Government measures in key jurisdictions 5th edition - Flipbook - Page 81
Japan
Contributor: Atsumi & Sakai
Loans and
financial
support
•
Has the
government put
in place any new
bank funding
schemes?
i.
Ryuichi Nozaki | ryuichi.nozaki@aplaw.jp | +81 (0)3 5501 2138
Naoki Kanehisa | naoki.kanehisa@aplaw.jp | +44 (0)20 3696 6540
Akira Shimazaki | akira.shimazaki@aplaw.jp | +81 (0)3 5501 2195
The Japanese government declared a State of Emergency on 7 April 2020 and the
same day the Financial Services Agency (the “FSA”), Japan’s financial service
regulatory authority, requested financial institutions to support borrowers’ cash-flow
by:
actively providing new loans, and promptly and flexibly rescheduling repayment terms
of existing loans in light of changes to borrowers’ ability to repay,
ii. cooperating with public credit guarantee associations (funded by local governments)
to provide loans with zero interest and no collateral,
iii. not automatically triggering acceleration of repayments when borrowers cannot
comply with financial covenants but instead promptly and sincerely discussing
relaxation of covenants if the borrower requests,
iv. closely cooperating with the Japan Finance Corporation (the “JFC”), a public financial
institution wholly owned by the Japanese government,
v. promptly and flexibly changing repayment terms of residential loans or loans for
individual borrowers, or guarantees for either of them, and
vi. not recording borrowers’ delinquency information with credit information institutions
when any default is due to the impact of Covid-19.
•
Regarding (ii) and (iv) above, the necessary government funding to public credit
guarantee associations through local governments and to the JFC was included in the
Emergency Economic Stimulus Package approved by the Cabinet on 7 April and in a
budget passed by the Diet on 30 April 2020.
•
On 16 April 2020 the FSA requested financial institutions to be flexible and not
immediately trigger the suspension of transactions when borrowers fail to pay
checks or promissory notes.
•
On 17 April 2020 the FSA announced that it will delay raising the minimum leverage
ratio requirement for banks whilst also disregarding banks’ deposits with the central
bank from the calculation of gross assets as the denominator for calculating a
leverage ratio, thus making it easier for banks to provide new loans or reschedule
repayment terms for borrowers impacted by Covid-19.
•
JFC and Shoko Chukin Bank (“SCB”) have been providing various financial support
programmes for SMEs and self-employed persons whose sales declined from between
0% to 20% including lending with either no or no preferential interest for an initial 3
years.
•
Regarding (iv) above, on 21 April 2020 the FSA explained to private sector financial
institutions that the JFC will actively assume exposures to bridge loans provided by
them to borrowers for dealing with the impact of the Coronavirus pandemic, and
requested them to provide bridge loans to such borrowers with the anticipation that
the loan exposures can be assumed by the JFC.
•
Regarding (ii) above, on 27 April 2020 the FSA urged private sector financial
institutions to provide “zero interest, no collateral and no guarantee fee” financing
with guarantees by public credit guarantee institutions to borrowers as promptly and
flexibly as possible, with zero interest etc periods of up to 5 years, as one-stop-shops
to process all necessary procedures with borrowers, including the guarantee
application procedures. This financing support by private sector financial institutions
started on 1 May 2020 for SMEs and self-employed persons whose sales declined by
5% or 15% compared to the same period in the preceding year. On 8 December 2020,
the Minister of Finance announced that the application period for the financial support
has been extended until 3 March 2021.
Government measures in key jurisdictions
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