Tokyo – Japanese commercial banks are likely to write off for fiscal 1997 ending Tuesday around 200 billion yen in loans to private companies in Indonesia that have been hit hard by the nation's economic crisis, banking sources said Monday.

As of the end of June 1997, Japanese banks had some 23.1 billion dollars in loans to Indonesia's private sector, according to the Basel-based Bank for International Settlements.

Of this total, around one-third of these bank loans are for Japanese companies operating in Indonesia and many are guaranteed by their parent companies in Japan, the sources said.

The Japanese banks plan to set aside provisions for around 10-15 % of the balance to prepare for possible loan losses, mainly for local companies, they said.

Japanese banks and the Indonesian government have considerable differences in views about how Southeast Asian private-sector debts should be handled.

The Indonesian government is seeking a moratorium on repayment of the principal portion of private-sector loans for several years, while the banks are hoping to limit that period to around six months.

Major Japanese banks have decided to opt for write-offs, given the wide gap in viewpoints, and also partly because massive loans to crisis-hit Asian countries are considered one of the factors behind their low credit ratings.

Although a breakdown of the balance of loans has not been published, industry sources estimate the largest Japanese bank creditor is the Bank of Tokyo-Mitsubishi, which held around 3 billion dollars in such loans.

Other banks such as Sanwa Bank, Sumitomo Bank, the Industrial Bank of Japan and the Long-Term Credit Bank of Japan are also known to be major creditors.