Government measures in key jurisdictions 2nd edition final pages - Flipbook - Page 61
1
Japan
Contributor: Atsumi & Sakai
Loans and
financial
support
•
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 | +44 (0)20 3696 6540
The Japanese government declared a State of Emergency on 7 April 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:
(i) actively providing new loans, and promptly and flexibly rescheduling repayment
terms of existing loans in light of changes to borrowers’ ability to repay,
Has the
government put
in place any new
bank funding
schemes?
(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 government’s necessary funding to public credit
guarantee associations through local governments and necessary funding to
the JFC are included in the Emergency Economic Stimulus Package, which was
approved by the Cabinet as initiative on 7 April and as budget bill on 20 April and
passed the Diet as budget on 30 April.
•
On 16 April 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 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 has launched a programme of lending with no interest for the initial 3 years for
borrowers whose sales declined by 5% from the same period in either of the two
immediately preceding years but who are still hopeful their business will recover in
the mid or long term.
•
Regarding (iv) above, on 21 April the FSA explained to private sector financial
institutions that the JFC will actively take over exposures to bridge loans provided
by them to borrowers for dealing with the Coronavirus pandemic impact, and
requested them to provide bridge loans to such borrowers with the anticipation
that the loan exposures can be taken over by the JFC.
•
Regarding (ii) above, on 27 April 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 an as long as possible “zero interest, no collateral and no
guarantee fee” period of up to 5 years, as one-stop-shops to process all necessary
procedures with borrowers, including the guarantee application procedures.
Government measures in key jurisdictions
61