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🌏 | Bank of China needs to prepare for increase in non-performing loans = Bancassurance



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[博鰲(ボアオ) 20日 ロイター] – 中国銀行保険監督管理委員会(銀保監会、CBIRC)の肖遠企… → Continue reading


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Bad debt

Bad debt(Friday,British: Bad debt, non-performing loans[1] ) Is a debt that is difficult to collect. In a narrow sense,bankな どFinancial institutionIn the loan (Loan) DestinationCompanyManagement deterioration andbankruptcyLoans that are likely to be difficult to collect due to reasons such asReceivable).

Bad debt in corporate accounting

For the debt held by the company, the possibility of collection is assessed every fiscal year.Allowance for doubtful accountsMust be set as a cost (generally referred to as indirect treatment), and the portion that cannot be recovered must be impaired (generally referred to as direct treatment). As a result of these loss treatments, profits may be reduced or losses may be expanded, resulting in a decrease in equity capital. This processing method is stipulated in the Companies Act (calculation rules) and corporate accounting principles. It is a process that has little disagreement in academia and is in line with international accounting standards. In addition, the corporation tax law and the income tax law permit this processing.

In general,RecessionIf this happens, the management condition of the lender will worsen and the number of bad loans will increase.BoomThen, the management condition of the lender will improve and the bad debts will decrease, so it is possible to use the provisions as profits.

The existence of bad debtbank,Non-bankOf the money lending businessBalance sheetCan be a factor that greatly damages. For example, let's say you borrow 80 yen (deposit at a bank) and own money of 20 yen, lend 90 yen and keep 10 yen as cash. If 1% of the loan (9 yen) is not repaid, your own money will be 11 yen. In this case, even if only 1% of the loan amount has a great influence on own funds, it can be seen that it can be a major management issue in the money lending business.

Bad debts in financial institutions

Financial institutions continue to process in accordance with corporate accounting principles, but the characteristic is that they categorize bad debts strictly and divide them into the following categories.

Especially for banks, BIS (Bank for International Settlements:International settlement bank)byBIS regulationSo, the banks involved in international financeCapital adequacy ratioThe minimum (of total assets) is set at 8%.


Although BIS does not specify financial institutions that operate only in Japan, Japan requires domestic law to maintain a capital adequacy ratio of 4%. These numbers are the minimum, and it is necessary to manage at a level above this ratio in order to deal with sudden risks.

Banks are subject to financial inspections by the Financial Services Agency, but assessing bad debts is of great concern.

In particular, in financial inspections, when the non-performing loan assessment in a specific industry is focused and tightened, it is said that banks' loans to specific industries tend to be conservative. For example, there were rumors that the assessment of bad debts in the real estate industry (subprime-related) and the construction industry (industrial recession due to the reduction of public works) was tightened in financial inspections since March 2008. In addition, many companies were refused loans due to stricter financial inspections, and the complaints flooded the FSA (the FSA Secretary explained that the facts were rootless, but it was unusual in itself. is there).

In addition, some banks limit the total amount of loans to protect the equity ratio itself. It in generalReluctance to lend(Loan)Renting offCall.

Obligor classification in self-assessment

Financial Services AgencyStipulated byFinancial inspection manualThe categories in[2].

Lending destinationDescriptionClassification
Bankruptcy destinationLegal and formal bankruptcy (bankruptcy,Corporate rehabilitation lawBe applicableLending toBad debt
Bankruptcy destination
Although it has not fallen into legal or formal management failure,There is no prospect of rebuilding due to serious business difficultiesLenders that are practically in bankruptcy
Although it is not in a state of business failure, it is in a difficult situation and the progress of the reconstruction plan is not good,Lenders that are likely to fall into bankruptcy in the future
Needs attentionThere is a problem with the loan conditions, there is a problem with the fulfillment of debt, there is a problem with the financial condition, etc.Attention is required for future managementLenders (received so-called financial support)
Management requiredOf the points requiring attention,Debt performance is overdue for 3 months or more, or loan terms are relaxedThe recipient of the loan
Other than management requiredLending destinations other than those requiring management among lending destinations requiring attentionNormal debt
Normal destinationExcellent lender with good business performance and no financial problems

Bad debt problems of banks in the 1990s

Normally, banks wouldReal estateSuch ascollateralTherefore, even if a bad debt occurs, no loss can be made by collecting the collateral.

