Japan’s major banks will dispose of 10 trillion yen in bad loans during fiscal 2002, Financial Services Minister Hakuo Yanagisawa said Saturday.
The banks will remove the sum from their balance sheets in the year to next March 31, he said from Tokyo in a teleconference for a financial symposium held in Washington.
Yanagisawa said the amount of bad-loan disposals will not damage the banks’ financial results, “as they have put up appropriate amounts of loan-loss provisions.”
On the growing calls from economists and some quarters of the ruling coalition to use public funds to bolster depleted bank capital, Yanagisawa said the government currently has no intention to do so.
He said taxpayer money is unnecessary at present because, he reckons, the economy is at no risk of a banking-system crisis.
“It is wrong to argue for an injection of public funds from a macroeconomic standpoint,” Yanagisawa said.
He immediately added, however, “When it becomes necessary, we should not hesitate to inject public funds.”
Yanagisawa said Japanese banks will confront the risks stemming from fluctuations in the prices of massive amounts of shares in businesses they hold.
In light of this, he called for support for the BOJ’s plan to buy banks’ shareholdings and hold them for a long period. This is to shield the banks from the possibility of swelling latent losses on the holdings.
“The planned share purchases by the Bank of Japan will produce significant effects in stabilizing the financial system,” the minister said.
On Thursday, BOJ Gov. Masaru Hayami said, “It is highly probable for the shares bought and possessed by the Bank of Japan to remain in its hands for about 10 years.”
The televised financial symposium has been held annually since 1998 with the participation of banking regulators and private-sector economists from Japan and the United States.
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