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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessMNI INSIGHT: BOJ Sees No Signs Credit Cost To Hit System Soon
By Hiroshi Inoue
TOKYO (MNI) - Credit costs facing Japanese banks are rising as bankruptcies
triggered by the coronavirus outbreak increase, but the Bank of Japan sees
little sign of an imminent destabilisation of the financial system as banks --
even regional banks - have sufficient capital reserves, MNI understands.
However, the longer the Covid-19 outbreak lasts, the greater the financing
problems for the corporate sector will become, eventually weighing on banks'
financial positions.
The BOJ's Financial System Report released in April cited credit costs as
one of the three heightened risks facing banks during the virus crisis, along
with volatile securities investment and foreign currency funding costs.
--MEGABANK RESERVES
The five major Japanese banks have added a total of JPY1.2 trillion to
reserves, concerned over a prolonged economic downturn and coronavirus, although
there is still a question marks over the scale of reserves required given the
remaining uncertainties over the outbreak.
There is also the remaining concern that the main banks can further
increase the capital base to insure against a bigger downturn, while the smaller
banks, including many regional lenders, will find it difficult to boost theirs
given tight operating margins.
--STABLE MARKETS WELCOME
Stable financial markets, helped by the accommodative monetary polices of
the globes leading central banks, has helped with overall financial stability,
as its prevented banks recording losses on securities, the BOJ analyses, with
the Federal Reserve's decision to buy 'fallen angel' bonds a particular help.
That has left the economy facing exceptional downward pressure, but for now
at least tied to falling demand as consumers stay at home amid emergency
provisions, with no concerns yet that financial market concerns will add to the
problems.
However, it remains a concern, as the BOJ warned in its latest Financial
Stability Report, when it said a prolonged economic downturn could "give rise to
a negative feedback loop between the real economy and the financial sector."
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: MMJBJ$,M$A$$$,M$J$$$,MT$$$$]
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.