Credit card payment processor Zentoshin has commenced bankruptcy proceedings, with total liabilities reaching 11.51 billion yen. Financial creditors number 63 institutions, including regional banks, shinkin banks, and credit cooperatives that had extended large loans. The Financial Services Agency plans to launch an investigation into regional financial institutions' credit management, examining whether their screening systems and borrower management practices are appropriate. Kinki Sangyo Credit Cooperative, the largest creditor, has stated that the loan was not a one-sided large exposure to a single company, while voices within the industry are calling for reflection. Towa Bank will provision for 5.8 billion yen of its 8 billion yen in loans that are unsecured in the fiscal year ending March 2027, and the risk management framework for cross-border lending is also likely to be questioned.
Towa Bank, Ltd.Towa Bank will provision 5.8 billion yen for unsecured loans to Zentoshin, impacting earnings.
Kinki Sangyo Credit Cooperative is the largest creditor and faces scrutiny from the FSA investigation into credit management.