Following the government's decision to temporarily place the Long-Term Credit Bank of Japan under state control, Finance Minister Kiichi Miyazawa said Friday that the bank's depositors and clients do not have to worry about its imminent takeover.Speaking at a news conference, he said all depositors' assets will be protected and the LTCB's derivatives transactions will be guaranteed under newly enacted legislation to stabilize the country's financial system."There is nothing to be worried about," Miyazawa said, attempting to allay fears of those at home and abroad. He also said that given the long parliamentary debate on such a course of action, the LTCB's temporary nationalization must not come as a surprise.Bank of Japan Gov. Masaru Hayami said in a statement that the central bank will extend full support to help stabilize the financial system. "The LTCB will continue operations as a temporarily nationalized bank," he said in the statement. "Thus, all of the bank's obligations -- including deposits, debentures, interbank borrowings and derivative transactions -- will be performed smoothly."The BOJ is expected to offer financial support to the Deposit Insurance Corp. in its fundraising. Under the newly adopted system, the DIC will acquire all LTCB shares and extend necessary funds to continue its management. "The BOJ strongly expects that the LTCB restructuring measures promptly will be implemented while it is nationalized," Hayami said. "We will continue to take the utmost efforts, in cooperation with the government, to ensure stability of the Japanese financial system."The BOJ already has provided a full explanation of the nationalization scheme to financial authorities abroad to avoid market confusion, the central bank said. Meanwhile, the LTCB offered an apology and tried to explain that little will change in its business operations. "As a participant in the financial system, we deeply regret the current situation it is in and offer apologies to our shareholders, customers and other parties involved for causing great concerns and for affecting its stability," the bank said in a statement.The LTCB's current directors are expected to resign soon after the new management is appointed by the planned Financial Revitalization Commission, to be formed by the end of the year under the state control scheme.
