TOKYO, Sept 20: Fifteen major Japanese banks vowed to cut over 14,000 jobs between them, improve profits and sell off more stockholdings in plans unveiled on Friday in response to an improvement order by the nation’s financial regulator.

The banks, which included three of Japan’s four biggest lenders but not Mitsubishi Tokyo Financial Group, submitted the plans by an August 29, deadline after the regulator Financial Services Agency (FSA) warned last month they might face nationalization without them.

In the plans publicised together Friday, Mizuho Financial Group, Japan’s largest banking group, vowed to trim its workforce by 14 percent or 3,900 jobs, while UFJ Holdings said it would cut 12 per cent or 2,677 jobs by March 2007.

Sumitomo Mitsui Financial Group said it would cut 14.7 per cent of its employees or 3,524 jobs in the same period.

Meanwhile, the three banks, which posted a combined 3.37 trillion yen in net losses in the year to March 2003, vowed to restore their profits in the year to next March and beyond.

Financial Affairs Minister Heizo Takenaka, who heads the FSA, told reporters before the release that results the plans produced were what mattered.

The banks have made their plans showing considerable resolve and taking into account various viewpoints, Takenaka said. What’s important is to enact those plans.

Mizuho vowed to achieve 200.1 billion in net profit, UFJ promised 135.1 billion yen, and Sumitomo Mitsui aimed for 100.0 billion yen by next March.

The targets are based on the plans for layoffs, improved profits from fee-based services and increased stockholdings sales, which reduce volatility caused by equity markets, an FSA official said.

Reduced credit costs due to fewer bad loan write-offs in the future were also expected to lead to better profitability, said UFJ spokesman Naoki Hirokawa.

We have already crossed over the mountain of bad-loan writeoffs, he said.

Bank stocks were mixed ahead of the announcement.

Mizuho gained 8,000 yen to 248,000 and UFJ rose 15,000 to 482,000, adding to huge gains over recent weeks. Mitsubishi Tokyo Financial Group fell 3,000 yen to 723,000 and Sumitomo Mitsui Financial Group ended 2,000 lower at 503,000.

The government injected 7.76 trillion yen ($67.5 billion) into the 15 troubled lenders in the late 1990s and early 2000s, the majority of which were in the form of preferred shares.

Under rules unveiled this spring, the government can convert shares of underperforming lenders into common stock, giving it voting rights and effectively nationalizing them.

In June, the FSA approved the injection of 1.96 trillion yen into Resona Bank, effectively taking it over, after its capital adequacy ratio fell below international standards when its auditor downgraded its capital based on deferred tax assets.

UFJ Holdings spokesman said it was not about to fall into the same trap as Resona.

We have always viewed our deferred tax assets conservatively, unlike Resona, said UFJ spokesman Naoki Hirokawa.

The bank’s deferred tax assets — credits on overpaid taxes that are used up during profitable times — are expected to fall from 1.5 trillion yen, or 59 per cent of its core capital, to 771 billion yen, or 19 per cent, by March 2007.

Mizuho also said it expected its controversial tax credits to fall in real terms as profits pick up speed. —AFP