Panel Calls on Govt to Sell All Shoko Chukin Shareholdings
13:45 JST, February 18, 2023
TOKYO — An industry ministry experts panel came up with a report Friday proposing the Japanese government sell all its shareholdings in Shoko Chukin Bank, a government-affiliated lender for small and midsize companies.
The government will aim to sell the 46% stake within two years after revising the law governing the financial institution. To do so, it plans to introduce an amendment bill to parliament during the ongoing session.
The shares can be sold for as much as ¥100 billion, people familiar with the matter said.
The panel, in the report, also suggested that the government keep investing in the lender’s special reserve fund and maintain the low-cost crisis response lending program.
This recommendation for the government’s continued commitment to Shoko Chukin even after the privatization is aimed at facilitating financing to less creditworthy small businesses, an official of the ministry said.
Furthermore, the panel advised that Shoko Chukin be reorganized into an institution owned by small business associations so client firms’ requests can be better reflected in its operations, and that the current authorization system for its chief’s appointment shift to a mere reporting system.
In line with the government’s withdrawal of its ownership, Shoko Chukin is expected to be allowed to launch new businesses including staffing services, people familiar with the matter said, adding that restrictions on its investment in startups and collaboration with commercial financial institutions would be relaxed as well.
At the day’s meeting, industry minister Yasutoshi Nishimura said the bank is required to lead efforts for achieving small businesses’ growth and promoting structural reform by joining hands with commercial lenders.
Shoko Chukin’s privatization was decided in 2006 under the administration of then Prime Minister Junichiro Koizumi. It was postponed, however, due to an economic slump and other factors including fraudulent lending practices across the bank that came into light in 2016.
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