No “new role” for RCC in Japanese NPL clean-up, claims ING
The decision by Mitsubishi Tokyo Financial (MTFG) to step up its sell-off of bad loans to the Resolution and Collection Corporation (RCC) will have little tangible effect on cleaning up Japanese financial institutions’ burgeoning non-performing loans (NPL), banking analysts at ING Securities claimed.
But ING senior financial analyst in Tokyo James Fiorillo said MTFG would only sell loans against which it already holds a great deal of reserves. “It would appear that the RCC is still prepared to only buy loans where the banks can take a serious cut on book value,” said Fiorillo. He claimed the RCC would not deviate significantly from its stance on trying to avoid public fund use. “This has made the RCC generally rather useless to the banks,” Fiorillo claimed.
He reiterated industry calls for the Japanese government to use public funds to resolve the banking system’s chronic non-performing loan issue. “Banks are doing all they can given capital limitations. We believe it is the government that should be stepping in to clear the NPL problem. We still see no sign of impending movement,” said Fiorillo.
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