Financial Services Minister Hakuo Yanagisawa expressed willingness Friday to protect the financial system by injecting public funds into the depleted capital bases of troubled banks if a financial catastrophe threatens stability.
"With courage, we will inject (public capital) into banks when a crisis strikes the financial system," Yanagisawa said.
The revised Deposit Insurance Law empowers the government to funnel up to 15 trillion yen into the capital accounts of banks in cases where a meltdown threatens to cause serious damage to the stability of regional and national banking systems.
"It is a matter of course for us to inject (public funds) and defend the financial system whenever a crisis breaks out," Yanagisawa said. "We will live up to our duties with calm and responsible attitudes while paying maximum attention" when implementing injection procedures.
In recent months, major banks' shares have been under relentless selling pressure. Asahi bank ended the day's trading at 59 yen, down 13 yen from Thursday's close. Chuo Mitsui Trust & Banking Co. ended at 105 yen, unchanged. Daiwa Bank Holdings Inc. ended at 72 yen, down 3 yen. Mizuho Holdings Inc. finished at 246,000 yen, down 4,000 yen.
"The pessimistic views (about banks), as shown by their share prices set yesterday and today, are not accurate," Yanagisawa reckoned. "There are no bank managers who apply for public funds when (their banks' capital-adequacy ratios) are hovering around levels of 9 percent or 10 percent."
Referring to the scheduled April abolishment of full deposit guarantees, Yanagisawa said, "I would like to implement that as scheduled."
Some senior lawmakers of the Liberal Democratic Party have been calling for postponing the plan, which would cap governmental deposit protection to 10 million yen per depositor, out of fear that consumers would close their accounts at teetering banks and in the process push them over the edge.