The first share buyback and cancellation by a Japanese bank (1997)

Being a bank that can give capital back

“To return profit to shareholders, and to improve financial indicators such as ROE and earnings per share” — the aim Shizuoka Bank described in 1998 looks obvious today. What was not obvious was that a bank said it in December 1997. With public capital injections about to arrive, one regional bank faced the other way and used its earnings to buy back its own shares. That it could act at all, when most companies were merely amending their articles of incorporation and waiting to see, appears to be because it held capital whose ratios would not be shaken by the cancellation.

Yet if you want to say this single move changed Shizuoka Bank, what followed is quiet. Its retained surplus stood at ¥350 billion in 2002, first among regional banks, and its core capital ratio was the highest in the country in 2003. A bank that had shown it could give capital back went on standing at the front in the thickness of its capital as well. Its 2026 explanation that a CET1 ratio of around 13% is appropriate is on the same line. The 1997 cancellation is less a turning point in capital discipline than the first occasion on which a Japanese bank asked out loud how much capital a bank ought to hold.