Hokkaido Takushoku Bank
Encyclopedia
, literally Hokkaidō Exploitation Bank, was one of major commercial bank
s in Japan
, founded in 1899 as a "Special Bank" to promote capitalization on the island of Hokkaidō
. Its nickname was ; it was also known in the media and business world as . It was the City Bank in its stronghold of Hokkaidō until it went bankrupt in November 1997, and the following year it transferred its business to the , which is another bank in Hokkaidō, and others. Its unified financial institution code was 0012.
and industry
banking law" in 1896, "agriculture and industry banks" were set up in 46 prefecture
s throughout Japan. Hokkaidō was thought to be in the forefront as a prime candidate for economic exploitation, and instead of an agriculture and industry bank, a special "national policy bank" was deemed necessary. For this purpose, the Hokkaidō Takushoku Bank was established in 1899, and was incorporated
as a "special bank" on February 2, 1900, providing long-term low-interest loans as capital for Hokkaidō's development. The target of these loans was not just the improvement of industry and agriculture; it also had as its object the key industries of fishing
and those related to the further exploitation of Hokkaidō.
As a result, since Takugin acted as a replacement for certain similar types of bank, the "agriculture and industry" bank, the Nippon Kangyo Bank
and the Industrial Bank of Japan
, it was not until after World War II
that Hokkaidō increased its representation in these sectors.
In 1950 the Hokkaidō Takushoku Bank law was repealed, and Takugin was converted into an ordinary bank. In 1952, the provision of "exploitation bonds", which had existed since Takugin originally opened, was ceased (this service was transferred to the Japan long-term credit bank). In 1960, Takugin achieved entry into the group of banks known as City Banks.
In March 1963, Takugin took over running of the Hokkaidō lottery
.
In Hokkaidō the great majority of families had an account at "Mr. Takugin", and virtually all the municipalities were clients. While having the smallest scale of operations as a "city bank", Takugin established a status as the "Hokkaidō people's bank".
Beginning from around 1962, Takugin began using the character of Takuchan ("little Taku") the brown bear
as a motif. Takuchan savings boxes made of vinyl chloride are still popular among figure collectors to this day. From 1989, Takugin used the character Sanrio.
and Osaka
, and became concerned with real estate. In ordinary banking activity,
finance is not provided above the 70% of real estate value, but at the time of the bubble it was foreseen that land values would rise steeply, so real estate financing was offered at 120-130% of value. Many credit facilities at this time were taking a similar form of finance, but Takugin had been somewhat slow off the mark. It therefore had to set collateral at a lower precedence than the collateral which had been already given to other credit providers. This meant that the part of the loan repayable to Takugin would be less if the borrowing real estate company were to go bankrupt. Ultimately, this is exactly what was to happen.
As bubble economics collapsed in the 1990s, Takugin's level of bad debts began to soar. Bad debts exceeded ¥1 trillion, and the means of collecting them were lost. For example they had financed the Sapporo real-estate company Kabuto Decom to more than ¥120 billion, helping it to grow rapidly, and when the bubble collapsed and the debt became bad, from 1993 onwards they changed their attitude to coercively recovering the money. The result of the dispute with Kabuto Decom's leadership was to get Kabuto Decom's president indicted and arrested by the public prosecutor's office. Meanwhile, in a September 1994 Ministry of Finance
study, the conclusions reached with regard to financing of resort companies were that ¥10 billion in loans continued without regard to the disposal of bad debts.
(Dohgin), which was the second bank in Hokkaidō, and whose president was the former head of treasury bills. Since Dohgin was also in financial difficulty due to the collapse of the bubble, at the end of March 1997 an amalgamation
plan was revealed under which Takugin would continue in the interim, and in April of the following year there would be an amalgamation to form a bank called the New Bank of Hokkaidō.
However, owing to mistrust over differences in perception of the bad debts, and emotional arguments based on the long-time rivalry with Takugin, the employees of Dohgin were strongly opposed to the merger. In the end, with no thawing in the antagonism of the two banks, it was announced on 9 December that there would be a half-year postponement of the merger, which in practical terms was a freeze, and it was understood that the Dohgin side had revoked the merger entirely.
With deposits peaking in 1994 at ¥8.7 trillion, increasing financial instability was causing contracts to be broken, particularly in the Honshū
region, and the outflow increased. By the end of September 1997, deposits had descended to ¥5.9 trillion. After the failure of the merger, Takugin's financial insecurity increased yet again, such that its share price actually fell 100 yen below the level assigned for a bankruptcy
warning. The cash flow situation was now more difficult, but Takugin was managing to put together some capital based on fixed-term loans from big lenders at relatively high interest rates, and from the "call market".
Already without the possibility of getting capital from the call market, Takugin, having been deserted by the finance ministry announced that its efforts to find financing would end the following week. On 17 November, an emergency meeting of the board of directors was organized in the Palace Hotel, Tokyo, where the decision was finally taken to abandon hope of continuing business.
) remain.
