rights offered, or to deliver shares or stock acquisition rights in connection with a share-for-share exchange,
DBJ Inc. shall obtain an authorization from the Finance Minister.

17. Crisis Response Reserve
DBJ Inc. recorded the accumulated amounts of the government’s contribution to implement the crisis response operations inaccordance with the provision of Article 2-22 of the supplementary provision of the DBJ Inc. Act (hereinafter the “Act”) as“Crisis response reserve.”
The reserve is characterized as follows:(a) For the purpose of calculating the amount of surplus, the amount of crisis response reserve is included in the total
amount of common stock and capital surplus based on the provision of Article 2-25 of the supplementary provision of
the Act.
(b) In case of compensation for deficit, the amount of crisis response reserve may be decreased when the capital surplus
and legal retained earnings become nil based on the provision of Article 2-26 of the supplementary provision of theAct. When the surplus becomes positive after the decrease in the amount of crisis response reserve, the amount of crisis
response reserve shall be increased based on the provision of Article 2-26 of the supplementary provision of the Act.
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(c) In case that DBJ Inc. determined that sufficient financial base required for the proper implementation of crisis response
operations has been secured, DBJ Inc. shall pay the full or partial amount of crisis response reserve to the National
Treasury according to the resolution of the shareholders meeting and authorization of the Minister of Finance, in
accordance with the provision of Article 2-27 of the supplementary provision of the Act.
(d) If DBJ Inc. were to be liquidated, DBJ Inc. shall pay the amount of crisis response reserve to the National Treasury basedon the provision of Article 2-28 of the supplementary provision of the Act when residual assets exist after discharging
debts.

18. Special Investment Reserve and Special Investment Surplus
Financial Condition

DBJ Inc. recorded the amounts transferred from the government’s investment and capital surplus to implement the
special investment operations in accordance with the provision of Article 2-23 of the supplementary provision of the Act
as “Special investment reserve.” In addition, profit or loss arising from special investment operations is transferred fromretained earnings to “Special investment surplus.”
Special Investment Reserve and Special Investment Surplus are characterized as follows:(a) For the purpose of calculating the amount of surplus, the amounts of special investment reserve and special investment
surplus are included in the total amount of common stock and capital surplus based on the provision of Article 2-25 of
the supplementary provision of the Act.
(b) In case of compensation for deficit, the amounts of special investment reserve or special investment surplus may bedecreased when the capital surplus and legal retained earnings become nil based on the provision of Article 2-26 of the
supplementary provision of the Act. When the surplus becomes positive after the decrease in the amounts of special
investment reserve or special investment surplus, the amounts of special investment reserve or special investment surplus
shall be increased based on the provision of Article 2-26 of the supplementary provision of the Act.
(c) In case that DBJ Inc. determined that these amounts became unnecessary to implement special investment operations
properly, DBJ Inc. may pay the full or partial amount of special investment reserve or special investment surplus to the
National Treasury according to the resolution of the shareholders meeting and authorization of the Minister of Finance,in accordance with the provision of Article 2-27 of the supplementary provision of the Act.
(d) If DBJ Inc. were to be liquidated, DBJ Inc. shall pay the amounts of special investment reserve and special investment
surplus corresponding to the amount attributable to the National Treasury to the National Treasury based on theprovision of Article 2-28 of the supplementary provision of the Act when residual assets exist after discharging debts.

19. Per Share Information
Basic net income per common share (“EPS”) for the years ended March 31, 2016 and 2015 is as follows:Year ended March 31, 2016

Basic EPS
Net income attributable to ownersof the parent
Net income not attributable tocommon shareholders (Amountattributable to the National Treasury
related to special investment
operations)
Net income attributable to ownersof the parent relating tocommon stock

Millions of Yen

Thousands of Shares

Yen

U.S. Dollars

Net income attributable toowners of the parent

Weighted average shares

EPS

EPS

¥128,952

309¥128,642

43,632¥2,948.33¥ 92,758

43,632¥2,125.91$26.17

Year ended March 31, 2015

Basic EPS
Net income attributable to ownersof the parent relating to common
stock

Note: Diluted net income per share for the years ended March 31, 2016 and 2015 is not disclosed because there are no dilutive securities.

Annual Report & CSR Report 2016169

As noted in Note 2 (b), DBJ Inc. applied the Accounting Standard for Business Combinations, etc. and followed thetransitional treatment set forth in Paragraph 58-2 (4) of the Business Combination Accounting Standard, Paragraph 44-5 (4)of the Consolidation Accounting Standard and Paragraph 57-4 (4) of the Business Divestiture Accounting Standard. As aresult, there was no effect on net income per share for the year ended March 31, 2016.

20. Other Operating Income
Other operating income for the years ended March 31, 2016 and 2015 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

Foreign exchange gains
Gains on sales of bonds

¥

—

2016

$

—

3,519

94

31,232

—

5,047

—

Gains on redemption of bonds
Gains on derivatives

2015¥ 6,930

5,107—

45,331

Other

899

1,011

7,982

Total

¥9,526¥13,084$84,545

21. Other Income
Other income for the years ended March 31, 2016 and 2015 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

Reversal of allowance for loan losses
Gains on sales of equities and other securities

2015

2016

¥ 17,488¥25,601$ 155,202

46,163

21,189409,685

Gains on money held in trust

261

36

2,324

Equity in net income of affiliates

6,140

2,299

54,496

Gains on sales of fixed assets

70

649

630

Collection of written-off claims

8,274

3,009

73,429Gains on investments in limited partnerships and other similar
partnerships

34,05722,301

302,247

Gain on bargain purchase

4,000

223

35,500Rental income on land and buildings

5,126

3,468

45,492

Other

4,926

3,668

43,725

Total¥126,509¥82,445$1,122,732

22. Other Operating Expenses
Other operating expenses for the years ended March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

170

2016

2015

Losses on sales of bonds¥2,616¥

1$23,222

Foreign exchange losses

3,219

—

28,576

Debenture issuance costs

867

708

7,697

Corporate bond issuance costs

769

758

6,831

Losses on derivatives

—

9,280

—

Other

5

1

52

Total

¥7,479¥10,751$66,378

Annual Report & CSR Report 20162016

23. Other Expenses
Other expenses for the years ended March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

2015

Write-off of loans
Losses on sales of equities and other securities
Write-off of equities
Losses on money held in trust
Losses on sales of fixed assets
Impairment losses
Losses on investments in limited partnerships and other similar
partnerships¥ 1,198
1
1,925
10
99
347

¥

7,588

6,432

67,341

Losses on step acquisitions
Other
Total

2,047
1,473
¥14,692—
1,492¥13,376

18,171
13,073$130,390

327
1
4,871
—
130
120

2016

$ 10,639
17
17,08795
886
3,081
Financial Condition

24. Employees’ Retirement Benefits
Employees whose service with DBJ Inc. is terminated are, under most circumstances, entitled to retirement and pension
benefits determined by reference to basic rates of pay at the time of termination, length of service and conditions underwhich the termination occurs. If the termination is involuntary, caused by retirement at the mandatory retirement age or
caused by death, the employee is entitled to greater payment than in the case of voluntary termination.
(a) Defined Benefit Pension Plan
(1) The changes in retirement benefit obligation for the years ended March 31, 2016 and 2015, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Balance at beginning of year
Cumulative effects of changes in accounting policies
Restated balance
Service cost
Interest cost
Actuarial losses
Benefits paid
Balance at end of year

2016

2015

¥32,243
—
—
1,518
351
873
(1,574)¥33,413¥31,888(41)
31,847
1,524
347
282
(1,759)¥32,2432016$286,151——
13,4803,122
7,754(13,973)$296,534(2) The changes in plan assets for the years ended March 31, 2016 and 2015, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Balance at beginning of year
Expected return on plan assets
Actuarial gains
Contributions from the employer
Benefits paid
Balance at end of year

2016

2015

¥26,792
133
679
961
(692)
¥27,874¥23,161
115
1,493
2,795
(773)
¥26,7922016$237,776
1,189
6,030
8,530
(6,146)$247,379

Annual Report & CSR Report 2016171

(3) Reconciliation between the liability for retirement benefits recorded in the consolidated balance sheet and the balancesof retirement benefit obligations and plan assets for the years ended March 31, 2016 and 2015, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Funded retirement benefit obligations
Plan assets
Unfunded retirement benefit obligations
Net liability for retirement benefits recorded in
the consolidated balance sheet
Liability for retirement benefits
Asset for retirement benefits
Net liability for retirement benefits recorded in
the consolidated balance sheet

2016

2015

2016

¥ 25,416(27,874)(2,458)
7,997¥ 24,284(26,792)(2,508)7,959$ 225,563(247,379)(21,817)70,971¥ 5,538¥ 5,450$ 49,154¥ 7,997(2,458)¥ 7,959(2,508)$ 70,971(21,817)¥ 5,538¥ 5,450$ 49,154(4) The components of net periodic benefit costs for the years ended March 31, 2016 and 2015, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Service cost
Interest cost
Expected return on plan assets
Amortization of net actuarial losses
Amortization of prior service cost
Net periodic benefit costs

2016

2015

2016

¥1,518
351
(133)
91
12
¥1,840¥1,524
347
(115)
212
12
¥1,981$13,480
3,122(1,189)811
112$16,336(5) Amounts recognized in other comprehensive income (before income tax effect) in respect of adjustments for
retirement benefit for the years ended March 31, 2016 and 2015, are as follows.
Thousands of
U.S. Dollars

Millions of Yen

2016

Prior service cost
Actuarial gains (losses)
Total

2015

¥ 12
(102)
¥ (90)

2016

¥ 12
1,422
¥1,435$ 112(913)$(800)(6) Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect ofadjustment for accumulated retirement benefit as of March 31, 2016 and 2015, are as follows.
Thousands of
U.S. Dollars

Millions of Yen

2016

Unrecognized prior service cost
Unrecognized actuarial gains (losses)
Total

172

Annual Report & CSR Report 2016

¥ (57)(57)¥(114)

2015

¥(69)
45
¥(24)

2016

$ (507)(512)$(1,018)

(7) Plan assets(i) Components of plan assets
Plan assets as of March 31, 2016 and 2015, consisted of the following:
2016

2015

Debentures

86%

85%

Equity11%

12%

Others

3%

3%

Total

100%

100%

Financial Condition(ii) Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return which are
expected currently and in the future from the various components of the plan assets.
(8) Assumptions used for the year ended March 31, 2016 and 2015, were set forth as follows:
2016

Discount rate
Expected salary increase rate
Expected rate of return on plan assets

2015

1.1%

1.1%

1.8%-5.3%

2.0%-5.5%

0.5%

0.5%

(b) Defined Contribution Plans
The amounts of the required contribution to the defined contribution plans of DBJ Inc. and its consolidated subsidiaries forthe years ended March 31, 2016 and 2015 are ¥218 million ($1,936 thousand) and ¥206 million, respectively.

25. Income Taxes
DBJ Inc. and its domestic consolidated subsidiaries are subject to Japanese national and local income taxes which, in theaggregate, resulted in a normal effective statutory tax rate of approximately 32.34% and 35.64% for the years ended
March 31, 2016 and 2015, respectively.
A reconciliation of the normal effective statutory tax rate with the actual effective tax rate for the year ended March 31,
2016 is omitted since the difference is less than 5% of the statutory tax rate.
A reconciliation of the normal effective statutory tax rate with the actual effective tax rate for the year ended March 31,
2015 is as follows:
2015

Normal effective statutory tax rate

35.64 %

Increase (decrease) in taxes resulting from:
Change in valuation allowance
Other
Actual effective tax rate

4.09 %(1.35)%
38.38 %

Annual Report & CSR Report 2016

173

The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities
as of March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

2015

2016

¥ 22,190¥ 35,282$ 196,938

Losses from revaluation of securities

12,504

14,511

110,971

Excess of fair value over assets of consolidated subsidiaries

5,439

4,200

48,276

Deferred tax assets:
Allowance for loan losses

Liability for retirement benefits

2,034

2,166

18,053Tax loss carryforwards

4,967

1,367

44,086

Other

11,527

9,055

102,304

Sub-total

58,664

66,584

520,627(47,050)(46,834)(417,562)

11,613

19,749103,066

Unrealized gain on available-for-sale securities(21,767)(39,093)(193,184)

Deferred gain on derivatives under hedge accounting(15,519)(16,068)(137,732)

Less-valuation allowance

Total
Deferred tax liabilities:(2,861)(4,018)(25,398)

Total

Other

(40,149)(59,179)(356,314)

Net deferred tax assets (liabilities)¥(28,536)¥(39,430)$(253,248)

New tax reform laws enacted in 2016 in Japan changed the income tax rate for the fiscal year beginning on or after April 1,
2016. Due to this change, the normal effective statutory tax rate to be used to calculate deferred tax assets and deferred tax
liabilities has been changed from 32.34% to 30.86% for the temporary differences expected to be settled in the fiscal years
beginning on April 1, 2016 and 2017, and to 30.62% for the temporary differences expected to be settled in the fiscal
years beginning on and after April 1, 2018. The effect of this change was to decrease deferred tax assets and deferred tax
liabilities in the consolidated balance sheet as of March 31, 2016 by ¥5 million ($45 thousand) and ¥1,513 million ($13,431
thousand), respectively, and to increase unrealized gain on available-for-sale securities, deferred gain on derivatives underhedge accounting, accumulated adjustments for retirement benefits and deferred income taxes by ¥1,170 million ($10,384
thousand), ¥818 million ($7,260 thousand), ¥0 million ($4 thousand) and ¥477 million ($4,241 thousand), respectively.
In addition, as the tax loss carryforwards which are available to be offset against taxable income will be limited to 60%of the taxable income before deducting tax losses from the fiscal year beginning on or after April 1, 2016 and 55% of thetaxable income before deducting tax losses from the fiscal years beginning on or after April 1, 2017, deferred tax assets
decreased by ¥14 million ($126 thousand) and deferred income taxes increased by ¥14 million ($126 thousand) comparedto March 31, 2015.

