The state-run Resolution and Collection Corp. has decided to buy real estate put up as collateral for loans that soured from 35 financial institutions at one-twentieth combined book value.

The Financial Reconstruction Commission has approved a request by the state-run Deposit Insurance Corp., which is charged with determining the price of bad-loan collateral, to have the RCC buy real estate collateral with a book value of 138.40 billion yen for 6.66 billion yen, commission officials said Monday.

The 35 financial institutions include 11 of the nation’s 17 largest commercial banks.

The purchase, expected to materialize Sept. 29, will mark the first time that a government-run body charged with collecting bad loans will buy real estate collateral.

The burst of the asset-inflated bubble economy of the late 1980s wiped out the value of real estate used as collateral for loans, leading to the current bad loan-riddled banking system.

In March, Japan amended the law governing the duties of the RCC so that it could buy bad loans from “healthy” financial institutions on top of those from failed banks.

In the period from June 22 through July 9, the FRC had financial institutions submit requests to have the RCC buy real estate collateral for bad loans.

Those loans are largely responsible for swamping lenders’ balance sheets with latent losses.Specs on state plots available on Web>
The Finance Ministry has publicized details of 19,027 pieces of state-owned real estate to accelerate efforts to sell them.

The information was made public Monday in response to calls from the Central National Property Council, an advisory panel to the finance minister, and from other quarters.

Details of the properties are available on the ministry’s Web site: http://www.mof.go.jp. Of the total, 5,011 are buildings and land that government ministries and agencies own in prefectural capitals and Tokyo’s 23 wards. The remaining 14,016 are plots held by the Finance Ministry.

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