DIC takes over 710.3 bil. yen credits from Shinsei Bank.

TOKYO, May 16 Kyodo

(EDS: UPDATING WITH MORE INFO)

The state-run Deposit Insurance Corp. (DIC) bought 168 bad loans worth a total of 710.3 billion yen from Shinsei Bank until March for 442.6 billion yen, the Financial Services Agency (FSA) said Thursday.

The DIC also took over 41 nonperforming loans worth 70.5 billion yen from Aozora Bank in the same period for 42.1 billion yen, the FSA told a joint meeting of two financial affairs panels of the ruling Liberal Democratic Party.

From August last year to March this year, the DIC took over 444.4 billion yen worth of bad loans in 113 cases from Shinsei Bank for 286.9 billion yen, as well as 33.2 billion yen worth of such loans in 25 cases from Aozora Bank for 20.9 billion yen, the FSA said.

Under a deal between the state and the two banks, Shinsei Bank and Aozora Bank can ask the DIC to take over bad loans if their value falls sharply, or should their borrowers go under or suffer business trouble.

Shinsei Bank, the reborn entity of the failed Long-Term Credit Bank of Japan, made a fresh start under the new name in June 2000 after being sold to a U.S. investment fund.

Aozora Bank is the reincarnation of failed Nippon Credit Bank. It was put under government control between December 1998 and August 2000, and then acquired in September 2000 by a consortium led by Softbank Corp., Orix Corp. and Tokio Marine & Fire Insurance Co.