Post-merger developments
In early 2003, the Resona Group's capital adequacy ratio fell dangerously low. The bank had proposed to maintain its capital adequacy ratio above the legal limit by factoring in deferred tax assets. However, the value of these deferred assets could only be claimed if the company turned a profit in the future. Due to the bank's profit outlook being so dim, Resona's auditor refused to certify the company's financial statement if the deferred tax assets were included. Without being able to count the deferred tax assets, the bank was effectively insolvent.[9]
The Resona case threatened to cripple the entire country's financial system, since the other major banks were also counting on deferred tax assets to maintain their capital adequacy ratios. On 17 May 2003, the Japan government decided to inject 1.96 trillion yen in public funds into the Resona Group through Resona Bank.[10] This move, through the share exchange agreement between the bank and the holding company, effectively nationalized the bank, since the government emerged as the company's majority shareholder, holding 68.25% of voting rights of the holding company,[11] while the holdings of existing shareholders were greatly diluted. The existing management was sacked and a new management was installed.
A Former Resona Chairman, Eiji Hosoya, is credited with leading the bank's revival following the 2003 bailout.[1] Hosoya initially resisted taking the appointment to head Resona, saying in a news conference held on 30 May 2003, "I decided to accept the offer as I realized that stabilizing the financial system is the highest priority for the Japanese economy."[1] Under Hosoya, the bank's new management immediately set about to reduce Resona's non-performing loans (NPLs). In 2004, the company managed to turn a profit of ¥386 billion. As a result, Resona's management announced a plan to, over the next 10 years, return to the government ¥868 billion of the ¥3 trillion in public funds it has received.
Resona introduced two new full-time employee career tracks in 2015: one "no overtime" track for employees seeking better work-life balance, and another track for employees who wish to remain in a single position for their entire career. These policies were unique among Japanese banks at the time of their introduction.[12]
