Japanese banks, including Mitsubishi UFJ Financial Group Inc., may face losses from their holdings of collateralized debt obligations and other asset-backed products, as risk aversion spreads from subprime mortgages.
"Direct exposure to subprime loans and mortgage lenders may be limited at Japanese banks," said Takahiro Tazaki, head of structured credit research at Barclays Capital in Japan. "The bigger impact may come from price declines in a wider range of products, such as asset-backed bonds."
Mitsubishi UFJ, Japan's biggest bank, Mizuho Financial Group Inc. and six others reported this month combined losses of ¥18.7 billion linked to investments backed by subprime loans. The disclosures represent less than 0.2 percent of their combined holdings of asset-backed bonds as of March 31, according to documents on their Web sites.