Reported about 1 year ago
Norinchukin received a clear warning from Japan's financial regulator about its risky strategy of deep reliance on foreign bond holdings but failed to react in time, resulting in significant losses. Despite being urged by the Financial Services Agency to diversify its portfolio over the years, the bank's heavy losses due to sustained high interest rates in the US led to an estimated loss of 1.5 trillion yen ($9.4 billion) within a month. Norinchukin's structure as an unlisted bank owned by agricultural cooperatives contributed to the debacle, with its assets mainly consisting of securities rather than loans. The bank funded its overseas investments by borrowing dollars, which became unsustainable as borrowing costs exceeded interest earnings, similar to other institutions facing losses on foreign bonds due to rising dollar funding costs.
Source: YAHOO