Financial leaders play down worries, give support to banks

Financial authorities continued Feb. 19 to play down concerns that the nation’s financial system is in dire straits, stressing that they will support banks while urging them to continue restructuring efforts.

Finance Minister Hiroshi Mitsuzuka told a news conference that he is continually informed of developments at the nation’s financial institutions, and that none are in trouble. “If banks, including long-term credit banks, make every effort to achieve healthy management, they will be able to overcome (the present situation,)” he said, adding that authorities would fully support financial institutions that make all-out, self-help efforts.

Similar remarks were made earlier in the day by Bank of Japan Gov. Yasuo Matsushita, who said that he welcomes banks’ own efforts to restore public trust through restructuring, and that the BOJ is prepared to take steps to ensure stability in the financial community. There have been several precedents for steps the central bank could take, including extending special loans, Matsushita said. “But looking at the current state of things, I don’t think things have come to that state,” he added.

Both the general public and financial markets have become queasy over incessant concerns about the health of Japanese financial institutions, especially Nippon Credit Bank, one of the three long-term credit banks. With stock prices still at low levels and financial institutions still burdened with considerable amounts of nonperforming loans, fear over the future of some of the weaker banks is growing.