Government bodies tasked with buying shares from financial institutions are gearing up to sell their holdings amid the economic recovery, putting the finishing touch on years of efforts to stabilize the financial system.
Deposit Insurance Corp. and Banks’ Shareholdings Purchase Corp. have acquired a huge amount of shares from the major bank failures and cross-shareholding liquidations that ensued as the financial industry unraveled during the 10-year malaise known as the “lost decade.”
DIC, which bought more than 6.5 trillion yen worth of shares, has decided the time has come to unload them to secure profits from the robust stock market recovery.
The banking safety net’s shareholdings include about 2.9 trillion yen worth of shares from the failures of Long-Term Credit Bank of Japan and Nippon Credit Bank, which are now Shinsei Bank and Aozora Bank, in 2000.
The shares were bought because if the two banks had retained their vast cross-shareholdings, they might have been dumped all at once when the failed banks were handed over, wreaking havoc on the stock market.
The corporation now has plans to sell 1.8 trillion yen worth of shares, excluding those bought back by Shinsei Bank and Aozora Bank and those purchased by individual companies.
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