Hakuo Yanagisawa, state minister in charge of financial system revitalization measures, pledged Tuesday to accelerate efforts to solve bad debt problems.

He made the remarks in response to a statement made Monday by U.S. Treasury Secretary Robert Rubin in Washington on Japan’s banking problem.

Speaking at a news conference following a Group of Seven meeting of finance chiefs and central bankers, Rubin said, “On the banking side … there are still enormous challenges ahead, including the question of disposing of bad loans (by Japanese banks).”

A G7 communique also said it is “crucial” to encourage Japanese “banks to dispose more actively of nonperforming assets.”

“I basically share the view (held by Rubin),” Yanagisawa told a Tuesday news conference.

Yanagisawa, also chairman of the Financial Reconstruction Commission, said the progress of restructuring efforts pledged by 15 major banks in return for public funds will be reviewed every three months.

Meanwhile, he said the government may not convert into common stock the convertible preferred stock purchased by the government-backed Deposit Insurance Corp. from four of 15 banks: Daiwa Bank, Mitsui Trust & Banking Co., Toyo Trust & Banking Co., and Chuo Trust & Banking Co.

The 15 banks received a total of 7.46 trillion yen in public funds from the government in return for preferred shares. DIC has the option to convert them into common shares after a hold period that varies from bank to bank. The hold period for the shares in the four banks is three months.

DIC may convert the preferred stock issued by Fuji Bank and Sumitomo Bank after seven years.

Asked whether the government will exercise its conversion options for the four banks, Yanagisawa said, “We have not yet decided to convert them, but we will receive reports from the banks on how far they’ve moved ahead with their management improvement programs” in June, when the conversion periods start.

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