Fifteen major Japanese banks vowed to cut over 14,000 jobs between them, improve profits and sell off more stockholdings in plans unveiled yesterday 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 Aug. 29 deadline after the regulator Financial Services Agency (FSA) warned last month they might face nationalization without them.
In the plans publicized together yesterday, 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 percent or 2,677 jobs by March 2007.
Sumitomo Mitsui Financial Group said it would cut 14.7 percent of its employees or 3,524 jobs in the same period.
Meanwhile, the three banks, which posted a combined Japanese Yen 3.37 trillion in net losses in the year to March, 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," he said.
Mizuho vowed to achieve Japanese Yen 200.1 billion in net profit, UFJ promised Japanese Yen 135.1 billion, and Sumitomo Mitsui aimed for Japanese Yen 100 billion 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.
The government injected Japanese Yen 7.76 trillion (US$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 Japanese Yen 1.96 trillion 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.
RSS