Rising interest rates have saddled Japan’s regional banks with large unrealized losses on their bond-based assets. Higher rates mean lower bond prices.
The Japan Asset Management Platform analyzed the midterm account settlements of 99 regional banks.
As of end-September, the banks had nearly 3 trillion yen, or about 19.5 billion dollars, in latent losses on domestic and foreign bonds, mutual funds and other holdings.
That’s up 81 percent from three months earlier.
Unrealized losses from government bills and other domestic bonds grew 2.6-fold, to around 10 billion dollars.
Long-term interest rates have risen in Japan, following the Bank of Japan’s decision in July to allow more flexibility in its yield curve control.
Higher rates abroad are also causing bond prices to drop.
In midterm reports, 57 regional banks posted net losses, as they set aside bigger contingency reserves to cover downturns in clients’ business operations.
Read More: Regional banks’ latent losses on bond assets increased by 80%