TOKYO -- The Japanese government guaranteed the Development Bank of Japan's crisis loans to Nissan Motor, Nikkei has learned, a move that could potentially leave taxpayers on the hook for future losses at the troubled automaker.
In May, the government-backed lender provided 180 billion yen ($1.7 billion) in loans to the automaker. Of this, 130 billion yen was guaranteed by the government, Nikkei has learned.
Under the arrangement, the government is expected to shoulder 80% of the guaranteed portion if the loans go sour.
It was the largest loan guarantee ever provided by the government to a major business corporation.
As a government-backed institution, the DBJ is supposed to rescue businesses that are hit by natural disasters or major financial crises, such as that created by the coronavirus pandemic.
Under the government-mandated coronavirus crisis support scheme created in March, the DBJ had made 185 loans to companies worth a total of 1.88 trillion yen by the end of July.
Nissan's loan came after the government agreed to a damage protection arrangement in which the DBJ pays an annual premium of between 0.1% to 1% of the loan's value for the guarantee.
Nissan was the only borrower that required such a guarantee.
The DBJ sought support from the government to expedite the loan decision, which came when Japan was under an emergency decree.
Nissan has secured a total of 832.6 billion yen in loans from both public and private lenders since April.
A Nissan representative said the company is not aware that the government is acting as a guarantor on its behalf.
The DBJ is basing its pandemic loans on the size of the borrower and the scale of the virus-caused damage.