Gulf Daily News
BASEL, Switzerland: The head of Japan's watchdog Financial Services Agency said yesterday the country's non-performing loan problems have been almost solved and Japan will no longer pose uncertainty to the global financial system.
In an interview, FSA commissioner Hirofumi Gomi also said it was important for global regulators to promote co-ordination and exchange of information as competition intensifies for Japanese banks operating abroad and foreign institutions operating in Japan.
For the past decade, Japanese banks have struggled to unload bad loans accumulated after the asset bubble burst in the early 1990s. Sour loans have bruised investor confidence in the financial system and stifled a recovery of the world's second biggest economy.
"The problems of non-performing loans on major Japanese banks have been of a global concern but at the present situation they have been almost normalised," Gomi said on the sidelines of a meeting of central and commercial bankers and regulators at the Bank for International Settlements.
"Major banks' capital adequacy ratio is also improving considerably as losses incurred on bad loan disposal decreases ... Therefore, what we want to emphasise the most here is that it is no longer the case that Japan would pose uncertainty to the world financial system."
Most top Japanese banks look likely to achieve a government target of halving the ratio of problem loans to total loans by March 2005 from levels in March 2002, although some are lagging.
