Japanese banks should base their lending decisions on sound business principles in order to solve their bad-loan problems, Standard & Poor's Corp., a U.S.-based credit rating firm, said in a report released Friday.
In the report, Naoko Nemoto, head of S&P's financial services rating group in Tokyo, said various measures proposed recently by Japanese authorities to solve the problem have thus far focused on existing problem loans and those that are potentially problematic.
"But key initiatives to help prevent the re-emergence of bad loans have not received a similar degree of attention," she says, warning that there are "no grounds at this stage to expect any improvement."