ECONOMIC FORUM / Basics of judo key to banking / Firms must know
July 11, 2008 – 11:33 amECONOMIC FORUM / Basics of judo key to banking / Firms must know.
The combined net profit of the Big Six for the business year through the end of March this year registered a 34 percent decline from the previous year.
The sharp year-on-year drop was due mainly to greater-than-expected losses caused by disastrous declines in the prices of their securities holdings linked to U.S. subprime mortgage loans. The combined losses of the six banking giants attributable to the U.S. subprime crisis reached nearly 1 trillion yen in fiscal 2007.
As a result, the megabanks” business strategy aimed at boosting their profitability through trading in securitized financial products has stalled.
Commenting on the situation, Terunobu Maeda, president and chief executive officer of Mizuho Financial Group Inc., the institution worst hit by the subprime crisis among the six, lamented at a press conference last week, ‘We have to admit that the way we ran our business may be subject to criticism because it was like a house built on sand, with its foundations highly susceptible to market turmoil.’
Maeda”s admission indicated that his way of thinking, as the top executive of one of the nation”s six largest financial banking groups that constitute the arteries of the financial system of this country, was overly complacent.
