Replies

Tokyo, Oct. 9 (Bloomberg) -- Mizuho Holdings Inc. and UFJ Holdings Inc. led drops in Japanese bank shares on speculation their loans to problem borrowers may put them first in line to be seized by the government.

Mizuho, the world's biggest bank by assets, and UFJ, Japan's fourth-largest lender, both fell as much as 30,000 yen, their daily limit, to record intraday lows of 164,000. Both lenders traded 7.7 percent lower at 179,000 on the Tokyo Stock Exchange as of 1 p.m. Japan time.

Both Japanese and foreign investors are concerned about Japan's banks, which they say may have more bad loans than the official estimate of about 52 trillion yen ($422 billion). The government may need to seize the most troubled lenders to reform and revive the industry, said Richard Medley, chairman of Medley Global Advisors, a New York-based hedge fund adviser who previously worked for George Soros.

``There may have to be a nationalization of a (major) bank or two,'' Medley said. ``The most important thing that can get done now is to support Minister (for Financial Services Heizo) Takenaka in his effort to get the bank situation dealt with as rapidly as possible.''

Takenaka, who was last week named to his post, has said Japan will consider injecting public funds into banks. Finance Minister Masajuro Shiokawa has said Japan must use taxpayer money to ``rescue'' the industry.

Takenaka is scheduled to hold a monthly press briefing on the economy at 4.15 p.m. Tokyo time, in his capacity as minister for economic and fiscal policy.
__________
Looks bad for world banking. Mizuho is the worlds biggest bank.