Global financial institutions take a $215 billion sub prime hit: Japanese regulator

10 March 2008

Mumbai: Global financial institutions hit by the US subprime mortgage crisis are estimated to have suffered losses to the tune of $215 billion, with about 55 per cent of that coming from the United States, Japan's financial regulator said.

The estimates by the Financial Services Agency (FSA) comes close on the heels of an earlier report by JPMorgan Chase & Co, which said Wall Street banks are facing a "systemic margin call" that could deplete them of up to $325 billion in capital.

European losses totalled about 8 trillion yen ($78.5 billion), while Asia and Canada together accounted for about 1.4 trillion, FSA chairman Takafumi Sato said.

He said while Japan's financial institutions have so far avoided any massive subprime losses, they have not escaped unscathed.

FSA put subprime losses at Japanese banks at 600 billion yen in the last quarter of 2007, with total exposure to subprime investments at 1.5 trillion yen.

Japan is considering investing some of its trillion-dollar currency reserves to help revitalise its own economy. But Japanese authorities are still debating whether to shift public funds into riskier assets even as its economy wrestles with huge national debt and a shrinking population that is struggling to support a growing number of pensioners.