Coalition panel OKs bill to ease way for bank sales of stocks.

TOKYO, May 27 Kyodo

A ruling coalition task force on financial policies approved Tuesday a law amendment aimed at reinforcing the functions of a stock-purchasing body, coalition lawmakers said.

Financial policy-makers of the Liberal Democratic Party, the New Komeito party and the New Conservative Party finalized the bill focusing on abolishing the requirement that banks contribute 8% of stock sales to Banks' Shareholdings Purchase Corp.

The amendment to the law restricting banks' shareholdings is expected to be submitted to the current Diet session later this week, the lawmakers said.

The mandatory 8% contribution has been seen as a hindrance to banks' use of the corporation, which was established in January 2002 by over 100 financial institutions across the country to help banks reduce their cross-held shares with other businesses.

The coalition lawmakers said the amendment is aimed at helping spur Japan's moribund stock market as sales of such cross-held shares have exacerbated the supply-demand balance.

Currently, the corporation's maximum allowable purchase of bank shares from other businesses is about half the total amount of shares of nonbank businesses it buys from banks. The revised law would also eliminate that difference, they said.

Among other features of the bill is a five-year extension of the stock-purchasing body's existence from the initial plan to terminate its operations in 2012, the lawmakers said.

The task force also decided to defer by two years the implementation of a clause limiting banks' shareholdings to within their own capital, a rule that was to be implemented in September 2004, they said.

Debate has been left to separate meetings on a contentious proposal to put a freeze on the mark-to-market method of accounting regarding the value of stocks held by companies, the lawmakers added.