The Bankwatch

Tracking the consumer evolution of financial services

Nikkei slides impact Japan megabank equity position

The global economy is impacting Japanese banks in a different way.  Due to the practice of holding stock in their clients the reduction in the stock market is impacting their balance sheet values and driving them to raise additional capital.

Nikkei slides | Reuters

TOKYO (Reuters) – As Japanese stocks slide toward a 26-year low, the country’s big banks may soon need to raise more capital and could go cap in hand to the companies whose weak shares triggered the problem in the first place.

Tokyo’s three “megabanks” — Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group — dodged much of the subprime damage that leveled New York and London, but have been whiplashed by losses on massive stock holdings and a deep recession.

Unlike their Western rivals, Japanese lenders take stakes in their corporate clients to cement business ties, making bank profits sensitive to swings in equity prices.

Written by Colin Henderson

April 4, 2009 at 01:46

Posted in Uncategorized

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