It's official: Softbank gets NCB as originally agreed
Wednesday, August 2, 2000
NCB Sale To Proceed With Loan
Buyback Provision Unchanged
TOKYO (Nikkei)--Nippon Credit Bank, currently under
state control, will be sold on Sept. 1 to a consortium led
by Softbank Corp. (9984) with the original provision that
the buyer's interest will be protected in case of major
loan losses, Prime Minister Yoshiro Mori said at
Wednesday's lower house budget committee meeting.
So as to avoid moral hazard, Mori said the government
will not readily permit Deposit Insurance Corp. to waive
claims on debts purchased from NCB or Shinsei Bank
under the special loan buyback provision.
The provision obligates Deposit Insurance Corp. to buy
loans taken over from former Long-Term Credit Bank of
Japan and NCB if the value of the loans falls by 20% or
more within three years of the sale of the banks.
Shinsei Bank, which was launched after a private
investment consortium took over LTCB from the
government, invoked the provision to rid itself of bad
loans to department store chain Sogo Co. The move
fueled public criticism over the use of huge sums of
taxpayer money to save a private company.
Opposition parties have been demanding the loss
coverage provision be canceled. The sale of NCB, which
was scheduled for Tuesday, was postponed by one
month.
Hideyuki Aizawa, the newly appointed head of the
Financial Reconstruction Commission, said, "Any
change to the loss coverage provision would have
considerable economic impact both within Japan and
abroad, and cost Japan's financial authorities the trust of
the public. The NCB sale, therefore, should proceed as
planned." Mori said his government shares Aizawa's
view.
(The Nihon Keizai Shimbun Wednesday evening edition)
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