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Strategies & Market Trends : World Outlook -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (996)	10/23/2002 1:22:28 PM
From: Don Green	Respond to of 48737

Bank heads set to protest tough steps to clear bad loans The heads of the nation's top 12 banks are set to hold a showdown Wednesday with Financial Services Minister Heizo Takenaka over his tough proposals to speed up the disposal of bad loans incurred by financial institutions, industry officials said. The bank operators are accusing Takenaka of moving the goalposts and are expected to demand that the finance czar retract the measures, which they view as too tough. "The move is tantamount to changing the rules in the midst of playing a game and declaring us dead," a senior board member of one of the banks said. "Discussions were held on the assumption that the government will inject public funds into banks," another said. Prime Minister Junichiro Koizumi expressed support Wednesday for Takenaka's plan, and ordered all his Cabinet ministers to work toward stabilizing the financial system in line with the plan. However, ominous clouds are threatening the prospects for speeding up the government's efforts to clear nonperforming loans as ruling Liberal Democratic Party (LDP) legislators have also voiced stiff opposition to the plan. Takenaka is to invite the heads of the 12 banks, including the Bank of Tokyo-Mitsubishi, Sumitomo Mitsui Banking Corp. and UFJ Bank, Wednesday evening to listen to their opinions on the bad loan disposal measures he had intended to publicize Tuesday. Under the plan, tougher U.S. standards would be used to more strictly evaluate assets owned by commercial banks and require banks to secure more reserves for bad loans. The government would forcibly provide banks that slip into a state of capital shortage with another infusion of public funds. Moreover, if the government exchanges preferred shares it owns in troubled banks for ordinary shares to place them under its stricter control, it would sack their top-ranking board members without paying their retirement allowances. Holders of preferred shares are given priority in receiving dividends while having no right to vote at shareholder meetings. Takenaka initially intended to announce an interim report detailing the measures on Tuesday evening. However, LDP legislators refused to approve the report criticizing Takenaka for what they call the dogmatic way he drafted it and his failure to fulfill his responsibility for explaining the measures, forcing him to postpone the announcement. Meanwhile, LDP policymakers have failed to provide an alternative proposal. (Mainichi Shimbun mdn.mainichi.co.jp