Could Japan finally be straightning out their banks?:
biz.yahoo.com
Enactment of Japan weak-bank bills certain--media
TOKYO, Oct 7 (Reuters) - Laws to allow the Japanese government to inject public funds into
weak banks -- and in some cases sound ones -- are sure to be enacted by the current session
of parliament, local media reported on Wednesday.
Two opposition groups basically agreed late on Tuesday to support a revised proposal by the
ruling Liberal Democratic Party, which the LDP will submit to parliament later on Wednesday,
the reports said.
The current session of parliament, which was originally scheduled to end on Wednesday, is expected to be extended by about 10
days to handle the weak-bank bills and other measures.
The Heiwa-Kaikaku group and the Social Democratic Party dropped their objections to the LDP plan after the ruling party made
several revisions, in particular adding conditions to any capital injections for banks that already meet international capital-adequacy
standards, the reports said.
The largest opposition Democratic Party, which joined the LDP on other bills to wind up failed banks and nationalise those that
request the move, remains opposed to the LDP's bank-recapitalisation bills, senior party official Yoshito Sengoku told Reuters
Television on Tuesday.
Following are key revisions in the LDP plan, obtained by Reuters:
* Set up a special account to fund capital injections, separate from the account that is to fund the cleanup of failed banks.
* Allow capital injections for banks with capital worth at least eight percent of assets if:
-- the bank is the receiver bank of a failed institution
-- the injection is needed to avoid a drastic cutback in
credit
-- a capital increase is unavoidable from the perspective
of realignment in the financial sector.
The LDP agreed to consider fuller disclosure of banks' class two ''grey zone'' problem loans by dividing them into categories.
They are now vaguely defined as those the bank itself feels require more care than other obligations.
The LDP did not accept opposition demands to require fixed amounts of loan-loss provisions for each class of problem loans, but
the plan agrees to consider the issue after the currenct crisis passes.
The ruling party rejected a Democrat demand that banks be made to value their securities holdings at the lower of either cost or
market price. The plan would allow banks to continue choosing which valuation to use.
Bank officials have argued that this could push some banks into technical insolvency. |
