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To: pallmer who wrote (4069)	12/15/2002 8:13:51 PM
From: pallmer	Read Replies (1) \| Respond to of 29609

-- DJ Japan Banks Pare Foreign Lending As They Cut Debt -Nikkei -- TOKYO (Nikkei)--Japanese banks are substantially reducing overseas lending to avoid piling up more bad debts as they struggle to rid themselves of existing ones, The Nihon Keizai Shimbun reported in its Sunday edition, citing financial observers. In the first eight months of this year, they reduced the balance of outstanding loans extended abroad by more than Y6 trillion. The total amount reduced this year could reach Y10 trillion, and this is in addition to the domestic corporate loan balance, which is being trimmed. The rate of decrease might be the sharpest since 1999, when overseas loans were drastically slashed due to a looming banking crisis. As of the end of August, the overseas branches of Japanese banks had a combined loan balance of Y21.66 trillion, down 22.5% from the end of December, 2001. The rate of decline is much steeper than the 3.8% for the balance of outstanding domestic corporate loans during the same period. Major banks, which have recently merged operations with other banks, are trying to consolidate their overseas branches. "In many cases, they are also consolidating the loans they extended before their mergers," said an official at Mizuho Corporate Bank. Such banks mainly lend money to Japanese companies operating in other Asian countries, but it is difficult to assess the business performances of such operations. "We are refraining from offering fresh loans because it is hard to tell the extent of risk involved in their overseas activities," said a manager at UFJ Bank. Banks such as Sumitomo Mitsui Banking Corp. (J.SMF or 8316) are securitizing claims to their outstanding overseas loans for sale to local investors. In contrast, banks are stepping up investment in foreign bonds. Their holdings of such bonds have jumped Y2.1 trillion so far this year, exceeding Y42 trillion as of the end of October. They are also active in the domestic bond market, purchasing significant amounts of government and municipal bonds. Banks are putting their funds in bonds instead of lending also because they are trying to meet the capital adequacy requirements of the Bank for International Settlements. Bank insiders say they intend to further reduce overseas lending because they are being urged by the government to put an end to the issue of nonperforming loans by fiscal 2004 and prevent their capital adequacy ratios from falling. (END) Dow Jones Newswires 12-14-02 1239ET- - 12 39 PM EST 12-14-02 Symbols: JP;8753 US;SMFI DE;SZ6 14-Dec-2002 17:39:00 GMT Source DJ - Dow Jones