HoweverJapanThen,Bubble economyA soft loan was made using the real estate that surged in the times as collateral. Normally, the loan amount is set at around 70% of the land valuation amount, but 120% is loaned in anticipation of a future rise in land prices, or collateral is set even if the mortgage rank is low because the loan is prioritized. Then, such acts as lending were also done.

Bubble burstLater, the borrower failed in the business and was unable to collect the loan.Furthermore, the collateral real estate collapsed and fell below the loan amount, and the financial institution that set the collateral with the lower mortgage could also collect the loan and collateral. There were many situations in which there was no such situation. The debt that could not be collected in this way put Japanese banks in a serious financial crisis.

By weakening the criteria for screening credits, we classify properties that should originally be bad debts as normal loans, or lend funds necessary for prescribed repayment and consider them as normal loans instead of bad debts. The act of trying to repair the business condition by showing the total amount of bad debts low was rampant[3].

The recession after the burst of the bubble,Credit crunchThese actions and suspicions were widely reported in (Credit Crunch), which contributed to financial unrest. The government initiallyConvoy systemThe financial institution has stated that it will not be crushed.

However, from around 1995, in order to solve these problems, the company changed its stance to "exit companies that should leave the market", tightened the examination of loans, did not allow the concealment of non-performing loans, and provided for bad debts. Requested more money.Then, it dealt with financial institutions that had become insolvent due to excessive non-performing loans.First,Hyogo BankBankrupted for the first time after the war as a bank, and even moreHokkaido Takushoku BanklikeCity bankAndJapan Long-Term Credit Bank-Japan Bond Credit BanklikeLong-term credit bankIt became a situation of bankruptcy.Other major banks that escaped bankruptcy are also large from the countryPublic fundsAfter being injected, he was able to surpass the situation.

The deprivation of the bank's physical strength in this way was a great shackle in rebuilding the Japanese economy after the burst of the bubble. Banks are overly cautious about lending,中小企业AgainstReluctance to lend,Renting offSuch a phenomenon has become noticeable. As a result, in addition to the recession, it became difficult to raise funds, which made it difficult to start new businesses, and it was not possible to obtain loans.bankruptcyAnd even bankruptcy calls for bankruptcyChain bankruptcy,Unemployment rateRising, the number of middle-aged and elderly suicides also increased rapidly, which became a serious social problem.

But,Obuchi CabinetThese credit crunches have been settled by the large-scale injection of public funds under. However, due to the economic downturn, bad debts continued to increase, and according to the Financial Services Agency, the nationwide bank's outstanding loans under the Financial Reconstruction Act reached 14 trillion yen at the end of March 3.

It was decided in December 1999 that the public funding for capital injection into banks would increase to 12 trillion yen.[4].

Bad bank problems since the 2000s

Summit at the beginning of 2001G7In Japan, Japan was strongly urged to promote the disposal of NPLs, especially from the United States[5].

In fiscal 2002, the cumulative amount of losses due to the disposal of NPLs at national banks reached ¥81 trillion and ¥5000 billion.[6].. Cumulative amount of bank losses associated with the disposal of bad debts was 1992 trillion yen at the end of 2002-94[7].

The non-performing loan ratio was 1999% as of March 3, but decreased to 6.1% in September 2006.[8].

In the fiscal year ended September 21, the receivables outstanding disclosed by the Financial Reconstruction Law of all banks contracted to 9 trillion yen.

In the fiscal year ended September 26, the receivables outstanding disclosed by the Financial Reconstruction Law of all banks contracted to 3 trillion yen.

In 2009Nobuo IkedaAccording to the report, the total net loss of non-performing loans of all banks was 100 trillion yen.[9]. Takaaki MihashiAccording to the said, the bad debts generated by the bubble burst are said to be about 200 trillion yen[10].

