In a bid to end a cautious trend in bank lending, the Finance Ministry said Wednesday it will essentially push back by one year the planned introduction of stricter capital requirements for banks operating solely in Japan.
The new standard on capital-to-asset ratios is designed as an early warning system should banks start to fall into financial disarray. It will take effect April 1, but Finance Minister Hiroshi Mitsuzuka said that if these banks present sound management-improvement programs showing that their capital-to-asset ratios will grow to at least 4 percent within a year, authorities will not take corrective action until April 1, 1999.
Introduction of a capital-to-asset ratio of 8 percent -- and prompt corrective action -- will go ahead as scheduled for banks with overseas business, Mitsuzuka said. But the ministry also said it will change the methods used for appraising stocks to ease the burden on these banks.