26. Lease Transactions(a) Finance leases
DBJ Inc. and its domestic consolidated subsidiaries lease certain equipment and other fixed tangible assets.
(b) Operating leases(As lessee)
The minimum lease commitments under non-cancelable operating leases as of March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

Due within 1 year
Due after 1 year
Total

174

Annual Report & CSR Report 2016

¥ 421

2015

¥365

2016

$3,741

581

176

5,160

¥1,003¥542$8,902

(As lessor)
The minimum lease commitments under non-cancelable operating leases as of March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

2015

2016

Due within 1 year

¥ 5,213¥ 3,811$ 46,266

Due after 1 year

11,097

13,16998,487

Total¥16,310¥16,980$144,753

Financial Condition

27. Other Comprehensive Income
The components of other comprehensive income for the years ended March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

2015

2016

Gains arising during the year¥363

¥ 90,884$

Reclassification adjustments to profit or loss

(54,885)(18,751)(487,090)

Unrealized (loss) gain on available-for-sale securities:
3,229

Amount before income tax effect(54,521)72,133(483,860)

Income tax effect

18,746(21,038)

166,369

Total(35,774)

51,094(317,492)

Deferred gain on derivatives under hedge accounting:
Gains arising during the year

7,618

11,336

67,608

Reclassification adjustments to profit or loss

(6,184)(8,291)(54,883)

Amount before income tax effect

1,433

3,044

12,725

99

494

881

1,533

3,538

13,605(592)

692(5,257)

Income tax effectTotal
Foreign currency translation adjustments:
Adjustments arising during the year
Reclassification adjustments to profit or loss

—

—

—

Amount before income tax effect

(592)

692

(5,257)

Income tax effect

—

—

—

(592)

692

(5,257)

Adjustments arising during the year

(194)

1,210

(1,723)

Reclassification adjustments to profit or loss

104

225

923

Amount before income tax effect

(90)

1,435

(800)

Income tax effect

27

(512)

241

Total

(62)

922

(559)

Total
Adjustments for retirement benefits

Share of other comprehensive (loss) income in affiliates:
3,760

(146)

33,375

Reclassification adjustments to profit or loss

Gains (losses) arising during the year

325

53

2,892

Amount before income tax effect

4,086

(93)

36,267———

Income tax effectTotal
Total other comprehensive (loss) income

4,086

(93)

36,267¥(30,810)¥ 56,155$(273,436)

Annual Report & CSR Report 2016175

28. Segment Information
DBJ Inc. consists of only one business segment of long-term financing and accordingly, the disclosure of the reportablesegment information is omitted.
Related information:
Segment information by service for the years ended March 31, 2016 and 2015 is following:
Millions of Yen
Year ended March 31, 2016

Loan business

Securities investment

Other

Total

Ordinary income from external customers¥210,899¥106,362¥41,344¥358,606

Year ended March 31, 2015

Loan business

Securities investment

Other

Total

Ordinary income from external customers¥233,516¥71,095¥34,430¥339,043

Year ended March 31, 2016

Loan business

Securities investment

Other

Total

Ordinary income from external customers$1,871,664$943,932$366,924$3,182,520

Millions of Yen

Thousands of U.S. Dollars

29. Financial Instruments and Related Disclosures(a) Financial Instruments(1) Policy for Financial Instruments
DBJ Inc. provides investment and loan services that are aimed to provide long-term stable funding. As main
methods of acquiring funds, in addition to issuing corporate bonds and long-term borrowings, DBJ Inc. relies on
the stable procurement of long-term funds from the government’s Fiscal Investment and Loan Program (FILP). Since
the majority of its assets are long-term with fixed rate, DBJ Inc. raises its funds mainly with long-term, fixed rate
liabilities.
From both funding and investment aspects, DBJ Inc. implements comprehensive asset/liability management inorder to mitigate the risk of capital shortfall and losses from fluctuations of interest rate and exchange rate. DBJ Inc.
utilizes derivative financial instruments in order to hedge or manage the risks related to interest and currency.
(2) Nature and Extent of Risks Arising from Financial Instruments
The financial assets of DBJ Inc. are mainly investments and loans in domestic customers, which are exposed tocredit risk that stems from customers’ default of contracts or decline of their creditworthiness. Main categories ofindustries of debtors are electricity, gas, thermal supply, water supply, manufacturing and others as of March 31,
2016. The changes of economic circumstances surrounding these industries may influence the fulfillment of their
obligations. DBJ Inc. holds securities such as bonds, equities and investments in limited partnerships and other similar
partnerships, which are exposed to issuer’s credit risk, interest rate risk, price volatility risk and other risks. DBJ Inc.
does not have any trading-related risk because it does not engage in trading (specified transactions).
Although corporate bonds and borrowings are exposed to cash liquidity risk and interest rate risk, these risks
are hedged or controlled by matching of financing and investing activities, interest-rate swap agreements and othertransactions.
Foreign currency denominated loans, debentures and corporate bonds are exposed to exchange rate risk. DBJ
Inc. mitigates this risk by matching foreign currency investments and loans with foreign currency corporate bonds
and currency-related transactions.
DBJ Inc. utilizes derivative financial transactions such as interest-rate swap agreements and currency swap
agreements in order to hedge or manage the risks related to interest and currency. DBJ Inc. applies hedge
accounting as necessary. Details for hedging instruments, hedged items, hedging policy and assessment ofeffectiveness of the hedges are described in Note 2 (f) “Hedge Accounting.”

176

Annual Report & CSR Report 2016

Financial Condition(3) Risk Management for Financial Instruments(i) Credit Risk Management
In accordance with the internal guidelines, DBJ Inc. utilizes credit exposure management and portfolio
management for investments and loans. When making an investment or loan, DBJ Inc. examines the entity’s
viability and the entity’s project’s profitability. After that, DBJ Inc. sets ratings along with an internal rating
system, grants credit amount, sets collateral and guarantee. The sales and credit analysis departments holdseparate roles in the screening and administering of credit for individual loans and each department keeps
the operations of the other in check. The Committee on Investment and Loan Decisions meets as needed todeliberate important issues concerning the management and governance of individual loans. DBJ Inc. performs acomprehensive analysis of data based on borrower ratings, and calculates the loan portfolio’s overall exposure tocredit risk, which is measured regularly to ensure that such risk remains within specified range of capital.
The credit risk of securities is managed in the same way as that of loans. In addition, DBJ Inc. regularly
examines total risk which takes into account the market value of the securities. As for counterparty risk arisingfrom derivative transactions, DBJ Inc. manages derivative transactions by continually monitoring the cost ofrestructuring its transactions and the creditworthiness of each counterparty. Additionally, DBJ Inc. diversifies
transactions among several counterparties to manage counterparty risk.
(ii) Market Risk Management
1) Interest Rate Risk Management
DBJ Inc. manages interest rate risk by asset/liability management. Details of risk management methods andprocedures are determined on internal rules, and Management Committee and ALM & Risk Management
Committee determine policies related to asset/liability management, monitoring of implementation andfuture plans. In addition, the risk management department monitors the interest rate and term of financial
assets/liabilities overall. ALM & Risk Management Committee conducts regular monitoring with cash flow
ladder analyses (gap analysis), value at risk (VaR), interest rate sensitivity analyses (basis point value), andother methods. As a part of asset/liability management, interest-rate swaps are executed to hedge interest
rate risk.
2) Foreign Exchange Risk Management
Foreign currency investments, loans and bonds are exposed to exchange rate risk, therefore those risks arehedged or managed not only by offsetting some foreign currency denominated investments and loans withforeign currency denominated corporate bonds and debentures but also by making currency-related hedging
transactions.
3) Price Volatility Risk Management
When DBJ Inc. acquires financial assets entailing price volatility risk such as securities with readily available
market quotations, it follows in-house regulations and policies which have been developed taking into
account market fluctuation risks, and the risk management department is involved in decision-making, as
necessary. Through regular monitoring, price volatility risks are reviewed on a timely basis and reported to
ALM & Risk Management Committee periodically.
4) Derivative Transactions
In conducting derivative transactions, segregation of duties is maintained in the front office, the back officeand the risk management department based on in-house regulations.
5) Quantitative Information about Market Risk
DBJ Inc. has not been engaged in trading activities, and all the assets and liabilities are financial instruments
other than for trading purposes.
Market risk exposure (estimated loss) is based on VaR using the historical simulation method (holding
period of 1 year, observation period of 5 years, and confidence interval of 99.9%). The amount of market
risk (risks pertaining to the changes in interest rates, foreign exchanges and market prices) as of March
31, 2016 and 2015 was ¥26,360 million ($233,945 thousand) and ¥25,415 million, respectively. Suchmeasurements are conducted by the risk management department on a regular basis and reported to ALM &Risk Management Committee to utilize for establishing ALM operating policies.

Annual Report & CSR Report 2016

177

DBJ Inc. conducts backtesting to compare the VaR calculated by the model with hypothetical
performances calculated based on the actual market movements and confirms that the measurement models
in use capture the market risk with sufficient accuracy. VaR measures the market risk volume under a definite
probability of incidence calculated statistically based on the historical market movements and accordingly,
and therefore there may be cases where market risk cannot be captured in such situations as when market
conditions are changing dramatically beyond what was experienced historically.
(iii) Liquidity Risk Management on Financing
The risk management department monitors the possession level of cash liquidity and reports it to the ALM & Risk
Management Committee periodically in line with in-house regulations of liquidity risk management on financing.
The ALM & Risk Management Committee manages liquidity risk by appropriate operations of financing andinvesting activities based on the risk situation.
(4) Supplementary Explanation on Fair Value of Financial Instruments
The fair value of financial instruments is measured at the quoted market price. If the quoted price is not available,
DBJ Inc. measures reasonably assessed price. Because assessed price is computed using certain assumptions, pricecould differ if different assumptions are used.
(b) Fair Values Information of Financial Instruments
The following are the carrying amount, fair value and differences between them as of March 31, 2016 and 2015.
Unlisted equities and others, whose fair value cannot be reliably determined, are excluded from the table below (see (2)).
Millions of Yen

2016
Carrying amount

Cash and due from banks¥

461,312Fair value¥

Difference

461,314¥2

Call loans and bills bought

—

—

—

Reverse repurchase agreements

—

—

—

804,050

821,180

17,130419,648419,648—

12,891,632

13,544,524

652,892

Securities
Held-to-maturity debt securities
Available-for-sale securities
Loans

12,952,567(60,935)

Allowance for loan losses*1
Total assets¥14,576,643¥15,246,667¥670,024

Debentures

3,221,870

3,377,600

155,729

Borrowed money

7,813,171

8,001,512

188,341

Corporate bonds

1,506,038

1,514,237

8,199

Total liabilities¥12,541,080¥12,893,351¥352,271

24,91924,919—Derivative transactions*2
Derivative transactions not qualifying forhedge accounting
Derivative transactions qualifying forhedge accounting
Total derivative transactions

178

Annual Report & CSR Report 2016¥

(1,731)
23,188¥(1,731)
23,188¥——

Millions of Yen

2015
Carrying amount

Cash and due from banks¥

Call loans and bills bought

Fair value

317,772¥

Difference

317,776¥3

335,000

335,000

—

5,299

5,299

—

Held-to-maturity debt securities

915,689

937,274

21,584

Available-for-sale securities

418,171

418,171—

Reverse repurchase agreements
Securities

Loans

13,261,343
13,177,578

13,743,661

566,083

Total assets¥15,169,511¥15,757,183¥587,671

Debentures

3,220,206

3,358,048

137,841

Borrowed money

8,498,219

8,606,481

108,261

Corporate bonds

1,349,102

1,353,954

4,852

Total liabilities¥13,067,528¥13,318,484¥250,956(10,929)(10,929)—39,83028,90039,83028,900——Derivative transactions*2
Derivative transactions not qualifying forhedge accounting
Derivative transactions qualifying forhedge accounting
Total derivative transactions

¥

¥

¥

Financial Condition(83,765)

Allowance for loan losses*1

Thousands of U.S. Dollars

2016
Carrying amount

Cash and due from banks$

4,094,005

Fair value$

Difference

4,094,024$

19

Call loans and bills bought

—

—

—

Reverse repurchase agreements

—

—

—

Held-to-maturity debt securities

7,135,696

7,287,721

152,025

Available-for-sale securities

3,724,249

3,724,249—

Securities

Loans

114,950,016(540,785)

Allowance for loan losses*1

114,409,231

120,203,448

5,794,217

Total assets$129,363,180$135,309,442$5,946,262

Debentures

28,593,101

29,975,156

1,382,055

Borrowed money

69,339,469

71,010,939

1,671,471

Corporate bonds

13,365,621

13,438,392

72,771

Total liabilities$111,298,190$114,424,487$3,126,296

221,152

221,152—

Derivative transactions*2
Derivative transactions not qualifying forhedge accounting
Derivative transactions qualifying forhedge accounting
Total derivative transactions$(15,365)
205,787$(15,365)
205,787$——*1. General and specific allowances for loan losses are deducted.
*2. Assets and liabilities arising from derivative transactions are presented on a net basis.

