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Wednesday October 24, 10:08 PMJapan's Mizuho to suffer losses due to subprime: reports
Japan's number two bank is expected to post 50 billion yen (435 million dollars) in losses for the first half, well above the 600 million yen it initially forecast, the Asahi Shimbun said in its evening edition. Mizuho officials declined to comment, saying that the bank would announce its earnings next month. The Asahi Shimbun said the banking group's investments in US funds were hit by the subprime woes. The subprime mortgage crisis was triggered during the summer as US borrowers with shaky credit histories defaulted on their loans. Investment funds and banks suffered huge losses, sparking turmoil in credit and financial markets. Japanese banks have been widely seen as less affected by the subprime crisis as they tend to be more conservative in their investments than their North American or European counterparts. Ratings agency Moody's in a report Wednesday said it believed the subprime trouble would have a limited impact on Japan. The effects on Japan from the turmoil caused by the residential mortgage-backed securities market have "so far been manageable," Moody's said. Corporations remain "in good shape, as strong banking relationships are helping Japanese companies maintain strong liquidity," it said. Globally, Moody's said the largest part of the losses being absorbed in the next couple of quarters, so "the resolution of central banks and public authorities to protect banking systems from liquidity stress will succeed." Concerns about upcoming earnings results led the Tokyo Stock Exchange's benchmark index to close lower on Wednesday after gains in early trade. The Nikkei business daily said brokerage firm Mizuho Securities, a Mizuho group subsidiary, was likely to post a loss of up to 10 billion yen for the six months to September as it is forced to write down the value of its securitised debt products. The brokerage firm had posted a 6.1 billion yen net profit in the three months to June. The unlisted Mizuho Securities is expected to merge early next year with Shinko Securities, another company under the Mizuho group, to form Japan's third-largest brokerage by revenue. Mizuho's expected losses follow those of Nomura Holdings Inc, Japan's largest securities firm. The company announced last week it expects to post a pre-tax loss of up to 60 billion yen (511 million dollars) for the fiscal second quarter to September because of restructuring charges and a 73-billion-yen loss from the subprime debacle. The pre-tax loss means Nomura will likely book a quarterly net loss in the second quarter, the first since early 2003. |
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