The latest earnings reports from Japan's top banks confirm what everyone already knows: They are still heavily burdened with bad loans that won't be paid back. In the financial year that ended March 31, the seven largest lenders chalked up a combined deficit of 4.6 trillion yen, in large part because they took a 5.6 trillion yen charge against loan writeoffs. Additionally, they booked more than 3 trillion yen in losses from stock sales.
Bankers say they are doing their best to clean up dud loans but that deflation, along with falling stock prices, is neutralizing their efforts. They believe the government should do more to halt the damaging price slide. Others say banking is a high-risk business and that those who criticize banks do not fully understand this.
The comments sound reasonable. But they also suggest a degree of passivity on the part of bank managers -- a tendency to play down their own problems and a lack of a sense of crisis. Bankers -- and corporate executives generally -- would do well to remember how Carlos Ghosn, president of Nissan Motor Co., has saved the firm from near bankruptcy. "Don't blame others for your company's poor showing," he would say. "If the company isn't doing well, there's something wrong with it."