In early 2003 the Resona Group's capital adequacy ratio fell dangerously low. The bank had proposed to maintain its capital adequacy ratio above the legal limit by factoring in deferred tax assets. However, the value of these deferred assets could only be claimed if the company turned a profit in the future. Because the bank's profit outlook was so dim, Resona's auditor refused to certify the company's financial statement if the deferred tax assets were included. Without being able to count the deferred tax assets, the bank was effectively insolvent.