Japanese city banks write off $10.1 billion in loans

The Associated Press

TOKYO (November 5, 2000 8:43 a.m. EST http://www.nandotimes.com) - Nine Japanese city banks wrote off about $10.1 billion in loans from April through September as bankruptcies were affecting borrowers' ability to pay debts, a major business daily reported Sunday.

The write-offs were about 60 percent more than the banks' earlier combined forecast of $6.3 billion, released in May, the Nihon Keizai newspaper said, without citing sources.

Bank officials were unavailable for comment Sunday in Tokyo.

The report suggested that despite modest signs of rising corporate investment in Japan, bankruptcies are delaying a full recovery from the country's worst economic slowdown since World War II.

Large write-offs at Japan's city banks are a particular concern, as such institutions have operations nationwide and are the chief lenders to major corporations.

The nine banks, which included the Bank of Tokyo-Mitsubishi, Sumitomo Bank, Tokai Bank and Asahi Bank, will report their first-half earnings later this month.

Liabilities left by corporate bankruptcies in Japan climbed 48 percent to a postwar high of $100.8 billion from April through September and were expected to reach near-record levels in calendar year 2000, the private Teikoku Databank research agency said last month.

The July collapse of major department store operator Sogo Co. and the October failure of insurer Chiyoda Mutual Life were expected to strongly affect earnings at lenders Tokai Bank and Asahi Bank, the Nikkei said.

For the full fiscal year ending March 31, 2001, the nine city banks had earlier planned to remove a total $12.4 billion from their ledgers, but will probably have to revise their outlook, the newspaper said.

http://www.nandotimes.com/noframes/business/story/0,2469,500276474-500432715-502738873-0,00.html

-- Martin Thompson (mthom1927@aol.com), November 05, 2000

Answers

I had read somewhere that in order to save face; The first announcment is made at about half the acutal amount, then a followup is made with the 'true' amount. This way things don't look quite as bad.

-- (perry@ofuzzy1.com), November 05, 2000.