They only have to count on a given date, but without continued improvement in the Nikkei, this accounting trick may not work next year. Also, Japanese banks measure their capital in yen, but many loans are dollar-denominated. As the yen falls in value, their equity drops relative to their loans, making them more likely to fail. Japanese banks have no external auditors, they classify their own non-performing loans. A newly created supervising office is considered understaffed.
Trust banks seem to be transferring some of their bad assets to their commercial banking division.
A real 80s word, meant banks were cut out of the relationships between lenders and borrowers. Big, healthy companies like Toyota, and Honda are cheating on their fragile banks by moving into the bond market. In Japan this started in 1996, with banks moving into selling mutual funds and life and casualty companies moving into each other s businesses. On October 14, Japan's Lower House passed a bill that allowed the government to inject capital into banks that are weak and into any bank that that takes over another bank which is insolvent. Y25 trillion will be set aside to recapitalize banks whose coffers have been depleted by bad loan write-offs, Y18 is to nationalize weak banks, and Y17 is already allocated to pay off depositors in failed banks.