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Japanese Banks Still Struggle, Despite Rise in Exports - 2004-05-28


Exports are on the rise from Japan, but some of the country's banks are still struggling to recover from a long slump. And one of Japan's automakers unveils a sweeping restructuring plan.

The Japanese government says exports rose by more than 10 percent for the fourth straight month in April. Exports shot up nearly 11 percent from the same month a year ago while imports rose 6.5 percent. The trade surplus increased 30 percent.

But economists warn Japanese export growth appears to have peaked in the last quarter of 2003 and could further slow amid signs that global economic growth is diminishing.

Five of Japan's top seven banks this week announced improved results as the industry continues its decade-long struggle to shed huge portfolios of bad loans.

The country's biggest bank, Mizuho, turned a net profit for 2003, but competitors UFJ and Resona stayed in the red.

Takamune Okihara is the new president at UFJ Bank.

Mr. Okihara says this year will be the last chance for a rebirth of UFJ.

The president of the Mitsubishi Tokyo Financial Group, Shigemitsu Miki, warns profits in the sector will decline as financial institutions seek to boost lending.

Mr. Miki says his bank is having a tough time increasing lending because there is no demand for loans and all the banks are chasing after the same qualified potential customers.

Another company in the Mitsubishi conglomerate has unveiled a sweeping restructuring plan.

Mitsubishi Motors says it will shut a domestic assembly plant, close an engine factory in Australia, slash nearly one-fourth of its group workforce and relocate its headquarters from Tokyo to Kyoto.

The chairman and chief executive officer of the struggling automaker, Yoichiro Okazaki, says this is a last chance for the company to survive.

Mr. Okazaki tells reporters that Mitsubishi Motors is determined to get back to the basics by putting top priority on safety and quality. He promises that the company will be reborn as a reliable one.

The automaker, plagued by defect cover-up scandals, will receive a capital injection of about $4 billion from the Mitsubishi group and other companies.

Japan's second largest telecommunications firm, KDDI, is in talks with electronics manufacturer Kyocera and Carlyle Group, a U.S. investment firm, about selling them its personal wireless systems subsidiary.

Media reports put the potential sale price at $2 billion.

Some analysts say shedding the subsidiary, known as DDI Pocket, would allow KDDI to focus on its growing mobile phone service.

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