Japanese banks gain as state fund cuts deposit levy

Tokyo

THE state-run fund that bailed out Japan's banks with taxpayer money from the end of the 1990s is now so flush with cash that it is cutting what it charges lenders to protect savers.

The Deposit Insurance Corp of Japan lowered to 4.2 basis points from 8.4 basis points what it charges banks to insure deposits and then uses as a reserve to rescue failed lenders. The cut to the lowest rate since early 1996 reflects the recovery of the local financial system, and will boost banks' profits, though the savings probably won't spur lending, according to BNP Paribas and Keefe Bruyette & Woods Inc.

More than two years into his term, Prime Minister Shinzo Abe is struggling to boost growth in the world's third-largest economy, which is still feeling the aftereffects of the collapse of a 1980s asset bubble. Companies expect to cut capital investment in the year started April 1, even as Toyota Motor Corp plans to spend US$1.3 billion to build plants in China and Mexico, the Nikkei …