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Japan's financial services minister out
By Alex Frew McMillan
TOKYO, Japan (CNN) -- Japan's Financial Services Minister Hakuo Yanagisawa was dumped on Monday, surprising most observers. They had expected little change in the first cabinet reshuffle since Prime Minster Junichiro Koizumi took office in April 2001. The move suggests the Koizumi administration may be serious about a new approach to Japan's bad-debt problem Yanagisawa's post will be taken over by Heizo Takenaka, who was also reappointed as economics minister. Finance Minister Masajuro Shiokawa also retained his job, the cabinet office announced. New approach to banking system"It certainly gives support to the idea that they're going to try to implement a new approach to the banking system," Richard Jerram, Japan economist for ING Barings, told CNN. Yanagisawa had been the minister who most vociferously opposed using public funds to inject cash into the banks. His post oversaw the bank watchdog Financial Services Agency (FSA).
Takenaka's appointment suggests the FSA may end its forbearance approach toward banks. He is expected to favor a more aggressive stance on injecting public funds into the financial industry. "The probability of more severe provisions and public fund injections has increased," Jerram said. "But I think that if you're going to say this is the start of a new beginning then you're a very brave person." "People have been too disappointed before by new appointments," Jerram said. "You have to remember that a year and a half ago, people were very enthusiastic about Yanagisawa getting the job." Waiting for details
Other analysts were also striking a cautious note. Takenaka is a career economist, not a politician. That means he depends heavily on Koizumi's backing for his authority. No details of how Takenaka will approach the bank have been made clear. "We are still left without a specific plan," noted Ryo Hino, Japan economist with J.P. Morgan. "This will be the next primary focus." However, Hino said the appointment was a "positive move" overall. The Bank of Japan last week put pressure on Yanagisawa when it began pushing a new approach to dealing with the mountain of bad debts facing its banks. The initiative was regarded as an attack on the FSA, which the BOJ feels was moving too cautiously on dealing with the banks. Bank stocks turn aroundBank stocks jumped on word of Yanagisawa's resignation, rebounding from solidly negative territory to post positives. Industry No. 2 Sumitomo Mitsui finished up 0.44 percent at 684 yen , having been down more than 2 percent at lunch. Mitsubishi Tokyo Financial Group rose 0.67 percent on the day to 899,000 yen. UFJ Holdings climbed 0.94 percent to 323,000 yen. Mizuho Holdings, Japan's largest bank, finished down 0.7 percent at 285,000 yen, but it had ended the morning down almost 4 percent. The yen also strengthened on the prospect of action on the banks, and is now trading at 121.32 to the U.S. dollar, from 121.50 before Yanagisawa stepped down. In addition to the changes to his economic team, Koizumi also announced a new position and four other ministerial changes, including Shigeru Ishiba replacing Gen Nakatani as defense minister.
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