Teikoku Bank’s New Strategy, 1943–45

Abstract

When Teikoku Bank started operations in April 1943 it adopted a policy of offering long-term capital loans over one-year period, as well as underwriting and holding corporate bonds. Supplying funds for production expansion in line with the national goals, an expression contained in a slogan of the time, meant the same thing as extending long-term capital loans.¹ The bank’s main objective was to secure business that had long been mainly the preserve of the Industrial Bank of Japan.² Large banks such as Sumitomo and Yasuda were still cautious of offering long-term loans, yet at the same time they were envious of Teikoku Bank’s success in doing so. Kenzo Oshima, the executive managing director of Sumitomo Bank, said at a meeting in October 1943 that the rise in major industries’ demand for funds had led to a large increase in bank lending, and that most of this lending involved long-term capital loans that were essentially unsuitable for deposit banks.³ On the other hand, in a history of Yasuda Bank it is stated that although the bank made a positive effort to increase its long-term capital loans, the three largest zaibatsu, including Mitsui, had built such a close relationship with promising munitions companies that it was difficult for Yasuda Bank to engage with these companies.⁴