With the top court decision dated Monday, Hiroshi Yamauchi, 82, and Sadamasa Kawatani, 74, both former presidents of the bank, commonly known as Takugin, will serve two years and six months in prison for breach of trust.

Yoichi Nakamura, 69, the head of a resort hotel developer that received loans from Takugin, will serve 18 months, also for breach of trust, as the decision finalized a Sapporo High Court's guilty ruling.

"Defendants, Yamauchi and Kawatani, were both aware the borrower is unlikely to recover from near-bankruptcy and that giving additional loans could cause more damage (to the bank)," the decision by Presiding Justice Kohei Nasu said, concluding their decision to extend loans was "unreasonable."

It is necessary for a bank to secure an objective reconstruction plan and its own stable management if it extends uncollateralized loans to a company in a state of near bankruptcy, the ruling said.

Yamauchi and Kawatani extended loans totaling some 8.6 billion yen to Nakamura's group between 1994 and 1997 although they knew the group lacked repayment capacity and caused damage to Takugin with it, according to the high court ruling.

Takugin, a commercial bank with a nationwide branch network, went under in November 1997 with a mountain of bad loans amassed during the bubble-economy era from the late 1980s to early 1990s.