The Democratic Party of Japan may push to sell Shinginko Tokyo Ltd., the unprofitable bank set up by Tokyo Gov. Shintaro Ishihara, if it wins next month's general election.
"If there's a change in government, as the ruling party in charge of financial regulation we'll take a different approach to Shinginko," Kohei Otsuka, a lawmaker and former Bank of Japan official who heads the DPJ's Upper House financial-policy group, said in an interview Wednesday. "We'll dispose of the bank."
The DPJ, which leads in polls ahead of the Aug. 30 general election, may ask the financial regulator to re-examine the bank's accounts if an earlier inspection is judged inadequate, said Otsuka, 49.
Shinginko, started by the Tokyo Metropolitan Government in 2005 to lend to small companies, has lost a total of ¥103 billion and is forecasting a fifth straight year of deficits.
Ishihara has tried to keep the bank afloat by providing capital and changing management. Shinginko, 84 percent owned by the metropolitan government, received a ¥40 billion capital injection from taxpayers last year. Hirotaka Terai, a former executive at Shinsei Bank Ltd., replaced Ryuichi Tsushima as Shinginko's president in June.
The bank has already "failed for all practical purposes," according to the DPJ's platform for the metropolitan assembly election last Sunday.
Otsuka's party will carry out financial reforms promised in local campaigns if it can break the Liberal Democratic Party's grip on power, he said. The DPJ became the biggest party in the Tokyo assembly, winning 54 of 127 seats, though it failed to seize an outright majority.
The party favors selling healthy portions of the bank to one or more private local financial firms, Otsuka said. Other options include using a government-owned financial institution to rescue the lender, or nationalizing it, he said.
