Finance Minister Sadakazu Tanigaki said Friday that the outstanding balance of emergency loans by the Bank of Japan to Yamaichi Securities Co., which collapsed in 1997, must first be determined before discussing who will foot the final bill.
"The liquidation procedures have yet to be completed," Tanigaki said in a news conference. "It is difficult for us to deal with the issue until the size of the losses becomes clearer."
The comments came after the Asahi Shimbun reported Friday that the BOJ is unlikely to recover about 114 billion yen of the loans it extended to the company.
If that is the case, it would be the first time since the end of the war that BOJ special loans have been deemed irrecoverable, the daily said.
Since the creditors of Yamaichi Securities are due to be reimbursed by March 2004 and the securities industry is opposed to shouldering part of the losses stemming from the irrecoverable special loans, it looks as though taxpayers will have to foot the bill, the paper said.
The BOJ extended emergency loans to Yamaichi after the brokerage voluntarily discontinued operations in November 1997 due to massive off-the-book debts.
The outstanding balance of the BOJ loans, which peaked at 1.2 trillion yen, totaled 489 billion yen in June 1999, when Yamaichi was declared bankrupt by the Tokyo District Court. Through ongoing liquidation procedures, the balance decreased to nearly 119.2 billion yen.