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Government to nationalize Ashikaga Bank

Prime Minister Junichiro Koizumi decided Nov. 29 that the government would temporarily nationalize Ashikaga Bank, currently part of the Ashikaga Financial Group Inc.

The move - prompted by the bank being declared insolvent by auditors - will wipe out shareholder capital and mean the government taking a 100-percent equity stake in the local lender.

The most serious losses will be felt by local businesses, which hold large amounts of preferred shares, as well as large banks - including Mitsubishi Tokyo Financial Group, which held a 3.5 percent stake as of March - and insurance companies.

"We must proceed with both bad loan disposal and economic recovery simultaneously," Koizumi said, following an emergency meeting Nov. 29. "We will take measures to prevent confusion or uncertainty, and I believe the markets will respond calmly."

It will be the first such nationalization since the government acquired Nippon Credit Bank in 1998.

The Ashikaga group's capital had deteriorated to minus ¥102.3 billion as of Sept. 30, according to the Financial Services Agency, a sharp drop from the ¥150.9 billion reported at the end of March.

The government completed procedures to seize all shares in Ashikaga Bank on Dec. 1. The Bank of Japan (BOJ) responded by telling financial institutions it would inject ¥1 trillion into the short-term money market to shield the banking system.

The BOJ will provide the additional liquidity to the market through the imminent purchase of securities held by the institutions.(The Japan Times)

Shukan ST: Dec. 12, 2003

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World News Government to nationalize Ashikaga Bank Prime Minister Junichiro Koizumi decided Nov. 29 that the government would temporarily nationalize Ashikaga Bank, currently part of the Ashikaga Financial Group Inc. The move - prompted by the bank being declared insolvent by auditors - will wipe out shareholder capital and mean the government taking a 100-percent equity stake in the local lender. The most serious losses will be felt by local businesses, which hold large amounts of preferred shares, as well as large banks - including Mitsubishi Tokyo Financial Group, which held a 3.5 percent stake as of March - and insurance companies. "We must proceed with both bad loan disposal and economic recovery simultaneously," Koizumi said, following an emergency meeting Nov. 29. "We will take measures to prevent confusion or uncertainty, and I believe the markets will respond calmly." It will be the first such nationalization since the government acquired Nippon Credit Bank in 1998. The Ashikaga group's capital had deteriorated to minus ¥102.3 billion as of Sept. 30, according to the Financial Services Agency, a sharp drop from the ¥150.9 billion reported at the end of March. The government completed procedures to seize all shares in Ashikaga Bank on Dec. 1. The Bank of Japan (BOJ) responded by telling financial institutions it would inject ¥1 trillion into the short-term money market to shield the banking system. The BOJ will provide the additional liquidity to the market through the imminent purchase of securities held by the institutions.(The Japan Times) Shukan ST: Dec. 12, 2003 (C) All rights reserved