Japanese regulators are heightening scrutiny of high-risk trades by domestic financial institutions in the wake of losses related to Archegos, two sources familiar with the matter said, as concern grows over huge losses incurred by some big players.
Mizuho Financial Group Inc. last week emerged as the third Japanese bank to face losses stemming from the collapse of Sung Kook "Bill" Hwang’s Archegos Capital Management under the weight of billions of dollars in leveraged stock bets. Nomura Holdings Inc. has signaled it stands to lose as much as $2 billion (¥219 billion), while Mitsubishi UFJ Financial Group Inc.’s securities unit warned of a $270 million loss.
The Financial Services Agency and the Bank of Japan will scrutinize how financial institutions that incurred losses had been managing transaction risks, the sources said on condition of anonymity due to the sensitivity of the matter.