ACCORDING to NHK, the 99 local Japanese banks had unrealized losses on bonds and funds amounting to 1.9 trillion yen or 13 billion U.S. dollars by the end of the 2022 fiscal year in March.
These losses are reportedly more than 5 times over the previous fiscal years as investments plunged.
Meanwhile, some financially robust banks have sold their bonds to reduce losses, which led to converting unrealized losses into realized losses.
However, weaker banks may struggle to handle the losses given their weaker capabilities in risk management.
The Japanese broadcaster said that with Japan’s long-term interest rates constrained to approximately zero, the local Japanese bonds have turned to buy U.S. bonds, which offer higher yields.
But a series of interest-rate hikes by both the United States and European Central Banks weighed on bond prices.
The value of bonds held by local banks in Japan has declined and has consequently resulted in varying degrees of losses.
