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Friday, 01 December 2023
Japan won't face instances like SVB collapse - finance minister

Japan won't face instances like SVB collapse - finance minister

Japan's banking sector won't face incidents similar to the collapse of U.S. lender Silicon Valley Bank due to differences in the structure of bank deposits, Finance Minister Shunichi Suzuki said on Wednesday.

"Japan's financial system is stable as a whole," as banks have sufficient capital buffers against risks, Suzuki, who is also the minister overseeing the banking sector, told parliament.

Japanese banking shares on Tuesday tumbled the most since the onset of the COVID-19 pandemic, as investors grappled with contagion fears stemming from the collapse of SVB and New York-based Signature Bank (NASDAQ:SBNY).

Losses in SVB's bond portfolio have highlighted similar risks for Japanese lenders' gigantic foreign bond holdings, which are carrying over $30 billion in unrealised losses.

While Japanese banks have suffered losses on their foreign bond portfolios, they have been mostly offset by profits from stock holdings, Suzuki said.

"For now, the chance of something similar to SVB's collapse happening in Japan's banking sector is low," Suzuki said.

Japanese regional lenders also face smaller risks of a bank run because their deposits consist mostly of small-sized ones for individuals, unlike the fast-moving, big deposits of SVB, he said.

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