Japan's four major banking groups plan to reduce risk assets such as stockholdings and loans by some 23 trillion yen in the current fiscal year ending March 31 to bolster their capital bases, according to banking industry sources.
The plan is designed to prevent possible increases in bad loans in the wake of more corporate failures and latent losses on stockholdings from further undermining the banking groups' capital standings, the sources said.
The capital-adequacy ratio for banks is measured by dividing their capital and retained reserves with their gross assets -- lending and securities holdings.
Combined with their efforts to trim risk assets, some banks have begun moves to boost their capital.
By the end of the current year, the banking groups will trim their combined assets by more than 7 percent, or 23 trillion yen, from 300 trillion yen as of the end of March 2001, the sources said.
The Mizuho Financial Group, comprising Dai-Ichi Kangyo Bank, Fuji Bank and the Industrial Bank of Japan, will cut its assets by 9 trillion yen in the current year, including 4.31 trillion yen already slashed in the first half, the sources said.
Sumitomo Mitsui Banking Corp. will reduce its assets by 5 trillion yen, while UFJ Holdings Inc. plans to cut assets by 5 trillion yen to 6 trillion yen. UFJ Holdings groups Sanwa Bank, Tokai Bank and Toyo Trust and Banking Co.
Mitsubishi Tokyo Financial Group Inc., which cut assets by 3.15 trillion yen in the first half, plans further cuts of 1.85 trillion yen by the end of March, the sources said. The group comprises the Bank of Tokyo-Mitsubishi and Mitsubishi Trust and Banking Corp.