$63,000,000,000 in US Treasuries and European Bonds To Be Liquidated As Unrealized Losses Hammer Major Bank in Japan

$63 billion worth of US Treasuries and European bonds are set to be liquidated by a major bank in Japan due to substantial unrealized losses on its balance sheet. Norinchukin Bank, with total assets of $681.6 billion, plans to complete the sell-off of sovereign bonds by March of next year. This move will result in a net loss of 1.5 trillion yen for the current fiscal year, three times higher than the bank’s initial estimate. The bank’s CEO, Kazuto Oku, expressed the need for a significant change in management to reduce unrealized losses on bonds, which amounted to around 2.2 trillion yen as of March. Oku outlined the bank’s intention to decrease sovereign interest rate risk and diversify its investments into assets with corporate and individual credit risk. With $144 billion in foreign bonds on its balance sheet, Norinchukin Bank’s decision will impact Japan, which is the largest foreign holder of US Treasury securities. Although some believe that this liquidation might not create substantial pressure on the US Treasury market at present, there could be potential effects on Treasury market yields if Japan’s currency struggles worsen.