Three of the four commercial banks that officially qualified March 13 for a capital injection of public funds will cut a total 2,900 employees over the next three years as part of their restructuring plans.
Most of the banks also intend to reduce the average pay for employees and executives. The voluntary restructuring plans were a prerequisite for the banks' applications for the public money to boost their capital bases. The applications were approved by the Cabinet earlier in the day.
The four banks had submitted 25- to 40-page documents to the screening panel of the government-backed Deposit Insurance Corp. The DIC released the documents March 13 after approval by the Cabinet.
The four banks -- Dai-Ichi Kangyo, Long-Term Credit Bank of Japan, Nippon Credit Bank, and Chuo Trust & Banking Co. -- are the first group of approved applicants under the government's scheme to end the credit crunch and stabilize the country's financial system with the help of taxpayer money.
LTCB, for instance, plans to cut the average annual pay for executives by 20 percent, from 25 million yen to 20 million yen, over three years. However, Chuo Trust plans to increase the number of employees from 3,200 to 4,300 because it will take over 63 branches of the failed Hokkaido Takushoku Bank this fall.
The four banks were required to devise measures to cope with the credit crunch that has hampered business activities. All four expressed their intention to increase lending.
But there is no guarantee these banks will actually increase lending. Experts doubt the credit crunch will be considerably alleviated, partly because banks may use the public money to write off their bad loans.