Japanese bank files for bankruptcy

An indebted Japanese bank for small businesses, the Incubator Bank of Japan, has filed for bankruptcy, the government financial watchdog announced today.

The Financial Services Agency said it immediately suspended operations at the bank.

It will also insure up to 10 million yen (€93,846) per depositor by launching the 1971 deposit protection scheme for the first time.

The bank was founded in 2004 to specialise in lending for small businesses.

Its founder and several other executives were arrested in July for allegedly obstructing the watchdog inspection.

Financial Services Minister Shozaburo Jimi urged bank customers to stay calm and said the government will do its utmost to secure stability in the financial system in Japan.

He said the bank will be managed properly by the financial administrator and that "the failure will not have further effect on the financial system as a whole.

"FSA will continue to do its best to secure stability of financial system, protect depositors, and maintain a financial order in Japan," Mr Jimi said in a statement.

The bank reported a net loss of 5.1 billion yen (€47.86m) in the fiscal year ended in March.

It had about 610 billion yen (€5.7bn) in deposits as of June and had 118 outlets across Japan.

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