Japan lower house approves bank bailout bill

Tokyo: Japan's lower house of parliament on Thursday approved a plan to inject capital into ailing banks if needed to contain the fallout from the financial crisis.

The bill was approved by a majority of lawmakers in the lower house, which is controlled by the ruling coalition, a parliamentary spokeswoman said. Under the plan, banks will be able to receive public funds pre-emptively to shore up their capital bases, which are being hurt by a credit crunch and a slump in the value of their shareholdings.

The legislation will be reviewed by the upper house, which is controlled by opposition parties that are demanding changes to the proposal. Japan's banks had been seen as relatively resilient to the global financial crisis that brought down once-mighty US banks Bear Stearns and Lehman Brothers and pushed financial firms worldwide to the brink of bankruptcy.

But they are now being squeezed by a plunging stock market and a Japanese economy on the brink of recession. Japan's central bank cut its key interest rate to just 0.3 per cent last week to try to pump up the economy.