The Federation of Bankers Associations of Japan adopted on Tuesday stricter disclosure standards on banks' bad loans, modeled on U.S. standards.Under the new rules, for example, banks will be obliged to release their figures for nonperforming loans if the borrower does not pay interest for three months or longer, instead of the previous six months.The federation added two categories for nonperforming loans: loans for which the principal repayments or interest are overdue by three months or longer and loans for which the interest is either reduced to above the official discount rate or whose repayment has been postponed, both as a way to help reconstruct borrower firms.Details about the new standards have yet to be agreed on, a federation official said, adding that individual banks may adopt new disclosure standards at their end-of-term settlement of accounts in March. Some banks will use the new standards in their reports for the business year that closes on March 31.At present, all member banks disclose their bad loans in four categories: loans to failed firms; those overdue for six months or longer; those to firms that the bank is helping reconstruct; and those with interest reduced to or below the official discount rate.In setting new categories, the federation aims to introduce disclosure standards that are close to those in the United States, an official said. There is widespread distrust among the public over the amount of nonperforming loans that banks admit to.On Monday, the Finance Ministry said major and regional banks estimate they have accumulated 76.71 trillion yen in potentially sour loans. The amount was tallied from self-assessment conducted by the individual banks and does not reflect nonperforming loans as of a set date.
12 mins ago
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.