SMFG will consider loan to TEPCO if conditions met

December 30, 2011


Sumitomo Mitsui Financial Group Inc. would consider extending an additional loan to Tokyo Electric Power Co. if several conditions are met, including sound management at the beleaguered utility.

SMFG President Koichi Miyata made the remark in a recent interview with The Asahi Shimbun. It is the first time the head of a major banking group has shown a positive stance for additional lending to TEPCO.

The electric power company is now plagued with problems stemming from the accident at its Fukushima No. 1 nuclear power plant. It faces a shortage of funds to deal with the damaged reactors and procure fuel for thermal power generation.

It is considering asking financial institutions for additional loans worth 1 trillion yen ($12.5 billion) or more.

"We have not yet received a request from TEPCO for an additional loan," Miyata said.

However, he said SMFG would be able to accept such a request on certain conditions, including smooth progress in TEPCO's compensation payments to victims of the nuclear accident, sound management, and if financial institutions are not required to forgive their loans to TEPCO.

TEPCO is in such dire straits that the government is considering effectively nationalizing the company through an injection of 1 trillion yen or more in taxpayer money.

Miyata said public funds "may be necessary for smooth payments of compensation."

But he added that the government's involvement in the management of TEPCO should be limited.

"TEPCO should continue to be an independent private company," Miyata said.

The utility wants to stave off nationalization, saying increased electricity rates would help it overcome the current crisis.

"It is the right of electric power companies (to decide whether) to raise electricity charges," TEPCO President Toshio Nishizawa said in a news conference on Dec. 22.

On Dec. 27, however, Yukio Edano, the industry minister, criticized Nishizawa.

"I want him to change that idea," Edano said.

Referring to Edano's criticism, Miyata said: "Even if public funds are injected into TEPCO, the firm is not a nationalized company. It is an ordinary thing for private companies to pass on the rise in material costs to consumers, although they have to make efforts to reduce costs before raising prices."

Immediately after the March 11 Great East Japan Earthquake and outbreak of the nuclear crisis, Sumitomo Mitsui Banking Corp. (SMBC), a key organization of SMFG, and seven other major financial institutions extended a total of 2 trillion yen in loans to TEPCO.

SMBC was also involved in working out a framework for compensation payments to the victims of the nuclear accident.

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Koichi Miyata (Asahi Shimbun file photo)

Koichi Miyata (Asahi Shimbun file photo)

  • Koichi Miyata (Asahi Shimbun file photo)

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