Commercial bank
After the implementation of the Glass–Steagall Act, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S...
s in Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
, founded in 1899 as a "Special Bank" to promote capitalization on the island of Hokkaidō
Hokkaido
, formerly known as Ezo, Yezo, Yeso, or Yesso, is Japan's second largest island; it is also the largest and northernmost of Japan's 47 prefectural-level subdivisions. The Tsugaru Strait separates Hokkaido from Honshu, although the two islands are connected by the underwater railway Seikan Tunnel...
. Its nickname was ; it was also known in the media and business world as . It was the City Bank in its stronghold of Hokkaidō until it went bankrupt in November 1997, and the following year it transferred its business to the , which is another bank in Hokkaidō, and others. Its unified financial institution code was 0012.
Early history
On the announcement of the "agricultureAgriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
and industry
Industry
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...
banking law" in 1896, "agriculture and industry banks" were set up in 46 prefecture
Prefectures of Japan
The prefectures of Japan are the country's 47 subnational jurisdictions: one "metropolis" , Tokyo; one "circuit" , Hokkaidō; two urban prefectures , Osaka and Kyoto; and 43 other prefectures . In Japanese, they are commonly referred to as...
s throughout Japan. Hokkaidō was thought to be in the forefront as a prime candidate for economic exploitation, and instead of an agriculture and industry bank, a special "national policy bank" was deemed necessary. For this purpose, the Hokkaidō Takushoku Bank was established in 1899, and was incorporated
Incorporation (business)
Incorporation is the forming of a new corporation . The corporation may be a business, a non-profit organisation, sports club, or a government of a new city or town...
as a "special bank" on February 2, 1900, providing long-term low-interest loans as capital for Hokkaidō's development. The target of these loans was not just the improvement of industry and agriculture; it also had as its object the key industries of fishing
Fishing
Fishing is the activity of trying to catch wild fish. Fish are normally caught in the wild. Techniques for catching fish include hand gathering, spearing, netting, angling and trapping....
and those related to the further exploitation of Hokkaidō.
As a result, since Takugin acted as a replacement for certain similar types of bank, the "agriculture and industry" bank, the Nippon Kangyo Bank
Dai-Ichi Kangyo Bank
The , abbreviated as , was one of the largest banks in the world during the latter half of the 20th century. It combined with Fuji Bank and the Industrial Bank of Japan in 2000 to form Mizuho Financial Group....
and the Industrial Bank of Japan
Industrial Bank of Japan
The , based in Tokyo, Japan, was one of the largest banks in the world during the latter half of the 20th century.It combined with Dai-Ichi Kangyo Bank and Fuji Bank in 2002 to form Mizuho Financial Group.- History :...
, it was not until after World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
that Hokkaidō increased its representation in these sectors.
1939 onwards
In 1939 there was an amendment to the Hokkaidō Takushoku Bank law, allowing the bank, which thus far had performed only long-term financing based on debt issuance, to handle bank accounts and offer short-term finance. Now performing simultaneously the roles of ordinary bank and savings bank, Takugin dramatically increased its scale of operations. Finally in the wartime unification, all banks relating to Hokkaidō and Karafuto, ordinary banks and savings banks, were merged together.In 1950 the Hokkaidō Takushoku Bank law was repealed, and Takugin was converted into an ordinary bank. In 1952, the provision of "exploitation bonds", which had existed since Takugin originally opened, was ceased (this service was transferred to the Japan long-term credit bank). In 1960, Takugin achieved entry into the group of banks known as City Banks.
In March 1963, Takugin took over running of the Hokkaidō lottery
Lottery
A lottery is a form of gambling which involves the drawing of lots for a prize.Lottery is outlawed by some governments, while others endorse it to the extent of organizing a national or state lottery. It is common to find some degree of regulation of lottery by governments...
.
In Hokkaidō the great majority of families had an account at "Mr. Takugin", and virtually all the municipalities were clients. While having the smallest scale of operations as a "city bank", Takugin established a status as the "Hokkaidō people's bank".
Beginning from around 1962, Takugin began using the character of Takuchan ("little Taku") the brown bear
Brown Bear
The brown bear is a large bear distributed across much of northern Eurasia and North America. It can weigh from and its largest subspecies, the Kodiak Bear, rivals the polar bear as the largest member of the bear family and as the largest land-based predator.There are several recognized...
as a motif. Takuchan savings boxes made of vinyl chloride are still popular among figure collectors to this day. From 1989, Takugin used the character Sanrio.
The bubble and its collapse
From about 1985, like many other banks, Takugin opened branches in TokyoTokyo
, ; officially , is one of the 47 prefectures of Japan. Tokyo is the capital of Japan, the center of the Greater Tokyo Area, and the largest metropolitan area of Japan. It is the seat of the Japanese government and the Imperial Palace, and the home of the Japanese Imperial Family...
and Osaka
Osaka
is a city in the Kansai region of Japan's main island of Honshu, a designated city under the Local Autonomy Law, the capital city of Osaka Prefecture and also the biggest part of Keihanshin area, which is represented by three major cities of Japan, Kyoto, Osaka and Kobe...
