In its September 1997 report to the Bank of Japan, the now-nationalized Nippon Credit Bank pretended to have fewer bad loans than it actually had, it was learned Monday.

Bank of Japan Gov. Masaru Hayami told the Lower House Budget Committee that Shigeoki Togo, then president of NCB, visited the central bank on Sept. 19, 1997, and claimed the bank had 700 billion yen worth of “third-category” loans, or loans perceived difficult to collect.

Speaking before the same committee, however, Masaharu Hino, chief of the Financial Supervisory Agency, said the Finance Ministry found 1.12 trillion yen worth of third-category loans in its inspection in April 1997.

He said the ministry conveyed those results to the bank on Sept. 11 the same year. Contradictory statements by the BOJ governor and FSA chief effectively revealed that the now-defunct bank reported some 400 billion yen less in bad loans to the BOJ despite knowing of the ministry’s inspection results.

The results were not reported last March to the BOJ’s screening panel involved in injecting public funds, putting into question not just the responsibility of NCB but also of the Finance Ministry and the BOJ as regulator.

Finance Minister Kiichi Miyazawa, however, defended his ministry, saying the inspection results were not to be disclosed to any third party, including the BOJ.

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