A second waiver for struggling companies whose debts were partially forgiven once should be given by banks only in exceptional cases, Financial Services Minister Hakuo Yanagisawa said Thursday.

If a bank opts to grant a second waiver, it should be done only in cases where such forgiveness is indispensable to enable the recipient to merge or integrate its management with another company that otherwise would shy away from the merger, Yanagisawa told reporters.

Basically, a second debt-waiver “is not desirable,” he said. “Costs would be sizable” for the bank.

But he added that the heart of the matter is “how to balance the pros and cons at a time when Japan needs to push a further reconfiguration of ties among companies to reinvigorate its industries.”

On May 15, Yanagisawa told the Diet that he wants banks to forgive the debts of major construction firms to prevent their bankruptcies from triggering a chain reaction of subcontractor failures.

Large contractors “have supported numerous subcontracting construction firms, so it would be better” for banks to forgive parts of their debts to help them revive, rather than wait until the firms are left with no alternative but to file for bankruptcy, he said.

Stimulus bills OK’d

The Cabinet approved bills Thursday for an economic stimulus package adopted in early April, including a bill to provide a tax break on small-sum capital gains from stock sales.

That bill is aimed at encouraging individual investors to participate in stock trading, thereby reviving the flagging stock market.

Under the tax break bill, individual investors would be given an annual tax exemption of up to 1 million yen on capital gains on stocks held for more than one year.

Stock transactions carried out from this Oct. 1 to March 31, 2003, would be subject to the tax break.

Under the current system, investors can either pay a 1.05 percent withholding tax on the value of share sales, whether or not they gained on the sales, or file a separate tax return and pay a 26 percent tax on the annual total of their capital gains.

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