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MNI INSIGHT: BOJ Concern Grows Over Megabank Investment Losses

(MNI) Tokyo

Big losses by Japanese megabanks on their overseas investments could crimp lending in Japan.

The Bank of Japan is increasingly concerned that the nation’s so-called megabanks could face big losses on their overseas financial investments as the U.S. faces both higher rates and a likely recession, possibly crimping lending in Japan and adding to downward pressure on the economy, MNI understands.

In its next Financial System Report in October, the BOJ will say that such risks have risen since April, and that while the Japanese financial system would remain robust even in the face of a severe market downturn, potential overseas losses by the three biggest banks could prompt a more cautious attitude to lending at home.

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The Bank of Japan is increasingly concerned that the nation’s so-called megabanks could face big losses on their overseas financial investments as the U.S. faces both higher rates and a likely recession, possibly crimping lending in Japan and adding to downward pressure on the economy, MNI understands.

In its next Financial System Report in October, the BOJ will say that such risks have risen since April, and that while the Japanese financial system would remain robust even in the face of a severe market downturn, potential overseas losses by the three biggest banks could prompt a more cautious attitude to lending at home.

Keep reading...Show less