Japan's Banks Lose Earnings Tailwind With Slump in Foreign Bonds
- Could book more unrealized losses this year, BI analyst says
- Mizuho is shifting assets to stocks, MUFG looking at Europe
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Japan’s biggest banks are losing an earnings driver, thanks to the slump in foreign government bonds.
With interest rates near zero at home, the three so-called megabanks had flocked to bonds abroad in recent years to bolster returns. Now, with Treasury yields surging since last year, they’re faced with either selling down their holdings in anticipation of further price declines, or incurring mounting valuation losses. And with political turmoil in Italy roiling European bond markets, banks may think twice about reallocating their holdings to the region.