IR Information

March 3, 2000

Start of Handling "Debt Assumption-Type Settlement Service" through Sakura Finance Service Co., Ltd.

The Sakura Bank, Limited (Akishige Okada, president) hereby announces that it has developed the "Debt Assumption-Type Settlement Service", which is a new settlement service substituting for Notes Payable, using Sakura Finance Service Co., Limited (Jiro Nishibori, president), its subsidiary, and that it will start handling from April 3, 2000

In this product, Sakura Finance Service will implement its "parallel debt assumption" (Note) for debts payable of large businesses, and thereby their suppliers can acquire the following merits compared with a bulk-factoring and a bulk-trust in the current method through assigning obligatory rights:

(1)	Suppliers' accounts receivable (names of paying companies) are unchanged. (The change in their accounting procedure is not necessary.)
(2)	They can acquire double security from both paying companies and Sakura Finance Service against risks for collecting accounts receivable, since Sakura Finance Service becomes a joint and several obligor.

Also, as to encashing before the maturity dates of obligatory rights for the purpose of raising funds in place of bill discount, Sakura Finance Service will prepare a system for implementing to discount at the rate of Sakura Bank's short-term prime rate, which enables suppliers to raise funds at the same rate as bill discount or more favorable conditions and to make their obligatory rights to be off-balanced in the same manner as the liquidation of claims by using the discount service.

In case of a bulk-factoring and a bulk-trust, some suppliers are reluctant to assign their claims receivable to high-rated excellent paying companies to factoring companies with no ratings. The new scheme of our service will solve this bottle neck. Also, for paying companies which highly need to abolish Notes Payable and those which have already introduced a similar bulk payment system, it is expected that a participating ratio of suppliers in this system will increase by about 10 to 20% from the present and that more than 80% of Notes Payable will be abolished.

Currently, we have contracted a bulk factoring system with about 6,000 suppliers in the credit purchasing limit of about \230 billion in total.We plan to prepare both products, the former type factoring method and this parallel type debt assumption method, and construct a system where paying companies can select either of them according to their needs, whereby effectively pursuing channels for outgoing funds of large companies as well as financial profits of supplier groups.

[Scheme of Debt Assumption-Type Settlement Service]

(1)

Suppliers will ship merchandises, etc. to paying companies and claim sales proceeds to them as before.

(2)

Paying companies will forward the details of debts to Sakura Finance Service. Also, they will apply for related debt assumption.

(3)

Based on the above-mentioned applications, Sakura Finance will execute parallel debt assumption (Note) for debts payable, which paying companies owe to the suppliers. (Thereby, both paying companies and Sakura Finance will become joint and several obligors for debts payable to suppliers.)

(4)

Sakura Finance will pay sales proceeds to suppliers. In case suppliers wish to encash their claims before their maturity dates ((4)'),Sakura Finance will transfer funds to the designated accounts upon receipt of applications.

(5)

Implementing the above-mentioned ((4)'), Sakura Finance will have rights for recourse to paying companies.

(6)

Paying companies will transfer proceeds to Sakura Finance (payments based on rights for recourse of (5)) on maturity dates of debts (former maturity dates of claims).

(Note)

There are two kinds of debt assumptions, i. e., debt assumption by way of exemption, where the former debtor is exempted from debts, and parallel debt assumption (also, called doubled debt assumption), where both a former debtor (Paying company)and a new debtor (Sakura Finance Service) become joint and several debtors.