Government measures in key jurisdictions 3rd edition final - Flipbook - Page 79
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
Loans and
financial
support
Has the
government put in
place any new
bank funding
schemes?
•
The Japanese government declared a State of Emergency on 7 April and the same day the
Financial Services Agency (the “
”), 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,
cooperating with public credit guarantee associations (funded by local governments) to
provide loans with zero interest and no collateral,
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,
closely cooperating with the Japan Finance Corporation (the “
”), a public financial
institution wholly owned by the Japanese government,
promptly and flexibly changing repayment terms of residential loans or loans for individual
borrowers, or guarantees for either of them, and
not recording borrowers’ delinquency information with credit information institutions when
any default is due to the impact of Covid-19.
ii.
iii.
iv.
v.
vi.
•
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.
•
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 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 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.
Government measures in key jurisdictions
79