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Combined group net losses at major financial institutions are believed to have exceeded ¥4 trillion in fiscal 2008, the highest in six years, according to their earnings results and forecasts.

Net losses at major banks, securities firms and nonlife insurance companies for the year that ended March 31 are estimated at ¥3.2 trillion, according to financial institutions’ reports compiled earlier this week. Including losses at life insurers, which have yet to release results or forecasts, the amount is expected to rise to ¥4 trillion.

This would represent the worst losses since major banks logged combined net losses of more than ¥4.6 trillion in fiscal 2002 due to the disposal of bad loans.

It is feared the deteriorating financial standing of major financial institutions could cause a credit crunch and serve as a drag on economic recovery.

Nomura Holdings Inc., the country’s No. 1 securities house, recently reported a group net loss of ¥709.4 billion for fiscal 2008, the biggest loss among major financial institutions.

Mizuho Financial Group Inc., one of the nation’s three biggest banking groups, has forecast a net loss of ¥580 billion.

Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc., the two other megabanking groups, will also likely fall into the red, with MUFG anticipating a net loss of ¥260 billion and SMFG ¥390 billion.

Many major financial institutions registered losses on securitized products and stock holdings due to the global financial crisis. At major banks, costs to dispose of bad loans surged as the businesses of companies they deal with deteriorated.

Norinchukin Bank, the de facto central bank for agricultural cooperatives and a major institutional investor, anticipates a net loss of ¥570 billion, as it incurred more than ¥600 billion in losses on securities holdings.

Among nonlife insurance companies, Sompo Japan Insurance Inc. and Aioi Insurance Co. are expected to report net losses.

Life insurers have not yet released earnings forecasts for fiscal 2008. For the first nine months of the fiscal year, however, Asahi Mutual Life Insurance Co. and Mitsui Life Insurance each reported a net loss of more than ¥100 billion.

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