Big Banks Sell Record Y490bn Worth Of Bad Loans In 6 Months
Wednesday, December 4, 2002
TOKYO (Nikkei)--Major banks sold 490 billion yen worth of nonperforming loans to the Resolution Collection Corp. during the six months ended September, a record half-year sell-off, RCC sources said Wednesday.
The group led by Bank of Tokyo-Mitsubishi accounted for over 60% of the selling, or 330 billion yen worth.
The sources believe that the stronger the bank, the more aggressively it sold bad loans due to the concern that selling the loans at market price could incur losses.
UFJ group, Sumitomo Mitsui Banking Corp. (8318) and Resona group sold 40-50 billion yen each. Mizuho Financial Group (8305) sold only about 21 billion yen, as the bank and RCC were unable to agree on prices for some loans.
In determining price, the RCC calculates a "spot price" based on how much is likely to be recovered. Although banks have loan-loss reserves set aside, sales of the bad loans lead to additional losses if these reserves are insufficient.
During the six months, the RCC bought 690 billion yen worth of nonperforming loans, of which over 70% were bought from big city banks, trust banks and long-term credit banks.
Big banks sold 160 billion yen worth of such loans in the previous six months ended March 31, less than one-third the nearly half trillion yen worth sold in April-September 2002, according to the Deposit Insurance Corp.
Many banks are accelerating sales of bad loans to the RCC as next spring marks the three-year deadline set by the government for big banks to clean up their nonperforming loans. As the government is now calling for even faster bad loan disposal, such sales may increase further.
(The Nihon Keizai Shimbun Thursday morning edition) |
