Japan will finally unveil concrete measures to clean up the banking system and fight deflation by the middle of next week, officials said yesterday, but reports warned banks could sue the government if the reforms were too tough.
Authorities were likely to decide on "the grand design" of their latest economy-boosting initiative later in the day, said Finance Minister Masajuro Shiokawa.
PHOTO: AP
But time is limited because Prime Minister Junichiro Koizumi is due to depart later for an APEC summit in Mexico this weekend.
Tokyo's final plan is to be released on Wednesday, and should complement a key report on accelerating bad loan disposals at banks, compiled the financial and economy minister Heizo Takenaka, which is due out the same day.
The ruling Liberal Democratic Party and its two junior allies are presenting their proposals for measures to fight sliding prices and fix the shaky financial system at a meeting with the government later in the day.
The coalition would oppose a proposal in Takenaka's plan to make tax accounting standards at banks more in line with those in the US, a measure that would result in slashing banks' capital adequacy levels to below international standards, local media said.
In its evening edition, the Nihon Keizai Shimbun said Takenaka may change his initial plan on the stricter tax accounting rule while maintaining proposals covering tougher rules on assets assessment and use of public funds.
The embattled minister initially wanted to introduce the new accounting rule in the year from April 2003 but he would "reconsider" due to strong opposition from the financial industry, the economic daily said.
He would later decide on whether to abandon the accounting-rule plan or delay the timing for introduction, it reported.
Asked about the ruling coalition's criticism over the Takenaka plan, Koizumi told reporters: "I want them to make appropriate adjustments [over different opinions] in line with the basic plan by minister Takenaka."
The release of a draft report by Takenaka's team was cancelled Tuesday because of stiff opposition from ruling party lawmakers, prompting analysts to speculate the final initiative would be severely watered down.
The financial czar, who has only been in office since Sept. 30, hoped to meet top executives of Japanese banks again yesterday to discuss reform proposals before finalizing his report.
But the Nihon Keizai earlier said major banks may issue a joint statement expressing their objection to measures compiled by Takenaka.
The statement is expected to brand the initiative "too hasty," it said.
A spokesman at the Japanese Bankers Association said nothing had been decided on what action to take, but local media reported banks were prepared to sue the state in the worse-case scenario.
"We would not hesitate to file a lawsuit," the Nihon Keizai quoted a high-ranking official from one of the major banks as saying.
The private Fuji television network also said bank executives were set to lodge a strong protest to Takenaka at yesterday's talks.
They would mention the possibility of considering a lawsuit alleging a sudden change in accounting rules contravened "the consistency" required for administrative work, Fuji reported.
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