Rehab support fund wins praise from Takenaka

Financial Services Minister Heizo Takenaka on Friday welcomed the involvement of a government-affiliated financial institution in the establishment of a support fund aimed at helping to rehabilitate Daiei Inc., saying the move is essential at a time when private-sector financial institutions are weak.

“Generally speaking, it is critical to utilize the support fund to ensure the implementation of (a firm’s) restructuring plan and to enhance the value of the company,” Takenaka told a news conference.

He also said the step is an important part of the government’s efforts to reform the nation’s financial system, which is designed to strengthen banks and rehabilitate industries.

On Thursday, three major creditor banks and the Development Bank of Japan announced a plan to establish a fund of 60 billion yen to support the rehabilitation efforts of the financially troubled supermarket operator.

The DBJ will invest 10 billion yen in the fund while the three creditor banks — UFJ Bank, Sumitomo Mitsui Banking Corp. and Mizuho Corporate Bank — will contribute the remaining 50 billion yen.

The DBJ’s 10 billion yen investment will be the bank’s biggest capital injection into a corporate rejuvenation fund since the government decided a year ago to allow the institution to invest 100 billion yen in such funds to assist the rehabilitation efforts of ailing firms.

Takenaka said the DBJ’s involvement will not hamper government efforts to reorganize government-affiliated financial institutions.

“We will continue to discuss the reorganization from the long-term perspective,” Takenaka said. “But the (DBJ’s involvement) should not be linked to discussions on the reform of state-affiliated institutions.”

He added there is a view that government-run financial institutions should be utilized more because private-sector financial institutions are currently not fulfilling their roles.

Takeo Hiranuma, minister of economy, trade and industry, also welcomed the creation of the fund, telling a separate news conference that the financial institutions decided on the measure to help rehabilitate Daiei.

“The measure is not bad,” he said.

Hiranuma also said similar funds may be established for other firms, but that the government will not tell private sector firms what to do.

“We should not say what they should to do,” he said. “Financial institutions as well as (debtor) firms should decide on what measures to take . . . and similar cases may appear.”