The head of Resolution and Collection Corp. voiced willingness Friday to boost ties with the planned state-backed industrial revival body that will be tasked with buying bank loans extended to troubled firms in an effort to help rehabilitate the companies in question.

“I expect that a liaison conference between us and the preparatory office of the new institution will be convened,” RCC President Akio Kioi told a news conference.

RCC is a state-run debt collector that buys up banks’ bad loans and tries to recover as much money as possible.

The two organizations are expected to hold the first of a series of meetings in early December.

The government is currently devising a set of criteria that will be used to determine whether loans to heavily indebted borrowers should be bought by the planned institution or by RCC.

The creation of the institution was proposed as part of an antideflation package released Oct. 30.

In an effort to step up bad-loan disposals among the nation’s banks, the institution will buy up nonperforming loans extended to large firms that are deemed to be salvageable.

Loans extended to corporate debtors judged to be beyond redemption will be sold to RCC.

Loan sales to the new institution will benefit debtors by offering revival opportunities based on an extension of fresh official loans. RCC’s lending resources, on the other hand, are very limited.

RCC booked a net loss of 46 billion yen in the fiscal first half through Sept. 30, against a loss of 28.4 billion yen incurred in the corresponding period a year earlier, according to Kioi.

Kioi attributed this decline to the setting aside of large loan-loss reserves for loans bought by RCC in order to deal with worsening asset deflation.

RCC’s operating revenues in the fiscal first half jumped 12.4 percent to 329.2 billion yen.

Pretax expenses surged 16.7 percent to 375.4 billion yen, however, due to the increase in loan-loss reserves. The surge wiped out RCC’s profitability.

Regarding a proposal to recapitalize RCC in order to bolster its financial health, Kioi said, “We are not so hard-pressed as to confront the need to recapitalize by the end of the current fiscal year.”

Help for shaky firms

UTSUNOMIYA, Tochigi Pref. (Kyodo) The public Tochigi Credit Guarantee Corp. (Tochigi Guarantee) said Friday it will guarantee loans to small and midsize firms whose debts were transferred to the state-run Resolution and Collection Corp.

The prefectural entity said the program, to begin Monday, is the first of its kind by a local credit guarantee corporation.

The guarantees of up to 50 million yen will be offered to local small and midsize companies that are seen as viable — on the condition that they present a restructuring program jointly with the lenders of the loans, Tochigi Guarantee said.

Tochigi Guarantee is one of 52 public loan guarantee entities in the 47 prefectures.

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