Screening criteria to determine whether public funds should be infused into banks should be revised, Finance Minister Kiichi Miyazawa indicated Friday, saying the current standards are difficult to understand.

The criteria, set by an in-house panel of the Deposit Insurance Corp. before capital injections amounting to roughly 1.8 trillion yen were made to 21 banks in March, include conditions under which financial institutions would be eligible for public money.

Miyazawa told a news conference that the criteria should be made as clear as possible so that the public can understand them. It would be up to the seven-member DIC panel, on which Miyazawa himself sits, to modify the criteria, he added.

His comments were taken as another sign of confirmation that the government is willing to discuss issues regarding resurrecting the banking sector in cooperation with the opposition.

It was the DIC panel that decided to inject capital into the troubled Long-Term Credit Bank of Japan, which is currently pinning hopes of survival on a proposed merger with Sumitomo Trust & Banking Co.

But Miyazawa stressed that the financial stabilization law, which allows for such use of public funds, itself must remain intact even though opposition parties are demanding that it be abolished. The law allows for a total 13 trillion yen in public money to be used to help shore up banks’ capital bases.

Regarding the LTCB’s plan to give up loans totaling 520 billion yen extended to its affiliate nonbanks, including Japan Leasing Corp., the finance minister said the DIC panel will decide whether nonbanks should be scrutinized.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.