After Abenomics

2015年3月末時点で前年度同月より全国115銀行の不良債権の残高は1兆780億円も減少して9兆1430億円となった。同じ基準で比較が可能な1999年以降で3月末時点として初めて10兆円を下回った。アベノミクスによる景気の回復によって、多くの銀行のLoanThe reason was that stable management of several companies contributed.[11].. At the end of March 2015, the ratio of non-performing loans to loans was 3%, down 0.3% from the previous year.[12][13]Is 1.1%,Local bankWas 2.4%.[14] 2016年3月末時点で全国115銀行の不良債権の残高は、前年度同月より8%減少して8兆3800億円となった。同じ基準で比較が可能な1999年以降で3月末時点として過去最低を更新して、90年代に深刻になった金融危機で急増して2002年3月末には43兆2070億円とピークに達した不良債権が激減した。継続している景気の回復で多くの銀行でLoanThe stable management of the former company contributed. At the end of March 2016, the ratio of non-performing loans to loans and other loans decreased by 3% from the previous year to 0.1%, with 1.5% for major banks,Local bankAre stable at 2.1%, both of which declined and the debt ratio continued to decline.[15] .

The view of an expert

In the latter half of the 1990s, the amount of public funds invested by Japanese banks to deal with bad debts amounted to 46.8 trillion yen.

economist OfUeda KazuoSaid that bad debts and delays in their processing adversely affected both borrowers and lenders, leading to lower lending and investment and a stagnation in the real economy.[16].

2001 yearsThe Industrial Bank of JapanAccording to the Research Department, the disposal of bad debts as a post-bubble era ended in 1997.[17].. In addition, the Industrial Bank of JapanDeflationIt was estimated that bad debts would increase by 5.6 trillion yen (as of 2001)[18].

There was also a calculation that 1 trillion yen of bad debts would be processed and 15000 unemployed people would be born.[19].

Takuro Morinaga"By around 1996, the land prices of the commercial areas in the metropolitan area had returned to the level around 1986 when the bubble began. In other words, the bubble adjustment was over. Bad debts that have occurred since 1996 are Management deterioration due to falling real estate prices and economic downturn,deflationIt is due to the deepening of[20].

EconomistYukio NoguchiAccording to the report, the total amount of the national burden determined by the processing of bankruptcy financial institutions was 2003 billion yen by the end of March 3, but the fact that the national burden is not generally recognized is said.[21].

Richard WernerIs the correct bad debt treatment,BOJWas proposing a way to buy at book value. This method was said to have two strengths. First, you can settle online immediately. And do not burden taxpayers (Crowding outDoes not happen).Moral hazardIn the first place, he explained that the responsibility for expanding the NPL problem lies with the BOJ's policy makers, rather than with city banks.[22].

EconomistAsahi Noguchi,Hideomi Tanaka"The economy without bad debts is an economy without risk and uncertainty, but it was tightly controlled.Socialist economyOr, there is nothing but a "government-dependent" economy in which all the risks are borne by the government."[23].


Non-current loans in the United States are generally over 90 days past due loans and non-accrual loans.[24].. The report (commonly called Call Report) that the banking supervisor submits to each bank must include various financial data and other delinquent loans 90 days or more past due and non-accrual loans, which are disclosed quarterly. ing[24].

The United Kingdom

The UK Banking Regulatory Authority, Financial Services Authority, “Financial Risk Outlook 2003” has a chart of the allowance for bad debts and bad debts for major UK banks, but the allowance for bad debts and bad debts No clear definition of non-performing loans has been established by banking supervisors, such as no explanation of definitions etc.[24].. Non-performing loans are categorized by each bank, and loans are managed by self-assessment, etc., and for loans that have concerns about repayment, the allowance for loan losses is determined in consultation with the auditors, etc. Results reported to UK Financial Services Authority[24].


The German banking supervisor, the Financial Services Supervisory Authority (Bundesanstalt fur Finanzdienstleistungasufsicht), also does not have a clear definition of NPLs[24].. The classification and provision of bad debts are decided in consultation with each bank and the auditor and reported to the Financial Services Authority.[24].


