The Japanese government's handling of the financial troubles of Resona Group is unlikely to fully resolve the lender's fundamental problems, Standard and Poor's Ratings Services said yesterday.
"A key concern for Standard and Poor's is whether the government's handling of the Resona case will merely be a repeat of the bank bailout in 1999," S&P director Takamasa Yamaoka said in a report.
"The [cash] infusion into Japan's major banks in 1999 was ultimately only a temporary solution and failed to eradicate the fundamental problems that had caused the shortage," he said.
The report came after the banking group formally asked the government to bail it out to the tune of Japanese Yen 1.96 trillion (US$16.6 billion) in public funds on Friday and announced a restructuring program, including the forced resignation of executives.
"The forced resignations should put pressure on managers at both Resona and other banks, which may accelerate a change in credit practices at Japanese banks," Yamaoka said. "However, real change in management's practices will hinge largely on the motives of all the participants."
Some politicians are likely to expect Resona Bank to keep playing a public role as a provider of financial support to the stagnant economy in the Kansai region in western Japan, he said.
This role may put a heavy drag on Resona's efforts to improve its profitability, he said.
Meanwhile, S&P said Tokyo's move to bail out the bank had no direct impact on its sovereign ratings on Japan. S&P said it regarded the non-performing loan problems as a contingent liability of the government and incorporated it as a rating factor.
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i Gasoline and diesel prices at fuel stations are this week to rise NT$0.1 per liter, as tensions in the Middle East pushed crude oil prices higher last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week rose for the third consecutive week due to an escalating conflict between Israel and Iran, as the market is concerned that the situation in the Middle East might affect crude oil supply, CPC and Formosa said in separate statements. Front-month Brent crude oil futures — the international oil benchmark — rose 3.75 percent to settle at US$77.01
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