Post World War II high growth and Trust Banks

Japan suffered severe inflation following World War II, and the propensity to save declined. Trust companies encountered great difficulties in accumulating long-term funds. The enactment of the Securities and Exchange Act also separated banking and securities businesses, resulting in trust companies no longer being able to engage in securities underwriting, which was an important business for them.

Under such circumstances, with government's and General Headquarters (GHQ) policies, trust companies were converted to banks under the Banking Act in 1948 and became trust banks that conduct concurrent trusts business in accordance with the Concurrent Business Act.

Japan's financial system cultivated and strengthened specialized financial institutions beginning in the mid-1950s to facilitate effective and smooth supply of funds. In accordance with this policy, trust banks selected either trust business or banking business as their core business between the mid-1950s and the mid-1960s. On the other hand,regional banks ceased their trust business, and the trust divisions of city banks were separated and merged.

Subsequently, a need arose for long-term stable funds, particularly for key industries such as electricity, coal, and iron and steel to restore the economy as the post-war turmoil subsided. The Loan Trust Act was enacted in 1952, and trust banks began handling loan trusts. Although loan trusts had a strong influence as a source of long-term funds for industry from the post-war recovery period through the subsequent period of high growth, they became widely popular among the public as a method of long-term savings with a comparatively stable high interest rate. New products using trust structures underwent active development, and trust banks began to manage products such as qualified retirement pension trusts (1962), employees' pension fund trusts (1966), asset formation trusts (1972), specified donor trusts (1975), and charitable trusts (1977).

Recently, financial institutions and other corporations have been using asset securitization type trust (monetary claims trust, real estate trusts) to securitize loan claims, receivables, and real estate as a means of improving their financial positions and raising funds.

The national pension funds system was put in place beginning in 1989 to enhance the existing government-run pension system for people such as the self-employed. In this system, trust banks began to manage national pension fund trusts in 1991. In addition, defined contribution pensions were introduced in 2001 and defined benefits type corporate pensions were introduced in 2002. Since then, trust banks have managed defined benefits type corporate pension trusts, defined contribution pension trusts (corporate type), and defined contribution pension trusts (individual type). Furthermore, the qualified retirement pension system, which had been managed since 1962, ceased at the end of March 2012 in accordance with the 2002 Defined Benefits Corporate Pension Act.

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