Page last updated at 12:14 GMT, Friday, 6 June 2008 13:14 UK

Japanese sub-prime losses up 41%

Mizuho bank
Mizuho are among those to have suffered from the US sub-prime crisis

Japanese banks are feeling the fallout from the US subprime mortgage crisis and the credit crunch, according to the country's financial watchdog.

The Financial Services Agency said losses stemming from US sub-prime lending increased by 41% to 850bn yen ($8bn; 4.1bn) at the end of March.

Total losses on investments related to risky mortgages was far bigger, amounting to $23bn.

But it said Japan's sub-prime hit was not as severe as in Europe and the US.

Losses at Japanese banks have been dwarfed by those suffered by American and European rivals, such as Citigroup and UBS.

But the sector still has been exposed to losses from investments in high-risk financial products, such as residential mortgage-backed securities and collateralised debt obligations.

Japan's second-largest lender Mizuho Financial Group, the hardest hit so far, lost $6.1bn on sub-prime-related investments in the year to March.

Mizuho Financial Group: 645bn yen ($6.1bn; 3.1bn)
Sumitomo Mitsui Financial: 93bn yen ($875m; 447m)
Mitsubishi UFJ Financial: 81bn yen ($763m; 389m)

The country's third biggest lender, Sumitomo Mitsui Financial, made losses of $875m in that period while the country's biggest lender, Mitsubishi UFJ Financial, sustained $763m in losses.

As well being battered by America's housing crisis and the global credit crunch, Japanese firms are also affected by the wider economic slowdown in the US, as America is Japan's biggest export market.

Economic growth, which started to recover last year after a decade-long downturn, is also being dented by the rising cost of oil and raw materials.

Earlier this week, the Organisation for Economic Cooperation and Development said economic growth would be moderate at 1.7% in 2008. The economy grew 1.5% in the year to March, and 2.5% the previous year.

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