Shares in Japanese megabank Mitsubishi UFJ Financial Group (MUFG) fell heavily Wednesday after the group said it had suffered about 43 million dollars in losses on US subprime loans.
MUFG, the world's largest banking group by assets, said in a statement late Tuesday that it had exposure of about 280 billion yen (2.4 billion dollars) to securities backed by subprime loans to risky borrowers in the United States.
As of the end of July, losses on those assets had reached about five billion yen (42.6 million dollars), MUFG said, adding that "the effect is limited." Of the 280 billion yen exposure, about 97 percent is in low-risk "AAA" assets, it said. The price of shares in MUFG fell by 50,000 yen or 4.4 percent to 1,090,000 in mid-morning trade.
MUFG's losses so far are small compared with the net profit of 880.9 billion yen it made the last fiscal year to March. The bank said its US subsidiary Union Bank of California was actively involved in housing loans but not in the subprime sector which caters to people with patchy credit histories.
Concerns about the US subprime woes have caused havoc on financial markets across the world this month. But top Japanese banks have relatively little risk of getting badly hit by defaults on loans in the US subprime mortgage market as they tend to be more conservative than their US and European peers, analysts say.