Additional capital injection to Tokyo’s failed bank must be stopped: JCP

   Tokyo Metropolitan Governor Ishihara Shintaro on February 15 unveiled his plan to inject additional capital of tens of billions yen to ShinGinko Tokyo that was established by the metropolitan government in 2004 with tax money of 100 billion yen. Until recently, Ishihara refused injections of additional capital.

   Ishihara’s new plan is criticized by Tokyo residents as a foolish attempt to throw away an enormous amount of tax money to bail out a bank.

   ShinGinko Tokyo, Ishihara’s brainchild that opened in April 2005, has been running at a loss and is now in a state of collapse. Its accumulated deficit was 93.6 billion yen according to its half-year earnings report for the period that ended in September 2007.

   In a Metropolitan Assembly meeting in March 2004, Japanese Communist Party member Kimura Yoji urged the governor to stop funding the bank. Ishihara in reply boldly stated, “I believe that the capital of 100 billion yen we are now providing the bank will balloon to several trillion yen some day.”

   At the time of its establishment, Ishihara promised that the bank will assist small- and medium-sized enterprises. However, the rate of its lending to small- and medium-sized businesses has largely decreased from 97.5 percent in September 2005 to 47.2 percent in September 2007.

   JCP Metropolitan Assembly members’ group on February 13 made representations to Ishihara demanding that no additional capital be injected, that the Metropolitan government immediately establish a third-party body and commence bankruptcy proceedings, and that the Metropolitan government determine the responsibility of the governor and fully disclose its policy to deal with this issue.
- Akahata, February 18, 2008