April 4, 2014 / 4:26 AM / 4 years ago

Banks likely not demanding collateral for Tepco refinance -sources

TOKYO, April 4 (Reuters) - Japanese banks including Sumitomo Mitsui Banking Corp and Bank of Tokyo-Mitsubishi UFJ are likely to forgo collateral from Tokyo Electric Power Co for about 100 billion yen ($962.5 million) loan due for refinancing this month, sources familiar with the matter said on Friday.

Once enjoying a stellar credit status, the power utility has become a struggling borrower with uncertain viability in the wake of Fukushima nuclear crisis, making banks to agree to extend loans only when backed by collateral.

But the government and lawmakers have been putting pressure on lenders to stop demanding collateral from the power utility as the practice could hamper its restructuring efforts.

Major banks are now leaning toward providing unsecured loans as the government has made bigger commitment to helping end the Fukushima crisis, said the sources who were not authorised to discuss the matter publicly.

Sumitomo Mitsui Banking Corp is a unit of Sumitomo Mitsui Financial Group and Bank of Tokyo-Mitsubishi UFJ is the banking unit of Mitsubishi UFJ Financial Group. ($1 = 103.8900 Japanese yen) (Reporting by Taiga Uranaka and Taro Fuse; Editing by Dominic Lau)

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