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To: Gord Bolton who wrote (20549)	10/3/1998 7:46:00 PM
From: Giraffe	Respond to of 116779

Saturday October 3, 5:29 pm Eastern Time BOJ, MOF chiefs say Japan banks' capital base low WASHINGTON, Oct 3 (Reuters) - The heads of Japan's Finance Ministry and central bank told their U.S. counterparts that Japanese banks have very weak capital bases relative to their loans outstanding, Finance Minister Kiichi Miyazawa said on Saturday. Bank of Japan Governor Masaru Hayami described Japanese banks, whose lendings totaled some 700 trillion yen, as being ''undercapitalized'' when he briefed U.S. Treasury Secretary Robert Rubin and Federal Reserve Chairman Alan Greenspan on the state of Japan's financial system, Miyazawa told reporters. Miyazawa, speaking after a bilateral meeting of the world's two biggest economies, said that because of the poor capital base, Japanese banks would not be able to afford a private sector-funded bailout packages for failed institutions like the one extended last month to troubled U.S. hedge fund Long Term Capital Management. ''In Japan, banks don't have a lot of money, so the government has to step in,'' he said. Much of the discussion on Japan at the meeting was said to have focused on its banking sector and on efforts to clean up its mountain of bad loans that is constricting economic recovery. Hayami was said to have used figures for the entire Japanese banking sector as well as those for the nation's top 19 banks to explain the dire state of Japan's banking system.