TOKYO, July 14 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
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.
Asked about possible currency intervention by Japanese
authorities, Nagayasu said he thinks "the government has such a
(Reporting by Taiga Uranaka; Editing by Chris Gallagher)