Progress of Initiatives for Improvement and the Prevention of recurrence Regarding Administrative Actions Issued by the Kanto Local Finance Bureau [PDF:1.

CHIBA BANK NEWS

July 16, 2024

The Chiba Bank, Ltd.

Chibagin Securities Co., Ltd.

Progress of Initiatives for Improvement and the Prevention of recurrence Regarding Administrative Actions Issued by the Kanto Local Finance Bureau

On June 23, 2023, Chiba Bank, Ltd. (President: Tsutomu Yonemoto) ("Chiba Bank" or "the Bank") was issued with the administrative actions (Business Improvement Order) for situations where a problem related to the investors' protection was raised by the Kanto Local Finance Bureau, pursuant to Article 51-2 of the Financial Instruments and Exchange Act, regarding the financial instruments intermediary business related to the solicitation and sales of structured bonds. In accordance with Article 51 of the Financial Instruments and Exchange Act, Chibagin Securities Co., Ltd. (President: Yukihito Inamura) ("Chibagin Securities") was issued with the administrative actions (Business Improvement Order) from the Kanto Local Finance Bureau regarding business operations that violate the suitability principle for solicitation and sales of structured bonds.

Chiba Bank and Chibagin Securities reported to the Kanto Local Finance Bureau the progress of initiatives for improvement and the prevention (As of June 30, 2024) of their respective business improvement reports to the Kanto Local Finance Bureau, based on each business improvement order mentioned above, on July 24. Chiba Bank and Chibagin Securities

Progress in initiatives to improve and prevent recurrence is as shown in the attachment.

Chiba Bank and Chibagin Securities will continue to make the whole company efforts to improve operations and prevent recurrence of these issues while striving to regain the trust of all our stakeholders, including our customers.

End

（Attachment）

Progress of Initiatives for Improvement and the Prevention of recurrence Regarding the Administrative Actions Issued by the Kanto Local Finance Bureau (Overview)

July 16, 2024 Chiba Bank/Chibagin Securities

Introduction

On June 23, 2023, Chiba Bank, Ltd. was issued with the administrative actions (Business Improvement Order) for situations where a problem related to the investors' protection was raised, pursuant to Article 51-2 of the Financial Instruments and Exchange Act, regarding the financial instruments intermediary business related to the solicitation and sales of structured bonds. In accordance with Article 51 of the Financial Instruments and Exchange Act, Chibagin Securities Co., Ltd. was issued with the administrative actions (Business Improvement Order) regarding business operations that violate the suitability principle for solicitation and sales of structured bonds. Taking this situation very seriously, and each company has formulated a business improvement plan, including efforts to prevent recurrence, based on a fundamental cause analysis as an initiative for improvement.

Since the establishment of the relevant business improvement plan, we have made the whole company initiatives to improve operations and prevent recurrence of these issues. We will continue to steadily implement initiatives for improvement and prevention of recurrence, while striving to regain the trust of all our stakeholders, including our customers.

Progress of the entire effort

• Of the total 57 measures, implementation of major measures has been completed except for some measures that require system development.
• Assessing the effectiveness of the program through various internal and external surveys and questionnaires, and striving to improve the effectiveness of the program through PDCA.

	At present
Establishment of	Execution and
frameworks based on the
effectiveness verification	Penetration / Establishment
business improvement
of each measure
plan

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2

Initiatives to Improve Operations and Prevent Recurrence (Overview)

Penetration and thoroughness of the Purpose, Vision, Fiduciary Duty, Human Resource Development Policy Chiba Bank

P4

Establishment of the

business operation system

P7

Strengthening comprehensive proposal		Elimination of incentives in the
capabilities in the personal business		personal business

Strengthening the internal

management system

P8

Strengthening 1st line functions		Strengthening 2nd line functions		Strengthening 3rd line functions

Strengthening the

business management

system

P10

Strengthening group governance		Reform of organizational culture

Building a new business model linking with the banking and securities

Strengthening the business

management system

Ｐ11

Chibagin Securities

Strengthening governance by		Reform of organizational structure		Reform of corporate culture
management team

Establishment of the business management system

Ｐ12

Strengthening confirmation of the compliance suitability principle

Review of performance award system and personnel evaluation system

Sophistication of product selection process

Review of Human Resource development system and training system

Strengthening the

internal management

system

Ｐ13

Strengthening 1st line functionsStrengthening 2nd line functionsStrengthening 3rd line functions

