DPJ to push for sale of Shinginko Tokyo?

July 17, 2009
By Ken Worsley

Yesterday, Bloomberg published a piece quoting Yasunori Sone, a political science professor at Keio University in Tokyo, as saying, “The DPJ, which takes a different stance than the governor, will liquidate Shinginko Tokyo…It was clear from the beginning that its business model didn’t work.”

The second part of that statement is very true. Troubles at the publicly funded bank have been documented here before. As a quick reminder:

Shinginko Tokyo, which apparently loaned money to some 2,300 firms that went bust between April 2005 and January 2008, now lists 28.5 billion yen of its initial 100 billion yen of capitalization as unrecoverable. The bank is also running a deficit of 93.6 billion yen.

That was as of March 2008. Since then the bank has received a massive injection of public funds to the tune of 40 billion yen, though it is still projecting losses. The situation with the tax-fund bleeding bank led in part to the Liberal Democratic Party being ousted from control of the Tokyo Metropolitan Assembly in last week’s election.

Who would line up to buy such a mess? Bloomberg continues:

The party favors selling healthy portions of Shinginko to one or more private local financial firms, [DPJ Upper House financial-policy group leader Kouhei] Ohtsuka said. Other options include using a state-owned financial institution to rescue the lender or nationalizing it, he said.

Ah. So if a private buyer doesn’t step in, losses get spread out to taxpayers from across the country. How is that supposed to help the DPJ?

Filed Under Banking, Politics