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The government’s Resolution and Collection Corp. has forgiven 60.5 billion yen in corporate and individual debt since it was launched in April last year, RCC President Akio Kioi said Thursday.

The debt-collection agency has so far waived 60 billion yen in loans held by 36 firms and 500 million yen by 38 people, Kioi told a press conference.

It is the first time the body has disclosed its debt forgiveness total.

Kioi said he decided to release the information in light of the public’s increased sensitivity to using taxpayers’ money to dispose of corporate loans.

Public outcry erupted in July when the government-backed Deposit Insurance Corp. said it planned to use taxpayer money to forgive debts that failed department-store operator Sogo Co. owed to Shinsei Bank, formerly the failed Long-Term Credit Bank of Japan.

Pressured by the government, Sogo filed for court protection from creditors and abandoned the plan.

Kioi said he regrets that the RCC could not publicize the data earlier.

“I must admit that we have been insensitive about the issue,” he said.

S&P issues reminder

New accounting rules that went into effect in April will force Japanese banks to disclose shortfalls in their reserves for retirement allowances and pension funds, Standard & Poor’s said Thursday.

“While this will impair Japanese banks’ already poor profitability, there is unlikely to be any immediate impact on their credit quality,” the U.S. credit-rating agency said.

S&P estimates that total shortfalls for major banks and first-tier regional banks in Japan will amount to about 2 trillion yen, which is equivalent to 63 percent of their core profits or 13 percent of their Tier 1 capital for fiscal 1999, which ended March 31.

While the new accounting rules are designed to improve transparency and will not increase the banks’ liabilities, they will nonetheless further harm profitability at Japanese banks, S&P said.

“In addition to the writeoff of the shortfall, recurring pension costs are anticipated to increase existing pension costs by about 10 percent to 30 percent, putting pressure on the banks’ already stressed operating profits,” S&P added.

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