Shinsei Bank will waive 15.3 billion yen of its 43 billion yen in outstanding loans to ailing construction firm Hazama Corp. and then sell the remainder to the debt-ridden company's two main banks, sources close to the negotiations said Wednesday.

Terms for the sale of the loans to Dai-Ichi Kangyo Bank and Mitsubishi Trust & Banking Corp., totaling some 28 billion yen, have yet to be finalized, the sources said.

Shinsei Bank, formerly the Long-Term Credit Bank of Japan, is estimated to have built up a loan-loss reserve of some 20 billion yen for its Hazama loans, and the sale of the 28 billion yen portion is expected to ensure it suffers no further losses.

Shinsei's decision paves the way for adoption of a final debt waiver plan for Hazama, whose other creditors, including Nippon Credit Bank, are also expected to forgive part of their outstanding loans to the contractor.

Sources close to the negotiations said that the nationalized Nippon Credit Bank, which will be sold Friday to a consortium led by Internet investor Softbank Corp., is also likely to decide to write off some 5 billion yen in Hazama loans after Friday's transfer.

Shinsei Bank earlier refused to accept a debt waiver request by department store operator Sogo Co.; Sogo later filed for court-mandated corporate rehabilitation on July 12.

Instead, the bank sold its Sogo loans to the governmental Deposit Insurance Corp. under the terms of the contract by which Ripplewood Holdings LLC of the United States bought Shinsei Bank's predecessor, the nationalized LTCB, from state control in March.

Under the contract, Shinsei Bank is allowed to sell to the DIC any of the loans it inherited from the LTCB whose market value falls by more than 20 percent within three years.

The DIC initially agreed to forgive part of the loans to Sogo, but public anger over use of taxpayers' money to save a private company forced Sogo to abandon the request for debt forgiveness and file for rehabilitation under court supervision.

Chuo to leave New York

Chuo Mitsui Trust & Banking Co. said Wednesday it will liquidate its wholly owned U.S. subsidiary Chuo Mitsui Trust Co. (U.S.A) during the first half of 2001.

The liquidation of the New York-based subsidiary is in line with a review of its overseas custody services, the Tokyo-based trust bank said.

The U.S. unit's asset-management service will be transferred to State Street Corp., a major U.S. bank that has business tieups with Chuo Mitsui Trust.

The closure of the subsidiary, which is capitalized at $55 million, is not expected to affect the parent's earnings in the current fiscal year through March.