Global Banking Directory 2.0
Press Release Distribution Service
Add Bank | Banking Forum Online
BankDEP Crypto Bank
BanksDaily on Twitter BanksDaily on LinkedIn BanksDaily on Instagram

Financial and Banking News

Japan megabanks resist to pay for subprime fund

Financial newsTop three banks of Japan are expected to resist a request to put up a total of US$15 billion for a U.S.-led subprime rescue fund, a move that could further cloud prospects for the bailout plan.

Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group Inc. had each been asked to invest US$5 billion. Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. initiated plans for the fund to prevent a fire sale of billions of dollars of securities held by structured investment vehicles (SIVs) at the heart of the subprime mortgage crisis.

But the size and even establishment of the fund have been put in doubt in recent days amid skepticism among market players over how effective it might be and an announcement by Citigroup that it would bail out SIVs on its own. "It could prove quite difficult for us to put up funds for this," said an executive at one of the megabanks, adding that he did not think the fund would be able to sell the commercial paper that would in theory be supported by Japanese credit lines. "Logically, it just doesn't make sense for us," he added.

Japanese bank shares slid sharply Monday amid concerns they could be setting themselves up for further losses. While their exposure to the subprime loan market is much smaller than that of Western banks, Japanese lenders have not escaped unscathed. Shares of Mitsubishi UFJ Financial Group tumbled 4.3% to 1,028 yen while Mizuho Financial fell 5 percent to 533,000 yen and Sumitomo Mitsui gave up 3.7 percent to 825,000 yen.

"This is a credit line so they wouldn't have to come up with cash right away. But the amount of money requested is large and the need to provide cash could emerge depending on the actions of the fund," said Nomura Securities bank analyst Keisuke Moriyama.

That Japanese banks are being asked to help support the global financial system is a development that would have been unthinkable four or five years ago when the country appeared on the verge of a financial sector crisis. Japanese banks have since cleaned up most of their non-performing loans and enjoyed a profit recovery thanks to a healthier economy, and their financial health has improved dramatically.

But they face their own domestic problems in exposure to a sickly consumer finance industry and an ongoing struggle to improve profits on corporate loans. They would also face a difficult time explaining to investors the logic behind putting up money for the fund.

Japanese banks are eager to expand their presence overseas and will not want to be seen as turning a blind eye to the health of the global financial system. "What did America do when we had our non-performing loan problem? They just pushed us into the corner. European banks also ran away. Why should Japan now shoulder this burden?" said the megabank executive. "But this is a decision made at a high political level and could end up defying logic."

Source: Chinapost
Date: 18.12.2007 [155]
Get your content published on BanksDAILY.com in just a few clicks.

Financial and Banking News
 Post-Pandemic Economic Recovery: Key Factors Driving Growth and Stability

The COVID-19 pandemic caused a global economic halt, resulting in disruption, job losses, and uncertainty. However, as vaccination efforts progress and countries adjust to the new normal, there is hope for an economic recovery.

 Wiki Finance Expo Sydney 2023 Is Coming Soon!

Regulation, Forex, Crypto, Web 3.0, Metaverse, AI, ESG Will Be in Focus. Taking place on November 16th, Wiki Finance Expo, Sydney 2023 is Aussie largest and most anticipated fintech event of the year. 30.10.2023 | Source: WikiExpo

 Blockchain Economy Dubai Summit 2023: Just Two Weeks Away and Buzzing with Anticipation

Dubai, UAE - The Blockchain Economy Dubai Summit is generating palpable excitement within the blockchain and crypto communities, with only two weeks remaining until the event. Scheduled for October 4-5, 2023, at the Le Meridien Dubai Hotel & Conference Center, this prestigious event gathers over 3,000 blockchain entrepreneurs, crypto enthusiasts, and industry leaders from 85 countries. 20.09.2023 | Source: Teklip

 📰 News Archive

2007-2024 © BanksDAILY.com | All Banks in One Place | Privacy Policy