Printer Friendly

Lower house committee starts debating bank woes.

TOKYO, Dec. 3 Kyodo


The House of Representatives Budget Committee on Monday started an intensive debate on how government authorities should deal with Japan's mountain of banking woes.

Topics discussed included the effects of the disposal of bad loans on the financial system, the possibility of pumping public funds into big banks and the collapse of credit unions linked to a pro-North Korean group in Japan.

The impact on Japanese banks of the financial ruin of U.S. energy giant Enron Corp. was also taken up.

Financial Services Agency (FSA) Commissioner Shoji Mori told the panel he sees no need for the government to inject public funds again into major banks as they are making progress in clearing bad loans from their balance sheets.

Mori also said the government should proceed with plans to abolish the system of providing unlimited guarantees on bank deposits as scheduled in April 2002 and introduce a ceiling on deposit protection.

The deliberation was held after 14 major Japanese banks in late November released plans to dispose of 6.44 trillion yen in irrecoverable loans in the current fiscal year ending next March 31, more than three times the sum reported earlier.

The scale of the disposal is forcing some banks to tap into their legally mandated capital reserves. Plunging stock prices also threaten their financial health as snowballing securities appraisal losses could result in some lenders becoming undercapitalized.

Akio Kioi, president of the governmental debt-collection body Resolution and Collection Corp. (RCC), said it will buy soured loans from banks in a way that will ensure no additional public money is spent on the problem.

Regarding the collapse of Enron, Mori said its impact on Japanese banks seems limited as their collective exposure to the Enron group is estimated at less than 100 billion yen.

He also said he plans to ask the Investment Trusts Association of Japan to devise stricter guidelines on risk management of money management funds (MMFs) as funds that incorporated euroyen bonds issued by Enron fell below par value following Enron's financial trouble.

During Monday's session, the financial authorities faced questions from committee members about whether their past inspections of the failed Korean credit unions were too lenient.

Industry analysts said it is expected the government will provide some 1 trillion yen to such institutions to guarantee their deposits and help them rehabilitate.

Last week, Tokyo police arrested a senior official of the pro-Pyongyang General Association of Korean Residents in Japan (Chongryon) on suspicion of embezzlement in a case involving the failed Chogin Tokyo credit union.
COPYRIGHT 2001 Kyodo News International, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Comment:Lower house committee starts debating bank woes.
Publication:Japan Policy & Politics
Geographic Code:1USA
Date:Dec 10, 2001
Previous Article:African development ministerial confab held in Tokyo.
Next Article:LDP and EU envoy agree on cooperation on Afghan support.

Related Articles
Affordable housing fund passes house in GSE reform bill: bill's sponsor believes billions of dollars will be generated for the construction,...
Kyodo economic news summary -5-.
U.S. economy saw modest but slower growth in late 2007, Fed says.
Kyodo economic news summary.
Interest rates hope for homeowners; Bank chiefs set to make their third cut in five months.
Congress balks at huge US financial bailout.
Congress balks at huge US financial bailout.
Recovery hopes are hit.
Congress balks at huge US financial bailout.

Terms of use | Privacy policy | Copyright © 2021 Farlex, Inc. | Feedback | For webmasters |