Debt Collection

Acquisition of Claims

1.Acquisition of Claims from Housing Loan Companies

Housing loan companies (hereinafter referred to as "Jusen"), established in the 1970s through joint investment by banks, security companies, and others, originally began operations with the primary purpose of providing housing loans. However, from the 1980s onward, as financial institutions expanded their housing loan businesses, the growth of Jusen housing loans stagnated. Amid the progression of the bubble economy, their lending gradually shifted toward real estate companies et al.
Following the collapse of the bubble economy, the business conditions of the above mentioned companies deteriorated rapidly, and Jusen companies came to hold massive amounts of non-performing loans. Given the enormous scale of this problem and its considerable impact on the management of financial institutions that had made loans to Jusen, measures to address the Jusen issue were examined by the government and ruling parties from the summer of 1995 onward with the goal of ensuring stability of Japan's financial system. In December of the same year, the Cabinet approved the "Concrete Measures for the Resolution of the Jusen Problem."
Based on this Cabinet decision, the Act on Emergency Measures for the Resolution of Assets and Liabilities of Specified Housing Loan Companies (hereinafter referred to as the "Jusen Law") came into force in June 1996. Consequently , in July of the same year, the Housing Loan Administration Corporation (hereinafter referred to as "HLAC") was established to acquire assets from Jusen and carry out claim collection, and it acquired claims and other assets totaling 4.6558 trillion yen from seven Jusen companies.

2.Acquisition of Claims from Failed Financial Institutions

Circa 1985, amid significant changes in the environment surrounding financial institutions, troubled institutions were, in principle, resolved through mergers with acquiring institutions. However, in the case of the failures of Tokyo Kyowa Credit Cooperative and Anzen Credit Cooperative, which occurred amid the worsening non-performing loan problem following the collapse of the bubble economy, no acquiring financial institution emerged.
As a result, in January 1995, Tokyo Kyodo Bank, Ltd. was established with capital contributions from the Bank of Japan and private financial institutions, and in March of the same year, it acquired the operations of the two failed credit cooperatives.
Subsequently, based on the report of the Financial System Research Council of the Ministry of Finance titled "Measures for Stabilizing the Financial System," the Deposit Insurance Act was amended in June 1996. Under this amendment, as a temporary measure until March 31, 2001, a new system was introduced--modeled on the Resolution Trust Corporation (RTC) in the United States--under which a bank would conclude an agreement with the Deposit Insurance Corporation of Japan (DICJ) to conduct resolution and collection operations (hereinafter referred to as "RCC operations"), including the resolution of businesses succeeded through mergers with failed credit cooperatives or acquired from them, as well as the management and disposal of assets purchased under commission from the DICJ. Such a bank (hereinafter referred to as a "Designated Bank") would carry out these operations.
In September 1996, Tokyo Kyodo Bank was reorganized into a resolution and collection bank, entered into an agreement with the DICJ regarding RCC operations, and became a Designated Bank.
Subsequently, in October 1998, amendments to the Deposit Insurance Act and the Jusen Law established provisions for creating the Resolution and Collection Corporation as a joint-stock company integrating HLAC and the resolution and collection bank, with the objective of promoting the early and efficient recovery of non-performing loans through fair and transparent methods and minimizing the use of public funds. Following this, the two entities merged, and in April 1999, the Resolution and Collection Corporation (RCC), wholly owned by the DICJ, was established.
Including the period of Tokyo Kyodo Bank, the RCC has acquired claims and other assets totaling 4.7572 trillion yen from 175 failed financial institutions.

3.Acquisition of Claims from Sound Financial Institutions, etc.

To ensure the stability and revitalization of financial functions, the Act on Emergency Measures for the Revitalization of the Financial Functions (hereinafter referred to as the "Financial Revitalization Act"), enacted in October 1998, provided not only for the purchase of assets from failed financial institutions but also for the purchase of assets from sound financial institutions.
Based on commissions from the DICJ, the RCC has acquired claims and other assets totaling 355.7 billion yen from sound financial institutions, etc.

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