Annual Report & CSR Report 2016179

(1) Following are the methods used to calculate the fair values of financial instruments:
Assets(i) Cash and due from banks
For deposits without maturity, the carrying amount is presented as the fair value, as the fair value approximatessuch carrying amount. For deposits with maturity, the carrying amount is presented as the fair value, as thefair value approximates such carrying amount because the remaining maturity period of the majority of suchdeposits is short (maturity within 1 year).
(ii) Call loans and bills bought and Reverse repurchase agreements
For each of these items, the majority of transactions have short contract terms (1 year or less). Thus, the carrying
amount is presented as the fair value, as the fair value approximates such carrying amount.
(iii) Securities
The fair value of marketable equity securities is measured at the market price. The fair value of bonds ismeasured at the market price or the quoted price from third party. For bonds without such price, the fair value isdetermined by discounting contractual cash flows at the rates that consist of the risk free rate and the credit risk
premium based on types of securities, internal ratings and tenor.
(iv) Loans
The fair value of loans is determined by discounting contractual cash flows at the rates that consist of the risk
free rate and the credit risk premium that is based on types of loans, internal ratings and tenor. Foreign currency
swap contracts which meet the hedging requirements of the assignment method is limited to loans for which
the contractual cash flows are matched with the interest rate swap and foreign currency swap. For loans which
are short contract terms (1 year or less), the carrying amount is presented as the fair value, as the fair value
approximates such carrying amount. With respect to the claims on debtors who are likely to become bankrupt
or to be closely monitored, and for which future cash flows can reasonably be estimated, the fair values are
determined by discounting expected cash flows that reflect expected loss at the risk free rate. For loans to
obligors who are “legally bankrupt,” “effectively bankrupt” and “possibly bankrupt,” the reserve is provided
based on the discounted cash flow method, or based on amounts expected to be collected through the disposalof collateral or execution of guarantees. Carrying value net of the reserve as of the consolidated balance sheet
date is the reasonable estimate of the fair values of those loans.
Liabilities(i) Debentures
For floating rate debentures issued by DBJ Inc., the carrying amount is presented as the fair value, as the fairvalue approximates such carrying amount. This is on the basis that the market interest rate is reflected in the fairvalue of such debentures because the terms of these were set within a short time period and that there has beenno significant change in the creditworthiness of DBJ Inc. before and after the issuance. For fixed rate debentureswith market prices, the fair value is determined based on their market price. For fixed rate debentures withoutmarket prices, the fair value is determined by discounting contractual cash flows based on types of maturity
lengths (when interest rate swap contracts which meet the hedging requirements of the accrual method isqualified to debentures, the contractual cash flows are based on the interest rate swap) at the rates that consistof the risk free rate and the rate of certain costs applicable to DBJ Inc. Certain foreign currency denominateddebentures are translated using the forward contract rates and the present value of the contractual cash flows is
computed regarding them as Japanese yen denominated debentures.
(ii) Borrowed money
For floating rate borrowed money, the carrying amount is presented as the fair value, as the fair value
approximates such carrying amount. This is on the basis that the market interest rate is reflected in the fair valueof such borrowed money because the terms of these were set within a short time period for such variable rateborrowings and that there has been no significant change in the creditworthiness of DBJ Inc. nor consolidated
subsidiaries before and after such borrowings were made. For fixed rate borrowed money, the fair values
are determined by discounting contractual cash flows based on types of maturity lengths (when interest rate
swap contracts which meet the hedging requirements of the accrual method is qualified to borrowings, the180

Annual Report & CSR Report 2016

contractual cash flows are based on the interest rate swap) at the rates that consist of the risk free rate and therate of certain costs applicable to DBJ Inc. or consolidated subsidiaries. Certain foreign currency denominatedborrowed money is translated using the forward contract rates and the present value of the contractual cash
flows is computed regarding them as Japanese yen denominated borrowed money.

Financial Condition(iii) Corporate bonds
For floating rate corporate bonds issued by DBJ Inc., the carrying amount is presented as the fair value, as thefair value approximates such carrying amount. This is on the basis that the market interest rate is reflected in theinterest rate set within a short time period and that there has been no significant change in the creditworthinessof DBJ Inc. before and after the issuance. For fixed rate corporate bonds with market prices, the fair value isdetermined based on their market price. For fixed rate corporate bonds without market prices, the fair value isdetermined by discounting contractual cash flows based on types of maturity lengths (when interest rate swap
contracts which meet the hedging requirements of the accrual method is qualified to corporate bonds, thecontractual cash flows are based on the interest rate swap) at the rates that consist of the risk free rate and therate of certain costs applicable to DBJ Inc. Certain foreign currency denominated corporate bonds are translatedusing the forward contract rates and the present value of the contractual cash flows is computed regarding themas Japanese yen denominated corporate bonds.
Derivatives
Derivatives consist of interest rate related derivatives (interest rate swaps), currency related derivatives (currency
swaps, forward foreign exchange contracts) and credit derivatives. Fair value of these derivatives is determined basedon the discounted present value, quoted prices presented by the financial institutions, etc.
(2) Following are the financial instruments whose fair value cannot be reliably determined as of March 31,
2016 and 2015:
These securities are not included in the amount in the table summarizing fair values of financial
instruments.
Carrying amountThousands of
U.S. Dollars

Millions of Yen

2016

2015

2016

Money held in trust*1¥ 17,786¥ 54,853$ 157,846

Unlisted equities*2, 3
Investments in limited partnerships and other similar
partnerships*1
Unlisted other securities*2, 3Industrial investment borrowed money (Special Account for
FILP)*4
Total

330,616

326,875

2,934,116

190,641
90,821

169,296
57,873

1,691,880
806,01179,000¥708,864

100,000¥708,899

701,100$6,290,953*1. Assets in trust and partnership assets which consist of financial instruments, whose fair value cannot be reliably determined,
such as unlisted equities and other securities, are not subject to fair value disclosures.
*2. Financial instruments for which the quoted price is not available and fair value cannot be reliably determined, are not subject
to fair value disclosures.
*3. Impairment loss on financial instruments whose fair value cannot be reliably determined for the year ended March 31, 2016
and 2015 was ¥1,910 million ($16,955 thousand) and ¥4,763 million, respectively, which consist of unlisted equities of ¥561
million ($4,985 thousand) and ¥984 million and unlisted other securities of ¥1,348 million ($11,970 thousand) and ¥3,778
million for the years ended March 31, 2016 and 2015, respectively.
*4. For the industrial investment borrowed money (Special Account for FILP), the interest rate is not determined at the time ofborrowing, but total amount of interest expense will be determined at the time of final repayment. Accordingly, since thefuture cash flows cannot be reasonably estimated and the fair value is extremely difficult to determine, it is not subject to thefair value disclosure requirement.

Annual Report & CSR Report 2016181

(3) Maturity analysis for financial assets and securities with contractual maturities as of March 31, 2016 and2015 are as follows:
Millions of Yen

2016
Due in 1
year or lessDue from banks
Call loans and bills bought
Securities
Held-to-maturity debt securities
with market values
Japanese government bonds
Japanese local government bonds
Corporate bonds
Other
Available-for-sale securities with
contractual maturities
Japanese government bonds
Japanese local government bonds
Corporate bonds
Other¥ 461,305

Due after 1
year through3 years

Due after 3
years through5 years

Due after 5
years through7 years

Due after 7
years through10 years

Due after
10 years

¥

¥

¥

¥

¥

—

—

—

—

—

—

—

—

—

—

—

187,91435,193

230,70965,568215,835
20,09081,226
15,24756,53515,15031,82920,129

—

—

—

—

—

—

93,682

88,571

99,61935,30035,00011,70059,03876,56996,12530,678

6,385—

24,358—36,589—113,368
5,372

78,171
26,78438,702
24,11944,088
—

—

—

—

—

—

—

24,35836,589107,996

51,387

11,12844,088

—

—

—

—

3,454

—

Loans*1

2,525,049

3,401,265

3,055,686

1,622,470

1,564,807

728,609

Total¥3,198,627¥3,668,563¥3,384,889¥1,781,867¥1,660,046¥804,527

Millions of Yen

2015
Due in 1
year or lessDue from banks

Due after 3
years through5 years

Due after 5
years through7 years

Due after 7
years through10 years

Due after
10 years

¥

¥

¥

¥

¥

—

—

—

—

—

Call loans and bills bought

335,000

—

—

—

—

—

Securities
Held-to-maturity debt securities
with market values
Japanese government bonds

276,551—

276,137
81,224

224,772
40,32866,324
10,29536,724
15,12435,17925,179

—

—

—

—

—

—

106,934

119,189

100,205

23,796

11,60010,000169,61775,723

84,23932,232

10,000—6,477—

67,641—

93,412—

90,13542,48839,99130,743

8,116
8,116

—

—

—

—

—

—

6,477

67,641

93,41247,647

5,894

—

—

—

—

—

3,354

—

Japanese local government bonds
Corporate bonds
Other
Available-for-sale securities with
contractual maturities
Japanese government bonds
Japanese local government bonds
Corporate bonds
Other

182

¥ 317,765

Due after 1
year through3 years

Loans*2

2,132,424

4,076,764

3,010,127

1,840,382

1,419,033

702,074

Total¥3,068,218¥4,420,542¥3,328,312¥1,996,842¥1,495,749¥745,369

Annual Report & CSR Report 2016

Thousands of U.S. Dollars

2016
Due in 1
year or lessDue from banks
Call loans and bills bought
Securities
Held-to-maturity debt securities
with market values
Japanese government bonds
Corporate bonds
Other
Available-for-sale securities with
contractual maturities
Japanese government bonds
Japanese local government bonds
Corporate bonds
Other

Due after 3
years through5 years

Due after 5
years through7 years

Due after 7
years through10 years

$

$

$

$

—

—

—

—

Due after
10 years

$

—

—

—

—

—

—

—

1,667,680
312,328

2,047,472
581,898

1,915,471
178,298

720,857
135,316

501,738
134,459

282,478
178,644

—

—

—

—

—

—

831,403

786,044884,088313,277

310,614103,834

523,949

679,530

853,086

272,265

56,665—

216,172—

324,719—

1,006,111
47,675

693,746
237,700

343,475
214,056

391,269
—

—

—

—

—

—

—

216,172

324,719

958,436

456,046

98,762391,269

—

—

—

—

30,658—Loans*1

22,409,027

30,185,171

27,118,265

14,398,921

13,887,182

6,466,181

Total$28,386,823$32,557,362$30,039,847$15,813,524$14,732,395$7,139,928

Financial Condition

Japanese local government bonds$ 4,093,943

Due after 1
year through3 years*1. Obligations to “Legally Bankrupt,” “Effectively Bankrupt” and “Possibly Bankrupt” amounting to ¥54,680 million ($485,269
thousand) are not included as of March 31, 2016.
*2. Obligations to “Legally Bankrupt,” “Effectively Bankrupt” and “Possibly Bankrupt” amounting to ¥80,537 million are notincluded as of March 31, 2015.

(4) Maturity analysis for Debentures, Borrowed money and Other Interest-Bearing Liability as of March 31,
2016 and 2015 are as follows:
Millions of Yen

2016

Borrowed money
Debentures and Corporate bonds
Total

Due in 1
year or lessDue after 1
year through3 years

Due after 3
years through5 years

Due after 5
years through7 years

Due after 7
years through10 years

Due after
10 years¥1,242,393¥2,152,580¥1,638,552¥ 968,592¥1,028,287¥ 861,763

837,694

1,389,077

808,749

589,822849,704

252,860¥2,080,087¥3,541,657¥2,447,302¥1,558,414¥1,877,992¥1,114,624

Millions of Yen

2015

Borrowed money
Debentures and Corporate bonds
Total

Due in 1
year or lessDue after 1
year through3 years

Due after 3
years through5 years

Due after 5
years through7 years

Due after 7
years through10 years

Due after
10 years¥1,412,658¥2,296,269¥1,811,920¥1,042,815¥1,110,694¥ 923,862

540,420

1,563,394

1,018,110

428,803

719,934

298,645¥1,953,079¥3,859,663¥2,830,030¥1,471,619¥1,830,628¥1,222,507

Due after 7
years through10 years

Due after
10 yearsThousands of U.S. Dollars

2016
Due in 1
year or less

Borrowed money
Debentures and Corporate bonds
Total

Due after 1
year through3 years

Due after 3
years through5 years

Due after 5
years through7 years$11,025,856 $19,103,486 $14,541,647 $ 8,595,960 $ 9,125,733
7,434,277

12,327,628

7,177,404

5,234,489$7,647,887

7,540,866

2,244,057$18,460,133 $31,431,114 $21,719,052 $13,830,448 $16,666,599$9,891,944

Annual Report & CSR Report 2016183

30. Derivative Transactions(a) Derivative Transactions to which Hedge Accounting is not applied(1) Interest rate-related transactions
Millions of Yen

2016
Contract amount

Over-the-counter
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed
Receive float/ Pay float
Total

Total

Due after 1 year

Fair value

Unrealized gains(losses)¥1,024,150
1,008,768
44,367—¥940,143
925,900——¥ 64,971(29,922)10¥ 35,058¥ 64,971(29,922)10¥ 35,058

Millions of Yen

2015
Contract amount

Over-the-counter
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed
Total

Total

Due after 1 year

Fair value

Unrealized gains(losses)¥852,007
845,243—¥787,406
782,892—¥ 22,068(16,259)¥ 5,808¥ 22,068(16,259)¥ 5,808

Thousands of U.S. Dollars

2016
Contract amount

Over-the-counter
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed
Receive float/ Pay float
Total

Total

Due after 1 year

Fair value

Unrealized gains(losses)$9,089,022
8,952,507
393,748—$8,343,485
8,217,077——$ 576,599(265,556)
89$ 311,133$ 576,599(265,556)
89$ 311,133*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statement of income.
*2. Fair values for the over-the-counter transactions are based primarily on discounted present values.

(2) Currency-related transactions
Millions of Yen

2016
Contract amount
Total

Over-the-counter
Swaps
Forwards
Sold
BoughtTotal

Due after 1 year

Fair value

Unrealized gains(losses)¥ 73,147¥—¥(11,572)¥(11,572)

195,698
151,731
—

—
—

2,722
(1,203)¥(10,053)

2,722(1,203)¥(10,053)—
Millions of Yen

2015
Contract amount
Total

Over-the-counter
Swaps
Forwards
Sold
BoughtTotal
184

Annual Report & CSR Report 2016

Due after 1 year

Fair value

Unrealized gains(losses)¥ 73,147¥73,147¥(17,921)¥(17,921)

256,929
1,256
—

—
—

1,297
(1)
¥(16,626)

1,297
(1)
¥(16,626)—

Thousands of U.S. Dollars

2016
Contract amount
Total

Fair value

Unrealized gains(losses)$(102,701)$(102,701)

Due after 1 year

Over-the-counter
Swaps$ 649,161

$—

Sold

1,736,765—

24,164

24,164

Bought

1,346,569—(10,682)(10,682)$ (89,219)$ (89,219)

Forwards

Total

—

—

Financial Condition*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statement of income.
*2. Fair values are based primarily on discounted present values.