Strengthening complaint response		Strengthening checks and balances by
	banks

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3

Purpose / Vision, Fiduciary Duty Policy , Human Resource Development Policy

Purpose		To create a local community better suited to bringing each person's hope to life

Customer

Support for prosperous lifestyles

Contribute to the resolution of regional

Offer

Fiduciary Duty Policy -Policy for acting "for the customer"-

Chibagin Group

Fiduciary Dutysocietal issues Policy

	Employees		Job satisfaction/compensation
Human	Resources		supporters
Development Policies
	Investor		Dividends

an empathetic set of values

Human Resources Development Policy

-Policy for "Promoting the growth and development of employees"-

"Become someone who keeps fighting for the customer".

think things through		utilize your own		gain more supporters
	strengths

Three Pledges - Action principles for the achievement of the Purpose and the implementation of fiduciary duty-

Whenever making a proposal to a customer or making a business decision, we always stop and think, will this proposal or decision lead to

the realization of the customer's		a solution to the customer's		the realization of prosperous
wish		problem		lifestyles for the customer

Vision		An Engagement Bank Group that works closely with the community

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4

Progress of Each Measure (Chiba Bank / Chibagin Securities)

Main measures

Major initiatives to date (until June 2024)

Major future initiatives

Penetration and thoroughness of the Purpose, Vision, Fiduciary Duty Policy,

Human Resource Development Policy

• The Purpose and Vision on business card and release paper, etc. (the first half of FY2023).

•

Started using the company logo with the Purpose for group companies (the second half of FY2023).

•

The fourth session of "Purpose and Vision

•

"IR Day", an IR event focusing on business improvement and governance, was held (Apr. 2024).

Penetration and

Penetration Project Team" will be held (Sep.

thoroughness of the

•

Group CSO delivered a video message about Project Team activities and penetration status of the Purpose and

2024).

Purpose and Vision

Vision on "Fiduciary Duty Day"(23rd of each month) (May. 2024).

•

Fixed point observation by CX survey*1 (the

•

"Group Company Opinion Exchange Meeting" was held by group company staffs (May. 2024).

second half of FY2024).

•

The third session of "Purpose and Vision Penetration Project Team" was held, discussing

evaluation and

issues of various penetration measures, and confirming current position in the penetration process (Jun. 2024).

•

Established Fiduciary Duty Handbook and the "Three Pledges" (Principles of Conduct for Executives

and Employees) (Oct. 2023).

•

Started of Fiduciary Duty monthly study meeting (Oct. 2023 onwards).

• Setting 23rd of each month as the "Fiduciary Duty Day" and started to distribute video messages from

executives (Dec. 2023 onwards).

•

Started "Fiduciary Duty Hearing" for the purpose of surveying the penetration of Fiduciary Duty Policy, etc.,

•

Reporting of businesses adopting the Principles

Penetration and

for Customer-Oriented Business Operations to

and collecting opinions of branch staffs on various measures, etc. (Dec. 2023 onwards).

thoroughness of the

•

Signed an advisory agreement with an outside consulting firm for Fiduciary Duty penetration (Jan. 2024).

the Financial Services Agency (Jul. 2024).

Fiduciary Duty Policy

•

Promote culture reform based on advice from

•

Implemented the "Special Fiduciary Duty Award" to commend the excellent efforts of the "customer-

external advisors (the second half of FY2024).

oriented business management," which is an important pillar in the realization of the Purpose (the second half

of FY2023).

•

Presentation by the external advisor at meeting of all branch managers (Apr. 2024).

•

Published the Q&A on Fiduciary Duty (May. 2024).

•

Updated business improvement efforts and revised Fiduciary Duty Policy (Jun. 2024).

• The measures that have already been implemented in the "Major future initiatives" in the material released on April 15, 2024 have been transcribed into "Major initiatives to date". New initiatives, additional measures, etc.is highlighted.

※1 Research on customer loyalty indicators and CX index is based on CXMM of Nomura Research Institute, Ltd

CXMMis a registered trademark of Nomura Research Institute, Ltd. (https://www.nri.com/jp/service/solution/fis/cxmm)

Copyright © 2024 The Chiba Bank, Ltd. All Rights Reserved.

