An emergency inspection into Resona Bank and its parent company will take place in June in connection with the government's decision to inject public funds into the bank, agency officials said Thursday.
The inspection of the bank and Resona Holdings Inc. will be carried out by a management monitory team set up within the Financial Services Agency. It will check the Resona group's legal compliance, risk management and fund management.
The move will follow Resona Bank's application for an injection of some 2 trillion yen of public funds into its capital base. The application is expected to be made May 30.
In addition, the FSA in June will notify Resona Bank of the results of an ordinary inspection into the bank conducted from December to February.
The on-the-spot inspection examined the self-assessed quality of assets held by Resona Bank's predecessor banks -- Daiwa Bank and Asahi Bank -- as of Sept. 30, the end of the first half of fiscal 2002.
With the notification of the inspection results, the FSA will urge Resona's core bank to manage bad loans more strictly than ever.
Work to separate bad loans from healthy loans at Resona Bank will also begin in June.
Meanwhile, the government plans to have Resona Holdings adopt a U.S.-style corporate governance system that draws a line between operations and supervision.
Specifically, the board of directors will supervise executives in charge of day-to-day operations. The executives have not yet been named.
While such a governance system became possible after April's revision of the Commercial Code, Resona Holdings may become the first major Japanese bank to adopt it.