The bank is one of the country's strongest and most realistic. If its bad loans are growing that fast, market watchers reasoned, other banks likely face similar problems they haven't recognized. Analysts are still trying to make sense of last week's numbers. It's likely both, he said. Official loan classifications are close to useless, they say.
Experts hope they'll write off bad loans to help reforms and Japan's turnaround.
But they need a turnaround before they can afford to write off loans. The banks have historically forgiven debts rather than write them off. That keeps inefficient companies in business, experts say. Ultimately they will have to force them out of business if Japan is to deal with its inefficiency and overcapacity. The government is keen to tackle reforms.