Asahi Bank forecasts full-year net loss of 530 bil. yen.TOKYO, Nov. 20 Kyodo
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Bad loan-swamped Asahi Bank on Tuesday revised its group net income forecast for the whole of fiscal 2001 sharply downward to a loss of 530 billion yen, a reversal from its May forecast of a 36 billion yen profit.
The 530 billion yen loss is the largest among group net losses for the year ending March 31, 2002 expected by major Japanese banks, which are accelerating disposal of nonperforming loans under pressure from the government.
The bank attributed the revision to a decision to bolster the tally of loan-loss charges for the year to 400 billion yen. This is an increase of 300 billion yen from the initially planned credit cost of 100 billion yen.
The bank decided to boost the loan-loss charges because the Financial Services Agency The Financial Services Agency is a Japanese government organization responsible for overseeing banking, securities and exchange, and insurance in order to ensure the stability of the financial system of Japan. The agency reports to the Minister of Financial Services. (FSA FSA Financial Services Authority
FSA Food Standards Agency (UK)
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FSA Financial Services Agency (Japan) ) began a special check of major banks' books to have banks set aside greater loan-loss provisions for outstanding loans to firms in serious trouble, bank officials said.
The loan-loss charges will be expanded in connection with loans to construction, real estate and retail firms, the officials said.
In an effort to prevent the expected hefty losses from eroding its capital adequacy ratio Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR), is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss. , Asahi Bank will issue special securities totaling 100 billion yen through a special purpose company to be set up as one of its subsidiaries, the bank said.
The issuance of the securities, scheduled to be implemented by the March 31 end of this fiscal year, will allow the bank's capital adequacy ratio to remain at the current 9% line despite the huge group net losses, it said.
The major commercial bank also lowered its pretax income pretax income
Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. forecast to a loss of 660 billion yen in a reversal of its 60 billion yen profit forecast.
Its operating revenues forecast remained the same at 800 billion yen on a group basis.
Earlier this month, Asahi said it and U.S. investment bank Goldman Sachs The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS) is one of the world's largest global investment banks. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street. Group Inc. agreed to set up two companies, one charged with buying Asahi's bad loans at market value and the other acting as a servicer company.
Under accounting rules, sales of loans by a bank to another company enables the bank to remove the loans from the asset column of its balance sheet.
In addition to the credit cost, Asahi said it will accelerate its unloading of shareholdings to clear huge latent losses on those shares. The bank will book an extraordinary loss to clear appraisal losses of 290 billion yen on its shareholdings, it said.
Asahi said it will cut its fixed costs fixed costs,
n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). , including personnel costs, by 17.5 billion yen a year, starting in fiscal 2002.
It will also cut 1,291 more jobs over the next six months. As a result, its workforce will shrink to 10,600 people by the end of next March.
The stepped-up bad-loan disposal and downsizing (1) Converting mainframe and mini-based systems to client/server LANs.
(2) To reduce equipment and associated costs by switching to a less-expensive system.
(jargon) downsizing program will increase the bank's parent-only net profit for the whole of fiscal 2002 by 6 billion yen to 42 billion yen.