Report: Japanese government planning five-year target for bad-loan disposal The Associated Press 4/2/01 8:55 PM

TOKYO (AP) -- The Japanese government wants the country's banks to clean up their bad-loan mess in the next five years, a national newspaper reported Tuesday.

A five-year target for write-offs of outstanding non-recoverable loans will be included in an emergency economic plan to be unveiled Wednesday by the country's three-party conservative coalition government, the Yomiuri newspaper said.

Japanese banks are struggling under a crushing burden of loans that went bad after stock and property prices collapsed in the early 1990s.

Analysts say Japan's ailing economy will not recover until the mess is cleaned up, and the government has recently come under pressure from global investors to show its resolve.

To stabilize the banking industry, the government is also considering putting limits on the amount of stock that banks are allowed to own, the Yomiuri and other national newspapers reported.

In Japan it has long been customary for banks and their corporate clients to hold each other's shares as a token of their business relationship. But large portfolios have become a heavy drag on the finances of many lenders as the nation's stock market recently slumped to its lowest level in 15 years.

Policy makers are discussing plans for a fund to buy up shares that banks have become desperate to dump. Public money will be used to cover losses if the fund is unable to sell the shares later at a profit, the Asahi newspaper reported Tuesday.

http://www.oregonlive.com/newsflash/index.ssf?/cgi-free/getstory_ssf.cgi?a0775_BC_Japan-Economy&&news&newsflash-international

-- Martin Thompson (mthom1927@aol.com), April 02, 2001