It is not necessarily desirable to allow a bank to fail and then place it under the “bridge bank” scheme, Vice Finance Minister Koji Tanami said Monday.
Tanami said other measures can be taken to deal with banks before they go under, such as prompt corrective action — in which the government forces restructuring or suspension of operations — and capital injection of public money.
Tanami made the comment in connection to government-backed merger talks between the ailing Long-Term Credit Bank of Japan and Sumitomo Trust & Banking Co.
The government’s strong support for the merger plan is seen as reflecting its intention to keep major banks from failing. Prime Minister Keizo Obuchi on Thursday personally asked the president of Sumitomo Trust to get the proposed merger moving.
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