(3) Equity-related transactions
Not applicable.
(4) Bond-related transactions
Not applicable.
(5) Commodity-related transactions
Not applicable.
(6) Credit Derivative Transactions
Millions of Yen

2016
Contract amountTotal

Due after 1 year

Unrealized gains(losses)

Fair value

Over-the-counter
Credit default options
Sold¥13,828¥13,828

Bought

6,500

6,500

(145)

(145)

—

—

¥ (85)¥ (85)

Total

¥ 59

¥ 59

Millions of Yen

2015
Contract amountTotal

Due after 1 year

Unrealized gains(losses)

Fair value

Over-the-counter
Credit default options
Sold¥20,404¥20,404

Bought

3,500

3,500

(113)

(113)

—

—

¥(112)¥(112)

Total

¥

0

¥

0

Thousands of U.S. Dollars

2016
Contract amount
Fair value

Unrealized gains(losses)Total

Due after 1 year

Sold

$122,726$122,726

Bought57,68557,685(1,291)(1,291)——$ (761)$ (761)

Over-the-counter
Credit default options

Total

$

530

$

530

*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statement of income.
*2. Fair values are based on discounted present values or the counterparties’ tendered price.
*3. ‘Sold’ means the underwriting of credit risk and ‘Bought’ means the transferring of credit risk.
Annual Report & CSR Report 2016

185

(b) Derivative Transactions to which Hedge Accounting is applied(1) Interest rate-related transactions
Millions of Yen
2016
Contract amount
Hedged item

Total

Due after 1 year

Fair value¥¥

Deferral method
Swaps
Receive fixed/ Pay float

Borrowed money,
Securities and Loans¥

Receive float/ Pay fixed
Accrual method
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed

Debentures,
Borrowed money,
Corporate bonds,
Securities and Loans

Total

—

—

—

95,26787,556(1,581)

1,030,643

862,005

*3

1,933

1,933

—

—

¥(1,581)Millions of Yen
2015
Contract amount
Hedged item

Deferral method
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed
Accrual method
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed

Debentures,
Borrowed money,
Securities and Loans

Due after 1 year

Fair value¥ 309,247¥308,664¥39,60335,19530,347(1,560)1,011,685

843,262*3

57,31132,355

—

—

Total

Debentures,
Borrowed money,
Corporate bonds and
Loans

Total

¥38,043

Thousands of U.S. Dollars
2016
Contract amount
Hedged item

Total

Due after 1 year

Fair value$$

Deferral method
Swaps
Receive fixed/ Pay float

Borrowed money,
Securities and Loans

Receive float/ Pay fixed
Accrual method
Swaps
Receive fixed/ Pay float
Receive float/ Pay fixed
Total

Debentures,
Borrowed money,
Corporate bonds,
Securities and Loans

$

—

—

—

845,467

777,035(14,038)

9,146,643

7,650,033*3

17,155

17,155——$(14,038)*1. DBJ Inc. applies the deferral method of hedge accounting primarily stipulated in “Accounting and Auditing Treatments on the
Application of Accounting Standards for Financial Instruments in Banking Industry” (JICPA Industry Audit Committee Report
No. 24, February 13, 2002).
*2. Fair values for the over-the-counter transactions are based primarily on discounted present values.
*3. The above interest rate swap contracts which qualify for the hedging requirements of the accrual method are not remeasured
at fair value but the differential paid or received under the swap agreements are recognized and included in interest expense or
income. In addition, the fair value of such interest rate swaps in Note 29 “Financial Instruments and Related Disclosures” isincluded in that of hedged items such as debentures, borrowed money, corporate bonds, securities and loans.

186

Annual Report & CSR Report 2016

(2) Currency-related transactions
Millions of Yen
2016
Contract amountTranslated at contractual rates
Currency swaps
Forward foreign exchange
contracts

Total

Due after 1 year

¥282,773¥282,773*2

45,239—¥(149)———

Available-for-salesecurities

BoughtTotal——

Fair value

Financial Condition

Sold

Hedged item

Foreign-currency
debentures, Corporate
bonds and Borrowed money¥(149)

Millions of Yen
2015
Contract amountTranslated at contractual rates
Currency swaps
Forward foreign exchange
contracts
Sold

Hedged item

Total

Due after 1 year

Foreign-currency debentures
and Corporate bonds¥155,782¥151,855*2

51,065—¥1,787———Available-for-salesecurities

BoughtTotal——

Fair value¥1,787

Thousands of U.S. Dollars
2016
Contract amountTranslated at contractual rates
Currency swaps
Forward foreign exchange
contracts
Sold

Hedged item

Total

Due after 1 year

Fair value

Foreign-currency
debentures, Corporate
bonds and Borrowed money$2,509,531$2,509,531*2

401,485—$(1,327)———

Available-for-salesecurities

BoughtTotal——$(1,327)*1. Fair values are based primarily on discounted present values.
*2. The above currency swaps which qualify for the hedging requirements of assignment method are not subject to the disclosureof fair value information. In addition, the fair value of such foreign currency swaps in Note 29 “Financial Instruments andRelated Disclosures” is included in that of hedged items such as foreign-currency debentures, corporate bonds and borrowed
money.

(3) Equity-related transactions
Not applicable.
(4) Bond-related transactions
Not applicable.

Annual Report & CSR Report 2016187

31. Fair Value of Securities and Money Held in Trust
Fair value of securities, money held in trust and negotiable certificate of deposit classified as “Cash and due from banks” asof March 31, 2016 and 2015 is summarized below.
(a) Securities(1) Held-to-Maturity Debt Securities as of March 31, 2016 and 2015, are as follows:
Millions of Yen

2016

Fair value exceeds
carrying amount

Carrying amount

Fair value

Difference¥171,379¥183,334¥11,954———

Corporate bonds

269,860

274,714

4,853

Other

177,552

180,258

2,706

618,793

638,307

19,514———

Japanese government bonds
Japanese local government bonds

Sub-total
Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds

—

—

—

Corporate bonds

94,012

93,265

(746)

Other

91,24589,607(1,637)

Sub-total

185,257

182,873(2,383)

Total¥804,050¥821,180¥17,130

Millions of Yen

2015

Fair value exceeds
carrying amountJapanese government bonds
Japanese local government bonds
Corporate bonds
Other

Sub-total
Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds
Corporate bonds
Other
Sub-total
Total

Carrying amount

Fair value

Difference¥172,151—
308,070
306,557
786,779——
63,65465,255
128,909¥915,689¥182,880—
313,567
312,569
809,017——
63,35064,906
128,256¥937,274¥10,728
—
5,496
6,012
22,237
—
—
(303)
(349)
(652)
¥21,584

Thousands of U.S. Dollars

2016

Fair value exceeds
carrying amountJapanese government bonds
Japanese local government bonds
Corporate bonds
Other

Sub-total
Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds
Corporate bonds
Other
Sub-total
Total

Carrying amount

Fair value

Difference$1,520,943—
2,394,932
1,575,722
5,491,596——
834,327
809,773
1,644,100$7,135,696$1,627,037—
2,438,003
1,599,737
5,664,777——
827,702795,242
1,622,944$7,287,721$106,094—
43,07224,015
173,181——(6,625)(14,531)(21,156)$152,025

Note: Fair value is based on the closing price at the consolidated balance sheet date.

188

Annual Report & CSR Report 2016

(2) Available-for-sale Securities as of March 31, 2016 and 2015, are as follows:
Millions of Yen

2016

Carrying amountexceeds cost

Equities
Bonds
Japanese government bonds
Japanese local government bonds
Corporate bonds
Other

Sub-total
Total

Acquisition cost

Difference¥ 68,361
323,242
56,275—
266,967
6,069
397,674
13,393
8,581
—
—
8,581
35,00056,974¥454,648¥ 24,571
307,426
54,070—253,356
3,587
335,585
14,668
8,712
—
—
8,712
35,00058,381¥393,966¥43,790
15,816
2,205—
13,6102,482
62,089(1,275)
(131)
—
—
(131)
—
(1,407)¥60,681

Financial Condition

Sub-total
Carrying amount does
not exceed cost

Equities
Bonds
Japanese government bonds
Japanese local government bonds
Corporate bonds
Other

Carrying amount(Fair value)

Millions of Yen

2015

Carrying amountexceeds cost

Carrying amount(Fair value)

Acquisition cost

Difference

Equities¥106,846¥ 33,475¥ 73,371

Bonds

271,942

238,259

33,682

81,34780,160

1,186

—

—

—

190,595

158,099

32,496

6,485

3,810

2,674

385,273

275,545

109,728

Japanese government bonds
Japanese local government bonds
Corporate bonds
Other
Sub-total
Carrying amount does
not exceed cost

Equities

2,390

2,419

(29)

Bonds

30,47730,755(278)

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

30,47730,755(278)

72,02872,028—

Corporate bonds
Other
Sub-total

104,897

105,204

(307)

Total

¥490,171¥380,750¥109,421

Annual Report & CSR Report 2016189

Thousands of U.S. Dollars

2016

Carrying amountexceeds cost

Carrying amount(Fair value)

Acquisition cost

Difference

Equities$ 606,690$ 218,061$388,628

Bonds

2,868,681

2,728,318

140,363499,430

479,857

19,573———2,369,250

2,248,461

120,789

53,86531,83422,031

3,529,235

2,978,213

551,022Equities

118,859

130,183(11,324)

Bonds

76,15577,321(1,166)

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

76,15577,321(1,166)

310,614

310,614—

Japanese government bonds
Japanese local government bonds
Corporate bonds
Other
Sub-total
Carrying amount does
not exceed cost

Corporate bonds
Other
Sub-total
Total

505,628

518,118(12,490)$4,034,863$3,496,331$538,532

Note: Carrying amount above represents the fair values determined based on the closing price at the fiscal year-end.

(3) Available-for-sale Securities sold during the year ended March 31, 2016 and 2015, are as follows:
Millions of Yen

2016
Proceeds from sales

Total amount ofgains on sales

Total amount oflosses on sales

Equities¥ 67,916¥45,705¥

Bonds

106,641

3,332

376

82,364

2,957

57

—

—

—

Japanese government bonds
Japanese local government bonds
Corporate bonds

124,277

375

319

Other

3,518

376

0

Total

¥178,075¥49,414¥378

Millions of Yen

2015
Proceeds from sales

Total amount ofgains on sales

Equities¥36,599¥18,226

Bonds

20,203

94

1

—

—

—

—

—

—

20,203

94

1

Japanese government bonds
Japanese local government bonds
Corporate bonds

190

Total amount oflosses on sales

¥ 1

Other

2,579

1,354

—

Total

¥59,382¥19,675¥ 2

Annual Report & CSR Report 2016

Thousands of U.S. Dollars
2016
Proceeds from sales

Total amount ofgains on sales

Equities$ 602,737$405,620

Bonds

946,409

29,576

3,345

730,955

26,243

509

—

—

—

Japanese government bonds
Japanese local government bonds
Corporate bonds

Total amount oflosses on sales

$

17

3,333

2,835

31,221

3,346

0

Total

$1,580,368$438,542$3,361

Financial Condition

215,454

Other(b) Money Held in Trust(1) Money Held in Trust for the Purpose of Investment
Not applicable.
(2) Other (other than for the purpose of investment and held to maturity)
Millions of Yen

2016
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost¥17,786¥16,821

Net

Carrying amountexceeds cost

(Carrying amount
does not exceed
cost)

¥964

¥964

¥—

Millions of Yen

2015
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost¥54,853¥54,451

Net

Carrying amountexceeds cost

(Carrying amount
does not exceed
cost)

¥401

¥401

¥—

Thousands of U.S. Dollars

2016
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost$157,846$149,290

Net

Carrying amountexceeds cost

(Carrying amount
does not exceed
cost)$8,556$8,556$—(c) Unrealized Gain on Available-for-sale Securities
The breakdown of unrealized gain on available-for-sale securities is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

2015

2016

Available-for-sale securities¥ 69,550¥132,657$ 617,238

Other money held in trust

964

401

8,556

Deferred tax liabilities(20,395)(39,142)(181,008)

Unrealized gain on available-for-sale securities before interest
adjustments

50,11893,917444,787—(8,023)

—

4,956

(28)

43,984¥ 55,074¥ 85,865$ 488,771

Unrealized gain on

Amount corresponding to non-controlling interests
DBJ Inc.’s interest in net unrealized gain on available-for-salesecurities held by affiliates accounted for by the equity method
Unrealized gain on available-for-sale securities, net of taxes

Annual Report & CSR Report 2016191

*1. The loss of ¥4,010 million ($35,588 thousand) and the profit of ¥5,170 million recognized by applying the fair value hedge accounting,which was reflected in profit or loss, is deducted from above unrealized gain on available-for-sale securities, net of taxes, as of March
31, 2016 and 2015, respectively.
*2. Unrealized gain includes foreign currency translation adjustments on available-for-sale securities denominated in foreign currency
whose fair value cannot be reliably determined as of March 31, 2016 and 2015.

32. Related Party Transactions
Related party transactions for the years ended March 31, 2016 and 2015 are as follows:
2016
Transaction Amount
Related party

Finance
MinisterCategory

Description

Shareholder Receipt ofcontribution*1
Borrowings*2

Account item—

Millions of Yen¥

65,000

Balance at March 31, 2016

Thousands of
U.S. Dollars

Millions of Yen

Thousands of
U.S. Dollars

576,855——¥3,929,091$34,869,464$

300,000

2,662,407

437,328

3,881,152

Repayments

Borrowed
money

Payment forinterest

Accruedexpenses

39,961

354,643

12,688112,606

Guarantees*3—

2,937,092

26,065,782——

According to Article 2, item 5 of the Japan Finance Corporation Act, DBJ Inc. has borrowed ¥2,723,044 million ($24,166,170
thousand) from Japan Finance Corporation relating to the crisis response operations.
*1. Receipt of contribution is related to the special investment operations.
*2. DBJ Inc. has borrowed from the fiscal investment and loan program funds, and applied interest rates for fiscal investment and loan. The
last redemption period is October 20, 2035 without posting collateral.
*3. The guarantees are for debentures issued by DBJ Inc. free of guarantee charge.

