Sub-Prime: The Albatross Around Japan's Financial Institutional Necks
" Labor to keep alive the little spark of celestial fire called conscience."
George Washington (1732 - 1799)
First U.S. President
Recent media reports out of Tokyo stated that the FSA (Financial Services Agency) have confirmed that losses incurred by Japanese financial institutions related to U.S. subprime doubled to approximately US$5.7 billion during the 4th quarter of 2007.
Additionally, the FSA upped the exposure of other Japanese banks, credit unions and other institutions to Yen1.52 trillion against Yen1.41 trillion in the third quarter. Yikes! Think about this? This does not even account for additional potential bad loss provisions that are likely if and when the monoline bond insurers "go down".
Implications? Clearly the Subprime Syndrome issue is a moving target; and likely to get worse not better. For the hedge fund community this might mean a closer look at the credit default swap levels on Japanese banks, insurers and other financial institutions for their relevant CDS rates to widen. It will also continue to weigh on their balance sheet reserves and ongoing quarterly reports and by implication their share prices and the market in general.
Lastly, with balance sheet constrained this is another potential reason why these "clients" are not expected to be buyers of global hedge fund of fund product in the near term. Mahalo.
" Labor to keep alive the little spark of celestial fire called conscience."
George Washington (1732 - 1799)
First U.S. President
Recent media reports out of Tokyo stated that the FSA (Financial Services Agency) have confirmed that losses incurred by Japanese financial institutions related to U.S. subprime doubled to approximately US$5.7 billion during the 4th quarter of 2007.
Additionally, the FSA upped the exposure of other Japanese banks, credit unions and other institutions to Yen1.52 trillion against Yen1.41 trillion in the third quarter. Yikes! Think about this? This does not even account for additional potential bad loss provisions that are likely if and when the monoline bond insurers "go down".
Implications? Clearly the Subprime Syndrome issue is a moving target; and likely to get worse not better. For the hedge fund community this might mean a closer look at the credit default swap levels on Japanese banks, insurers and other financial institutions for their relevant CDS rates to widen. It will also continue to weigh on their balance sheet reserves and ongoing quarterly reports and by implication their share prices and the market in general.
Lastly, with balance sheet constrained this is another potential reason why these "clients" are not expected to be buyers of global hedge fund of fund product in the near term. Mahalo.
posted by Franklin Scruggins | 9:57 AM
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