Deeper into the mire

Article Abstract:

Based on figures up to Mar 1992, most of the big Japanese banks had higher provisions for non-performing loans. This indicates arising level of bad debts which could possibly overwhelm profitability. The 32%increase in operating profits to 1.9 trillion yen ($14,6 billion) is reduced by27% to 648 billion yen after bad debt provisions. Finance officials reported that total non-performing loans for the top banks reaches 7-8 trillion yen although this could be four to five times more according to confidential central bank data.

Japan, Statistics, Loan loss reserves

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Perpetual liability

Article Abstract:

Japanese banks are issuing permanent subordinated debentures to increase their permanent capital. Expected difficulties in meeting the capital-asset ratio set by the Bank for International Settlements, which is scheduled to take effect starting Mar 31, 1993, are forcing Japanese banks to rely on instruments which, in 1986, nearly led to their closure. The Bank of Japan should be prepared to come to the rescue of the banking system in case the issuance of these perpetual liability notes leads to the system's collapse.

Economic aspects, Subordinated debentures

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