Hakuo Yanagisawa first learned how to pitch to foreigners in the 1970s when he was a New York-based finance ministry official pushing Japanese bonds.
Today, the minister for financial services heads abroad for the second time in two years to convince the world Japan is fixing its banks. Quite what he has to sell or what he can boast about is another matter.
Since his 1999 overseas tour, Japan's banks have dished out ?30 trillion (US$250 billion) writing off bad loans -- yet his agency still categorizes one fifth of borrowers as troubled. Only one nationwide bank has been sold to a foreign investor and analysts say the rest of the banks are no closer to profits.
"They promise much but haven't accomplished all they could have," said Roger Kubarych, a US economic advisor to Germany's HypoVereinsbank AG, who met Yanagisawa during his last New York visit. "It's like holes in the boat have been patched up but it could still sink." The regulator has picked an awkward time to jet off across the globe. Reports this week showed industrial production plunged for a fifth month in July and unemployment rose to a record 5 percent, driving the broad Topix stock index to a 30-month low.
That's putting pressure on Prime Minister Junichiro Koizumi to stem a rise in bankruptcies by relaxing his pledge to fix the bad loan problem within three years. The government this week said it may take until 2007 to fix the problem.
"It's still not clear how much priority will be put on dealing with bad loans," said Merit Janow, a Columbia University professor specializing in East Asian trade and economic issues.
Investors would like Yanagisawa to say he won't go soft on banks or bend accounting rules that now force shareholdings to be valued at market price, said Patricia Kuwayama, vice president of economic research at J.P. Morgan Chase & Co in New York. They'd also like to hear that he will shut banks found insolvent after results in November and sell stakes to foreign investors.
Beyond saying he wants to explain Japan's financial situation directly, Yanasigawa hasn't made it clear what he wants to achieve. He will visit the Bank of England and Britain's Financial Services Agency and then call on US Federal Reserve Chairman Alan Greenspan.
Yanasigawa says Japan's loosening regulations, which have allowed foreign firms take a larger slice of Japanese business, are on the agenda. There are no meetings with foreign investors on his schedule, however.
He also declined an offer by the International Monetary Fund to inspect Japan's banking system saying he doesn't have enough manpower to prepare. IMF managing director Horst Kohler is expected to urge Japan to accept the inspection when he meets Yanagisawa in Washington, the Nihon Keizai newspaper reported earlier yesterday.
"The more of these trips they take the more likely they won't actually do anything," said David Atkinson, a Tokyo-based Goldman Sachs Group Inc director. "Why explain to people who don't have anything to do with it."
Things were different two years ago. In 1999, Yanagisawa was in charge of a year-old agency that had put two insolvent lenders under government control, recapitalized more than a dozen others, and encouraged a series of mergers promising to streamline Japan's banking market.
Yanagisawa, a politician whose gravelly voice outsizes his small frame, had made sure what's now called the Financial Services Agency hit the ground running after it was made independent from the finance ministry in 1998. The new agency began inspecting banks and brokerages using a rule manual, casting off the cozy ties that used to pass for regulation.
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