The government has effectively placed Nippon Credit Bank under temporary state control, concluding the bad loan-laden institution had a capital deficit of 94.4 billion yen at the end of March.
Overriding resistance from NCB, Prime Minister Keizo Obuchi authorized nationalization of the bank on Sunday under Article 36 of the Financial Revitalization Law and the acquisition of NCB's outstanding shares by the government-backed Deposit Insurance Corp. under Article 38 of the law.
The decision effectively puts NCB under state control although the actual transfer of the bank's shares will not take place until Thursday. "The Financial Supervisory Agency determined that the estimated net value of the bank's assets was negative as of March 31," the prime minister said in a statement.