5

Progress of Each Measure (Chiba Bank / Chibagin Securities)

Main measures

Major initiatives to date (until June 2024)

Major future initiatives

Penetration and thoroughness of the Purpose, Vision, Fiduciary Duty Policy,

Human Resource Development Policy

Penetration and thoroughness of the Human Resource Development Policy

• Human Resources Division started giving advice on careers in line with the Human Resource Development Policy during the annual personnel interview (Oct. 2023 onwards).
• Conducted training for managers on coaching skills for vision formulation and penetration (Jul. 2023 - Feb. 2024).
• Linked the employee performance evaluation system to the Human Resource Development Policy (the first half of FY2024 onwards).
• Incorporated the Fiduciary Duty element into the target setting of bonus evaluation (the first half of FY2024 onwards).

• Career development support for staff led by senior deputy general manager of career support (ongoing).

• The measures that have already been implemented in the "Major future initiatives" in the material released on April 15, 2024 have been transcribed into "Major initiatives to date". New initiatives, additional measures, etc.is highlighted.

Monitoring (Customer Evaluation)

Three intentions

Analyze issues that need

to calculate CX index

to be prioritized by

・Reporting to management

CX index※1

understanding the

Continue

difference between

・Briefing for headquarters

Reflected in

departments

Highest point in

Highest point in

evaluations and

・Return (customer

each measure

the banking

the banking

expectations for the

feedback) to branches

industry*3

industry*3

Recommen-

Purchase

various values we provide

7.00

dation

to customers.

～～～～

6.50

*1

CX index is based on CXMM of Nomura Research Institute, Ltd.

Business

In 2022

In 2023

CXMMis a registered trademark of Nomura Research Institute, Ltd.

6.00

Improvement

April to

October

to

https://www.nri.com/jp/service/solution/fis/cxmm

（Japanese）

Order in June

May

November

5.50

2023

*2

CX Benchmark Survey FY2023 is a survey conducted by Nomura Research Institute, Ltd.

Average of

Average of

Implementation period: FY2022 figures are for December 2021, and FY2023 figures are for December 2023.

banking

5.00

banking

industry*2

industry*2

*3

The highest score among banks that introduced CXMM in the most recent year since the completion of the

FY2022

FY2023

survey analysis for each year of Chiba Bank

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6

Progress of Each Measure (Chiba Bank)

Main measures

Major initiatives to date (until June 2024)

Major future initiatives

Establishment of the operational management system (problem of incentive mechanism)

• Implemented four major measures to investment trust (Apr. 2023 onwards in sequence).

			① Improving financial literacy of customers by building an asset management portal site
			② Provide highly convenient non-face-to-face channels, including investment trusts of app
			③ Specialization of "careful explanation/ convincing proposal" through paperless investment trust
Strengthening			procedures		•	Further utilization of the "Okane no Basket" (Money
		④ Introduce Advanced consulting proposals through the use of the proposal tool the "Okane no			Basket).
comprehensive proposal
		Basket" (Money Basket)		•	Train specialists who can provide comprehensive
capabilities in the
personal business	•	Started dispatching trainees to be trained as specialists who can provide comprehensive consulting		consulting services for individuals is planned to be
			services for individuals (FY2023 onwards).		50 (through FY2025).
	•	Launched customer satisfaction questionnaire on "Okane no Basket"(Money Basket) (Feb. 2024).
	• Started distributing case study videos of "Okane no Basket"(Money Basket) utilization (Mar. 2024).
	•
	Briefing sessions were held on "Okane no Basket"(Money Basket) for insurance companies and investment
			management companies (Apr. 2024).
	• Established the Banking and Securities Strategic Review Committee, and froze the profit targets of
			Chibagin Securities (Jul. 2022).
	• In principle, the introduction of customers to Chibagin Securities by Chiba Bank was suspended (Jul.
			2022).
	•	New sales of structured bonds were completely suspended (Aug. 2022).	•
	• Abolished the profit target for the individual division of bank branches and reviewed the assessment	Management reform training for general managers
Elimination of incentives		and senior deputy general managers of branch to
		system by Fiduciary Duty and activity volume, etc. (Oct. 2023 onwards).
in personal businesses				strengthen sales skill leadership and acquire
• Implement training, video distribution on Fiduciary Duty and penetration of new evaluation system to
		management skills (Jul. 2024).
			focus on activity volume (Sep. 2023 onwards).

• • Completely eliminated the revenue return incentive from Chibagin Securities that had been generated when a customer referred by the Bank, closing a deal (Oct. 2023).
  • An outside professional gave a lecture about sales measures to individuals to general managers and staffs (Apr. 2024).
• The measures that have already been implemented in the "Major future initiatives" in the material released on April 15, 2024 have been transcribed into "Major initiatives to date". New initiatives, additional measures, etc.is highlighted.

