The ruling bloc said Thursday it will submit a bill to authorize the Banks' Shareholding Acquisition Corporation, an asset-purchasing body set up in 2002, to purchase ¥20 trillion worth of shares from banks to help stabilize the stock market, unnamed coalition lawmakers said.
The share-buying entity was established by the government and banks in January 2002 to purchase shares being unwound by the banks, which had acquired them in cross-shareholding deals — protectionist arrangements for supporting business allies by acquiring stakes in each other.
The government and ruling bloc plan to present an amendment to the Diet in the form of a lawmaker-proposed bill in early January so it can activate the measure by the end of March, the lawmakers said.
The entity is expected to buy shares of banks and other firms held by both banks and nonbank entities, they said.
The Liberal Democratic Party opted to revive the entity at the request of Prime Minister Taro Aso, who called for the action as part of an emergency financial market stabilization package announced in late October.
Initially, the LDP was looking to authorize more than ¥10 trillion in purchases. But that number was doubled to ¥20 trillion at the request of New Komeito, the LDP's junior coalition partner.
The corporation bought shares worth some ¥1.6 trillion between 2002 and 2006 and later sold them on the market in stages. Sales, however, were frozen in October as the global financial crisis began to spread.
A legal revision is necessary to resume the purchases.