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To: patron_anejo_por_favor who wrote (196770)	10/10/2002 11:33:15 AM
From: stockman_scott	Respond to of 436258

Bank of Japan Plans `Drastic Step,' Takenaka Says By Taizo Hirose, Kanako Chiba, Hideki Asai and Kyoko Shimodoi (Update1) Tokyo, Oct. 10 (Bloomberg) -- Japan's top banking regulator said the Bank of Japan is poised for ``drastic'' action to help mop up $430 billion of bad loans that is crippling growth. ``The BOJ is considering a drastic step,'' Minister for Financial Services Heizo Takenaka said, declining to be more specific. ``The government and the BOJ will unify efforts to deal with bad loans.'' Takenaka's comments suggest the Bank of Japan, whose policy board began a meeting at 2 p.m., will supplement government efforts to dispose of dud credit. The Nihon Keizai newspaper said the central bank may provide unsecured emergency loans to banks if there is the threat of a banking crisis. ``The BOJ has several possible avenues of action,'' such as helping provide cash to help banks write off bad loans, said Edwin Merner, who helps manage $600 million at Atlantis Investment Research Corp. in Tokyo. ``But they need to pump big money into the banks,'' he said, putting the amount as high as 40 trillion yen ($324 billion). A Bank of Japan proposal would be the first such plan since its governor, Masaru Hayami, proposed three weeks ago that the central bank buy shares directly from ailing lenders after the benchmark Nikkei 225 Index fell to a 19-year low. Banks Gain UFJ Holdings Inc., the nation's fourth-biggest bank, rose 8.6 percent, erasing an intraday loss of as much as 13 percent, after Takenaka's comments. Mizuho Holdings Inc., the world's biggest bank, rose 5.2 percent after dropping 13 percent. ``When every one is so bearish, it takes a little comment that shines some hope for quicker resolution to prompt some buying,'' said Hiroichi Nishi, a manager at Nikko Cordial Securities Inc. The Nikkei has fallen more than 10 percent since Takenaka's appointment Sept. 30 on concern he would force banks to cut ties with delinquent borrowers, pushing more companies into bankruptcy. Hayami had repeatedly criticized Takenaka's predecessor, Hakuo Yanagisawa, for not doing enough to bolster banks. Japanese government officials, meantime, spoke out in an attempt to bolster public confidence. ``Stock prices in Japan are being influenced by the U.S. stock market, as well as by world economic uncertainty and Japan's economic stagnation,'' Prime Minister Junichiro Koizumi told reporters. Even though the government's monthly economic report yesterday said conditions are getting worse, they are ``not yet that bad,'' said Chief Cabinet Secretary Yasuo Fukuda. He said the government hopes to have a plan to dispose of bad loans by the end of this month. Finance Minister Masajuro Shiokawa said he expects the market to hit bottom. He didn't say when that would occur. ``Even though this is a very severe condition, I wouldn't call it a crisis,'' he said. ©2002 Bloomberg L.P. All rights reserved.