TOKYO (AFX-ASIA) - Banks Association of Japan chairman Yoshiro Yamamoto said the major banks aim to reach agreement with the Financial Services Agency on the basic details of the government's proposed stock-buying body in August.
"The FSA plans to enact a law for the body in the upcoming extraordinary parliamentary session, so we need agree with the agency on the overall framework in August," Yamamoto said. "Finance Minister Masajuro Shiokawa told me today that the association should cooperate in creating the stock-purchasing body as soon as possible. There was no other request from the minister," he said.
Shiokawa said yesterday that he planned to ask banks to increase lending to companies to help boost exports and to boost capital spending, although this would not take the form of administrative guidance.
Yamamoto added: "I asked Shiokawa to implement securities tax incentives to bring more individual investors into the market. "The decline in stock prices will bite into banks' dividend payments because we have to use reserves to make up latent losses on stock holdings," he said.
"The effect of recent stock price declines on major banks' capital adequacy ratios will be limited, however, even after the introduction of market-price accounting," he added.
Yamamoto reiterated that he sees no need for an injection of public funds into the banks to help them write off their bad loans as major banks have maintained a capital adequacy ratio of just over 11 pct on average.
"I think there is no good reason for the recent declines in banks' share prices, although the stockmarket is citing the effects of stock price declines on capital adequacy ratios and uncertainty over bad loan write offs."