(Adds Finance Minister’s comments)
By Tetsushi Kajimoto and Leika Kihara
TOKYO, March 28 (Reuters) – Japanese banks’ holdings of Additional Tier-1 (AT1) bonds issued by Credit Suisse are small, so the direct impact of a writedown will be limited to zero, Finance Minister Shunichi Suzuki said on Tuesday.
As part of the billion-euro bailout of Credit Suisse by rival UBS, Credit Suisse’s AT1 bonds with a face value of CHF 16 billion would be wiped out.
Suzuki also said that some companies and wealthy individuals also hold Credit Suisse’s AT1 bonds and are likely to incur losses.
However, he added that Japanese financial institutions have sufficient liquidity and capital buffers to absorb any losses.
Suzuki spoke in parliament when asked about the possible impact of the problems in the US and European banking sectors on the Japanese banking sector.
Suzuki’s comments came after Prime Minister Fumio Kishida said Tuesday he was closely monitoring developments in Japanese financial institutions amid Western banking woes.
“Risk aversion is evident in the underlying financial markets, but Japanese financial institutions have ample liquidity and capital, so the financial system as a whole remains stable,” Kishida told a parliamentary session.
“I will continue to monitor various situations and developments with caution.” (Reporting by Tetsushi Kajimoto and Leika Kihara; Editing by Tom Hogue and Jacqueline Wong)
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