Nationalisation required for Japanese bank recovery, says Fitch

A partial nationalisation of Japan's ailing banks may be the only way to resolve the country's economic woes, with recent efforts by individual institutions to restructure their balance sheets unlikely to lead to an autonomous recovery in the banking sector, according to a report by ratings agency Fitch Ratings.

Despite recent initiatives from three of the four major Japanese banks – Mizuho, Sumitomo Mitsui Financial Group (SMFG) and UFJ – to strengthen capital provisions and write off bad loans, there is little prospect of a meaningful recovery in the near to medium term, said Fitch analyst and report author Reiko Toritani.

In January, Mizuho said it expected to post a net loss of around ¥2 trillion in the year to March – making it the largest loss in Japanese corporate history - after drastically