TOKYO - Mitsubishi Tokyo
Financial Group Inc plans to sell 700 billion yen
(US$5.84 billion) in non-performing loans to the
Resolution Collection Corp (RCC), sources at the holding
company said.
The financial firm will use the
sale to remove non-performing lending from its portfolio
of loan assets when it closes its books for fiscal 2002.
The figure is believed to be the biggest sale of
bad loans to the RCC by any financial group.
Mitsubishi Tokyo Financial, the holding
company for Bank of Tokyo Mitsubishi and other group
financial institutions, sold 330 billion yen in
non-performing loans to the RCC in the six months that ended
September 30. This figure is much greater than the approximately 40
billion yen in loans sold to the RCC by the next-largest seller
during the same period and more than triple the 100
billion yen in lending likely to be unloaded by each of
the other major banking groups for all of fiscal 2002.
The RCC buys loan claims held by banks against
insolvent borrowers deemed to be in danger of collapse.
It originally bought the loans at below-market prices
based on the assumption that the corporate borrowers
would be liquidated. But since 2002, the RCC has
increasingly begun to pay market prices on the
optimistic belief that the corporate borrowers would
survive.
Mitsubishi Tokyo Financial cites the
payment of market prices as the reason it is selling so
many bad loans to the RCC.
