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FRC determined to push through bank reorganization: minutes.

TOKYO, June 8 Kyodo

The Financial Reconstruction Commission (FRC), the predecessor of the Financial Services Agency (FSA), set out to push through a major reorganization of 17 major Japanese banks immediately after its inauguration in December 1998, according to minutes of the FRC's meetings disclosed Friday by the FSA.

The FRC, a government agency that was disbanded in January for replacement by the FSA, was charged with disposing of failed financial institutions and helping major banks strengthen capital bases.

According the minutes of its first seven meetings from December 1998 to January 1999, the FRC also conducted a detailed study to devise a standard for injecting public funds into banks to bolster their weak capital bases.

The minutes, which were published at the request of Kyodo News under the Information Disclosure Law, are the first FRC meeting minutes ever to be made public.

The minutes show the FRC wanted banks requesting public fund injections to write off bad loans incurred during the era of an asset price bubble.

The agency also required the banks to deal strictly with classification of their loan portfolios and in setting aside loan-loss reserves, the minutes said.

The FRC commissioners were generally skeptical about moves by banks to forgive their loans to troubled corporate borrowers such as construction companies.

During one meeting, one commissioner said there were too many major banks in Japan, while another commissioner said he wanted banks that lacked competitiveness to exit from the market.

During the two years of its existence, the FRC helped a total of 25 banks boost their capital with injections of public money. The group held a total of 216 meetings over the two years.

The minutes of the other meetings are expected to be published sequentially by the end of March 2002, FSA officials said.
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Publication:Japan Weekly Monitor
Date:Jun 11, 2001
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