Finance Minister Hiroshi Mitsuzuka said Sept. 30 that his ministry is not at present planning to help the troubled Hokkaido Takushoku Bank increase its capital.

Speaking at a regular news conference, Mitsuzuka said the commercial bank is making serious efforts on its own to outline a restructuring plan and raise new capital. “Basically, a bank needs to work things out on its own,” he said, adding that the ministry will continue to monitor developments.

In September, Hokkaido Takushoku, the smallest of the nation’s 10 “city banks,” and Hokkaido Bank, a regional bank, acknowledged what observers had suspected for months — that the merger they originally planned for April 1998 would be postponed. Many industry sources said one of the main reasons for the delay was lingering doubt within Hokkaido Bank that Takushoku had more nonperforming assets than it had initially revealed.

Hokkaido Takushoku is currently seeking to improve its balance sheet, but many financial institutions, such as some life insurers, have expressed reluctance to help, also due to concerns over the bank’s sour loans. Some observers say the Finance Ministry, which had hoped the merger would help ease Hokkaido Takushoku’s woes, will have to step in and call on financial institutions to help prop up the bank.

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