2015
Related party

Finance
MinisterTransaction Amount

Balance at March 31, 2015
Millions of Yen

Category

Description

Account item

Millions of Yen

Shareholder

Borrowings*1

Borrowedmoney¥ 300,000

Repayments
Payment forinterest

Accruedexpenses

44,822

13,687

Guarantees*2—

2,895,482—¥4,066,419

447,275

According to Article 2, item 5 of the Japan Finance Corporation Act, DBJ Inc. has borrowed ¥3,286,500 million from Japan FinanceCorporation relating to the crisis response operations.
*1. DBJ Inc. has borrowed from the fiscal investment and loan program funds, and applied interest rates for fiscal investment and loan. The
last redemption period is October 20, 2034 without posting collateral.
*2. The guarantees are for debentures issued by DBJ Inc. free of guarantee charge.

33. Subsequent Event
On June 29, 2016, the shareholders approved the following appropriations of retained earnings. Subsequently, the timing
and amounts for dividends were authorized by the Finance Minister on June 30, 2016:
Appropriations of Retained earnings as of March 31, 2016

Year-end cash dividends-Common stock (¥671-$5.95 per share)

192

Annual Report & CSR Report 2016

Millions of Yen

Thousands of
U.S. Dollars¥29,277$259,827

Independent Auditor’s Report

Financial Condition

Annual Report & CSR Report 2016193

Non-Consolidated Balance Sheet (Unaudited)
Development Bank of Japan Inc.

Thousands of
U.S. Dollars (Note)

Millions of Yen

As of March 31,

2016

2015

2016

AssetsCash and due from banks
Call loans
Reverse repurchase agreements
Money held in trust¥

433,496—¥287,698
335,000$

3,847,145
—

—

5,299

—

16,03253,742

142,286

Securities

1,828,773

1,848,890

16,229,798

Loans

13,119,393

13,409,078

116,430,540

Other assets

172,215

138,722

1,528,358

Tangible fixed assets

113,291

114,863

1,005,425

Intangible fixed assets

6,883

5,279

61,089Prepaid pension costs

1,290

1,326

11,449Customers’ liabilities for acceptances and guarantees

180,124

167,482

1,598,553

Allowance for loan losses(61,907)(83,460)(549,407)

(594)

(525)

(5,279)¥15,808,999¥16,283,399$140,299,958

Allowance for investment losses
Total assets
Liabilities and equity
Liabilities:
Debentures¥ 3,221,870¥ 3,220,206$ 28,593,101

Borrowed money

7,840,720

8,566,219

69,583,955

Corporate bonds

1,501,288

1,341,602

13,323,466

Other liabilities

176,320

218,200

1,564,792

4,400

4,415

39,049Accrued bonuses to employees
Accrued bonuses to directors
Reserve for employees’ retirement benefits

11

11

105

6,544

6,601

58,080Reserve for directors’ retirement benefits

56

66

504

Reserve for contingent losses

16

12

143

Deferred tax liabilities

27,60339,175244,970

Acceptances and guarantees

180,124

167,482

1,598,553

12,958,957

13,563,994

115,006,719

Total liabilities
Equity:Common stock authorized, 160,000 thousand shares in 2016 and2015; issued, 43,632 thousand shares in 2016 and 2015

1,000,424

1,206,953

8,878,452

Crisis response reserve

206,529—

1,832,881

Special investment reserve

130,000—

1,153,710

Special investment surplus

618

—

5,491

Capital surplus

995,466

1,060,466

8,834,455

Retained earnings

429,751

335,018

3,813,914

Unrealized gain on available-for-sale securities

52,20684,749463,319

Deferred gain on derivatives under hedge accounting
Total equity
Total liabilities and equity

35,04532,217

311,018

2,850,042

2,719,404

25,293,239¥15,808,999¥16,283,399$140,299,958

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥112.68=$1.00, the effective
exchange rate prevailing as of March 31, 2016, has been used in the conversion.

194

Annual Report & CSR Report 2016

Non-Consolidated Statement of Income (Unaudited)
Development Bank of Japan Inc.

Thousands of
U.S. Dollars (Note)

Millions of Yen

For the year ended March 31,

2016

2015

2016

IncomeInterest income:¥216,972¥236,107$1,925,566Interest on loans

187,526

207,042

1,664,243

Interest and dividends on securities

20,748

189,937

82

149

735

Interest on reverse repurchase agreements

226

231

2,008

Interest on due from banks

43

46

387

7,549

7,720

66,997

141

167

1,259

10,333

8,091

91,707

Interest on swaps
Other interest income
Fees and commissions
Other operating income
Other income
Total income

9,526

14,01584,545

108,148

70,575

959,783

344,981

328,790

3,061,601

106,933

117,846

949,001

35,05636,488311,119

Financial Condition

21,402

Interest on call loans

Expenses
Interest expense:
Interest on debentures
Interest on call money and bills soldInterest on borrowed money
Interest on short-term corporate bonds
Interest on corporate bonds
Other interest expense
Fees and commissions

0

0

1

66,982

76,785594,447

202

12

1,799

4,623

4,497

41,030

68

62

606

391

662

3,474

8,296

10,751

73,628General and administrative expenses

42,40140,352376,298

Other expenses

12,66010,974112,359

Total expenses

170,683

180,588

1,514,760

Income before income taxes

174,298

148,202

1,546,841

50,84450,322451,233

Other operating expenses

Income taxes:
Current
Deferred
Total income taxes
Net income

5,587

7,798

49,58556,432

58,121

500,817¥117,865¥ 90,080$1,046,024

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥112.68=$1.00, the effective
exchange rate prevailing as of March 31, 2016, has been used in the conversion.

Annual Report & CSR Report 2016

195

Non-Consolidated Statement of Changes in Equity (Unaudited)
Development Bank of Japan Inc.

Millions of Yen

For the year ended March 31, 2016

Balance at beginning of year

Commonstock

Crisis response
reserve¥1,206,953¥

Special investment Special investment
reserve
surplus—¥Investment from government
Transfer from common stock to crisis response reserve—¥ —Capitalsurplus¥1,060,466

65,000(206,529)

206,529

Transfer account from capital surplus to special investment reserve

65,000(65,000)

Cash dividends
Net income
Transfer from retained earnings to special investment surplus

618

Net change during the year
Balance at end of year

¥1,000,424¥206,529¥130,000¥618¥ 995,466

Millions of Yen

For the year ended March 31, 2016

Balance at beginning of year

Retained earnings

Unrealized gain on
available-for-salesecurities

Deferred gain onderivatives underhedge accounting

Total equity¥335,018¥ 84,749¥32,217¥2,719,404

Investment from government

65,000Transfer from common stock to crisis response reserve
Transfer account from capital surplus to special investment reserve
Cash dividends(22,514)(22,514)

Net income

117,865

117,865

Transfer from retained earnings to special investment surplus(618)

Net change during the year
Balance at end of year

¥429,751(32,542)2,828(29,714)¥ 52,206¥35,045¥2,850,042

Millions of Yen

For the year ended March 31, 2015

Balance at beginning of year

Commonstock

Crisis response
reserve

Special investment Special investment
reserve
surplusCapitalsurplus¥1,206,953

¥—

¥—

¥—

¥1,060,466

1,206,953———

1,060,466¥1,206,953

¥—

¥—

¥—

¥1,060,466

Cumulative effects of changes in accounting policies
Restated balance
Cash dividends
Net income
Net change during the year
Balance at end of year

Millions of Yen

For the year ended March 31, 2015

Balance at beginning of year
Cumulative effects of changes in accounting policies

Retained earnings

Unrealized gain on
available-for-salesecurities

Deferred gain onderivatives underhedge accounting

Total equity¥275,716¥37,703¥29,243¥2,610,081

37,70329,243

2,610,10826
275,742

Cash dividends(30,804)(30,804)

Net income

90,08090,080Net change during the year
Balance at end of year

196

26

Restated balance

Annual Report & CSR Report 2016

¥335,018

47,046

2,973

50,020¥84,749¥32,217¥2,719,404

Thousands of U.S. Dollars (Note)

For the year ended March 31, 2016

Balance at beginning of year

Commonstock$10,711,333

Crisis response
reserve$

Special investment Special investment
reserve
surplus—$Investment from government
Transfer from common stock to crisis response reserve

—

$

—

Capitalsurplus$9,411,310

576,855(1,832,881)

1,832,881

Transfer account from capital surplus to special investment reserve

576,855(576,855)

Cash dividends
Net income
Transfer from retained earnings to special investment surplus

5,491

Net change during the year
$ 8,878,452$1,832,881$1,153,710$5,491$8,834,455

Financial Condition

Balance at end of year

Thousands of U.S. Dollars (Note)

For the year ended March 31, 2016

Balance at beginning of year

Retained earnings

Unrealized gain on
available-for-salesecurities

Deferred gain onderivatives underhedge accounting

Total equity$2,973,188$ 752,126$285,917$24,133,874

Investment from government

576,855

Transfer from common stock to crisis response reserve
Transfer account from capital surplus to special investment reserve
Cash dividends(199,807)(199,807)

Net income

1,046,024

1,046,024

Transfer from retained earnings to special investment surplus(5,491)

Net change during the year
Balance at end of year

$3,813,914(288,807)

25,101(263,706)$ 463,319$311,018$25,293,239

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥112.68=$1.00, the effective
exchange rate prevailing as of March 31, 2016, has been used in the conversion.

Annual Report & CSR Report 2016197

Capital Adequacy Ratio

Although DBJ is not yet subject to Article 14-2 of the Banking Act of Japan, capital adequacy ratios have been calculated inaccordance with “Criteria for Judging Whether a Financial Institution’s Own Capital Is Sufficient in Light of the Assets Held,etc. under the Provision of Article 14-2 of the Banking Act” (2006, Financial Services Agency Notification No. 19,
hereinafter, the “Capital Adequacy Ratio Notification”), and therefore effectively conform to this act.
(Reference)
In addition to the application of uniform international standards, credit risk assets were calculated using the standardized
approach, and equivalent operational risk was calculated using the basic indicator approach. The DBJ Group has not
introduced procedures in line with market risk regulations.

[1] Capital Structure Information
Capital Structure Information (Consolidated)(Millions of yen)March 31, 2016
Items

Common Equity Tier 1 capital: instruments andreserves
Directly issued qualifying common share capital plus
related capital surplus and retained earningsof which: common stock and capital surplusof which: retained earningsof which: treasury stockof which: planned distribution of incomeof which: other than the above
Rights to acquire new common shares
Accumulated other comprehensive income andother disclosed reserves
Adjusted non-controlling interests, etc. (amountallowed to be included in group Common Equity
Tier 1)
Total of items included in Common Equity Tier 1
capital: instruments and reserves subject totransitional arrangementsof which: items included in non-controlling interests,
etc. subject to transitional arrangements
Common Equity Tier 1 capital: instruments andreserves (A)Common Equity Tier 1 capital: regulatory
adjustments
Total intangible assets (excluding those relating tomortgage servicing rights)
of which: goodwill (including those equivalent)of which: other intangible assets other than goodwill
and mortgage servicing rights
Deferred tax assets that rely on future profitability
excluding those arising from temporary differences(net of related tax liability)
Deferred gains or losses on derivatives under hedge
accounting
Shortfall of eligible reserves to expected losses
Capital increase due to securitization transactions
Gains and losses due to changes in own credit risk onfair valued liabilities
Assets for retirement benefits
Investments in own shares (excluding those reported in
the Equity section)
Reciprocal cross-holdings in common equity

198

Annual Report & CSR Report 2016

March 31, 2015

Amounts
excluded undertransitionalarrangements

2,423,204
1,995,890
456,591—
29,277——391,137

Amounts
excluded undertransitionalarrangements

2,589,627
2,267,419
344,728—
22,520——35,992

48,312

24

24

1,316

1,838

1,316

1,838

2,815,681

2,639,803

Basel III
Template No.

1a+2-1c-26
1a
2
1c
26
1b
72,469

3

5

6

3,315
436

2,210
290

1,781
333

2,671
500

8+9
8

2,879

1,919

1,447

2,171

9

110

73

80

120

10

20,736——

13,824——

13,324——

19,987
—
—

11
12
13

—
1,009

—
672

—
676

— 14
1,014 15

—
—

—
—

—
—

— 16
— 17

(Millions of yen)March 31, 2016
Items

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

—

—

—

—

18

—

—

—

—

19+20+21

—
—

—
—

—
—

— 19
— 20

—

—

—

—

21

—

—

—

—

22

—
—

—
—

—
—

— 23
— 24

—

—

—

—

Financial Condition

Investments in the capital of banking, financial andinsurance entities that are outside the scope of
regulatory consolidation (“Other Financial
Institutions”), net of eligible short positions, where
the bank does not own more than 10% of the issued
share capital (amount above the 10% threshold)Amount exceeding the 10% threshold on specified
items
of which: significant investments in the common
stock of Other Financial Institutions, net of eligible
short positionsof which: mortgage servicing rightsof which: deferred tax assets arising from temporary
differences (net of related tax liability)
Amount exceeding the 15% threshold on specified
items
of which: significant investments in the common
stock of Other Financial Institutions, net of eligible
short positionsof which: mortgage servicing rightsof which: deferred tax assets arising from temporary
differences (net of related tax liability)
Regulatory adjustments applied to Common Equity
Tier 1 due to insufficient Additional Tier 1 andTier 2 to cover deductions
Common Equity Tier 1 capital: regulatory adjustments(B)
Common Equity Tier 1 capital (CET1)
Common Equity Tier 1 capital (CET1) ((A)-(B)) (C)Additional Tier 1 capital: instruments
Directly issued qualifying Additional Tier 1 instruments
plus related capital surplus of which: classified as
equity under applicable accounting standards andthe breakdown
Rights to acquire new shares in relation to Additional
Tier 1 instruments
Directly issued qualifying Additional Tier 1 instruments
plus related capital surplus of which: classified asliabilities under applicable accounting standards
Qualifying Additional Tier 1 instruments plus related
capital surplus issued by special purpose vehicles andother equivalent entities
Adjusted non-controlling interests, etc. (amountallowed to be included in group Additional Tier 1)
Eligible Tier 1 capital instruments subject to transitionalarrangements included in Additional Tier 1 capital:
instrumentsof which: instruments issued by banks and their
special purpose vehiclesof which: instruments issued by subsidiaries(excluding banks’ special purpose vehicles)

