Sapporo Hokuyo mulls applying for public funds to boost capital

TOKYO, Jan. 18 Kyodo -
Sapporo Hokuyo Holdings Inc., a Hokkaido-based financial institution, is
considering asking the Financial Services Agency for an injection of public
funds to boost its capital amid deteriorating economic conditions, sources
close to the matter said Sunday.
Although Sapporo Hokuyo, which holds North Pacific Bank, a regional bank
headquartered in Sapporo, has relatively sound financial footing, it aims to
preemptively strengthen its capital by using a revised law on financial
functions, the sources said.
The revised law took effect in December last year, with an aim of facilitating
the financing of small and midsize companies through injecting public funds
into financial institutions.
The amount of public funds Sapporo Hokuyo is thinking to receive is several
tens of billions of yen, and the injection could take place as early as by the
end of March, they said.
If the deal is realized, Sapporo Hokuyo would be the first financial
institution to receive taxpayers' money since Howa Bank, based in Oita
Prefecture, in December 2006.
The move by Sapporo Hokuyo, one of the largest second-tier regional lenders in
Japan, may encourage other regional banks to take similar actions amid
increasing concerns over capital shortage due to a weakening economy and the
turbulence of the stock market.
The capital adequacy ratio, a key gauge of the financial soundness of banks, at
Sapporo Hokuyo stood at 9.2 percent as of the end of September 2008, well over
the 4 percent required for domestically operating banks.
However, Sapporo Hokuyo expects to incur 27.5 billion yen in group net loss for
the year to March due to increased losses stemming from bad-loan disposals.
It intends to boost its capital adequacy ratio to over 10 percent with the
public money and also by taking its own fundraising steps, the sources said.
Sapporo Hokuyo issued a statement Sunday saying nothing has been decided yet.
==Kyodo