Japanese banks’ bad loans won’t be driven higher by a proposed moratorium on debt payments by struggling small companies, said Financial Services Minister Shizuka Kamei. Lenders won’t have to classify loans encompassed by the plan as non-performing, Kamei, 72, said in an interview yesterday at his office in Tokyo. That means they won’t be forced to boost provisions when borrowers postpone repayments of interest or principal, he said. At the same time, Kamei vowed to push banks to extend more credit to small businesses after bankruptcies hit a six-year high in Japan, Bloomberg reported.

Japan's new bank regulator is softening its stance on a proposed moratorium on loan repayments by small business and individuals, in the latest sign that the country's new leadership is adjusting its rhetoric to the reality of government, The Wall Street Journal reported. Soon after Japan's new government was formed last month, the banking and postal-services minister, Shizuka Kamei, called for a three-year grace period on debt repayments to help small businesses and individuals cope with tough economic conditions. Bankers in Tokyo complain that Mr.

The Bank of Japan may decide as soon as next month to let its emergency corporate-debt buying programs expire as businesses regain access to private funding, people with direct knowledge of the discussions said, Bloomberg reported. Officials are concerned that maintaining their purchases of corporate bonds and commercial paper beyond the scheduled end in December would distort capital markets, according to the people, who spoke on condition of anonymity because the deliberations are private.

Japan's transport minister said Sunday he will not force the struggling Japan Airlines, Asia's biggest airline, into bankruptcy, The Associated Press reported. "We will not crush and liquidate (the airline)," Land, Infrastructure and Transport Minister Seiji Maehara said on a TV Asahi talk show.

The Japanese government was not considering bankruptcy for loss-making Japan Airlines Corp, Transport Minister Seiji Maehara said on Thursday, adding he had not yet given the airline an answer to its plea for a public bail-out, Reuters reported. The new transport minister met JAL's CEO and the airline's lenders on Thursday to discuss how to rescue the airline, which has been hit hard by the global aviation downturn in the wake of the financial crisis. Speaking after the meetings, Maehara said the biggest problem for JAL was a lack of capital.

Japan’s transportation minister sought on Thursday to allay concerns that the country’s new centre-left government might withdraw financial support for Japan Airlines, the loss-making carrier that is seeking at least Y100 billion ($1.09 billion) in emergency aid, the Financial Times reported. Seiji Maehara, who assumed the transportation post on Wednesday, said: “Japan’s skies have always had two airlines, and it’s important that we continue with a system of two major airlines.

Japan Airlines Corp., the recipient of three government bailouts since 2001, will find out soon if the rules have changed, Bloomberg reported. The Democratic Party of Japan, which takes power Sept. 16, pledged to cut what incoming Prime Minister Yukio Hatoyama called “wasteful” government spending. Japan Air, with 235 billion yen ($2.6 billion) in loans from a state-owned bank, likely will seek more aid after it submits a mid-term business plan by Sept. 30, according to analysts.

Japanese corporate bankruptcies fell for the first time in three months in August as companies found it easier to borrow and government spending fueled demand, Bloomberg reported. Business failures declined 1 percent from a year earlier to 1,241 cases, Tokyo Shoko Research Ltd. said in Tokyo today. Efforts by the Bank of Japan and the government to encourage lending helped businesses stay afloat in the wake of the country’s deepest postwar recession. Companies have also benefited from more than $2 trillion in worldwide government stimulus that encouraged consumers to buy cars and electronics.

The World Trade Organisation is expected to rule on Friday that billions of dollars in European government subsidies for Airbus aircraft are illegal, the Financial Times reported. That would hand victory to the US and Boeing, in the first round of a WTO dogfight between the world’s biggest aircraft manufacturers. The preliminary ruling, is likely to spur Washington to launch a WTO challenge to further government loans for Airbus to develop its new €11 billion ($16 billion, £10 billion) A350 extra wide-bodied airliner which will compete with Boeing’s long-delayed 787 Dreamliner.

Japan is on the verge of a reluctant revolution, The Wall Street Journal reported. On Sunday, voters here are poised to remove the country's ruling party from power after 54 years of nearly continuous rule. Polls show voters in Sunday's election heavily favor the Democratic Party of Japan, an 11-year-old collection of market reformers, union leaders and consumer activists that has never held full political power.