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Strategies & Market Trends : JAPAN-Nikkei-Time to go back up? -- Ignore unavailable to you. Want to Upgrade?

To: borb who wrote (1263)	7/14/1998 6:07:00 AM
From: fut_trade	Read Replies (1) \| Respond to of 3902

Japan parties to stabilise fin system--bank head TOKYO, July 14 (Reuters) - Japan's ruling and opposition parties intend to stabilise the country's financial system, the chairman of the Federation of Bankers' Associations of Japan, Satoru Kishi, said on Tuesday. Kishi, who is also president of Bank of Tokyo-Mitsubishi Ltd (8315.T), told reporters his bank was not in favour of revealing its own assessment of its problem loans because to do so would have a negative impact on the economy. ''Both ruling and opposition parties agree on the need to stabilise and revive the financial system and I don't think there are any major differences in their opinions,'' Kishi said. Japanese Prime Minister Ryutaro Hashimoto on Monday announced his intention to resign, a day after his ruling party suffered a devastating setback in Sunday's Upper House election, in which the LDP won only 44 seats in voting for half of the chamber's 252 members. The failure to maintain its standing in the Upper House has raised fears that economic policies would be hindered in the short term. Kishi said he hopes for the early implementation of measures to stimulate the economy and remove non-performing loans from banks' balance sheets. Earlier this month, Japan's ruling Liberal Democratic Party (LDP) and government approved a ''bridge bank'' plan aimed at solving bad loan problems. Under the plan, failed banks would be put under temporary public administration before dissolution while their healthy loan business is taken over by public bridge banks. The plan still requires approval by Japan's parliament, and the LDP has said it would submit the bridge bank plan to an emergency session of parliament from the end of July. Kishi said that while it is important to recover confidence in Japan's financial system by boosting trustworthiness in the number of problem loans banks unveil, he was not in favor of disclosing its own assessment of problem loans. ''It is only a process to meet the prompt corrective action system that banks calculate problem loans on their own assessment... Revealing problem loans based on a bank's own assessment will have a negative impact, such as a further tightening of the bank's credit stance,'' he said. The so-called prompt corrective action (PCA) system, which took into effect in April, requires banks to undertake a far more rigorous assessment of their loan assets and to be more conservative in setting up loan-loss reserves. Under the PCA system, capital adequacy ratios are used to gauge the soundness of financial institutions. While the top 19 banks unveiled last May that they had about 22 trillion yen of problem loans based on the U.S. accounting models at the end of March, analysts said that problem loans at Japanese banking sector may have already reached 100 trillion yen. Kishi said that the Financial Supervisory Agency (FSA) will concentrate on inspections of 19 biggest banks in the coming months in order to check whether banks appropriately dispose of their problem loans under the PCA system. Earlier on Tuesday, the heads of Japan's top 19 banks and senior officials at the FSA met to exchange opinions. The agency recently took over bank inspection and supervision functions from the Ministry of Finance (MOF). FSA began inspecting the troubled Long-Term Credit Bank of Japan (LTCB) (4303.T) on Monday, the first of a series of its planned inspections of the top 19 banks.