Loans to smaller firms increased

Fifteen major Japanese banks are considered likely to have reached a target of increasing their fiscal 1999 loans to small and midsize enterprises by 3.7 trillion yen over the previous 12 months, an industry association announced Tuesday.

The Japanese Bankers Association said the tally of the loans probably increased by 4.8 trillion yen to 5.3 trillion yen in fiscal 1999, which ended Friday.

The 15 banks had pledged to boost loans to small and midsize firms in exchange for receiving 7.46 trillion yen in taxpayers’ money in March 1999. The injection was intended to end the credit crunch by pushing up the capital-adequacy ratios of the 15, which had depleted capital bases due to writing off bad loans.

There had been fears that the target would not be met because of frail fund demand amid the weak economy. At the end of September, outstanding loans at six of the 15 banks had declined over year-before levels.

However, the loans probably increased after the banks instituted a number of measures such as setting up investment associations for venture companies.

Such loans by Fuji Bank are expected to have increased by more than 1 trillion yen, and those by Tokai Bank and Daiwa Bank are expected to have risen by some 450 billion yen, the association said.

Katsuyuki Sugita, head of the bankers association, told the House of Representatives Finance Committee on Tuesday that fund demand has been picking up since the latter half of fiscal 1999.

In reports submitted to the Financial Reconstruction Commission, the 15 banks said they would increase their outstanding loans to around 117.1 trillion yen by the end of March 2000 from 113.4 trillion yen at the end of March 1999.

The banks’ outstanding loans at the end of March this year are expected to total 118.2 trillion yen to 118.7 trillion yen.

The 12 others are Asahi Bank, Dai-Ichi Kangyo Bank, Sakura Bank, Sanwa Bank, Sumitomo Bank, Chuo Trust & Banking Co., Mitsubishi Trust & Banking Corp., Mitsui Trust & Banking Co., Sumitomo Trust & Banking Co., Toyo Trust & Banking Co., the Industrial Bank of Japan and the Bank of Yokohama.

Chuo Trust and Mitsui Trust merged Saturday to create a new bank.