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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Paul Berliner who wrote (6870)	10/4/1998 12:36:00 PM
From: Tundra	Respond to of 9980

Paul, "So the problem also lies outside the banking sector." A sobering thought. As to the banking sector we share a similiar view. Some realistic multiple needs to attach the the sector's self analyzed bad loan portfolio. Credibility is lacking. For what its worth, see; Japan City Banks Have 30 Trln Yen Of Category-2 Loans As Of March-End TOKYO (Nikkei)-Japan's nine city banks had a combined total of about 30 trillion yen of potentially problematic, or category-2, loans as of March 31, according to sources familiar with the banks' internal assessments. Category-2 credits, defined broadly as loans on which recovery requires monitoring, accounted for 7-14% of the banks' lending totals. The Financial Supervisory Agency plans to press banks to increase loan-loss reserves against a portion of their category-2 lending. The city banks have loan-loss reserves covering only 2-5% of their category-2 loans, a coverage ratio they determine by calculating historical rates of corporate insolvencies. Facing the prospect of more loss provisions, these banks are mapping out steps to shore up their equity bases or shrink their asset totals to prevent an erosion of their capital ratios. The bulk of the category-2 total is made up of loans to companies whose performance requires monitoring, minus high-grade collateral such as a bank deposit. This group includes companies that have been granted eased interest terms on a loan, as well as businesses that are meeting scheduled loan payments but which have been recording losses. Some borrowers have racked up consecutive years of losses, or would fall into negative net worth if their assets were marked down to market value. The category-2 total also includes real-estate collateral backing loans to failed firms or businesses with overdue loans, which would not require provisioning against loan losses. Fuji Bank (8317), which voluntarily disclosed its category-2 lending totals, says that such real-estate collateral accounts for almost 50% of its category-2 figure. (The Nihon Keizai Shimbun Saturday morning edition) Regards, Tundra