Okinawa 50 years since return: Regional banks boost efforts to circulate funds locally

The Yomiuri Shimbun
The Royal View Hotel Churaumi in Motobu, Okinawa Prefecture. The hotel was bought last autumn by a fund led by the Bank of the Ryukyus.

Regional banks in Okinawa Prefecture are stepping up efforts to have capital circulating locally.

One of the problems since Okinawa’s reversion to Japan has been the flow of funds to companies outside the prefecture.

These regional banks are aiming to bolster the local economy, which has suffered serious blows from the COVID-19 pandemic.

A symbol of this attempt to boost Okinawa’s economy is the Royal View Hotel Churaumi. The hotel, which had been operated by a Tokyo-based company under a different name, was acquired in autumn 2021 by Ryukyu Capital, an investment company led by the Bank of the Ryukyus.

Overlooking the ocean and beach, the hotel in Motobu on the main island of Okinawa was built on the occasion of the Okinawa International Ocean Exposition held in 1975. The Okinawa Churaumi Aquarium, a popular tourist attraction, is nearby.

Due to the hardships caused by the pandemic, Ryukyu Capital and entities in the prefecture acquired the hotel through a fund in which they invest. Nago-based Maeda Sangyo Hotels was commissioned to manage the hotel. The name was changed to signal the fresh start.

Together with a loan from the Bank of the Ryukyus, the total amount invested was ¥4 billion.

An issue for Okinawa has been the flow of funds and other benefits generated by businesses in the prefecture to companies capitalized outside, leaving no money or expertise for local communities.

A trait of the Ryukyu Capital fund is that fund managers choose from local entities wishing to buy revitalized businesses in which it has invested capital, looking to keep the money circulating within the prefecture.

“Our ultimate goal is to break down the economic situation in which money drains out of the prefecture,” said Toru Ikehata, former managing director of the bank and president of Ryukyu Capital.


Okinawa’s financial industry is supported mainly by three regional banks, listed in terms of assets: the Bank of the Ryukyus, the largest in the prefecture; the Bank of Okinawa, which is almost comparable; and the Okinawa Kaiho Bank, which is slightly smaller.

The three banks were established between 1948 and 1956 while the United States administered Okinawa.

For the Bank of the Ryukyus, 51% of it was capitalized by the U.S. military administration, and it had the authority to issue currency like a central bank.

The city of Naha had its deposits at the bank frozen after a candidate who had campaigned against U.S. military bases won the 1956 mayoral election. According to the corporate history of the Bank of the Ryukyus, the head of the bank at the time said he had no real authority, suggesting that the freeze on deposits was at the behest of the United States.

In 1971, the Bank of Okinawa agreed to a three-way merger with Chuo Sogo Bank and Nanyo Sogo Bank, but talks on the merger ratio and other issues proved difficult. Chuo Sogo dropped out of the agreement and later changed its name to the Okinawa Kaiho Bank.


Since the reversion to Japan, the retail and tourism industries have seen entities outside Okinawa make advances into the prefecture, but the financial sector has experienced little cross-border activity.

“In addition to the small scale of the prefecture’s economy, the relationship between the regional banks and their clients was tight,” said an executive at a regional bank in Kyushu.

When the Kagoshima Bank opened a branch in Naha in 2015, it became the first regional bank from outside the prefecture to do so since the end of World War II. Among megabanks, Mizuho Bank’s single branch is their only presence in the prefecture.

According to the Okinawa Development Finance Corporation, a government-affiliated financial institution, banks led by the Bank of the Ryukyus, the Bank of Okinawa and the Okinawa Kaiho Bank account for about 70% of all lending in the prefecture. The remainder is covered by financial institutions including the ODFC and shinkin credit unions.

The average lending rate for the three banks also remains higher than the national average. This is due to the fact that transactions tend to be skewed toward real estate businesses in the prefecture, where loan terms are long and interest rates can easily run high, observers said.


The pandemic served as the catalyst for a major change in the growing presence of the three regional banks.

Longtime rivals the Bank of the Ryukyus and the Bank of Okinawa announced in January 2021 that they would form a comprehensive business alliance.

While maintaining competition in sales, the two banks have reduced administrative costs by integrating cash transportation operations and paperwork. They plan to boost the local economy affected by the spread of the virus, using capital reserves generated through their efforts.

“We will show our commitment to the people of the prefecture, making utmost efforts for them,” Bank of the Ryukyus President Yasushi Kawakami said at a joint press conference with the top executive of the Bank of Okinawa.

Both banks are providing specific support to the local community. This April, the Bank of Okinawa began sending two of its employees to Zamami, a remote island without a regional bank branch or ATM. In addition to improving the efficiency of clerical work, the bank also intends to support the digitization of the entire village office.

“By entering a community where there were no bank employees before, we should be able find issues that have not been recognized as such,” said an employee of the Bank of Okinawa, who has been assigned as the accounting section chief.

“We have not had much contact with banks except for handling public funds,” said Satoru Miyazato, head of Zamami village. “We hope to create a model for regional development together.”

“It can be appreciated that regional banks have played a role since the postwar period when the financial system did not function,” said Prof. Itsuko Shimabukuro of Okinawa International University, who is familiar with the prefecture’s financial market.

“However, the issue remains that the industries they finance are still limited, even 50 years after the reversion of Okinawa to Japan,” she said. “More sophisticated services are needed from a local perspective, such as the provision of funds and consulting services to support companies’ new challenges.”