TOKYO, Dec 3: Japan’s 12 major banks saw the emergence of two trillion yen (16.1 billion dollars) in new nonperforming loans in the fiscal first half through September, a report said on Tuesday.
The loans were rated at risk of bankruptcy or in even worse condition, said the Nihon Keizai Shimbun newspaper, which reviewed data at the watchdog Financial Services Agency.
The major banks registered 12.3 trillion yen of nonperforming loans as of September 30, down 3.1 trillion yen from March 31, “but still stubbornly high because of the growth of new bad loans,” it said.
Loans to borrowers rated at risk of bankruptcy, technically bankrupt or bankrupt accounted for about half of the entire 23.9 trillion yen of nonperforming loans held by the major banks as of September 30, the Nihon Keizai said.
“The figures, obtained by the FSA through an informal polling of the major banks, underscore how new bad loans keep rising to replace old ones as banks move to sweep away nonperforming loans with final write-offs,” it said.
In the past two years, the major banks have cleared 70 per cent of the 12.7 trillion yen of these loans that were on their books as of the end of September 2000, representing a clean up of 9.3 trillion yen, the Nihon Keizai said.
But about two trillion to three trillion yen of new nonperforming loans have arisen every six months during the same period, the newspaper said.
As a result, loans to borrowers at risk of bankruptcy, technically bankrupt or bankrupt declined only 400 billion yen in the past two years, the Nihon Keizai said.
Roughly 6.9 trillion in new nonperforming loans emerged during the six months through March 31, 2002, largely due to the impact of tighter assessments made during special regulatory examinations.
Banks might register another big increase in new bad loans when they close their books for the current fiscal year, the newspaper said.
Meanwhile, the heads of Japan’s four mega-banks said Tuesday the government must introduce bold measures to combat deflation in order to stop the bad loan problem growing.
“Under the current prolonged economic slowdown and deflation, we cannot avoid new non-performing loans arising. We hope the government... will implement bold anti-deflation measures,” said Yoshifumi Nishikawa, president of Sumitomo Mitsui Financial Group Inc.
Nishikawa was testifying before parliament’s upper house financial affairs committee with UFJ Bank president Masashi Teranishi, Mizuho Holdings Inc head Terunobu Maeda and Mitsubishi Tokyo Financial Group Inc president Shigemitsu Miki.
They were asked for their views on a government plan to halve the ratio of bad loans at banks by March 2005.
Bank chiefs want the government to take care in devising the plan to ensure it does not hurt the economy, Miki said.
He said it was important that the views of business people were taken into account.—AFP