March 31, 2015

Amounts
excluded undertransitionalarrangements

25

—

—

27

25,172

15,86228

2,790,509

2,623,941

29

—

—

31a

—

—

31b

—

—

32

—

—

597

10,599

34-35

—

—

33+35

—

—

33

—

—

35

30

Annual Report & CSR Report 2016

199

(Millions of yen)March 31, 2016
Items

Total of items included in Additional Tier 1 capital:
items subject to transitional arrangementsof which: foreign currency translation adjustmentsof which: items included in non-controlling interests,
etc. subject to transitional arrangements
Additional Tier 1 capital: instruments (D)Additional Tier 1 capital: regulatory adjustments
Investments in own Additional Tier 1 instruments
Reciprocal cross-holdings in Additional Tier 1
instruments
Investments in the capital of banking, financial andinsurance entities that are outside the scope of
regulatory consolidation, net of eligible shortpositions, where the bank does not own more than
10% of the issued common share capital of the entity(amount above the 10% threshold)
Significant investments in the Additional Tier 1 capitalof Other Financial Institutions (net of eligible shortpositions)
Total of items included in Additional Tier 1 capital:
regulatory adjustments subject to transitionalarrangementsof which: goodwill
Regulatory adjustments applied to Additional Tier 1
due to insufficient Tier 2 to cover deductions
Additional Tier 1 capital: regulatory adjustments (E)Additional Tier 1 capital (AT1)
Additional Tier 1 capital ((D)-(E)) (F)Tier 1 capital (T1 = CET1 + AT1)
Tier 1 capital (T1 = CET1 + AT1) ((C)+(F)) (G)Tier 2 capital: instruments and reserves
Directly issued qualifying Tier 2 instruments plus related
capital surplus of which: classified as equity underapplicable accounting standards and its breakdown
Rights to acquire new shares in relation to Tier 2
instruments
Directly issued qualifying Tier 2 instruments plus related
capital surplus of which: classified as liabilities underapplicable accounting standards
Tier 2 instruments plus related capital surplus issued by
special purpose vehicles and other equivalent entities
Adjusted non-controlling interests, etc. (amountallowed to be included in group Tier 2)
Eligible Tier 2 capital instruments subject to transitionalarrangements included in Tier 2: instruments andreservesof which: instruments issued by banks and their
special purpose vehiclesof which: instruments issued by subsidiaries(excluding banks’ special purpose vehicles)
Total of general allowance for loan losses and eligible
reserves included in Tier 2of which: general allowance for loan lossesof which: eligible reserves

200

Annual Report & CSR Report 2016

March 31, 2015

Amounts
excluded undertransitionalarrangements

Amounts
excluded undertransitionalarrangements

384
171

1,269
970

213
982

299
11,869Basel III
Template No.

36

—

—

—

—

37

—

—

—

—

38

—

—

—

—

39

4

3

24

37

40

200
200

500
500

—
295

—
525

42
43

686

11,34344

2,791,197

2,635,285

45

—

—

—

—

—

—

—

—

141

157

48-49

—

—

47+49

—

—

47

—

—

49

38,49338,493—

46,58046,580
—

50
50a
50b

46

(Millions of yen)March 31, 2016
Items

Amounts
excluded undertransitionalarrangements

13,57535,905

13,57552,21035,90582,642

Basel III
Template No.

51

—
—

—
—

—
—

—
—

52
53

—

—

—

—

54

—

—

—

—

55

—
—

—
—

57

52,21082,64258

2,843,407

2,717,927

59

2,669

3,343

1,919

2,171

3

37

73
672
15,908,614

120
1,014
16,173,097

60

17.54%
17.54%
17.87%

16.22%
16.29%
16.80%

61
62
63

72,29182,005

72

1,221

966

73

—

—

74

2,332

1,890

75

Annual Report & CSR Report 2016

Financial Condition

Total of items included in Tier 2 capital: instruments
and reserves subject to transitional arrangementsof which: items included in accumulated othercomprehensive income, etc. subject to transitionalarrangements
Tier 2 capital: instruments and reserves (H)Tier 2 capital: regulatory adjustments
Investments in own Tier 2 instruments
Reciprocal cross-holdings in Tier 2 instruments
Non-significant Investments in the Tier 2 capital of
Other Financial Institutions, net of eligible shortpositions (amount above the 10% threshold)
Significant investments in the Tier 2 capital of Other
Financial Institutions (net of eligible short positions)
Total of items included in Tier 2 capital: regulatory
adjustments subject to transitional arrangements
Tier 2 capital: regulatory adjustments (I)Tier 2 capital (T2)
Tier 2 capital (T2) ((H)-(I)) (J)Total capital (TC = T1 + T2)
Total capital (TC = T1 + T2) ((G) + (J)) (K)Risk weighted assets
Total of items included in risk weighted assets subject
to transitional arrangementsof which: other intangible fixed assets other than
goodwill and mortgage servicing rightsof which, significant investments in the Additional
Tier 1 capital of Other Financial Institutions (net of
eligible short positions)of which: deferred tax assets that rely on future
profitability excluding those arising from temporary
differences (net of related tax liability)of which: net defined benefit assets
Risk weighted assets (L)Capital ratio (consolidated)
Common Equity Tier 1 risk-weighted capital ratio(consolidated) ((C)/(L))
Tier 1 risk-weighted capital ratio (consolidated) ((G)/(L))
Total risk-weighted capital ratio (consolidated) ((K)/(L))
Regulatory adjustments
Non-significant Investments in the capital of Other
Financial Institutions that are below the thresholds
for deduction (before risk weighting)Significant investments in the common stock of Other
Financial Institutions that are below the thresholds fordeduction (before risk weighting)Mortgage servicing rights that are below the thresholds
for deduction (before risk weighting)Deferred tax assets arising from temporary differencesthat are below the thresholds for deduction (before
risk weighting)March 31, 2015

Amounts
excluded undertransitionalarrangements

201

(Millions of yen)March 31, 2016
Items

Reserves included in Tier 2 capital: instruments
and reserves
General allowance for loan losses
Cap on inclusion of general allowance for loan losses
Eligible reserves for inclusion in Tier 2 in respect of
exposures subject to internal ratings-based approach(prior to application of cap)
Cap for inclusion of reserves in Tier 2 under internalratings-based approach
Capital instruments subject to transitionalarrangements
Current cap on Additional Tier 1 instruments subject totransitional arrangements
Amount excluded from Additional Tier 1 due to cap(excess over cap after redemptions and maturities)
Current cap on Tier 2 instruments subject totransitional arrangements
Amount excluded from Tier 2 due to cap (excess overcap after redemptions and maturities)

202

Annual Report & CSR Report 2016

March 31, 2015

Amounts
excluded undertransitionalarrangements

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

38,493
195,844

46,580199,133

76
77

—

—

78

—

—

79

—

—

82

—

—

83

—

—

84

—

—

85

Capital Structure Information (Non-Consolidated)(Millions of yen)March 31, 2016

March 31, 2015

Amounts
excluded undertransitionalarrangements

Items

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

Common Equity Tier 1 capital: instruments andreserves
Directly issued qualifying common share capital plus
related capital surplus and retained earnings

2,396,364

2,579,918

of which: common stock and capital surplus

1,995,890

2,267,419

1a

429,751

335,018

2of which: treasury stock

—

—

1c

29,27722,52026

of which: other than the above——

Rights to acquire new common shares——of which: planned distribution of income

Valuation and translation adjustment and otherdisclosed reserves

389,499

Total of items included in Common Equity Tier 1
capital: instruments and reserves subject totransitional arrangements——

Common Equity Tier 1 capital: instruments andreserves (A)2,785,863

2,626,704

34,90046,786

Financial Conditionof which: retained earnings

1a+2-1c-26

1b70,1793

6Common Equity Tier 1 capital: regulatory
adjustments
Total intangible assets (excluding those relating tomortgage servicing rights)

2,855

1,903

1,428

2,143

of which: goodwill (including those equivalent)

—

—

—

—

8

2,855

1,903

1,428

2,143

9

Deferred tax assets that rely on future profitability
excluding those arising from temporary differences(net of related tax liability)

—

—

—

—

10

Deferred gains or losses on derivatives under hedge
accountingof which: other intangible assets other than goodwill
and mortgage servicing rights

8+9

21,027

14,01812,886

19,330

11

Shortfall of eligible reserves to expected losses

—

—

—

—

12

Capital increase due to securitization transactions

—

—

—

—

13

Gains and losses due to changes in own credit risk onfair valued liabilities

—

—

—

—

14

Prepaid pension cost

535

356

356

534

15

Investments in own shares (excluding those reported in
the Equity section)

—

—

—

—

16

Reciprocal cross-holdings in common equity

—

—

—

—

17

Investments in the capital of banking, financial andinsurance entities that are outside the scope of
regulatory consolidation (“Other Financial
Institutions”), net of eligible short positions, where
the bank does not own more than 10% of the issued
share capital (“Non-significant Investment”) (amountabove the 10% threshold)

—

—

—

—

18

—

—

—

—

19+20+21

of which: mortgage servicing rights

—
—

—
—

—
—

— 19
— 20

of which: deferred tax assets arising from temporary
differences (net of related tax liability)

—

—

—

—

Amount exceeding the 10% threshold on specified
items
of which: significant investments in the common
stock of Other Financial Institutions, net of eligible
short positions

21

Annual Report & CSR Report 2016

203

(Millions of yen)March 31, 2016

March 31, 2015

Amounts
excluded undertransitionalarrangements

Items

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

Amount exceeding the 15% threshold on specified
items
of which: significant investments in the common
stock of Other Financial Institutions, net of eligible
short positionsof which: mortgage servicing rights

—

—

—

—

—
—

—
—

—
—

— 23
— 24

of which: deferred tax assets arising from temporary
differences (net of related tax liability)

—

—

—

—

Regulatory adjustments applied to Common Equity
Tier 1 due to insufficient Additional Tier 1 and Tier 2
to cover deductions

4

24

27

Common Equity Tier 1 capital: regulatory adjustments(B)

24,422

14,69728

2,761,441

2,612,007

29

Directly issued qualifying Additional Tier 1 instruments
plus related capital surplus of which: classified as
equity under applicable accounting standards andthe breakdown

—

—

31a

Rights to acquire new shares in relation to Additional
Tier 1 instruments

—

—

31b

Directly issued qualifying Additional Tier 1 instruments
plus related capital surplus of which: classified asliabilities under applicable accounting standards

—

—

32

—

—

Eligible Tier 1 capital instruments subject to transitionalarrangements included in Additional Tier 1 capital:
instruments——

Total of items included in Additional Tier 1 capital:
items subject to transitional arrangements——

Additional Tier 1 capital: instruments (D)

—

—

36

Investments in own Additional Tier 1 instruments

—

—

37

Reciprocal cross-holdings in Additional Tier 1
instruments

—

—

38

Investments in the capital of banking, financial andinsurance entities that are outside the scope of
regulatory consolidation, net of eligible shortpositions, where the bank does not own more than
10% of the issued common share capital of the entity(amount above the 10% threshold)

—

—

39

Significant investments in the Additional Tier 1 capitalof Other Financial Institutions (net of eligible shortpositions)4

Total of items included in Additional Tier 1 capital:
regulatory adjustments subject to transitionalarrangements——

Regulatory adjustments applied to Additional Tier 1
due to insufficient Tier 2 to cover deductions

—

—

42

Additional Tier 1 capital: regulatory adjustments (E)

4

24

43

22

25

Common Equity Tier 1 capital (CET1)
Common Equity Tier 1 capital (CET1) ((A)-(B)) (C)Additional Tier 1 capital: instruments

Qualifying Additional Tier 1 instruments plus related
capital surplus issued by special purpose vehicles andother equivalent entities

33+35

Additional Tier 1 capital: regulatory adjustments

204

Annual Report & CSR Report 2016

3

24

37

40

30

(Millions of yen)March 31, 2016

March 31, 2015

Amounts
excluded undertransitionalarrangements

Items

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

Additional Tier 1 capital (AT1)
Additional Tier 1 capital ((D)-(E)) (F)

—

—

44

2,761,441

2,612,007

45

Directly issued qualifying Tier 2 instruments plus related
capital surplus of which: classified as equity underapplicable accounting standards and its breakdown——

Rights to acquire new shares in relation to Tier 2
instruments——

Directly issued qualifying Tier 2 instruments plus related
capital surplus of which: classified as liabilities underapplicable accounting standards——

Tier 2 instruments plus related capital surplus issued by
special purpose vehicles and other equivalent entities——

Eligible Tier 2 capital instruments subject to transitionalarrangements included in Tier 2: instruments andreserves——

38,871

46,92350

38,871

46,92350a
50b

Tier 1 capital (T1 = CET1 + AT1)
Tier 1 capital (T1 = CET1 + AT1) ((C)+(F)) (G)Tier 2 capital: instruments and reservesof which: general allowance for loan losses——

Total of items included in Tier 2 capital: instruments
and reserves subject to transitional arrangementsof which: eligible reserves

13,22733,271of which: items included valuation and translation
adjustments, etc. subject to transitionalarrangements

13,22733,27152,09880,194Tier 2 capital: instruments and reserves (H)Financial Condition

Total of general allowance for loan losses and eligible
reserves included in Tier 2

46

47+49

51

Tier 2 capital: regulatory adjustments
Investments in own Tier 2 instruments

—

—

—

—

52

Reciprocal cross-holdings in Tier 2 instruments

—

—

—

—

53

Non-significant Investments in the Tier 2 capital of
Other Financial Institutions, net of eligible shortpositions (amount above the 10% threshold)

—

—

—

—

54

Significant investments in the Tier 2 capital of Other
Financial Institutions (net of eligible short positions)

—

—

—

—

55

Total of items included in Tier 2 capital: regulatory
adjustments subject to transitional arrangements——

