The government will wait to receive the results of ongoing bank inspections, due in late March, before deciding whether to recapitalize shaky banks, a top official said Friday.
The government will also take into account the stock market's reaction to the results before making its decision, according to the official, who asked not be named.
The government believes that accelerating the disposal of nonperforming loans is unlikely to severely deplete the capital bases of major banks, which would further erode confidence in Japan's financial system, he said. The official also ruled out any immediate plans of the government convening a meeting to tackle the nation's financial problems.
"It would be like declaring to the world that Japan is in a terrible situation," he said. The government has set aside 15 trillion yen to respond to a financial crisis, but must convene a special panel to disburse any funds. In an effort to accelerate bad-loan disposals and counter deflation, Prime Minister Junichiro Koizumi instructed Financial Services Minister Hakuo Yanagisawa on Thursday to disclose the results of bank inspections currently being conducted.
The government is expected to disclose information such as loans held by companies at risk of failure and the amount of loan-loss reserves set aside by banks.