Repeal of the IBJ Act: becoming an ordinary bank, then a long-term credit bank (1952)

What it refused to change was the substance of the decision

In April 1950 the Industrial Bank of Japan Act was repealed and IBJ became, in law, an ordinary bank. With the special-bank charter gone, the road to gathering deposits and doing the same business as the city banks was open; branch siting and even a merger with the Nippon Kangyo Bank were examined inside the bank. IBJ moved none of it: it went on raising money by debenture and lending it for plant and equipment. The Long-Term Credit Bank Act of December 1952 was the law catching up — retrospective sanction for the two years and eight months of practice that Vice-President Ninomiya Yoshimoto called “the road that is neither A nor B.”

The price was a permanently narrow funding base. At the end of March 1955 deposits stood at ¥46.5 billion against ¥158.7 billion of debentures outstanding, and placing that paper took constant effort — leaning on regional banks that still remembered their frozen wartime accounts, working the Trust Fund Bureau on the occasion of disaster reconstruction. So long as the country remained short of capital, the structure meshed with the system around it. As President Nishimura Masao later observed, that premise vanished first, by the mid-1970s. The long survival of the framework does not prove the decision right: when LTCB and NCB failed in 1998, what came under suspicion was not individual loans but the mechanism itself — raise money on debentures, lend it long.