Japanese banks have no need for extra cash from the government as they speed up the write offs of bad loans, the chairman of the world's largest banking group said yesterday.
Mizuho Holdings Inc chairman Toru Hashimoto was commenting after Finance Minister Masajuro Shiokawa said Monday the government would consider if necessary pumping extra cash into Japanese banks to promote bad loan write-offs.
"I think banks will not need to ask the government for public funds," Hashimoto said.
"Even after bad debt write-offs, capital adequacy ratios at major banks will not fall below the Bank of International Settlement's eight percent requirement," he said.
Capital adequacy ratio is the minimum amount of capital a bank must keep in reserve compared to its total loans. Concerns have been raised that zealous bad loan write-offs could drag the ratio of some lenders below international standards.
Despite Hashimoto's comments, senior JP Morgan economist Masaaki Kanno said the government would inject emergency money into Japan's banking sector soon to offset a potential crisis.
"It is just a matter of time before the capital adequacy ratio falls short of requirements," he said.
In March 1999 the country's lenders received ?7.5 trillion (US$62.5 billion) to bolster their capital.
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