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Friday, Nov. 23, 2007

¥226 billion in subprime losses for banks here, survey finds

Staff writer

Japan's banks logged a combined ¥226 billion in losses due to the U.S. subprime mortgage crisis in the six months to September, the Financial Services Agency said Thursday.

According to an FSA survey, 575 deposit-handling financial institutions in Japan booked ¥119 billion in realized losses and ¥107 billion in unrealized losses in the April-September period because of the subprime loan mess.

During the period, those institutions had ¥1.33 trillion in financial products in book value linked to the poor-credit mortgage loans, including asset-backed securities and collateralized debt obligations.

FSA chief Yoshimi Watanabe said the losses are not a big threat to Japan's financial institutions because they have abundant profits from their core banking business and unrealized gains on their stockholdings.

"Even if additional losses surface (in the latter half of the business year), financial institutions can cover them sufficiently," Watanabe said.

Japanese banks booked ¥12.4 trillion in unrealized profits from their stockholdings as of the end of September, while they raked in ¥6.3 trillion from their banking operations in fiscal 2006, which ended in March, said the FSA survey of the banks' earnings reports.

The FSA survey does not include losses from October on, and the financial watchdog said it has not compiled estimate losses for the full business year to March.

The survey covered 10 major banks, 110 regional banks and 455 "shinkin" (credit) banks and credit unions based on their consolidated midterm financial results.

Nomura Holdings Inc., which logged ¥104.2 billion in losses from the mortgage loan woes in the period, was not included in the survey, but losses at Mizuho Securities Co., an affiliate of Mizuho Financial Group, were.

Two Ashikaga offers Kyodo News Two financial groups willing to buy the temporarily nationalized Ashikaga Bank have presented respective offer prices to the Financial Services Agency, Financial Services Minister Yoshimi Watanabe said Thursday.

An alliance of 21 financial institutions, led by eight regional banks in cooperation with Nikko Citigroup Ltd., and another led by brokerage group Nomura Holdings Inc. have expressed their interest in purchasing the Tochigi Prefecture-based regional bank, which came under state control in 2003 after becoming swamped with bad loans.

Ashikaga Bank is expected to carry a price tag of more than ¥300 billion.

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The Japan Times

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