Tier 2 capital: regulatory adjustments (I)

—

—

57

52,09880,19458

2,813,539

2,692,202

59

Tier 2 capital (T2)
Tier 2 capital (T2) ((H)-(I)) (J)Total capital (TC = T1 + T2)
Total capital (TC = T1 + T2) ((G) + (J)) (K)Annual Report & CSR Report 2016

205

(Millions of yen)March 31, 2016

March 31, 2015

Amounts
excluded undertransitionalarrangements

Items

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

Risk weighted assets
Total of items included in risk weighted assets subject
to transitional arrangements

2,263

2,715

of which: other intangible fixed assets other than
goodwill and mortgage servicing rights

1,903

2,143

of which: significant investments in the Additional
Tier 1 capital of Other Financial Institutions (net of
eligible short positions)

3

37

356

534

16,695,289

16,431,381

60

Common Equity Tier 1 risk-weighted capital ratio(consolidated) ((C)/(L))

16.54%

15.89%

61

Tier 1 risk-weighted capital ratio (non-consolidated)((G)/(L))

16.54%

15.89%

62

Total risk-weighted capital ratio (non-consolidated)((K)/(L))

16.85%

16.38%

63

Non-significant Investments in the capital of Other
Financial Institutions that are below the thresholds
for deduction (before risk weighting)

72,321

79,434

72

Significant investments in the common stock of Other
Financial Institutions that are below the thresholds
for deduction (before risk weighting)

394

348

73

Mortgage servicing rights that are below the thresholds
for deduction (before risk weighting)

—

—

74

Deferred tax assets arising from temporary differencesthat are below the thresholds for deduction (before
risk weighting)

2,124

1,707

75

General allowance for loan losses

38,871

46,92376

Cap on inclusion of general allowance for loan losses

205,678

202,355

77

Eligible reserves for inclusion in Tier 2 in respect of
exposures subject to internal ratings-based approach(prior to application of cap)

—

—

78

Cap for inclusion of reserves in Tier 2 under internalratings-based approach

—

—

79

Current cap on Additional Tier 1 instruments subject
to transitional arrangements

—

—

82

Amount excluded from Additional Tier 1 due to cap(excess over cap after redemptions and maturities)

—

—

83

Current cap on Tier 2 instruments subject totransitional arrangements

—

—

84

Amount excluded from Tier 2 due to cap (excess overcap after redemptions and maturities)

—

—

85

of which: prepaid pension cost
Risk weighted assets (L)Capital ratio (non-consolidated)

Regulatory adjustments

Reserves included in Tier 2 capital: instruments
and reserves

Capital instruments subject to transitionalarrangements

206

Annual Report & CSR Report 2016

[2] Qualitative Disclosure
1. Scope ofConsolidation

Company

Financial Condition(1) Differences and the reasons for those differences at companies included in the scope of
consolidation based on the regulation (Ministry of Finance Regulation No. 28, 1976)
related to the companies belonging to the group of companies included in the scope of
calculation of the consolidated capital adequacy ratio as provided in Article 3 of the
Notification (hereinafter, the “Consolidated Group”), and the language, format andpreparation method of their consolidated financial statements (hereinafter, the “Scope of
Accounting Consolidation”)
No differences.
(2) Within the Consolidated Group, the number of consolidated subsidiaries and the names
and main businesses of principal consolidated subsidiaries.
The number of consolidated subsidiaries as of March 31, 2016 is 25.
Principal consolidated subsidiaries
Principal Businesses

Japan Economic Research Institute Inc. Research, consulting and advisory services
Value Management Institute, Inc.

Research, consulting and advisory services

DBJ Securities Co., Ltd.

Securities business

DBJ Capital Co., Ltd.

Management of investment associations

DBJ Asset Management Co., Ltd.

Investment management, investment advisory
and agency services

DBJ Singapore Limited

Investment and loan support and advisory services

DBJ Europe Limited

Investment and loan support and advisory services

DBJ Investment Advisory Co., Ltd.

Investment advisory and agency services

DBJ Real Estate Co., Ltd.

Real estate leasing

DBJ Investment Consulting (Beijing)Co., Ltd.

Investment and loan support and advisory services(3) Number of affiliated companies that conduct financial business to which Article 9 of the
Notification applies, the names of affiliated companies conducting such related financial
business and their primary businesses
Not applicable.
(4) Companies that belong to the Consolidated Group but are not included in the Scope of
Accounting Consolidation and companies that do not belong to the Consolidated Groupbut are included in the Scope of Accounting Consolidation, as well as the amount of total
assets and net assets on their balance sheets, and their primary businesses
Not applicable.
(5) Overview of limitations related to the transfer of funds or capital within the ConsolidatedGroup
Not applicable.
2. Overview of Methods
for Evaluating the
Degree of Capital
Adequacy

Regarding the degree of capital adequacy, DBJ quantifies credit risk, investment risk, interest raterisk and operational risk, compares the total risk amount with total capital and measures the capitalsurplus. This surplus enables DBJ to respond to unquantifiable risks and unforeseen events, decide
whether to take new financing risks and establish the operating directions.

3. Credit Risk(a) Overview of Risk Management Policies and Procedures
Credit risk refers to the risk of loss to DBJ resulting from the decline in or disappearance of thevalue of credit assets, owing to the worsening credit standing of clients for loans or debt
guarantees. These risks include expected losses (EL), or losses that on average can be expected
to occur within a certain measurement period; and unexpected losses (UL), which go extend
beyond the boundaries of losses that, on average, are expected within a period of time. DBJ
periodically compares UL and capital to measure the amount of capital in surplus.
(b) Rating Agencies Eligible to Weight Risks
The rating agencies that DBJ uses for weighting risk are among the four that the FSA has
named eligible to perform such weighting. Eligible rating agencies are not selected according totype of exposure.
The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating
Agency, Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

Annual Report & CSR Report 2016

207

208

4. Overview of Risk
Management Policies
and Procedures for
Reducing Credit Risk

DBJ obtains collateral or guarantees as necessary based on changes in the borrower’s
creditworthiness. If required, the effectiveness of collateral is determined from the perspective of
the amount certain to be recovered based on a reasonable evaluation of the collateral.
In principal, collateral valuation is performed by the Credit Analysis Department, based on therequest of investment and loan departments/offices. Investment and loan departments/offices andthe Credit Analysis Department manage credit risk based on valuation results. In principle, thevaluation of all collateral property is reviewed once or twice each year to ensure DBJ is aware of thecurrent status of its collateral property.

5. Overview of Risk
Management Policies
and Procedures
Related to Risk
Involving Counterparties in Derivative
Product Transactions
and Transactions withLong Settlement
Periods

DBJ regularly refers to the ratings and credit amounts of transaction counterparties to determine
the advisability of entering a transaction or to understand the risks of existing transactions.

6. Securitization
Exposure(a) Overview of Risk Management Policies and Risk Characteristics
Excluding credit derivatives, the majority of DBJ’s securitization exposure falls into the categoryof specialised lending (Item 47, Article 1, of the Capital Adequacy Ratio Notification) employing
internal rating methods. Different from the internal ratings that are applied to standard
corporate credit, this exposure is given a rating by using a grading system applied to match thecharacteristics of specialised lending. DBJ conducts risk management in line with changes inrating level. In addition to rating its exposure when making new acquisitions, DBJ reviews theseratings periodically.
DBJ’s involvement in securitized and resecuritized transactions is typically that of an investor,and in principle the exposure acquired through such transactions continues until the
instrument’s maturity.
(b) Overview of status of implementation and operation of systems stipulated in Article
249, Paragraph 4, Items 3-6, of the Capital Adequacy Ratio Notification (including
application with modifications in Capital Adequacy Ratio Notification Article 254,
Paragraph 2, and Article 302-4, Item 1)
DBJ has created the systems necessary for operating within its credit risk management framework.
Specifically, as one aspect of our credit risk management, our sales department endeavors toappropriately collect information related to comprehensive risk characteristics and performance,
and DBJ monitors conditions to determine any changes in the borrower’s creditworthiness.
Related information is also provided to the credit analysis department, which may revise
borrower ratings or make other adjustments on the basis of this related information as necessary.
(c) Methods Used to Calculate Credit Risk Asset Amount of Securitization Exposure
DBJ employs the standardized approach for these calculations.
(d) Method of Accounting for Securitized Transactions
DBJ’s involvement in securitized transactions is that of an investor. DBJ adequately accounts forthese transactions in accordance with the ”Accounting Standard for Financial Instruments.”(e) Rating Agencies Eligible to Weight Risks by Type of Securitization Exposure
The rating agencies that DBJ uses for weighting risk are among the four that the FSA has
named eligible to perform such weighting. Eligible rating agencies are not selected according totype of securitization exposure.
The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating
Agency, Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

Annual Report & CSR Report 2016

DBJ includes in its calculation method no market risk equivalent amount.

8. Operational risk(a) Overview of Risk Management Policies and Procedures
DBJ defines operational risk as the risk of loss arising from internal processes, the activities ofofficers and employees or systems that are inappropriate or non-functioning, or from extrinsic
events.
DBJ establishes its management structure and basic risk management policy pertaining tomanagement methods after considering the wide range of operational risks that it potentiallyfaces, such as operational risk, systems risk, legal risk, human risk, tangible asset risk andreputational risk.
DBJ designates operational risk officers at each of its offices. These personnel are charged
with establishing data collection procedures, understanding risks and creating risk databases.
In line with the increasing advancement and diversity of the financial business, DBJ
addresses various operational risks by establishing or improving management methods andpreparations to appropriately identify, evaluate, measure, monitor and control these risks.
(b) Method Used to Calculate Operational Risk Equivalent AmountDBJ uses the basic indicator approach to calculate this risk.

9. Overview of Risk
Management Policies
and Procedures
Regarding Exposure
to Shares and Other
Equity Investments
and Capital Injections
into the Banking Book

DBJ defines investment risk as its risk of sustaining a partial or total loss on the economic value of
assets (including off-balance-sheet assets), owing to such factors as the worsening of an investee’s
financial conditions or to fluctuations in the market environment. For newly acquired exposure, DBJ
considers the balance between investment risk and potential return in each field of investment.
Thereafter, DBJ regularly conducts performance evaluations on its exposure.

10. Interest Rate Risk on
the Banking Book(a) Overview of Risk Management Policies and Procedures
Long-term, fixed-rate loans make up the majority of the DBJ’s lending, and DBJ seeks to reduce
its interest rate risk by raising funds featuring similarly long-term, fixed rates. DBJ also employs
the value at risk (VaR) and Basis Point Value (BPV) to compute various risks from the standpointof their economic value.
DBJ regularly compares VaR and 200 BPV against capital to ensure that interest rate risk
remains within a specified range of capital.
(b) Overview of Methods for Calculating Interest Rate Risk Used by the Bank for Internal
Control of the Banking Book
DBJ calculates interest rate risk based on the following method.
(i) VaR: Use a historical method of measurement with a one-year holding period, a five-yeartime horizon and a 99.9% confidence level(ii) Measure interest rate fluctuations in the 1st percentile and 99th percentile, using a one-year
holding period and a five-year time horizon(iii) 200 BPV: Use a 2% parallel shift in a standardized interest rate shock to measure thechange in economic value

Annual Report & CSR Report 2016

Financial Condition

7. Market Risk

209

[3] Quantitative Disclosure
Quantitative Disclosure (Consolidated)
1. Items Related to Credit Risk (Excluding Securitization Exposure)(a) Fiscal year-end credit risk exposure and breakdown by principal categories
Loans
Equities, funds(Millions of yen)March 31, 2016

March 31, 2015

¥12,439,266¥12,513,935

599,297584,878

Central counterparty clearing house

15,712

12,808Commitments and customers’ liabilities for acceptances and guarantees

450,976

518,192

Bonds (JGBs and corporate bonds, etc.)

850,148

1,071,870

Reverse repurchase agreement/call loan

7,962

394,043

Other

1,122,837

935,649

Total¥15,486,201¥16,031,378(b) Fiscal year-end credit risk exposure, broken down as follows:(1) By region(Millions of yen)March 31, 2016

March 31, 2015

Domestic total¥15,476,856¥16,024,252

Overseas total

9,345

7,126

March 31, 2016

March 31, 2015

¥ 3,184,409¥ 3,414,170

Agriculture and forestry

184

1,014

Fisheries

350

500

Note: ”Overseas” refers to overseas consolidated subsidiaries. DBJ has no overseas branches.

(2) Breakdown by industry and transaction counterparty
Manufacturing

Mining, quarrying and gravel extraction

79,711

68,710Construction

54,94960,527

3,586,791

3,507,215

427,900

468,917

Electrical, gas, heat supply and water
Information and communications
Transportation and postal

2,418,207

2,589,470

Wholesale and retail988,276

1,048,632

Finance and insurance

1,608,972

2,024,675

Real estate and leasing of goods

2,098,076

1,892,500

320,266

322,315Services

210(Millions of yen)

Municipal government

16,645

16,405

Other

701,458

616,320

Total¥15,486,201¥16,031,378

Annual Report & CSR Report 2016

(3) Breakdown by period to maturity(Millions of yen)March 31, 2016

March 31, 2015

Five years or less

¥7,504,681¥7,972,828

More than five years, up to 10

4,619,964

4,536,950

More than 10 years, up to 15

1,703,740

1,751,721

More than 15 years

630,494855,797

No maturity date

1,027,321

914,080(c) Breakdown of exposure by risk weight (after accounting for credit risk mitigations)
March 31, 2016

March 31, 2015

¥ 564,565¥ 532,466

Risk weight 10%

6,185

11,411

Risk weight 20%

1,265,891

1,845,956

Risk weight 50%

6,424,898

6,569,284

Risk weight 100%

7,065,556

6,946,420

Risk weight 150%

40,43913,836

Risk weight 250%

6,490

6,439

Risk weight 1,250%

2,242

1,888

Other

79,44868,294

Financial Condition

Risk weight 0%(Millions of yen)

2. Securitization Exposure(a) Securitization exposure in which the Consolidated Group is the originator
Not applicable.
(b) Securitization exposure in which the Consolidated Group is an investor(1) Retained securitization exposure amount and breakdown by major underlying asset type
Structured finance(Millions of yen)March 31, 2016

March 31, 2015

¥1,007,271¥957,747

—

—

7,328

16,904

5,454

10,514

211,724

223,706——

Of which, resecuritization exposure
Credit derivatives
Of which, resecuritization exposure
Funds*Of which, resecuritization exposure* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

(2) Balance of retained securitization exposure by risk weight and required capital amounts(Millions of yen)March 31, 2016

March 31, 2015

¥ 76,766¥ 70,576

Risk weight0%

Balance

Risk weight

20%

Balance
Capital requirement

1,198

1,118

Risk weight

50%

Balance

44,94529,243

Capital requirement

1,797

1,169

Balance

681,563

670,599

Capital requirement

54,52553,647

Capital requirement

Risk weight
Risk weight
Risk weight100%
1,250%
Other*

0074,90569,875

Balance

322,615

347,169

Capital requirement322,615

347,169

Balance

20,073378

Capital requirement

6,334

63

* Applying to exposure the transitional arrangements indicated in Article 15 of the Supplementary Provisions to the Capital Adequacy Ratio Notification.

