About corporate support carried out by local banks and the rough waves of reorganization

We are strengthening the movement to support each regional economy under the jurisdiction of regional banks.

For example, Gunma Bank will create a 6 billion yen fund to support the business revitalization of local companies. There is also a movement in which nine regional banks from Hokkaido to Kyushu work together to revitalize the region.

Such movements of regional banks are reliable in regions where the economy is exhausted, but the background to this is the harsh business conditions of the regional banks themselves.

In this article, we will introduce the rough waves of reorganization along with the activities of regional banks.

How do local banks support the local economy?

Introducing the efforts of regional banks to revitalize local areas.

Gunma Bank establishes support fund of up to 6 billion yen including measures against corona

In February 2021, Gunma Bank announced that it would establish a “Gunma Regional Co-creation Fund” to support local companies with a maximum scale of 6 billion yen (* 1, 2).

The target of support is medium-sized enterprises, small and medium-sized enterprises, venture companies, etc. in Gunma prefecture. The main purpose of using the funds is to revitalize the business, but it is also used for business succession. The Gunma Bank aims to establish the fund in order to maintain local industry, technology and employment. The fund also has implications for combating the new coronavirus.

The Gunma Bank has invested 100 million yen to establish a subsidiary specializing in investment, “Gunma Regional Co-creation Partners,” which will launch three funds. Initially, we will set up an investment limit of 3 billion yen, and when the money is used up, we will launch an additional 3 billion yen fund. Therefore, the total amount of support will be 6 billion yen.

The support method is to buy the stock of the target company or lend a subordinated loan. Companies that borrow subordinated loans can capitalize part of their debt.

In addition to financial support, we will actively commit to management by dispatching management personnel to target companies and providing consulting services.

(※1) new fund of Gunma Bank, 5 6.0 billion in the years after the prospect composition
(※2)investment frame setting founded 30 years put the investment company to Gunma Bank small and medium-sized support

Supporting regions with a cross-regional regional banking alliance

It is not surprising that local banks support the local economy. Three-quarters of Japanese banks are regional banks, and there are so many regional financial institutions because they have the purpose of meeting the financial needs of local businesses and individuals (* 3).

Therefore, local banks have a long history of local support.

Hokkaido Bank, 77 Bank (Miyagi Prefecture), Chiba Bank, Hachijuni Bank (Nagano Prefecture), Shizuoka Bank, Kyoto Bank, Hiroshima Bank, Iyo Bank (Ehime Prefecture), Fukuoka Bank The “Regeneration / Activation Network” was formed in 2014 (* 4).

This nine-bank collaboration, which runs through Japan from Hokkaido to Kyushu, has the purpose of smoothly promoting business expansion and management stabilization of local companies.

For example, if a Hokkaido company expands into Kyushu, the company may be able to obtain loans from both the Hokkaido Bank and the Bank of Fukuoka. If you gather 9 banks, you will be able to build a network that is comparable to Mega Bank, which covers the whole of Japan, so the support system will be enhanced both qualitatively and quantitatively (* 4).

The government is also welcoming these movements, and in 2020, the Organization for Small & Medium Enterprises and Regional Innovation, which is under the jurisdiction of the Ministry of Economy, Trade and Industry, will launch a fund aimed at revitalizing small and medium-sized enterprises together with 12 regional banks. Announced (* 5). The total amount of support will be 19.1 billion yen.

(※3)Current status and issues of regional banks
(※4)Nine regional banks collaborate in regional revitalization Overseas loans such as Fukuoka Bank
(※5)12 regional banks, revitalization fund Small and medium-sized organizations and scale of 19 billion yen

The country teams up with local financial institutions on four measures

The Ministry of Economy, Trade and Industry has created a “Collaboration Program with Regional Financial Institutions” and is strengthening the framework for supporting small and medium-sized enterprises in the region by forming a tag between the Ministry and local financial institutions such as regional banks (* 6).

