The Bank of Japan and the Financial Supervisory Agency should re-examine second-category loans held by the nation’s commercial banks as soon as possible, Takashi Imai, chairman of the Japan Federation of Economic Organizations (Keidanren), said Monday.
Commercial banks have so far disclosed they hold about 65 trillion yen worth of “difficult to collect” or second-category loans, but those include loans to sound borrowers, financial experts say.
Since the loans were disclosed on the basis of self-examination and announced by each bank, the BOJ and FSA should re-examine them thoroughly by using common standards and determine whether they really are unrecoverable, Imai said. “After doing that, the financial authorities can order banks to improve their financial condition if necessary … and the results of the examinations should be disclosed,” he said.
Commenting on the government’s “bridge-bank” scheme, announced last week, Imai said it should be applied to small and medium-size financial institutions instead of major commercial banks.
While welcoming the plan’s potential for solving the problem of financial stability, he said it should not be applied to large banks because of its tremendous impact on the economy.
Imai said that, according to inspections by the Finance Ministry, liabilities do not exceed assets at any of the major banks and they thus do not need bridge banks.
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