WASHINGTON (Kyodo) Foreign direct investment in Japanese financial institutions is helping to promote financial reforms in Japan, including the disposal of bad loans, a senior U.S. official said Thursday.

“I believe the financial services sector is one good example of the way that foreign direct investment can help promote the type of restructuring that the Japanese government and people themselves wish,” Alan Larson, undersecretary of state for economy, business and agricultural affairs, told reporters.

He was commenting on last month’s listing on the Tokyo Stock Exchange of Shinsei Bank, the successor to the nationalized Long-Term Credit Bank of Japan.

An international consortium, led by the U.S. investment fund Ripplewood Holdings LLC, purchased LTCB in March 2000, with the bank having collapsed due to massive bad loans. LTCB was nationalized in October 1998.

Ripplewood changed LTCB’s name to Shinsei Bank after the acquisition, and the bank debuted on the TSE on Feb. 19.

With stock sales for the listing, the consortium earned about 220 billion yen in profit.

Larson said the U.S. held a high-level teleconference with Japan on investment issues.

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