The chief of the Japanese Bankers Association on Tuesday voiced strong concern over the plunge of the key 225-issue Nikkei stock index below the 12,000 level, but dismissed fears of a potential banking crisis at the March 31 end of fiscal 2000.
"It will be very severe (in the next fiscal year) if the average falls below the 12,000 level," Chairman Yoshifumi Nishikawa told reporters after meeting with Financial Services Agency officials. "But there will be no March crisis in the banking system."
His comments came after the Nikkei slid under 12,000 at the outset of trading Tuesday. The average closed the day 351.67 points lower at 11,819.70, its first finish below the 12,000 threshold since February 1985.
Nishikawa, also president of Sumitomo Bank, played down the effect on March book closings as companies are still not required to settle stock accounts based on their market value at that time.
Companies will be obliged to book stock portfolios on the basis of market value from midterm book-closings in September. The measure will deprive them of a way to dress up balance sheets through latent gains from stockholdings, currently based on book value.
Nishikawa said pushing through structural reforms will be necessary to boost the market and that financial institutions must do their part by removing nonperforming assets from their balance sheets.
He refrained from making clear comments about a proposal to create a private-sector fund to purchase cross-held shares from banks, suggested in an emergency economic package that the ruling coalition announced last week.
"We have to consider a way to solve the issue of cross-shareholding, but whether a purchasing body will be appropriate is uncertain as yet."