Under the deal, the government will inject 2.98 trillion yen in taxpayers' money into NCB to balance the lender's books. NCB, which came under state control in late 1998, is estimated to have liabilities exceeding assets by 3.24 trillion yen as of the end of this month, up from 3.05 trillion yen when it was nationalised. The takeover marks the first time a non-financial firm has won a foothold in the struggling banking sector and sets the stage for a dramatic shift in financial services from "old Japan" banks to innovative and more nimble outsiders. The market applauded the approval. Shares in Softbank jumped 16.58 per cent to 13,990 yen on Friday, although they were still down 79 per cent from a share-split adjusted peak of 66,000 yen in mid-February.

Some analysts, however, have questioned what Softbank Corp hoped to gain from a venture that risked pulling it too far from its core business and just how much of a scare the resuscitated NCB would prove for the nation's debt-heavy banks. The difference between NCB's negative net worth and the public fund total will be largely covered by deposit insurance premiums levied on all banks in Japan by the DIC. The DIC also said it had agreed to pump an additional 3.15 trillion yen into the bank largely to replenish its capital base, just behind the 3.24 trillion yen government recapitalisation of the failed Long-Term Credit Bank of Japan (LTCB), which was sold to a foreign investment fund.

Softbank is due to take a stake of just below 50 per cent, while its partners - leading Japanese non-life insurer Tokio Marine & Fire Insurance Co and leasing company Orix Corp - plan to hold just under 15 per cent each. The government put off the sale after politicians objected to a loss-coverage clause, under which the DIC agrees for three years to buy back NCB loans that have fallen in value by 20 per cent or more.