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7

Progress of Each Measure (Chiba Bank)

Main measures

Major initiatives to date (until June 2024)

Major future initiatives

Strengthening the internal management system

Efforts to Understand the actual status of the workplace

•

Identification of issues and consideration of

• Opening of "Chocotto line" to group companies (Sep. 2023)

improvement measures based on analysis of

engagement survey results (ongoing).

• Conducted engagement surveys for staffs (first survey: Sep. 2023,

second survey: Apr. 2024).

•

•

Conduct 360-degree evaluation to group

Talent management system "Talent Palette" introduced to group companies (Apr. 2024).

companies (Aug. 2024).

•

Established "Engagement Improvement Committee" to study and discuss various measures to improve

•

The first session of "Engagement Improvement

Strengthening 1st

engagement (Jun. 2024).

Committee" will be held (Sep.2024)

line functions

Strengthening internal management functions on 1st line

•

Follow-up of participants in training for newly

• Establishment of new criteria for referral to Chibagin securities (Apr. 2023).

assigned in charge of the internal administration

• Newly-established practical training for newly assigned in charge of the internal administration supervisors (Oct.

supervisors (ongoing).

2023).

•

The effectiveness of suitability verification tools will

•

Introduction of suitability verification tools at all branches (Mar. 2024).

be verified, and improvements and additions of

functions will be made as necessary (ongoing).

•

Improvement of suitability verification tools and dissemination of information on how to utilize them (Jun. 2024).

•

Appointment of the General Manager in charge of Corporate Management, consolidation of the Compliance

and Risk Management Division and the Service Quality Management Division, and Newly-established the

"Customer Support Monitoring Office" in the Compliance and Risk Management Division (Oct. 2023).

• Started conducting direct customer interviews regarding financial product sales by headquarters staff (Dec.

•

Recording interviews with business-use

Strengthening

smartphones will be starting(Aug. 2024).

2023 onwards).

2nd line functions

•

Report on the implementation status of the NPS®※1 questionnaire for customers who have conducted financial

•

Using the text mining tool for advanced analysis of

complaints, requests, etc. (Sep. 2024).

product transactions at the internal meeting (Feb. 2024 and

May. 2024).

•

In the "watch alert" function of "Okane no Basket"(Money Basket), corrective action is triggered when suspicious

activity is detected in Fiduciary Duty (Apr. 2024).

• The measures that have already been implemented in the "Major future initiatives" in the material released on April 15, 2024 have been transcribed into "Major initiatives to date". New initiatives, additional measures, etc.is highlighted.

※1 NPS® is a survey method to measure customer loyalty and is registered trademark of Bain & Company, Fred Reichheld, NICE Systems, Inc

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8

Progress of Each Measure (Chiba Bank)

Main measures	Major initiatives to date (until June 2024)	Major future initiatives

Strengthening the internal management system

• Strengthen group collaboration in the audit department through participation in conference bodies of the Audit and Inspection Division of Chibagin Securities by the Audit and Inspection Division of the Bank (Sep. 2023 onwards).
• The President is officer in charge of the Audit and Inspection Division and is deeply involved in PDCA (Oct. 2023 onwards).

Strengthening 3rd •	The Audit and Inspection Division reviews the implementation status of the business improvement plan and makes
line functions	recommendations for each measure to the relevant division (Jan. 2024 onwards).
•	Conducted thematic audits "Progress of the business improvement plan" (Feb. 2024)
•	Introduction of cultural audits (Mar.2024).
•
The Audit and Inspection Division participates in accompanying support with a consulting firm to improve internal
	management system of Chibagin Securities (Apr.2024).

• Sophistication of culture audits (ongoing).
• Improve effectiveness of business improvement measures (ongoing).

• The measures that have already been implemented in the "Major future initiatives" in the material released on April 15, 2024 have been transcribed into "Major initiatives to date". New initiatives, additional measures, etc.is highlighted.

Monitoring (internal evaluation) FY2023 Engagement Survey Results for Staff (Percentage of Positive Responses)

Overall Score	I feel that my current job is	I share the Bank's The Purpose	I feel that I am contributing to society,
(Mean of main scores）	worthwhile	and Vision.	customers, and the community through
			my work.

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