Norinchukin bank to report huge loss on bond holdings

Norinchukin Bank is set to report a massive loss this fiscal year due to soured investments in foreign government bonds.

The bank said this week it expects a net loss of 1.5 trillion yen, or about 9.5 billion dollars, for the year ending in March.

The shortfall is three times what the bank forecast last month when it said it planned to raise about 1.2 trillion yen, or 7.5 billion dollars, in capital.

Norinchukin says it plans to sell about 10 trillion yen's worth of its foreign bond holdings.

The bank had mainly invested in US government bonds due to low interest rates in Japan. But the value of those holdings have since slumped after the Federal Reserve raised US interest rates.

Norinchukin serves agricultural, forestry and fisheries cooperatives across the country. It is a leading institutional investor, with 50 trillion yen in investment funds.

Agriculture, Forestry and Fisheries Minister Sakamoto Tetsushi said on Friday: "The bank has ample capital that exceeds regulatory standards, so its financial health is guaranteed. I understand the bank does not plan to raise more funds than what it has announced. I don't think there will be any impact on farmers."

The minister said he will continue to closely monitor the bank's management.