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" Japanese financial regulators have found an additional 1.4 trillion yen ($10.6 billion) in nonperforming loans that must be written off by the country's 13 largest lenders . . . "
"Sensing that a lack of faith in the banks' candor was leading investors to assume the worst, the Financial Services Agency sent inspectors to review the loans the banks had made to their 149 largest borrowers. More than three-quarters of these loans were to companies in fields like real estate, construction and retailing that have been hit especially hard by the collapse of Japan's asset-price bubble in 1990."
"The regulators said the banks' losses on bad loans would probably total 7.8 trillion yen ($59 billion) for the fiscal year that ended March 31, about 22 percent more than the banks initially forecast."
"The audit is likely to increase pressure on the banks to write off nonperforming loans swiftly. But analysts said that losses at the banks had made them that much more hesitant to call in loans from major companies near the breaking point, for fear of worse losses if the borrowers failed."
"A strengthening of the economy might revive borrowers' fortunes enough to avoid that crisis, as has happened before, and the Bank of Japan said in its latest monthly report that it saw glimmers of hope on that front. 'Japan's economy still continues to deteriorate as a whole, but the pace has moderated somewhat,' the bank said." ... [more]
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