, and became concerned with real estate. In ordinary banking activity,
finance is not provided above the 70% of real estate value, but at the time of the bubble it was foreseen that land values would rise steeply, so real estate financing was offered at 120-130% of value. Many credit facilities at this time were taking a similar form of finance, but Takugin had been somewhat slow off the mark. It therefore had to set collateral at a lower precedence than the collateral which had been already given to other credit providers. This meant that the part of the loan repayable to Takugin would be less if the borrowing real estate company were to go bankrupt. Ultimately, this is exactly what was to happen.
As bubble economics collapsed in the 1990s, Takugin's level of bad debts began to soar. Bad debts exceeded ¥1 trillion, and the means of collecting them were lost. For example they had financed the Sapporo real-estate company Kabuto Decom to more than ¥120 billion, helping it to grow rapidly, and when the bubble collapsed and the debt became bad, from 1993 onwards they changed their attitude to coercively recovering the money. The result of the dispute with Kabuto Decom's leadership was to get Kabuto Decom's president indicted and arrested by the public prosecutor's office. Meanwhile, in a September 1994 Ministry of Finance
Ministry of Finance (Japan)
The ' is one of cabinet-level ministries of the Japanese government. The ministry was once named Ōkura-shō . The Ministry is headed by the Minister of Finance , who is a member of the Cabinet and is typically chosen from members of the Diet by the Prime Minister.The Ministry's origin was back in...
study, the conclusions reached with regard to financing of resort companies were that ¥10 billion in loans continued without regard to the disposal of bad debts.
The phantom amalgamation plan
In March 1997, with bad debts at 13.4% of Takugin's bank's total lending, thought to be the largest rate of all the City Banks, along with economic uncertainty, a problem with money supply emerged. With the policy aim "don't crush the big 20", the finance ministry formed a plan to merge Takugin with Hokkaidō BankHokkaido Bank
Hokkaido Bank is a Japanese bank that is headquartered in Sapporo, Hokkaidō. The Hokkaido Bank is a subsidiary of the Hokuhoku Financial Group as a result of a merger with the Hokuriku Bank on September 1, 2004...
(Dohgin), which was the second bank in Hokkaidō, and whose president was the former head of treasury bills. Since Dohgin was also in financial difficulty due to the collapse of the bubble, at the end of March 1997 an amalgamation
Consolidation (business)
Consolidation or amalgamation is the act of merging many things into one. In business, it often refers to the mergers and acquisitions of many smaller companies into much larger ones. In the context of financial accounting, consolidation refers to the aggregation of financial statements of a group...
plan was revealed under which Takugin would continue in the interim, and in April of the following year there would be an amalgamation to form a bank called the New Bank of Hokkaidō.
However, owing to mistrust over differences in perception of the bad debts, and emotional arguments based on the long-time rivalry with Takugin, the employees of Dohgin were strongly opposed to the merger. In the end, with no thawing in the antagonism of the two banks, it was announced on 9 December that there would be a half-year postponement of the merger, which in practical terms was a freeze, and it was understood that the Dohgin side had revoked the merger entirely.
With deposits peaking in 1994 at ¥8.7 trillion, increasing financial instability was causing contracts to be broken, particularly in the Honshū
Honshu
is the largest island of Japan. The nation's main island, it is south of Hokkaido across the Tsugaru Strait, north of Shikoku across the Inland Sea, and northeast of Kyushu across the Kanmon Strait...
region, and the outflow increased. By the end of September 1997, deposits had descended to ¥5.9 trillion. After the failure of the merger, Takugin's financial insecurity increased yet again, such that its share price actually fell 100 yen below the level assigned for a bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
warning. The cash flow situation was now more difficult, but Takugin was managing to put together some capital based on fixed-term loans from big lenders at relatively high interest rates, and from the "call market".
Bankruptcy
On 4 November 1997 the bankruptcy of Sanyō Securities caused the Central Gunma Trust Fund (now Gunma Trust Fund) to default on about ¥1 billion yen of unsecured loans. As a result, the unsecured call market descended into chaos, with every funding facility ordering an emergency decrease in its credit line. The cash flow in the call market became difficult for Takugin. With its share price at 59 yen, Takugin was on the verge of breaking the 50 yen barrier.Already without the possibility of getting capital from the call market, Takugin, having been deserted by the finance ministry announced that its efforts to find financing would end the following week. On 17 November, an emergency meeting of the board of directors was organized in the Palace Hotel, Tokyo, where the decision was finally taken to abandon hope of continuing business.
Aftermath
As a result of the collapse, Takugin's operations on Hokkaidō Island were absorbed by the Hokuyo Bank (North Pacific Bank), while all operations outside were absorbed by what is now The Chūō Mitsui Trust and Banking Co., Ltd. After the inauguration of Chūō Mitsui Trust, almost all the old Takugin branches outside of Hokkaidō are disappearing, and only the branches associated with Takugin's old partners Shakujii (in Tokyo) and Sugido (in Saitama prefectureSaitama Prefecture
is a prefecture of Japan located in the Kantō region of the island of Honshu. The capital is the city of Saitama.This prefecture is part of the Greater Tokyo Area, and most of Saitama's cities can be described as suburbs of Tokyo, to which a large amount of residents commute each day.- History...
) remain.