TOKYO - Japan's Ministry of Finance will allow banks to delay writing off their stock market losses until the end of the current fiscal year, Finance Minister Tsutomu Hata said at a press conference Tuesday.
In their half-year financial results, banks must disclose market losses incurred in the April-September period, Mr. Hata said, but they can postpone any necessary writeoffs until March, when they close their books for the 1993 fiscal year.
Market Effect Feared
Bank officials said the Ministry of Finance wants banks to postpone writeoffs so they can avoid showing huge losses that, when disclosed, could depress the stock market further.
The Ministry of Finance will also expand the range of instruments banks can use to raise their capital ratios, in order to meet the international guidelines, Mr. Hata said. Such new instruments include perpetual subordinated loans, he said.
Banks are expected to disclose the amounts of their nonperforming loans beginning in the current business year, which ends March 31, he said.
The ministry will also consider measures to let banks sell real estate that they hold as collateral against their non-performing loans, Mr. Hata said.
The announcement was timed to coincide with the return of market participants from summer holidays, he said.
It has no connection to Tuesday's 4.15% drop in the Nikkei stock average. "These measures are to sweep away the prevailing bearish sentiment," he said.
Asked whether the writeoff ruling would only postpone the problem of stock losses, Mr. Hata said, "It is up to the decisions made by financial institutions and nothing that the [Ministry of Finance] will force them to do."
Losses Stir Visible
Shareholders will be able to see banks' stock losses because the institutions are required to note them in their midyear balance sheets, he said.
Asked whether it would be better for Japan to seek a review of the BIS standards, Mr. Hata said, "They have been set by international discussions. The problem is falling [domestic] stock and real estate prices are plaguing [Japanese] financial institutions."
