The Japan Federation of Economic Organizations (Keidanren) and the Japanese Bankers Association have agreed to begin working on guidelines for banks to forgive loans to troubled corporate borrowers, Financial Services Minister Hakuo Yanagisawa said Thursday.

“I hear they have agreed, and I understand they will soon launch a study group,” Yanagisawa told a meeting of the House of Representatives Financial Affairs Committee.

The planned study group is expected to invite accounting experts, including Toshikatsu Fukuma, Mitsui & Co. executive vice president and chief financial officer, government officials said. Officials from the Financial Services Agency will also probably attend as observers.

The guidelines are expected to be mapped out by the end of June, the officials said.

The study group will work out specific conditions under which banks are allowed to forgive debts, such as the viability of the borrowers’ rehabilitation plans.

The group will also spell out responsibilities of the borrowers’ management and shareholders when they ask for debt forgiveness, while making clear the negotiation process between the banks and the borrowers, the officials said.

Securitizing real estate

Resolution and Collection Corp. aims to securitize 100 billion yen worth of real estate that was seized as collateral, beginning with the Tokyo headquarters of the failed Long-Term Credit Bank of Japan, RCC President Akio Kioi said Thursday.

The government debt collection agency hopes to recover 40 billion yen by issuing securities for sale to investors on the Otemachi building, which LTCB — having since been reborn as Shinsei Bank — used as its headquarters until 1993.

As many as 10 additional real estate plots held by the RCC are being considered for securitization in the future, Kioi said.

Most of these are in large cities, especially Osaka, he said.

“We are limited when we consider which ones offer rates of return and location that will appeal to the general public,” Kioi said.

RCC is funded by Deposit Insurance Corp.

It collects the assets of failed financial institutions and recovers failed nonperforming loans transferred from financial institutions.

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