Takao Suzuki was chairing a board meeting on the fourth floor of Daito Bank headquarters when the earthquake struck. As windows shattered and the floor shook, he dashed for the door, opening it to secure an escape route.
Less than a month later, as radiation continued to leak from the Fukushima Dai-Ichi plant 38 miles away, Suzuki still had a sense of urgency. He dispatched three bank directors around the region to lend cash as the world's worst nuclear accident in 25 years threatened to drive off companies. "We must avoid an exodus of people and businesses," says Suzuki, 57, the bank's president, at his office in Koriyama, where windows cracked by the quake are held together with tape.
Suzuki and the executives have sought to lend as much as 20 billion yen ($248 million) to help companies repair buildings and factories and stay afloat. One loan recipient, Toyo System, a maker of testers for rechargeable batteries that secured a 200 million yen credit line from Daito, illustrates the challenges Suzuki faces. The company is using some of the money it borrowed to build a plant outside the Fukushima prefecture because of radiation concerns, according to company president Hideki Shoji. "Men like me in our late 40s can stay here, but my workers in their 20s, 30s, and early 40s should go to the new factory," he says. Along with worker safety, he adds, he had to consider demands from some customers at home and abroad that products come with certificates showing they are free of radioactive contamination or made outside the area.
Some companies are being forced to relocate after the government set a 12-mile no-entry zone around the reactors and told residents of some villages outside the area to evacuate by the end of May because radiation had reached dangerous levels. Toto, a maker of plumbing fixtures and specialty ceramics, suspended operations at two factories inside the zone that make parts used for fiber-optic cables, spokesman Yukinori Saijo says. For its part, Daito Bank has mothballed two branches inside the area.
Toho Bank, Fukushima prefecture's biggest, is providing cheaper credit to lure borrowers. It unveiled a plan on Apr. 19 to offer loans of as much as 300 million yen to local businesses at a 0.2 percentage point discount to its usual interest rate. "Time is of the essence," President Seishi Kitamura, 64, says in an interview at Toho's headquarters in Fukushima city. "The longer it takes before reconstruction begins, the greater the risk that businesses will lose their appetite to rebuild."
While the banks are eager to extend credit, they may face losses on existing loans. Fukushima prefecture incurred 3.1 trillion yen of wreckage to roads, buildings, and factories, according to a study conducted by the state-run Development Bank of Japan. That figure excludes the potential adverse economic impact from radioactive contamination. It's too early for banks in northeast Japan to estimate potential nonperforming loans as the disaster shuts businesses and puts people out of work, says Yasuhide Yajima, an economist at NLI Research Institute in Tokyo. Some lenders in the region may need bailing out, he says: "Without a government rescue, banks in Iwate, Miyagi, and Fukushima will find it tough to go it alone."
The bottom line: Radiation concerns may limit rebuilding, even as local banks are lending to encourage companies to remain in Fukushima.