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As I will go all the way ,, on dips,,,
You will see SA members buying major.. also I will get the #daytraders in this ... word is out ...
Also it loks like we will rally tomorrow ...
Top News
Thu, 17 Sep 1998, 8:30pm EDT
Japan's Ruling LDP Backs Takeover of Some Banks, Creating Bad-Debt Agency
Japan's LDP Proposes Taking Over Troubled Banks (Update5) (Adds in 6th paragraph that LDP agreed to nationalization of LTCB. Adds in 2nd paragraph of 2nd section that talks will resume at 10 a.m. local time.)
Tokyo, Sept. 18 (Bloomberg) -- Japan's politicians are poised to put the final pieces in place for a plan that could restore Japan's $7.6 trillion banking system to health.
Under the plan proposed by the ruling Liberal Democratic Party, the government would take over the biggest of the country's troubled banks, shut down smaller insolvent lenders and buy up bad loans with public money. Prime Minister Keizo Obuchi hopes to reach an agreement before he leaves for the U.S. Sunday. ''There's increasingly a framework put in place to deal with the issue,'' said James McGinnis, a banking analyst at Dresdner Kleinwort Benson (Asia) Ltd.
One reason for optimism an agreement will be reached is that the leaders of the LDP, as well as the opposition, are involved in the negotiations.
In a final concession following all-night talks, the LDP consented to nationalization of Long-Term Credit Bank of Japan. Ltd., agreeing not to keep it afloat with public money.
The government's handling of LTCB, one of three long-term lenders that helped fund Japan's postwar ''economic miracle,'' will serve as a model for dealing with major institutions in trouble.
Ministry Power
In another key concession, the party agreed to trim the Finance Ministry's authority over the financial industry, according to a party document.
The parties will meet again at 10 a.m. local time after the opposition examines the latest concessions. The opposition aims to have the legislation enacted by Oct. 1.
The LDP also agreed to accept an opposition-party proposal that would shutter smaller financial companies.
In addition, the LDP agreed to create a body similar to the U.S. Resolution Trust Corp. to take over problem loans, according to an earlier document.
To trim the Finance Ministry's authority over the industry, the LDP agreed to set up an independent agency to set industry policy. Authority of the ministry's financial planning bureau would be placed with the agency.
Opposition lawmakers and much of the public blame the ministry's policy-makers for failing to control lending excesses in the late 1980s that have saddled banks with 77 trillion yen ($582 billion) in problem loans.
Even if the plan is approved, there's some skepticism it will be implemented. Critics point out that successive Japanese government's have pledged to clean up the problem loans, then failed to follow through.
Shares of banks have plunged in the last year, led by Long- Term Credit Bank of Japan, which is down 89 percent.
Other banks among the worst performers include Yasuda Trust & Banking Co., Fuji Bank Ltd. and Mitsui Trust & Banking, all of which have declined more than 70 percent in the last year, compared with a 45 percent drop in the industry index.
Daiwa Bank Ltd., Sumitomo Trust & Banking Ltd., Industrial Bank of Japan Ltd. and Sakura Bank Ltd., have all dropped more than 60 percent.
Visit to New York
An agreement would allow Obuchi to show President Bill Clinton at a meeting next week in New York that Japan is taking steps to lead Asia out of its economic crisis.
The proposal calls for maintaining a 17 trillion yen government fund established in February to protect deposits.
The government ''will study measures to increase banks' capital and restore the banking system,'' the document said, to replace a 13 trillion yen fund set up to buy preferred shares and subordinated debt of banks.
The opposition had demanded the fund be scrapped and that only failed banks receive government funding.
The opposition today said that nationalized banks shouldn't be allowed to forgive bad loans to affiliated companies. LTCB last month said it would forgive 520 billion yen in bad loans to three non-bank affiliates. ''LTCB was an extremely powerful and effective bank in its day. But, like the dinosaurs, it simply couldn't adapt quickly enough to prospering in this new environment,'' said Walter Altherr, an analyst at Jardine Fleming Securities (Asia) Ltd.
Rising Costs
The LDP had hoped to pass the banking legislation in the lower house before Obuchi leaves for the U.S.
Any delay adds to the cost of the eventual bank cleanup and increases the chances Japan's recession will deepen, the U.S. rating company Standard & Poor's said yesterday as it revised its outlook for four Japanese Banks to negative from stable. ''Despite the severity of the banking industry's problems, the Japanese government has not shown strong leadership in managing the problems and restoring market confidence,'' Standard & Poor's said in its report.
U.S. Trade Representative Charlene Barshefsky called on Japan to act quickly to boost its economy, repair ailing banks and deregulate industry. ''It takes more than pumping money into the economy,'' she said. ''Fiscal stimulus and banking reform must go hand in hand with deregulation.'' ''Delay in carrying out these steps has an extraordinary cost for Japan, the U.S. and the World,'' she said in a speech at the Japan National Press Club.
Soft Landing
The Liberal Democrats had sought a compromise with the opposition to allow a ''soft-landing'' for major banks in financial trouble.
Japan's three biggest opposition parties had stalled debate on the legislation, objecting to the use of public money to bail out banks.
Earlier reports that the LDP would bow to opposition demands pushed the benchmark Japanese government bond yield to a record low 0.665 percent.
LTCB shares, which fell 34 percent Wednesday, dropped 12 percent, or 3 yen, to 22 yesterday and topped the most-actives list with 50.2 million shares traded. ''Long-Term Credit Bank may turn out to be a bank failure after all,'' said Naomi Hasegawa, a senior economist at Tokyo- Mitsubishi Securities Co.
The government wants to merge the bank with smaller, healthier Sumitomo Trust & Banking Co., which said that LTCB's problem loans must be cleaned up before it agrees to a takeover. |
