Govt To Begin Mulling Changes To Deferred Tax Assets By Year-End
November 30, 2002
TOKYO (Nikkei)--The government plans to begin considering this year the potential changes to how banks are allowed to include their deferred tax assets in their capital bases, according to the financial stabilization timetable released Friday by Economics and Financial Services Minister Heizo Takenaka.
The timetable maps out the order in which the government's financial revitalization program -- consisting of policies to speed up bad-loan disposals and rehabilitate ailing companies -- will be carried out.
The FSA's initial version of the timetable had called for the discussions about changes in deferred tax accounting to be carried out at an early time. The FSA nixed that version, however, and instead scheduled in the timetable such discussions to start within this year. The Financial System Council, an advisory board to Prime Minister Junichiro Koizumi, is set to spearhead deliberations.
Separately, the timetable focuses on speeding up the cleanup of bad-loans. "In accordance with the timetable, we will strive to resolve the bad-loan problem by fiscal 2004," said Takenaka, according to his comments made public Friday.
The timetable also calls for the creation this year of a special team to inspect banks and assess how their major borrowers' loans are classified. The discounted cash flow method, which calculates asset valuations based on the anticipated future earnings of a company, is set to be employed starting with the current fiscal year ending March 31, as will tougher assessment standards for collateral. These changes are expected to encourage banks to speed up their disposal of bad-loans this fiscal year.
As for the conversion into common stock of banks' preferred shares acquired by the government during public fund infusions in 1998 and 1999, specific guidelines for standards -- such as what types of situations will warrant the conversion of preferred shares into common stock with voting rights -- are set to be drawn up within this fiscal year.
Furthermore, the government is eyeing a plan to set up measures designed to help address a potential crisis. Specifically, the government plans to begin considering a public fund infusion system consisting of pre-emptive fund injections in order to beef up banks' equity capital. By infusing these funds into banks early on, the government would enable financial institutions to prepare for future bad-loan disposals. A conclusion about such plans is slated in about six months.
(The Nihon Keizai Shimbun Saturday morning edition) |
