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Japan credit unions

should disclose more

TOKYO: A working group advising Japan's Finance Ministry (MOF) has agreed the country's credit unions should disclose more financial data to help improve their management, a MOF official said.

Opinions were still divided in the group, however, as to how speedily the unions should start disclosing the data, he said.

Credit unions are small financial institutions that take deposits and make loans, mainly to members.

Some of Japan's 373 credit unions developed severe bad loan problems due to aggressive lending policies in the late 1980s.

Earlier this month, Tokyo-based credit union Cosmo Shinyo Kumiai was ordered to stop most of its operations following a run on its deposits.

Tokyo metropolitan and financial authorities have been working on a bail-out plan for Cosmo's business.

Some members of the working group advocated early implementation of new requirements on disclosure, but others said they should be gradually implemented, the MOF official said.

At present, whether and how far the unions disclose such data is decided by each union, the MOF official quoted local government officials which supervise credit unions as saying.

An advisory committee, to which the working group reports, is scheduled to announce interim proposals on September 21 on ways to resolve Japan's bad loan problems, and a final plan by the end of December.

The MOF official said the working group was positive towards an idea that credit unions' financial condition should be inspected by external auditors.

They also advocated an end to the right of credit union managers to maintain other business interests, something they believed helped cause the sector's bad loan woes.-Reuter