  1. ^ Osamu Ito "Economics of Japan-History, Current Situation, Issues" Chuokoron Shinsha <Chukou Shinsho>, 2007, 142 pages.
  2. ^ Financial Services Agency Laws and Guidelines
  3. ^ Junichi Nakamura, Shinichi Fukuda "How the so-called "zombie company" has become sound"Economic Management Research," Vol. 28, No. 1, Development Bank of Japan, Capital Investment Research Institute, March 2008, pp. 3-1, NOT 40016026053.
  4. ^ Nihon Keizai Shimbun, "Verification Bubble, No Criminal Errors," Nikkei Business Nikkei Business Bunko, 2001, page 36.
  5. ^ Asahi Noguchi, Hideomi Tanaka, “Misunderstanding of Structural Reform Theory,” Toyo Keizai, Inc., 2001, 100 pages.
  6. ^ Norihisa Iwata "Refreshing! Introduction to the Japanese Economy-Fifteen Laws to Read and Read Contemporary Society," Nihon Keizai Shimbun, 15, p. 2003.
  7. ^ Norihisa Iwata, “What's happening in the Japanese economy,” Toyo Keizai, Inc., 2005, p. 30.
  8. ^ Yusuke Kawamura “Japanese Finance (Illustrated trivia series)” Jujube-Revised new edition, second edition, 2, 2007 pages.
  9. ^ Nobuo Ikeda, Courage to Give Up Hope-Economics of Stagnation and Growth, Diamond, 2009, p. 122.
  10. ^ Takaaki Mitsuhashi "Introduction to the "new" Japanese economy, 10 times better in economic news" Ascom <ASCOM BOOKS>, 2010, p.158.
  11. ^ "Introduction to Japanese Economy" Tsuyoshi Kazuyoshi-
  12. ^ Mizuho Bank, Mizuho Trust & Banking, Bank of Tokyo-Mitsubishi UFJ, Mitsubishi UFJ Trust and Banking, Sumitomo Mitsui Banking, Sumitomo Mitsui Trust Bank, Resona Bank, Shinsei Bank, Aozora Bank
  13. ^ [1]
  14. ^ "Bank's NPLs fell by 10 trillion yen at the end of March, the first since 3" August 99, 2015 [ http://www.nikkei.com/article/DGXLASDF07H0T_X00C15A8000000/ ]
  15. ^ “Bank's NPLs Update Record Low to 16 Trillion Yen at the End of March 8.3” August 2016, 8[ https://www.nikkei.com/article/DGXLASFS12H1J_S6A810C1PP8000/]
  16. ^ Hideomi Tanaka "Ben Bernanke, New Emperor of the World Economy" Kodansha <Kodansha BIZ>, 2006, p. 142.
  17. ^ Asahi Noguchi, Hideomi Tanaka, “Misunderstanding of Structural Reform Theory,” Toyo Keizai, Inc., 2001, 108 pages.
  18. ^ Hideomi Tanaka, Asahi Noguchi, Masazumi Wakatabe "Economist Michelin" Ota Publishing, 2003, p.31.
  19. ^ Gyosuke Kamiki "The most interesting and understandable mechanism of the latest economy-solving simple questions from macroeconomics to microeconomics (textbooks not taught at school)" Nippon Bungeisha, 2008, p. 130.
  20. ^ Morinaga Takuro, "The 50 Great Questions of the Japanese Economy" Kodansha <Kodansha Hyundai Shinsho>, 2002, 42 pages.
  21. ^ Yukio Noguchi, Postwar Japanese Economic History, Shinchosha, Shincho Selection, 2008, 215 pages.
  22. ^ ``The end of fiction'' = Towards a new macroeconomic paradigm. Tokyo: PHP. (2003) P253,255
  23. ^ Asahi Noguchi, Hideomi Tanaka, “Misunderstanding of Structural Reform Theory,” Toyo Keizai, Inc., 2001, 125 pages.
  24. ^ a b c d e f "Status of Disclosure of Bad Credit in Other Countries"(International Financial Information Center, 2003)

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