Finance Minister Kiichi Miyazawa denied Wednesday that the government already has a set policy of supporting future mergers involving major banks.
At a regular news conference, Miyazawa said the government will decide on a case-by-case basis how to cope with bank merger plans, independent of troubled Long-Term Credit Bank of Japan’s situation.
The government has expressed full support for LTCB’s planned merger with Sumitomo Trust & Banking Co. in an effort to prevent a disaster in the financial sector.
Miyazawa said in general it would be desirable for major banks to have good reason for desiring a merger, adding the government and the Bank of Japan would probably help promote such a merger. But he said he has not heard of any plans at the moment and thus cannot make more specific comments.
In connection with the massive amount of severance pay LTCB has paid to former top executives, the finance minister urged other financial institutions to reconsider their own payments.
LTCB has paid 4.4 billion yen in retirement allowances to 35 senior executives for the past six years, according to a report the bank submitted to the Diet through the Financial Supervisory Agency. LTCB is asking them to return part of the money to aid the bank’s restructuring.
Miyazawa said LTCB’s generous payouts in the past cannot be easily accepted as reasonable. The public may consider it a “dreamlike story,” he said.
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