MNI BRIEF: Impact of AT1 On Japanese Banks Is Limited - Suzuki
Finance Minister Shunichi Suzuki said on Tuesday the scale of investment in Additional Tier 1 (AT1) bonds by Japanese financial institutions was small and the direct impact of turmoil linked to AT1 bonds overseas on Japanese financial institutions is limited.
Suzuki told lawmakers that some firms and retailers had invested money in AT1 bonds and they could incur losses and the government requested brokers to properly deal with them. He added that Japanese mega banks had issued AT1 bonds but there was no special contract with regard to those bonds.
The minister also said Japanese authorities continued to monitor developments and the impact on the financial system, although Japanese banks have sufficient capital and liquidity.
AT1 bonds pay higher interest but are lower in the order of claims than ordinary bonds, making them a riskier investment.
Bank of Japan Governor Haruhiko Kuroda at the same panel said that he hopes incoming new governor Kazuo Ueda manages monetary policy in an appropriate manner, while taking various risks into consideration.