THE JAPAN NEWS

 

TOKYO (Jiji Press) — Scandal-hit Suruga Bank is seen reporting a net loss of up to ¥90 billion for April-September, against its current projection of a ¥12 billion profit, informed sources said Wednesday.

The expected loss for the first half of fiscal 2018 reflects a sharp increase in reserves for possible losses on real-estate investment loans, at the center of the bank’s scandal.

Despite the red ink, the regional lender’s capital-to-asset ratio is expected to stay above 8 percent, against the minimum level of 4 percent required for domestic banks.

Suruga Bank is scheduled to release its April-September results on Nov. 14. Its current projection was announced in August.

The bank, based in Numazu, Shizuoka Prefecture, extended loans to buyers of share houses managed by Tokyo-based Smart Days Inc., which collapsed in April this year.

Document falsification and other irregularities have been found rampant in the loan operations.

The bank plans to file a damages lawsuit against former executives including former Chairman Mitsuyoshi Okano, blaming them for overlooking the misconduct.

The outstanding amount of the bank’s share house-related loans stood at ¥203.5 billion at the end of March. The company had set aside a total of ¥42 billion in the loan loss reserves by that time.

Suruga Bank has found it necessary to sharply increase the reserves, following a third-party panel report in September, informed sources said.
The bank extended a lot of loans for real estate investments other than share-house projects.

Irregularities have been found also in this segment, but few projects face serious problems, unlike in the share-house segment, according to the sources.