Stock price falls and the disposal of bad loans are forcing many regional banks to cut earnings projections for the fiscal first half.

In the latest in a series of moves, Bank of Yokohama announced a downward revision of its group earnings for the first half to Sept. 30, citing appraisal losses of 29 billion yen on securities holdings.

Bank of Yokohama, the biggest regional bank, is one of many regional banks falling victim to new accounting rules introduced April 1.

Under the new rules, Japanese firms must adopt tighter accounting rules, including evaluation of cross-held securities holdings on a mark-to-market basis, a move designed to make it more difficult to hide losses or debts.

In the case of banks, they are required to book appraisal losses on their shareholdings if the market value of the shares drops more than 50 percent, or for certain issues if the market value drops more than 30 percent.

Suruga Bank, based in Shizuoka Prefecture, is one of the regional banks forced to revise earnings projections on such losses of 21.5 billion yen. It is expected to have fallen into the red in the first half.

Mycal Corp.'s collapse is casting a shadow over some regional banks, forcing Tochigi Bank to write off 2 billion yen worth of bonds issued by the failed store chain. It faces red ink for the first time.

The new accounting rules allow banks to skip reporting appraisal losses on their shareholdings when their market value falls by a margin of more than 30 percent to less than 50 percent from the book value if their prices are expected to recover.

Many regional banks are to report appraisal losses on their shareholdings when their market value falls by more than 30 percent, but some banks have taken advantage of the rules to skip reporting every loss.

Bank analysts said the rules could widen the gap between the strong and the weak among regional banks if share prices go down further by the end of next March, when they close their books for fiscal 2001.