Business News
Japan's bank for small businesses goes under
Sep 10, 2010, 6:02 GMT
Tokyo - The Incubator Bank of Japan, a lender for small businesses, Friday filed for bankruptcy with the Financial Services Agency (FSA), but officials said the move would have little impact on Japan's financial system.
The bank, founded in 2004, was investigated earlier this year for allegedly obstructing a government audit. Its founder and some top executives were arrested.
Financial Services Minister Shozaburo Jimi announced that the Deposit Insurance Law, a deposit protection scheme, would be invoked for the first time since its launch in 1971. It is to protect deposits of up to 10 million yen (118,850 dollars).
As of the end of August, 3,560 depositors had a total of 47.1 billion yen in excess of 10 million yen, Senior Vice Minister Kohei Otsuka in charge of the FSA was quoted by Kyodo News as saying.
The bank reported a 5.1-billion-yen net loss in the financial year through March.
The FSA immediately suspended operations at 114 outlets throughout Japan as the agency told the bank to suspend business from Friday to Sunday.
Government officials and Bank of Japan officials played down the impact of the bank's failure on the country's financial system, Kyodo said.
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