Annual Report & CSR Report 2016211

Resecuritization exposure(Millions of yen)March 31, 2016

Risk weight

40%

Balance
Capital requirement

March 31, 2015

¥5,454¥10,514174336(3) A 1,250% risk weight is applied to the breakdown of securitization exposure amounts in accordance with Article 247 of
the Capital Adequacy Ratio Notification(Millions of yen)March 31, 2016

March 31, 2015

Structured finance¥111,401¥123,850

Funds*

211,214223,328* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

(4) Breakdown of retained resecuritization exposure by application of techniques to mitigate credit risks and guarantors, or byrisk weighting applied to guarantors.
Not applicable.
(5) Amount of credit risk assets calculated with application of Article 15 of the Supplementary Provisions to the Capital
Adequacy Ratio Notification(Millions of yen)March 31, 2016

Credit risk assets¥—

March 31, 2015¥—

3. Interest Rate Risk in the Banking Book
Decrease in economic value resulting from interest rate shock

212

Annual Report & CSR Report 2016

March 31, 2016

March 31, 2015

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a oneyear holding period anda five-year time horizon:¥10.1 billion

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a oneyear holding period anda five-year time horizon:¥13.9 billion

Composition of Leverage Ratio Disclosure (Consolidated)
Item(Millions of yen)March 31, 2016

March 31, 2015

Corresponding Line No.
on Basel III Disclosure Template
Table 2On-balance sheet exposures (1)On-balance sheet exposures before deducting adjustments items
Total assets reported in the consolidated balance sheet

15,645,193

16,126,048

1

15,907,180

16,360,608

1a

1

—

—

1b

2

—

—

1c

7

261,986
4,731
15,640,462

234,560
3,063
16,122,985

1d
2
3

3
7

118,524
49,676

181,079
60,6454
513,873

937

—

—

6

—

—

7

—
13,828—20,4048
9—
195,903—
263,067

10
11

4

—
—
—
—
—

5,299
—
0
—
5,300

12
13
14
15
16

5

1,163,033

1,041,229

17

332,330
830,702

290,874
750,35418
192,791,197
16,667,068
16.74%

2,635,285
17,141,706
15.37%

20
21
22

Financial Condition

The amount of assets of subsidiaries that are not included in thescope of the leverage ratio on a consolidated basis (-)
The amount of assets of subsidiaries that are included in thescope of the leverage ratio on a consolidated basis (except
those included in the total assets reported in the consolidatedbalance sheet)
The amount of assets that are deducted from the total assets
reported in the consolidated balance sheet (except adjustment
items) (-)
The amount of adjustment items pertaining to Tier1 capital (-)
Total on-balance sheet exposures(a)
Exposures related to derivatives transactions (2)Replacement cost associated with derivatives transactions, etc.
Add-on amount associated with derivatives transactions, etc.
The amount of receivables arising from providing cash margin in
relation to derivatives transactions, etc.
The amount of receivables arising from providing cash margin,
provided where deducted from the consolidated balance sheet
pursuant to the operative accounting framework
The amount of deductions of receivables (out of those arisingfrom providing cash variation margin) (-)
The amount of client-cleared trade exposures for which a bankor bank holding company acting as clearing member is not
obliged to make any indemnification (-)
Adjusted effective notional amount of written credit derivatives
The amount of deductions from effective notional amount of
written credit derivatives (-)
Total exposures related to derivative transactions(b)
Exposures related to repo transactions (3)The amount of assets related to repo transactions, etc.
The amount of deductions from the assets above (line 12) (-)
The exposures for counterparty credit risk for repo transactions, etc.
The exposures for agent repo transactions
Total exposures related to repo transactions, etc.
(c)
Exposures related to off-balance sheet transactions (4)Notional amount of off-balance sheet transactions
The amount of adjustments for conversion in relation to offbalance sheet transactions (-)
Total exposures related to off-balance sheet transactions(d)Leverage ratio on a consolidated basis (5)The amount of capital (Tier1 capital)(e)
Total exposures ((a)+(b)+(c)+(d))(f)
Leverage ratio on a consolidated basis ((e)/(f))

Table 1

6

8

Annual Report & CSR Report 2016213

Quantitative Disclosure (Non-Consolidated)
1. Items Related to Capital Adequacy Level(a) Capital requirement to total credit risk
(1) Exposure by portfolio to which standardized method applied(i) Japanese government and regional municipal bodies(Millions of yen)March 31, 2016

March 31, 2015

¥1,316,522¥1,295,076

859,308

868,388——(ii) Exposure to financial institutions

14,534

21,198(iii) Exposure to corporations

775,437

778,030(iv) Equity exposure

57,61557,445(v) Other exposure

11,721

11,713448,372

416,047(2) Securitization risk exposure(3) Central counterparty clearing house(4) Capital requirement to credit valuation adjustment (CVA) risk(b) Capital requirement to market risk(c) Capital requirement to operational risk(d) Non-consolidated total capital requirement ((a) + (b) + (c))

25

20

8,817

10,620——19,10019,434

1,335,622

1,314,510

2. Items Related to Credit Risk (Excluding Securitization Exposure)(a) Fiscal year-end credit risk exposure and breakdown by principal categories(Millions of yen)March 31, 2016

March 31, 2015

¥12,662,784¥12,715,642

Equities, funds

657,256

654,084

Central counterparty clearing house

15,712

12,808Commitments and customers’ liabilities for acceptances and guarantees

453,128

521,833

Bonds (JGBs and corporate bonds, etc.)

850,148

1,071,828

Reverse repurchase agreement/call loan

7,962

394,043

Other

831,624

747,151

Total¥15,478,616¥16,117,392

Loans(b) Fiscal year-end credit risk exposure, broken down as follows:(1) By region(Millions of yen)March 31, 2016

March 31, 2015

Domestic total¥15,478,616¥16,117,392

Overseas total——

Note: DBJ has no overseas branches.

(2) Breakdown by industry and transaction counterparty
Manufacturing

March 31, 2016

March 31, 2015

¥ 3,184,409¥ 3,414,170

Agriculture and forestry

184

1,014

Fisheries

350

500

Mining, quarrying and gravel extraction

79,711

68,710Construction

54,94960,527

3,586,791

3,507,215

Electrical, gas, heat supply and water
Information and communications

427,900

468,917

2,418,207

2,589,470

Wholesale and retail988,276

1,048,632

Finance and insurance

1,834,706

2,242,843

Real estate and leasing of goods

2,174,852

1,969,613

321,379

323,428

Transportation and postal

Services

214(Millions of yen)

Municipal government

16,645

16,405

Other390,250

405,940

Total¥15,478,616¥16,117,392

Annual Report & CSR Report 2016

(3) Breakdown by period to maturity(Millions of yen)March 31, 2016

March 31, 2015

Five years or less

¥7,646,767¥8,066,411

More than five years, up to 10

4,674,053

4,614,243

More than 10 years, up to 15

1,703,740

1,751,721

More than 15 years

635,901

864,197

No maturity date

818,154820,817(c) Breakdown of exposure by risk weight (after accounting for credit risk mitigations)(Millions of yen)March 31, 2015

Risk weight 0%¥ 564,565¥ 532,466

Risk weight 10%

6,185

11,411

Risk weight 20%

1,237,802

1,815,834

Risk weight 50%

6,424,898

6,569,284

Risk weight 100%

7,078,666

7,051,069

Risk weight 150%

40,43913,836

Risk weight 250%

5,455

5,638

Risk weight 1,250%

2,242

1,888

Other

89,60969,4293. Items Related to the Effect of Credit Risk Mitigations
Exposure to Items to Which Effect of Credit Risk Mitigations Applied

Financial Condition

March 31, 2016

(Millions of yen)March 31, 2016

Eligible financial collaterals¥

Guarantees or credit derivatives

1,002,656—

March 31, 2015

¥

5,299

1,016,328

4. Transaction Counterparties’ Risk on Derivative Product Transactions and Transactions with Long Settlement Periods(Millions of yen)

Equivalent credit calculation method
Gross restructuring cost

March 31, 2016

March 31, 2015

Current exposure
methodCurrent exposure
method¥175,991¥246,921

59,79972,790Interest rate transactions

28,49635,496

Foreign exchange transactions

30,95437,071Credit derivative transactions

325

175

Gross add-on, by transaction type24

48

Reducing credit equivalent amounts through netting

73,02880,322Net equivalent credit

162,762

239,389

Net restructuring cost
Notional amounts of credit derivatives forcalculated credit equivalent amount by type ofCredit default swaps provisioncredit derivative, by protection purchase or provision

118,206

180,678

13,82920,404Credit default swaps purchase

6,500

3,500

—

—

Other commodity transactions

Notional amounts of credit derivatives taking
into account credit risk mitigations

Notes: 1. Collateral is not used to reduce credit risk on derivative product transactions.
2. Credit derivatives used to compute the credit equivalent amount are included in securitization exposure; there is some data overlap withsecuritization exposure indicated elsewhere and what are known as single-name CDS offerings include the measurement of customers’ liabilities
for acceptances and guarantees as consisting of the legal and other exposure of the company in question.

Annual Report & CSR Report 2016

215

5. Securitization Exposure(a) Securitization exposure in which DBJ is the originator
Not applicable.
(b) Securitization exposure in which DBJ is an investor(1) Retained securitization exposure amount and breakdown by major underlying asset type
Structured finance(Millions of yen)March 31, 2016

March 31, 2015

¥1,139,376¥1,011,991

—

—

7,328

16,904

Of which, resecuritization exposure
Credit derivatives
Of which, resecuritization exposure
Funds*Of which, resecuritization exposure

5,454

10,514

211,454

201,028——* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

(2) Balance of retained securitization exposure by risk weight and required capital amounts(Millions of yen)March 31, 2016

March 31, 2015

¥ 76,766¥ 70,576

Risk weight0%

Balance

Risk weight

20%

Balance
Capital requirement

1,198

1,118

Risk weight

50%

Balance

44,94529,243

1,797

1,169

Risk weight

100%

Balance

757,074

694,066

Capital requirement60,56555,525

Capital requirement

Capital requirement

Risk weight
Risk weight

1,250%
Other*——

74,90569,875

Balance369,500

341,992

Capital requirement369,500

341,992

Balance

29,512

13,654

Capital requirement

15,135

15,905* Applying to exposure the transitional measures indicated in Article 15 of the Supplementary Provision to the Capital Adequacy Ratio Notification.

Resecuritization exposure(Millions of yen)March 31, 2016

Risk weight

40%

Balance
Capital requirement

March 31, 2015

¥5,454¥10,514174336(3) A 1,250% risk weight is applied to the breakdown of securitization exposure amounts in accordance with Article 247 of
the Capital Adequacy Ratio Notification(Millions of yen)March 31, 2016

March 31, 2015

Structured finance¥167,995¥154,641

Funds*

201,505

187,373* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

(4) Breakdown of retained resecuritization exposure by application of techniques to mitigate credit risks and guarantors, or byrisk weighting applied to guarantors.
Not applicable.

216

Annual Report & CSR Report 2016

6. Items Related to Market Risk
DBJ falls into the category indicated in Article 16 of the Capital Adequacy Ratio Notification. Consequently, calculation of themarket risk equivalent amount was not performed.
7. Items Related to Shares and Other Equity Investments and Capital Injections into the Banking Book(a) Market value of below-listed items as included within categories in
the non-consolidated balance sheets
Exposure to listed shares
Exposure to other equity investments and capital injections(Millions of yen)March 31, 2015

¥ 84,369¥109,519

575,946

547,155

45,787

12,353

1,797

4,776

52,20684,749(b) Gains or losses on the sale of equity investments or shares
Gain or loss on write-off of equity exposure(c) Gains or losses from valuation recognized on the non-consolidated balance sheets
but not recognized on the non-consolidated statement of income

Financial Condition

March 31, 2016

Notes: 1. DBJ has no gains or losses from valuation unrecognized on the non-consolidated balance sheets or the non-consolidated statement of income.
2. DBJ has no exposure to shares to which Article 13 of the Supplementary Provisions to the Capital Adequacy Ratio Notification applies.

8. Exposure Applied for the Deemed Calculation of Credit Risk Assets
Not applicable.
9. Interest Rate Risk in the Banking Book
Decrease in economic value resulting from interest rate shock

March 31, 2016

March 31, 2015

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a
one-year holding period
and a five-year time
horizon:¥10.1 billion

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a
one-year holding period
and a five-year time
horizon:¥13.9 billion

Annual Report & CSR Report 2016

217

218

Annual Report & CSR Report 2016

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Development Bank of Japan Inc.
Published in September 2016 by the Public Relations & Corporate Social Responsibility Office,Corporate Planning & Coodination Department
URL: http://www.dbj.jp/en

16/09/13 13:13

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Annual Report & CSR Report

http://www.dbj.jp/en
Development Bank of Japan Inc.
South Tower, Otemachi Financial City,
9-6, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8178, Japan2016
Development Bank of Japan Inc.

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