The Financial Services Agency will seek new managers for the nationalized Ashikaga Bank who boast expertise in extending short-term loans to troubled companies and can respond to the claims of local businesses.
"For the sake of better safeguarding the local economy, someone with knowledge in DIP (debtor-in-possession) finance would be desirable," Financial Services Minister Heizo Takenaka told a Lower House financial committee meeting Thursday.
DIP is the practice of providing funds to ailing companies while they restructure their debts and balance sheets.
Providers of DIP financing, considered to face high risk, are limited in Japan. The state-affiliated Development Bank of Japan is the No. 1 provider of such loans.
The government will consider other forms of peripheral support to help businesses and individuals suffering massive losses on Ashikaga Bank shares, Takenaka said.
"Keeping in mind the enormity of the actual problem, we will actively consider any and all measures," the banking minister said. "We must take all measures to make sure the regional economy will not freeze, through damage to shareholders."
While it would be impossible to protect investors from Ashikaga Financial Group shares becoming practically worthless, the government will study funding for loan procurement, job procurement and other assistance to local municipalities and businesses.
In an effort to address local uncertainty, the state will provide some form of assistance, even to problem borrowers, said Tatsuya Ito, senior vice minister of financial services.
