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Friday, 6 April, 2001, 10:27 GMT 11:27 UK
Japan approves rescue package
bank of japan employee
A stack of new notes, but Japan's banks face mountains of debt
Japan's government has launched yet another emergency package designed to kick-start the country's flagging economy and shore up its banking system.

But the plan failed to make much impact with investors and stock brokers, who said the package was short on key details.

At the end of trade on Friday, the Tokyo's benchmark index, the Nikkei, had gained just a few points.

The economic package is designed to tackle the key area of bank debt, by imposing a two-year deadline for Japan's 16 biggest banks to dispose of their worst debts.

The government also wants banks to write off any loans that are expected to become non-performing within three years.

A system to buy up shares held by the banks will also set up as soon as possible, although no firm implementation date has been set.

"If the stock-buying body generates losses when it sells shareholdings to the market, the government will cover the losses in some form," said Taro Aso, state minister for economic and fiscal policy.

The package also called for a restriction on the amount of shares a Japanese bank can hold.

Japan's banks are estimated to hold as much as 15% of all shares of companies traded on the Tokyo stock exchange, leaving them vulnerable because of the huge falls on the stock markets.

Muted response

But the long-awaited package received at best a lukewarm response from the markets, with traders saying that it was lacking in detail.

japan's stockmarkets
The markets gave a lacklustre response to the new economic measures

"The... package only contained what investors had expected," said Nikko Securities broker Hiroichi Nishi.

"The dates [for implementation] were not specific," he added.

On Thursday, the benchmark Nikkei index ended up 2.38 points, or just 0.02%, at 13,383.76.

The rescue plan came as Japan's beleaguered prime minister Yoshiro Mori ended a month of speculation by formally announcing he would resign.

A dispute between the government and the three ruling coalition parties had prevented the package being announced on Wednesday, as planned.

A month ago the Bank of Japan returned to a zero-interest rate policy in another move to solve the country's economic problems.

See also:

06 Apr 01 | Asia-Pacific
04 Apr 01 | Business
19 Mar 01 | Business
19 Mar 01 | Business
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