Japan now hit by sub-prime crisis

19 November 2007

The US sub-prime crisis has finally started trickling through to Japanese financial institutions although many had assumed that their businesses would not be affected.

So far Japanese financial institutions have lost over $40 billion as a result of the sub-prime crash, and more losses are expected to come as problems continue.

Mizuho Financial Group has been forced to revise its profit predictions by $13 billion for the second half of the current financial year, after its three main banks were hit.

For the first half of this year, the big three banks incurred nine billion dollars in sub-prime losses, and now expects $13 billion more losses related to the sub-prime situation.

Mizuho Financial's president Terunobu Maeda, said at a press conference: "Judging from the comments by top US bank executives, I didn't expect the market to suffer as badly as it is doing," referring to an earlier meeting with experts in October. However he admitted: "The aftermath of the sub-prime fiasco hit us directly."

Aozora Bank has also changed its predictions for profits, with chairman Kimikazu Nomi expecting losses of around $670 million in the second half of this financial year.

Shinsei Bank and Sumitomo Mitsui Financial Group are also likely to be hit, as well as local banks and credit unions.

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