The Japan Business Federation (Nippon Keidanren) on Thursday denied a report in The Times of London that paraphrases the group’s chairman as predicting at least one of Japan’s top four banks will probably be nationalized next month.
“It is not factual to say that Chairman (Hiroshi) Okuda made such a remark,” Nippon Keidanren said in a statement. “We have already lodged a protest with The Times and requested that it kill the news story and publish a correction.”
The Times reported that Okuda, concurrently chairman of Toyota Motor Corp., said Wednesday that the nationalization will probably be precipitated by a bankruptcy of one of Japan’s 30 most indebted companies before the end of the year.
It said he suggested the nationalization will stem from the much more stringent guidelines on the necessary sums of loan-loss provisions proposed by the Financial Services Agency on Oct. 30. The standards were devised by Financial Services Minister Heizo Takenaka.
If the losses resulting from such new provisions reduced a bank’s capital to below the level mandated by the Bank for International Settlements, the government would inject new capital and take control, it reported.
But a Nippon Keidanren official said Okuda only said in an interview with the British news organizations that a nationalization of a financial institution could take place in the future.
Okuda, however, did not say nationalization procedures will be applied to any of the four megabanks, the official said.
The official quoted Okuda as saying the capital adequacy ratios of the four megabanks clear the level mandated by the BIS.
The BIS requires banks operating internationally to have capital equivalent to at least 8 percent of their risk-weighted assets, including outstanding loans.
Meanwhile, the Financial Times, one of the British media organizations present at the interview, reported Thursday that Okuda said two of the four largest banks would be in a “fragile” state if Takenaka’s proposals were strictly implemented.
If the measures proposed by Takenaka were implemented, some of the top four could breach the 8 percent capital rule, the paper quoted Okuda as saying.
“If I (may be) blunt, two are very solid,” he was quoted as saying. “But the other two are fragile.”
The paper said Okuda’s comments will serve as a reminder to the banks that they must take urgent action to avert a breach of the BIS limit if they are to stand any chance of avoiding an injection of public funds and partial nationalization.
The Times of London reported Okuda refused to say which of the four banks were solid and which fragile.
But the daily added, “Analysts are virtually unanimous that the two ‘solid’ banks are Mitsubishi Tokyo Financial and Sumitomo Mitsui, while the two weaker institutions are UFJ Holdings and Mizuho Holdings, the world’s biggest bank in terms of assets.”
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