4. Increasing our capital ratio
While continuing to struggle with large amounts of credit costs from its start, SMBC was challenged by a new issue associated with the full-scale application of the ''Accounting Standards for Financial Instruments'' in fiscal year 2001, which required the difference of valuation between the market value and the book value of marketable securities categorized as “other securities holdings” such as cross-holding stocks to be counted in the shareholders' equity section. This could result in decreased surplus cash to be allocated for dividend payouts, which would affect the bank’s dividend policy. To address this issue, SMBC transferred some amount of capital reserves and the entire amount of earnings reserves to the capital surplus posted for the fiscal year 2001. In addition, the bank sold the head office building in Otemachi to increase surplus cash.
SMFG recognized that increasing the capital ratio had become an ever-pressing management issue since the launch of SMBC. Among the actions taken to address this problem were an issuance of convertible preferred stock worth 150.3 billion yen to Goldman Sachs, which had a close relationship with the former Sumitomo Bank, in February 2003, and another issuance of the same type of stock worth 345.0 billion yen to foreign investors in March 2004. This enabled SMFG to compensate for a loss in equity capital resulting from a net loss posted for the fiscal year ended March 31, 2003 and kept the capital ratio above 10% after paying out dividends of preferred stock.
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Chapter 1The Financial Crisis and Realignment of the Financial Sector
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Chapter 2The Birth of SMBC and SMFG
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Chapter 3Initiatives Pursued by SMBC Banking Units in the Early Years
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Chapter 3Initiatives Pursued by SMBC Banking Units in the Early Years
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- Enhancing our retail consulting and payments & consumer finance businesses
- Enhancing corporate financial solutions
- Banking-Securities collaboration in the wholesale securities business
- Challenges facing our global banking business
- Actions by Treasury Unit in preparation for rising interest rates
- Integration of operating systems and administrative functions
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Chapter 4Embarking on Fresh Challenges Under New Leadership
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Chapter 4Embarking on Fresh Challenges Under New Leadership
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- Changes of leadership and the announcement of our new management policy
- Developing group business strategies
- Addressing antitrust issues
- Completing repayment of public funds
- LEAD THE VALUE
- Enhancing our retail financial consulting business
- Enhancing our corporate solution business
- Enhancing our investment banking business
- Global banking business turnaround
- Upgrading risk management in preparation for Basel II
- Development of human resources
- CSR activities
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Chapter 5SMFG’s Response to Global Economic and Financial Turmoil
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Chapter 6Preparing for the Next Decade
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Chapter 1Business Model Reform Under Challenging Business Conditions
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Chapter 1Business Model Reform Under Challenging Business Conditions
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- Our journey under new leadership (the second decade)
- Focusing on growth industries and businesses
- Reforming domestic business operations
- Promoting banking-securities collaboration in Wholesale Banking Unit
- Structural reform of our retail business
- Meeting the needs of an aging society
- Abenomics and Treasury Unit's nimble portfolio management
- Operating in a negative-interest-rate environment
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Chapter 2Enhancing Group Businesses
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Chapter 3Expanding Our Global Business
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Chapter 4Enhancing Corporate Infrastructure Under a New Governance Framework
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Chapter 4Enhancing Corporate Infrastructure Under a New Governance Framework
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- New leadership and enhancing corporate governance
- Introducing group-wide business units and CxO system
- Improving capital, asset, and cost efficiency
- Pursuing our cashless payment strategies
- Retail branch reorganization
- Customer-oriented business conduct
- Enhancing internal-control frameworks
- Valuing diversity and revision of our HR framework
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Chapter 5The Path for Our Future
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Chapter 6Opening a New Chapter in SMBC Group’s History