FRANKFURT – The outstanding balance of overseas investments and loans by Japanese banks totaled $1.179 trillion at the end of December, down 5.6 percent from the end of September, the Bank for International Settlements said in a report Tuesday.
The substantial decrease in the balance reflects curbed lending by Japanese banks due to consolidation within the industry, analysts and banking officials said.
In addition, faced with falling credibility under the weight of bad loans, Japanese banks are sharply cutting back on their overseas assets, they said.
Overseas investments and loans by Japanese banks, which had been on the decline since the burst in the early 1990s of the asset-inflated economic bubble, turned upward at the end of 2000.
With the latest BIS report showing the resumption of a downward trend in Japanese banks’ overseas investments and loans, an international monetary source said this partly reflects Japanese banks’ moves to prevent their net worth ratios from falling.
Of the outstanding balance of overseas investments and loans by financial institutions in 23 major countries, including Britain, Japan, Hong Kong and the United States, Japanese banks accounted for 10.3 percent at the end of December, down 0.5 percentage point from the end of September, according to the BIS report.
FSA to check Mizuho
Financial Services Minister Hakuo Yanagisawa said Tuesday the financial regulator will begin on-site inspections of the Mizuho Financial Group this week to look into the computer fiasco that marred the April 1 launch of the two Mizuho banks.
The inspections will be conducted jointly by the Financial Services Agency and the Bank of Japan on Wednesday, FSA officials said.
On April 1, Mizuho Bank and Mizuho Corporate Bank were created under Mizuho Holdings Inc. through the integration of Dai-Ichi Kangyo Bank, Fuji Bank and the Industrial Bank of Japan.
From the outset, the computer disaster disrupted the new banks’ operations, resulting in such troubles as customers being double-billed for utilities charges and automated teller machines malfunctioning.
Mizuho Bank, which deals mainly with individuals, will be inspected by the FSA, while the BOJ will inspect Mizuho Corporate Bank.
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