Japan bank lobby:Tepco would face insolvency without bailout scheme
TOKYO, July 14
TOKYO, July 14 (Reuters) - The head of Japan's banking lobby said on Thursday that Tokyo Electric could become insolvent if parliament fails to pass a bailout bill by the end of September, when the operator of the crippled Fukushima nuclear plant closes books for the fiscal first half.
Katsunori Nagayasu, chairman of the Japanese Bankers Association, told a regular news conference time is running out as the government panel on nuclear damages compensation is set to release guidelines around late July.
"It will be known how much the compensation will be in rough figures, but if there is no (government) scheme for that then, Tokyo Electric could immediately become insolvent," he said.
"And it will trigger a series of risks for the power industry and the markets and put a damper on Japan's reconstruction efforts," he said.
Japan's parliament has started deliberations on a bill to set up a fund to help the operator of crippled nuclear reactors in Fukushima pay for damages, which could total billions of dollars.
Japanese banks, including Nagayasu's Mitsubishi UFJ Financial Group , provided a total 2 trillion yen in March in emergency loans to Tokyo Electric.
The creditors has been pushing for strong government commitment to keeping Tokyo Electric solvent and listed on the stock exchange, fearing a massive shock to the equity and bond markets in case of its default.
Nagayasu also said the direct impact from U.S. and European debt problems is relatively limited on the Japanese economy. But the European sovereign issue has various indirect ramifications, including a higher yen.
"A continued rise in yen would deal a great blow to the Japanese economy," he said.
Moody's Investors Service warned on Wednesday the United States may lose its top-notch credit rating in the next few weeks if lawmakers fail to increase the country's legal borrowing limit and the government misses debt payments.