The Reality of Japan's Bad Loan Problems Aug 01

  • ID: 1802900
  • August 2001
  • Region: Japan
  • Standard & Poors
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  • 77 Bank Ltd.
  • Chiba Bank Ltd.
  • Hiroshima Bank Ltd.
  • Juroku Bank Ltd.
  • Oita Bank Ltd.
  • Suruga Bank Ltd.
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The major issues underpinning the bad loan problems plaguing Japan's banking system are the fast pace of loans migrating from other categories into nonperforming status, together with the banks' insufficient interest margins to absorb their credit costs. The Japanese government recently proposed a final disposal ("saishu shori") of the banks' bad loans. However, this solution only confronts part of the deeper problem. Japanese banks cannot recover their financial health without a recovery in the domestic economy, which is unlikely to take place soon. Furthermore, development of Japan's underwriting culture, without which the banks cannot prevent the continuing emergence of new bad loans, is also expected to happen only slowly. Japan's many definitions of nonperforming loans (NPLs) are a source of...

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Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.

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- Industrial Bank of Japan Ltd.
- Shinsei Bank Ltd.
- Fuji Bank Ltd.
- UFJ Bank Ltd.
- Tokai Bank Ltd.
- Daiwa Bank Ltd.
- Norinchukin Bank
- Mizuho Asset Trust & Banking Co. Ltd.
- Aozora Bank Ltd.
- Sumitomo Mitsui Trust Bank Ltd.
- Mitsubishi UFJ Trust and Banking Corp.
- Hokuriku Bank Ltd.
- Shizuoka Bank Ltd.
- Chiba Bank Ltd.
- Joyo Bank Ltd.
- Asahi Bank Ltd.
- Gunma Bank Ltd.
- Bank of Tokyo-Mitsubishi Ltd.
- Toho Bank Ltd.
- Hyakujushi Bank Ltd.
- Iyo Bank Ltd.
- Kiyo Bank Ltd.
- Bank of Yokohama Ltd.
- Hachijuni Bank Ltd.
- Nanto Bank Ltd.
- Suruga Bank Ltd.
- Juroku Bank Ltd.
- Daishi Bank Ltd.
- Bank of Kyoto Ltd.
- Hyakugo Bank Ltd.
- Hokkaido Bank Ltd.
- Shikoku Bank Ltd.
- Yamanashi Chuo Bank Ltd.
- Fukuoka City Bank Ltd.
- Hiroshima Bank Ltd.
- San-in Godo Bank Ltd.
- Bank of Fukuoka Ltd.
- Bank of Nagoya Ltd.
- Musashino Bank Ltd.
- Tokyo Tomin Bank Ltd.
- 77 Bank Ltd.
- Shoko Chukin Bank
- Akita Bank Ltd.
- Higo Bank Ltd.
- Hokkoku Bank Ltd.
- Kagoshima Bank Ltd.
- Oita Bank Ltd.
- Ogaki Kyoritsu Bank Ltd.
- Shiga Bank Ltd.
- Yamaguchi Bank Ltd.
- Keiyo Bank Ltd.
- UFJ Trust Bank Ltd.
- Shinkin Central Bank
- Chuo Mitsui Trust & Banking Co. Ltd.
- Sumitomo Mitsui Banking Corp.

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