Sunday, March 2, 2008 0 comments ++[ CLICK TO COMMENT ]++

Yikes! Even Takefuji is not spared the Subprime Virus

Although the possibility existed, I never quite imagined that Takefuji, a Japanese subprime lender, was exposed to the 'Subprime Virus'. Well, it looks Takefuji will take a big loss on some structured finance transactions it entered into during the middle of last year. Bloomberg reports:

Takefuji Corp. fell in Tokyo trading after the consumer lender said it may cut its full-year earnings forecast from 43.3 billion yen ($420 million) because of losses related to the U.S. subprime mortgage market...

Japan's third-largest consumer lender by market value may post a loss as large as 30 billion yen on subprime-linked derivatives transactions arranged by Merrill Lynch & Co., it said in a statement filed to the Tokyo exchange.

Takefuji removed from its balance sheet 30 billion yen of 20-year bonds carrying a coupon rate of 4 percent, through transactions last May set up by Merrill Lynch Japan Securities Co.

I recall reading an article--I think it was in The Economist--wondering whether Japanese banks were spared the subprime problems. A few of the big Japanese banks wrote down some minor losses but it seemed like only American and European banks were taking big subprime-related losses. Well, the Takefuji news is bound to raise questions about the Japanese banks.


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