The US sub-prime crisis has begun to affect Japanese financial institutions although many had assumed that their businesses would be safe.
So far Japanese financial institutions have lost over $40 billion as a result of the sub-prime crisis, 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 $9 billion in sub-prime losses, and now expects a further $13 billion in losses as a result of the sub-prime crash.
“Judging from the comments by top US bank executives, I didn’t expect the market to suffer as badly as it is doing. The aftermath of the sub-prime fiasco hit us directly,” says Terunobu Maeda, financial president, Mizuho Financial Group.
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.