Zeev,
Assets is assets. That should include all loans, real estate, branches and even "blue sky". Bank regulations here require banks to set aside reserves for deposits, loans and bad loans. As an example, (if I remember some of these numbers correctly) most loans require around an 8% reserve. So if a bank takes in $10 in deposits, they can, in theory, only loan out $9.20, keeping $.80 in reserve. If a loan is in default, the reserve requirement shoots up to around 16%. Further more, write downs are required as the underlying security diminished in value.
Eventually, if an institution has a disproportional amount of bad debt on their books, they will not be able to meet the reserve requirement.
One more astonishing figure that I did not mention in the last post. As of Mar 31, Sumitomo was posting a PROFIT of 131 billion Y while LTCB is posting 164 billion Y, again PROFIT.
Based on these figures, I am not sure what is the "overblown" Japan bank problem. Needless to say, I think this points to the extent of potentially hidden problems that I hope will surface soon.
Ramsey |
