Takenaka urges speedier disposal of bad loans

Japanese banks should take advantage of an improving economy to accelerate their disposal of bad loans, Economics and Financial Services Minister Heizo Takenaka said on Sunday.
Major banks are on their way to achieve a government target to half their ratios of bad loans to total loans by March 2005, but they are still burdened with some big, troubled borrowers.
"I want the banks and companies to overcome this final mountain," Takenaka told local media. "This is the best chance, and perhaps the final chance to do so."
His comments come after ailing Japanese trading firm Sojitz Holdings Corp said on Friday it would receive a capital boost from its main bank, UFJ Holdings, Swiss bank UBS and others.
The plan marks the first case of UFJ dealing with one of its major problem borrowers since Japan's fourth-largest bank announced this month it was in talks to be taken over by rival Mitsubishi-Tokyo Financial Group.
Local media reported over the weekend that UFJ group and Mitsubishi-Tokyo would aim for a full merger on October 1, 2005.
Asked about ailing retailer Daiei Inc, another troubled creditor of UFJ, Takenaka said he could not comment on individual firms, but repeated it would be necessary to take measures to deal with bad loans.
Overcoming the bad loan problem and "creating a situation where everyone believes that the Japanese economy has reached a stage where one could take a break, would, as a result, be better for that firm as well," he said.
As a result of bank reform plans introduced by the Financial Services Agency in mid-2002, big Japanese financial groups have substantially reduced their bad loans.
On the issue of privatising postal services, Prime Minister Junichiro Koizumi's top priority in his reform agenda, Takenaka told a forum in Osaka on Saturday that Japan Post should be split into its three main operations of mail delivery, postal savings and life insurance, Kyodo news agency reported.
The government's top economic panel, the Council on Economic and Fiscal Policy, plans to begin talks in August on the structure of postal privatisation.
The government plans to begin the privatisation of the entity starting in 2007.