Ministry leans on financial firms in NCB bailout

Finance Ministry sources said Apr. 4 that it has asked financial institutions to waive stock dividends on a new forthcoming issue by Nippon Credit Bank in return for below-market prices on the shares.

NCB is the smallest of Japan’s three long-term credit banks. It plans to issue new stock in an effort to raise its capital-adequacy ratio by 300 billion yen as part of a restructuring plan to get it out of financial danger brought on by bad loans.

It plans to write off some 560 billion yen — mostly bad loans — when it closes its books for fiscal 1996. Of the 300 billion yen it hopes to raise, some 80 billion yen will come from the Bank of Japan in a purchase of preferred NCB stock.

The Finance Ministry-sponsored plan also encourages private-sector firms to purchase 70 billion yen worth of common stock the ailing NCB will offer.

The ministry said it proposed that the preferred stock have a yield of only 1 percent, sources said. But to sell the discounted stocks, NCB will need the approval of more than two-thirds of its shareholders.