Superbanks in biggest bad loan loss

THE WORLD'S biggest banks have unveiled the world's biggest bad loan losses in Tokyo. Three Japanese superbanks, created by a series of mergers over the past 12 months, wrote off 1.45 trillion yen (£8bn) in the six months to the end of September.

This was the first time the banks had reported figures that consolidated the results of the merged components. But despite the write-offs, trillions of yen of bad debts remain in the sector.

The biggest clear-out was made by Mizuho Holdings, the world's largest bank by assets, which wrote off 861bn yen of debt. The bank, formed by the merger of Dai-Ichi Kangyo Bank, Industrial Bank of Japan and Fuji Bank, has a further 5.75 trillion yen of non-performing loans, and plans to book a further two trillion yen of losses in the full year, double last year's total.

Mizuho's losses climbed to 264.64bn yen in the six months compared with a profit of 155bn yen over the same period last year. It expects to make losses of 720bn yen for the full year against a profit of 211bn yen.

Sumitomo Mitsui Banking Corp, which ranks second, doubled its losses on loans to 305.4bn yen, but still managed to turn in a modest 34bn yen profit. The third-largest operator Mitsubishi Tokyo Financial Group, reported losses of 97m yen after writing off 284.9bn yen.

As bad as the figures looked, the actions were seen by analysts as a sign that the banks were at last biting the bullet.