Bring the following four measures by bringing together 1) policy measures of the Ministry of Economy, Trade and Industry, 2) networks with local governments, 3) community-based sales networks of local financial institutions, 4) corporate networks, and 5) consulting functions. We will promote.

  • Promotion of accompanying support to equip companies with earning power
  • Promote sustainable management that strengthens both financial and non-financial factors
  • Promotion of digitalization with a view to converting to a new business model
  • Promotion of business succession support for companies without successors

(※6)Collaboration program with regional financial institutions 2020

Movement of reorganization of regional banks

Local banks focus on supporting local companies not only because of their core business, but also because they themselves survive.

There is a recognition that there are too many regional banks in the country, and reorganization is inevitable (* 7). A reorganization is when two or more regional banks stick together, for example by a merger, and it may be up to now whether or not your bank can take the initiative.

(※7)Are there too many regional banks? ~ Whereabouts of regional bank reorganization ~

Why do regional banks have to be reorganized?

The total number of regional banks, including the 1st and 2nd regional banks, is 102, which has decreased by only 20{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} in the last 30 years. “Shika” means that the number of city banks has decreased from 13 before the bubble to the current four banks of Mitsubishi UFJ, Sumitomo Mitsui, Mizuho, ​​and Resona, and the rate of decrease is 69{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}.

Moreover, the management of regional banks is becoming more difficult, and the total net income of all 102 regional banks in the fiscal year ended March 2020 was down 10{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} from the previous year. Some regional banks have fallen into the red due to the corona disaster.

The Financial Services Agency is scrutinizing this situation, and told the media that “the business model that has been going on for decades has not been established. Some banks will collapse as it is, but they will do the same. There are many banks that do. “

The harsh business environment and the sense of crisis in the country seem to be the driving force behind the reorganization of regional banks.

How will the reorganization of regional banks proceed?

SBI Holdings, which handles online securities, sees the reorganization of regional banks as a business opportunity. SBI intends to create a fourth mega bank and is about to enter into the reorganization business of regional banks.

SBI has already formed capital tie-ups with seven banks: Kirayaka Bank (Yamagata Prefecture), Sendai Bank, Fukushima Bank, Towa Bank (Gunma Prefecture), Shimizu Bank (Shizuoka Prefecture), Shimane Bank, and Chikuho Bank (Fukuoka Prefecture). We also dispatch experts to support the capital management and system strengthening of partner regional banks.

In addition, Japan Post Bank has embarked on a reorganization of regional banks.

Japan Post Bank will invest in the fund “Japan Co-creation Platform” established by Consulting Co., Ltd. Industrial Growth Platform, Inc. (Headquarters: Chiyoda-ku, Tokyo) (* 8, 9).

This Japanese co-creation platform is a rehabilitation fund for “local companies”, but the local companies also include local banks. And one of the menus of local bank support is reorganization.

The Japan Co-creation Platform aims to raise 100 billion yen in funds, including Japan Post Bank, KDDI, Sumitomo Mitsui Trust Bank, Iyo Bank, and Gunma Bank. Since Iyo Bank and Gunma Bank are regional banks, the composition of regional banks to support the reorganization of regional banks emerges.

Some regional banks support local businesses, while others are on the side of support.

(※8)Giant ship Yucho Bank calls itself to regional bank reorganization and establishes a 100 billion yen fund
(※9)Industrial Growth Platform, regional DX promotion

Summary-The seriousness of the local economy is highlighted

The power of local banks is indispensable to support the local economy, and local banks are working hard to fulfill their role. However, the local bank itself is in need of assistance.

The movement of local banks to establish funds and the reorganization of local banks seem to be the opposite phenomenon, but they are firmly connected behind the scenes. What connects the two is the worsening of the local economy.

How will local banks survive this difficult situation? It is a problem that is familiar to both local business people and local residents, so it will be necessary to pay close attention to it.