The government is keen to tackle reforms. It has set a two-year deadline for banks to write off their existing bad loans. They have three years to handle new bad loans. The new data suggests banks will struggle to meet those deadlines. They typically sell stock to offset writeoffs, but a bad market makes that tough.
Experts say they require government help.
New prime minister Junichiro Koizumi has admitted reforms will lead to unemployment and bankruptcies. Other than pursuing the debt write-off plan, though, it's not clear what he plans to do. The government says a bailout isn't necessary now. But there's a convincing case for injecting a large amount of public money, Rogers said, if the problem is going to be dealt with swiftly and decisively. It is also highly unlikely.