Japan Wants To Take Over Nippon
Dec. 12, 1998
TOKYO (AP) _ In what appears to be the second collapse of a major Japanese bank in less than two months, Nippon Credit Bank Ltd. said financial authorities asked it Saturday to formally request the government to take over its operations.
The Financial Supervisory Agency delivered an effective ultimatum to Nippon Credit's president, Shigeoki Togo, after determining that the bank was insolvent due to a massive burden of bad loans, said a bank spokesman who spoke on condition of anonymity.
NCB would be only the second bank in Japan to be placed under state control since World War II. The government nationalized the Long-Term Credit Bank of Japan Ltd. on Oct. 23.
Like many other Japanese lenders, NCB's bad loans mounted after the collapse of inflated real estate prices and stock values in the early 1990s.
After meeting financial authorities at the Prime Minister's Office, Togo called an emergency board meeting to discuss the government's request.
But a government official told reporters that the bank will be nationalized Sunday regardless of the board's decision, Kyodo News agency reported.
The move was widely expected after merger talks collapsed between NCB and a suitor, Chuo Trust and Banking Co.
Nippon Credit, with 2,000 employees, was one of the 50 largest banks in the world in 1997, according to Fortune magazine. It has assets totaling $106 billion, but about $27 billion of its loans were high-risk and in danger of going bad, according to Kyodo.
Nippon Credit is one of Japan's three so-called long-term credit banks. These banks financed the rebuilding of Japanese industry after World War II by providing companies with long-term, low-cost loans. But deregulation of the financial industry has allowed more companies to raise money directly from financial markets, and the banks have failed to find a new role.